Light at the end of the VUCA tunnel

31 Oct,2013

 

By Fatema Rajkotwala

 

It’s a VUCA, VUCA world. Indeed. Even as former Procter & Gamble chairman and managing director Bharat Patel may have made light of the acronym with the lyrics of a famed Shakira song, almost all of the 350-odd delegates at the inaugural Indian Society of Advertisers (ISA) Global CEO conference held on Wednesday were in agreement that the prevailing times were indeed VUCA – Volatile, Uncertain, Complex and Ambiguous.

 

Unilever’s Global CEO Paul Polman was chief guest at the day-long event which had “Navigating through a VUCA World” as its theme. Mr Polman urged business leaders and marketers present to shift their focus to undeniable international struggles through corporate responsibility. Acknowledging the power of the internet, he stated how the concentration of wealth from few was now passing on as power to many as consumer connectivity has increased and being discovered by the youth.

 

R Gopalakrishnan, Executive Director, Tata Sons led the conversation with his illustrative presentation titled “India’s VUCA Moment”. Manu Anand, President, India and South Asia, Mondelez International Managing Director, Cadbury India and Ravi Kant, Vice Chairman, Tata Motors spoke in the pre-lunch session. Later, Marten Pieters, Managing Director and CEO, Vodafone India addressed the gathering, followed by a panel discussion moderated by Sunil Kataria, COO, Sales, Marketing and SAARC, Godrej Consumer Products Limited with stakeholders Sanjay Behl, CEO, Raymond representing advertisers, Kirthiga Reddy, Director, Online Operations and Head, Facebook India from the new media and Ashok Venkatramani, CEO, MCCS from the traditional media side. Before the Polman session, Pawan Munjal, MD & CEO, Hero Motocorp shared his approach and attitude to business in his talk, “Taking Risks in a Volatile World”.

 

Meanwhile, Hemant Bakshi, ISA Chairman and Executive Director, Home & Personal Care, HUL, expressed satisfaction with the Global CEO Conference. “We hope to make it an annual affair, and see greater participation in the years to come,” he said. Paulomi Dhawan, Chairperson, Events Committee and Treasurer of the ISA attributed the success to the emphasis on content and the speakers.

 

For the record, the ISA was established in 1939 which aims at safeguarding and promoting the interests of organizations involved in Indian advertising, marketing and media industry. Today, the association consists of 160 members of small and large advertisers in the country.

 

First half sessions:

With the population growing steadily, which translates into new consumers and newer markets, while resources are limited, and even though India’s growth rate is slow, it is comparatively better than that of Europe or USA. In an increasingly globalised and boundary-free market, digitization is unleashing forces that are significantly changing the game. In such a setting, a changing market is the new normal and presents huge opportunities for businesses.

 

So, is the Indian market and are Indian companies new to a VUCA environment? How real is the Indian downturn or recession with simultaneous stories of companies growing? What adaptive measures need to be taken by businesses in their leadership and business models in the current times? Instead of deploying defensive strategies, how can companies gain a competitive advantage in such a scenario? Hemant Bakshi Executive Director, Home & Personal Care, HUL and Annurag Batra, media entrepreneur and Editor-in-Chief, Exchange4media group threw light on the chosen theme and set the context for the sessions for the day.

 

R Gopalakrishnan, Executive Director, Tata Sons argued that VUCA has always been a reality for India and that technological response has kept pace with a constant delta, while it is human adaptiveness that takes time to change. He urged audiences to focus on the implications hereof by developing three insights and observations with the help of examples. “We’ve always been a VUCA country and now our moment has come. That is why Indians are successful entrepreneurs.” In terms of practical implications, he listed out, “We’ve forgotten to look back at nature. We have been programmed to achieve efficiency whereas nature works at effectiveness. We also need to rediscover intuition to make important decisions as a faculty that would be foolish to ignore its role in a VUCA world, as rationality can bring you this far. We need to invest in market and consumer research and face competition with élan.”

 

Manu Anand, President, India and South Asia, Mondelez International Managing Director, Cadbury India took the floor next for his talk on “Reigniting Growth in an Economic Slowdown”.  Mr Anand led his speech with the backdrop of how in an economic downturn demand for products decreases, inflation and commodity costs are high which leaves companies two routes – Either buckle down and cut costs or look at this market as an opportunity and ride the wave. Acknowledging that there is no right way and a combination of both can be done, he discussed Mondelez’s growth story during the 2008-2010 slowdown to highlight what techniques worked effectively for the company.

 

Finding a balance between where to selectively reduce costs and where to invest for the future; increase brand investments with a focus on master branding and the lead brand propositioning; create innovation pillars by launching new categories through different brand portfolios and focusing on your people, customers and stakeholders – these are some insights listed out by Mr Anand. “There needs to be a greater reliance on intuitive based decision making in a price expectation sensitive market such as India, VUCA times present high opportunities. It would be a mistake to make no change in management models or on the other extreme, to make aggressive investments.” To sum up, during a downturn, management leaders were asked to switch off their auto-pilot business model, keep a check on cash flow, focus on strengthening core business portfolio, increase revenue speeds, and most importantly, exploit and not waste a downturn to emerge stronger and leaner.

 

“Leading Business in the New Reality” by Ravi Kant, Vice Chairman, Tata Motors addressed the topic by peering into the past and see how companies have navigated through it. Citing Tata Motors’ example, he stated that the company has moved its business model from hierarchial to cross-functional; from vertically integrated o outsourced; from centralized to poly-centric, from a purely Indian market to one that gets up to three-fourths  of its business from outside the country. “Any change happening in the transitional or contextual environment will have an impact on your business. The new reality is that of high uncertainty with natural disasters no longer being rare events; complexity due to globalization presenting diverse demographics or climate changes; and rapid changes in industries within a span of the last 10 years.”

 

As solutions, Mr Kant offered the following advice, “Companies that are quick to self-check, able to experiment and collaborative are the ones that grow profitably in such times. Predictive analysis helps in giving short-term insights and with the help of technology and available data, the power of analytics and anticipation gives time to face situations better. Innovation is key to keep you going, to gain market share or within internal processes. Finally, collaborate because in today’s times, no company can do anything without networking, integrating or information-sharing.”

 

Second-half sessions

Shedding light on the cut-throat industry of telecomm operators, Marten Pieters, Managing Director and CEO, Vodafone India took on a positive approach in his presentation titled, “Not every Consumer has Sealed her Wallet: Finding New Pockets of Growth”. Sharing simple rules that helped Vodafone prosper in the economic slowdown, he pointed out, “As business professionals, we have no other choice but to embrace the change. As a marketer or advertiser, make VUCA a friend, instead of a foe.”

 

In the Vodafone context, he shared marketing mantras that worked. His key pointers were – 1. Understanding your customer better – our future customer is already with us. 2. Behaviour change happens more slowly than expected. 3. Business grows by leveraging opportunity not only by solving problems. 4. Acquisition is a must and not optional for brands. 5. Light or infrequent buyers matter. 6. Intensify investments during lean period. “Satisfy consumer needs – customers bend if there is something worth to be picked up. Marketeers tend to get impatient while consumers take time to accept and embrace change. Businesses need to be light on their feet to mine opportunities. During a downturn, brand building can be done while media costs are low. While suggestions for VUCA times may be different for different industries, consumer behavior broadly does not change across categories regardless.”

 

A panel discussion on the sensitive issue of “Cut Costs, Not Corners: Smart Marketing for Turbulent Times” moderated By Sunil Kataria, COO, Sales, Marketing and SAARC, Godrej Consumer Products Limited. On the panel were reprentatives of three sides – Sanjay Behl, CEO, Raymond, as the advertiser; Kirthiga Reddy, Director, Online Operations and Head, Facebook India as the new media and Ashok Venkatramni, CEO, MCCS from the traditional media side. The panel gave their views on what is withholding open-hearted collaborations between the media and marketing fraternities and why has this scenario developed. Some interesting suggestions for a VUCA world that emerged from the conversation was of the need for more responsible marketing due to marketing spends being one of the few operational costs that is based on speculation and a plethora of choices. ‘Personalization of messages ‘was pegged as one of the biggest themes leveraged by marketers. CSR moving to BSR, that is, Brand Corporate responsibility was yet another interesting insight by the panelists.

 

Sharing the brand’s success story, Pawan Munjal, MD & CEO, Hero Motocorp shared his approach and attitude to business in his talk, “Taking Risks in a Volatile World”. As a pioneer brand in the category that has reached international markets, Mr Munjal shared Hero’s VUCA times. “VUCA is equal to Opportunity. We at Hero, believe in disruption. A clear and steadfast vision will be the anchor that will bring order to chaos and help you make the right decisions in the interest of your stakeholders and consumers with resolve and confidence. It is important to have a mindset of anticipation and embracing change within the organization. Ensuring flexibility is key to diversifying risks. Lastly, courage and unflinching belief will help you through any uncertain times.”

 

The Polman Session

Paul Polman, Global CEO, Unilever shared his eye-opening and inspiring viewpoints on “How Responsible Business Models Can Help in VUCA Times”. Looking beyond short-term ROIs or pricing strategies, Mr Polman took on a human stance at viewing the current global scenario. Citing global realities of lack of food or sanitation for a large part of the planet’s population, or the European slowdown or the political upheaval in Syria – Mr Polman urged business leaders and marketers to shift their focus to undeniable international struggles through corporate responsibility not just as an obligation but as a business idea.

 

Acknowledging the power of the internet, he stated how the concentration of wealth from few was now passing on as power to many as consumer connectivity has increased and being discovered by the youth. “If you can get an ingrained political regime out of government in 17 days, you can out a company within nanoseconds. If a political system doesn’t work, trust in businesses also goes down. This is an end of the era of abundance. Transparency can be built only on trust, which will lead to prosperity. This is a unique moment for mankind. As businesses, we have to become solution providers and not just by-standers in the system that helps us grow. It’s time marketers run ahead instead of behind and look at mainstream corporate responsibility. The biggest tool you have as a marketer, is to build your brand to build trust. Give brands a social mission and purpose as a changed business model or become isolated.”

 

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