The small and medium enterprises are generally regarded as major drivers of innovation primarily due to the unique ability of the entrepreneurs to see connections and their creative urge to challenge existing businesses with disruptive ideas. Natural advantages of smallness such as adaptability, low cost of due diligence and lean organisational structures further facilitate the process of converting the creative potential of the entrepreneurs to viable businesses.
However, after every successful commercial application of a new idea, to maximise the benefits of economies of scale and scope, the firms come under tremendous pressure to produce more with consistent quality. But with rapid expansion of production capacity the creative passions of the entrepreneurial firms start getting choked. Slowly facts become more important than intuition, norms count more than out-of-the-box thinking and planning is preferred to spontaneity.
This process worked well for many firms to achieve consistent growth in an era when disruptive innovations were much less frequent and analysis of equilibrium states could predict reasonably well stakeholders’ motivations. But in the present scenario, as constant introduction of innovations is keeping the markets in transient states for much longer period of time and further away from equilibrium, to sustain profitable growth every firm, irrespective of its size, has to mange very efficiently quality and innovation.
The former requires a high degree of discipline and normative behaviour, since it is impossible to consistently achieve a high level of quality (for example, not more than 3.4 defects per million opportunities in a Six Sigma company) without a disciplined workforce adhering strictly to benchmarks. But the latter demands a creative climate for generation of unorganised and spontaneous ideas or serendipity. Such a climate does not stigmatise individuals with non-conforming attitudes who openly question accepted norms and benchmarks.
So far as quality is concerned, since the deployment of the new quality systems by the Japanese automobile industry, the world has been witnessing explosive growth of a variety of sophisticated quality management techniques. Many small firms too are now turning to latest performance measurement systems, such as the Malcolm Baldrige Criteria, Balanced Scorecard, Six Sigma Business Scorecard and ISO 9000 quality management systems. However, many of these firms are still failing to improve performance even after making heavy investments to reengineer their business processes. That is probably due to an inability to identify the critically important processes for performance enhancement.
In this race for achieving very high quality standards together with high production targets, creativity has been somewhat relegated to the back seat in the corporate strategy maps, notwithstanding the emphasis on innovation in the value proposition of many companies. In the current environment when customers are pampered to expect delight in every transaction, for sustaining competitive advantage, the firms - as they shift to the expansion mode - have to ensure that their performance improvement efforts are not limited to only controlling process variations, and that they do not give short shrift to innovation.
Sustained bias in favour of only one aspect (quality or innovation), can significantly reduce a company’s capability to manage the other aspect. The recent developments in General Electric and 3M are good indications of this problem, though in all fairness it must be acknowledged that both these companies have been enjoying comparatively good track record of quality and cutting-edge innovations.
Jeffrey Immelt, the successor of the legendary CEO, Jack Welch credited for transforming GE to a Six Sigma company, on assuming the CEO’s position in 2001 prescribed increased levels of innovation to spur growth and create new lines of business. Two years after Welch’s retirement growth- and metric-conscious GE’s market value fell by 45%. It is not yet clear how the company is going to meet the challenges of high growth through accelerated innovation and high quality in the coming years.
On the other hand, James McNerney, another frontrunner for the top job at GE, after taking charge of one of the most innovative companies in the world, 3M, tried to convert the company to a Six Sigma machine only to end up creating confusion about 3M’s core competence as a highly innovative company. The post-McNerney management is now trying to dial back many Six Sigma initiatives.
If an entrepreneurial start-up is not conscious of the need to continuously balance the discipline needed for total quality management with the ‘anarchy’ essential for creativity from the very beginning, then with mounting pressure of growth the firm’s creative potential will be frittered away. This process ultimately leads to total dominance of the left brain over the right when crazy and absurd ideas are not entertained anymore. In such a climate tolerance to ambiguity gives way to precise planning and creativity is ‘sigmatised’.
Though our understanding of the peculiarities of the non-linear behaviour of the innovation process is still at a nascent stage, with a firm commitment to make creativity a competence but not a coincidence, businesses can still implement strategies to maximise performance by intelligently combining management of quality and creativity. In their attempts to institutionalise creativity, many big companies are now experimenting with new types of work environment and organisational boundaries.
For example, 3M and Google allow employees to have 15% to 20% free time to live in a creative fog and P&G has replaced its traditional in-house R&D with Control & Develop model wherein 50% of the ideas for new products must come from outside P&G labs - from a network of inventors, scientists and suppliers.
Industries like fashion and industrial design, video and educational games, crafts and other similar activities have huge growth potential in a knowledge- and creativity-driven economy. India has a good number of world famous designers and artists but without Infys and Sifys of their own. With conscious efforts to achieve high growth by simultaneously institutionalising creativity and quality, it may be only a matter of time when many products and services will prominently display the names of their Indian design firms, like the way world is today informed about “Intel inside” or “Powered by Google”.
Nov 28, 2007
INDIANS HIGH ON EMOTIONAL QUOTIENT
Talent war is raging the world over - certainly so in the two sizzling economies - India and China. But scratch the surface - and the two talent markets are qualitatively vastly different. Why and how is the talent scarcity playing out in these two geographies? Why is it being felt so acutely in China? And what makes Indian managers one of the most sought after breeds in the global talent market? Karen Fifer , managing partner (consumer practice) Asia Pacific at Heidrick & Struggles has a vantage point in seeing global talent war play out. Based out of Hong Kong, with a pulse on Mainland China, keeping track of the Asia Pacific market and dealing with western MNCs rushing to Asia, she is well versed with dynamics of the Asian job market. She spoke with ET on her recent trip to India. Excerpts:
What’s the big difference between Indian and Chinese market?
Of course, everybody is expanding, growing and worrying over talent scarcity. This talent scarcity is being felt even here in India - but in China its far more acute. To give you some sense of the difference in scale - according to some recent media reports I saw here, India is facing a scarcity at CXO level by around 2,500. In China that figure stands at 75,000.
Why is talent crisis so acute in China?
China is paying a price for the Cultural Revolution. The Chinese economic growth isn’t going to last unless the talent crisis is addressed. University education has become a top priority for the government there. We have become open to getting western expertise in the sector.
What role do expats play in China’s talent market?
In China, expats hold leadership role. Some amount of localisation has begun to happen and western expats are being replaced by Asian expats, but local Chinese are still few in numbers. In India it’s a different story. Indian managers are in great demand. They are doing extremely well globally - I think they are one of the most wanted managers in the global talent market.
What makes Indian executives so sought-after?
Their cultural sensitivity, their work ethics, their ability to manage diversity and work in tough markets and environment, is remarkable. With western expats, the moment the need is away from Beijing, Shanghai where living conditions are tough, we find it difficult to get them. But Indians can adjust easily. We find India managers very high on emotional quotient. I think doing business in India, dealing with its complexity and diversity enables them well for the global challenges.
How does this demand for Indian talent manifest in your search mandates?
Today it’s not rare to get a mandate from companies looking for out-of-India requirement where they specifically ask for an Indian manager with international experience. Recently, an MNC wanted a head of strategy in Hong Kong asking for an Indian with international exposure. I would say if you look at globally, India and Australia offer great talent and leadership pool. Australians because as a nation they are fairly mobile and adventurous.
What’s the big change you see in the talent search market?
What I notice is that earlier we would largely hire from the West for Asian markets. Now it’s just the reverse - we need to recruit talent from Asia for the western markets. Also searches are going international. Almost every search we do in Hong Kong, is international. And the managers’ willingness to relocate internationally too has risen.
How does talent scarcity manifest in China?
The government has passed legislation on minimum wages. It hopes that this could be one way to control the massive talent demand. In China, the focus is shifting from acquiring talent to retaining them in private as well as the government sector. One of the side effects of talent scarcity is title inflation - companies are dangling out these fancy titles to keep their executives happy. Companies are also trying to offer them opportunities to work in other parts of the world. Things like alumni network, care for the aged parents too are becoming important to keep their staff hooked. The entire game in the talent market is moving from reactive to being proactive. We are beginning to actively work with companies to map their future talents needs and see potentially where we could tap them on a global scale.
EMPLOYER BRANDING IS TOKENISM IN INDIA
A brand is something that is woven around a product. A good employer brand would, and should, represent the personality, the soul of the company. Building such a brand requires a lot of introspection by the company, and answering the question, “what kind of company we are, and want to become”; it must involve all the constituents of the organisation.
In most cases, however, companies treat ‘employer branding’ as a mere short-cut for attracting the talent. Instead of soul-searching, the HR departments tie up with ad agencies to conjure up an image that may be attractive to their target market, even if not their own. That’s a real dampener for new recruits––there’s a perception-reality gap they’re confronted with. The myriad ‘Best Employer’ media surveys add fuel to fire as they bring out checklists. So a ‘fun place’ for some may not be the same for others.
If one looks at successful employer brands carefully, one finds that companies do not do it consciously. For instance, when Sasken Technologies was a growing company in 2001, they decided what kind of organisation they want to be. Out of this introspection came things like their single-status policy, wherein all employees, whether the CEO or the young programmer, would be treated at par––such as every company executive would travel in the same class, etc.
Now this may attract certain kind of people, and it may also ward off others who wouldn’t like to ‘work in a commune’. Sasken certainly didn’t do this to attract talent. But later, such policies became the chief constituent of the company’s employer branding policy.
Similarly, Infosys, Wipro and TCS never consciously built a brand. They just built a workplace that would be productive and where people would be happy. Employer branding becomes a tokenism when it doesn’t fit in the DNA of the company. And, there needs to be a lot of self-sustained and conscious effort needed to create such a fit; to ‘become oneself’.
The Tatas would never like to become like Reliance, or vice-versa. The brand as an employer must provide a long-term advantage. And this advantage comes only when the profile of the candidate fits well with the profile of the company. Also, one must also appreciate that employer branding works mainly at the entry-level since the mid-level workforce and upwards look at other things, such as job profile, career enhancement et al.
No Brands without Exprerience
Any good brand manager would tell you that nothing kills a bad product faster than good advertising. We at Great Place to Work® Institute have studied “Best Workplaces” for last 25 years. Every year, more than one million employees in over 3,000 organisations participate in our Best Workplace Study, which is conducted in 30 countries.
There is no doubt that most organisations who make it to the ‘Best Companies’ or ‘Best Workplaces’ list of the Great Place to Work® Institute do have a strong employer brand. Sasken, for example, has a stated ‘People First’ policy to emphasise that employees are the focus.
Fedex has a core philosophy of ‘people – service – profit’ to indicate what comes first. Bill Marriott of Marriott Hotels do not tire of repeating the founder’s belief “Take care of the associates, and they’ll take good care of the guests, and the guests will come back.” Indeed, for many of these organisations it seems that their entire business strategy is built around their people, rather than the other way round.
If these companies were indulging in mere tokenism, their employees would see through it. What is relevant is that independent third party employee surveys in these organisations reveal a high degree of trust in the management of the organisation.
What sets these organisations apart, in my opinion, is the realisation that there is no brand without experience in line with the brand. These organisations are obsessed about feedback. RMSI, for example, seeks feedback from customers and suppliers on how they are living their values.
What proponents of employer brand as a mere corporate communication tool often overlook is that an employer brand can only exist if the employees believe in it. Even if advertising and spin doctoring succeeds in luring talented employees to join you, they will not stay long if their experience is different from the employer brand proposition.
Indeed, organisations like Google with strong employer brand hardly spend money in building the brand; instead they focus on living the brand. CEOs and leadership teams in these most organisations with strong employer brand live the brand values.
Rajiv Mody, CEO of Sasken, has the same perquisites that any other employee has, because equity in treatment is a core part of their employer brand. And if the CEO and the entire leadership team live the brand beliefs, how is it tokenism?
In most cases, however, companies treat ‘employer branding’ as a mere short-cut for attracting the talent. Instead of soul-searching, the HR departments tie up with ad agencies to conjure up an image that may be attractive to their target market, even if not their own. That’s a real dampener for new recruits––there’s a perception-reality gap they’re confronted with. The myriad ‘Best Employer’ media surveys add fuel to fire as they bring out checklists. So a ‘fun place’ for some may not be the same for others.
If one looks at successful employer brands carefully, one finds that companies do not do it consciously. For instance, when Sasken Technologies was a growing company in 2001, they decided what kind of organisation they want to be. Out of this introspection came things like their single-status policy, wherein all employees, whether the CEO or the young programmer, would be treated at par––such as every company executive would travel in the same class, etc.
Now this may attract certain kind of people, and it may also ward off others who wouldn’t like to ‘work in a commune’. Sasken certainly didn’t do this to attract talent. But later, such policies became the chief constituent of the company’s employer branding policy.
Similarly, Infosys, Wipro and TCS never consciously built a brand. They just built a workplace that would be productive and where people would be happy. Employer branding becomes a tokenism when it doesn’t fit in the DNA of the company. And, there needs to be a lot of self-sustained and conscious effort needed to create such a fit; to ‘become oneself’.
The Tatas would never like to become like Reliance, or vice-versa. The brand as an employer must provide a long-term advantage. And this advantage comes only when the profile of the candidate fits well with the profile of the company. Also, one must also appreciate that employer branding works mainly at the entry-level since the mid-level workforce and upwards look at other things, such as job profile, career enhancement et al.
No Brands without Exprerience
Any good brand manager would tell you that nothing kills a bad product faster than good advertising. We at Great Place to Work® Institute have studied “Best Workplaces” for last 25 years. Every year, more than one million employees in over 3,000 organisations participate in our Best Workplace Study, which is conducted in 30 countries.
There is no doubt that most organisations who make it to the ‘Best Companies’ or ‘Best Workplaces’ list of the Great Place to Work® Institute do have a strong employer brand. Sasken, for example, has a stated ‘People First’ policy to emphasise that employees are the focus.
Fedex has a core philosophy of ‘people – service – profit’ to indicate what comes first. Bill Marriott of Marriott Hotels do not tire of repeating the founder’s belief “Take care of the associates, and they’ll take good care of the guests, and the guests will come back.” Indeed, for many of these organisations it seems that their entire business strategy is built around their people, rather than the other way round.
If these companies were indulging in mere tokenism, their employees would see through it. What is relevant is that independent third party employee surveys in these organisations reveal a high degree of trust in the management of the organisation.
What sets these organisations apart, in my opinion, is the realisation that there is no brand without experience in line with the brand. These organisations are obsessed about feedback. RMSI, for example, seeks feedback from customers and suppliers on how they are living their values.
What proponents of employer brand as a mere corporate communication tool often overlook is that an employer brand can only exist if the employees believe in it. Even if advertising and spin doctoring succeeds in luring talented employees to join you, they will not stay long if their experience is different from the employer brand proposition.
Indeed, organisations like Google with strong employer brand hardly spend money in building the brand; instead they focus on living the brand. CEOs and leadership teams in these most organisations with strong employer brand live the brand values.
Rajiv Mody, CEO of Sasken, has the same perquisites that any other employee has, because equity in treatment is a core part of their employer brand. And if the CEO and the entire leadership team live the brand beliefs, how is it tokenism?
DOES A CEO NEED TO BE AN MBA?
As technology changes like quicksilver and globalisation issues come to a boil, the role of leadership in firms have come under the scanner. Clearly, the notion of leadership in an era of global connectivity means that the top job not only has to ensure profits for all shareholders, it has to fix problems, tap new markets, bring cutting edge ideas to the table, and lead cross-cultural teams.
The person has to be passionate , empathetic, sharp and inspirational at the same time.A couple of weeks ago, if you have been following our page one ticker, you would know that in the Forbes’ 400, the first MBA CEO was one whose company ranked 22 on the list. Which means that 21 of the world’s best companies don’t have CEOs who have MBAs on their resume.
So what gives? According to Mickey Matthews, VP, North America, Stanton Chase International, the global headhunter : “MBA’s are losing some relevance as they become more and more ‘easy’ to obtain. With the proliferation of opportunities to get this credential we are seeing it as more of a nice to have but not a stand out requirement.” Amplifying the argument, Avneesh Raghuvanshi, partner , DKR Daulet-Singh , the CEO search firm: “An MBA degree is useful but not necessarily a decisive factor, the most stressed upon areas are prior experience and leadership abilities”.
As India Inc gets younger, however, things are changing. Says Omam Consultants executive director Anil Koul:” In the current scenario, MBA is almost an essential requirement, if not must. Only in some core or manufacturing sectors where they are looking for CEO’s with age profile 50 + years, this may not be a pre-requisite factor.”.
Then there is the setting of a benchmark. Says Dhiren Shantilal, senior VP and MD, Asia Pacific, Kelly Service says: “MBAs not only offer more to a company but also they require less, in that their need for basic.
Also, an MBA from a good institute means an established career path and network to bank upon. More and more senior executives are opting for executive MBAs from foreign universities these days says Shiv Agrawal, CEO, ABC Consultants:“If you were to hire a CEO from outside, for example, there is a lot of discontent amongst the team. If the person has an MBA degree from a top-rung B-school means that the person is competitive, has experience and hence a good candidate.”
Currently, in the world of cross domain movement, one might think that the task of nominating a CEO will be all the more difficult, however, its not so. Experts hold different opinion about the importance of sectoral knowledge. Some are of the view that domain knowledge at CEO level is not as important as at operational level as there are certain components in the agenda that remains the same across domains.
“Domain knowledge is a great advantage,” says Raghuvanshi , “but given the reality of a marketplace when CEO talent is getting scarce, other issues are given importance.” Adds Agrawal: “In fact bringing talent from outside the industry has its added advantage as the person comes in with fresh ideas, is not biases, open to ideas and reenergises the whole system.”
That said and done, however, one cannot rule out the importance of domain knowledge when it come to certain specific industries. “What is critical is a keen business and strategic sense which can be relevant in any sector. However, areas involving R&D need people with more technical sense than any other sector,” says Pravin Tatavarti, MD, Allegis India, the recruitment major.
The requirements vary between different genre of companies. Though some requirements remain the same, there are some differences when it comes to large scale and a start-up . While a big company might look for some one who can mobilise the resources in the right direction, an SME or a start-up looks for a person who can create these resources. “The core elements,” says Shantilal, can be the same.
“One of the key differences however lies in the mindsets & characteristics of the people they hire. For example in a start-up , they hire people who are more flexible and entrepreneurial, whereas for a big and stable company, the people they hire tend to be able to work in an environment where there are complex internal matrices.”
The current league of CEOs is younger, savvier and have harnessed their skills in a more rapidly changing environment. There is a desire for diversity, more openness for non-industry specific candidates, says Matthews, and also more openness for more junior candidates.
Today’s CEO’s mindsets are very different from those of yesterday. “They see the need to position their organisations as “global companies” rather than “US-centric” or “Europe-centric” companies,” says Shantilal.
Once the ideal candidate has been identified, the bait is out. Many companies are prepared to shell out more where talent is scarce, where the skills set are niche and where there is a very strategic appointment. “Judging from experience companies are willing to ‘shell out’ more when: they have realised how much this vacancy is actually costing them,” he adds. But, that’s another story.
The person has to be passionate , empathetic, sharp and inspirational at the same time.A couple of weeks ago, if you have been following our page one ticker, you would know that in the Forbes’ 400, the first MBA CEO was one whose company ranked 22 on the list. Which means that 21 of the world’s best companies don’t have CEOs who have MBAs on their resume.
So what gives? According to Mickey Matthews, VP, North America, Stanton Chase International, the global headhunter : “MBA’s are losing some relevance as they become more and more ‘easy’ to obtain. With the proliferation of opportunities to get this credential we are seeing it as more of a nice to have but not a stand out requirement.” Amplifying the argument, Avneesh Raghuvanshi, partner , DKR Daulet-Singh , the CEO search firm: “An MBA degree is useful but not necessarily a decisive factor, the most stressed upon areas are prior experience and leadership abilities”.
As India Inc gets younger, however, things are changing. Says Omam Consultants executive director Anil Koul:” In the current scenario, MBA is almost an essential requirement, if not must. Only in some core or manufacturing sectors where they are looking for CEO’s with age profile 50 + years, this may not be a pre-requisite factor.”.
Then there is the setting of a benchmark. Says Dhiren Shantilal, senior VP and MD, Asia Pacific, Kelly Service says: “MBAs not only offer more to a company but also they require less, in that their need for basic.
Also, an MBA from a good institute means an established career path and network to bank upon. More and more senior executives are opting for executive MBAs from foreign universities these days says Shiv Agrawal, CEO, ABC Consultants:“If you were to hire a CEO from outside, for example, there is a lot of discontent amongst the team. If the person has an MBA degree from a top-rung B-school means that the person is competitive, has experience and hence a good candidate.”
Currently, in the world of cross domain movement, one might think that the task of nominating a CEO will be all the more difficult, however, its not so. Experts hold different opinion about the importance of sectoral knowledge. Some are of the view that domain knowledge at CEO level is not as important as at operational level as there are certain components in the agenda that remains the same across domains.
“Domain knowledge is a great advantage,” says Raghuvanshi , “but given the reality of a marketplace when CEO talent is getting scarce, other issues are given importance.” Adds Agrawal: “In fact bringing talent from outside the industry has its added advantage as the person comes in with fresh ideas, is not biases, open to ideas and reenergises the whole system.”
That said and done, however, one cannot rule out the importance of domain knowledge when it come to certain specific industries. “What is critical is a keen business and strategic sense which can be relevant in any sector. However, areas involving R&D need people with more technical sense than any other sector,” says Pravin Tatavarti, MD, Allegis India, the recruitment major.
The requirements vary between different genre of companies. Though some requirements remain the same, there are some differences when it comes to large scale and a start-up . While a big company might look for some one who can mobilise the resources in the right direction, an SME or a start-up looks for a person who can create these resources. “The core elements,” says Shantilal, can be the same.
“One of the key differences however lies in the mindsets & characteristics of the people they hire. For example in a start-up , they hire people who are more flexible and entrepreneurial, whereas for a big and stable company, the people they hire tend to be able to work in an environment where there are complex internal matrices.”
The current league of CEOs is younger, savvier and have harnessed their skills in a more rapidly changing environment. There is a desire for diversity, more openness for non-industry specific candidates, says Matthews, and also more openness for more junior candidates.
Today’s CEO’s mindsets are very different from those of yesterday. “They see the need to position their organisations as “global companies” rather than “US-centric” or “Europe-centric” companies,” says Shantilal.
Once the ideal candidate has been identified, the bait is out. Many companies are prepared to shell out more where talent is scarce, where the skills set are niche and where there is a very strategic appointment. “Judging from experience companies are willing to ‘shell out’ more when: they have realised how much this vacancy is actually costing them,” he adds. But, that’s another story.
THE MANY ERRORS IN THINKING ABOUT MISTAKES
by Alina Tugend ( as published in the New York Times)
OF the many mistakes I have no doubt made over the last few weeks, two stand out: One cost me money and one cost me some pride.
I made an error in an article, and of the thousands who read it, a few gleefully e-mailed me about it.
I corrected it, although I sheepishly admit my first — though fleeting — instinct was to avoid owning up.
In the second case, in a flurry of zealous organization, I sent in a check to cover a bill for my husband’s monthly train pass. It turns out that he pays by direct debit. I canceled the check.
Then we got a notice that we were being charged $20 for a bounced check.
Neither mistake was on the scale, with, say, amputating the wrong leg or causing two planes to collide.
But they bothered me and made me consider how we are taught to think of mistakes in our society.
“I think it’s a very difficult subject,” said Paul J. H. Schoemaker, chairman of Decision Strategies International and teaches marketing at the Wharton School of the University of Pennsylvania. “There’s a lot of ambivalence around making mistakes.”
On one hand, as children we’re taught that everyone makes mistakes and that the great thinkers and inventors embraced them. Thomas Edison’s famous quote is often inscribed in schools and children’s museums: “I have not failed. I have just found ten thousand ways that won’t work.”
On the other hand, good grades are usually a reward for doing things right, not making errors. Compliments are given for having the correct answer and, in fact, the wrong one may elicit scorn from classmates.
We grow up with a mixed message: making mistakes is a necessary learning tool, but we should avoid them.
Carol S. Dweck, a psychology professor at Stanford University, has studied this and related issues for decades.
“Studies with children and adults show that a large percentage cannot tolerate mistakes or setbacks,” she said. In particular, those who believe that intelligence is fixed and cannot change tend to avoid taking chances that may lead to errors.
Often parents and teachers unwittingly encourage this mind-set by praising children for being smart rather than for trying hard or struggling with the process.
For example, in a study that Professor Dweck and her researchers did with 400 fifth graders, half were randomly praised as being “really smart” for doing well on a test; the others were praised for their effort.
Then they were given two tasks to choose from: an easy one that they would learn little from but do well, or a more challenging one that might be more interesting but induce more mistakes.
The majority of those praised for being smart chose the simple task, while 90 percent of those commended for trying hard selected the more difficult one.
The difference was surprising, Professor Dweck said, especially because it came from one sentence of praise.
They were then given another test, above their grade level, on which many performed poorly. Afterward, they were asked to write anonymously about their experience to another school and report their scores. Thirty-seven percent of those who were told they were smart lied about their scores, while only 13 percent of the other group did.
“One thing I’ve learned is that kids are exquisitely attuned to the real message, and the real message is, ‘Be smart,’” Professor Dweck said. “It’s not, ‘We love it when you struggle, or when you learn and make mistakes.’”
As we get older, many of us invest a great deal in being right. When things go wrong, as they inevitably do, we focus on flagellating ourselves, blaming someone else or covering it up. Or we rationalize it by saying others make even more mistakes.
What we do not want to do, most of the time, is learn from the experience.
Professor Dweck, who wrote a book on the subject called “Mindset” (Random House, 2006), proved this point in another study, this one of college students. They were divided into two camps: those who did readings about how intelligence is fixed, and those who learned that intelligence could grow and develop if you worked at it.
The students then took a very tough test on which most did badly. They were given the option of bolstering their self-esteem in two ways: looking at scores and strategies of those who did worse or those who did better.
Those in the fixed mind-set chose to compare themselves with students who had performed worse, as opposed to those Professor Dweck refers to as in “the growth mind-set,” who more frequently chose to learn by looking at those who had performed better.Mr. Schoemaker would agree. He was the co-author of a June 2006 article for the Harvard Business Review called “The Wisdom of Deliberate Mistakes.” Among its theories is that there is too much focus on outcome rather than on process.
If businesses and people are not making a certain number of mistakes, “they’re playing it too safe,” he said.
The resistance to making mistakes runs deep, he writes, but it is necessary for the following reasons, which he outlined in the article:
¶We are overconfident. “Inexperienced managers make many mistakes and learn from them. Experienced managers may become so good at the game they’re used to playing that they no longer see ways to improve significantly. They may need to make deliberate mistakes to test the limits of their knowledge.”
¶We are risk-averse because “our personal and professional pride is tied up in being right. Employees are rewarded for good decisions and penalized for failures, so they spend a great deal of time and energy trying not to make mistakes.”
¶We tend to favor data that confirms our beliefs.
¶We assume feedback is reliable, although in reality it is often lacking or misleading. We don’t often look outside tested channels.
Of course, there are mistakes and then there are mistakes.
“With children, you want them to make mistakes, but not end up in prison or in a wheelchair,” Mr. Schoemaker said. One also has to weigh the consequences. We want people who run nuclear power plants or fly planes to avoid mistakes as much as possible.
But most of us are not holding people’s lives in our hands and can stand to take a few more chances.
“Unfortunately, the people who most need to make mistakes are the ones least likely to admit it, and the same is true of companies,” Mr. Schoemaker wrote.
Of course, there are stupid mistakes, or what Stanley M. Gully, associate professor at the School of Management and Labor Relations at Rutgers University, called “unintelligent failures.”
After all, nobody wants a worker who keeps making the same mistake, and “if we fail and don’t learn from it, it’s not an intelligent failure,” he said.
Professor Gully and other researchers have looked at ways of training people to do complex tasks and found that in some cases encouraging them to make mistakes works better than teaching them to avoid them.
Those who were good at processing information, open to learning and not overly conscientious were more effectively trained if they were persuaded to make mistakes.
“We get fixated on achievement,” he said, but, “everyone is talking about the need to innovate. If you already know the answer, it’s not learning. In most personal and business contexts, if you avoid the error, you avoid the learning process.”
But old habits die hard. I want to be more open to — or less afraid of — making mistakes. But if you catch an error in this column, do me a favor. Keep it to yourself.
CYBERSPACE FOR SALE
For a man who knows the pulse of the advertising world better than most, WPP chief Sir Martin Sorrell was probably painfully slow to hop on to the digital bandwagon.
If international news reports are to be believed, Sir Martin didn’t think too highly of Murdoch’s display of greed for internet companies in 2005, including the buyout of MySpace. It’s been a while since he’s had a change of heart. And after scouting for agencies in markets like the US and the UK, Sir Martin’s turned his attention to emerging ones like India.
WPP’s head is not the only one shopping in India . Over the last year, Omnicom, WPP, Publicis and Interpublic Group have launched a bareknuckled war to gobble up digital independents.
The last two months alone saw an assortment of no less than five agency CEOs and holding company heads visit India, and acquiring a digital agency was high on their agenda. There remain very few agencies being fought over, BC Web Wise, Indigo Consulting, Interactive Avenues, Mauj, Media 2win, the digital arm of Contests2Win, Webchutney, among others. WPP, in fact, bought a 75% stake in Quasar last week; a firm that industry sources reveal was actively being courted by Carat as well.
It is not hard to see why. Even though internet penetration in India still lags behind most of its western counterparts, the Indian online population is estimated to touch 100 million by 2007-08 , according to the Internet and Mobile Association of India (IAMAI).
IAMAI pegged the online ad market at Rs 218 crore for fiscal 2006-07, with financial services companies forming 24% of the spends. Industry sources reckon this to cross over Rs 400 crore by the end of this financial year. Cellular subscribers, on the other hand, have crossed the 250 million mark.
“Computer and mobile are now the digital toys of those under 30,” says Alok Kejriwal, chairman, Contests2Win Group. This has even persuaded the FMCG companies , which typically dealt with traditional agencies, to test the digital waters, cases in point being the Sunsilk’s Gangofgirls initiative on the net and Cadbury’s ‘Pappu Pass Ho Gaya’ campaign which used both the internet and mobile.
According to Vikas Tandon, managing director, Indigo Consulting, it is erroneous to confine digital to just the PC and mobile domains. “Consider the entry of IPTV, digital LCD outdoor hoardings, epaper everything in media is becoming digital,” he says.
Given the growing clout, it’s not surprising that clients are turning to specialised agencies for digital solutions rather than traditional ones which lack adequate expertise in the field.
Can we click?
“The bulk of our revenue, over 90% comes from direct clients,” observes Ratish Nair, CEO, Interactive Avenues. Agencies themselves have probably seen the writing on the wall, since in many cases, they are called in only to help brief the digital shops.
“The industry hasn’t evolved as rapidly as it should have and is playing catch up now,” says Mahesh Chauhan, president, Rediffusion DYR, pointing to the 35% to 40% rate of digital growth, much higher that the traditional rate of 10% to 12%.
“Digital is a new language and I need to have expertise in this area to compete better,” says Jagdip Bakshi, CEO of Contract. Chaya Carvalho, CEO & MD, BC Web Wise, reckons traditional agencies have been slow to play the digital game because they didn’t see enough monetary gains in the short-term. “Even for the next two to three years, traditional advertising will remain a much more lucrative option,” she opines.
For traditional agencies that have mastered the art of passive communication, having grown up servicing passive media like TV, radio, print, interactive media is a whole new world. “Traditional agencies are too offline for their own good,” says Webchutney COO Rahul Nanda.
“They don’t understand the interactive nature of this medium and tend to get too ‘print-ish’ in their execution.” For instance, they may be able to create a banner for website since the tools remain the same but may not understand the nuances of its interactivity; how the banner integrates with the overall digital strategy or how it helps the client or consumer.
Carvalho believes the website is a full advertising and communication tool of its own which necessitates a different approach: “A TV or a print ad can be plugged into any other media. But web ads are a self-sustaining proposition.”
According to Vivek Bhargava, managing director, communicate2, in the traditional world, one ad may target a million people but in digital advertising, a single ad typically targets as few as 1,000 people. More ads need to be made at a fraction of traditional spends, he says. Traditional agencies are also hampered when it comes to the technological know-how required for handling mediums like the internet.
It is little wonder then that most agencies are scaling up capabilities in the digital space, either by building skillsets ground up (like RK Swamy/BBDO which launched Digital Direction) or through buyouts. But the scales are clearly tilted in favour of the latter.
“It’s much easier to buy. There’s no market time to develop a separate set up; clients want solutions right now,” says Kejriwal, pointing to long gestation periods and the time spent understanding nuances of a new business. According to Ravi Kiran, CEO - south Asia, Starcom MediaVest, “Most acquisitions are the cost of not making decisions at the right time.”
Another alternative is that which Starcom IP claims to be pursuing, attempting to build its own capabilities. According to Pushkar Sane, general manager, Asia, Starcom IP, “Most of the industry is in the transactional space and not really creating digital solutions. We’ve decided to provide solutions. Today, we give away strategy for free but that’s what we’d like to be paid for. The transaction part is increasingly getting commoditised.”
However, an industry observer remarks that buyouts are not merely a function of adding capabilities. With stocks being monitored by analysts, an acquisition in the digital space is seen as a step in the right direction, one that does wonders for quarterly valuations.
Typically, what the WPPs and the Omnicoms of the world offer is access to a larger client base, international practices and learnings as well as the power to take an idea and present it globally. “From a client point of view, they are seeking holistic solutions that help build a brand. We can help the digital guys climb the value chain, making them a part of the larger brand play,” says Chauhan.
Still, most of the digital independents don’t seem to be impressed. “We are not clear about the learnings and value they bring, especially since many of the digital agencies are in the learning mode at the moment,” says Carvalho. As far as bringing in more businesses is concerned, this alone is not an attractive proposition. One of the independents who prefers to remain anonymous observes, “They offer exciting clients but given the ones we’ve got, it’s not a one-way trade. It makes us equals.”
Among the chief deterrents to selling out is disagreement over valuation. “Price discovery is a problem,” admits Kejriwal. “Some of the acquirers don’t appreciate the intrinsic value that resides in new media. Traditional agencies may get valued at 8-10 times but the price for new media is much higher.”
A young market that’s growing at a rapid pace has prompted these independents to adopt the wait and watch approach. “It’s too early to sell. If we’d been around for four to five years, it may have been a quicker decision. We’d like to build something valuable at this stage,” says Nair.
A dearth of talent and easy financing options through IPOs and venture capital investments have added to the bargaining power. In fact, Capital18, the venture capital and private equity arm of Network18, acquired a substantial stake in Webchutney just last week.
“No one is going to sell cheap unless they are in a really bad shape,” reiterates Carvalho. But many of the holding companies and ad agencies who’ve approached these shops so far imagine they are a ‘budget buy’. Agencies are typically offered low threshold multiple levels of around six or 10 and an earnout model through the next six years.
“Given their own salary packages and the way they function, agencies ought to be more aware. The ‘sasta hai, khareed lo’ attitude puts you off like nothing else. All of us are independent entrepreneurs. And we are all doing very well on our own, growing year on year. Why should we sell? This is something they really need to think about,” says Carvalho. Agency groups are also not above arm twisting, threats to hire all the talent present in an independent at a vastly inflated salary.
That’s countered, in turn, by apprehensions about losing freedom and culture clashes that are typically a part of aligning with big agencies. Carvalho confesses to being the most excited when the agency received its first offer in 2005; something her team didn’t share in at all.
The need to have a certain comfort level is why most Indian digital firms claim they would much prefer to partner a pure play digital agency and use their best practices instead of teaming up with big networks. According to Nakul Chopra, CEO & MD, Publicis India, his agency is inured from this owing to its global tie-up with Digitas and the establishment of Publicis Modem.
“The digital agency has to fit into the larger scheme of things of a network. One should understand the other. Else, the marriage won’t fructify,” says Chauhan.
The industry at present is rife with rumours of who’s going to be on the block next, of negotiations that broke down at the last minute and one of the big shops that just may tie the knot in December. With even agencies that many in the industry consider stragglers in the digital arena being wooed, the battle for those with pedigree and an impressive track record will be all the more bloody.
MASTERING THE ART OF MARKETING
It is said that during a gold rush, the biggest fortunes are made not by the gold-diggers, but by the shovel and spade suppliers. Now take the business of competitive entrance exams for professional courses, CAT, JEE and PMT, for example.
Here, the gold-diggers are the students, of whom only one in a few hundred is likely to hit pay dirt and gain access into an IIT, an IIM or the AIIMS. The suppliers though, institutes like Career Forum, Career Launcher, IMS, Brilliant Tutorials and TIME, that are tutoring the gold diggers, are raking it in and fast shedding the cottage industry-like tag of ‘coaching classes’.
These businesses, no longer the one-man-shows set up by a local college professor trying to augment his/her income, are now professionally run firms with a national presence. The industry as a whole is witnessing growth of well over 30%, and the biggest of these firms now clock in excess of a hundred crore in revenues.
It’s hardly surprising then that competition is hotting up, the battle for market share is getting increasingly fierce and big established names like IMS and Brilliant Tutorials are finding that newer names like Career Forum, Career Launcher and TIME are getting more and more aggressive.
Everyone is realising that beefing up distribution, brand building and new product offerings is what will separate the winners from the also-rans. Says Satya Narayanan, chairman, Career Launcher: “Today , firms like ours have to approach the business like consumer marketers.”
And the business is about distinctive branding. As Sanjay Choudhary, COO, IMS, says: “We take pride that CEOs and CIOs of various companies are our students. And we were rated the fourth Most Trusted Brand in education behind Kendriya Vidyalaya and IIT by Brand Equity.”
Spread to Perfection
Distribution is one of the biggest challenges for firms in this space. When the industry first came into being, the biggest pan-India players were IMS and Brilliant, both of which offered only correspondence coaching. In those days distribution was rather easy, involving couriering of course material, and quality perceptions were formed purely on the basis of course material.
However, over the years classroom coaching has become the preferred mode (so much so that IMS and Brilliant have both been forced to offer classroom coaching as well), and this has massively complicated distribution. For unlike most service industries where standardisation works well, in classroom coaching standardisation is hard to achieve given the human element, it’s impossible to have the same teaching staff across cities.
Hear what Manek Daruvala, founder, TIME, has to say: “It is very important that the people we work with share our passion for education, they have to be extremely quality conscious. We cannot say ‘sorry, we goofed up, you can take your money back’ or things like that.”
Quality considerations means franchising has to be done carefully and selectively. Career Forum, which today has 58 centres across 42 locations in India, has approached franchising cautiously, founder Sujata Khanna wanted to ensure to that quality standards of the franchisees were of the highest standards.
This cost the company a few years, but Khanna believes that it has been well worth it, and helped it open shop even in smaller locations like Hissar and Yamunanagar. Most firms, in order to ensure consistency and a standardised teaching methodology, regularly hold refresher courses and skill-updation workshops for their faculty.
Besides maintaining quality standards, location is another key factor. Like in the retail industry, it is imperative for a training centre to be in a prime location, which is easily accessible to students. And it may not always be easy to find the right location at the right price, given the spiraling real estate costs.
Franchising, though, has helped some firms here. For example, BullsEye, a firm that is headquartered in Pune: its Chandigarh franchise is today the largest branch for the company, and Atul Gopal, founder, BullsEye, admits, “The innovations that Hirdesh (the franchise owner behind the Chandigarh success) has used have been replicated by us across centers and helped us raise overall the quality standards.”
Eyeball Game
In the early days, most of these firms built their reputation through word-of-mouth . This was sufficient when numbers were small and they were restricted to one city. In fact, in the days of correspondence coaching, hand-medown course materials were often the best advertisement for firms like Brilliant, Agarwals and IMS.
However, as the dynamics of the industry have changed and firms have grown bigger, both in revenue and geographical spread terms, they are now using large advertising outlays and employing the services of big ad agencies to deploy communication across multiple media to reach their target audience.
Sample this: Career Launcher spends close to Rs 10 crore, IMS claims it spends about 10% to 12% of its turnover (which industry estimates suggest could be well over Rs 200 crore), and Mahesh Tutorials estimates it will spend close to Rs 5 crore this year. Not small or insignificant by any standard.
Lessons in Branding
Given the scale of spends, marketing is no longer ad hoc, and most of the firms have marketing professionals who actively manage the brand. Most spends tend to be on the print and outdoor media. Some firms like Career Forum, TIME and IMS have experimented with TV as well, though they’re not sure how well it works for them.
Says Khanna of Career Forum, “We did a TVC last year, but the returns were not good enough. Moreover, one has to be present in all the channels with expensive ad rates; it wasn’t feasible. We’re better off with print.” The other medium that they are increasingly gravitating towards is online.
This is not surprising, considering most of the target audience is between the age of 19 and 25, and is net-savvy to boot. Many believe that in the long run, a number of enrolments could end up coming from this medium. On ground events too, are gaining currency as they try and connect with their constituency.
Sanjay Choudhary, COO, IMS, says, “IQ (IMS Quiz) is a branding event that we do and it’s the single largest quiz for graduates in India. Last year we held it in 24 cities and the finals were held on Star Cruises. Also, we have reached out to about two lakh students through various seminars.”
Despite the emphasis on quality of education, one of the key brand building tools remains what was originally Brilliant’s core strategy, the ‘testimonial’ advertising of the success of a firm’s students in the competitive exams. All companies tend to splurge heavily once results are out with ‘claim ads’ on how many students from their institute managed making the grade.
At times, this creates complications. For instance, a student could feature in two competing ads as he subscribed to both courses. Worse still, even if a student comes only for the group discussion and personal training, the institutes tend to run his name as a ‘successful student’ without necessarily revealing that it did not coach the student for the entrance examination. Given the importance of this claim-based advertising, TIME has sought to lend credibility by appointing a top auditor, KPMG, to scrutinise and validate its claims.
Similarly, many firms are now showcasing what they call the R&D or quality department. In this business, R&D is basically the effort that goes into tutoring methods and preparation of course content. TIME has a 120-strong R&D unit, and IMS says that it has 60 of the best professionals working in this area. One way or another, as the pie gets bigger and the competition fiercer, a lot more innovations will come about.
More buck for the bang
Companies in this space are also realising that diversification is the order of the day. This is happening partly because the strengths that they possess can be leveraged further, and partly to avoid putting all eggs in one basket. Diversification is taking place in two ways.
The first method of diversification is to extend the number of professional exams for which tutoring is provided. Typically, most of these firms now offer coaching for international tests like GMAT, GRE, TOEFL, engineering entrances and medical entrances.
The second route of diversification is a more complex one as it involves getting into businesses beyond the core tutoring product. Take, for instance, Mahesh Tutorials where the name, given the activities that it has now diversified into, is in a manner of speaking misleading (the company has diversified into day-care and corporate training).
Mahesh Shetty, founder of the company, believes that the professional course space is not very big given that everything, MBA, medical, engineering et al ,put together comprises about 10-15 lakh students. “We believe day-care is going to be a big business with the number of working parents increasing. We also provide corporate training under the name of Empower, where we provide training for retail management, import-export management, and real-estate management, which are all short-term courses of one to two months duration,” Shetty explains the rationale.
A granddaddy in this business, IMS too is busy diversifying. In 2003 it started IMS Publications, which today has 17 titles to its credit. In 2005, it started Admission Consulting , where it helps students who want to study abroad. In 2006, it started with pro-schools through which it provides training on wealth management, investment banking, insurance management and retail.
And this year it has started its own Bschool called Pracsis in Kolkata because IMS felt there aren’t many good B-schools in the east. TIME has also moved into new areas and is now into employability training in a big way. Says Daruvala, “Here we train candidates to get employment with companies like Satyam, Wipro and Deloitte , among others, and help groom them for success. We also have plans to open schools by 2009 in Hyderabad as we feel that is something which is scalable if we have a good curriculum in place.” Career Launcher is also considering setting up a nationwide chain of schools.
It is clear that while most eyes have focused on bigger, conventional and more glamorous industries, coaching has metamorphosed from being a mom-and-pop dominated show into a full-fledged industry. And given the demographics of India, in all likelihood, it’s one that is set to go from strength to strength.
Flash of Brilliance
Call it the big daddy of coaching institutes when it comes to competitive exams like IITJee. Brilliant Tutorials, a 37-year-old brand, is much like the content it produces, hand me down. Parents who have learnt the ropes of tackling competitive exams at Brilliant recommend it to their children.
Yet, despite the amazing brand recall, Brilliant, which has one of the most extensive distance education programmes, is looking to get in synch with the changing times. SB Swaminathan, CEO, Brilliant Tutorials, admits that the institution which services students across 700 cities and towns in India through post, needs course correction. It’s a mandate that the ex-Citibank professional is busy implementing.
“Though content is still relevant, the methodology has changed. Distractions at home have become far too many, so self-learning is difficult,” he explains. The medium today are classroom centres where a lot of collaboration takes place. Swaminathan admits that while the market has moved towards classroom teaching, Brilliant has been a late mover in this space.
The institution began its foray into physical centres in 2003 with the Northern Capital Region as the first catchment area. It has now started adding centres in cities in south, with the west and the east next on the radar. “Maybe we should have started earlier. But even now there is ample scope to expand the network,” he states, adding that as market becomes more competitive, a brick-and-mortar presence will enable the institution to have higher brand recall.
While other players are expanding using the franchisee route, Brilliant has opted for company-owned centres. “It’s very tempting to go the franchisee route, but we believe company-owned centres allow us better control over brand image and the student experience,” Swaminathan explains.
Brilliant, he adds, is funding the expansion through internal accruals, but he refuses to divulge whether the company is in talks for possible strategic investment. The brand founded by eminent political cartoonist Thanu, clearly understands the need to live up to its name.
Here, the gold-diggers are the students, of whom only one in a few hundred is likely to hit pay dirt and gain access into an IIT, an IIM or the AIIMS. The suppliers though, institutes like Career Forum, Career Launcher, IMS, Brilliant Tutorials and TIME, that are tutoring the gold diggers, are raking it in and fast shedding the cottage industry-like tag of ‘coaching classes’.
These businesses, no longer the one-man-shows set up by a local college professor trying to augment his/her income, are now professionally run firms with a national presence. The industry as a whole is witnessing growth of well over 30%, and the biggest of these firms now clock in excess of a hundred crore in revenues.
It’s hardly surprising then that competition is hotting up, the battle for market share is getting increasingly fierce and big established names like IMS and Brilliant Tutorials are finding that newer names like Career Forum, Career Launcher and TIME are getting more and more aggressive.
Everyone is realising that beefing up distribution, brand building and new product offerings is what will separate the winners from the also-rans. Says Satya Narayanan, chairman, Career Launcher: “Today , firms like ours have to approach the business like consumer marketers.”
And the business is about distinctive branding. As Sanjay Choudhary, COO, IMS, says: “We take pride that CEOs and CIOs of various companies are our students. And we were rated the fourth Most Trusted Brand in education behind Kendriya Vidyalaya and IIT by Brand Equity.”
Spread to Perfection
Distribution is one of the biggest challenges for firms in this space. When the industry first came into being, the biggest pan-India players were IMS and Brilliant, both of which offered only correspondence coaching. In those days distribution was rather easy, involving couriering of course material, and quality perceptions were formed purely on the basis of course material.
However, over the years classroom coaching has become the preferred mode (so much so that IMS and Brilliant have both been forced to offer classroom coaching as well), and this has massively complicated distribution. For unlike most service industries where standardisation works well, in classroom coaching standardisation is hard to achieve given the human element, it’s impossible to have the same teaching staff across cities.
Hear what Manek Daruvala, founder, TIME, has to say: “It is very important that the people we work with share our passion for education, they have to be extremely quality conscious. We cannot say ‘sorry, we goofed up, you can take your money back’ or things like that.”
Quality considerations means franchising has to be done carefully and selectively. Career Forum, which today has 58 centres across 42 locations in India, has approached franchising cautiously, founder Sujata Khanna wanted to ensure to that quality standards of the franchisees were of the highest standards.
This cost the company a few years, but Khanna believes that it has been well worth it, and helped it open shop even in smaller locations like Hissar and Yamunanagar. Most firms, in order to ensure consistency and a standardised teaching methodology, regularly hold refresher courses and skill-updation workshops for their faculty.
Besides maintaining quality standards, location is another key factor. Like in the retail industry, it is imperative for a training centre to be in a prime location, which is easily accessible to students. And it may not always be easy to find the right location at the right price, given the spiraling real estate costs.
Franchising, though, has helped some firms here. For example, BullsEye, a firm that is headquartered in Pune: its Chandigarh franchise is today the largest branch for the company, and Atul Gopal, founder, BullsEye, admits, “The innovations that Hirdesh (the franchise owner behind the Chandigarh success) has used have been replicated by us across centers and helped us raise overall the quality standards.”
Eyeball Game
In the early days, most of these firms built their reputation through word-of-mouth . This was sufficient when numbers were small and they were restricted to one city. In fact, in the days of correspondence coaching, hand-medown course materials were often the best advertisement for firms like Brilliant, Agarwals and IMS.
However, as the dynamics of the industry have changed and firms have grown bigger, both in revenue and geographical spread terms, they are now using large advertising outlays and employing the services of big ad agencies to deploy communication across multiple media to reach their target audience.
Sample this: Career Launcher spends close to Rs 10 crore, IMS claims it spends about 10% to 12% of its turnover (which industry estimates suggest could be well over Rs 200 crore), and Mahesh Tutorials estimates it will spend close to Rs 5 crore this year. Not small or insignificant by any standard.
Lessons in Branding
Given the scale of spends, marketing is no longer ad hoc, and most of the firms have marketing professionals who actively manage the brand. Most spends tend to be on the print and outdoor media. Some firms like Career Forum, TIME and IMS have experimented with TV as well, though they’re not sure how well it works for them.
Says Khanna of Career Forum, “We did a TVC last year, but the returns were not good enough. Moreover, one has to be present in all the channels with expensive ad rates; it wasn’t feasible. We’re better off with print.” The other medium that they are increasingly gravitating towards is online.
This is not surprising, considering most of the target audience is between the age of 19 and 25, and is net-savvy to boot. Many believe that in the long run, a number of enrolments could end up coming from this medium. On ground events too, are gaining currency as they try and connect with their constituency.
Sanjay Choudhary, COO, IMS, says, “IQ (IMS Quiz) is a branding event that we do and it’s the single largest quiz for graduates in India. Last year we held it in 24 cities and the finals were held on Star Cruises. Also, we have reached out to about two lakh students through various seminars.”
Despite the emphasis on quality of education, one of the key brand building tools remains what was originally Brilliant’s core strategy, the ‘testimonial’ advertising of the success of a firm’s students in the competitive exams. All companies tend to splurge heavily once results are out with ‘claim ads’ on how many students from their institute managed making the grade.
At times, this creates complications. For instance, a student could feature in two competing ads as he subscribed to both courses. Worse still, even if a student comes only for the group discussion and personal training, the institutes tend to run his name as a ‘successful student’ without necessarily revealing that it did not coach the student for the entrance examination. Given the importance of this claim-based advertising, TIME has sought to lend credibility by appointing a top auditor, KPMG, to scrutinise and validate its claims.
Similarly, many firms are now showcasing what they call the R&D or quality department. In this business, R&D is basically the effort that goes into tutoring methods and preparation of course content. TIME has a 120-strong R&D unit, and IMS says that it has 60 of the best professionals working in this area. One way or another, as the pie gets bigger and the competition fiercer, a lot more innovations will come about.
More buck for the bang
Companies in this space are also realising that diversification is the order of the day. This is happening partly because the strengths that they possess can be leveraged further, and partly to avoid putting all eggs in one basket. Diversification is taking place in two ways.
The first method of diversification is to extend the number of professional exams for which tutoring is provided. Typically, most of these firms now offer coaching for international tests like GMAT, GRE, TOEFL, engineering entrances and medical entrances.
The second route of diversification is a more complex one as it involves getting into businesses beyond the core tutoring product. Take, for instance, Mahesh Tutorials where the name, given the activities that it has now diversified into, is in a manner of speaking misleading (the company has diversified into day-care and corporate training).
Mahesh Shetty, founder of the company, believes that the professional course space is not very big given that everything, MBA, medical, engineering et al ,put together comprises about 10-15 lakh students. “We believe day-care is going to be a big business with the number of working parents increasing. We also provide corporate training under the name of Empower, where we provide training for retail management, import-export management, and real-estate management, which are all short-term courses of one to two months duration,” Shetty explains the rationale.
A granddaddy in this business, IMS too is busy diversifying. In 2003 it started IMS Publications, which today has 17 titles to its credit. In 2005, it started Admission Consulting , where it helps students who want to study abroad. In 2006, it started with pro-schools through which it provides training on wealth management, investment banking, insurance management and retail.
And this year it has started its own Bschool called Pracsis in Kolkata because IMS felt there aren’t many good B-schools in the east. TIME has also moved into new areas and is now into employability training in a big way. Says Daruvala, “Here we train candidates to get employment with companies like Satyam, Wipro and Deloitte , among others, and help groom them for success. We also have plans to open schools by 2009 in Hyderabad as we feel that is something which is scalable if we have a good curriculum in place.” Career Launcher is also considering setting up a nationwide chain of schools.
It is clear that while most eyes have focused on bigger, conventional and more glamorous industries, coaching has metamorphosed from being a mom-and-pop dominated show into a full-fledged industry. And given the demographics of India, in all likelihood, it’s one that is set to go from strength to strength.
Flash of Brilliance
Call it the big daddy of coaching institutes when it comes to competitive exams like IITJee. Brilliant Tutorials, a 37-year-old brand, is much like the content it produces, hand me down. Parents who have learnt the ropes of tackling competitive exams at Brilliant recommend it to their children.
Yet, despite the amazing brand recall, Brilliant, which has one of the most extensive distance education programmes, is looking to get in synch with the changing times. SB Swaminathan, CEO, Brilliant Tutorials, admits that the institution which services students across 700 cities and towns in India through post, needs course correction. It’s a mandate that the ex-Citibank professional is busy implementing.
“Though content is still relevant, the methodology has changed. Distractions at home have become far too many, so self-learning is difficult,” he explains. The medium today are classroom centres where a lot of collaboration takes place. Swaminathan admits that while the market has moved towards classroom teaching, Brilliant has been a late mover in this space.
The institution began its foray into physical centres in 2003 with the Northern Capital Region as the first catchment area. It has now started adding centres in cities in south, with the west and the east next on the radar. “Maybe we should have started earlier. But even now there is ample scope to expand the network,” he states, adding that as market becomes more competitive, a brick-and-mortar presence will enable the institution to have higher brand recall.
While other players are expanding using the franchisee route, Brilliant has opted for company-owned centres. “It’s very tempting to go the franchisee route, but we believe company-owned centres allow us better control over brand image and the student experience,” Swaminathan explains.
Brilliant, he adds, is funding the expansion through internal accruals, but he refuses to divulge whether the company is in talks for possible strategic investment. The brand founded by eminent political cartoonist Thanu, clearly understands the need to live up to its name.
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