Disruption is a word that's getting bandied about today in every management conference. Except that the ability to unsettle existing market order and create new solutions that are either more efficient or radically new—if one could call this phenomenon disruption—is now a reality. New competitors are now bursting on the scene, businesses protected by large and deep moats are finding their defences easily breached, or vast new markets are being conjured from nothing. And therefore, sometimes, the best and even the only way to keep your business intact is to destroy it with a superior solution, before someone else does.
Founding Fuel, in association with Boom Live, conducted a live Hangout on August 25, 2015 to discuss how to deal with disruption.
The topics discussed were
1. Are you being disrupted?
2. Leading through disruptive change
3. How to become a market-driving firm
The panelists were -
Kishore Biyani - CEO, Future Group
Sanjay Gupta - COO, Star India
Rishikesha T Krishnan - Director, IIM Indore
Rajesh Srivastava - Strategist and Author
The hangout was moderated by Indrajit Gupta - Co-Founder, Founding Fuel.
Good afternoon, this is Indrajit Gupta. I am the co-founder and director at Founding Fuel. This is our third special Google hangout that we hosting with Boom Live, our partners.
The topic today is around disruption.
Now that’s the term that you would hear bandied around in every management conference, except that now it’s for real. It’s a term that is increasingly getting discussed around at the board rooms and not without reasons, because new competitors are bursting on the scene. Think Paytm think Alibaba—people who creating value at a very, very short time. New market spaces have been imagined that perhaps never existed—think Uber or Airbnb for that matter. The incumbents I think are increasingly finding it difficult to keep their defences intact or to build moats around them.
So what do you do? I think that’s where I think we are coming around the view that disruption may well be an answer. If you are able to disrupt your own business with a better solution, nothing could be better. Of course, it is easier said than done.
What we have got today is a stellar panel of four leaders who have practiced, thought about and planned disruption inside their organizations and I will quickly introduce you to them. In my studio today I have Sanjay Gupta, COO at Star India—welcome Sanjay. I have also got Rajesh Srivastava who is a familiar face for Founding Fuel audiences. He anchors a very popular column called New Rules Of Business and he is also a professor and an author. Kishore Biyani obviously needs no introduction. He is seen as a doyen and stalwart of the Indian retail industry and someone I have known since the last two decades doing incredible things across the industry. And finally Professor Rishikesha Krishnan, director at IIM Indore. Hi Rishi! Rishi has written whole lot on the subject of Innovation and disruption. In many ways we cannot get a better panel than this. So we’ll dive in.
We have three broad segments planned.
1. To understand the landscape and understand why disruption is emerging as a phenomenon and how that’s impacting various industries—and we will hear from our panelist about their experiences.
2. How do you lead through disruptive change—and that’s the big question before us today.
3. And the final one is, once we understand the leadership lessons, how do we kind of move to a situation where firms embrace this in their basic DNA; how do you become a much more market driving enterprise, as opposed to market driven enterprise.
So that’s the format. We will obviously keep this conversational and listen and learn.
SEGMENT 1: Are you being disrupted?
[Watch Segment 1 here : How to Disrupt and Destroy Your Own Business]
So first I will come to you Sanjay and I wanted you to quickly walk us through how you see disruption as a phenomenon impacting the business that you are in—media. We hear a lot about that and I myself have to deal with it on daily basis, so tell us.
Sanjay Gupta: So let me start by telling you that media is going through some really exciting time now as an industry. It is growing at the rate 12-13% CAGR and if I look at ourselves at Star, we are growing at double that rate today. We are reaching out to 70 crore people every day. They spend 40 minutes with Star. Life couldn’t be better. We are growing at a very hectic pace and earning revenues. But equally if you ask me are you getting disrupted? Like how! You can’t imagine. In my mind 2-3 big changes are happening in media
1. Consumer behavior. If I look at this business, whether it is films or television, it has been built on back of somebody will come to you at a point in time. So if you go and see a movie in a theater on a Friday evening. You will come and see a 9 o’clock news. So almost the consumers walk to a screen. Or you will go and see a show at Star Plus at 10 pm at night. Whereas the consumers today don’t want that. They want the screen to come to them, they want the content to come to them rather than they going to the screen. That’s the one big change happening.
2. The second big change from a media point of view is the creation of content. Till now the content creation was limited to few set of people who had the resources, technology, cameras, crew and edit suites etc. But that’s changing dramatically. It is democratization of content creation is a really big change which is happening and everybody today can create content and publish it.
3. And the third big change, which is in relation to the first and second but is really enabling the two to connect together, is the change in screens. We have grown up delivering content on television at Star India and there are 170 million television screens today. But look at the number mobile screens in the country today—there are 900 million mobile screens and they are with them [consumers] all the time. There are 200 billion people in this country, whose first screen is mobile screen. So fundamentality this space, in spite of the fact—as I said earlier—it’s growing very well, but the amount of disruption that’s happening is quite dramatic and if as business you are not prepared and planned for it, it is something that can really—the businesses can change very dramatically and quickly.
Indrajit Gupta: That is a very interesting point about how the central gravity is shifting. I will quickly move on to Mr. Biyani. Mr. Biyani, you heard Sanjay talk about the democratization of content. In retail what’s the reality? How does disruption really impact a leader like you and the organization you lead?
Kishore Biyani: We always have been philosophical about change and we have always prepared our organization to deal with changes at regular intervals. We always believed in the concept of creation, preservation and disruption.
Secondly we also strongly believe that nothing is permanent in life and whatever comes has to go and one has to be prepared for it for something new. Currently we are dealing with interesting change which is happening in the business, which is technology-aided commerce, which has occupied so much of mindspace—that is a mindspace wherein everyday you being attacked on various fronts on a new way of doing commerce and that is something we are dealing with. I don’t know how much change is happening and how much is real, but the amount of the mindspace it has occupied is something which we have to deal with and that’s an interesting change we have to explain internally in the organization as well as externally.
Besides technological change I think there is change that is happening in terms of the way consumers are looking at things, the way you communicate with them, the way consumption, SKUs [stock keeping units] are emerging and changing and whether the retailer will deal with the change on a day to day basis, as whatever was sold ten years ago is not going to sell again today. As a retailer we are trained to deal with change in a larger context. I think the new context is technological change which is emerging in the country and the dynamics of India as consumers, which is a very young set if consumers that are digitally savvy and are more researching the products, more aware of the prices compared to the earlier consumers used to be. And I believe that change is not what is there right now, we are dealing with the change that is going to come tomorrow so how do you forecast the change? How do you look at the new predictions which are happening, new consumption which will happen? We have to deal with that scenario which is much much more serious than the current issues which we are grappling with currently.
Indrajit Gupta: Rishi you heard both Sanjay and Mr. Biyani talk about two things—one was the impact technology is having on existing businesses and also Mr. Biyani and Sanjay talked about the whole role in emergence of this new consumer, or prosumer as some people like to call it. The issue that I wanted to bring to your attention was that sometimes it’s becoming difficult to predict where the next source of competition will emerge from. Would the hotel industry have ever been able to predict the phenomena of Airbnb or Oyo rooms back from India. How do business leaders or organizations deal with that phenomena?
Rishikesha Krishnan: I agree that it’s going to be a significant challenge going forward. In almost any industry it is difficult to predict where the next competitor will come from. One thing is pretty clear that first of all wherever something can be digitized and put on the internet that is going to happen. So you should be looking at your entire value chain and looking for any opportunities for digitization in that chain.
Secondly, you are going to have a lot of decentralization or disaggregation, as it might be called for both the hotel or the taxi industry.
Third, you are moving away from a system that was very tightly licensed and regulated to one which has much user affiliations. Conventionally you would have thought of hotels as very regulated spaces, you would thought of taxis as people who got licenses from local regulatory authorities, but now you are looking at very decentralized, almost individual suppliers. It’s related to the disaggregation point I made earlier, but it’s a fact that a lot of this is happening without the traditional requirement of regulation and licensing. So I think these are the things one needs to look out for if one is looking for new disruptions to happen. The first point is essentially anywhere you see the potential for digitization or you see the potential for disaggregation and the third point is wherever you see the possibility of removing licensing or regulation.
Indrajit Gupta: Rajesh, Mr. Biyani talked about predicting what’s next and how hard that is to do—we all know that and businesses have sometimes tended to rely on the consultants to figure out what’s going to happen next, which I am not sure necessarily a very smart thing. Now how do you develop the capacity of being able to see what’s the fork at the end of the road.
Rajesh Srivastava: I personally believe that we—all the people who are sitting here—the industrial leaders—need to bring about a change in their mindset. What I have noticed is that most of the corporates are competitor-led. They look at competition and most of us try and bring out a better version of what they are doing. That’s innovation, but that’s incremental innovation. So the way to get out of this trap is that we should stop looking at competitors and start looking at our own customers—so that’s the first shift. Everything that we do should be done for our customers.
So what do we now do? If you are focusing on the customer, let’s try and understand their pain points and remove them. I will give you 2 or 3 examples. Let us take Amazon. When they got into etailing business when it came to books, it predicted that someone is going to come and destroy the business and in this case they felt that Apple would. So before Apple could come and destroy their business, they proactively put in an exercise which led to the creation of Kindle. So Kindle, Indrajit was one of the devices to destroy and disrupt the existing business model and they succeeded. Today Kindle is an important part of Armory.
Take Netflix. Netflix disrupted Blockbuster from its preeminent position. It became one when it came to delivering DVDs by post. But Reed Hastings, looking at customers—and what Sanjay mentioned—what did he realize? That there is a shift happening in the customers. Customers want to consume content at the time that they desire and on the device they desire and on the screen they desire. Having realized this, what did he do? He took his most successful business and converted it from DVD delivery to online delivery of content.
When he took that shift his share prices fell but he believed that is what was in the interest of the customers and he continued. Today, Netflix share prices are soaring. So what’s the lesson? The lesson is as old as the hills. We should stop focusing on competitors for god sake! it doesn’t really matter what the competitors do. I personally believe I am in the business of serving my customer, whatever is their pain point I need to eliminate them, and the second thing—if I have to do that, I have to become my own strongest competitor. What do I do? When I become my own strongest competitor I have to destroy my own business before others do, but re-emerge in a more stronger and formidable avatar.
Indrajit Gupta: Sure, Sanjay do you agree with Rajesh that companies tend to be competitor-focused and obsessed about tackling competition instead of reimagining?
Sanjay Gupta: Yes I think he has a very valid point and I’ll share our own example and challenges to build on what he said. I think the bigger the company, the more successful the company, the bigger the challenges. Because then you can get complacent. I think one of the challenges is the mindset. The mindset about are you playing to defend your market share and defend your business, or are you there to grow your business. To me that’s a one big distinction between people who have disrupted vs. people who have withered away. I think the mindset that you bring to say why do you exist in this business.
The second difference in my mind, building on the point he made, is around knowing what’s the core of your business. I think the fundamentally, if you look at Star, it is called a broadcaster, it is called a TV company, but internally we don’t believe we are a TV company. We define our business—we are in the business of storytelling actually. To define the business sharply around what you stand for is the way to find different ways of disrupting your own business models. Today when we are doing Hotstar, we are saying Hotstar is one more screen. We know consumers are changing, we know technology is changing, we know this is going to be a dramatic force—it’s a tidal wave which is coming on us. We should be participating in it and growing our business. Because we are there to engage consumers with powerful stories that we have—be it drama, movies or sports. And that solves for what do we do next? Then we don’t worry about that digital is going to take away or mobile is going to take away my business. It’s about saying it will actually grow my business. And that really starts solving for some of the fundamental challenges that businesses face. It goes back to the point that you have to be consumer-focused and your core business focus is to really grow your business and disrupt.
SEGMENT 2: Leading through disruptive change
[Watch Segment 2 here :Leading Through Disruptive Change]
Indrajit Gupta: That’s right. We will quickly move into the next segment which is really around leading disruptive change and pick up the threads on Hotstar because we’d love to learn a little more on what you did there, because it’s a brilliant piece of work.
I will come to you Mr. Biyani. You have kind of done many different things across two decades and you’ve done it again and again disrupting existing categories. Now give us a sense, if you were to pick maybe one of the many things that you did, including Big Bazaar which I love as a concept. What do you think was the starting point there, the point Rajesh and Sanjay were making today, which is that let’s be focused on what’s changing at the consumer end instead of worrying about what competitors are doing. You have exemplified that. Give us a sense of how you thought about some of the disruptive formats that you thought of.
Kishore Biyani: If you look at us, we always call ourselves Future Group and we always believed in scenario planning. We have always been proponent of design thinking and the way we created our organization design way back—this must have been 15 years ago—of how we will construct our business, we created lines of business such as food, fashion and home and we will deliver this through multiple formats—that’s how we were able to deliver multiple formats. Today as a company we run the format for one of the lowest strata of society called KB’s Fairprice which are non-air conditioned stores, to Food Hall which deals with the crème de la crème of the country. We have been able to create multiple formats and we have been able to sell food through various formats, we have been able to sell fashion through multiple formats and now we have been able to sell home through multiple formats. This design has allowed us to do much much than what we could have done traditionally through one single format. Now when technology-related format will come in, we can easily sell our products. So we never looked at ourselves as a retailer; we looked at ourselves as a consumer goods company, creating products and selling it through various formats.
What we are currently doing, which we believe can be a game changer, is—in fashion nearly 92% of our business which we do is coming out of our product and brands. We are doing a similar exercise in foods business. We believe in the next 5 years 70% of the food which we will sell in our stores will be of our own brand or brands in which we have significant investment or stake in. That I believe can bring about a significant change.
Thirdly, this design allows us to destroy whatever we want and create anything new. Currently we are also working on building up our digital strategy on how digital consumption will shape up, so there is lot of work and research happening and we are again using scenario planning methods in terms of how many people can shop digitally and what is the products which can be shopped digitally and what is the cost of doing that operation, will they ever be able to compete economically with the physical stores. It’s a continuous exercise and we are meeting the world leaders in understanding the whole evolution of this business and how it will shape up. For us the challenge is to still remain younger to deal with a younger customer, always be relevant in whatever we do, we always feel good that we have brought in design thinking too early, we brought in organization design which allows us to do multiple things, we also created an organization which can destroy many things and we are not all emotionally attached to what we create—which we have done and demonstrated earlier. We believe a lot of things are going to change and as an organization we also believe in the credo that nothing is permanent and everything is going to change.
Indrajit Gupta: Mr. Biyani you always make it sounds so easy. I wish it was. Every time I talk to you, you tell me how you found it so easy to tear down whatever you have done. I wish that it was easy because most people struggle with that.
I come to you Rishi. Mr. Biyani talked about two things: one was the whole idea of organizational design and the other was the power of design thinking itself. In the organizations that you’ve studied and looked at both in India as well as abroad, how many of them have kind of been able to—Apple of course is the great example—but how of them have been able to embrace the whole power of design thinking or for that matter design organizations in such a way for innovation—radical innovation—to happen on a consistent basis?
Rishikesha Krishnan: So I look at these two things a bit separately. If you take design thinking to start with, clearly design thinking involves an empathetic understanding of users and the willingness to immerse yourselves in the lives and daily routines of people who could possibly use your products and services. I think ever since design firms like Ideo built a successful practice around design thinking, this has certainly become much more influential the world over. Just like there’s been a democratization of innovation and disruption and so on, there is also a democratization of design. It’s no longer just the province of people who have been to design schools. Perhaps there’s no better example than a company like Infosys, which is perhaps one of the last places one would expect to see design thinking pervading the whole organization; it’s slowly getting transformed to incorporate that kind of an approach. I think elements of design thinking have seeped in all over the place. It is getting into mainstream management curricula and many companies across the board, even if they are not going whole hog on design thinking, are bringing in elements of design thinking in the way they look at Innovation. As far as organizational design is concerned, the ability to disrupt, to make your organization adaptive enough as Mr. Biyani who was just suggesting, is not easy at all. As one of the earlier speakers also mentioned, most organization have a tendency towards inertia and particularly if there are successful in a particular business, it’s very difficult for them to venture into any arena which would disrupt their existing business model. Clayton Christensen addressed this issue many years ago in his book The Innovator’s Dilemma. He said that if you really want to have the potential to disrupt, you have to be willing to create new organizational forms, maybe even arm’s length subsidiaries or other sort of spinoffs from the company, that are willing to embrace disruption, because it is very utopian to think that your mainstream business will be willing to disrupt itself, unless you have someone very courageous like Mr. Biyani at the helm who can push that. But in the normal company that you and I see every day, it is difficult to imagine that happening. So you have to structure your organization in such way that some parts of the organization which are not beholden to or subject to the decisions of the mainstream business so they can actually embrace disruptive ideas.
Indrajit Gupta: Rishi I will just pick up the threads to what you said and ask you a follow-up question because the whole idea of locating innovation outside the mothership is obviously fair. I mean people have attempted that but sometimes it’s not enough, when you bring it back and integrate it into the mother organization, sometimes it completely gets rejected—the whole culture, the whole way of doing things. Xerox is I think a great example of that and many other organizations, including Hindustan Lever which tried to locate innovation outside the mothership, with a new ventures team. Do you kind of have anything to respond by the way of using that structure as a design concept in terms of if you locate innovation outside the mothership, what are the challenges that come up, because you are trying to do a lot of things inside and change from within if I understand right.
Sanjay Gupta: Our belief and my belief is that it has to be within and disruption has to be done for each business everyday and the dimensions on which you will disrupt will keep changing. So it can’t be a separate location. I know you talked about Hindustan Lever having a separate wing, where the rest of the organization continues to do what it does and somebody else thinks about it and tries to change the rest of the company is very, very difficult to work. Fundamentally it’s a mindset that you are grappling with beside these strategies of what to do and that has to happen at the core of the business. So the issue that you are really grappling with more are the capabilities that you may need in the new environment—do you have them in the organization or not, more than anything else, because the new rules of the game are different, the new capabilities are very different and do you have them and are you able to play with the new rules of the game. Those two are the biggest challenge I personally see while dealing with disruption.
Indrajit Gupta: You raised Hotstar a little while ago and we are all keen to learn a little more. That was a really bold decision. How did you come to the realization that the timing was now, that we ought to do this now and not later because obviously anything as disruptive as this—as organizations tend to push this away as baad main karenge, we will do it later, there’s no earth-shattering need as digital advertising businesses haven't yet reached any kind of critical mass. How did you think through that?
Sanjay Gupta: I think one of the thoughts in the country has been that though there is a lot of consumer change, the bandwidths are not enough today and therefore content consumption is very, very difficult. Smartphones are still limited and that’s been the conversation that I’ve had and I am sure this industry has had for a long time. But the reality is that the question we have is whether we are late already—that’s the question in my mind—not so much whether we should have done it later. The core being I think looking back and defining what is the core of our business. Is that simplified as to what we needed to do. Once we agreed internally as a company that we are not a TV company but a storytelling company, that really helped us take the big bold decision of saying what do we need to do on Hotstar? And yes then we broke all the rules, honestly. This is the first time we have put 40,000 hours of well curated content across 7 languages, across drama, movies and sports, into an on-demand destination. The learning of TV is, it is linearly delivered to you at a time. Here it is not linearly delivered, it is delivered to you when you want to see it. So you can choose your time. So if it is a cricket match, you can see it at that moment as it is urgent, but for drama you can see it at your convenience. So fundamentally we have taken the core of our business at the core of Hotstar, and the consumer at the core of our decision making. And honestly the results have been staggering. It’s been one of the fastest adoption of any digital platform in the world in the last few months. We launched it in February and we have more than 30 million downloads already. We are getting 20 million people to come to it every month. And the most strikingly the challenge was bandwidth, data consumption and people said digital is a medium of “you snack content here, you don’t consume full length content”. We are getting people when they come to Hotstar they spend 30 minutes a day. Some consumers spend 1 ½ hour a day—in a country where pricing of bandwidth is a challenge, where bandwidth itself is a challenge, and where handset is a challenge. So I think the question no longer is that have we done it earlier. The question is could it have been done before and how much more do we invest today to rebuild this business.
Indrajit Gupta: Phenomenal! Thanks for sharing that.
Rajesh, you heard Sanjay talk about non-linearity and I know that in your New Rules of Business series you’ve spoken about the phenomena and how that’s kind of shaping the business landscape. We have seen in retail, Mr. Biyani will agree, we are seeing it with banks. Walk us through what this means to your mind and what is your understanding of what non-linearity does to the customer experience.
Rajesh Srivastava: See what happens is most of the corporate people, barring lets say Sanjay or Mr. Biyani who have really understood what customers want, unfortunately majority of the corporates haven’t understood. So while both of our colleagues are proactive, majority of the people aren’t. So before I answer that, I want to say what are the hurdles that stand in the way of people trying to become customer-oriented so that they are able to deliver customers what they want. This again comes back to the entire thing of mindset.
There are three things in terms of mindset that people need to be looking at. What most people do is that they look at past success as a prediction of future success. So as Harvard Business School has rightly said, success has failure built into it and most people don’t realize it and they take their past success into future—that’s their problem.
Secondly, most people are scared about cannibalization. And here is Sanjay saying—he didn’t mention it, but I am sure the fear, the thought would have scared him—what about cannibalization? Like him, corporates should not fear cannibalization. In fact, the entire business—the size of Star’s business will grow.
The third thing which is very, very important is that most of the people measure the success of their competitor using their own yard stick. So if I may just say, a very common example Nokia vs. Apple: Nokia had over 70% market share when Apple was launched. Nokia had one test by which they identified whether a handset was worthy of being its competitor and that was called a drop test. From 5 feet they dropped it. So then Apple came, they dropped it from 5 feet. Unfortunately it did not work and they said it’s not a worthy competitor. This is the mindset issue that most people have to get out with. Once they do that, what will happen is that whether it is consumption of entertainment or retail, they will naturally go to the customer. So I will wrap up by saying that I think originally this concept was done by Titan versus HMT. HMT wanted customers to come to them, but when Titan was launched even 30 years back, they said we don’t want customers to come to us, we will go to the customers. Once you start going to the customer, you start giving them what they want and that is what is non-linearity.
Indrajit Gupta: Thanks Rajesh. Rishi we will come to you quickly unless Mr. Biyani, you want to respond to what Rajesh just said.
Kishore Biyani: I was trying to put in the thought on linear thinking. I believe the education as a process when you write its very linear, when you read it is linear, but the thoughts don’t come linear. And when you are working on business of ideas, thoughts don’t come as linear. How can an organization end up to work with multiple thoughts coming on the same time. That’s what the organization has to be created on and that’s what we are trying to do. Ideas will be non-linear and execution of idea, how can you create non-linearity to it.
Indrajit Gupta: I will come to the whole idea of education since you touched upon it, I was meaning to go to Rishi and ask him. You are training future leaders, but business schools itself are challenged on a whole set of dimensions because the way we learn and the way we create education, which is relevant in today’s world, itself the business schools are in some danger perhaps of being disrupted as well. How do you see that phenomena playing across the education sector, particularly higher education?
Rishikesha Krishnan: In education, the fear of disruption has been around quite some time. I remember as far as 15 years ago people were talking about how education would be disrupted, particularly by e-learning. I think the actual disruption process has not been as quick as expected at that time and the classroom, university or institutional higher education continues to be relevant. However there are different set of challenges related to the comments made by Mr. Biyani as well as by Sanjay. And that is the speed at which things are changing. Traditionally we taught people through case studies. Case studies are very well tailored, they have nice tables, exhibits and graphs, you have all the data there and you can crank it out looking at the answers. But that’s not the way business is happening. Business is happening at a much faster pace as we just discussed, you have competitors from unexpected quarters, so you will have been able to—yes for sure churn a lot of data—but you will have to figure out what the right data to collect, how to analyze it and how to use it to make good decisions. So I think business education today has to be much more dynamic, it has to be much more skill oriented, we have got to use more games and simulation which can to some extent mimic the dynamism of the real world. We have also got to be able to get people to integrate and synthesize things better as lot of innovation rides on that synthesis ability and our curriculum and the way we teach needs to start reflecting all of this if we want to be relevant.
SEGMENT 3: How to be a market-driving enterprise
[Watch Segment 3 here: How To Be A Market-Driving Enterprise]
Indrajit Gupta: We will move on to the last segment: what does it take to create a market-driving enterprise as opposed to market-driven enterprise. In some ways, what Mr. Biyani said, you could keep on reinventing yourself every now and then. It’s hard, but he makes it sound easy. It’s hard for most companies to do that. So what are the levers that you can press, what are the things that could help you build that kind of culture so you can make disruption a part of your DNA.
I will come to you Sanjay. when you plan your slightly more disruptive ideas, one of the big constraints—and I have heard from the likes of Dr. Ram Charan—is that organizations don’t always have the leadership bench to really put on their big ambitious bold projects. How did you go about picking leaders who would lead these projects and what do you look for when you unleash a new disruptive organization so that one gets a bit of an idea of what it takes to pick leadership to lead projects.
Sanjay Gupta: This is a very valid point that you have raised. I think one of the biggest challenges that you face when you are opening a new business sector almost—a new disruption—the rules of the game are very different and the current organization has learned to play with certain rules. Until and unless you in your mind are willing to give up those rules and play with the new rules, it is difficult. You need to find those people within the team or outside. Ideally, in most of the cases, you have to find the leaders outside the current set of people, to find someone to the lead the business who is inherently capable of challenging the current rules of the business. So I will give you an example of our own Hotstar.
When we started the business the pricing of the content is really important and the core decision that we have and I think our current mindset of TV is, if you give it to a DTH platform you charge X rupees of money and that is a must if you have to deal with us as a content company. But in the digital space where the consumer is consuming this content, especially if you are paying for your 3G or 4G charges, with 30 minutes a day you spend 1,800 rupees already on consuming that content. How do you do pricing in this case? We decided to go free and say it’s ad-led model, because consumer is already paying 1800 rupees a month, you can’t now be charging another 100 rupees because that will create friction. So, had we played with the rules of the game, which were TV rules, the answer would have been very different.
The answer finally lay in first our ability as a management team to play by the different rules and second, the team that was put together, which was our digital team as a non-television team. Their past experience on television was almost zero, so they are coming in and questioning every aspect of the business and the decision that they come up to say, why do you look at this way—is very different from if you were to put a person in the job who has run the TV business for long, long time. So fundamentally it’s a big difference. How do you find the right mindset so they can challenge the rules of the game in a very different way.
Indrajit Gupta: Mr. Biyani, when you talk about disruption, at the same time folks in your organization will constantly look for some anchor, some continuity amidst the change. It’s the way the human mind is wired. But you have constantly pushed the envelope, tried to do new things. How did you balance the two—of embracing change and at the same time keeping an element of continuity? Is that important?
Kishore Biyani: I think it’s very important. To be honest, we looked at the human brain, the left side and the right side of the brain. One is the creative side, the aesthetic side. One is the visual side, the right side of the brain and the left side of the brain—the logical side, the rational side, the analytical side. How can create an organization which can work on both sides of the brain together?
When we created the organization design recently, we looked at the concept of creation and control, how can creation and control happen at the same time and what are the elements which are control related and what are the elements which are creation related. That is how we designed our organization and I believed that’s helping us to do creation and control at the same time. Control is the continuity with the processes which have to be repeated again and again and that can be seen from a very different lens. The creation process also, you need to quantify the creation with time lines, with schedules with each and everything. We brought in this discipline and I believe that’s helping us to do both the things at the same time.
It is a very difficult exercise to do, everyone just doesn’t get it. You need to make the organization much younger and that’s what we are currently doing. We have 100 trainees who don’t have any history of the past, who have come in the organization. We have created the Chairman’s club of the people who can change and work on both sides of the brain, we brought them into the mainstreams. It’s an exercise that is still going on. It is very important to bring new energy into the organization to bring about a change like this.
Indrajit Gupta: Very interesting! Mr. Biyani talked about the beginner’s mindset and the intellectual curiosity to learn. In your experience how do you view that—the idea of intellectual curiosity and embedding that in the DNA of the organization. How important is that today? Especially the point he was making about getting young people in.
Rajesh Srivastava: I think Mr. Biyani needs to be complimented for the fact that he is one of the few leaders who is looking upon his organization as a living human being which has a left brain and a right brain much like anyone of us, so compliments to him.
The second thing is, he also mentioned he has a whole army of people—a whole set of dedicated people who are out there pursuing this mission of his, that’s very, very good.
The thing that I would recommend in this case, how do you go forward is that it just doesn’t require—the mindset is fine—but it requires a transformational mindset. What I mean by transformational mindset is a couple of things that are happening and unless we realize that, we will be in trouble. So let me just say three things.
First thing, and this is in my opinion, business plans are dead. What is going to replace business plans is customer plan. What is the reason? Whenever you have business plan you only think in terms of measurement device, in terms of return on equity, return on capital employed, and return on asset—that’s how you measure the performance. I think that’s dead. What we’ve got to start doing is building an entire customer plan and the metrics that will decide the customer plan is customer engagement, customer stickiness, brand advocacy score, net promoter score, etc. Why I am saying that? The moment you shift your entire focus from business plan to customer plan and the moment these metrics start showing up your return on equity etc. will obviously follow. It’s like the body and the tail, wherever the body goes the tail follows—so that’s one.
The second big shift that we haven’t discussed is millennials—people born between 1982 and 2000. You know they are totally a different animals on both sides—as employees and customers. What do they want? As an employee they want to engage with companies who have a higher purpose than just making money and as customers they want to support those companies which have a higher purpose. By 2025, majority of people, both as employees and customers, are going to be the millennials. Has the organization changed to take them on board, their thinking, etc? I fear most of the organizations haven’t and therefore I would like to say one thing, that if there is one mantra that we can follow it is this—this is as old as the hills—let’s be customer-focused and not be competitor-focused. What is hastening this thing is technology—technology based on four pillars of SMAAC: social, mobile, apps and analytics and cloud. Based on this, power has shifted from a brand owner onto the customer. Like Sanjay was saying, today the customer decides when he wants to see and what he wants to see, on the device of his choice. So my recommendation would be that to gain competitive advantage we have to be customer-focused. Second, we have to realize who our customer is and who our employees will be.
No. 3, in terms of business plan, I am very, very passionate that business plan is dead and we got to be focusing on customer plan.
Indrajit Gupta: So it’s almost like a new version of sense and respond, as it were. If you have the ability to sense what’s going on in the consumers’ world and the ability to respond to them in the best possible way…
Rajesh Srivastava: See the whole point is what—I just want to build on what Mr. Biyani said. He took the discussion of brain and restricted it—because of time constraints I am sure—to an organization. I am saying, that if you or any organization wishes to get competitive advantage in today’s dynamic and disruptive environment, you have to do two things. First, use behavioral sciences and understand why people behave the way they do and build it into your business model. Amazon is one classical example. The second things, and I am saying with lot of passion, is that we need to understand the human brain and if we understand the human brain and we are able to change human behavior then things will work out like magic for any organization. I will just take only one example, how do you bring about the change in human behavior? Most organizations are only focusing on neocortex, which is giving them rational reason to buy and consume their content. Forget that! First look at what is in the interest of customers and tell them. So first touch their emotions. Once you touch people’s emotions, it will change their behavior, and once their behavior is changed, then give them a rational reason to buy your product. So these are my recommendations as to how to cope with today’s time.
Indrajit Gupta: Rishi I will come to you. Mr. Biyani spoke about disciplined execution and I know Sanjay has some views on that as well. We often associate radical innovation with a rather chaotic kind of process, which it needn’t necessarily be. If Apple is any evidence or Amazon is any evidence, it can be a very, very—or Google for that matter—they systematically bring about disruptive innovations. In your book you talked about how difficult it is for Indian organizations to do radical innovation. What are the things that they could learn from the Western models of innovation?
Rishikesha Krishnan: There are several things that the Indian companies can do to embrace more radical innovation. I think the first thing they need to do is encourage more experimentation. I think there’s the fear of failure that’s holding back a lot of organizations from doing a lot more experiments. Many times in this changing digital world you can’t simply by analytical methods determine whether a particular thing is working or not, so unless you are willing to try it out…. The good news is that in the digital space experimentation is not all that expensive. So you can do many more experiments than before as long as you are not scared to fail and you are willing to move on even if something doesn’t work out.
I am quite fond, for example, of the ideas propounded in the lean start-up, which really talks about the willingness to experiment and if things do not work out, pivot and try something else. I think we need to be able to adapt that kind of thinking much more even into our large organizations. Small organizations do that almost by necessity because otherwise they won’t survive. But in our larger organization we need to embrace that kind of thinking.
We need to have more resources available in the organization for experimentation and testing. We need to give people more time and space in their work environment so that they can try these things out. Managers, for example, need to be evaluated based on how much flexibility and how much time and space they give people who report to them so that they have time for experimentation.
We also need to look at ways to train people to be more innovative in the workplace. Many people are very creative almost inherently but sometimes they do not know how to translate that creativity into innovation in their work sphere. There are lots of good techniques like design thinking which was mentioned earlier or lateral thinking or several others that could help people translate their inherent creativity into innovation at their workplace.
Indrajit Gupta: Sanjay I will come to you. This whole idea of execution. Does it get enough importance in the whole idea of doing blue sky thinking and getting things done and making innovation really happen? What is your thought on that?
Sanjay Gupta: Based on what you said and Mr. Biyani said. First thing I think creativity or disruption can only happen on the back of serious discipline. It is not that you do blue sky thinking and suddenly the biggest idea will come. This is something that we do as business. We are in the business of creating content, which disrupts very regularly—be it Satyamev Jayate or Kabbadi. I think one of the basic principles is being disciplined around it.
The second principle is being consumer-focused, which is about saying you don’t lose sight of, in a very real terms, who you are catering to. And the results are an outcome—whether it is viewership, revenue, profit—it’s an outcome of how focused are you on creating an engaging enough product and content.
Third, I think, which is really important is, betting the house big, I think which is the DNA of our company including our 21st Century Fox. That if you believe in something, then really go out and put enough mind behind it so that you have tested it well enough and to me honestly, one of the example that we feel very proud about is kabaddi as a sport. In the last one year, it is one sport which has been watched by almost 50 – 60 crore people everytime it has come on air. The number of young and old urban people who are watching it is quite phenomenal, the number of people who are watching around digital is even more staggering—around 25 million unique people viewed it on mobile phones this year on Hotstar and it tells you that discipline, consumer focus and betting the house big.
Indrajit Gupta: How does discipline come into the way that you work?
Sanjay Gupta: To think about a concept, it can’t be that somebody sits in a blue space, has a cup of coffee and then the idea gets created. It’s about looking at what consumers need in a very disciplined way, understanding the needs of the consumers in a more sharper way. What can this business deliver? So it’s a lot of science and rigor which goes into a concept which is being created. Be it Satyamev Jayate or be it kabbadi. The process of effort or amount of effort which has gone in to sharpen the concept has taken a few years. Satyamev Jayate took 3 years in the making, kabbadi has been 2 years in the making before you saw the first thing on air, including how you package it, how you position it, how you market it, how much do you invest. So fundamentally I think discipline and execution is key to making an idea big.
Indrajit Gupta: In fact that’s what I wanted to come to Mr. Biyani as well, because the last time we spoke about this you stressed on this whole issue of execution and how you kind of trying to get better and better at making things happen, because great ideas are fine but if they don’t have impact in the market place it amounts to nothing—the point that Sanjay was making. Tell us what your experiences have been of late in what it takes to understand the execution game.
Kishore Biyani: I think, as I admitted earlier, we were majorly into a creation phase and we were able to build many concepts, many prototypes and going live with it, we were still very successful, but I think when you have to really make money out of every of your idea, it is disciple and execution which was required and probably I didn’t have that. At that time I happened to read the book Execution by Ram Charan and I said I will need a coach and a mentor to see how do I learn execution because execution is a lot about discipline. Being in the creation side of business I think the disciple and rigor was probably not there into me. I think I have to re-invent myself to get into reviews, sitting into the meetings whole day on a particular subject—that’s what I never used to do. But today 15 days a month I am only into getting into the rigor of execution and seeing how execution is being done. I think it’s been a big shift for me. The first 20 years of my career I was majorly into creation, execution and watching it from the side. I think now creation, execution and watching it right into it—it’s been a long journey.
Indrajit Gupta: Rishi I wanted to come to you with the whole issue that Mr. Biyani was talking about that he himself has to now invest a considerable amount of time—at least 15 days a month—on tracking progress, doing reviews and becoming better at execution. But we have also seen quite a few Indian companies, Cognizant is one that comes to mind and you’re familiar with them—where they have tried to separate the two roles. They have a CEO who is doing the more market making staff in terms of reimagining the more frontier areas and leaving maybe a deputy, COO maybe, to manage the basic operations so that they don’t lose control over operations and cash flows in the whole attempt to create the future. How much premium do you place on that kind of approach? Does it work?
Rishikesha Krishnan: I think the crux of the matter is quite simple. Somebody at a very senior level needs to be paying attention to execution and all the discipline and the things we have just been talking about. It is usually rare that we find a single individual who is able to combine both creativity and disciplined execution. I admire Mr. Biyani for actually trying to develop those skills because most people are quite happy if they can have even one set, you know which is really good. One more way organizations dealt with that is to have a top management team which has complimentary capabilities. When a company like Infosys did that very well and they had 5-6-7 founders and each founder brought something different to the table. They had a couple of people who were not in the public eye but really focusing on how to get the job done. So either you have the kind of multifaceted team of people or if you are lucky enough to have one person who can sort of combine everything and do it. But in general that is unlikely to be the case. Even if you take a company like Apple for example, you have Steve Jobs who was undoubtedly a creative genius and on the other hand you have somebody like Tim Cook behind the scenes taking care of the supply chain and making sure that all the execution happened.
Indrajit Gupta: In fact, I remember interviewing Ram Charan on this one and asking him about the role of Steve Jobs and he said that he was in some ways a master connector. He would kind of orchestrate that change and would bring people together—at least the pieces which were so important for Apple’s future. Sanjay one final question. We are trying to re-imagine this whole market-driving enterprise, assuming that there will be a powerful pipeline of ideas that will keep coming—much like what Apple does or Google does. How far are you from there? Are you already at a stage where you are able to create a portfolio of ideas that you are willing to back for the next five years?
Sanjay Gupta: I think it’s a really difficult question to answer. Are we there? I think we are trying, I would say. But one of the big things in my mind that we need to solve for continuously is that we don’t know enough as a company, and capabilities. And just to link it back to our business of Hotstar and TV—we are a very good content company, we understand the content and we know how to create the content and position it very well. But we are not a technology company, we don’t understand technology as well. But in this new world, we need to appreciate and leverage technology as well as our competitors. So one of the realizations that we don’t know enough and we need to build capabilities, is a very important part of building the future organization. And it’s a journey. I don’t think today I can say that we are ready but this is one area that we are clearly short of today. So if there is one capability that we want to build brilliantly, whether through our internal talent or partnerships, is this area of technology. This dimension that we need to build in future will keep changing as we go along this journey. I don’t think at any point of time I would be ready to say that we are ready for the next five years.
Indrajit Gupta: That’s a great note to start on, to say that I don’t know is a very, very important first step. That in some ways ignites the need for learning and for intellectual curiosity and figuring out what’s around the corner and learning.
On that note I would like to thank all our four panelists for contributing their ideas and sharing some of the leadership lessons that I think would have left us much richer.
Disruption is an area that Founding Fuel will keep revisiting and focusing on, because it’s a theme that will not die so soon. Feel free as audiences to send us your questions and we will see if there are some that this panel can also take a stab at. With that, thank you for watching. Thank you panel members for being there—Mr. Biyani, Rajesh, Rishi and of course Sanjay. We will keep this conversation going. Good afternoon and thank you so much.