Thursday, 24 February 2011

Business Success in India: Romans, Wine, and Relationships

There is one perennial question that plagues several multinational corporations (MNC)…and this is “what does it take to be successful (including make money) in the India market”. Multinationals often find it difficult (so it seems) to replicate their global success mantra in India? While many struggle, there are several multinationals that have been able to crack the code…so what do they do differently?
 A multitude of factors that contribute to “success” and this is true of any business anywhere.  In India, there are some unique factors that are uniquely Indian and these play a vital role in improving success probability.  To keep it simple, I will pick the key factors using the title of the blog as a guide.

Romans, Wines, Relationship…these if done correctly can lead to Business Success in India.

#1 – Romans behave differently.  As the saying goes…”be a Roman when in Rome”…but this is often a lot more difficult to execute than give lip service to.  Companies get caught up in “business is business”…leaders lack the essential flat-world global mind-set of “Think global-act global, AND think local-act local”.  Also, some confusion stems from the use of English as a business language this confuses multinationals into thinking “how different can it be”?

In the business culture in India, what you say, how you say (what you say), what not to say, when (and what) not to say, importance of silence (and meaning of it), when to ask for payments due, the role these of these payments etc... are uniquely Indian. Net-net, it is hard from someone from Rome to be an “Indian when in India”…unless someone fully understands the underlying belief system that drives behavior.  Finding the right Indian(s) to help with business leads to challenges for multinationals….can we find the right person to represent us?, do they know our business?, can they be trusted? etc.

#2 – Wine delivers Value.  Wine we know is not Toddy (Toddy is cheap India country liquor).  Both can get you high….toddy is a lot cheaper, wine in contrast delivers experience-centered value. Indians love “value”, want “value for money”, and interestingly will open wallets…”no questions asked” if value is clear.

Ask any most Indian (or India origin person), what TV they would like to buy (likely answer; Sony by a big margin), and there will be little negotiation.  Another example; Toyota’s recent troubles aside, ask any India origin in person in the US what car they will buy…the answer likely will be Honda, Toyota, or Nissan (and their pricier Lexus etc.)…why?…well in the minds of Indians (or India origin people) the value is not in doubt.

For businesses then the big question is; what is the intrinsic value of their product/offering and how to make the value embedded in the minds of the customer? Unfortunately, if an Indian customer cannot be convinced that you offer wine….then you are in the cost trap and here…the best one can make is toddy rates.  Businesses have to get to TCVO (Total Cost and “Value” of Ownership)…this is true in all geographies…but the relationship between “C” and hard to quantify “V” is paramount.

For those who think it is all about “C”, the lack of success of the Tata Nano is a great example of the “V” seeking mature Indian consumer. Guess what Tata is doing….aggressively enhancing “V”, while trying to stay on the promise made on “C”.

As an aside, culturally sensitive advertising/branding…i.e. advertising that appeals culturally but emphasizes that value is a tool to build value. Interestingly, multinationals are on strong footing on “V”, since value has been demonstrated in other geographies……this needs to be capitalized upon.

#3 – Relationships beyond Business.  In the culture relationships are important because they are taken “literally” and “personally”.  So the fact that you have a “relationship” implicitly ensures that each party is interested in other’s success.  Hence, Indians (like peers from eastern cultures) do business with people they trust, or with someone with a second degree of trust/relationship separation…which may mean the 1.2 billion people.

Secondly, once you have relationships then you need to maintain the relationships (and reputation)…if not for anything else, then for saving “face”….in a society with two degrees of separation, bad reputation can be problematic.  Maintaining the relationship includes; going beyond the contract, providing good after sales services, not talking about money till the “fat lady sings” etc. Trust is taken for granted and the understanding is that “I cover for you and you cover for me”…since we know there will be problems along the way. For multinationals this gets tricky because local expectations from the relationship conflicts with the role of payments and contracts. From the customer perspective; we have relationships--then “why can’t you wait for the money till success is demonstrated”, I’s dotted, and T’s crossed in the contract - “why do we need a contract…all these items make me think that you are only interested in protecting yourself”.

None of the above are showstoppers and the customer is not against a provider making money, it is a question of WHEN and HOW.  Net-net, customers need to be managed a lot more and providers need to be flexible, and yes customers are “high maintenance”….what is maintenance within family anyway!!!

#4 – Success the final variable is simply the sum of others...and comes from the fact the companies have to innovate to overcome the challenges/constraints outlined.  For example; a) How to embed “V” in people’s minds--could mean innovative marketing, b) How to ask for money after success—could mean innovative business models dependent on customer success, c) How do ensure that you understand market needs—could mean that you market shampoo in single use pouches that the poor can afford (without compromising on margins/unit volume), d) How to understand culture better—could be overcome with local leadership or local origin repatriating leadership.

Interestingly, when businesses are flexible and innovate aggressively in these aspects they not only achieve success, make money, but become better global organizations in the process.

Let me end with some examples of companies who have deciphered the above….this is not a complete list….I should also state that the list is growing at an accelerating pace; IBM, Dell, Cisco, Nokia, Nokia Siemens, Oracle/Sun, Pepsi, Unilever, Siemens, ABB among others.  More recently making the shift are Capgemini, Accenture, GE, Boeing..and others.
I am interested in your views, so what do you think? Are there other "big" factors that orgnaizations should consider?

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