Vivek Kaul
The decision by Team Anna to form a political party has become the butt of jokes on the internet. A Facebook friend suggested that they name their party, the Char Anna Party and someone else suggested the name Kejriwal Liberal Party for Democracy (KLPD).
The jokes are clearly in a bad taste and reflect the level of cynicism that has seeped into us. Let me paraphrase lines written by my favourite economist John Kenneth Galbraith (borrowed from his book The Affluent Society) to capture this cynicism. “When Indians see someone agitating for change they enquire almost automatically: “What is there for him?” They suspect that the moral crusades of reformers, do-gooders, liberal politicians, and public servants, all their noble protestations notwithstanding are based ultimately on self interest. “What,” they enquire, “is their gimmick?””
The cynicism comes largely from the way things have evolved in the sixty five years of independence where the political parties have taken us for a royal ride. Given this the skepticism that prevails at the decision of Team Anna to form a political party isn’t surprising. Take the case of Justice Markandey Katju, who asked CNN-IBN “Which caste will this political party represent? Because unless you represent one caste, you won’t get votes…Whether you are honest or meritorious nobody bothers. People see your caste or religion. You may thump your chest and say you are very honest but you will get no votes.”
Former Supreme Court justice N. Santosh Hegde said “Personally, am not in favour of Annaji floating a political party and contesting elections, which is an expensive affair and requires huge resources in terms of funds and cadres.”
Some other experts and observers have expressed their pessimism at the chances of success of the political party being launched by Team Anna. Questions are being raised. Where will they get the money to fight elections from? How will they choose their candidates? What if Team Anna candidates win elections and start behaving like other politicians?
All valid questions. But I remain optimistic despite the fact that things look bleak at this moment for Team Anna’s political party.
I look at Team Anna’s political party as a disruptive innovation. Clayton Christensen, a professor of strategy at the Harvard Business School is the man who coined this phrase. He defines it as “These are innovations that transform an existing market or create a new one by introducing simplicity, convenience, accessibility and affordability. It is initially formed in a narrow foothold market that appears unattractive or inconsequential to industry incumbents.”
An excellent example of a home grown disruptive innovation is Nirma detergent. Karsanbhai Patel, who used to work as a chemist in the Geology & Mining Department of the Gujarat government, introduced Nirma detergent in 1969.
He first started selling it at Rs 3.50 per kg. At that point of time Hindustan Lever Ltd’s (now Hindustan Unilever) Surf retailed for Rs 15 per kg. The lowest-priced detergent used to sell at Rs 13.50 per kg. The price point at which Nirma sold made it accessible to consumers, who till then really couldn’t afford the luxury of washing their clothes using a detergent and had to use soap instead.
If Karsanbhai Patel had thought at the very beginning that Hindustan Lever would crush his small detergent, he would have never gotten around launching it. The same applies to Team Anna’s political party as well. They will never know what lies in store for them unless they get around launching the party and running it for the next few years.
Getting back to Nirma, the logical question to ask is who should have introduced a product like Nirma? The answer is Hindustan Lever, the company which through the launch of Surf detergent, pioneered the concept of bucket wash in India. But they did not. Even after the launch of Nirma, for a very long time they continued to ignore Nirma, primarily because the price point at which Nirma sold was too low for Hindustan Lever to even think about. And by the time the MBAs at Hindustan Lever woke up, Nirma had already established itself as a pan-India brand. But, to their credit they were able to launch the ‘Wheel’ brand, which competed with Nirma directly.
At times the biggest players in the market are immune to the opportunity that is waiting to be exploited. A great example is that of Kodak which invented the digital camera but did not commercialize it for a very long time thinking that the digital camera would eat into its photo film business. The company recently filed for bankruptcy.
Ted Turner’s CNN was the first 24-hour news channel. Who should have really seen the opportunity? The BBC. But they remained blind to the opportunity and handed over a big market to CNN on a platter.
Along similar lines, maybe there is an opportunity for a political party in India which fields honest candidates who work towards eradicating corruption and does not work along narrow caste or regional lines. Maybe the Indian voter now wants to go beyond voting along the lines of caste or region. Maybe he did not have an option until now. And now that he has an option he might just want to exercise it.
While there is a huge maybe but the thing is we will never know the answers unless Team Anna’s political party gets around to fighting a few elections.
The other thing that works to the advantage of disruptive innovators is the fact that the major players in the market ignore them initially and do not take them as a big enough force that deserves attention.
A great example is the Apple personal computer. As Clayton Christensen told me in an interview I carried out for the Daily News and Analysis (DNA) a few years back “Apple made a wise decision and first sold the personal computer as a toy for children. Children had been non-consumers of computers and did not care that the product was not as good as the existing mainframe and minicomputers. Over time Apple and the other PC companies improved the PC so it could handle more complicated tasks. And ultimately the PC has transformed the market by allowing many people to benefit from its simplicity, affordability, and convenience relative to the minicomputer.”
Before the personal computer was introduced, the biggest computer available was called the minicomputer. “But minicomputers cost well over $200,000, and required an engineering degree to operate. The leading minicomputer company was Digital Equipment Corporation (DEC), which during the 1970s and 1980s, was one of the most admired companies in the world economy,” write Clayton Christensen, Michael B Horn and Curtis W Johnson in Disrupting Class —How Disruptive Innovation Will Change the Way the World Learns.
But even then DEC did not realise the importance of the personal computer. “None of DEC’s customers could even use a personal computer for the first 10 years it was on the market because it wasn’t good enough for the problems they needed to solve. That meant that more carefully DEC listened to its best customers, the less signal they got that the personal computer mattered — because in fact it didn’t — to those customers,” the authors explain.
That DEC could generate a gross profit of $112,500 when selling a minicomputer and $300,000 while selling the much bigger ‘mainframe’ also didn’t help. In comparison, the $800 margin on the personal computer looked quite pale.
Another example is Sony. “In 1955, Sony introduced the first battery-powered, pocket transistor radio. In comparison with the big RCA tabletop radios, the Sony pocket radio was tiny and static laced. But Sony chose to sell to its transistor radio to non-consumers – teenagers who could not afford big tabletop radio. It allowed teenagers to listen to music out of earshot of their parents because it was portable. And although the reception and fidelity weren’t great, it was far better than their alternative, which was no radio at all,” write Christensen, Horn and Johnson. Sony went onto to come up with other great disruptive innovations like the Walkman and the CDMan. But did not see the rise of MP3 players.
The point is that incumbents are so clued in to their business that it is very difficult for them to see the rise of a new category.
So what is the learning here for Team Anna? The learning is that their political party may not take the nation by storm all at once. They might appeal only to a section of the voters initially, probably the urban middle class, like Apple PCs had appealed to children and Sony radios to teenagers. So the Team Anna political party is likely to start off with a limited appeal and if that is the case the bigger political parties will not give them much weight initially. Chances are if they stay true to their cause their popularity might gradually go up over the years, as has been the case with disruptive innovators in business. The fact that political parties might ignore them might turn out to be their biggest strength in the years to come.
Any disruption does not come as an immediate shift. As the authors write, “Disruption rarely arrives as an abrupt shift in reality; for a decade, the personal computer did not affect DEC’s growth or profits.” Similarly, the Team Anna political party isn’t going to take India by storm overnight. It will need time.
Business is littered with examples of companies that did not spot a new opportunity that they should have and allowed smaller entrepreneurial starts up to grow big. The only minicomputer company that successfully made the transition to being a personal computer company was IBM. “They set up a separate organisation in Florida, the mission of which was to create and sell a personal computer as successfully as possible. This organisation had to figure out its own sales channel, it had its own engineers, and it was unencumbered by the existing organization,” said Christensen.
But even IBM wasn’t convinced about the personal computer and that is why it handed over the rights of the operating system to Microsoft on a platter. Even disruptive innovators get disrupted. Microsoft did not see the rise of email and it’s still trying to correct that mistake through the launch of Outlook.com. It didn’t see the rise of search engines either. Nokia did not see the rise of smart phones. Google did not see the rise of social media. And Facebook will not see the rise of something else.
Team Anna is a disruptive innovation which can disrupt the model of the existing political parties in India. There are three things that can happen with this disruptive innovation. The Team Anna political party tries for a few years and doesn’t go anywhere. That doesn’t harm us in anyway. The Team Anna political party fights elections and is able to build a major presence in the country and stays true to its cause. That benefits all of us. The Team Anna political party fights elections and its candidates win. But these candidates and the party turn out to be as corrupt as the other political parties that are already there. While this will be disappointing but then one more corrupt political party is not going to make things more difficult for the citizens of this country in anyway. We are used to it by now.
Given these reasons the Team Anna political party deserves a chance and should not be viewed with the cynicism and skepticism which seems to be cropping up.
(The article originally appeared on www.firstpost.com on August 4,2012. http://www.firstpost.com/politics/what-team-anna-can-learn-from-nirma-sony-apple-and-ford-404843.html)
(Vivek Kaul is a writer and can be reached at [email protected])
microsoft
'The best thing that can happen to Google is that all its new products fail early'
Michael Brandtner is one of the leading branding and focusing consultants in Europe. and Associate of Ries & Ries. Beside his consulting work he is a frequent speaker on the topics of branding and positioning. “All my presentations start with “Brandtner on Branding”. But “focusing” is still the most important job to do in branding. A brand without a focus has no power at all in the long term. Take Sony! What does Sony stand for? Fifteen years ago Sony was a brand superstar. Today it is a burned out brand,” he points out. In this interview he speaks to Vivek Kaul.
You are a focusing consultant. What does a focusing consultant do?
I help companies to find the right focus for their brands. Most brands today are unfocused. That means that they try to stand for many different attributes at the same time. In a typical brand statement you will find phrases like this: Our brand stands for high quality, great service and innovation. Maybe this makes sense in a brand or positioning statement. But it sure makes no sense in the mind of the customer. Today, if you want to be successful, you need a powerful focus like “driving” for BMW, “breathes” for Geox or “search” for Google. The most powerful brands today are built around a single idea or even better a single word. That is the focus of a brand. And in my consulting work I help companies to find this one word.
What does it take for a company to be focused?
It takes strategic long-term thinking. You really must decide what your brand should stand for. Here in Europe Ryanair is focused on “low fare” airline. Today Ryanair is the most successful airline in Europe. Most other airlines are unfocused. They try to appeal to everybody. Of course most other airlines are in trouble today. Or take the Automobile industry. The brands in the so-called mushy middle are in trouble. The real successful brands are at the high end like Porsche, BMW. Mercedes-Benz, Audi or Lexus or at the low end like Hyundai or Kia. The brands in the mushy middle are unfocused. The brands at the high end or at the low end are focused. So I predict that Hyundai will become the largest Automobile brand in the world.
How does it help if a company is focused?
For most managers it seems not logical to focus. They still believe that the more you have to sell the more you will sell. It sounds so logical. But it isn’t. Marketing is not a battle of products. It is a battle of ideas. So if you want to win the marketing war, you have to focus on the right idea. Here is an example from Germany: In 1988 Dr. Best was just another toothbrush with a market share of about five percent. Then the brand becomes the first “flexible” toothbrush. This idea is the focus of the brand. They only make flexible toothbrushes. The advertising is focused on the flexible idea. They developed a powerful key visual or better called visual hammer with a tomato to dramatize the benefits of a flexible toothbrush. Dr. Best is flexible, flexible and flexible. Today the market share is over 40 percent. This is the power of a clear defined focus. A focus is more than an idea, it also a long term direction for the brand. It is the single idea that helps a brand to dominate a category.
Any other examples?
Take Opel. Opel is a European car manufacturer that makes a lot of different car models. But Opel has no focus. Why should anyone buy an Opel? I don’t know. Most people don’t know. In the mind of the prospect Opel is just another manufacturer of different car models.
What does it take a company to be all over the place?
Not much! A brand becomes successful with a single idea even a single product like Red Bull as the first energy drink. Then the management starts to add a “sugarfree” Red Bull and even a Red Bull Simply Cola. In most companies this is a natural way to grow a brand. And it is the perfect way to lose focus. This does not happen overnight because it is not easy to change the mind of the prospects. And that is the big problem with the issue of brand- and line-extensions. You can expand a brand over a long period of time and you are still clearly positioned. Then one morning you wake up and you have to realize that your brand does not stand for anything anymore. It takes time to build a brand and it takes time to destroy a brand. Take Sony! What does Sony stand for? Fifteen years ago Sony was a brand superstar. Today it is a burned out brand.
How does it hurt if a company is not focused?
If a brand has no focus, it will end up standing for nothing. That is the problem of Sony today. And maybe it will be the problem of Samsung tomorrow. Samsung is also unfocused. But today Samsung has the Galaxy. The success of the Galaxy is the main reason why most people think that Samsung is a hot company and brand. But Samsung as a brand does not stand for anything specific. Do you know what Samsung stands for? I do not. Fifteen years ago many people thought that Sony was a hot brand because of the success of products like HandyCam, CamCorder and Trinitron. These products faded away and Sony was left as an unfocused brand that stands for nothing specific. Now Sony is in deep trouble. It is like in the political world: If a political candidate tries to appeal to everybody, he will appeal to nobody. Take Barack Obama in 2008! He really did a brilliant move by focusing his entire campaign on one word, on “change”. “Change we can believe in” became his battle cry. That is the power of a focus.
Since everybody is talking about Facebook these days, how focused is a company like Facebook?
Today Facebook is a focused brand and company. Facebook stands for “social network”. It is the leading social network in the mind.
What about Google?
Google as a company is in the process of becoming unfocused. Google as a brand is still focused, because it still stands for “search” in the mind of the customers. It is still the ultimate search engine. But if Google is successful in expanding the company, it will destroy the focus of the brand. The best thing that can happen to Google is that all the new products under the Google brand will fail early.
How do you view the potential of Facebook when it comes to brands advertising themselves?
Facebook is not an advertising medium. It is much more an information medium. To but it even better: It is an interactive information medium. On Facebook people are interested in information, in conversation, in gossip, in buzz. But they are not really interested in advertising. On Facebook marketers have to think more like editors than like classical advertising people.
How does a marketer market in the world of Facebook, Twitter, blogs, and what not? How do you see social media changing marketing?
Social media today is totally overhyped. For many people it is a medium that will change the world of marketing as we know it. Here is my point of view: Social media is an important medium, but it is still only a medium. How important is television as a marketing channel for a company or a brand? It depends on the company, on the brand, on its strategy, on its messages and so on. How important are Facebook or Twitter or blogs as marketing channels for a company or a brand? It depends on the company, on the brand, on its strategy, on its messages and so on. For some companies and brands social media will become very important, for other companies and brands social media will only be another information medium like the web-site. For a car brand like BMW or Audi Facebook may be a great medium, because both brands have a lot of fans and a lot of relevant news for these fans. For a tissue brand Facebook is more like an additional web-site to give some basic information about the brand. Every company has to find out for itself how important Facebook, Twitter or blogs are in the media mix.
What’s the biggest branding mistake that a company can make?
(1) Believing that brand- or line-extension is the ultimate strategy to grow a brand.
(2) Believing that the better product will win
(3) Believing that it is easy to change the perception of customers with advertising.
Especially companies in trouble are doing these three things at the same time. Typical example here in Europe is Opel! Opel is in trouble. The typical reaction: We have to launch new models under our brand name to win market share. We have to build better products than the competition, because customers prefer better products. We have to change our logo and we have to launch a new advertising campaign to change the perception of our brand. Will it work? Of course not. Opel needs a new focus. Take Apple! About 15 years ago Apple was in trouble. What did Steve Jobs? He launched the iPod in 2001. He focused his efforts on a new brand to rebuild Apple. The success of the iPod did more for Apple than all other marketing efforts combined. It was also the base for the iPhone and the iPad. Steve Jobs knew about the power of a clear defined focus. He built three leading focused brands in only one decade, the iPod, the iPhone and the iPad. By doing this he made Apple the most admired company and brand in the world.
What are the areas of marketing according to you which marketers have the most trouble with? How can they address it effectively?
Still many management and also marketing people confuse reality with perception. That`s why they believe that the better product will win. Not true. The better brand will win. New Coke was the better product. Coke Classic is the better brand. Who wins? Coke Classic. Marketing is not a battle of products. Marketing is a battle of perceptions.
Could you elaborate on this point a little more?
Most companies are still building or investing in better products. But they should invest in better brands. Take Nokia! Nokia is the dominant brand for mobile phones. But Nokia is a weak brand in smart phones. Nokia stands for mobile phone, not for smart phone in the mind of the customer. So what is Nokia doing? They try to build better smart phones like the Nokia Lumia. Maybe the Lumia is a great smart phone in the factory. But in the perceptions of the customer it is just another smart phone on the market. Nokia should stop building better smart phones and start building a better smart phone brand. To achieve this they have to do two steps: Step one: Nokia has to create a new category of smart phones with a new powerful app. Step 2: Nokia has to give this smart phone a completely new brand name.
Why are big companies unable to launch successful new brands? They usually end up buying other brands. Like Google bought Orkut or Facebook bought Instagram recently.
The reason behind this is the so called corporate ego. If a company has a powerful brand name, it will tend to use this “powerful” name for all products. That is good thinking inside the company, but it is bad thinking outside the company. For the Kodak management is was logical to use the Kodak name also for the digital products. But this does not make any sense outside the company. Why should anyone buy a digital camera from a photo film company or brand? Kodak is not perceived as an expert for digital cameras. That`s the point. So it is not a bad strategy for big companies to buy new brands. If Google had launched a web-site for video search on its own, they would have probably called it Google Video. Instead they bought YouTube. Google now owns two strong brands and also market leaders in the search engine business. Google is the ultimate search engine. YouTube is the ultimate “video” search engine. Additionally Google has also Android. That is a great multi brand strategy. Google+ on the other hand is only a me-too social network. That’s a bad brand strategy.
So what does that mean?
That means: Companies have to overcome their corporate ego to launch second brands. But there is one very important point. It is not enough to launch a second brand first of all you need a new category. Take Microsoft in the search engine business! It is regardless whether the call the search engine MSN Search or Bing, because the strategy “launching a me-too search engine” is wrong. That means: If you launch a second brand, you first will need a new category. Without a new category you should not launch a second brand at all.
(Interviewer Kaul is a writer and can be reached at [email protected])
(The interview was originally published in the Daily News and Analysis(DNA) on June 11,2012. http://www.dnaindia.com/money/interview_the-best-thing-that-can-happen-to-google-is-all-its-new-products-fail-early_1700670)