Indian businesses require scale and marquee Branding to move up the value chain

Read Startup diaries – Part-1: Indian Political ecosystem

Startup diaries – Part-2: Sky-high valuations

Startup diaries – Part-3: International Macro-economic Funding environment

Startup diaries – Part-4: Indian Macro-economic Funding environment

Startup diaries – Part-5: Exits for Investors

The way of moving up the value chain in India lies in forming a relation of trust with the Indian customer, basis consistent delivery of quality backed by painstaking access to customer relationships. It would not be wrong to say that Indians may have a short memory when it comes to blunders committed by Public figures, but have a long tail when it comes to businesses. It is not for no reason that the average talk time for Indian telecom firms is highest in the world, with lowest average tariffs!

The problem, in many ways, is that price discounting is seen as enabler for driving topline in India. Way forward is to do away with the middlemen between manufacturers and end-customers and creating marquee branding. World class brands like Samsung, Apple are successful since they caged the Brand parrot more than the Price pigeon. These two can work to make businessmen successful at global scale in India. A large number of Indian entrepreneurs are indeed doing it in India, quite successfully and taking the realization home, that “Everything sells in India, just needs the right person to sell”.

Branding for Startup's success

Cue to take is from South Korea’s chaebols – Samsung, LG and Hyundai. India has developed huge number of MSME’s and a workforce, which is largely in the unorganized sector. This gives it some particular advantages (aka “Small is beautiful”), like nimbleness, but gives them a distinct disadvantage of not being able to compete basis economies of scale and investment in creating mega Brands.

India is the youngest country on planet. Our youth is aware, hence aspirational and since he lacks time, he is impatient. He is Brand conscious and not only Price conscious. He demands great service. Look of product matters to him. With persistent high inflation since 10 years of Congress regime and concurrent reduced discretionary spending power, youth looks for satiation in right price but with the comfort of a Brand.

The world is now competing with one another and it requires scale – massive & sustained investments to build the capability of pushing the global competitors out (and gain market share) as well as climbing up the technology ladder exponentially by investments in R&D (Research & Development). Acquisitions of startups is one such strategy which marquee players like Google and Facebook have somewhat perfected.

Indians seem short of big thinking, even Tata’s and Reliance are not world class brands, but conglomerates. Till recently, US companies preferred Indians either up to below top-level Blue collar jobs or middle/ lower Management White collar jobs. With accession of a plethora of Indians as CEO’s of world’s leading firms like Google, Microsoft and Pepsi, the trend has digressed, especially in the US. But go elsewhere – take the example of Dubai or Singapore: The Sheikhs and the Confucian masters still keep top Management posts for whites and the middle level for Indians. For a white and an Indian on same post, the white guy gets a higher pay. This says something about racism but also calls for introspection on the commitment and integrity of Indian Leadership to have a long-term vision and work actively towards it to build globally competitive companies.

Talent is there, a positive legacy is building up, but being at a goal for really long period seems to be missing. It doesn’t help that the cut-throat nature of competition calls for a leader with killer instinct, one who believes in creating better products/ services, goes all out for wiping out the competition by all available means and doesn’t get satisfied by the comfort of huge compensation which lifts his standard of living so much that it ends up killing his motivation for larger success. A number of such potential Leaders, like Rajat Gupta (ex-McKinsey, currently behind bars in the US in an Insider Trading case), end up falling by the wayside, allured by short term gains made with unethical and unlawful means.

Some of my articles explained these issues in greater detail, see below:

http://www.tusharkansal.com/2015/08/22/interview-in-digital-marketing-asia-startups-india/

http://www.tusharkansal.com/2015/02/18/interview-with-tushar-kansal-founder-cfo-indus-b2c-global/

http://www.tusharkansal.com/2015/03/17/interview-with-startup-tushar-kansal-part-2/

More in next Part, next week

Tushar Kansal
Tushar Kansal has served in senior positions in Corporate Finance at Deloitte Touche Tohmatsu, Brand Capital (ToI), Aircel & was Head (Debt Management) at MTS India. He is promoter of KansalTancy.com & SengeKhabab.com, prior to which he served as CFO of DLI India, owned by Guggenheim; a US PE Fund.

He is a B.Tech (Textiles), MBA (Financial Management) from University of Delhi.

He is a Columnist @ Business World, Indian Defence News, Indian Economist, Digital Market Asia, Business & Economy, Swarajya, OpIndia & Growing India.

Tushar blogs at tusharkansal.com, tweets @TusharKansal & publishes inside news on the right-wing Facebook page @IndusChurning