lessons from the indian retail guru

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19march 2008 l microfinance insights lwww..

intervieW

Lessons from the Indian Retail Guru

Kisr Biyani, Grup ceo t Futur Grup, is n Indias st sussul frst gnratin ntrprnurs and widlynsidrd t b Indias rtail king. his ain rtail utltsPantalns, Big Bazaar, Fd Bazaar t na a wav

xpandd quikly and sussully trugut t untry, apitalizing n t ni b, and rising iddl lass in-s. In an xlusiv intrviw, Naikt mr, Prsidnt t IcIcI Fundatin r Inlusiv Grwt, at t invitatin microfnance Insights, sat dwn wit mr. Biyani t draw r is past xprin bing in a start-up spa, t sd sligt n wat t grwing irfnan str an larn r a str tat s all t nw BPo.

Everything depends on second level

leaders

Mr. Mor: Te reader o the magazine

is a practitioner who is thinking about

growth, or those that are thinking about

getting into the sector, and thinking about

how to move orward. Wearing your start-

up hat, do you have any sense o general

advice or the sector to think aboutasthey think about people issues? Where

do you get the initial lot o people, people

to work with you, believe in you?

Mr. Biyani: You will not get extraordi-

nary people to start with. But, ordinary

people are plenty in this countrywith

the right leadership, you can get everyone

to perorm well. Most people are moral,

decent and smart enough. Te problem is

when you expect too muchperection

its too much. You cant set expectations

too high.

Mr. Mor: But one could argue that Future

Group has a Kishore Biyani. And really,

you made a dierence. And this sector

has its own Biyanis: Vikram Akula (SKS),

Vijay Mahajan (BASIX)the older lead-

ers in this eld, to name a ew. But, the

bulk o this work is done by the lower level

sta

Mr. Biyani: Yes, top leaders are required.

But, everyone is an integral part o the

business. You can still create second-rung

leaders who believe in the philosophy andconcept. And there are many people like

that. Everything depends on how second

level leaders build things out. oday we

say that we are more than 100 leaders at

this company, but when we started we had

none. One leader can create many sub-

leaders. Te strategy is to have everything

managed by a thought leader. And there

will be ew thought leaders. But, there

are others below who can develop skilled

leadership.

Mr. Mor: So, the top leaders, the thought

leaders, have provided the guidance, but

the lower levels can take that idea and see

how it can be implemented

Mr. Biyani: Yes, through skill leadership.

Tought leaders are not going to do every-

thing. But, I think that skill leadership can

be developed a lot.

Mr. Mor: One issue that comes up is the

area o work competency and ocus. In

micronance you see two kinds o peo-

ple: mission driventhose who think we

should only do this work to help poor

people; and those who want to work

broader, and expand into dierent areas

by creating new oersbut sometimesyou have too much breadth in that kind

o situation. For a long time, youve stuck

to one arena, but now youre branching

into others

Mr. Biyani: Actually, weve always been

in the consumption space. We have never

le the consumption space. Even today,

whatever we do is part o the consumption

space. Te way that we look at people is

that they are consumers and we should

provide them with whatever they want

products, goods and services. We have

not been outside o the space. I have a very

clear and open-ended design. We work on

an open source policy and dont dene

segmentations too sharply, in whatever

we do. I think that denition can be o

use. We are all a victims o the B-school

education system, which looks at allocat-

ing resources and looks at segmentation

too early. When youre thinking (about

expansion), you have to look much, much

broader.

Mr. Mor: Any guidance or the micro-

nance institutions that are starting up and

have acquired 10,000 clientsshould they

take the same model and go to 25 dierent

locations, or take the same location andprovide loans o varying amounts, and

product diversication?

Mr. Biyani: I think that in micronance

everyone will have to do everything in or-

der to provide value in the market. Micro-

nance will have to look at smaller loans,

dierent enterprises, and dierent metrics

Kishore Biyani, Group CEO, Future Group and Nachiket Mor, President ICICI Foundation

Sketch by Ranjan Banerjee

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or everything. We live in a huge country

o a billion people enough to create the

capacity to consume, or to earn, around

which a whole manuacturing sector can

be built up. I see a New India building

upon the ports, airports, railwayseacha new area o delivering products and ser-

vices. Te new areas o delivering products

and services can be linked to micronance

to the various set-up registers. I think that

the modern ecosystems thought process

is limited to thinking largelarge things,

large corporations delivering goods and

services. But, to make a 1 billion [person]

country run like a 200 million [person]

country or a 10 million [person] country,

your model has to be very dierent. Here

is where I believe micronance can play

a big role because they are a consolidator.[Tey can] create alignment o groups at

both ends and keep the unnel absolutely

seamless.

Mr. Mor: So, what Im hearing rom you

is dont be too rigid about what youre do-

ing. Start where you eel comortable, be

organic, grow around it, and dont have

a pre-conceived notion o a large single

company running like a machine.

Mr. Biyani: Exactly. Tings will happen as

they happen. And no one can dene the

model rom the beginning.

Mr. Mor: A question about loyalty. How

can these MFIs that are losing people,

build loyalty?

Mr. Biyani: Tose MFIs that cant retain

peoplethey say that its the employees

aultI dont buy that argument. I believe

that its the MFIs ault i they cant retain

someone. Te MFI needs to make it inter-

esting and worthwhile to work there. Te

problem is that so many managers want to

escape when theres a problem. Tey dontwant to look at themselves. Tats not what

leadership is about. Someone has to take

the blame.

Mr. Mor: Te NGO sector thrives on at

structure. Everybody is equal and in-

volved in enormous consensus-building

processes. Yet, you can spend three days

discussing issues and even then not reach

a conclusion. Tis leads me to think about

the role o hierarchywhat I hear is that

your organization tries to maintain a at

structure and stay away rom hierarchy.

Mr. Biyani: I think that decision mak-

ing has to be as ast as possible. Without

decisions you cannot grow. I you want

to manage growth, decisions can only

happen i the organizations structure is

much atteri you look at the hierarchyo structures o businesses in the 1900s,

during the industrial economy inorma-

tion used to ow upwards based on the

capacity o people to make a decision. o-

day, everybody gets the same inormation.

I do not know why we need hierarchies

in any case.

Mr. Mor: I come rom the banking busi-

ness, a business in which the sale happens

ex-post. oday, I give you money. Te sale

is when you bring my money back. Tere

is this thought that i you dont have a

command and control structure, i you

dont have rigidity, raud will happen, and

you will lose your money. Do you think

this is a reection o the negative mindset

we are bringing to the situation or is there

a slight dierence here that we would want

to think about?

Mr. Biyani: I think that trust begets trust.

You have to create a society where trust is

the edice. And based on your insights,

you have to create management systems.

But it cant be a risk management system

like you have in the West that is very pro-cess orientedyou have to look at the

cognitive styles or the soer aspects o

the people you are working with.

Mr. Mor: So, be pragmatic, but be trust-

ing. In terms o people, as youre thinking

about building out an MFI, dont start out

with the premise that youre guilty until

proven innocent. Wait until you see evi-

dence o wrongdoing beore you disci-

pline. Wait until someone does something

wrong beore you start accusing.

In many ways there is trust between

top management and the ront ofce.But, with middle management level, cre-

ate structures that allow clear decision

making. Tis means, make sure that you

trust each other, and allow business to

happen.

Mr. Biyani: Tere are all these boundaries

to prevent decisions rom happening, and

really, values should be your boundaries.

Decision making is very important in any

ast-growing business, and today India is

trying to catch up with the worldso

making those decisions needs to be much,much aster.

Mr. Mor: When we (ICICI) decided to get

into micronance, we tried to do it our-

selves, but we had a bit o a challengeour

cost structureso we built partnerships.

We decided to work with partners on the

ground and see what we could do to en-

able our partners to grow. Tis means that

our control over processes is lost. For ex-

ample, in the Andhra Pradesh crisis (MFIs

in this Indian state were shut down due to

accusations that they were charging usuri-

ous interest rates and bullying clients), we

learned that some o our partners were

not treating their clients well. Perhaps,

the nature o the partnership was such

that our control underneath was not that

high. What is your experience with part-

nerships, do you enter a lot o partner-

ships, and do you think that at the core

level you need control?

Mr. Biyani: We are not controlling at

all. Our businesses are not. We believe

a lot in partnerships and treat them like

an Indian marriagethere is respect andcompromise. And whichever party does

something better, takes on that role and

we trust that they will play that role bet-

ter than us.

Mr. Mor: As you think about your growth,

do you see a lot more partnerships? And

what about your brand? Would you share

Those MFIs that cant re-tain peoplethey say that

its the employees faultIdont buy that argument.- Kishore Biyani, Group CEO, Future Group

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1march 2008 l microfinance insights lwww..

your brand? Do you think that your brand

should dominate?

Mr. Biyani: We believe the next phase o

growth is going to be true collaboration

through alliances and partnerships. Wesee co-existing partnerships. We dont

care so much about branding. We are

practical about these things. Te brand

is what the brand does. Brand equity

should be scrapped. Te era where the

brand matters is over. Everything used

to start with the brand. But, no longer.

No brand in the world stays the same or

more than a ew years. Look at ICICIits

completely dierent today rom what it

was when it started. You cant shape the

destiny o a brand.

Mr. Mor: When you think about strategy,

when you think about what youre doing

15 years rom now, how precisely do you

articulate it? Do you say I know Im going

to go here and here in the uture? Or do

you only see tomorrow and the day aer

tomorrow?

Mr. Biyani: We do plan a lot. We do sce-

nario planning exercises in terms o how

we think the country will emerge. We do

schematics. We design the organization

and strategy or 3-5 years. We cant think

15 years ahead because o the technology

and the reception in the market place to-

day. Te economy is such that something

will come up that you cant anticipate. You

cant create anything that will last more

than 5 years these days. Tats why I dont

agree with perection. Permanency was an

American notion. Nothing is permanent.

Tere is no permanency. Your ideas are

going to be more important in any case.

Te marriage-marketability o micro-

nance is not very high

Mr. Mor: Te estimates that we haveabout the number o people in India

needed to serve the micronance sector

aloneabout 300 millionand the best

possible ratio we could get rom credit

ofcers needed to serve this population

would be about 1000 people per credit

ofcer--but thats an extremeits more

likely 400-500 people per ofcer. So,

when thinking about the number o peo-

ple required in this sectorjust looking at

credit ofcersit is enormous. So, do you

have any guidance or India or or large

independent MFIs, like SKS, Spandana

and Share, who have grown to over a mil-lion partners and show no signs o slowing

down? You have grown all over the place,

and I dont know i youre struggling, but

is there a people issue here, in terms o

raw recruitment and training?

Mr. Biyani: o be very honest, I dont see

a people issue in this country, because

the number o people in the talent pool is

large enough. But, I think that ew people

understand the concept o micronance

its too technical. It has to be made sim-

pler. What works in this countrywhatweve discovered in the retail businessis

that a person working in a particular eld,

a young person, unmarriedwhat they

worry about is how glamorous is a job in

terms o his marriage market; what value

can he derive rom his job on the mar-

riage market. I you make that interesting,

youll get everyoneno problem bringing

in people to work in the sector. oday, the

marriage-marketability o micronance is

not very high. And I think thats one o the

biggest insights I can ever give you.

Mr. Mor: I had never considered that at

all.

Mr. Mor: Well, when people think o their

careers, they dont think that theres a ca-

reer in micronance. I I were a young

man in a hurry to make my mark, micro-nance is not considered a viable option.

What specically are you doing to glam-

orize retail?

Mr. Biyani: We have created schools. We

have made retail glamorousbut weve

worked on that. We created programs at

14-15 schools in the country. And now we

are building our own schools. And that

has been a successul way to bring people

directly into the business.

Now we are looking at changing the

contentand maybe its something you

can use. We use mythology and story-telling. People understand everything in

relation to other things. No PowerPoints

or slide presentation, no teachers, just

storytelling.

In act, we are building up a whole ed-

ucation system right nowa leadership

curriculum, entrepreneurship curriculum.

And its all based on digitized content and

storytelling, where we dont require teach-

ers. You should create schools.

Mr. Mor: So youre saying, i we thought

careully about this, the micronance sec-tor could try to use a similar schooling

system in order to nd a way to trans-

orm.

Mr. Biyani: Yes. But its very iy because

you cant deliver this through systems o

the West. You have to build your own.

And all o your systems right now are

borrowed, not your own.

Mr. Mor: Yes yes. An MFI in many stages

looks like a start-up organization, and any

young man that wants to join may wonder

i it will survive or not. And somehow the

anthropological instinct that you need to

join a young company, to be a part o it

even as a credit ofcer, seems to be a little

bit o a struggle.

Mr. Biyani: You have to capture the suc-

cess stories and communicate those sto-

rieseven through popular culturelike

through commercial cinema and televi-

sion.

Mr. Mor: So, your core message is that

were thinking about recruitment too an-alyticallywe should think about things

rom our hearts. Tink about the ideas.

Stop thinking about these things as HR

issues, management issues. And think

about things in simple terms. Tis is

about desirability, appeal, glamourand

we should think about this rom those

perspectives.

intervieW

We believe a lot in partner-ships and treat them like an

Indian marriagethere isrespect and compromise.- Kishore Biyani, Group CEO, Future Group

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Bearing the weight o regulation

Mr. Biyani: I think that this is a transor-

mational idea, but it has not been treated

as such. Most people use management

techniques or incremental thinking, not

transormational thinking.

Mr. Mor: What is the transormational

thinking going on with your company?

Have you thought about getting into mi-

cronance at all?

Mr. Biyani: I think our next big venture

is Future Ventures. We want to own the

entrepreneurship arena. I think that our

amily system leads to ailure because it

doesnt allow you to think big. People

think that we are a country o entre-

preneurship. But Indians just do small,small things to make ends meet. Tat is

not entrepreneurship. Entrepreneurship

is thinking and doing something big,

which is why weve started our entrepre-

neurship school. So people will think big

and grow big. And in a way this is similar

to micronanceby turning people into

entrepreneurs. But, we are not looking at

micronance as an area to go into. We are

only interested in bringing retail where

there is a capacity to consumewhich

micronance can create, but no; were not

going into the sector itsel.

Mr. Mor: You have multiple ormats o

stores. And in some stores you deal with

bottom o the pyramid consumers

which everyone has a theory about. Youre

only the largest seller o gully cricket bats,

aer all.

Mr. Biyani: I think bottom o the

pyramidits absolutely nonsense. It

doesnt exist in a country like India. Be-

cause the bottomthe 25%, the people

who dont have anythingwhat can you

sell them? I think the bottom o the pyra-mid has two ends to meetand they are

concerned with ood, clothing, and shelter.

We are only in the middle o the pyramid.

Te bottom o the pyramid was created in

the West and is a great textbook word, but

it is nonsense. I dont mind being quoted

on this.

But, denitions and groups are chang-

ing. For example, the urban poor, their

aspirations are changing. Tey see their

uture in their children. And their second

aspiration is to lend money to others

they care about how the communityperceives them. But, mostly they eel em-

powered by lending money to the next

generation.

Mr. Mor: In terms o where youre grow-

ing your business, volume, etc. you men-

tioned that 70 million people have visited

your stores.

Mr. Biyani: Tis year it will be 200 mil-

lion.

Mr. Mor: So, we take heart rom your suc-

cess to say that it can be done, that this

volume o people can be managed.

Mr. Biyani: India is a huge countryyou

can do a lot. We see a trend in India

which no one has really seen, and Im

saying it or the rst time: people see ev-

erything but they go back to their roots.

Tis is both positive and negative. Indian

people are willing to try anythingwatch

it, experiment with it, use it. But, to project

whether they will keep using it, watching

it or a longer period o time is circum-

spect. Our tendency as Indians is to go

back to our roots.

Mr. Mor: Weve discussed hierarchy, the

issue o trust as you manage growth what

about systems? How oen do you review

perormance in your stores? How muchtechnology have you put in place?

Mr. Biyani: I think we have a good amount

o technology. I review everything once a

month or all o our businesses. You need

to understand whats happening. Your

thinking is only as good as the inorma-

tion you have. We need to read plans;

thats how you keep on learning. Systems

or core thoughts, core processes should

be automated as smoothly as possible, but

not or other things. You have to have a

balance.

Mr. Mor: Tere is a book that came out on

the most eective nonprots.1 Listening to

you during this interview, I can hear some

resonation there. Te book says, look at

the most successul nonprots, the ones

that make the most impact, and learn

rom them. I want to see what you think o

thisthe book says that the most eective

nonprots are the most secure: they didnt

care about brand or sharing, in act they

openly shared their donor lists (which, i

you know nonprots, most o them guardthese very closely). Tey ound that by

being more open and more secure, the

impact that they had was much greater

than those entities that built everything

in a very tightly guarded manner.

Mr. Biyani: Absolutely. Actually, we dis-

covered while doing the business o retail

something very similar. Let me tell you a

little about it. We went into a cycle o a

human being and what makes them run.

It was greed, ear (it wont be available to-

morrow), vanity (this will make me look

better), ego, and the most surprising o all:

altruism. I a customer eels that a busi-

ness is a good citizen, they will be loyal.

So we are open. Everything is open in

our ofce, down to our locks. Nothing is

hidden. Everything is ully transparent.

Tere is some the, but we dont penal-

ize anyone. We try to create a nice envi-

ronment, and that environment creates a

value o its own.

Tats why we dont mind being cop-

ied. We can create the model and build

our own soul around it. Anyone can copy

the model. Tey cant take our soul, ourvalues.

Mr. Mor: Loyalty is important. An open

culture is important. We learned so much

rom you in this conversation. Tank you

or your time. n

intervieW

1 Crutchfeld, Leslie, and Heather McLeod Grant. Te Six Practices o High-Impact Nonprofts. San Francisco: Jossey-Bass, 2008.

The bottom of the pyramidwas created in the West and

is a great textbook word, butit is nonsense.

- Kishore Biyani, Group CEO, Future Group

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lessons from the indian retail guru

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