retail isb report

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THE INDIAN SCHOOL OF BUSINESS MAGAZINE

Forecasting the Sweeping Impact on the Economy

COVER STORY

boomretail

in India

New Dean at ISB Class of 2005

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ISBinsight TeamBhuvana RamalingamVidya NarasimhanAparna GantiSriram Karri

DesignSarita Sundar Associates

ResourcesLearning Resources Centre at the ISB

Printed atPragati Offset Pvt. Ltd., Hyderabad

Indian School of BusinessGachibowli, Hyderabad 500019, IndiaPhone: 91 40 23007000, Fax: 23007012Email: [email protected]

Front CoverPhoto by Manoj Sudhakaran

Back CoverThe Class of 2004: On Graduation Day

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3 ‘ISB will be in Top 50’ New Dean of ISB, Professor

Mendu Rammohan Rao, explains his vision of taking the ISB to the top 50 global B-Schools rankings within five years

4 ISB Ambassadors step into Corporate World A report on the Graduation Day

ceremony of the Class of 2004

5 Anil Ambani’s wish for a Flying Carpet An exclusive on Anil Ambani’s speech

at the Graduation Day ceremony, and why he almost wished for Kellogg Dean Dipak Jain’s flying carpet

6 Class of 2005 begins rigorous year with fun A report on the new class, and the Pre-

Term and Orientation programmes

8 Global Student Practicums An insight into the working of the

Global Consulting Practicum (GCP) and Experiential Learning Projects (ELP) – practicums where students undertake corporate projects

9 Cover Story: Retail Boom in India A feature on the impending retail

boom in India, and an analysis on its likely impact on all sectors, bringing together the views and opinions of leading academic experts and industry leaders

14 Re-Focusing on Organisational Dynamics Some of the executive participants at

the Advanced Management Programme explain why they prefer ISB for the best in executive education

15 Professor of the Year Award A report on the ISB Professor of

the Year Award – conceptualised by students, the Award celebrates outstanding teaching

16 Dell and the Art of Making Computers An exclusive on the visit of

Michael S Dell, Chairman, Dell Computers, to the ISB as part of the CEO Forum – excerpts from the interview

18 The Leadership Dynamic At ISB, the emphasis is on

grooming leaders who can motivate, build coalitions, and influence others – a report on the Leadership Development Programme

19 Global Advanced Management Programme A preview of a new executive

programme from the ISB and Kellogg, which address the challenges of today’s business era

20 TAFE gets huge RoI from ISB’s Programme An interview with Mallika Srinivasan,

Director, Tractors and Farm Equipment Ltd. (TAFE), who says that their returns on investment from the ISB executive education have been high

22 ISB Happenings

24 Book Review

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Contents

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2 | ISB insight | June 2004

Dear Reader,

It was a casual remark by one of our CEO visitors that confirmed the idea for our cover story. Azim Premji, Chairman, Wipro Technologies, visited the ISB to talk about Offshore Outsourcing and commented that the next few years “will see the reversal of the current outsourcing trend. India has been under consistent international pressure to open up our retail segment – and it is inevitable that we will.” But what caught our attention was his prediction that “…every Wal-Mart store will displace 500 people and replace 2,500 jobs.”

If current trends are an indication, that India is witnessing a Retail Revolution is not in question. Following Mr Premji’s comments, we were intrigued by what this Revolution spells for India. Deciding to investigate further, ISBinsight’s discussions with faculty members showed clearly that opinions on India’s retailing future varied sharply. However, everybody agrees on one thing. The retail industry is certainly on the brink of a boom. Our cover story examines this issue, and also shares insights gleaned from ISB faculty and industry experts on what is in store for Indian retail.

Another CEO visitor generated excitement of a different kind. Michael Dell, Chairman, Dell Corporation, was at the ISB to interact with our students in an exclusive, interactive session. It was fascinating to hear Dell on Dell, and an amazing opportunity to learn more about Michael Dell – the man.

Closer home, ISBinsight caught up with Mallika Srinivasan, Director, Tractors and Farm Equipment Limited (TAFE). She is among the handful of women who figure in India’s corporate power list. Having made a mark in the burgeoning automotive industry, she was featured among the top 25 women in Indian business by Business Today.

The last three months have been a whirlwind of activity and an emotionally charged time. We said goodbye to the Class of 2004 who graduated in a spectacular ceremony. It has also been a time of pride and accomplishment, as the ISB completed another outstanding placements season, and as our students came out with flying colours in international competitions. With endings come new beginnings. The new Class of 2005 is here and all of us at the ISB are looking forward to a year that promises to be every bit as exciting and eventful as the one gone by.

Bhuvana RamalingamEditor

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From the editor’s desk

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June 2004 | ISB insight | 3

Professor Mendu Rammohan Rao has taken over as the Dean of the ISB. He succeeds Professor Vijay Mahajan, who served as the Dean of the ISB since 2002. Renowned for his research and teaching capabilities, Professor Rao taught Operations Research at the Stern School of Business, New York University. He is also the winner of the prestigious Fulkerson Prize.

What are the challenges you foresee in your new role?The biggest challenge as an emerging global B-school is the recruitment of world-class faculty. We will continue our drive to add five to six members each year for the next few years, till we create a pool of around 40 faculty. We have set processes for faculty tenure to meet global benchmarks and we will continue to strengthen them. We will encourage our faculty to publish in more international journals and get global recognition. In a sense, the ISB will derive its brand worth and ranking from the fame and academic excellence of its faculty.

Another major challenge will be to raise funds and create endowments to support research, provide more scholarships, and to strengthen our Centres of Excellence.

Our PGP class strength of 276 is the highest for the region but we will continue to increase the numbers gradually, besides getting more international and women students.

You have been a faculty, researcher, consultant, and Dean. How different are

these roles and how would you shift between these different thinking hats?As a researcher, or faculty, the subject becomes most significant. As a Dean, the administrative capabilities are very important – you have to deal with several challenges on a daily basis. You have to be more people-oriented. I would like to continue to do some research work but the role as Dean, as an administrator, will be my top priority.

What is the vision you have in terms of building the ISB into a global school?The ISB will strive to reach a world

ranking, in the first 50, within the next five years.

How do you propose to build research at the ISB? Last year, we started our doctoral programme – we will build it further. We will encourage faculty to take up research and get industry partners to provide support. We are exploring ways to get collaborative research underway with our partner schools.

What greater value proposition should our Executive Education provide?As we seek to improve industry-academia partnerships, a key way in which the ISB can provide value is the Executive Education programmes. We will launch certificate courses for executives, along with our partner schools, and introduce an Executive MBA programme.

What will be the contribution of the ISB to management education in the region?In the coming years, the ISB Doctoral Programme will create world-class faculty and researchers for this region – addressing a very significant need. There needs to be greater interaction between management education institutions, both in India and globally, to create platforms by which we can come together to face some of the common challenges. The ISB will initiate conferences and seminars to build a strong relationship among B-Schools.

‘ISB will be in top 50

ISB Deanship was a privilege: Professor MahajanPassing the baton of the Deanship to Professor M Rammohan Rao, Dean Vijay Mahajan said, “It was a privilege and honour to have served as the Dean of the ISB. Rarely does one get the opportunity to be part of building a great institution and I have been very lucky to have been given such a wonderful privilege.”

Speaking about his experience as Dean, Professor Mahajan said, “Over the past two years, we faced several challenges but I was able to overcome them with the tremendous support of the Board, faculty, students and staff. I will always be associated with the ISB in a number of ways and will watch it grow from strength to strength.”

Welcoming Dean Rao, he said, “I wish Professor Rao the very best. He is an excellent academician and will lead the ISB to become a great B- school that India will be proud of.”

ROLE OF DEANSHIP CHALLENGING: PROFESSOR RAO

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Professor Mendu Rammohan Rao, Dean, ISB

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When the vision of an institution is to groom future leaders for Asia and the world – the passing out

of a class becomes a significant, even if a modest step, towards the giant leap.

The ISB’s aspiration to groom tomorrow’s leaders took concrete form when the Class of 2004, the third since inception, graduated and entered the corporate world to begin its tryst with success. The ceremony was colourful, complete with the traditional academic regalia.

The audience including corporate luminaries like Anil Ambani, academic leaders like Dipak Jain, Dean, Kellogg School; Jagmohan Raju, Joseph J Aresty Professor of Marketing, The Wharton School; George W Gau, Dean, McCombs School of Business, Austin; and others, deliberately stood back to allow the spotlight to focus on the stars of the day – the Graduates of 2004.

The batch was already celebrating its placements success, having brought to Indian shores an international offer matching its Ivy League counterparts – an all time high of US$ 151,768 per year.

After a gruelling year, it was a day to get a few last lessons. Rajat Gupta stressed upon the need to distinguish between career and professional development, saying, “Build

successes around yourselves… enable others to succeed… while building your own success.”

Dean Mahajan said, “Our students have truly done us proud and their talents have been well appreciated by the corporate world. We have great expectations of them.”

Dean Dipak Jain added, “Ultimately, it’s the quality of students that makes a B-School successful. I am proud to see that these students have done so well for themselves.”

A highpoint of the ceremony was the presentation of the ISB Scholars of

Excellence awards to Karthik Jayaraman and Tejaswy Mohanram in recognition of consistent and exceptional academic achievement. The Dean’s List recognised 22 students, the top 10 per cent of the Class.

The ceremony paid tribute to Professor Sumantra Ghoshal, who played an active role in the setting up of the ISB. Rajat Gupta recalled Sumantra as a dreamer, saying, “He took the aspirations of ISB to the next level... Sumantra truly represents the soul and spirit of the ISB.”

The Sumantra Ghoshal Award for Excellence in Strategy and Leadership & Change Management was awarded to Santhosh Bandreddi.

Speeches, photographs, nostalgia, handshakes and hugs, the joy of success and the sorrow of parting, and the promise to script a great success story ahead… and the day was gone.

As the ceremony drew to a close, and the hats flew, there were reasons enough for the moments to be etched in the history of the School. And each ambassador of the ISB geared to start a new life, of contributing to their new companies in a way as to make their School proud.

ISB ambassadors step

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into corporate world

GRADUATION DAY

We Graduated: Delighted students of the Class of 2004 after the ceremony

COMPENSATION HIGHLIGHTS

Average Indian CTC Highest Indian CTC Average international CTC Highest international CTC CLASS SNAPSHOTS

Total No. of students No. that participated in placement processNo. of participating companies THE OFFERS

No. of offersNo. of international offers No. of lateral offers WOMEN STUDENTS

No. of Women Students Total Offers International Offers Highest CTC Average CTC

INR 9,05,000INR 20,55,000US $ 90,000US $ 151,768

219

192144

27320221

40525INR 13, 00, 000INR 8,86,000

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The Man has been there and seen it all. But even for Anil Ambani, Vice Chairman & Managing Director,

Reliance Industries, and a Wharton Alumnus, the Graduation Day Ceremony of the Class of 2004 at the ISB was special. At the outset, he said, “…not too many individuals in their lifetime can have opportunities to create a world-class institution like the ISB.”

The speech began on a humorous note, “I reverse the instructions given to all of you at the start – Please switch ON your mobile phones.”

Even in setting expectations, he was direct. “I will not speak to you about leadership styles because what I say will be something you have already learnt – in fact, possibly from the same faculty.”

But he did share the wisdom of one management guru, only his elder brother Mukesh and he had the exclusive privilege of learning from – the legendary Dhirubhai Ambani. “My dad said to me when I came back home with an MBA degree… MBA makes you think you know everything. Don’t be a know-all; have humility enough to continue to learn.”

Alluding to the efforts of Dean Dipak Jain to make it to the ceremony despite hassles at airports in three continents and a few missed flights, so much as to prompt Master of Ceremonies, Dean Vijay Mahajan to say, “Dipak must be having a flying carpet,” Ambani quipped, “I am glad I am going to two important ceremonies today...but in the same country. Otherwise, I might have to borrow Dean Dipak Jain’s flying carpet.”

The speech was wide ranging – from history to personalities, from global B-School campuses to the Ambani household, from flying carpets and the telecom revolution to social responsibility and gender diversity. “Just over a century ago, when Sarojini Naidu, India’s nightingale, was ready for high school, she had to go to Chennai for lack of a good school. It is amazing that today one of India’s most famous of B-Schools is located here.”

The male dominance in the corporate world was on his mind, for he strongly took up the cause to promote gender diversity, though not letting the opportunity pass for a friendly spar with Rajat Gupta. Call it Big Boys fun, when Ambani said, “We have 18 per cent women in our class. Even a lesser known School like the Harvard, to which Rajat went, has 35 per cent. Now, if we consider a better known School like Wharton, to which I went, the number is perhaps greater.”

“It is for the ISB to take a lead in changing this trend… encourage more women students, and create a way for women to take on leadership roles in the corporate world.”

He moved to another passionate interest – encouraging the youth to take up leadership roles. “The country needs young people who are committed and capable of making a difference. This ISB Class is a good example.”

Inspired by Ambani, they definitely will be tomorrow’s leaders.

Anil Ambani’s wish for a flying carpet

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Anil Ambani, Vice Chairman & Managing Director, Reliance Industries delivering the Chief Guest’s address

Anil Ambani with Rajat Gupta

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rigorous year with fun

A few weeks ago, there was a riot at the ISB. Groups of new students jumped up on stage, threw histrionics, and generally kicked up quite a fuss just about everything from admissions to the pre-term. And how did the administration

view this? With amusement!As part of the ritual of Orientation Week, this was the students’ time to shine. The

only time they get a chance to take a dig at everything – the admissions process, the ISB administration, even their peers. Well almost the only chance – they have to wait another year until Graduation before they can repeat the famous circus act!

Even though this is year four, the new Class still generates excitement. This year’s Class is the biggest so far with 276 students. The Class is also a cheerful mix – different experiences and perspectives gleaned from varying educational and work backgrounds – all coming together for a shared learning experience. But the diversity of the Class is no accident – it is carefully orchestrated by the Admissions Office.

At the ISB, we see an opportunity to learn in almost everything, reflected in our learning model which emphasises holistic learning. We believe that the peer group offers each student a great learning opportunity.

Each ISB Class is an exceptional group of achievers, with a demonstrated record of accomplishment – professional and personal – in a range of areas. Academics will not be a problem with this bunch! We have winners in the National Talent Search Exam (NTSE), rank holders in Mathematics Olympiads, Gold Medallists, Merit Scholars at national and state levels, and even Dean’s Listers, which include two Awardees under the Duke of Edinburgh Award Scheme (DEAS).

Not satisfied with academic excellence, our students have other accomplishments to their credit as well. In sports for instance – we have 11 National-level players and four State-level players. We also have two mountaineers. Incredibly, two students hold patents for technological innovations. All in all, a dynamic bunch, raring to go.

The ISB offers the perfect environment to provide for a personally enriching and professionally rewarding experience. As one of the world’s finest management education institutions, we value academic excellence.

“The ISB is a dream come true for me… it is fun meeting so many different people.”Pooja Maheshwari, Class of 2005

CLASS OF 2005 BEGINS

Fun at the orientation programme

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rigorous year with fun

We are committed to helping our students maximise their potential. Towards this end, our scholarships reward exceptional academic achievement, and are awarded to students based on academic merit, and need. This year the ISB awarded close to a 100 scholarships at the time of admissions.

The Class of 2005 kickstarted their intense academic year with the Pre-term Programme. The ‘Pre-Term’ is an optional programme designed to prepare incoming students, who come from diverse backgrounds, with the fundamental knowledge and skills required for a management programme. During the pre-term, students refresh their knowledge of subjects such as statistics, accounting, and economics, while being introduced to some new academic concepts. Also on offer this year is a course in Business Communication.

This was followed by more serious stuff, and a very important part of settling in at the ISB – a course on ‘Understanding General Management’. This 5-day module was presented by two professors from the

London Business School. The module familiarised students to the case method, which is central to ISB’s learning pedagogy.

But it was not all work and no play. Orientation was marked by a host of fun activities that helped new students get to know each other, and the School better. This is the time when new students get to know their classmates, flatmates, and groupmates.

A variety of social and recreational activities emphasised teamwork and class spirit. Students spent their time registering for courses, settling down, and familiarising themselves with the School, and the city of Hyderabad. A group of ‘seniors’ from the Class of 2004 helped the new admits settle in. These freshly graduated ISBians had the all-important task of making sure that the ISB tradition was passed on to the next generation.

What does the year ahead hold for these new ISBians? We will have to wait to find out. For now, it’s time to hit the books, and prepare for a gruelling year ahead.

“The facilities are amazing and the infrastructure is comparable to any great B-school anywhere in the world. I think of joining it (the ISB) as a great career move.”Pratyush Midha, Class of 2005

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Corporations across the world traditionally look up to big-time consulting firms for cutting-edge

consulting on areas of strategic significance. A trend that has been gradually changing, with leading B-schools providing student teams that produce a similar quality of work, and sometimes providing teams better suited for specific projects.

The Wharton Global Consulting Practicum (GCP) is one such example. The GCP has undertaken and executed world-class consulting to major corporations globally. The ISB now brings this best practice to India along with another new initiative, the Experiential Learning Projects (ELP).

The ISB Wharton GCP, offered in collaboration between the ISB and Wharton, is a cross-functional, globally-oriented programme aimed at Indian companies seeking to establish or enlarge their marketing presence in the North American markets. Two teams from the ISB and Wharton work jointly for predominantly India-based clients – giving the students first-hand experience in solving real problems of international businesses and an opportunity to enhance their consulting skills.

The GCP integrates several disciplines including marketing, operations, accounting, finance, and general management, and gives students the opportunity to enhance their leadership, human resources, and teamwork skills.

Since inception, the ISB Wharton GCP has consulted for Mahindra & Mahindra, Max India and Satyam. Says Ashoo Khosla, Alumni of 2002, “It is hard to decide what the best thing about the GCP was – the thrill of working on a live business problem, the excitement of being part of a multinational team, or the building of lifelong friendships.”

“The Wharton GCP was one of the best parts of the ISB curriculum. It provided me the opportunity to work on a live project related to the expansion strategy of a healthcare services provider in the US market, and see my recommendations being accepted by the client as part of their future growth plans,” says Dr Priyanka Pandey, Class of 2004. “The biggest validation of our success was client satisfaction and feedback... coming from someone with years of consulting experience at McKinsey behind him.”

The Experiential Learning Projects (ELP) has a broader focus. It was created to provide

a new paradigm in cost-effective, fast-track solutions, spanning a range of critical corporate interests.

The Programme helps take learning beyond case studies. Discussions and interactions with external experts and leading business leaders add global consulting experience in real-time to students learning. Students respond by developing a strategic plan grounded in market research, and a detailed implementation plan, including financial and operational plans.

“While the ISB Wharton GCP is only aimed at Indian companies focussing on the US market, the ELP addresses a variety of areas – finance, marketing, branding, sales, strategy, SCM, CRM, channel management etc,” says Joseph Hopper, Senior Manager, ISB.

ELP projects have energised clients through fresh ideas and new insights, and easy to implement action plans that incorporate global best practices and are easy to manage. Says Nalin Jain, Business Development Manager, Bombardier, “The ELP student consultants delivered beyond expectations... the quality of work done was on par with what we would normally have received from a fulltime professional consultant.”

ISB brings global best practices to Indian corporations

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Retail

The big question – ‘is a retail boom coming India’s way?’ – is on everyone’s minds. If current trends are any

indication, the answer to that question is a resounding yes.

A recent McKinsey study titled “India’s Retailing Comes of Age” has predicted a definite retail revolution in India. While India is the last among the large Asian economies to liberalise its retail sector, the ‘licensing raj’ has well and truly passed.

A number of Indian and international retailers are entering this nascent, though dynamic market. Market liberalisation and increasingly assertive consumers are sowing the seeds of a retail transformation that will bring bigger Indian and multinational players on to the scene. Buoyed by a strong increase in private consumption, retailing is one industry that is waiting to explode.

Though retail may well be our next sunrise industry after Information Technology, capitalising on the opportunities is still a formidable task for retailers. We may have made several forays into the world of international retailing, but success has only been moderate.

At about 2 per cent of the total global retail market, we are still only scraping the surface. (Economic Times Knowledge Series – Changing Gears: Retailing in India, 2003).

Says B S Nagesh, CEO, Shoppers Stop, “Indian retailing is on the threshold of growth – early leaders have now to take their technology and current learning into much larger scales. Companies like us will lead in creating retail experiences and retail brands, whereas mall developers will lead in providing retail space. But it is for the government to make India a great shopping and travel destination through right policy decisions and direction.”

However, opportunities already abound. The liberalisation of the consumer goods industry initiated in the mid-80s has accelerated the pace of transformation.

According to Euromonitor, the retail sector is India’s second largest employer after agriculture. It employs about 10 per cent of the labour force, estimated at 39.3 million people in 2001.

to Indian corporations

A BOOM ON THE THRESHOLD

– India’s next sunrise industry

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It was also one of the fastest growing employers, averaging an annual growth of 37 per cent between 1996 and 2001, until it was displaced by Business Process Outsourcing (BPO).

The retail market in India is the second largest untapped market after China. According to a survey by A T Kearney, the size of the retail industry in India is pegged at Rs 400,000 crore, and is expected to double to Rs 800,000 crore by 2005. The biggest challenge for Indian retailing lies in the nature of the sector, which is highly fragmented and unstructured.

ETIG estimates the unorganised retail sector at Rs 16,000 crore, growing at the rate of 18 – 20 per cent per annum. It is expected to cross the Rs 37,000 crore sales mark by 2007. A T Kearney estimates that the organised retail market is Rs 20,000 crore, while K S A Technopak, values it at Rs 5,000 crore. By 2005, A T Kearney predicts an eight-fold increase in organised retail while KSA Technopak estimates a six-fold growth. The difference in these projections is attributed to their divergent definitions of ‘organised retailing’.

While India’s retailing format has hitherto been basic at best, change is in the air. Over the past few years, there has been a proliferation of organised sector players entering or expanding their presence in the retail market. A number of large business groups such as Tata, RPG, Rahejas and Piramal have set up malls and built businesses within retail.

This includes the Rs 190 crore (McKinsey estimate) FoodWorld, India’s leading supermarket chain. Other supermarket chains like Trinetra, Nilgiris, Apna Bazar and Subhiksha are rapidly establishing themselves. The apparel sector has seen the emergence of stores like Pantaloons apart from company owned exclusive stores. Names like Shopper’s Stop, Lifestyle, Westside etc., have gained prominence in the lifestyle and fashion segments, and chains like Archies, Musicworld and Crossword cater to the books and music market. Even sectors like consumer durables have seen the emergence of organised retailers like Viveks (in Chennai) and Jainsons.

As organised retail evolves, urban India

is emerging a clear base for future growth. McKinsey points out that the retail boom is a largely urban phenomenon and is likely to stay that way for a while at least. Urban markets are more attractive given the higher disposable incomes of the urban population. The increasing attractiveness of the sector is raising interest from a number of global retailers. McKinsey predicts that global companies such as Tesco, Kingfisher, Metro, Carrefour, and Ahold are exploring entry options, even as names like Benetton and Lifestyle have already built a presence in India.

Even though the retail sector in India has been growing rapidly, there is still a long way to go. Firstly, organised retailers face steep regulatory and infrastructural barriers. Real estate access is complicated and complex, as is the tax system. In addition, the competition from the unorganised sector is formidable.

As in any other industry, unorganised retailers enjoy higher margins due to lower operational costs. Organised retailers must counter the convenience of a hop-skip-and-jump access of the small, neighbourhood stores. These Indian versions of the mom-and-pop store have some traditional advantages that make them formidable opponents for modern trade – established relationships with local consumers, easy credit terms, quick and easy acquisition of products in line with customer preferences and home delivery.

The past few years have seen the spending power of the middle class increasing exponentially. Shopping for anything – from cars to cutlery, groceries to personal accessories – is now a fun thing for the family to do together. Malls have become the alternative hangout and are growing in their popularity as the preferred venue for holiday and evening outings. The new brand of consumer has arrived – ‘the recreational shopper’.

The Retail Industry in India is at the crossroads. While the opportunity is large the rate and quantum of growth is uncertain. As retailers hope that shopping becomes the sport of choice (perhaps even displacing the old favourite – cricket), some might well say that the retail boom is only just beginning.

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Shopping for anything – from cars to cutlery, groceries to personal accessories – is now a fun thing for the family to do together. Malls have become the alternative hangout and are growing in their popularity as the preferred venue for holiday and evening outings.

“Indian retailing is on the threshold of growth.” – B S Nagesh

CEO, Shoppers Stop

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The most significant impact of the retail boom on the economy will be at the macro-level, with the proportion of

retail contribution to the GDP going up. The boom will also transform the position of retail as an employer – though when it will match the western economies as the second largest employer cannot be projected yet.

The changing structure and scale of retail will critically impact several industries immediately – the retail industry itself, manufacturing, real estate, and in the long term, cascading effects will be felt on tourism, Information Technology, and others. The impact on brand management and advertising will be huge, even as professionals in sales, marketing, merchandising, and promotions will have to cope with radical changes.

Local Retailers: Will Small Stay?Globally, the picture of a Wal-Mart’s arrival to a community resulting in the cannibalisation of mom-and-pop stores has been established as more than a stereotype. Will the Indian retail industry, with its predominance of small street-side corner-stores, or kirana shops, survive the threat?

Experts clearly vary. Dr Prem Shamdasani, Associate Professor of Marketing, National University of Singapore, and faculty on ISB’s Executive Education Programmes, is emphatic in his belief that

the small retailers will not only stay but also thrive. (See box)

Another leading global academic, Amitava Chattopadhyay, the L’Oreal Chaired Professor in Marketing Innovation and Creativity, INSEAD, and faculty on ISB’s Executive Education Programmes, leads a diverse group of people who feel that the small time retailer will be hit, for sheer inability to match quality, range or prices that the big retailers can afford. He says, “The lesson from China, Malaysia, Hong Kong show that it is a long haul. Even after a decade of entry into China by hypermarkets, modern retail formats only account for 2 per cent of business.”

The wiping out of small retailers will not happen overnight, it will take place in small instalments, firstly in the metros, then smaller towns and finally in the villages. This could even take decades.

Says B S Nagesh, Managing Director and CEO, Shoppers Stop, “We have to get into intense competition, at say 20 per cent share for organised retailers, before the shakeouts start.”

Musharraf Hai, Chairperson, Unilever, Pakistan, concurs, saying, “As expected, roadside retailers and kirana shops, pan shops, will decline in the longer term.”

Siju Narayan, Retail Business Consultant, Satyam, feels the impact will not be uniform,

MANUFACTURERS’ POWER WILL REDUCE, SMALL RETAILERS MAY GO BUST

Retail Boom will impact economy – Wholesale

The impending retail boom in India has a certain irresistible force behind it, but its impact

on the economy, and on various industries, will be mixed. A transforming middle-class

characterised by increasing brand consciousness under powerful media impact, exposure

through global travel, rapidly increasing disposable incomes and changing lifestyles, is

fuelling the demand, which will definitely benefit consumers. ‘But at what price?’

The ISBinsight analyses.

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“The pop-and-mom grocery units in your neighbourhood, even smaller

chains and marginally branded units, will be wiped out, unable to face the

onslaught.” – Atanu Sinha

Associate Professor of Marketing, ISB

“Even after a decade of entry into China by hypermarkets, modern retail formats only account for 2 per cent of business.” – Amitava Chattopadhyay

The L’Oreal Chaired Professor, in Marketing Innovation and

Creativity, INSEAD, and faculty on ISB’s Executive Education

Programmes

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arguing, “A largely urban phenomenon, the shakeout may be felt in Metros and other urban pockets. Small village retailers will be untouched.”

Atanu Sinha, Associate Professor of Marketing, ISB, is strong in spelling doom for the small store. “The pop-and-mom grocery units in your neighbourhood, even smaller chains and marginally branded units, will be wiped out, unable to face the onslaught.”

The reasons, he says, are not far to seek. The first is the bargaining power during purchase that major retailers can exert on suppliers and manufacturers. They can provide consumers with more opportunities to compare various brands, provide a great range of products under one roof, and above all, offer best prices and ‘deals’.

Retailing: The New Power Base In the new scenario, big retail chains will control what customers see at stores, and buy. The manufacturers will have to buckle to pricing pressures of retailers. Everyone agrees that the manufacturer’s brand clout will reduce.

Typically, FMCG companies will have to share power with retailers in various ways. A greater share of the per dollar promotion budget of manufacturers will go towards merchandising within the store. Greater margins will have to be shared with retailers, as already witnessed in more mature segments, like automobiles.

Chattopadhyay says, “The boom will imply that brand marketers will have to face a shift in power towards retailers. Categories where new retail formats become dominant will impose huge pressures on brand owners’ margins.”

Hai concurs. “The retail growth will lead to challenges like coping with newer quality and price equations, providing both affordability and value. Manufacturers will also have to face competition from retailers’ own brands,” she adds.

“Promotions will increase at the retail level. Customers will enjoy the environment, and brands will drive marketing and advertising,” says Nagesh. “Brand managers will be pushed to create more targeted and memorable communication in a cluttered media environment besides more sleek go-to-market operations and innovative demand generation activities,” says Hai.

The unanimity of opinion of the impact on big manufacturers does not hold for smaller ones. Says Chattopadhyay, “The emergence of large retailers may open possibilities for private label manufacture and enable smaller manufacturers to expand their markets. Their export potential will also grow.”

Sinha disagrees, “Entry threshold for smaller manufacturers will increase. Big retailers won’t provide them shelf space.”

Shop Where? City’s Heart, Or OutskirtsThe real estate industry will closely watch the trends in the boom for clues to where the action is headed. Presently, there is a

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Small Retailers Will Survive , The Wal-Marts: Shamdasani

The notion that the Wal-Marts will come and wipe out the small retailer arises due to the powerful imagery it gives rise to. But we have seen big retailers enter and operate for long in south-east Asia, in countries like Malaysia, Thailand and Indonesia, where small retailers are still surviving. There are actually laws in some markets like Malaysia and Japan to prevent cannibalisation of small retailers.

The growth of Wal-Mart has led to some cannibalisation, but India is different. It has more number of small retailers, who are a hardy bunch. They know the market and have been there for many years. Even with the advent of big retailers and modern concepts, they will stay.

They will knit themselves much more strongly through value-added customer services like customisation. Far from getting cannibalised, the small players will successfully hitch themselves around the big boys.

The benefits of the retail boom will be extended to smaller players, with good co-existence between the two to serve the communities better.

We have seen in China how they have been forced to copy the big boys, bring in better merchandising and technology, and manage growth.

The best way to reconcile the two is to learn from the Telecom industry, where an overall boom in mobile communications happened because the big boys come in with concepts and technology, while the government created a level playing field for the local industries to thrive.

“As expected, roadside retailers and

kirana shops, pan shops will decline in the

longer term.” – Musharraf Hai

Chairperson, Unilever, Pakistan

– Dr Prem Shamdasani, Associate

Professor of Marketing, National

University of Singapore, and

faculty on ISB’s Executive

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lack of clarity of the model best suited for India – the US model of huge outskirts malls to save on rentals, or the largely Asian model of heart-of-the-city ‘entertainment hubs’. A case in point is Singapore, where big retailers faced problems of land scarcity and moved out.

Shamdasani says, “Modern retailing will grow in the suburbs, at least in bigger metros, where land is available and rentals are lower. This is the trend retailers are likely to follow, so they can develop the big mall format like in the US and Europe.”

Retail Strategies and DirectionsThe unanimous view among experts about the retail boom in India in the next few years is that it will be about moving to more organised formats – with evolved concepts, greater preference for international brands, and greater focus on service and customer care.

Firstly, there is potential for speciality

retailers in some segments, like medicines and jewellery etc. Secondly, there will be a consolidation of franchisee sellers. Finally, and perhaps predominantly, the all-round malls will thrive.

Projecting strategies that will work, Chattopadhyay says, “The key will be to manage a product mix to suit local tastes and needs, while offering competitive prices. Price is key – a reason why early supermarkets in India did not grow… they were pleasant environments, but prices were high.”

Local preferences will also be significant. “The convenience factor is deeply entrenched in the Indian consumer psyche, probably because for ages we had vegetables and milk delivered to our doorsteps regularly,” says Shamdasani.

The retail industry, presently a mix of many models, leads one to infer that India will change the rules of the game and create its own success model.

Shopping For Jobs? Jobs will be created aplenty. There will also be a corresponding loss of jobs and local entrepreneurship. “Jobs created by big retailers will typically be lower end jobs, with minimum wages, little scope for growth, yet they will wipe out jobs of small-scale entrepreneurs,” says Sinha.

While research and actual events will show whether jobs lost are more or less than those created anew, the silver lining is that unorganised retail with its unorganised labour will transform to organised manpower. The corporate retailers will avoid child labour and ensure minimum wage standards.

Tourism Take-offTourism will probably benefit as people like to feel at home when they travel. One aspect of this is being able to shop at familiar outlets or eat at familiar places e.g., McDonalds.

Says Shamdasani, “A vibrant retail sector with diversity will be a strong attraction for tourists who come to India. Besides visiting cultural and historical sites, now they can also shop.”

In the Final AnalysisThere are a large number of big

global players waiting in the wings of India’s organised retail sector. Their entry depends, among other things, on the extent to which India opens up her Foreign Direct Investments (FDI) Policy. In the present scenario, the FDI Policy poses limitations which translate into high entry barriers for global retailers.

As the retail sector takes off, its varying effects will reflect on consumers, employees, and the community at large. While the consumer benefits from reduced prices and increased options, it is important to ensure that a fine balance is maintained. To make sure that while we gain as buyers, we do not lose as employees and sellers.

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Quick takesCredit Shopping

Today credit card spends in retail is at 45 per cent… it will go up to 65 per cent in the next 3-5 years. Industry Report

Global Players’ EntryBig brands and speciality retailers will enter in the next 2-3 years

but hypermarkets will be here within 12-18 months. B S Nagesh

IT Solutions for RetailIndian Retailers will focus on managing supply chain,

understanding customer preferences and enhancing service levels using IT. Big IT players are not going to focus here, yet. Siju Narayan

India versus ChinaChina has potential to grow more rapidly because of higher literacy, more concentrated spending power based on dynamics of smaller

families and working women. Musharraf Hai

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Across the corporate world, leadership is at a premium. Senior corporate executives need newer tools and insights to meet the challenges of a rapidly changing business environment. The Accelerated Management Programme (AMP) at the ISB addresses

such needs, helping participating executives transform from managers into leaders. “The AMP provides an overview of key managerial disciplines and equips participants to

meet the challenges of increasing uncertainty, global competition, declining product cycles, rapid technological change and organisational transformation,” says Shyam Viswanathan, Associate Dean, Centre of Executive Education, ISB.

“We have a globally renowned faculty team for the programme, which includes Ananth Iyer – Purdue University, Atul Nerkar – Columbia University, Amitava Chattopadhyay – INSEAD, Bhagwan Chowdhry – UCLA, Suren Mansingka – HKUST, and Ramayya Krishnan – Carnegie Mellon University,” he says.

Several global industry leaders are also invited to share their insights with participants. In the past, these have included noted names such as Dave Weller, VP, International Market Development, J&J Ethicon; Harjit Bhatia, President Asia-Pacific, GE Global Financial Restructuring; and Paul Galvani, Director of Marketing, Riviana Foods Inc.

Andre Wallace, Executive Director, Kanbay Inc., Japan, and Head of Asia-Pac operations, a participant, says, “The programme fits brilliantly with my challenge of having to manage businesses across countries. The curriculum focuses on leadership, strategy, sales, marketing, finance, operations, organisation, people, branding – elements I need to effectively run the organisation.”

The programme has an optional module that addresses ‘Managing in IT Organisations’, a module created for participants who hold management positions within IT organisations.

Mark Davey, COO, Hill & Associates, Hong Kong, feels that the ISB fits to the tee in his company’s quest to manage extraordinary growth and acquire a global mindset. “Being based in Asia, like us, the ISB is local, yet in terms of focus, quality and scope it is truly global.”

The International Discussion Forums built into the programme helps participants interact with global business leaders for intensive learning sessions.

Asanga Ranasinghe, Senior Vice President, Unilever, says, “This programme was of great help to me in honing my skills in all-round management, and in updating my other business areas as well.”

Adds Davey, “There is nothing short at the ISB of what a global manager or CEO might want except maybe I could do with my favourite McDonalds hamburger.” Given the ISB penchant for customer delight, it is bound to follow soon.

Re-focusing on organisational dynamics

GLOBAL EXECUTIVES COME TO ISB FOR ENHANCING LEADERSHIP SKILLS

From left: Asanga Ranasinghe, Senior Vice President, Unilever, Sri Lanka

Mark Davey, COO, Hill & Associates, Hong Kong

Andre Wallace, Executive Director, Kanbay Inc. Japan

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The ISB Professor of the Year Award celebrates outstanding teaching, having been conceptualised and designed by

the student body to express gratitude to faculty who contributed to making their learning at the ISB memorable. Professor Jagmohan S Raju, J Aresty Professor of Marketing, The Wharton School, was honoured as the ISB Professor of the Year – Class of 2004, for Core courses; while Professor N R Prabhala, University of Maryland, was honoured as ISB Professor of the Year – Class of 2004, for Elective courses. The Ceremony, held on the eve of Graduation Day at the Khemka Auditorium, began with a presentation about all faculty who taught that year, with students’ reflections and words of praise. The remarks ranged from the serious to the funny, inviting chuckles aplenty, and applause. “Professor Jagmohan Raju… a sweet person, remarkable presence in class, humane… a great listener… magician of analysis, ever so full of insights, someone who taught us newer ways of looking at marketing, and life… above all, a leader by example.” Professor Raju said, “There are only two things to say – to add to whatever you have learnt. Always be grateful to your parents for what they gave you … and always remain in touch with your friends here. After 30 years, it will be the most worthwhile wealth you would have accumulated. Always remember to share your success with the lesser privileged ones in this world… make a difference to society.”

Professor Prabhala, who won the award for the second consecutive year, received the award saying, “When I won the award the first time, I thought there was a mistake… now I am convinced there is a serious mistake…somewhere.” “There is a great likelihood at this point when you are about to graduate tomorrow to say to yourself – I have learnt, my education is over. Make your faculty proud with your achievements… but base them on your ability to constantly learn, including from your mistakes,” he said. Professor Raju dedicated the award to all his colleagues at Wharton. Speaking about the pleasure of teaching at the ISB, he said, “They are a fine bunch of bright students… matching the best anywhere. I learn something new, even in an old case study, each time we open up for a discussion. Teaching at the ISB is a great pleasure… that is what keeps me going.” Added Professor Prabhala, “We do get several awards, as faculty, researchers, consultants, writers… yet this award is special. One because I know the caliber of my counterparts. The second reason why I cherish this so much is because the award is given by the students… it feels nice to know you have made a difference to their lives.” Ajit Rangnekar, Deputy Dean, ISB, echoed the feelings of the students, when he said, “This evening represents everything we value at the ISB – excellence in learning and teaching. Jagmohan and Prabhala are outstanding academics – leaders in their fields. There isn’t a better way to say thank you.”

Professor of the Year Award

Top: Professor Jagmohan S Raju

ISB Professor of the Year, 2004 (core courses)

Bottom: Professor N R Prabhala

ISB Professor of the Year, 2004 (elective courses)

BY THE STUDENTS, FOR THE FACULTY

celebrates teaching excellence

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Dell and the Art of Making ComputersDIRECT FROM DELL

The Dell Direct Model is a unique value proposition. Why have other companies failed in replicating the model?Companies do try to replicate our model. But competitors or the environment underestimated its potential to be successful in new areas. There is a history over 20 years of a lack of understanding of what the model really is. The desire to believe that this model is not going to work by our competitors was an enormous advantage to us and still is today.

What is the Dell Direct Model like at work? How does a typical day at Dell go?

In a typical day, we sell about 140,000 computers. Orders come into us through all sorts of mechanisms, and as those orders go to our factories, they are translated into millions of signals that go to our suppliers, who indicate them to our delivery inventory; and the inventory is delivered. We build products based on customer orders and ship them.

What is the culture within Dell? How is it different from others?Our powerful culture is a large part of our success – more than our business model, it is our culture of execution

Four days before Graduation Day at the ISB, the Class of 2004 was at a high point of excitement and anticipation – not over placements, not over moving to a new phase of life, not even about the G-Day. The palpable excitement was about the visit of a visionary business leader who had changed the way computers are made and sold globally – Michael S Dell.

Michael Dell, Chairman, Dell Computers, visited the ISB on March 23, as part of the CEO Forum, and addressed the students on the creation of Dell, Inc. and the unique Supply Chain Model that catapulted the company from a single-person idea to a leading global player in a couple of decades.

He shared his insights of the various forces and decisions that led to the creation and success of Dell. A serious talk, often laced with cheeky one-liners and spontaneity, he had everyone laughing, and thinking deeply long after he had left.

‘India’s intellectual horsepower will enable growth’

Michael Dell with Dean Vijay Mahajan

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that is hard to replicate. Organisational culture is not a commodity, and at Dell, we consider our culture, business model and execution engine as real differentiators.

We have a belief that we can improve everything all the time. We set several aspirational goals to achieve great things – and we build our teams around big goals.

Do your people take pride in doing something truly meaningful?We have an event called the ‘World Quality Day’, which is probably one of the ‘funniest’ days Dell has... where teams come together from all over the world. They compete and demonstrate their projects – be it marketing, finance, HR, sales, manufacturing, development, IT or whatever. They talk about how they found an opportunity to improve and how they made a difference – the pride they have is incredibly powerful.

Are you able to find ‘Dell type of people’ all over the world?Nobody wants to be in the last place. I have never been to a country where they said we are happy to be in last place. Everybody wants to be the best – it is a natural human instinct.

What are Dell’s aspirations in India? It is enormously exciting for us – our largest population outside of the US is in India. The Indian operations have grown tremendously.

We are getting ready to set up a centre in a third location – we see doubling our population to 10,000 in terms of the

workforce. We are incredibly impressed with the intellectual horsepower in India, this is a key enabler for growth. There is enormous potential for India to continue to grow as a part of Dell’s global success. We don’t think of it as outsourcing – this is Dell, a part of Dell.

What is the future of BPO... with legislation proposed against it in US? A lot of legislation is being proposed, but it may not actually be passed. No country has benefited more from global trade than the United States. The US has over 53 per cent of the world’s wealth, and for 20 years, the gap has been widening.

For the first time it is starting to change a bit with countries like India and China, which is a good thing. We can’t call time out in the middle of the game and say we don’t like the fact that some countries are doing well now.

Protectionism doesn’t work – you can’t find an example of a developed country with protectionism. The fascinating thing about this debate is people talk about jobs but never discuss competitiveness. But if you don’t have competitiveness you don’t have any jobs.

India is succeeding because it has bright, intelligent people who are massively motivated and well educated. That is something for the US to learn from, not criticise.

What convinced you to step down as CEO?We have in Dell what we call “Two in the Box”, a kind of model to share responsibility. In the last 7-8 years, Kevin and I have been running the Company together.

What I wanted to do was to recognise his capabilities. I have been CEO for 20 years.When you start a company you get all sorts of titles, I did too. Gradually I have given them up and I am left with one. Yes, I will stick with this one.

What are your technology predictions for the next 20 years?The semi conductor miracle will continue. Communications needs to be a great element as integrated computing wireless is taking off – we are at early stages of how these tools continue to be of use. If you just look at the distribution of returns on IT investment across organisations you will find there are massively different results and productivity.

What do you think is the biggest threat to the industry?The industry has not really done a good job of understanding how it is going to apply itself to emerging markets. My biggest worry is how do we at Dell grow and develop to keep pace with the challenges and opportunities ahead. We need lot of new leaders to help us grow our company, to help us grow. We need a lot of talent and that is why we are here at the ISB.

What does it take to be a leader?I would say curiosity, desire to learn, to ask questions, find out how things work the way they work and just kind of a continuous learning approach. At Dell we talk about being pleased but never satisfied, so a desire for a breakthrough environment and setting stretch goals. It is hard to succeed without some passion for what you are doing.

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We need talent, that’s why we are at ISB: Dell

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The Leadership

Today’s global competition and a volatile economy have overhauled the traditional view of leadership and

created a new leadership dynamic. The changing marketplace dictates a need for leaders who can think strategically and act decisively at all levels of the organisation.

Good leadership is about motivating other people to become leaders.

At the ISB, the emphasis is on grooming such leaders. Leaders who can motivate, build coalitions, and influence others. The old command-and-control hierarchies no longer work well in today’s flatter organisational structures. The leaders of tomorrow need highly developed social and communication skills, a capacity to deal with ambiguity, and the ability to change in response to shifting circumstances.

The ISB’s Leadership Development Programme is a focused effort in leader creation. Says Savita Mahajan, Assistant Dean of the Post Graduate Programme, “Our vision at the ISB is to groom leaders for the region and the world. To be a successful leader, one needs certain soft skills. Since we are creating managers for a lateral hire, we must complete the grooming of leaders with relevant soft skills.”

The programme is led by Rajeshwar Upadhyay, who is well-known for his leadership training courses. He has been on the faculty at the School of Finance and Management, Oxford Brookes University, UK, and regularly consults with top MNCs in behavioural skills development.

Talking about the programme structure, he says, “We are trying to provide an integrated input, so that individuals can make a quantum leap from who they are, and move closer to who they want to be.”

The Leadership Development Progra-mme is designed to provide students four key skill inputs – listening and asserting skills; group dynamics; managing teams and meetings; and advanced business presentation skills. The programme has psychometric testing and other analyses to help students better understand themselves, figure out their management and leadership styles, and learn how to deal with teams and situations. Students figure out their effectiveness versus dysfunctional elements.

The LDP addresses leadership issues at cognitive and experiential levels. This happens through articles and discussions about leadership, and case analysis of

present trends of leaderships. At the experiential level, there are intense role plays to provide a rigorous micro-skilling of several key leadership traits – or core competencies in leadership and inter-personal situations.

A key tenet of the ISB programme is the belief that leadership can be taught, that it can be honed. Explains Upadhyay, “Research has demonstrated that a lot of leadership traits, attributes and skills can be acquired, and through a process of education they can be honed. We have found that leadership for a business world can indeed be taught.”

Says Sumit Anand, student, Class of 2005, “Key thought elements of leadership are thrown at us as challenges. We analyse several issues – leadership in the community, leadership at the office, and above all, how values connect.”

While the business of leadership development is clearly complex, Upadhyay is quietly confident. He says, “The ISB will lead the new age in creating the best of Business Leaders, and a score of successful entrepreneurs, who will in turn change India Inc., and make the face of Indian business more global, and successful.”

LEADERSHIP DEVELOPMENT PROGRAMME

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A classroom session as part of the Leadership Development Programme in progress

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The challenges of today’s business era have no precedent. With phenomenal shifts in the socio-political and

economic world trade orders and role of governments across the world, the leadership challenges have transformed too. The modern corporations need leaders with vision, strategic brilliance, speed, network, ability to foresee and manage change, who can optimise technology, constantly innovate and harness people resources.

Realising the significance of leadership in a completely transformed context, the Indian School of Business and Kellogg School of Management have created a programme for the 21st century business leaders. A natural extension of the partnership is that the learning is stimulated by the business environments of the USA, and India.

The programme provides participants – who would typically be at President, Managing Director, CEO, CFO, COO, and Country Manager levels – an exposure to the latest thought and experiences from leading academics globally. The participants will also learn from the formal and informal debates and exchanges with fellow participants, besides benefiting from networking with top leaders across the world.

“The ISB-Kellogg Global Advanced Management Programme will focus on business areas of critical importance to top and senior management,” says Shyam Viswanathan, Associate Dean, Centre of Executive Education, ISB. “The programmes will not only transform the participants, but will provide great value to the companies they come from.”

The faculty for the GAMP is an all-star cast. In addition, the programme invites several industry leaders to share their experiences with the participant group.

Taking into account research on the

preferences of executive participants, the programme has been designed in a modular format, with a two-week module at the ISB, followed after six weeks, by a week at the Kellogg Evanston Campus.

The programme has comprehensive modules on ‘Leading the 21st century’; ‘Globalisation and international marketing’; ‘Corporate finance’; and ‘Strategic implementation, change and transformation’. It also has an upfront optional finance module.

“The participants will understand themselves and their leadership characteristics better, reflect upon their business, as well as their careers, and get better prepared for the challenges ahead in the highly competitive global business environment,” explains Viswanathan.

Besides serious learning, the programme offers lots of fun, relaxation and adequate focus on health and fitness. “The GAMP will be a challenging and an energising learning experience,” adds Dipak Jain, Dean, the Kellogg School of Management.

Global Advanced ISB – KELLOGG PARTNERSHIP

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Faculty for the GAMP

Dipak Jain Dean – Kellogg School

Rajiv D Banker Dean – University of California,

Riverside

Pramath Sinha Principal – McKinsey

Philip Kotler International Marketing

– Kellogg School

Amitava Chattopadhyay Marketing Innovation

and Creativity – INSEAD

David Messick Ethics and Decision – Kellogg

School

Aneel Karnani Corporate Strategy and

International Business – University of Michigan

Brian Uzzi Management and Organisation

– Kellogg School

J Keith Murnighan Risk Management – Kellogg

School

Leigh Thompson Dispute Resolutions &

Organisations – Kellogg School Top: ISB campus, Bottom: Kellogg campus

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Can you trace the significant achievements TAFE has made in the last five years?We make tractors and hi-tech implements and are into a couple of other diversifications elsewhere. We have a joint venture with Massey Ferguson (now ADCO Corporation). Today, we have a completely different profile from when we started, with a definite leadership in the small horse power segment (less than 60 HP) in India, and as a key player in the world in the segment.

We have seen the Company transform into a more competitive unit, led by domestic growth. In the last four to five years we have been able to stand on our own. We introduced new products in the last two to three years, which are world- class in terms of competing on performance, proficiency, or ergonomics – that’s the transformation at TAFE. With the opening up of the Indian economy and globalisation, we have developed a big team to observe our core segment closely, and developed intrinsic capabilities.

How important are innovation and customer-focus in a predominantly rural market? When we launch a new product, there is an aspiration among the farmers to be at the cutting edge of technology. They are taking to technology much better than in the past. They are looking for something new, they are knowledgeable, demanding

and are getting it. They look carefully at product performance, evaluate it, build faith in the product and look at resale value, before making a decision. It is a tool of production, and gives a return to them, so they are touchy on performance, fuel consumption and multi-purpose use.

How is the growth in your industry? Which are your major export markets?Product life cycles are getting shorter. There is a demand for greater investment within the industry and more innovation too. Our industry is becoming more mature, where growth rates are uniform. We realise it is not good enough being a good local player, we must move into the global market in a big way. We have market leadership in Bangladesh and Sri Lanka, besides good presence in parts of Africa, Eastern Europe, and the US. We had 40 per cent growth on exports last year - this year we will see something similar.

Nearly 70 per cent of Indian industry has started as a family business, but over a period of time, a lot of professionalism has come in. How have you dealt with the issue?There is distinction between family-owned business and a family business. Any business today has to be run in the most efficient way if it has to be really successful. If a non-

ISB’s Customised Executive Programme

gave TAFE huge returns

Mallika Srinivasan, Director, Tractors and Farm Equipment Ltd. (TAFE), is a member of the

ISB Governing Board. TAFE is part of the diversified Amalgamations Group. Established

in 1961, the Company is a pioneer in farm mechanisation in India, and a leader in the

manufacturing and marketing of tractors, especially in the smaller HP segments. TAFE

has also diversified into developing trailers, implements and accessories for tractors.

ISBinsight talks to Ms Srinivasan on TAFE’s experience with ISB Executive Education.

Mallika Srinivasan, Director

Tractors & Farm Equipment Ltd. (TAFE)

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family professional is best equipped to do the job, then so be it. You have to look at ownership divorced from the running of the business. You have to get the best people – whether they are non-family professionals, and if they are family members, they have to be professionals as well.

Across the industry, have you seen any change in attitude in business families and promoters to educate themselves more, and better?There is a huge change. It is in keeping with the times... if you look at three generations in a business family, you will see the education levels going up. Some of them are opting to stay in the business, others are opting to work outside, or opting to go abroad. There is an understanding today that whatever you do, unless you are extraordinarily competent you cannot survive. This understanding has gone in deeply, it starts from competition at the school-level.

How do you see your organisation building up competencies, especially in creating a strategic team when you have ambitious action plans?We have an elaborate competency planning programme which is mapped to every individual, both on the technical side as well as the behavioural side. Opportunities are bright for engineers and technicians, but they have to understand the concepts of design, get focused and deliver. Our products are engineering products, that is really the key, whether it is reliability analysis or design details, there can absolutely be no compromise.

How was your experience with the ISB customised executive programme?The ISB leadership development programme

was of a high quality and highly customised. We picked some of our best people – the idea was to develop leaders, with the key skill being an ability to build on a team and on implementing projects. This was one of our biggest internal challenges. The programme addressed the issues we were facing given the profile of people we have and our culture. The faculty spent a lot of time understanding each individual’s profile, our company’s needs, and the programme was drawn up in the context of our global vision, our people, our culture, our industry. We did a 360-degree appraisal for all participants, and then the faculty worked out the programme... It benefited our people a lot.

TAFE undertook a unique exercise to calculate the return on investment on this training programme. Can you share some details of the findings? People took on a project, called the ISB project, over and above the other projects they were already handling. We tried to measure its benefit, to quantify the gains in monetary terms. We got technological innovation to solve the most irritating problems, nuisance value problems which kept us going in circles in the past – and we got those resolved. We got better technical solutions than in the past. We are introducing more of them. We did a lot of other projects and we are measuring them in terms of finance... we have had some huge returns on investment.

What was the key to the programme’s success?The key to success was the faculty spending a lot of time understanding our needs. It was about understanding our needs, tailor-making the programme... so

it was very individualised. It was pertinent and we could apply the learnings. The projects helped apply the concepts taught at class, whether related to team work or the project management process. It was about setting new benchmarks, breaking barriers, bringing innovations, and stretching. So we were really trying to raise performance and most of them have done pretty well.

How do you retain the good leaders you have created? When people find job success, companies can pay more, even though that doesn’t ensure you will keep people because there will always be somebody who will pay more. You cannot retain people only on the basis of pay. The way to retain people is to make them feel valued, by giving them more freedom on the job. Greater responsibility will also lead to greater attachment with the company, and above all, if they are happy they tend to contribute a lot more.

What potential does the academia-corporate partnership hold? How can industry maximise the relationship with academia?The partnership has yielded wonderful results in other countries. However, there remains a gap between knowledge and its implementation in real situations. Academia needs to understand the practical issues faced by industry, at the same time industry needs to highlight the issues faced on the ground. While academia brings thought leadership to the table, the onus lies on the industry to determine deliverables, timeframes, results, and strategise on how to utilise the association and get maximum value. Companies must direct the partnership for maximum value realisation.

gave TAFE huge returns

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Dinesh Paliwal sets Speaker Series rollingThe ISB Speaker Series for the year 2004-05 got off to a flying start with an address by Dinesh Paliwal to the Class of 2005 on the challenges of leadership in a global economy. Paliwal, a member of ABB’s Group Executive Committee, headquartered in Zurich, analysed today’s fast changing and dynamic world order.

“Economies and corporates are becoming increasingly global as geographical boundaries lose relevance in a networked world and barriers to trade are disappearing,” he said. He closed posing the challenge - “Ask yourself everyday – would you follow you?”

Programme on contemporary arts Dr Saryu Doshi, art historian and Director of National Gallery of Modern Arts, Mumbai, made a presentation on ‘Contemprary Arts in India’. It was the first event this year of the ISB’s Business and Arts Programme. The Business & Arts – Creativity Beyond Thought Leadership programme provides students with an exposure to arts. It is part of the ISB endeavour to groom not just business graduates but leaders with the ability to think creatively, evolving new strategies and solutions.

ISB Happenings

Ajay Mookerjee of Capital One addresses ISB Dr Ajay Mookerjee, Managing Director – Asia, Capital One, talked to the ISB community on the ‘Experiences in the Financial Services Industry: Asia and Beyond’. Dr Mookerjee discussed Capital One’s market entry into India, as well as the organisation’s strategies and experiences in other markets across the world.

BEICO CEO Nikhil Sanghvi addresses studentsNikhil Sanghvi, CEO of BEICO Industries Ltd. interacted with ISB students and spoke about the practical difficulties entrepreneurs face during the initial stages of business.

Commenting upon benefits of entrepreneurship vis-à-vis ‘secure jobs’, he said, “Success as an entrepreneur is the headiest narcotic, but to get there, you MUST HAVE a mad streak within yourself. The only way to achieve success is hard work, meticulous preparation and perseverance.”

ISB must create leaders for tomorrow, says Motorola CTO Addressing the ISB community, Padmasree Warrior, Senior Vice President and Chief Technology Officer, Motorola, Inc., said, “A key challenge in rapidly commercialising technology is short shelf life, longer gesticulation of R&D, and complexity in understanding changing needs of the market and customers.”

“The greatest challenge is to create leaders of tomorrow who combine vision with precision in execution… the ISB is itself a product of such leadership, and must create more such leaders,” she said.

ISB alumni placed second at LBS competitionThe ISB student team led by Kalyan Charavarthy, Alumni of 2004, won acclaim for their B Plan in the prestigious Global Social Venture Competition, 2004. Organised by the Haas School of Business, Columbia Business School, the London Business School and Goldman Sachs Foundation, the competition encourages advances in the field of social enterprise and in development of ideas that will grow into successful businesses with a double bottomline.

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Dinesh Paliwal, Member, Group Executive Committee, ABB, with

ISB Deputy Dean Ajit Rangnekar at the ISB Speaker Series

Dr Ajay Mookerjee, Managing Director – Asia, Capital One, along with

members of his company delegation, at the ISB

Padmasree Warrior, Senior Vice President & Chief Technology Officer,

Motorola Inc, with Ajit Rangnekar at the ISB Speaker Series

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Shrinivas Chellappa elected student board President The Graduate Students Association (GSA), an organisation of the students of the Post Graduate Programme, and governed by the Graduate Students Board (GSB), held its elections. The GSA comprises representatives elected by students. The GSB is led by Shrinivas Chellappa, who was elected Class President for 2005.

Students continue winning spreeA class of 2004 student team, comprising Subramani Ramachandrappa and Kaushal Khakhar, capped their B-Plan winning spree by placing second in the Asia Moot Business Plan Competition held at Hawaii. The duo formulated an inventive plan to manufacture artificial flowers using hydroscopic paper.

At the ISB Career Forum, speakers addressed the Class of 2005 on the art of planning careers. Harish Bijoor was the moderator, and first speaker. Other speakers included Noni Chawla, Arun Duggal, Anu Acharya and Utpal Sen Gupta.

Setting the tone for discussion, Bijoor said, “If people stopped giving money too much importance, and focused on doing what they enjoyed most, money would follow. Do several dirty jobs... you will be ready when plush roles come.”

Chawla explained how significant the cultural fit of an individual with an organisation remains. “Ask yourself what you would do if you did not have to make a living, it would give you insights into what you really want to do,” he said.

Arun Duggal, an international banker, spoke of the difficulty faced by leaders when taking hard decisions, like firing people.

Anu Acharya, CEO, Ocimum Biosolutions, spoke of the need of the entrepreneurial spirit, and how each individual must treat oneself as a one-person company, be its CEO and make profits.

Utpal Sen Gupta, President, Agro Tech Foods Limited, spoke of leaving the best impressions because people around us are constantly evaluating us.

The speeches were followed by discussions and a question and answer session. The ISB organises the Career Perspectives Forum to provide the students an opportunity to interact with industry leaders and successful people to understand what companies look for in their employees, and how to optimise their education.

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Shrinivas Chellappa

President of the Graduate Students Board

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Roger D Blackwell, an Ohio State University marketing professor and Fortune 500 consultant, believes that nothing short of a “radical reinvention of retail” will suffice in the hypercompetitive marketplace expected in the future.

From Mind to Market: Reinventing the Retail Supply Chain is his prescription for 21st-century success. His strategy involves getting into the heads of consumers, accurately anticipating their needs, and then quickly meeting them with effectively developed products and services. Blackwell illustrates his points with examples from companies that already employ such practices, including Kinko’s, The Limited, and Banc One Corporation. (Courtesy: Amazon.com)

Blackwell explains how the old linear supply chain (manufacturer to distributor to retailer to consumer) has been supplanted by a consumer-driven demand chain. Up and down the line the question becomes, “What does the consumer want?”

Blackwell illustrates this point with examples from a variety of successful but diverse businesses, from Ford with its Taurus to F Rees, a clothing store in Mount Airy,

North Carolina, which attracts customers from all over the world, says Library Journal.

“Anyone in business today who hopes to be in business tomorrow needs to understand the rules of the new marketplace,” says Roger Blackwell, one of the most sought-after authorities on consumer behaviour and marketing.

The traditional approach to retailing, beginning at the point of manufacture and ending with the sale to the consumer, is out of date and unrealistic. “In an ultra-competitive marketplace, manufacturers can no longer dictate what consumers will buy. The savvy consumer is more educated than ever as to what he or she wants and where to get it at the best price. Using this information to develop the products consumers are looking for is demand-chain management.”

Featuring visionary companies like Wal-Mart, AT&T and Kinko’s, whose leadership as demand-chain managers is helping them to create the marketplace of the 21st-century, Blackwell illustrates the cutting-edge concept of demand-chain management and its role in revolutionising retailing in the new millennium.

From Mind to Market: Reinventing the Retail Supply Chainby Roger D Blackwell(Harper Business)Pages 251, Hardbound.Call No. 658.87; Acc. No. 016298

‘Retail needs Radical Reinvention’

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retail isb report

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