admin
December 12, 2023
Akshit Pushkarna, Afaqs
12 December 2023
The season for Indian weddings, usually spanning October to December, experienced an unusual twist due to Hindu calendar nuances this year, resulting in a shorter duration. The unexpected shift has upended the conventional decrease in marriage ceremonies, resulting in a condensed surge of weddings.
A report by the Confederation of All India Traders (CAIT) anticipates Rs 4.74 lakh crore in business earnings from the 38 lakh marriages expected this wedding season, marking a historic high. In comparison, the corresponding period last year witnessed around 32 lakh weddings with total expenses amounting to Rs 3.75 lakh crore.
This presents brands involved in the wedding business with an ample opportunity to capitalise and drive forth their business revenues for the year to come. Three key brands associated with wedding business are steering their strategies to align with the evolving preferences of Indian consumers in the lucrative wedding market.
A more region-specific focus for Shaadi.com’s marketing communication
In a conversation with afaqs!, Adhish Zaveri, VP-marketing, Shaadi.com, a prominent online matrimonial and matchmaking service, speaks about how digital media is more relevant for brand building for wedding-oriented businesses now, eclipsing the relevance of traditional TV and out-of-home advertising. He sees mass media serving only reminders to prompt registrations, while the primary focus shifts towards digital platforms.
This change involves a robust regional focus within our marketing playbook, recognising the dynamic shifts in matrimonial behavior across diverse geographies
Adhish Zaveri, VP-marketing, Shaadi.com
“This season, we have incorporated a paradigm shift in our marketing strategy, driven not only by the upswing in weddings but also by observing how Indians approach finding life partners, with nuances varying across regions. This change involves a robust regional focus within our marketing playbook, recognising the dynamic shifts in matrimonial behaviour across diverse geographies,” he says.
The campaign is driven by the company’s commitment to assure individuals of finding a match within a specified timeframe. The pledge to successfully matchmake within 30 days, with a refund guarantee, serves as the crux of their messaging this season. “Tailoring our approach to each market, we’ve executed this promise uniquely.”
This approach sees the company partner with people of influence across markets to drive better visibility. For the Hindi market, they’ve forged a strategic partnership with Jasleen Royal, the acclaimed singer behind popular wedding songs like Din Shagna Da and Hiriye. Leveraging her association, Zaveri says they have orchestrated a robust social media engagement strategy.
“In the Tamil market, we’ve employed celebrities who recently tied the knot as our ‘matchmakers.’ Adapting a viral reel from this region, featuring the celebrity couple, became a cornerstone of our campaign. While regional focus has always been part of our strategy, this time we’ve approached it through a celebrity lens, creating bespoke strategies for each South Indian market. Although distinct, each strategy is unified by a celebrity-centric approach. From featuring Supriya and Sachin Pilgaonkar for Marathi audiences to enlisting Jasleen Royal for the North, and partnering with Ashok Selvan and Keerthi Pandian for the South – we’ve delved deeper into regional dynamics,” he adds.
Zaveri believes the success of the approach is evident, particularly in the South, where the company’s market presence has increased dramatically post-campaign, providing them an opportunity to further invest in the region.
A focus on the Wedding planning business for Vikaas Gutgutia’s Ferns N Petals
In the backdrop of a season that signals prosperity, Vikaas Gutgutia, founder and managing director, Ferns N Petals (FnP), reflects on the trajectory of its business, navigating through the challenges of a pandemic-induced wedding lull.
He says FnP strategically sustained its business in 2022, aligning with the resumption of the wedding business. With the focus shifting to a year poised for business takeoff, the company plans on exploring the wedding planning business with their new business line Shaadi Central.
“With a legacy in the wedding industry, FnP has historically undertaken various wedding-related tasks, albeit not comprehensively under one roof or in an organised manner. This year marks a strategic shift as the company introduced ‘Shaadi Central,’ a luxury wedding company offering a one-stop solution for all wedding needs.”
“This holistic approach aims to streamline and elevate the wedding planning experience, allowing partners and their families to focus on the approaching wedding date with ease. The innovation and consolidation under ‘Shaadi Central’ have sparked notable interest and engagement in the new business venture. Having weathered a less-than-ideal summer season and traditionally subdued winter numbers, we anticipate a robust revenue surge, making the current season particularly promising,” he asserts.”
The business setup was sparked by Gutgutia’s assertion that, with the evolving landscape of wedding planning, which has made destination weddings and grandeur now necessary for some, the role of wedding planners has become significantly prominent. The launch’s alignment with the business boom anticipated with the wedding season of 2023, Gutgutia underscores the importance of timing in business.
The innovation and consolidation under ‘Shaadi Central’ have sparked notable interest and engagement in the new business venture.
Vikaas Gutgutia, founder and managing director, Ferns N Petals (FnP)
Delving into the marketing approach for this new business vertical, he explains, “The momentum generated by word of mouth for the growth of its wedding planning vertical. Each wedding becomes a nexus of potential customers, and social media plays a pivotal role in amplifying references. With clear and specific messaging in the realm of social media, we have successfully driven business, recognising the platform as the primary point of reference in shaping preferences.”
Looking ahead, FnP anticipates a substantial increase in business revenue across all its verticals. The wedding services vertical, in particular, is expected to bring in significant growth in revenue for the company. The belief stems from the observation that the wedding planning sector remains largely unorganised, and he believes that FnP stands out as a formidable player in terms of size and brand image. As the business charts its course forward, the wedding services vertical emerges as a key focus, poised for substantial expansion.
Senco Gold & Diamonds leveraging virtual try-ons for delivering business growth
Joita Sen, director- marketing and design, Senco Gold & Diamonds, says that the company, with a legacy of 80 years, is uniquely equipped to understand the evolving landscape of bridal desires.
Sen elaborates that the company started the year fresh after initiating their Rajwada Collection, a campaign with which the brand aims to weave together traditional designs infused with modern touches and patterns in their offerings. These offerings, thus, can resonate with the essence of the contemporary woman.
The move also sees the brand shifting its focus towards diverse designs, moving away from region-specific choices. Herein lies a unique selling proposition (USP) for the brand—fulfilling a diverse range of needs while ensuring accessibility across various price points. From high-end designs to more budget-friendly options, the brand aims to leave every customer content upon leaving the store.
“The evolution of groom preferences and competitive pricing have further shaped our approach. A significant aspect of our marketing strategy here revolves around social media, leveraging its targeted reach compared to traditional approaches like billboards and footfall. 50 percent of the marketing budget is allocated to digital channels, where advancements have allowed for more precise consumer outreach.”
50 percent of the marketing budget is allocated to digital channels, where advancements have allowed for more precise consumer outreach.
Joita Sen, director- marketing and design, Senco Gold & Diamonds
However, the digital realm poses a challenge in providing a comprehensive array of options compared to the immersive experience offered in showrooms. To address this, Sen acknowledges the importance of virtual try-ons.
“While currently available for select products, we are actively working on expanding our offerings in virtual try-ons. This approach proves instrumental in effectively communicating the design, look, and feel of the jewellery to consumers, bridging the gap between the digital and physical shopping experiences.
According to Devangshu Dutta, CEO, Third Eyesight, the ongoing mega-season of weddings presents a favourable outlook for formalwear and traditional wear brands across various categories. This surge in weddings is not limited to the upper-income segment but extends across the income spectrum, reaching the middle class and towns of all sizes.
Thus, to effectively capitalise on the wedding season, brands must establish a strong position in customers’ minds well in advance, he believes.
“Products and brands associated with brides, grooms, and close family members, as well as those intended for gifting to the extended family, are inherently perceived as “premium” within their respective consumer segments. This holds true regardless of the targeted population segment. Success as a “wedding brand” requires a long-term perspective, with continuous investments in product development, service enhancement, and marketing expenditure to ensure that the brand stands out prominently amid competition,” he says.
”In the current market landscape, achieving visibility demands a multi-modal approach, encompassing both offline and traditional channels, along with tactical online advertising.”
Devangshu Dutta, CEO, Third Eyesight
In the short term, however, he opines that the visibility and availability of products just before the wedding season play a crucial role in influencing specific performance during that period.
”In the current market landscape, achieving visibility demands a multi-modal approach, encompassing both offline and traditional channels, along with tactical online advertising.”
(Published in Afaqs)
admin
May 12, 2015
A seminar was organised on the 12th of May in Zeist (the Netherlands) on “the Opportunities & Challenges for Dutch (Semi-) Processed Food Companies in India”. Highlights of a report and other insights were presented by Devangshu Dutta, chief executive of Third Eyesight. Other entrepreneurs who also shared their experiences in India, and the Dutch agricultural counsellor, Wouter Verhey, was present at the event.
The sessions included:
You can download a summary of the report via this link: India – Opportunities Challenges for Dutch Processed Food Companies
Devangshu Dutta
March 13, 2012
Among consumer sectors, very few can match up to fashion in terms of its global nature. Despite food having led the way in global trade through spices, it is the fashion sector that led the global march of brands. As the economies in Europe and Asia recovered and grew, historical colonial linkages as well as modern culture-vehicles such as movies carried images of what was cool in the benchmark culture. Fashion brands were the most identifiable representation of cool.
India itself has known international fashion and luxury brands for several decades. From the mass footwear brand Bata to the top-notch luxury of LVMH, some of whose most important global customers included the rulers of Indian princely states, international fashion brands have an age-old connection with India.
In spite of these old links, the absolute base of consumers for fashion brands was small, and for them, prior to the 1980s , India was a relatively low potential market with low attractiveness and low probability of success.
A transition began in the 1980s, as India moved emphasis from central planning and a restrictive economy to a more liberal business regime, and brands and modern retailers started growing in presence gradually. During this transition period, other than the notable exception of Bata, it was mainly Indian brands that were at the forefront of modernisation of retail in India, with the first retail chains being set up for textiles, footwear and clothing. Though the seeds were laid earlier – Liberty is credited with the launch of the first ready-to-wear shirt brand in the 1950s, Raymond with the first ready-to-wear trouser brand in the 1960s – the growth started in real earnest only in the 1980s when apparel exporters such as Intercraft (with brands like “FU’s”), Gokaldas Exports (“Wearhouse”), and Gokaldas Images (“Weekender”) also tried their hand at modern retail, as did corporate groups (“Little Kingdom” for kids and “Ms” stores for womenswear).
Yet, even in the early to mid-1990s, when western companies looked at the Asian economies for international growth, West Asia and East Asia (countries such as Japan, South Korea, Taiwan and even Thailand) were seen as more attractive due to higher incomes and better infrastructure. In the mid-1990s there was a brief upward bump in international fashion brands entering the Indian market, but by and large it was a slow, steady process of increase.
By the mid-2000s, however, a very distinct shift became visible. By this time India had demonstrated itself to be an economy that showed a very large, long-term potential and, at least for some brands, the short to mid-term prospects had also begun looking good. In a few years, from 2005 onwards, the number of international fashion brands entering the market has increased 4-fold.
Market Still Evolving, but Brands are Confident
The sheer number of brands that are now present in India and the new ones that are entering every year is a clear sign of strengthening confidence among international brands that India is now one of the most important markets that they cannot ignore for long.
There is a visible acceleration of growth in absolute revenues, too, being achieved by individual brands. Brands such as Levi Strauss, Reebok, Louis Philippe (a British brand formerly owned by Coats Viyella, now by Aditya Birla Group for India and other territories) and its sister brands took perhaps 12-15 years to break through the threshold of Rs. 500 crores (Rs. 5 billion) in sales turnover, but industry opinion is that the “0 to 500” trajectories today are faster and that younger brands are likely to take less time – under a decade – to cross the threshold. While modern apparel retail currently contributes less than 20 per cent of the total apparel market, with growing incomes and increased availability of modern retail environments, consumers are spending more on branded fashion than ever before. In the year closing March 2012, at least 2-3 additional brands (including Indian ones) are expected to cross the Rs. 500 crores threshold.
Clearly, there are few markets globally that can support potential growth from zero to US$100 million in a decade, with the potential to even reach a billion-dollar mark within the next couple of decades. However, some of these markets are already hugely competitive, and also going through painful economic churns. India, on the other hand, is a market that is at the earliest stages of consumer growth – it is, in the words of the managing director of a European brand, a market where “a brand can enter now and live out its whole lifecycle”.
In fact, it is tempting to compare the emerging golden bird of India to the golden dragon of China where western brands seem to have rapidly established as products of choice for the newly affluent Chinese consumer during the last 15 years or so.
In our work with brands and marketers from around the world, we have to constantly remind them that not all emerging markets are the same. The explosion of luxury and premium brands in China during the last decade or so has happened on the back of explosive economic growth that came after a long cultural and economic vacuum. When the new money wanted links with the old and when uniform grey-blue suits needed to give way to something more expressive, well-established western premium and luxury brands provided the most convenient bridge.
On the other hand, in India “discernment” may be a new experience to the newly-rich Indians for whom brands can be a valuable guide and “secure” purchase, but discernment and taste are not new to India as a whole. More importantly, differentiation and self-expression never disappeared even during India’s darkest years of “socialistic” economics. Therefore, the Indian market has a more “layered” approach to the premium fashion market and will continue to grow in a more fragmented, more organic manner than the Chinese market. There would be multiple tiers of growth available for international as well as Indian brands. For international brands customisation and Indianisation will be important. This is already visible in bespoke products by Louis Vuitton and Indian products by brands such as Canali (jackets) on the one hand, and significant re-thinking on product mix and pricing by brands such as Marks & Spencer. That brands are willing to rethink their position in the context of the Indian market demonstrates that they see India as a strategic market, worth investing in for the long term.
Another sign of the growing confidence amongst international brands in the Indian market is the number of companies that are looking at directly investing in joint ventures, or even going further to set up wholly-owned subsidiaries in the country.
It is worth keeping in mind that setting up a subsidiary is a decision that is not taken lightly, regardless of the size of the business and the amount of investment, since it involves a disproportionate amount of management time and effort from the headquarters during the launch and early growth phase where revenues are small and profits non-existent.
Among our clients, brands have taken the decision to step into an ownership structure in India when they feel that India is too strategic a market to be “delegated” entirely to a partner (whether licensee or franchisee), or that an Indian partner alone may not be able to do justice to the brand in terms of management effort and financial capital.
In the last few years we have seen several brands take the plunge into investing in the Indian business, among them S. Oliver (Germany), Marks & Spencer (UK) and Mothercare (UK).
During 2011 specifically, Promod changed its franchise arrangement with Major Brands into a joint-venture that is majority-owned by Promod. From its launch in 2005, the brand has opened 9 stores so far. However with the new JV in place, the venture is reported to be looking at opening 40 stores in the next five years.
Most recently, Canali was one of the brands that moved into a majority-owned joint-venture. The brand entered in India in 2004 through a distribution agreement with Genesis Luxury. This has recently given way to a joint venture between the two companies that is owned 51 per cent by Canali. The brand currently operates five exclusive stores in India has plans to accelerate the brands growth in India by opening 10-15 stores over the next three-four years.
The Impact of FDI Regulations
If a “theme of the year” has to be picked for the Indian retail sector in 2011, it must be ‘Foreign Direct Investment’. The debate during the year was hardly a clean and clear “pro vs. con” exchange of ideas. It was a motley mix of extreme lobbying for and against FDI, some balanced reasoning on why FDI should be allowed, and also moderate voices calling for governing the speed at which and the conditions under which foreign investment could be allowed. In many cases there seemed to be dissenting voices emerging from within the government. One possible impact of this uncertainty through the year was that several brands postponed their decisions regarding the potential entry and the strategy that they would follow in India with regard to partnership or investment.
In November 2011, the Indian government announced that 100 per cent foreign investment in single brand retail and 51 per cent foreign ownership of multi-brand retail operations, but was forced to back-track due to vociferous opposition from several quarters. At the very end of the year, the government finally reopened 100 per cent foreign ownership retail operations, albeit limiting it to single brand retail businesses. However, it allowed this under the condition that the Indian retail operation would source at least 30 per cent of its needs from Indian small and mid-sized suppliers.
The condition of 30 per cent domestic sourcing from SMEs is well-intentioned – aiming to provide a growth platform for India’s manufacturing enterprises – but unachievable for brands that do not currently source any serious volumes from India. In fact, for most international fashion brands India contributes less than 10 per cent of their total sourcing, in many cases well under 5 per cent.
Under these circumstances, we shouldn’t expect any dramatic changes, though we do expect the growth in joint-ventures and subsidiaries to continue in the coming months and years.
If an international brand perceives India to be at the right stage of development, and it wishes to exert significant or complete control over its Indian presence, then a majority or completely owned subsidiary seems the most logical step, and the brand will find a way to structure its involvement in India appropriately.
However, many brands that today have a 51 per cent ownership in India are stopping short of climbing to 100 per cent until they can sort out how to meet the SME sourcing conditions.
Getting Over the Sourcing Hurdle
The problem with the 30 per cent sourcing rider is simple. When a brand launches in India, it would like to present the consumer with the most complete product offering that showcases its capabilities and positioning as relevant to the target consumer in India. In most instances, the brand would not be sourcing the full range of its merchandise from India.
This is not a problem if the brand approaches the market through a wholesale or franchise structure, or even with a retail business that is not owned by it 100 per cent.
But for a retailer that wants to own the Indian business completely, complying with the 30 per cent domestic sourcing restriction means developing a new set of suppliers in India from scratch, pulling in the design and product development staff to work with them, and to develop ranges that suit not only the Indian market, but also other markets around the world. Simply putting together an India-specific sourcing team to replicate the entire range to buy small volumes for the Indian business is neither practical nor feasible for most of these brands. This means that the product development and sourcing team must be willing to see India as a strategic supply base for the future, just as their selling-side colleagues may be seeing it as a strategic market.
In this context it is worth repeating something that I have said before: retail managers are generally risk averse, and like to move in packs – where there are some brands, more come in and create a mutually reinforcing business environment. The presence of other international brands – especially from their own country – helps in creating a familiar context at first sight and encourages further exploration of the market. At least for the executives handling international retail expansion, India presents a more ‘familiar’ and ‘developed’ face today than ten years ago.
However, the explosive growth that we have witnessed in terms of the number of brands present in India is not mirrored by the growth of fashion sourcing out of India. In fact, even when compared to what has happened in the global textile, apparel and footwear sourcing environment since quotas were removed in 2005, the India’s export growth looks dispiritingly low, even stagnant. China still remains the largest source for fashion products, while countries such as Bangladesh, Indonesia and Viet Nam have grown their share aggressively. India’s share of clothing exports is a lowly one-tenth that of China.
In our work related to global sourcing strategies for western retailers, on an objective measurement matrix of sourcing competitiveness India rates highly. In several cases, sourcing from India as a hub (and, for European retailers, Turkey as a hub) has been seen as a logical counterweight to balance out the high concentration of current sourcing in China.
However, product development and sourcing is not entirely an objective process – in fact, sourcing habits are sometimes the hardest to change. The buyer’s subjective experiences – sometimes buried deeply in the past career – have a significant role to play. A conversation from 2001 with the sourcing head of a European brand sticks in my mind, when he said, “I don’t really want to buy anything from India – Indian suppliers can do a very limited product range, quality isn’t always good and the shipments are always late.” On probing further, I discovered that his last transaction was in 1992, after which he never set foot in India again. Much as we might present statistics and facts about the developments in the Indian textile and apparel industry, a personal injury early in his career has left a deep scar that obviously influenced this gentleman’s buying decisions worth over €300 million in global apparel sourcing, or about €700-800 million worth of sales.
There is clearly much to be done in terms of encouraging modernisation and better organisation amongst apparel suppliers, and making those changes visible to buyers. Even brands that are well-engaged with the Indian supply base have between 40-70% of their people here focussed on in-line and post-production quality issues. We are today at a stage where larger and better-equipped apparel exporters would be best placed to address the needs of international brands within India, but find the volumes too small to bother with setting up entirely different documentation and accounting processes.
Health & Safety and Labour compliances are also areas in which the brands will not forego their corporate standards. Can we imagine a brand saying that its European customers do not want their products made in sweatshops, but for the Indian consumers of the brand this is not (yet) an issue? While this may be a fact, would a high profile brand risk its global reputation to source competitively for its small Indian business?
So a government dictat to international brands’ fully-owned subsidiaries to ensure that they source 30 per cent of their needs is not enough. At best it will encourage some of the brands to start looking at India more seriously, but a more likely scenario for most brands is that they will carry on business as usual until the supply base in India pulls up its socks, or until the business in India becomes large enough to be interesting to their existing Indian suppliers who are currently focussed on exports.
Certainly the government itself needs to do much for more manufacturing-friendly policies, as well as focussed investment in infrastructure that can provide rapid, efficient and cost-effective transportation from the country and within the country.
It is time to bridge the gap between “textile exports” and “fashion retail” in the country. Remember, the explosive growth of brands in China followed the manufacturing explosion, not the other way round. Until the Indian apparel, textile and footwear manufacturing sector grows strongly, the actual volume growth of modern fashion retail will remain hobbled, regardless of the number of brands that enter the market.
To me this statement by a senior professional from one of Hong Kong’s largest apparel companies says it all: “The Indian industry looks like a formidable competitor, the day it decides to wake up.”
Drawing the Full Circle of Confidence
In closing I would like to mention the least acknowledged, but a very important part of the growth of international brands in India: the acquisition of brands overseas by Indian companies. The Aditya Birla group laid an early foundation when it bought out, for India and several other territories, the perpetual rights for Coats Viyella’s brands including Louis Philippe, Van Heusen and Allen Solly. Lerros was a slightly different example – being a brand that was set up by the House of Pearl in Germany – but that also circled back to India. More recently (2010) we have the example of the Swiss company Switcher Holdings, whose with brands including Switcher, Respect and Whale, was bought by PGC Industries.
In markets such as the EU, there are today brands that may be available because they are finding difficult to survive in harsh trading environments and that do not have the financial or management bandwidth to take on initiatives in growing markets like India. These offer a legitimate growth platform for Indian companies that are strong in manufacturing those product categories and want to move higher up the value chain from being a generic commodity “supplier”.
Although exporters may initially approach these brands for franchise or license relationships, to some it soon becomes clear that if they are in a position to make an incremental investment they could well own the perpetual rights and perhaps the whole business, rather than investing in building up someone else’s brand, especially in the business in India is likely to grow very rapidly. Obviously, this new-found confidence needs to be backed with solid management capability, but as other consumer goods companies such as Tata (beverages, automotive), Mahindra (automotive) and Dabur (personal care) have shown, it is entirely feasible to look at growth in India as well as internationally by using an existing international brand as a stepping stone.
It also presents a challenge of classifying such brands as international or Indian. Bata was founded in the Czech Republic and went global from there – however, today it is legitimate to treat it as a Canadian brand since its headquarters moved there in the 1960s. Among other products, Gloria Jean’s Coffee was founded in the USA, but is now completely Australian-owned. In that sense, today would that not make Louis Philippe, Allen Solly, Switcher Indian brands?
I think this puzzle is a challenge that many people in the industry in India would look forward to contributing to.
—–
Additional comment after reading the following blog post on Forbes on Single Brand Retailing (March 12, 2012):
Policies restricting foreign investment are not the biggest barrier to entering the Indian market. Brands and retailers that are clear that India is a strategic market with which they wish to engage will find a way. Even the largest global retailers have created structures that allow them a toehold in the market, awaiting a larger opening, despite the current ban on FDI in multi-brand retail.
The biggest barrier to entering India is actually the comfort zone within which the management team of an international retailer or brand may be operating. For some, the business environment of India needs at least a small step outside that comfort zone, for others it needs a big leap of faith.
There are encouraging signs of this happening already. Research carried out by Third Eyesight shows that the number of foreign brands operating in India in the fashion segment alone have quadrupled since 2005-2006, and a significant chunk of these are operating with direct investment in the Indian operations, whether as 100 per cent owned subsidiaries or as joint-ventures, indicating their growing comfort and confidence in the market.
One last word of advice: assess the opportunity pragmatically; don’t come looking for “a small percentage of the 1.3 billion population” in the short term – it takes time and patience to develop a meaningful share in the market.
Devangshu Dutta
August 17, 2010
Most of the people reading this would be familiar with fast food, and think of it as a cheap, tasteless, “throw-away” excuse for food. You may think of it as a deeply penetrated product category, close to being ubiquitous.
Here’s a picture that tells the other story.
For these kids, who are clearly not able to afford the products, the fries, burgers etc. are aspirational and exciting. For them, McDonald’s is clearly not open early enough (in their lives).
It’s a different perspective when you look through the other side of the glass, I guess.
Devangshu Dutta
October 16, 2007
BOOK REVIEW: HIDDEN IN PLAIN SIGHT: Erich Joachimsthaler
In the midst of extensive or frequent civil works, fluorescent high-visibility clothing contributes to the invisibility of the individual, and can serve as a superb disguise. Similarly, in the midst of extensive research and in-depth analyses, basic insights can go unnoticed.
Erich Joachimsthaler has plenty of examples in his book Hidden in Plain Sight to drive home the point that attention to stuff that is not so obvious to competition can lead to brilliant success such as Sony’s growth through innovative products (the WalkmanT, for one) that met unexpressed consumer needs. Conversely, an inability to spot this can bring even the leaders down, illustrated once again by Sony’s loss of leadership in mobile personal entertainment to Apple’s iPod.
The challenge for companies is to uncover the hidden opportunities by looking into their business from the outside rather than the usual inside-outwards view, and by accurately defining the ecosystem of demand. For most management professionals, this will be harder than it seems.
The exercise begins with the question, “Why didn’t we think of that?” This is intended to remind the reader of how the obvious escapes attention as we sink deeper and deeper into complex analysis and in developing ever more complicated scenarios. And Joachimsthaler sets out a framework that he believes can help larger companies to innovate in a structured way.
Of course, the reader may feel differently, and quote George Bernard Shaw who divided the world into two kinds of people, the reasonable and the unreasonable, and credited innovation to the latter. Or one may agree with Henry Ford who, apparently, felt that customers did not really know what they wanted. He is reported to have quipped: “If I had asked my customers what they wanted, they would have said, ‘A faster horse'”
Yes, at the cutting edge, innovation may seem to be more about the innovator’s creative desire to do something different, and less about “meeting customer needs”. Yet, it is the unmet and, more importantly, unexpressed customer needs, that offer the greatest source of competitive advantage.
This is why innovation seems to spring more from small companies, or companies that are started up around a specific idea that is unique or new. In such a small company or a start-up, typically the founder/innovator/inventor is drawn from the same pool as the target customer. Therefore, while they may be addressing a need they feel acutely, the innovators are unconsciously plugged into their customer’s unmet/unexpressed needs. There are seldom any silos; the whole team is generally focussed on the one problem to be solved.
However, as companies grow larger, functional specialisation emerges — division of labour based on skill-set is deemed to be a more efficient way of doing things. The design folk design based on “trends”, the marketing folk market as they know best, and the manufacturing folk produce to specification and the “demand” generated.
With this speciality of skills taking over, there is a growing disconnect between their efforts to dig for insight and the gold that is “hidden in plain sight”. While data is available in abundance, real knowledge is scarce, and insight just gets buried in well-structured processes and hand-offs between functional silos.
This trend has only accelerated in the past 15-20 years with pervasive information technology that enables the mundane operational process to the most strategic. Never before have management teams been so focussed on information and analyses. As businesses grow, data warehousing and data mining are defined as the competitive cutting edge, pushed along by interested parties (including IT solution providers, but that is another book!).
However, in reality, excessive information is increasingly passed off as knowledge. An inward focus on the management team”s own objectives is often disguised as insight gained on the customer or the market. Functional specialists analyse the market, the latent needs and the gaps in their own way, and if the company is lucky to have some generalists, some of those dots get joined to form a more complete picture.
It is in reminding management of this reality that Joachimsthaler’s book provides a tremendous service. It presents a well thought out model named, curiously enough, DIG – short for Demand-First Innovation and Growth. The three elements laid out sequentially begin with a framework for defining the demand landscape, identifying the opportunity space within it, and then creating a strategic blueprint for action.
Joachimsthaler’s process to define the demand landscape requires managers to put themselves in the customer’ shoes – a process demonstrated with examples from Proctor and Gamble and Pepsi”s Frito Lay. Using the customer’s goals, actions, priorities (there’s the “GAP”), needs and frustrations, demand clusters can be developed and filled out with additional research. The strategic fit between these demand clusters and the brand can then feed into the next steps of identifying the opportunity space.
The filters, or lenses, as the author calls them, are the “eye of the customer”, the “eye of the market”; and the “eye of the industry”. At every step, assumptions and presumptions need to be challenged. Using these lenses, the sweet spot or spots and the growth platforms can be identified, and extrapolated into the strategy. On the downside, the book is clearly about a framework, which may have been best detailed in an article, rather than being stretched over a book.
The author does stress at one point that it is not about “brainstorming”, but about structured thinking. However, he seems to do this in a tone that suggests brainstorming as something vaguely distasteful due to the lack of directional structure.
While examples from the companies studied keep the text alive, yet in places one struggles to correlate the examples with the framework. Indeed, there may well be too much structure to this book, and not enough examples of how inter-disciplinary thinking and functioning can actually produce sustained innovation.
Understanding the model itself can be a fairly involved process. The best way to tackle it may be to approach it as a project, and use the DIG framework as a how-to guide for a real problem. If you are a structured, methodical, sequential kind of manager and possibly work in a large company, the book could provide tools to put that thinking to work for innovation in a team. On the other hand, if you are more of a “people person”, you may want to leave this book alone. [For more, here’s the book on Amazon.]
