The philosophy behind his writing and his books is to share his experiences and learning

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Ten Lessons from Ten Business Moments & Trends of 2023

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The business landscape of 2023 was a mixed bag, offering both bouquets of roses and thorns. Ten moments stand out, not just for their headlines, but for the lessons they whisper.

1. Chaos at OpenAI

The Key Takeaway

The sacking of Sam Altman by the OpenAI board and his return after five days has cast a spotlight on the crucial need for robust governance models within institutions dedicated to the advancement of AI.

2. The Mass Layoffs

The Key Takeaway

A wave of layoffs that began in 2022 swept through major companies this year. What stood out was the drawn-out process, causing immense stress for employees and leaving them perpetually on edge, unsure if they’ll be next.

3. NVIDIA joins $1 Trillion club

The Key Takeaway

Nvidia’s market capitalisation touched $1 trillion this year, a testament to the 30-year dedication of its founders and their ability to navigate numerous challenges. Embracing the ‘always on the way to going out of business’ mindset, as advocated by CEO Jensen Huang, can fuel the drive of entrepreneurs to endure challenges. Fortune truly favour the resilient.

4. Sam Bankman-Fried Conviction

The Key Takeaway

Transitioning from a crypto king to a convicted felon, Sam Bankman-Fried’s meteoric rise and spectacular fall culminated in a verdict of fraud and conspiracy. His conviction serves as a cautionary tale, emphasising that entrepreneurs should never become overwhelmed by bewildering sums of money to the point of losing sight of what is happening and what needs to be done.

5. Banking Crisis of 2023

The Key Takeaway

From the failures of Silicon Valley Bank, Signature Bank, First Republic Bank, Silvergate Bank and Credit Suisse, it’s clear that a robust risk management culture is not a luxury, but a necessity for financial institutions. One critical area of focus must be sharpening our ability to identify and respond effectively to the growing threat of digital bank runs.

6. AI Safety

The Key Takeaway

The year saw heightened discussion on AI safety, which included a petition signed by over 1000 leaders calling for a pause in AI experiments. This included names such as Elon Musk, Steve Wozniak, Emad Mostaque, and many others. There were also those who said that pausing AI would be disastrous for innovation. One thing is clear that risky technologies have always been subject to regulation, and the trend will continue with AI, with the Biden Administration’s Executive Order, the EU’s recent AI Act, and China’s AI regulations. Crucially, AI safety can only truly be achieved when commercial goals align with human well-being.

7. Ozempic Effect

The Key Takeaway

This refers to how semaglutides, a group of drugs including Ozempic and Wegovy, not only facilitate weight loss but also offer protection to the heart, liver, and kidneys, impacting various industries. Their potent appetite suppression and weight loss effects are already disrupting industries like food, insurance, and fitness, which are heavily influenced by people’s eating habits. Analysts even project a 10% reduction in the cardiovascular disease market by the year 2050.

8. Launch of Huawei Mate 60 Pro Handset

The Key Takeaway

Huawei unveiled a 5G smartphone powered by a new Kirin 9000s chip, made in China by Semiconductor Manufacturing International Corp (SMIC), defying U.S. sanctions that cut off access to advanced semiconductors. This proves that innovation blooms under difficult conditions. From adversity comes triumph.

9. AI Adoption Frenzy

The Key Takeaway

In their rush to adopt a GenAI program, companies need to be selective, opting for one that safeguards their data. They must consider risks such as bias and hallucinations and should not forget to disclose when using AI-generated content.

10. Tesla Vehicle Recall

The Key Takeaway

The recent recall of Tesla vehicles related to the autopilot system emphasizes the importance of providing explicit communication when introducing advanced technologies, ensuring that both the benefits and limitations are clearly conveyed.

Top three pre-process transformation actions to ensure success

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When we talk about process transformation, what comes to our mind are the obvious elements that include process, technology, people, methods and tools. These are indeed important. If you look at successful transformations closely, however, you will realize that these companies undergo a set of actions in the pre-transformation phase that create an enabling environment for the transformation to be successful.

Quite often, process excellence professionals do not look at them and jump straight into working on the processes. This is probably the reason why results are not achieved or even if they get the desired outcomes, the gains do not sustain for long.

While there are quite a few things that need to be done at the pre- transformation stage, I am listing here three areas that I believe are most important and have proven to be critical success factors for some of the most successful process transformations that I have led.

Understanding the context

Before embarking on a process transformation, it is important to step back and understand the context. This is because, beyond the process, it plays a big role in the success of the program and successful transformations always begin with a scan of the context.

Doing this helps to understand the building blocks beyond the process that enable or impede a transformation. This is a quick reconnaissance done by the core team to understand a whole host of elements such as strategic aspirations, the transformation alignment with the business strategy, the change readiness, the organizational structure, current culture, metrics that top management tracks and performance management.

Now why is this important? Let me give you an example. After doing the scan, if it is found that the existing culture has built a silo mind-set, the transformation team needs to embed new ways of working that facilitate collaboration, install metrics that drive the right behaviors and revisit the way the employees get incentivized.

Without these in place, the process transformation may not deliver sustainable outcomes. If you are already a part of the organization you should still do this exercise but with a fresh pair of eyes. I have often seen process transformation fail because we have not addressed issues around context.

Encouraging people to speak up

We frequently assume that those involved in transformation will share their ideas and contribute to it with the belief that putting together a high performing team will provide the desired outcome. The reality, however, could be different.

The team members may not speak freely for fear of being ridiculed, rejected or reprimanded. Hence, it is upon the transformation leader, the sponsor and sometimes even top management to make sure they make it psychologically safe for participants to speak without the risk of any sort of humiliation.

When the core team of the transformation meets for the first time, it has to be explicitly communicated that candor and dissent will be valued. This has to be backed up by the sponsor and the transformation leader demonstrating vulnerability and communicating that they do not have all the answers. The team has to contribute to the project’s success and they should even be open to getting insights from outside.

Once the core team feels psychologically safe, the effort should be to cascade the same to those impacted by the transformation and whose insights and buy-in are critical for success. The worst thing that can happen to a transformation is that people agree to avoid conflicts.

Encourage people to play devil’s advocate and ask questions. Before anything gets decided, make sure it is debated and discussed. Get worried if transformation meetings are full of harmony. On the pretext of urgency, never decide prematurely without seeking all views.

Linking with the larger purpose

Normally, participants in any transformation would know the objective ofthe project. But what is different about highly-effective transformations is that they also connect with the larger purpose.

They know that they are not just solving a problem but are a part of creating something much bigger. Think about the impact on people’s behavior when they know that they are working on automating a process versus they are working on creating the country’s first digitally-enabled healthcare institution.

To understand this, let’s refer to the phenomenon in psychology called construal level theory. According to this, the psychological distance that people have from a topic has a major impact on their decisions and behavior.

When we connect a process transformation to a larger purpose, people are more motivated and excited to contribute to the transformation. When we zoom in and take a look at the specific process that we are working on, it brings in concreteness and helps to solve the problem better.

Both levels of construal are required, but we often tend to forget to connect with the larger purpose. What highly-effective transformations do is to connect the transformation to the larger vision and purpose. Not only does it inspire and energize teams when they are are low during the arduous matches, connecting with the big picture helps to get the mojo back.

Five process excellence areas to focus on in a Covid-19 world

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The last few months have changed our lives with large numbers of people working from home under lockdown and many scared to go outside in countries that have opened back up.

Companies are facing huge challenges to navigate the impact of the pandemic, with CEOs and business owners concerned about an unpredictable future and muted economic recovery. There are issues ­that need to be addressed ranging from slow demand and increased competitiveness to morphed consumer behavior and labor and raw materials shortages.

IMF managing director Kristalina Georgieva has warned the world that a full recovery may not be possible in 2021. Clearly, many businesses worldwide will be impacted and will struggle to survive the pandemic. CEOs and business owners will have to rethink the way they have been operating and reinvent their business models. Many of them will have to take a multi-pronged approach to outmaneuver an uncertain future.

The pandemic has provided a lifetime of opportunity for process excellence professionals to directly impact their business by working with the CEO and top management to get their business up the curve of performance. There is a sense of urgency, there is a business need and there are problems to solve; rarely are there occasions when everything seems to be favoring PEX professionals as it is today.

This article explores five areas where process improvement professionals can contribute.

1. Digitization as a business imperative

Digitization has been on the agenda of many companies for the last few years. There are those who have completed their transformations, while it is still a work in progress for others. Some have yet to begin their digital journey.

Those that have been up the curve of their digital transformation journey found it easier to run their operations and deliver to customers stuck at home. For example, due to digitization, Cairn’s plant in India continued its operations despite a substantially low turnout of people during the lockdown. Clearly, whether to digitize or not is no longer a matter of choice for companies – it is a business imperative.

Digitization efforts will be underway for a myriad of objectives such as workforce efficiency; customer experience improvements; operating the value chain despite disruptions; allowing remote working; process automation; workplace simplification; contactless delivery and operations; embedding competitiveness; and operational performance improvements.

The fact that digitization will receive more attention is echoed in a survey conducted with Fortune 500 CEOs which found that three of four survey respondents planned to accelerate technological transformation at their companies by adopting technology solutions that include robotic process automation (RPA).

Irrespective of their digitization efforts, process excellence professionals will have a role to play in a Covid-19 world. They will not only define the future state of processes, but will have to revisit the existing ones to understand what needs to be changed. They will have to ensure the processes are waste-free and look at issues around data models, operating model, organizational structures and skills. Most importantly, they will also be a catalyst of change management in this journey.

2. Optimizing for efficiency

As economies try to limp back to normal, businesses are gasping for survival. For many of them, both top-line and bottom-line are majorly stressed, and PEX professionals have an opportunity to work on process improvements that directly impact the financial performance of the company.

The areas that will receive attention are supply chain optimization; improving cash flow and working capital efficiency; customer self-service; smart sourcing; process automation; spans and layers; implementation of shared services; and improving inventory management and many more.

Each of these areas will need PEX professionals to play an active role to accomplish the objectives of the business. The focus will be on projects that deliver hard savings rather than ones which deliver soft savings. Knowledge of Lean, Six Sigma and automation will come in handy here.

3. Strengthening customer service

While companies focus on costs, they also have to make sure customer experience does not suffer. During this pandemic, where everything is uncertain around the globe, customers may be more patient if a company misses on promises of delivering on time for example. What they will not forgive, however, is a lack of empathy and care.

Customers will also expect companies to tweak the way they serve the needs of the pandemic such as contactless delivery and enhanced safety. PEX professionals will have to work with their customer experience teams to redesign customer journeys and make them more relevant to the customers’ context.

4. Contributing to new business models

The pandemic may require business models to be revisited, either by tweaking an existing model, undergoing major changes to an existing model or creating a completely new business model.

Whatever the approach taken, PEX professionals will contribute to designing new business models by declaring war on processes, practices, policies and behaviors that are no longer relevant to their companies. They will be designing new processes and value propositions that matter in these Covid-19 times.

5. Embedding new ways of working

Surviving the pandemic will require companies to build new ways of working that will help navigate the pandemic, together with top management and human resources; PEX professionals will need to hardwire new ways of working that embed behaviors, and drive speed and execution. They will have to specifically work to uproot mindsets that impeded change and work with those who may lack the sense of urgency to do things differently.

Demand, expectation and robots

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Every business has always needed customers, but today they are impacting businesses much more than ever before.  

Why? 

There are many reasons: the power of social media means that companies can no longer take customers for granted.  

The power of marketing is also waning, as a customer’s buying decision will be less influenced by high voltage advertisement and more by what other users say.   

Add in disruption that can upturn mature industries (traditional taxi drivers in Mumbai never thought that a distant cab aggregator could kill their business, but it did), the demand that customers have to be treated as an individual, and the fact that they don’t mind dropping a company if they don’t get what they had been promised. The customer’s world has been filled with choice, and the challenge for business is to understand the customer before they go elsewhere. 

Demanding

Customers are more demanding today, because their expectations are being influenced by benchmarks being created by pioneers such Amazon, Apple, Vistaprint, Warby Parker, Disney, Zappos, Ritz Carlton, Surf Air and thousands more. When customers come to buy a product from your company, they may have in mind experiences which may be from a different industry or something that they have experienced in a different context.

The connected consumer of today is used to getting things at a click of the button. They seek instant gratification and don’t have patience to wait for a product or service delivery. They also don’t mind punishing a company who don’t deliver what was promised, naming and shaming without hesitation in the social media. 

Key point: today, customers are seeking experience and not just a product. 

Expectation

If you understand the ‘experience as product’, you can understand your customer’s specific needs – which if catered to, makes them happy. Of course, it’s important for a customer to understand what to expect from a company. They can’t expect a Ritz Carlton experience in a Holiday Inn Express.

What business leaders often mistake is to think that all customers deserve equal treatment. ‘Customer Centricity’ is about creating value for the right set of customers – not all customers.

Automation / human balance

The challenge for businesses – which too few businesses seem to be thinking through – is balancing automation and the human touch. In their effort to adopt technology, companies risk forgetting the balance that has to be kept in mind before automating interactions. Customer service bereft of humans will not work. While straight through processes may be automated, those requiring cognitive effort, managing exceptions, building connection and addressing emotionally charged moments require humans. Key point: It’s imperative to keep the customer at the centre of all automation efforts.

Where do the robots step in?

It’s true that tools like BPM and RPA help to build efficiency into business but they also help to serve the customers. For example, RPA can help to automate repetitive activities in customer journeys done by humans. When processes are done by software robots, they not only eliminate pain points but also deliver error free customer experience. Chatbots have cognitive abilities and respond to text and voice queries of routine customer issues. Predictive analytics can help to understand customer behaviour, predict what they want, when they want and when they are losing interest. They could also trigger offerings based on customer life events and offer ways to keep the customers engaged.

AI will work brilliantly when a transaction is binary in nature and does not require critical thinking, but when there is a problem where emotions are involved robots can’t help. For interactions focussed on deepening relations, humans cannot be substituted. 

So, machines have lot to offer which may not be obvious to us but we should know how and where to use them.

Operational Metrics – The five Fs which every small business should know

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When an entrepreneur begins his journey, his focus is to manufacture products of high quality and make sure it’s bought by large number of consumers. He puts a lot effort to drive up sales and support it with robust and reliable operations which can support the growing demand of customers.

While he does all this, he keeps an eye on overall business performance by keeping an eye on metrics such as Revenues, Production Volume, Cash Flow, Gross Margin, Cash Burn Rate etc. These are what I call the “business metrics” as they help to help to ascertain the overall business performance.

However, a successful business outcome needs to be supported by a robust operations department. By operations I am referring to the part of the business that produces goods and services.

An SME/MSME, would call these functions in various names such as production, manufacturing, kitchen (in a hotel), back-office (in service company) etc. This is the heart of the business wherein raw material gets transformed to finished goods which are sold to the customer.

A business owner or an SME/MSME CEO keen to have a sustainable business needs to have a well-oiled operations function that is not only productive but also to provide quality products to the customer. So, how does a business-owner know his operations function is managed well and is capable of consistently meeting the customer needs.

This is where metrics come into play. They not only help to ascertain the health of the operations, but also trigger initiatives that can improve competitiveness. When there are metrics, you know “where you are”, and you know “where you want to go”.

But, what metrics should a small business owner install? After all measurement requires resources and it may not always be possible to put in place a comprehensive measurement in a single go. It can sometimes be a challenge for an SME/MSME to decide which metrics to focus on, given the maze of metrics that could possibly be tracked. A business owner should known which set of metrics he should track that gives him an overview of how effectively he is meeting customer requirements.

Here, is my recommendation. Don’t get lost in maze. Focus on the fives Fs or five metrics that can help to ascertain operation’s performance which impact customers and competitiveness.

The five Fs stand for Fitness, Fulfilment, Fast, Flexibility and Fare. Let me explain each one of them in detail:

1. Fitness: This refers to whether a product or service is fit for the purpose of the customer. This is essentially about quality and ensuring that defect-free products reach the customers. Examples of product and service quality metrics are: per cent defectives, error percentage, etc.

2. Fulfilment: This measures the organization’s ability to meet the quantity requirements of customer within the committed time. One common metric that is commonly used here is percentage of deliveries “on time in full”.

3. Fast: This is how quickly a business can meet the customer’s orders. This is the lead time between the customer placing an order and when it gets delivered to him.

4. Flexibility: This is the ability to meet the varying needs of the customer and the operations teams’ ability to make it happen.

5. Fare: One of the meanings of the word “fare” is money paid for taking a journey in a public transport. Well, here the word “fare” represents the cost towards producing goods and service. The objective of any business is to do things cheaply and price it aptly so that it’s competitive in the marketplace.

Having installed the 5Fs, small business owners may realize that they are not performing as desired. So, on which metrics should a small business owner focus? It may not be possible to work on improving all the metrics at the same time. So, the primary focus should be to improve Fitness or Quality of products that are going to the market. Once this problem is in control, the focus should be on improving Fast and Fulfilment metrics. Having got these three metrics in order, the focus should be on  ..

(Debashis Sarkar is an Author and Founder of Proliferator Advisory & Consulting and Proliferator Academy. He works with the C-suite to make their businesses Customer Centric and Operationally Excellent. To know more about him, please visit: www.debashissarkar.com)

Lessons on Quality Management From Kobe Steel

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The cheating at Kobe Steel shook not just Japan but the entire manufacturing world. As Kobe Steel CEO Hiroya Kawasaki revealed, about 500 companies had received its falsely certified products, which affected not only those companies but also its entire supply chain. However, the issue at Kobe was only the latest. Sadly, Japan has had many quality eruptions during the past year, including the recent recall by Nissan Motor Co of more than one million vehicles, and the major quality issues with now-bankrupt airbag producer Takata Corp.

As W. Edwards Deming said, more than 85 percent of quality problems are due to management, and that seems to be the case with what happened at Kobe Steel.

Here are few lessons that top management in any company could learn from Kobe Steel’s problems in order to avoid the same.

Conduct a top management diagnosis

As organizations mature, CEOs often take quality for granted. They delegate the quality function to the head of quality and chief quality and assume everything will run as desired. They may involve themselves in occasional quality reviews and make big pronouncements in town-hall meetings, but remain at arm’s length to quality.

If a CEO’s involvement is superficial, any quality deployment will also be cosmetic. A company’s quality agenda must be owned by the CEO and the entire top management. This is where a top management diagnosis comes in. A top management diagnosis is a meeting where the CEO and top management come together to discuss all matters that have an effect on the quality of the company’s product or service.

These are not just sessions where staff members present but are deep discussions during which top leaders ask questions about current, past, and potential issues that could be faced by a product or service. The power of this meeting comes from the cross-functional leadership looking at issues pertaining to quality from different perspectives. For example, the CFO, who may have no knowledge about the manufacturing process, could still make an incisive observation.

These sessions should also include unplanned visits to the shop floor, vendor location, or product delivery centers to understand the operating system of the workplace. The typical agenda for such leadership meetings would include topics such as customer issues, chronic quality problems, strategic alignment (i.e., how employees are aligned with the larger objectives of the company), employee engagement issues, accomplishments, product design, and so forth.

The objective of this exercise is for top management to gain a deep understanding of one part of the company and also connect with those on the shop floor and the front line. What delivers value to this exercise is incisive questions posed not only by the CEO but also the diverse team of top management.

The top team should set aside at least one day per month for this exercise.

Do a regular external deep dive

An outsider’s observations can be important in dissecting the operating system of a selected area of the company. This would mean an outside set of relevant experts coming into a department to look at it with fresh eyes. They look at existing practices, how well they are being adhered to, whether they are relevant today, people issues, the degree of strategic alignment, and how all these compare with best-in-class companies. The findings are reported back to the CEO.

For example, a CEO of a food company could get an outside perspective of the existing manufacturing practices being adopted by the firm. When these experts come in, they would not only look at the equipment and other engineering and operational excellence parameters but also GMP (good manufacturing practices), microbiology challenges, sanitation processes, the shop-floor environment, employee engagement, and strategy alignment. Essentially, this has to be a cross-functional, multidisciplinary team.

The outsiders’ deep-dive has to be should be done on a regular basis across all departments and functions.

Build a culture that embraces quality

This is the most important element that is spoken about a lot yet rarely done well. The root cause of issues such as those at Kobe Steel was an inept culture.

Edgar Schein of MIT taught us that culture is not just what’s visible to us (such as policies, processes, structure, and behaviors) but also comprises values and assumptions.

Here are four things that are critical building a culture that brings “quality” and “customer” to the center of the enterprise.

1.Never let anything unacceptable go unnoticed.

This includes unacceptable behavior, unacceptable practices, unacceptable products, and so forth.

If there are practices that go unnoticed or overlooked, they become part of the organizational culture. For example, if the management of a manufacturing company does not reprimand or take action against employees who take shortcuts while doing inspection, employees will soon think that it’s OK to take shortcuts.

2.Make it safe for employees to speak out when something isn’t right.

This is not just about things in their work area but also on matters pertaining to other departments and even the larger organization. As a matter of fact, identifying abnormalities is an integral part of the lean thinking that has emerged from the Toyota Production Process.

Remember that employees who are closest to the processes, or frontline employees who are in contact with customers, have some of the finest ideas for improvement. Hence, it’s imperative to reach out for their ideas, not just on matters pertaining to their work but also about anything related to the larger company. I know of a few CEOs who proactively share even the larger business strategy with employees so they can question and contribute wherever is relevant. The top management of a company that encourages ideas not only demonstrates its openness but also shows it knows about the treasure trove lying in people’s minds.

3.Empower employees to take action if required.

For a shop-floor worker in a manufacturing company, this would mean having the authority to stop a machine if the output is not good quality. For customer-facing staff, this would mean having the authority to resolve customer issues on the spot.

4. Leaders in the company must lead by example.

They not only communicate the culture they want to but also demonstrate and live the values that the organization espouses, at all times. They know that if they want to see a positive culture change, they must demonstrate the change for others to emulate.

Clearly, there are no shortcuts to building a good culture. It’s both the little and big things that make it happen. Making quality an integral part of the organizational fabric is only possible when the CEO and top management lead from the front.

Three Reasons Why Customers Are Not Always Right

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We all know the famous quote, “The customer is always right.” It was coined more than a century ago. In the United States, it was popularized by Marshall Field during the early 1900s. In the United Kingdom, it was popularized by Harry Gordon Selfridge of luxury retailer Selfridge’s fame. Since then, businesses have used it generously to demonstrate their focus on customers. Don’t we still see CEOs, business owners, and shops proudly displaying this message in their office or place of work?

Although this focus is well intentioned, I wonder if they understand the impact of the statement? I have seen CEOs establishing it as a corporate mantra, reinforcing the idea among their employees by communicating it in all forums. If customer-centricity is what a business would like to embed, I would say this is a hazardous mantra to adopt because it can lead to not understanding what customers really want, set up false expectations, and worse, could demotivate employees.

The customer is not always correct, Let me tell you why.

1. Customers decide emotionally and express rationally

Customers are irrational. They often make decisions emotionally and are dependent on the context in which the decisions are made. If you ask customers why they love Coke over Pepsi, their preference will most likely be based on brand preference and it’s influence on their emotions, rather than a reasoned explanation.

Sometimes the decision is based on competing brands that are available on the shelf; sometimes it’s a sense of urgency created by the seller (saying the product is in limited stock); or the emotion generated by remembering an advertising jingle. For example, a supermarket selling German and French wine found that the type of in-store music being played influenced the sales of type of wines they sold. The day when the supermarket played French music, about 80 percent of wine-buying customers bought French wines. The day German music was played, most people bought German wines.

Another point is that humans’ desire for clarity is huge. So whenever we struggle to find an answer, we often jump to an immediate conclusion and reason that may not be accurate. 

Organizations need to get into customers’ shoes to understand what’s important to them. Hence the need to conduct anthropological studies to observe customers and their behavior in their habitats. Not surprisingly, Steve Jobs said, “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

2. Customers don’t understand the value proposition

To explain this point. Let me give you an example. You check into a budget, no-frills hotel, and then complain that you were not treated well. You had to carry the luggage to your room, there was no room service, the rooms were just cleaned once, and you felt unattended while in the restaurant.

However, none of those amenities were supposed to be there. This was a self-service hotel where the product proposition is about providing a clean, no-frills accommodation where customers are expected to do everything themselves. It’s foolish to compare this with the product proposition of a full-service luxury hotel, where from the time you enter the hotel door, you are treated like royalty.

The customer needs to understand the strategic positioning of the product and the segment that is it catering to. If you are going to buy a Maruti 100, you can’t expect the purchase experience of a BMW. However, customers often seem to forget that and then complain about it. Customers need to understand the value proposition being provided by an organization, and see if it aligns with their needs and expectations.

3. Customers can take advantage of company policy and employees

When the organizational mantra is, “The customer is always right,” it can preclude employees from doing what’s right for the organization. Let me give you a few examples. A customer knowingly makes a false claim about a defective product to a retailer. If the customer is always right, and yet the staff knows that the claim is false but aren’t allowed to take the correct action (perhaps denying a refund or return), this would clearly not be in the interest of the company.

Or let’s say a disgruntled customer mistreats a company employee. If the customer is always right, he will have to take the customer’s abuse without taking any action or informing higher authorities. This can severely demotivate staff. I am not saying that the employee should also mistreat a customer who has mistreated him. But if someone misbehaves, suitable action should be taken. The customer shouldn’t think he can get away with everything.

When customer-centricity is the objective, employees should always serve customers and meet their expectations predictably and profitably. However, they shouldn’t reward bad behavior. .

6 Reasons Why Real-World Stores Are Here To Stay

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Online portals can’t wipe them out.

With the rise of online retailers many observers had written the obit of physical stores. However, it’s clear that they jumped the gun. Physical stores keep popping up and even online retailers—like Amazon—are dabbling with real-world outlets to maintain their relevance. In India, too, we are seeing online players, such as Pepperfry and Firstcry to name a few, opening brick-and-mortar stores. So, don’t write off physical stores. They are here to stay. Here are the top six reasons for this.

1. Companies need to maintain multiple touchpoints with customers

Customers want to make a purchase at their convenience from the context they like. Hence retailers have to provide customers the flexibility to shop the way they want from wherever they want. They want customers to have an option to shop across channels spanning mobile, laptops, tablets, desktop, stores, phone etc. According to the Aberdeen Research group, companies with strong “omnichannel” strategies retained 89% of their customers, compared with 33% for businesses that were weaker on this front.

Having an omnichannel presence is no longer a matter of choice, but a must for business success.

Research done by Emma Sopadjiva, Utpal Dholakia ad Beth Benjamin found that omnichannel customers spent 4% more on every shopping occasion in the store and 10% more online than single-channel customers. Customers who used multiple channels spent 9% more in the stores than those who used single channel. The researchers noted, “Within six months after an omnichannel shopping experience, these customers had logged 23% more repeat shopping trips to the retailer’s stores and were more likely to recommend the brand to family and friends than those who used a single channel.”

Clearly then, having an omnichannel presence is no longer a matter of choice, but a must for business success.

2. Touch-and-feel will never be redundant

Customers want to touch and feel a product, and for that a physical store is the best bet. Before buying, people want to try on clothes, browse through a book, see the picture quality of a TV. They also want their questions to be answered.

However, this often works in conjunction with an online experience. For example, I often browse through books in a store and then order them online later. Flipping through a book myself helps me better gauge if it’s the right choice for me since customer reviews can sometimes be misleading. An ideal experience would be that the online store provides a personalised recommendation of books for me and then I go to the physical store to browse through them. When I am in the store, the online store should nudge me with various options. After which I can order the books through the app and they get delivered at home.

3. To differentiate and enhance brand engagement

In the crowded online retail space it’s very difficult to differentiate. Today there are so many stores which are vying for customers’ attention and they all depend excessively on Google. The company that spends more gets a better position on a Google search. However, stores can be used for creative marketing activities to improve customer engagement. Stores can even use the help of digital tools such as iBeacon Scavenger Hunt, In-Store Photo Booth & Social Sharing, Augmented Reality etc.

4. Customers need instant gratification

Customers often prefer instant gratification and have what they’ve bought with them right away. They are often not willing to wait for a couple of days for the product to arrive. As a matter of fact, a Retail Dive consumer survey found that 49% of consumers say they choose stores over the web because they want “to take items home immediately.”

A study found that 70% of millennials like brick-and-mortar stores better than virtual ones.

We should not forget the last-mile delivery issues which online retailers still face because of which products take longer to arrive than is acceptable to consumers. It will be a while before online retailers are able to replicate and provide the instant gratification that customers are seeking.

5. Customer behaviour is not easy to change

A recent study found that 85% of consumers prefer a physical store to buying online. A major reason is trust—they want to see and try what they are buying even if they use online channels to zero in on the product they like. What shoppers also like is assistance provided by service staff on the products that they are buying. The other issue that leads to a preference for physical stores is the willingness, or lack thereof, to share personal data. A survey done by Retail Dive found that 57% of American consumers do not find it comfortable to share their personal data. Also, if there are problems, a product can be returned instantly to the store rather than the consumer having to jump through hoops as often happens with an online purchase. These ingrained attitudes and behaviours serve as deterrents to adoption of online shopping.

6. Millennials want to spend time in stores

While millennials do spend a lot of time online, they surprisingly tend to prefer physical stores when it comes to shopping. A study found that 70% of millennials like brick-and-mortar stores better than virtual ones. This indicates that physical stores are going to critical in order to build a loyal customer base among millennials

Clearly, online and physical stores are here to co-exist together. Of course, the stores have to become “smarter.” As physical stores go digital it’s time to welcome click-and-mortar shops, click-and-collect stores etc. Regardless, if someone tells you that physical stores are going to vanish, don’t believe them.

Spotlight: Developing a relationship with customers can be a game-changer for SMEs

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Customer-centricity simply speaking means bringing customers at the centre of the enterprise and aligning strategies, decisions and actions to deepen this relationship with them over a period of time. Aligning strategies, decision and actions includes products, distribution, behaviour, business models, talent acquisition and so.

Deepening relationship is about increasing share of wallet and doing repeat business with the company. This holds true whether you are a MSME, SME or large corporate. However, a journey of customer-centricity is easier said than done. For MSME owners, to understand this journey, we must first put in place the foundational elements called the AUDI of customer-centricity: Align, Understand, Define and Inventorise.

A = Align for commitment
Alignment commences with the CEO and top management coming together and deciding to bring customer-centricity from the periphery of an enterprise to being a strategic-choice for achieving the company’s vision.

This is where the team commits to position this as a profit-driven cross-functional effort that encompasses the entire company. They put together a plan to pivot the operating system of the company around deep understanding of the customer and what they want to accomplish. This is followed by top management team going out and communicating to the rest of the organization, why this change effort is the need of the hour and what inputs they have.

An ideal process to follow here is the Japanese process of “catchball” which entails throwing back and forth this strategic idea of a “customer-centric enterprise” till it is developed and agreed upon by all. This entire alignment process can never be done in a short-cut.

Depending on the size of organisation, this can be a fairly long process. For example, when ICICI Lombard embarked on a journey of customer-centricity a couple of years back the initiative was led by the CEO Bhargav Dasgupta. The alignment process began with a top team comprising 60 leaders coming together and deciding that customer-centricity is going to be a key pillar to achieve the vision.

This was followed by a series of interventions to get rest of the employees on board which took a couple of months to complete. As Bhargav told me a couple of months back when I met him: “The heart of a customer-centric enterprise is employee mindsets in an organizational culture”. MSMEs should not think that as their size is small they do not need to do this. They too need to go through an alignment process before rolling out an agenda of Customer Centricity.

U = Understand the Customer Value Proposition
Do you know your customer value proposition? It is not just about the physical attributes or the specifications or what is before your eyes. It is the finer details that connect a product with the customers. A customer value proposition should clarify the benefits that consumers can expect from a product.

A value proposition canvas delineating all these should be drawn and communicated to all in the enterprise. What this does is that not only do employees grasp the value proposition better; they also get an idea about the role they have to play. When employees are not clear about the value proposition, it can have myriad gaps in areas such as design, production, delivery, after sales service etc. Also, customer-centricity is the business of all employees and when they exactly know the customer value proposition, they can communicate to customers if need be and not wait for the marketing team to do so. MSMEs often do not focus on this much. This is something that they need to get right.

D = Define what is the Service Intent
One thing that organizations often struggle with is lack of clarity on what the customer should experience while using the product. Service intent is a short definition of what customers would experience while interacting with the organization across touch-points. It is a statement that stipulates what experience would be delivered to customers.

This should include physical, emotional and experiential components that are easily understood by all. Ideally service intent should be short and easily understood by all. This gives clarity on the type of experience that the organization will deliver.

For example Hotel Ritz Carlton has a motto (they do not call it a Service Intent) which reads “We are Ladies and Gentlemen serving Ladies and Gentlemen”. W Hotel has two words service intent which is: “Whatever/Whenever” of W Hotel. For Taj Hotels, the service intent is called Tajness and talks about things such as Nobility, Care, Homage to Local Culture, Authenticity, Pioneering Journey and Sensorial Journey.

It is important to have a service intent in a language which the employees understand. For example, when Standard Chartered Bank, Tanazania embarked on a journey to improve customer experience with CEO Sanjay Rughani leading from the front, the top team with employee participation, came up with a service intent called: “Hapa CAS” (CAS stands for Care, Accuracy & Speed) Tuu”. This is partly in Swahili language and means “Here for our Customers” essentially stating that in all touch points customers would experience Care, Accuracy and Speed.

Remember, service intent cannot just be a one-time exercise. As Rughani says: “We at Standard Chartered Bank strive to deliver a quality and fulfilling experience through repeated reinforcement and engagements. The overarching message of service intent has to be repeatedly communicated to our employees so that it becomes a part of their DNA”. For MSMEs, a Service Intent can be a big differentiator. They should use service intent as an overarching mission to embed quality in processes.

I = Inventorise initiatives that matter

Once the leadership alignment is in place and there is clarity on customer value proposition and the service intent, the top management in participation with employees should come up with a laundry list of initiatives that would need to be deployed.

Some of the action items on this list should include clear roadmap, metrics to adopt, expected behaviors, processes to be optimized, technology to be adopted, understanding the customer journey, governance process, change management, positioning, capability assessment, structure, mindsets, analytics etc. This is not a one-time exercise, but something you will keep on listing at regular intervals as the journey progresses and new ideas and needs come up. Remember, customer-centricity is not an end, but a means to reaching the organizational vision. Initiatives and projects will get added as long as the organization focusses on customer loyalty and company’s economics.

So, before you embark on a journey of customer-centricity remember the acronym AUDI which we delineated above. The above learnings can be very effectively applied in MSMEs too. But this is only possible when the CEO takes ownership for the same. One thing that needs to be kept in mind is the CEO and top management can never soften the pedal around customer-centricity.

The writer is a recognisedname in Lean Management & Customer-Centricity and author of eight books. He is a Fellow of American Society of Quality and recipient of 2014 Phil Crosby Medal. He is currently the managing partner at Proliferator Advisory & Consulting.
To know more about him, visit: www.debashissarkar.com

3 Reasons Why Scientists And Researchers Need Formal Leadership Training

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Even brilliant minds need emotional intelligence and social competence.

I have had the opportunity to interact with many scientists and science researchers over the years. These are individuals who have spent their lives in academia or research institutes. Upon speaking to them, certain themes emerge again and again—curiosity, eye for detail, dedication, perseverance, deep subject matter expertise, cutting-edge research, applications, funding, problem solving, invention, innovation and impact. One thing that I never get to hear from them though is the importance of leadership in their work.

The myth prevails among many scientists that “leadership” is a soft skill that has little bearing in the world of science and laboratories.

What also stands out is that these scientists have attended myriad conferences, presented at various forums, written papers, authored books and gathered patents—but they have never undergone any form of leadership education. Some of them have taken up administrative responsibilities, yet have never attended any management development programmes. It’s a pity because when you engage with them about the challenges they face, it becomes clear that knowing the intricacies of leadership would have made them perform better and achieve more. Still, the myth prevails among many scientists that “leadership” is a soft skill that has little bearing in the world of science and laboratories. What’s sometimes also assumed is that whatever leadership skills are required, they can be learnt on the job.

Of course, there are forward looking scientists who understand the power of leadership and how it can impact their work. But these individuals are far and few. So what are three key reasons why scientists and science researchers need to think about leadership? Here’s my take.

1. Scientist need to influence

Whether it’s seeking grants or convincing diverse stakeholders of an idea or collaborating with industry or converting research findings into business or communicating ideas to the general public—scientists need to be able to influence others. Else, their ideas run the risk of mouldering in a Petri dish. To influence means to take along people or make them agree with your views. This is achieved by persuasion and inspiring commitment and not by exerting force.

To get people on board you need to understand their agenda and the approaches they want to adopt. This is where scientists need to develop political competence…

Like all other professions, this is probably one of the most important leadership skills required of scientists. Having the skill to influence others can make a big difference. There is so much scientists can pick up from the works of works of psychologists such as Dr Robert Cialdinior from management thinkers such as Samuel B Bacharach . For example, knowing their agendas is critical to influence people. To get people on board you need to understand their agenda and the approaches they want to adopt. This is where scientists need to develop political competence to scan the context and understand who is with them, who is not with them, what can be controlled, what can’t be controlled and how to create coalitions to move ahead with the proposed agenda. To develop such skills scientists need to either read or be taught about them. One cannot expect to acquire these skills without undergoing a formal leadership session.

However, there are and have been scientists who have been masters in the art of influence and how to communicate their ideas. I am going to talk about two individuals here. One is R A Mashelkar, the former director general of the Council of Scientific & Industrial Research who is just not an excellent researcher but someone who leveraged the art of influence to take Indian scientific research to a new level.

The other scientist was Charles Darwin who took the help of four stalwarts of that time— geologist Charles Lyell, botanists Joseph Dalton and Asa Gray and finally zoologist Thomas Huxley—to spread his theory of “The Origin of Species”—A great example of scaling an idea by taking the help of top influencers.

2. Scientists lead teams

Teams are an integral part of scientific pursuit. When a scientist invents or discovers something, it is typically an outcome of many people working behind the scenes.

A scientist trained in creating a shared vision or telling a compelling story would do a much better job than someone who has not developed the skills to do so.

The pursuit of science is a journey into the unknown where the goal is to discover things that were not known before. Here a scientist needs to create a compelling vision, make others believe in it and inspire them to undertake the journey towards achieving it. This is quite like a CEO who leads an organisation towards achieving a vision. A scientist trained in creating a shared vision or telling a compelling story would do a much better job than someone who has not developed the skills to do so.

Also, when there are teams, there are instances of dysfunctional behaviour. There are conflicts, issues around trust, commitment, cohesion, communication deficit, team engagement and so on. And formal training on how to manage teams and handle conflicts can make it easier for a scientist to handle such issues rather than let them affect the course of a project.

When scientists work on big ticket projects there is growing trend of putting together a multi-disciplinary team, some of whom could be beyond the confines of the laboratory and even be based in different continents. Such diverse teams are better at solving problems , they improve thinking and bring different perspectives to the table. However, a diverse team brings its own set of challenges. Not only do such teams have greater perceived conflict, they also cause larger discomfort among the team members. A scientist who has leadership skills can manage such teams very well.

3. Scientists need to understand the impact of their behaviour

Scientists need to understand the impact of their behaviour on others. For example, a tenured scientist may block the opportunities of a bright young researcher because he is threatened by his intellectual depth. Sometimes a lead scientist or a principal investigator creates a toxic culture in a laboratory wherein junior scientists and researchers are bullied and intimidated. They yell, belittle, repeatedly change work guidelines, put unreasonable pressure and criticise. This further gets accentuated when the team members are conflict avoiding, unassertive and don’t want to get their impending Master’s or PhD theses to be impacted.

Emotional and social competence could help boost a scientist’s career considerably.

Many times the lead scientist /principal investigator may not even be aware of the deleterious impact of his/her behaviour. He or she could be a brilliant mind but has never undergone management training that could expose him/her to people skills. Scientists, like other professionals, can be trained to recognise their emotions, understand the impact of their behaviour on others and so on. They could regulate their emotions better and thus minimise workplace disruptions. Emotional and social competence could help boost a scientist’s career considerably.

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