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MART Book

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For over 25 years, Pradeep Kashyap, Founder and CEO, MART, has been sharing his
knowledge at various CEO platforms, investor meets, marketing conferences,
academic institutions, and very recently he spoke at TEDx Events about MART as an
endearing organization and freedom from poverty. He has also spoken about rural
marketing, social marketing, rural transformation & innovation, business ethics and
leadership. We wish to share a few of these talks with you.

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MART Book

  1. 1. Pradeep Kashyap Founder and CEO, MART Demystifying Rural Markets
  2. 2. Pradeep kashyap, Founder & CEO MART, is known as the father of rural marketing in India. He is recognized as a thought leader and is a regular speaker at CEO forums in India and abroad. He has been Marketing Advisor to Ministry of Rural Development and has served on Prime Minister Office and Chief Minister Committees on rural development. He is a World Bank and United Nations consultant. He was Chairman, Khadi Commission National Marketing Committee and member of RBI, NABARD and SIDBI national advisory committees. He has worked in the private sector for the first 20 years with MNCs like EXIDE, BOSCH & DENSO, and the next 20 years as a rural development and marketing advisor. He has worked relentlessly to create tens of thousands of livelihoods for rural poor through collective marketing, public private partnerships and the 300 Gramshree melas organized in 75 cities for sale of rural products. He co-created Project Shakti with Hindustan Unilever to appoint 46,000 poor women from micro finance groups as company dealers. He has pioneered another low cost, last mile rural distribution model by appointing village entrepreneurs on bicycles for many FMCG and durable companies. He has also pioneered the concept of ‘Inclusive Marketing’. Mr. Kashyap was the only speaker from India at Cannes Lions 2008 among the 50 Global speakers that addressed the 2,000 participants in France, where his topic was ‘Rural India: The Emerging Market’. He was the key note speaker at an International conference in 2010 on inclusive marketing in Chicago. He has also given talks at University of Cambridge and London Business School, UK and was recently invited to speak on ‘MART – An Endearing Organisation’ and ‘Freedom from Poverty’ by TEDx DECCAN and TEDx Knowledge City respectively. He is President, Rural Marketing Association of India.
  3. 3. C O N T E N T S For over 25 years, Pradeep Kashyap, Founder and CEO, MART, has been sharing his knowledge at various CEO platforms, investor meets, marketing conferences, academic institutions, and very recently he spoke at TEDx Events about MART as an endearing organization and freedom from poverty. He has also spoken about rural marketing, social marketing, rural transformation & innovation, business ethics and leadership.Wewishtoshareafewofthesetalkswithyou. Creating an Endearing Organization Social Marketing Case on MART Inclusive Marketing My 7 Big Thoughts for the Rural Market Rural Game Changers Ethics, Excellence & The World of Management Managing India’s Rural Transformation Making India an Innovation Hub An Interview with the Emerging Markets Guru 02 06 12 16 20 22 25 30 34 38
  4. 4. 02 For the first 20 years of my professional life I worked with 3 multinational companies in India. During this period I acquired fair amount of material wealth and creature comforts. But the inner richness was missing from my life and a hollow feeling kept bothering me. It was around the same time I met my spiritual guru. He encouragedme toinquire into the purpose of life. The year I turned 40, I decided with the blessings of my guru that I should change the course of my life. I voluntarily opted out ofthecorporatesectortoservethepoor. In the initial years as a consultant to some NGOs and the government I got the opportunity to travel the length and breadth of this vast country and experienced rural poverty first hand. I had lived all my life in a city and never seen such abject poverty. This moved me. I realized I had to do something about it. I decided to start a professional organization to help create large scale livelihoods for the poor. But having experienced the impersonal, ‘what’s in it for me’ selfish culture of multinationals, I was determined that my organization would offer a strong sense of belonging and self-giving among its employees. I studied the different types of institutions in society – government organization,privatecompany,notforprofitNGO,andeven theinstitutionofmarriage.Irealizedthat‘Family’istheonly institution to which we continue to belong throughout our lives.SoMARTwasestablishedin1993on‘Familyvalues’. 1. NoDesignations In a family on one has a fixed designation. I am husband, father, son, brother and more. So in MART too no one hasadesignationandthereforethereisnohierarchy.We areaflatorganization. 2. LifelongBelonging No one leaves his family is our shared belief and we put this to practice. On completing 10 years service in MART every employee becomes a partner with 2.5% shareholding gifted by the company. We have already inducted 9 partners this way and in the next few years my hope is that MART would become a fully employee ownedorganization.Weareateamof100professionals. In the last 5 years only 5 people have left us of which 3 have rejoined. Against the industry average of 7% employees leaving every year, our attrition rate is less than1%. 3. Transparency A close knit family is transparent and shares problems, joys and information with each other. At MART we have taken transparency to an extreme. Every employee knowseveryotheremployee’ssalary. 4. Caring We celebrate all happy occasions of the family members and reach out whenever any member has a problem, including personal problems. Rajeev joined us two years creating an endearing organization the MART story August 30, 2011
  5. 5. 03 back as a management trainee. Last month his father who was visiting his son from Patna suddenly developed chest pain. He was rushed to hospital where he was diagnosed with two completely blocked arteries. He was advised immediate stents. The hospital admitted him and advised Rajeev to deposit Rs 250,000 by the evening. A distraught Rajeev came back to office and broke down in front of his senior expressing his inability to raise such a large sum of money at such short notice. By the evening the money had been collected from contributions by employees and deposited with the hospital. The next morning the surgery was conducted successfully.AfewdayslaterhisfatherreturnedtoPatna from where he remitted the money which was returned to the employees. I was away to Bangladesh when this happened. On my return an emotionally charged Rajeev metmeandsaid“HowcanIeverleavemyMARTfamily”. 5. CEOasHeadofFamily The role of the Head of a family is much larger than the CEO of a company. For example most professionals have joined MART straight out of college and several of them have got married while working with us. Many a times, the father-in-law to be met me before meeting the boy’s father, to check out career prospects of the “groom in consideration”. Pankaj an MBA worked with MART for 5 years but was unsuccessful in finding himself a suitable bride, despite persistent efforts by his parents. Reasons for rejection were, the boy is neither in government service nor does he work for a bank or a known private company. He works for some small, unknown consulting firm. What is this consultancy business anyway they would ask? So Pankaj decided to leave us. He joined a well known American organization and within a year found himself a lovely bride. Mission accomplished he rejoined MART. Four years into his second innings at MART he is the proudheadofahappyfamily-HumdoHamaredo. 6. NoJobDescriptions At home no work is considered menial. The same is true at MART. We scrub toilets and wash utensils happily when the cleaning person doesn’t show up. In keeping with this philosophy we do not have any written Job Descriptions at MART because we are ready to do any workthatneedstobedone. I am sure by now many of you must be thinking that whilst this family approach may work for a small set up like MART, surely large organizations cannot follow a family culture? There will be chaos. Well Toyota and many other Japanese companies follow the life time employment philosophy and host employees wedding receptions because the company considersitselfasheadofalargefamily. Inanycasetherearenoteven7000largecompaniesinIndia and together they employ less than 7% of the country’s work force. On the other hand we have 30 million small and tiny units, each employing an average of 7 people. If these enterprises adopt ‘family values and culture’ in their organizations we can hope to make 200 million employees and their families happy. This will lead to a much happier nation. OurPurpose Let me now come to our Purpose which is to help improve the quality of life of the poor. Whatever we do at MART is focusedaroundthispurpose.Itiscentraltoallourwork.We have shown that if you are passionate about a higher purpose and have a strong sense of family, even a bunch of ordinarypeoplefromBgrademanagementinstituteslikeus can deliver extraordinary results. Our clients include the best Fortune 500 companies and the best development agencieslikeTheWorldBankandUNorganizations. TEDx TalkTEDx Talk
  6. 6. 04 A glimpse of few of our large scale livelihood initiatives • We co-created ‘Project Shakti’ with Unilever where 50,000 poor, rural women across 12 states have been appointed as company dealers. These women have doubled their family income and utilize the additional earning on better healthcare and education for their children. • Webrought10,000tribalwomenfrom500villagesin6of the most backward districts of Orissa into a ‘Collective Marketing’ model. This initiative recorded a sale of 9 crorerupeeslastyear,significantlyenhancingincomesof thesewomen. Let me now come to our Philosophy which is enshrined in our logo. The two arms of the letter M are two people shaking hands which represent our commitment to teamwork and partnerships. The heads bent forward representourhumilityandrespectforall. TheNewGenerationOrganization Let us now look at the kind of organization we need in the twenty first century. We all know every organization has a mind but it also has a heart whether social or business. NGOs have compassion but often lack strategic thinking because of which their good work is not scaled. Diametrically oppositeis the corporate sectorthathires the best minds but these people lack compassion and are not able to empathize with the poor. The government, with due apologies often brings the wrong kind of heart and mind and therefore does not create impact. Fortunately NGOs are now talking about a business approach and are therefore moving into the Business Mind Social Heart segment. Similarly corporate are talking about CSR, green and social marketing. Even governments are realizing that they need to turn their approach the right side up. So the new generation organization will have a Business mind and SocialheartwhichiswhereMARThaspositioneditselfsince inception. Business mind is required to deal with the complex problems of modern society and poverty. Social heart is necessary to empathize with the poor so that the bestsolutionsarefoundtotheirproblems. Let me conclude with the Characteristics of this New GenerationOrganization. • It will be built on Family values which will lead to higher motivation, productivity and retention among employees • Byadoptingthephilosophyof‘whatisgoodforsocietyis good for the organization or what is good for the family isgoodfortheemployee.Profitswillcomefrompurpose and passion and not from exploitation. These organizations will believe if you live by a higher purpose, profits will follow automatically. Let me share MART works only for the poor and despite not receiving any BusinessMindSocialMind Social Heart Business Heart New Generation Organization New Generation Organization CorporateCorporate NGONGO GovernmentGovernment Business Mind Social Heart
  7. 7. Pradeep Kashyap grants from any source, we have been a profit making company,yearafteryearsinceinception18yearsago. • CEOs of these organizations will be Servant Leaders. They will maintain a simple and modest lifestyle. Peter Drucker, the legendary management guru advised companies that CEO salary should not exceed 20 times lowest paid worker. My salary as CEO is only 15 times. During the Global economic meltdown in 2008 salaries of many American CEOs were 200 times, reflecting the greed of our times. Fortunately there has been a lot of rethink since then and society is realizing that greed is notsustainableandwewillseeanew,moreausterekind ofleadership. SpiritualOrientation Spiritually teaches us we are all one. New generation organizations will co-operate and not compete with others. For the same reasons that we are all one they will share knowledgefreelywitheveryone. Emotional Quotient: These organizations will realize we needemotionalintelligenceandintuitivewisdomforbetter decision making. Such organizations will realize we are humanbeingsfirstandmanagerslast. 05
  8. 8. 06
  9. 9. IMS 2013 social marketing valedictory address March 16, 2013 Good afternoon. I spent the first 20 years of my professional life in corporate marketing with 3 multinational companies. For the next 25 years I have worked in BoP and social marketing. There may not be many marketers globally who would have been fortunate enough to work two decades each in corporate marketing and social marketing. I also have the rare distinction of having worked in most sectors -in the private sector for 20 years, with NGOs for 2 years, government for 3 years, donors, academic institutions and as an entrepreneur for thelast20years. I have been closely associated with social marketing for many years. I was Chairman of Khadi Commission marketing. It is the world’s largest social marketing organization providing part time livelihoods to 6 million poor, has 8,000 retail outlets and a turnover which is the same as Unilever in India. On behalf of CAPART I conceived and started Gramshree Melas for sale of products made by rural poor. 300 sales exhibitions have been held in 75 cities making it the largest mobile social marketing system in the world. My diverse experience of 45 years has given me a reasonably holistic perspective to different kinds of marketing. Over the next 45 minutes I will share insights from my direct experience. I suspect what I have to say may be somewhat different from what you have heard over the lastdayandahalf. In the 60s Prof. Philip Kotler defined corporate marketing as satisfying customer need. Let us understand who is a customer? She is an individual? Sure. But she is also a member of a family and the community. And hundreds of thousandsofsuchconsumersmakeupthelargersociety.So it would be correct to say the primary purpose of corporate marketing is to satisfy the needs of society through individual consumers. The objective of social marketing is also to satisfy the larger needs of society. I agree that in Corporate marketing need is satisfied largely through a product whereas in social marketing it is mostly through a concept. Further corporate marketing is for economic gain whereassocialmarketingisforsocietalgood.Butinessence both use the same 4Ps or 4As framework of marketing. The fundamental principles of marketing are the same; the differenceisreallyinthedetailandapproach. Further I am surprised there is a school of thought globally which advocate that social marketing should be mainstreamed. My question is mainstreamed into what? Mainstreamed into corporate marketing? Well I do not know about other developing countries but in India the annualturnoveroftheFMCGindustryisaboutRs1.7trillion whereas the annual spending of Central and State governments on social sector schemes is Rs1.9 trillion. You will agree these schemes could benefit from social marketing inputs to achieve their objectives better and create greater impact. So where is the logic of mainstreamingthebiggerpiecei.esocialmarketingintothe smallerpiece,corporatemarketing? I now wanttodraw an analogy with rural marketing. For the last two decades I have been the main crusader for the cause of rural marketing in India. For the first 15 years from 1995to2010,Imadethemistakeofpushingruralmarketing asaddontourbanmarketing.Evenmyfirsttext bookonthe subject which came out in 2005 bench marked rural against urban in all aspects. During these 15 years there were few takers for rural marketing in the corporate world. In 2010 I decided to change my approach and started telling Corporate India that rural is the largest segment of the Indian market and companies that ignored it would do so at their own peril. My second book on rural marketing which came out in 2011 I made no comparison with urban and treated rural marketing on its own merit. From last year I have become even more aggressive and now insist that urban should be bench marked against rural because the latter is bigger in size. Lo and behold, the interest in rural marketing among corporates has grown exponentially. Last year alone I addressed 150 CEOs across 6 cities of Mumbai, Delhi, Chennai, Bangalore, Hyderabad and Pune. I was also invited to address 10 Global investor meets in Singapore, London,MumbaiandDelhionthebusinessopportunitiesin rural India. I was a keynote speaker at dozens of seminars 07 Pradeep Kashyap
  10. 10. and conferences organized last year. The lesson to be learnt here is rural marketing got mainstreamed on its own merit, notbypiggybackingonurbanmarketing. The Fair Trade movement globally has been trying to mainstream for the last 30 years but without much success. The reason is simple. It has been trying to piggyback on mainstream marketing without addressing the critical issues of overpriced and poor quality products sold through a limited alternate distribution network. Same is the story of Social Marketing. The concept was introduced 40 years back by Prof. Kotler. All these years it has been trying to piggyback on corporate marketing. Both Fair Trade and Social Marketing are making the same mistake I made with Rural Marketing for 15 years. If we have confidence that socialmarketingisrelevantforsocietywhichitis,weshould treat it as stand-alone and I assure you it will get mainstreamed. Let me share an experience here. Way back in 1990 I taught the first course on Social Marketing in India at IRMA, Anand. I was surprised why no other B-school introduced this as an elective course? I am wiser in hindsight. I now know why this course did not spread to other institutes? Because I did not take the responsibility of convincing faculty and students of other institutes that this course was extremely relevant for a developing society like India and hence should be included in the list of electives. Aren’t International Marketing and Retail Marketing well accepted disciplines of marketing? So social marketing too can gain acceptance provided B-schools develop local coursecontentandmoreimportantly,Indiancases. In social marketing as indeed in corporate marketing the customer or beneficiary must remain at the centre. The objective of social marketing is to motivate individuals and society to adopt a new practice or bring about change in behavior. Love and caring is essential to achieve this objective. Unfortunately the language of marketing with phrases like grab market share and kill competition has become the language of war. War cannot win us customers, only love can. Prof. Kotler gave us the 4Ps of corporate marketing and Prof. Sheth gave us the more customer centric 4As of marketing. These have served us well. For socialmarketingIproposeanadditionalsetof4Ps. The first P stands for Purpose. Let me explain what it means in the marketing context. All marketers know what product or concept they sell, they also know its price, pack size etc. Most also know how they market the concept or product using appropriate communication packages and customer engagement platforms like the mela, haat, SHG meeting etc. But hardly any marketer knows why she is promoting the product, concept or cause.If the Purpose or beliefis not known how can a marketer be effective? Let me explain this What, How and Why of business with an example. What do Apple, Nokia and Samsung sell? All sell mobile phones. Right? How do these companies make the products? They use technology that is quite similar. Then Why is the market cap of Apple many times higher than that of Nokia or Samsung, it is in fact the highest among all companiesin the world. If the differentiator is neither the product, nor technology then what is it? Steve Jobs believed in challenging status quo, in thinking differently. His Purpose 08
  11. 11. was clear - to delight the customer every time whether it was with the ipod, smartphone or itunes. In a very small way I may share that the Purpose of MART is to improve the quality of life of the poor, whether through corporate marketing or social marketing. Our Purpose is central to every decision and action we take. The result is, despite not having received any grant or monetary support since the inception of MART 20 years ago and working only for the poor,wehavemadeprofityearafteryear. The next P stands for Passion. To establish a strong connect with customers social marketers need to have passion and feel compassion. We need to learn the language of love and shun the language of war because love will attract more customers to us. To understand their need and develop appropriate solutions we should follow a bottom up, co- creation process involving the beneficiary and the community. Unfortunately social programs are designed by senior bureaucrats in Delhi or in state capitals, people who have no understanding or direct connect with the local community. Further the program design is rigid and does not allow flexibility which is essential for a vast country like Indiawithsosuchregionalandlocalvariations.Thisonesize fitallapproachisthemainreasonwhysocialprogramshave not delivered desired results. The other reason is that a systematic social marketing approach has not been adopted to improve effectiveness in designing, planning andexecutingtheseprograms. 09 Pradeep Kashyap
  12. 12. The third P is about People, about beneficiaries and society. What governments need to understand is ‘what is good for society should be good for the government’ and not the otherwayround. The last P stands for Partnerships. Rural transformation is a colossal task and requires effort from all stakeholders, not just the government. We need to build strong partnerships between government, NGOs and private sector but these must be win-win partnerships where value is shared equitablybyall.SoSocialMarketingisaboutpartnerships. There are some differences between corporate marketing and social marketing as mentioned earlier. Corporate marketing follows a transactional framework. The seller offers products which customers buy to satisfy a particular need. Social marketing is far more complex because more often than not it involves behavior change. In many cases the beneficiary does not feel the need to change behavior. For example people believe washing hands with water before a meal is good enough and they do not feel the need to wash them with soap. In other cases the new behavior is seen to be beneficial but the person does not have the will or motivation to bring about that change, for example giving up smoking. In such cases the communication has to be very convincing and compelling, it must invoke a strong desire in the person to change a deeply ingrained habit. It calls for action. Unfortunately most bureaucrats carry the wrong perception that to deal with the poor professional marketing inputs are not necessary. Unilever and KVIC have the same annual turnover but the former employs hundredsofMBAswhereasthelatteremploysnone! Social marketing requires professionals with a Business Mind, Social Heart approach as they need to feel compassion for the poor. On the other hand corporate marketing is all about Business Mind and Business Heart where marketers develop aggressive strategies to grab market share and seduce consumers to buy their brands. Corporate marketing focuses on Profit whereas social marketing focuses on People. Corporate marketing is about Product,socialisaboutProcesses.Withthesedifferencesin approach and attitude if we try to mainstream social marketing into corporate marketing it will lead to a clash of values. 10
  13. 13. thank you I would conclude by saying that in India as in many developing countries social marketing is a big business opportunity and therefore deserves special focus. As it requires a different mindset from corporate marketing it needs a standalone status. Frankly it has not got serious recognition so far because not many marketers know the size and potential of the social marketing industry. I sincerely hope some evangelists will emerge in the coming years and they will create awareness about the importance of social marketing in transforming society. I can assure these evangelists they will enjoy the early mover benefitsin socialmarketingasIdidinruralmarketing. Government is the biggest customer of social marketing. We need to ensure larger participation from rural development, health, social welfare and other departmentsof thegovernmentinsuch seminars tobeable to convince government on the benefits of social marketing for social change. As a beginning I would suggest BIMTECH should circulate the recommendations of this seminar to secretariesofrelevantgovernmentdepartments. The summit has made a good beginning to sensitize civil society and academics on the advantages of social marketing. The effort cannot stop with just one workshop. BIMTECH and other participating organizations should collectively start a social marketingmovementbyopening a dialogue with other academic institutions as also organize one on one meetings with decision makers in the government. 11 Pradeep Kashyap
  14. 14. case on MART Professor Ishwar Dayal* by Afteran engineeringdegree from BITS,Pilani in 1969, Pradeep Kashyap served in three multinational companies in marketing. He completed a one year, part-time post graduate management diploma in 1974. His last assignment was as Head of Marketing of a large Japanese auto ancillary. The job required extensive travelling and experience in widely different areas. Pradeep was innovative in his job and was appreciated by his peers and supervisors. Pradeep said ‘I come from a well- to-do family and the job gave me material comforts. I was able to construct a house in South Delhi at a young age of 29 years. Butahollowfeelingkeptbotheringme’. In 1980 he accompanied his wife to her family Guru’s ashram. Pradeep had several discussions with the Guru about the meaning and purpose of life, and was greatly impressed by his ideas and the model farm and dairy in the ashram. The Guru suggested that working for the rural poor could be more meaningful. He explained that when you work for money, you are alone but when you work for others, the world works behind you. In 1987, the year Pradeep turned 40 he resigned from his corporate job after 18 years in the sector. Initially he worked with an NGO for 2 years and thereafter as a Marketing Advisor to the Ministry ofRuralDevelopment,GovernmentofIndia.Heestablished MARTin1993. For the next 10 years Pradeep and his small team worked on minimal remuneration for several NGOs, Central and State governments and donor agencies on poverty reduction programmes for which he travelled extensively in rural areas. Several families produced traditional handicrafts but they had no knowledge of what products will sell or how to access city markets. Pradeep undertook market research, product modification and created a mela system for sale of rural products in urban areas. This involvement of MART with producers continues and has expanded over the years. Because of their committed approach and deep involvement in rural areas, MART is funded by many agencies and often have been chosen in preference to international and larger organizations. As an illustration, MART is working as Livelihood consultant to World Bank funded project in Orissa and Maharashtra to create large scale, sustainable livelihoods for the rural poor in the forestry andagribusinessareas.Earliertheywerefundedby World Bank and Department of International Department (DFID), UK on creationof largescale,sustainable livelihoods for the rural poor in AP, Tamil Nadu and MP. One reason why they are chosen over others came from an associate who said, ‘MART is dedicated to the work they do. Technically their approach is superior, they research the market thoroughly to improve the lives of the poor, because rural developmentistheirmission.’ In 2000 a corporate house approached MART to undertake research for their product in rural markets. This was the genesis of setting up a corporate rural marketing division. Since then MART has worked with many Fortune 500 and large Indian companies, in market research, product development, go to market strategy and promotion assignments. MART focuses on what people need, not merely on sale of a product. They modify, or redesign, or suggest alternate uses to the advantage of the community aswellasthemanufacturer. 12
  15. 15. TalkingaboutthecontributionofMART,Pradeepgavesome examples. He said 'we co-created Project Shakti with Unilever where 50,000 poor rural women across 12 states have been appointed as company dealers. These women have doubled their family income and utilize the additional income on better healthcare and education for their children'. ‘We brought 10,000 women from 500 villages in 6 of the most backward districts of Odisha into a Collective Marketing model. This initiative recorded a sale of 90 million rupees in 2011, significantly enhancing income of thepoorfamilies’. ‘IstartedGramshreemelasin1989forsaleofruralproducts in urban areas by artisans. Three hundred melas have been held in 75 cities. These have benefited 100,000 poor producers and encouraged them to continue their craft in thevillage’. ‘Whatever work we undertake from government or corporateclients,ourprimaryfocusremainstheruralpoor’. ‘We have developed a last mile rural distribution model for Colgate involving local youth on cycles as entrepreneurs. We have promoted TATA corrugated roofing sheets through haats’. ‘We have enabled development of low cost health care products like baby warmers and ultrasound machines for a multinationalcompany’ . ‘We have co-created a unique business model with NOVARTIS in 5 states for treating TB patients in rural areas by activating the private sector health delivery channel – doctors, testing labs, chemists and local youth as health entrepreneurs. Three million people have been exposed to this programme and 12,000 patients cured over a 2 year period’. WithdedicatedmanpowerMARThasinnovatedandhelped in creating a variety of services in rural areas. In this process they have also created Public Private Partnerships to benefitlocalcommunities. Organizationalorientation MART expands the nature of work around individuals who have interest in that area. The approach of MART is that projects should not be forced upon people. Rather project leaders should choose the project. Once responsibility for the project is decided, the person chooses his team and handleseverythingthatisrequiredfortheproject. Pradeep said that he wanted to develop an organization where people are self-giving, they work to improve quality of life of people and society, and are driven from within themselves rather than wait for external motivation. He wanted people to feel free, work in teams and learn from oneanother,andhaveasenseofbelonging. His experience of over 40 years in multinationals, business and government repeatedly shows that managers tend to develop an attitude of ‘what is in it for me’, competition, secretiveness, groupism, maneuvering and work for personal rather than organizational and social goals. His experience of different kinds of organizations shows that the only organization that ensures lifelong belonging is the family.MARTismodeledonfamilyvalues. MART has no hierarchy at work. When a project proposal comes to MART, a group of two or three senior consultants discuss it and depending upon the interest, knowledge and experience, involve other colleagues. The Project leader chooses his team in consultation with senior colleagues, keeping in view the expertise that would be needed in carrying out the Project. Once a team is formed, they take overtotalresponsibilityoftheProject.TheProjectteamcan discuss with anyone they wish or seek new knowledge 13
  16. 16. inputs. As a team works on the project, success or failure is attributedtotheteam,notanyindividual. Employees are free to move from one group to another and approach any one for technical or personal help. Everything beingopenandknowntoall,thereareno‘behind-the-back’ or office gossip. In case of personal differences, the individuals resolve among themselves. In case anyone violates the norm the effort is to discuss the problem with him or her, and encourage him/her to learn from the mistake.Inthelast5yearsonlyfiveemployeesleftMART,of these3haverejoinedand theothertwowanttoreturn.The average age of employees is 30 yrs, the oldest being 42 yrs. Formany,MARTisthefirstjob. MART works only one Saturday of the month where some external expert is invited for a talk, followed by lunch for everyone. If an individual wants to attend some training programmeofhisinterest,MARTmeetshalfhisprogramme fee. If the organization sends the individual for any chosen program,allexpensesaremetbyMART. There is no stigma attached to failure. Several colleagues sit down to analyze the reasons of failure and genuinely try to learn from the experience. This is seen as strength of MART because they do not hide failures as people often do in manyorganizations. An employee becomes a partner after 10 years service and MART gifts him/her 2.5 % share of the company. Pradeep expects that over time everyone in MART will become a partner and the company will be owned and run by them. All decisions are taken in meetings where anyone can raise an issue or problem. Everything is open at MART- salaries, accounts,plansandallsuchmatters. ReactionsofemployeestoMART Some comments made by individuals in my interviews with them about their work and life at MART. All the comments are made without probing. In some cases I asked for some events,situationtosupportabstractandopenstatements. ‘I had come to Delhi in search of a job. I was engaged in some odd jobs, when a friend suggested I go and see Mr. Kashyap. My first impression on meeting him was he was totally unassuming, open and friendly. He shared his plans and his vision, and I made up my mind thatI wanted towork for him. He said that he had no opening but he will contact me when he had one. My mind was made up and without waiting for his call I called him within two days and told him that I want to join. He said that he could not pay much salary. I said I don’t mind. Soon after I joined we got a big World Bank project, we have not looked back for work after this project. I experienced professional and personal growth and cooperation at work I had not experienced elsewhere’. ‘Pradeep Sir is the caringHead of the MARTfamily and not a typical, formal CEO in a company. He is always available when you need him. I go to him for my personal problems, besidesworkrelatedissues’. ‘He talks to people at their own level. It is easy to talk to him aboutpersonalproblems’. ‘In every project I learn something new. MART has helped mewidenmyinterest,Ienjoymywork’. ‘MART provides continuous scope for enhancing my knowledge, innovation and experimentation with ideas. We work on projects in a team. From day-one whenever I talkedaboutmyhavingdonethisorthat,Pradeepcorrected metosaythatachievementorfailureisoftheteam,andnot thatofanindividual’. ‘The work environment is relaxed. There are few rules and regulations imposed on us from above. Decisions are taken inmeetingsbyconsensus’. ‘During my college days Mr. Kashyap had come to deliver a lecture. After listening to him and going through the website of MART, I decided that I wanted to work for this organization. I was selected in the campus interview. After joining, I found MART to be even better than what I had imaginedittobe’. ‘Of all the places I have worked, MART has given me maximum freedom to work, opportunity for self development, respect, colleagueship and variety in work. Eachprojectisdifferent’. ‘MART is a very open organization. We believe in collective decisions and I am, like others, a part of the process. We can express our views openly. We can disagree with a point withoutfearofpersonalrisk’. 14
  17. 17. ‘MART helps us mature our thinking which makes me feel goodaboutmyself.Itisgoodtoshareideaswithfriends.The experience here makes you grow and gives you confidence inyourself’. ‘Mr. Kashyap does not speak much but he knows what everyone is doing. He listens to our personal problems patientlyandresolvesthem’. ‘Comingtoofficeislikecominghome’. ‘Ihadapersonalproblemathomeandcouldseenosolution other than resign from the company. Before sending a formal resignation, I felt obliged to personally tell Mr. Kashyap about my decision. He found a solution that had notoccurredtome.Ididnothavetoleavethecompany’. ‘Whenever I approach anyone in MART with personal or work related problem people co-operate. The other day I went to a senior colleague who was busy completing a *CaseiswrittenbyProf.IshwarDayal(doyenofmanagementeducation,hetaughtatIIMCalcuttainthe60s,wasseniorfacultyandmember of management committee at IIM Ahmedabad when Ravi Mathai was Director. Later Prof. Dayal served as Founder Director of IIM Lucknow), as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright is held by Birla Institute of Management Technology, Greater Noida. All rights are reserved. No part of this publication may be reproduced, stored in a retrieval system,used in a spread sheet, or transmittedin any form or by any electronic, mechanical,photocopying, recording, or otherwise without the permission of Birla Institute of Management Technology, Plot No. 5, Knowledge Park II, Institutional Area,GreaterNoida,(NCR),U.P.201306 report. He put his work aside to discuss my problem and resolvedit.ThisishowweworkinMART’. MART has to grow in staff numbers and the expertise it currently offers, and expand its geographical reach to respond tochangesin rural markets.The strengths of MART lie in its conceptual approach, knowledge-base and dedication of its people. However, as the rural scenario changes, MART may have to develop new skills, experiment with new approaches, and remain one step ahead of other organizations in providing cutting edge knowledge. MART has started an internal dialogue on these issues. MART believes its strength lies in the leadership and the family- like work environment. The model is derived from their conviction, belief and commitment to the organizational attributes and the workculture. Experience suggeststhatin an affiliative society like India, Western approaches have generally failed to create the desired work culture. What should MART do to sustain its culture while growing its businessandstaff? 15 Pradeep Kashyap
  18. 18. Good Morning Ladies and Gentlemen, On behalf of MART and BIMTECH it gives me great pleasure to welcome you to the Indian Marketing Summit on the important topic of ‘Inclusive Marketing’. The Bottom of the Pyramid market has generated a lot of interest among corporates in recent years. The reason simply is that the 650 million people, each earning less than a dollar a day collectively amount for 30% of India’s income and consumption. They represent a 165 billion dollar market. Some companies have quickly tried to tap into this market by offering inferior or stripped down products at reduced prices. Others haveoffered obsolete products with no adaptation to meet usage needs of the poor. It is therefore not surprising that not many companies have been able to unlock potential of this low income market. The real challenge is that though the total market is huge, the per capita income is a paltry Rs 40 per day. As BoP marketing looks at the poor as consumers only it cannot be expectedtoincreasetheirincomesnorreducepoverty. For the social sector the challenge is to increase incomes of the millionsof poor engagedin the handicrafts,handlooms, dairy and other sectors. The promotional agencies in these sectors lack professional marketing support and hence are unable to help the poor get better value for products made bythem. This brings us to ‘Inclusive Marketing’, an approach that looks at the poor not only as consumers but also as producers. This approach offers promise to add economic value to goods and services contributed by the poor. It can therefore impact poverty positively. ITC’s E-choupal is a perfectexampleofinclusivemarketing.Thebusinessmodel ensures that farmers as producers get better value for their produce. Once their incomes are enhanced the model then uses the same channel that was created for procuring produce to push relevant goods and services needed by the farmersasconsumers. inclusive marketing Keynote Address 16 February 22, 2008
  19. 19. As the chief mentor of the summit I therefore felt we needed to ask some candid questions about the promised benefits of inclusive marketing. Once the questions were articulated we then decided on specific topics so that the summit could engage in focused and meaningful discussion. Thecriticalquestionsweposedwere • Whatcanmarketingdoforthepoor? • How can poor be included in the free market system? Andfinally • CanInclusiveMarketingofferawayoutofpoverty? Letusstartwiththefirstquestion WhatcanMarketingdoforthepoor? Governmentpoverty reduction programs assume thatpoor are unable to help themselves and hence they are treated as ‘beneficiaries’ who need a generous dose of grants and subsidies for their income generating activities. This traditional approach has not created sustainable solutions because once the funding is withdrawn the activities collapse. On the other hand a market based approach focuses on the poor as consumers and producers and on solutions that can make markets more efficient, competitive and inclusive so that BoP can benefit from them. The market oriented approach recognizes that only sustainable solutions can be scaledtomeettheneedsofthe650millionpoor. Corporates are known to use marketing as an effective tool to first understand the needs of consumers and then offer appropriate products and services to fulfill their need at affordableprices.Thechallengeinfrontofusishowcanthis effectivetoolofmarketingbeusedtohelpincreaseincomes of the poor and empower them. I am sure we can look forward to some answers from the successful initiatives such as the treadle pump and Grameen phone initiatives thatwillbepresentedatthesummit. If marketing skills of promotional agencies (Khadi Commission Handicrafts & Handloom agencies) and NGOs that are engaged in the non-farm sector are enhanced these agencies will then be able to help the poor get better valuefortheirproductsandhigherincomes. How can the poor be included in the free market system? India’s GDP has been growing at an impressive 7-8% for the last several years. The country is witnessing a significant improvement in physical infrastructure such as IT and road connectivity, tele-connectivity, warehousing, electronic commodity exchanges and transport. This has opened up manynewopportunities. But BOP is often not integrated into the market economy and therefore does not benefit from it. Engaging the BOP in the formal economy must be a critical part of any wealth generating and growth strategy. Let us take the example of the labour market to explain this point. Two thirds of the labor force is the BOP segment. Currently they earn low wages and do not get regular work. Recent CII and Planning Commission studies have identified Tourism, Construction, Retail and Healthcare as high growth sectors. These sectors canabsorbmillionsofworkersintheorganizedsectorofthe economy provided their skills are upgraded at higher incomelevelsandbetteremploymentbenefits. 17 Pradeep Kashyap Marginalized Inclusive Marketing Approach Producers Consumers INCLUSIVE MARKETING NGOs/Govt. Private Sector Innovation Co-Creation Partnerships Sustainable Incomes
  20. 20. In the fastest growing services sector which now contributes 60% to GDP if domestic servants, plumbers, electricians and other service providers living in urban slums form themselves into marketing collectives they can negotiate better rates for their services. They can also look at providing services to large contractors and builders and thus enter the organized economy, something they can neverhopetoachieveindividually. The rapid spread of InformationTechnology will also ensure greater inclusion of the poor in the market as they can now have access to market information hither to the exclusive reserve of the rich and powerful. For example the poor can now access prices of commodities in different mandis (agri-markets) through the new, transparent electronic exchanges or receive this information through SMS on mobiles. Marketing cooperatives of small farmers will help them achieve scale and will allow them to access bigger markets and get better prices for their produce. The case of AMUL thatwillbepresentedatthesummitisanexcellentexample of milk production by millions of individual dairy farmers and processing and marketing centrally under the strong AMULbrand. Corporates too stand to gain by engaging with the poor as they can get skilled manpower for their growing businesses and aggregated supply of raw materials and other produce. Buttogetthisbenefittheywillneedtocommitresources. Can inclusive marketing offer a way out of poverty? From the time economic reforms were set in motion in 1991, the gap between the rich and poor has only widened and the absolute numbers of poor has not declined significantly. Special efforts will therefore have to be made to enhance incomes of the poor using inclusive marketing approaches. Public – Private partnerships is one such approach that can benefit the poor. But it should be a win-win model that offers benefits to all stakeholders equally. Such equitable, market based models are more likely to be sustainable as they utilize the best strengths of each partner. ITCs e- choupal mentioned earlier and Project Shakti that was co- created by HUL with MART are examples of successful PPP models. In Project Shakti for example the SHG women benefit because of the additional income they earn from this business, the company has been able to reach their brands to remote villages which was not possible earlier because of high distribution costs. It has helped the Inclusive Marketing is an approach that looks at the marginalized not only as consumers but also as producers/suppliers. This approach uses innovative co- creation and appropriate partnerships offering promise to add economic value to goods and services contributed by the marginalized. It creates solutions that can make markets more efficient, competitive and inclusive. It can therefore impact poverty positively. 18
  21. 21. government in meeting its objective of reducing poverty by creating more livelihoods and NABARD has benefited because the loan off take has gone up. Rural Business Hubs ofthegovernment,DhristeeITkiosksandHPRasoiGharare some new initiatives that will be presented at the summit which will enhance our learning on this important area of inclusivemarketing The micro-finance model is one PPP initiative that has achieved scale and sustainability because of the active involvement of the different stake holders – the poor themselves, NGOs, government and financial institutions. Several learning from this successful model can be applied tomakenewPPPinitiativessuccessful. To conclude I believe enlightened corporates will consider inclusive marketing part of their market development strategy because as BOP incomes rise it will translate to higher business growth for companies. For development professionals inclusive marketing can help empower the pooreconomically. We have lined up a galaxy of eminent speakers from India and abroad including some of the best marketing minds. You will benefit immensely from their vast knowledge and experience. I am personally grateful to each of them for having honored my request to address the summit despite your busy schedules. I would like to say a big personal thank youtoallofyou. The next two days promise to be exciting and packed with new learning. We can look forward to getting some definite solutions from the presentations, discussions and individual interactions that take place during the tea and lunchbreaks. 19 Pradeep Kashyap
  22. 22. Rural Boom: By 2015 it is expected that every village will be connected by an all weather road, every 1village will have internet connectivity, and a large majority of homes willhaveelectricityand possess a mobile phone. This significant improvement in rural infrastructure coupled with agriculture reforms already under way we can expect rural markets to reach inflexion point. This will lead toanexplosionindemandthewayithappenedintheurban marketsin the mid 90s as a result of easy consumerfinance, a boom in the IT sector and steep increase in corporate salaries. Companies are not anticipating this boom and manywillbetakenbysurprisewhenithappens. Reverse Innovation: Ever since the BoP concept was introduced at the turn of the century many 2companies have tried to transform their business models through single serve sachets, low cost production, extendedmomandpopdistributionandNGOpartnerships. But in the rush to capture the fortune at the base of the pyramid, something may have been lost-the perspective of the poor themselves. In my view most such initiatives have failed to hit the mark. Pushing the company’s reformulated or repackaged products into villages may indeed produce incremental sales in the short term. But in the long term, this strategy will almost certainly fail because the business remainsalientothecommunitiesitintendstoserve. For decades, MNCs have sold modified products in India, a process widely recognized as glocalization. This strategy worked reasonably well with the more affluent urban consumers whose behavior is somewhat similar to Western consumers. . my 7 big thoughts for the Rural Market 20
  23. 23. With growing rural purchasing power and the three times larger population than urban, companies will need to develop appropriate products for this market. The glocalization or minor modification will not work as rural consumers are very different. This will call for a reverse innovation approach, totally opposite to the glocalization approach. This will involve a bottom up, community embedded process of co-invention and business co- creation. Such an approach will bring the company into close, personal business partnership with BoP communities. While creating enduring value for the community, it will establish a foundation for long-term corporategrowthandinnovation. New price-performance paradigm: What the rural market requires of products is delivery of decent performance at very low cost. My advice to companies is to aim for 75% performance at 50% cost. Nirma or Ghadi washing powders are excellent lower performance-low cost products compared to the global Surf and Ariel brands. Rural consumers are interested in derivingcorebenefitfromtheproductandtheselowpriced brands essentially clean clothes adequately. Users are not worried if these powders don’t have a softener or whitener. The sachet as a solution of making the offering more affordable will not work in the long term as the price still continuestoremainhigh. Innovative rural distribution: The biggest challenge in rural remains reaching your product to 600,000 villages compared to 7,800 odd towns in urban. A few new rural distribution and procurement models have been innovated by ITC e-choupal and HUL Project Shakti. But much more needs to be done in this area. One possibility is the use of the social infrastructure being created by government. For example there are over 7 million women’s micro-finance groups in existence and by 2015 the number of groups is expected to jump to 15 million. Thus 150 million rural women or 150 million of the 200 million total households in rural would be linked to self help groups. Can this channel be used innovatively to reach productsandservicestoruralhomes? Dedicated Rural teams: Companies will need to shift power to where the growth is by dedicating empowered teams for the rural markets so that they can develop their own strategies and products. A separate 3 4 5 sales force is also desirable as the regular force will avoid covering the more difficult and small off-take rural markets. MBAs from B grade small town institutes should be hired. Not only will they work at much lower salaries but will stick aroundastheybelongtothelocalareas. Inclusive marketing: This is a new concept I have created which goes much beyond BoP. Inclusive marketing looks at the poor not only as consumers but also as producers/suppliers of goods and services. This approach offers promise to add economic value to goods and services contributed by the poor. It can therefore impact poverty positively. ITC’s E-choupal is a perfect example of inclusive marketing. The business model ensures that farmers as producers get better value for their produce. Once their incomes are enhanced the model then uses the same channel that was created for procuring produce to push relevant goods and services needed by the farmers as consumers. Government and the private sector need to come together to promote inclusive marketing and grow the size of the rural pie through the development of reverse distribution channels rather than companies fightingwitheachothertograbshareofthelimitedpie. New Opportunities: Rural markets now offer a numberofnewopportunities. • Healthcare: Total rural spending on health care currently is Rs 700 billion and expected to reach Rs 3.5 trillion by 2025, an impressivefivefold increase. Despitethe launch of the National Rural Health Mission 80% of health spendingwillbeintheprivatesector. • Durables consumer financing: In the 90s consumer finance became available easily which led to high growth insaleofdurables.Ruralconsumerfinancehasbecomea big opportunity only now with rapid electrification of ruralhouseholds • Banking: According to a World Bank study bankable peopleinruralIndiais185million. • Construction and Housing: Currently there is shortage of 40millionhousesinruralIndia. In conclusion I would say the next growth will come from the rural market and companies that ignore this segment willdosoattheirownperil. 6 7 21 Pradeep Kashyap
  24. 24. rural game changers EEMA Talk July 30, 2012 22
  25. 25. Iwould like to thank EEMA for inviting me to this event. The theme ‘Time for Change’ is perhaps most relevant for rural marketing. With your permission I will take the liberty of being a little provocative in my talk because my intention is to make you sit up and seize the big rural opportunity. Can anyone guess how big is the Indian rural economy in terms of size or share of the total economy? Just the rural economy of India is bigger than the total economy of Canada. It is a one trillion dollar economy. Rural contributes 50% of India’s GDP. The 7,800 small towns with populations below one million account for another 25% of India’s GDP. Soruralandsmalltownsaccountfor75%ofIndia’sGDP.The 50 top cities account for only 25% of our GDP but attract 100% of the attention of marketers and event agencies. Whatanirony? Thereasonforthisisthereisverylittleunderstandingabout the rural market. There are a number of myths which stem from ignorance among marketers and agencies. The first is that rural is a homogenous mass. Nothing could be further from the truth. We have 28 states, 56 soci-cultural regions, 16 official languages, 4 major religions and varying levels of literacyacross states.RuralIndia isthemostheterogeneous market in the world. But unfortunately activation agencies follow a mass population approach using a van. This does not create the desired impact and the clientsoon loses faith in the potential of the rural market. Later in my talk I will share the concept of strategic activation and show how it is very different from mass activation and can therefore achievemuchbetterresults.Thesecondmyth isthatruralis all about agriculture. So if the monsoon is weak we conclude rural demand will be poor. The reality is that 60% of rural income now comes from the non-farm sector and services. So demand in rural India is not dependent only on the monsoon. The third myth is that rural is all about product marketing. The reality is that services including retail, banking, insurance, education and health contribute more to rural GDP than agriculture or manufacturing. The fourth myth is that there is mass scale migration from rural and very soon most people will start living in cities. The reality is very different. Sixty years after Independence two thirds of the populationcontinues tolive in villages.Evenby 2020 this figure will be 60%. So the majority of Indians will continuetoliveinvillages.Thefifthmythisthatruralpeople buy cheap products. The reality is that Clinic, an expensive brand is the largest selling shampoo in rural and not the cheaper Chic or Velvette. Same is the case with many categories.Ruralpeoplebuyvalueformoneyandnotcheap products. Rural accounts for more than half the country’s sale of FMCGs, durables, services or vehicles. If this be the case then why aren’t more companies engaging agencies for activation,awarenessgeneration,trialsandconversion. There are many reasons. The first is that marketers themselves have little understanding or knowledge about rural markets. Remember when they attended Business School years ago institutes did not offera course on rural marketing. The other irony is that all consultancy firms give strategy on urban markets only because their MBAs too do not haveknowledge on rural. It is like the health care sector. 70%ofourpopulationlivesinruralIndiabut80%ofdoctors’ practice in urban India. Do you know that besides my organization MART there is no full-fledged rural consultancy organization in India that can recommend distribution models, pricing strategy, communication plans and other elements of go to market. So when a company decides to enter the rural market it often invites MART to conduct a one or two day sensitizing workshop on rural marketing. Thereafter the company develops its plan of action. The first step is to identify certain potential geographies and then commission a market study to understand the rural consumer, her purchase behavior, lifestyle, brand usage and attitudes etc. Most research agencies in India use numeric western tools for measuring responses which are not appropriate when interviewing illiterate rural people. The other problem is research agenciesdo not havedeep knowledge of the rural sector. So their findings do not givemuch direction tothe company on go-to-market route. This is where things slowdown. The point I am trying to make is that it can take a company up to 2 years before it is ready for the activation phase. Agencies like yours can help to cut short this waiting period if you 23 Pradeep Kashyap
  26. 26. have knowledge about rural and proactively engage with the company during the planning stage of the activation strategy. Otherwise your wait as a passive agency today can be very long and frustrating? At this stage the question I would like to ask all of you is what steps have you taken to acquire knowledge on the rural sector? For example how many of you are aware of the Rural Marketing Association of India, a knowledge body. How many of you have contactedourassociation?Howmanyofyouhaveattended training programs on rural marketing? How many have a copyofmybookonruralmarketing,astandardtextatevery IIMandpremierB-schools? Let us now examine the approach of agencies to rural activation. For years event agencies have recommended van operation as the only solution for all rural activation needs. Have we made effort to innovate new solutions? SadlytheanswerisNO.15yearsbackIconductedanational study of haats, the weekly markets and found this platform tobe appropriate for promoting rural brands bycompanies. For the next 15 years, agencies recommended haat campaign blindly to every client irrespective of the nature of product, type of consumer or her shopper behavior. I think agencies will have to play a far more proactive role in evolving game changing solutions. This brings me to strategic activation which by definition focuses on unconventional and innovative solutions, unlike the one size fits all van campaign. Strategic activation involves not only targeted activation but in addition designing last mile distribution models like Project Shakti that MART co- createdwithUnileverwhere50,000individualwomenfrom micro finance groups were appointed dealers in the unreached <2,000 population villages. Or the bicycle entrepreneur model we created for Colgate where young men buy stocks from the nearest sub-stockist and sell in 20 designated villages and 4 haats on the basis of a permanent journey plan finalized by us. Behavior Change Communication, Experiential Marketing, Public Private Partnership models are other aspects of Strategic Activation. It also focuses on Affordability, Accessibility and Awareness. Let me explain how strategic activation works with the example of Asha Project weimplemented for Pepsi which addresses iron deficiency among girls in the 10-16 age groups. We tied up with the government ICDS and midday meal programs to create awareness and focused on EDUTAINMENT in schools where girls were specifically targeted. We appointed Asha workers as Behavior Change Communication agents in every village to target individual households.Theydistributedfreesamplestoinducetrial. We set up last mile distribution by appointing entrepreneurs in the 2,000+ pop villagesand linked them to the company’s last leg distribution. In other words we addressed many aspects of marketing through an integrated approach. A post evaluation research showed impressive results - 34% of target group tried the iron fortified biscuit or puff and 95% of them made repeat purchase. You will perhaps appreciate this strategic activation approach has gone much beyond conventional awareness generation as it includes behavior change and distribution. This project wonus the WOW Gold Award. You allknowbetterthanmethatBTLisgrowingoverATL.Inrural it is largely BTL because of limited availability of electronic and print media. And BTL is your core strength. So you have a great business opportunity provided you enhance knowledgeoftheruralsector. Let us now see what companies are doing in rural. The first fact is that nowadays the decision to go rural is taken at the CEO level. Companies are therefore more serious about their rural initiative. Let me give you the example of Hero MotoCorp. Six years ago I was invited to address their top management on the rural opportunity. The audience included the Chairman and other members of the Munjal family. They took the advice seriously and acted on it. Just 6 years later they have 2500 touch points in rural through authorized representatives of dealers and 1,000 sales and service outlets. The combined dealer sales force in rural is around 10,000 people. Not surprising a whopping 45% of their total annual sale of 6 million units comes from rural where as six years back it was insignificant. The story of Marutiissimilar.Threeyearsbackwhentheylaunchedtheir rural initiative only 3% sale came from rural. Today they have a workforce of 6,000 rural representatives who network with Pradhans, panchayat members, small businessmen and salaried people in villages. Last year 22% of their car sales came from rural. Cadbury, GSK, Marico, LG and a hostof others havea strong focus on rural now. It may not be out of place to say that companies are perhaps more proactivethan agencies when it comes to rural. Till a couple of years ago MART used to follow up with companies for work. Now more and more companies are approaching us themselves.Theyaremuchmoreproactivenow. In conclusion I would say the time for change is here and now. If you want to fast forward the rural business opportunity you should become the change you seek. My advice - acquires knowledge, become proactive and embracestrategicactivation.Goforit. ThankyouandGodblessyouall. 24
  27. 27. ethics, excellence & the world of management 25
  28. 28. We all live by some principles. I was fortunate to have met my spiritual guru 30 years ago who inspired me to live by high principles and values. Values inspire in us the highest that we should do. It is the job of a leader like a spiritual Guru or a CEO to inspire inusthesevalues. A little background about me and my organization MART would help, as a number of examples in this article will be frommylife. For the first 20 years of my professional life I worked with 3 multinationalcompaniesin India - Exide from the UK, Bosch from Germany and Denso from Japan. During this period I acquired fair amount of material wealth and creature comforts. But the inner richness was missing from my life and a hollow feeling kept bothering me. The year I turned 40, I decided with the guidance of my Guru that I must change the course of my life. I voluntarily opted out of the corporate sector and since I wanted to understand the social sector I joined a large NGO at just 10% of my last drawn salary. I have been working for 20 years in the rural sector and have not regretted my decision even once. Sure, there have been times when I was not making enough money but this was more than compensated by the inner satisfaction I derived from my work. I have had the privilege of meeting some of the best minds in the world and seen somegreatandhighlyinnovativework. Itoohavecreatedsomeinnovativemodelsofdevelopment, particularly in the area of marketing. Had I continued in the corporate sector I would have probably become the CEO of a large MNC but would have continued to do repetitive and dissatisfyingwork.IamgladImadethedecisionIdid. In 1993 I founded MART, a livelihoods and rural marketing agency, as a value based organization. Today, 20 years later, we are a family of 75 dedicated professionals serving rural India. We are a flat, non hierarchical totally transparent organization – no designations, every staff member knows each other’s salary or the fact that we submit detailed, itemized consultancy budgets to clients. We are a team based organization where all decisions are taken through consensus. We are an employee owned organization where on completing 10 years of service every employee automaticallybecomeapartnerinthefirm. Let us now come to Ethics. To begin with let us try and understandwhatethicsis? Ethics is the application of spiritual principles to human behavior. So ethics involves living by (and not theorizing about) the highest principles applicable to human behavior onadailybasis. WhatarePrinciples? Principles are guidelines for human conduct. They are fundamental and universal because their source is the spirit. These principles have come to us from rishis and sages who received them over centuries in meditation, throughdreamsandasvisions. Ethics can be understood at two levels. Steven Covey in his book ‘Seven Habits of Highly Effective People’ calls them Personality ethic which refers to the development of personality, and Character ethicwhich focuses on evolution ofhumancharacter. WhatisPersonalityEthic&CharacterEthic? Personality ethic includes public image, attitude, skills and techniques. The effort here is to develop a more pleasing and attractive personality with the objective of achieving better social acceptability and greater material success. This is the job of psychologists and personality grooming experts who teach you better communication skills, better social manners and personality grooming methods. These are secondary traits and not primary like character. Personality ethic results in quick fix solutions without addressing the fundamental causes of human behavior. I willnotbefocusingonpersonalityethic. My concern is with character ethic which involves basic principles of effective living – integrity, humility, courage, fairness, patience and simplicity. These are value based motives or ‘Lighthouse’ principles that govern human growth and happiness. It is important to understand that these fundamental principles do not change. Principles do not react to anything; they do not depend on the behavior ofothers. ethics, excellence & the world of management 26
  29. 29. Personal power that comes with principle centered living is the power of self aware, knowledgeable proactive individual,unrestrictedbytheattitude,behaviorandaction of others or by any circumstances. Gandhiji never held any position of power in the government in waiting, but he wieldedmore power in politics than anyone else becauseof his principle centered living. We accord the highest respect to a spiritual master, even political leaders and royalty bow to them, because they are centered in universal principles. Highest power rests with the person with the highest awareness. WhatareSpiritualPrinciples? The most fundamental principle of effectiveness is the Principle of Personal vision: For this we need to know ‘Who am I’. We should understand that we are not our body because if we were then which part defines us –legs, hands, brain or the heart? What happens to people with heart transplants? Do they cease to be or do they assume the persona of the donor? Further we need to understand that we are not our feelings. If we were then which feeling defines us? We are not our moods. We are not even our thoughts. If we were then how come we continue to exist in deep sleep when there are no thoughts? And the very fact we can think about these things separates us from them. It is self awareness that enables us to stand apart and examine even the way we “see” ourselves. The continuous effort has to be to expanding our self awareness which also helpstofindourinnercentre. Our centre is where we deal with our vision and values. Spiritual dimension is your core, your centre, your commitment to your principles. Meditation, contemplation, enquiry into who am I are ways to remain in touchwiththetimelesscore. DreamsasOurInnerGuide When your external action reflects your internal code you are in alignment with your principles. This is how you gain integrity. Integrity is important because without it you are living with a sense of division within yourself. You will know when you are not acting in alignment with your moral code because your conscience will remind you of the difference between what is ethically right and how you actually behaved.Thevoiceofconscienceissodelicatethatitiseasy tostifleit:butitisalsosoclearthatitisdifficulttomistakeit. When we refuse to hear the voice of conscience in our wakinglife,itoftenappearsasacriticinourdreamsatnight. Dreams often show a mirror to our behavior by becoming critical of us. For example if we have told a lie in waking life our dream may create a situation where we are reprimanded for telling a lie. We wake up feeling guilty knowing well that we have tried to cheat on ourselves. Or when we are going through an anxious phase in our life we dream of reaching late for an exam or missing a train. Dreams are the royal road to the unconscious. If we record our dreams and make the effort to interpret them they will guideushowtoconductourlivesethically. When we make any commitment it is our conscience that ensures that we keep it. So when we set a personal or professional goal we must make a promise to our conscience and set out to achieve it. Trust is cornerstone of every strong business relationship. Without trust your prospective customers won’t buy from you, your team mates won’t listen to you and your family and friends will runawayfromyou. 27 Pradeep Kashyap
  30. 30. Information,Knowledge&Wisdom A man of wisdom is a man of ethics. But how do we become wise? I will explain in the next few paragraphs how informationleadstoknowledgeandfinallytowisdom. Information is something we read or hear about. For example we dial railway enquiry to get the timing of ShatabdifromJaipurtoDelhiortheTV newsinformsus that it rained in Delhi yesterday. Information is essential to conductour dailyactivitiessmoothly.But itdoes not impact ethicsinanyway. But when information is analyzed and understood it becomes knowledge. This is the purpose of education. In school and college teachers impart information and then encourage us to use the tool box of analysis to transform information into knowledge. So knowledge can be taught, you can acquire it from external sources. And knowledge is what you know you know. For example I know that I can solve a particular mathematics problem because I learnt theanalyticaltoolsinschool. When knowledge is integrated with intuition, it becomes wisdom, your experiential knowledge. Analysis as described earlier and intuition are not substitutes of each other,theyarecomplimentary. We don’t receive wisdom; we must discover it after a journeyof lifethatno one cantakeforus.Eachoneof us has to undertake our own journey. The ultimate destination of your life, if there is one is wisdom. Wisdom is the highest and deepest degree of knowledge, insight and understanding. It provides you with the broadest perspective on life. They say when you find your wisdom youarelivinginthe‘light’,thelightofthespirit. Wisdom is not a state tobe achieved but rathera state tobe recalled. You arrived on this planet with the boundless wisdom inherent in all human beings; you only need to access that place within you that connects you to the infinite divine source. You are potentially as wise as the Buddha or Aristotle-they have simply accessed places within themselves where perhaps you have not journeyed. ThatiswhyitissaidweareallbornapotentialBuddha. Wisdom is not intelligence. Wisdom is much more. It is the highest level of emotional, spiritual and mental evolution where you synergize your deepest understanding with your deepesteverydayactions. Whatisintuition? Intuition, extra sensory perception (ESP) or insight is when we see things other people do not see. It is the ‘Aha’ or the ‘Eureka’ moment. Intuition is what you do not know you know. Intuition is not what can be taught, you develop it on your own. The word itself means to learn (tuition) from within(in). Our subconscious minds are our link to the wisdom of the universe (the collective unconscious as described by Jung). Our conscious thinking is limited, but our subconscious thinkingwhenconnectedtotheunconsciousisinfinite. WhyisIntuitionimportantformanagers? At a management school you learn techniques and concepts to develop your analytical brain. In real life the executive does analyze, but he also needs to synthesize for which he needs experience and intuition which as we discussed earlier, cannot be taught. So the single biggest challenge for a corporate leader is to develop the power of intuition because intuition is the critical differentiator between a good and a visionary leader. Ray Croc recalls in his memoirs that he had this strong intuition that he should buy the then unknown, few, franchised McDonald stores. There was no logical or obviously analytical reason for his decision. Today, we all know, it is the largest retail chain in theworld. As wegrowin our careers knowledge alone is not enough to make complex decisions. Decisions such as should the company enter the European or Asian market? Should we partner a local company or go it alone? Should we hire local managers who understand the local culture or send out managers from the parent company who know the working of the company well? These are decisions concerning the future and knowledge alone is not enough to act. The manager needs to have intuition or insight to foresee the future. HowtodevelopIntuition? You can develop intuition through viewing issues holistically. Intuition is enhanced through varied experiences and relationships. Emotion is a strong element fordevelopingintuition.Storytellingstirsemotion. Intuition is developed by exploring and sensing beyond what is visible and audible (sleep over things, sometimes intuition comes through dreams). Intuition can be developed by paying attentiontoour dreams. The language of dream connects us to our unconscious where all knowledgeoftheuniversepreexists. Intuition is developed through total involvement with the work. Women are more intuitive because they are more emotionally involved in work. Contemplation, reflection, meditation and long walks help the mind become quiet. A quiet mind helps to see things the way they are and not the way you would like them to be. At the crucial moment of decision making, trust your intuitive brain and not your analytical brain. Managers have to be intuitive, inclusive andhumane. 28
  31. 31. Excellence Let us now move the discussion to excellence. What is excellence? Like life, excellence is a journey, a search for the highest. That is why Tom Peters called his famous book ‘In Search of Excellence’ and not the destination of excellence. Excellence is a total quality movement. It is a process of continuousselfimprovement. My guru used to say you should bring the same level of awareness and concentrationyou experience during prayer to your daily activities. Every meal at the ashram was preceded by Aarti in the temple. And after every meal we washed the dishes. The Guru would say the awareness and concentration you apply to washing dishes should be the same you achieve during prayer. So level of awareness equals degree of excellence. Total awareness or enlightenment in other words leads to complete excellence. That is why when we see something truly excellent we say God must have made it. So the constant effort must be to increase our awareness. Excellence is not achieved by attitude alone, it depends equally on the awarenessyoubringtothetask. ExcellencethroughMentoring Another way to put an employee on the road to excellence is through mentoring where the junior has complete trust, respect and faith in his senior, resulting in a strong, instructional and emotional relationship. The two share warmth, love and support like the bond between Lord KrishnaandArjun. I look for every opportunity to show and tell my team members that I care for them deeply. These young people have given some of the best years of their lives to help me grow MART. I honor them for that. Their successes are my success and we celebrate all successes. Similarly their setbacks are my setbacks and I always offer my shoulder andhandtothemintheirhourofneed. When you strive towards excellence it does not help to compete with others because you may be better than one but worse than another. So are you better or worse? Comparing yourself with a moving benchmark cannot give you an accurate picture of yourself and it only results in wastage of productive energy. So don’t race against others, race against yourself. Resolve to be better today than yesterday. This approach will get you out of competition with others and put you on the fast track towards excellence. MotivatingforExcellencethroughStoryTelling A big part of a CEO’s job is to motivate the team towards excellence. To do that he must engage their emotion, not just their mind, and the key to their hearts is a story. At MART we have a tradition of celebrating staff members’ birthdays, weddings, annual increments and just about any occasion. Most of my teaching and inspiring people are done through stories I tell at these gatherings. Story telling is a very personal, emotional experience and therefore allows management ideas to get united with an emotion in thelistener. Many cultures have a rich tradition of parables, stories and mythology to help common people relate to complex subjects like character, honesty, sincerity and so on. In management too, anecdotes and evocative stories can help managers learn about human nature. These stories inspire managerstoseekexcellence. Another important truth is, for you to win, no one needs to lose. We are conditioned to compete for scarce resources. We are told to be best in our class at school and encouraged tobefirstinsports.Thiscreatesascarcitymindsetandleads to competition because only one child can walk away with theprize.Allcompetitiondoesisfueltheillusionthatweare allseparate.Butwhenweoperateatahigherlevelwebegin to see the interconnectedness of everything, we all win. Whenweworkinharmony,thereismoreforeveryone,Take love, the more we give the more we get and our love bank does not diminish. Or take happiness, or even knowledge. Themorewesharethemoreitgrows. Success in life does not lie in reaching your goals. It lies in the personal transformation and inner shifts in consciousnessandawarenessthattakeplace. Having read my advice the question in your mind must be,is it possible to practice what I have suggested in a competitive, corrupt and greedy world? Well Ratan Tata runs his multibillion dollar business on ethical principles, so do Warren Buffet and Narayanmurthy and many others. BarrackObama isa symbolof hope for humanity becauseof his transparency and middle class values. If you are looking for enduring happiness you should be prepared to lose out on some material gains. Or you could follow a competitive, aggressive and manipulative approach to seek short lived gains but a life filled with stress and anxiety. I made the choice to run MART and live my life on value based principles.Youmustmakeyourchoice. 29 Pradeep Kashyap
  32. 32. managing india’s rural transformation at IHMR, Jaipur,Keynote Address February 26, 2013 Good morning. Respected Shri Vyas, ex-Director IIM Ahmedabad; Shri Mehta, Former Chief Secretary, Rajasthan, Dr Gupta, Director IHMR, faculty members, participants and students. I am delighted to be heretoday. Iamfortunatetohaveworkedinmostsectors–first20years in the private sector, next 2 years with a large NGO, 3 years with government, as an academician, an advisor to donors and an entrepreneur for the last 20 years running MART, a for profit company. Hopefully I bring a more holistic approachtoRuralTransformation. Within India we have two countries, the less privileged Rural or Bharat and the pampered Urban or Shining India. Even after 65 years of Independence we have not been able to provide basic facilities in rural India. 200,000 out of the 640,000villagesarestillnotconnectedbyroad,40%ofrural homes do not have an electric connection, 70% do not have atoiletand30%ofruralpopulationisstillilliterate.Thisisan unacceptable performance by our central and state governments. In the current decade we must ensure provision of urban level of services in rural areas or what PresidentKalampopularizedasPURA. The primary responsibility of transforming Rural India is with the government. It is evident to everyone that the centralized, top-down model adopted by the country has failed us completely. India is a huge country with wide regional and local variations. As students of marketing I am sure you have learnt that understanding the consumer is fundamental to satisfying her needs. Secondly all customers need to be segment using appropriate criteria for effective targeting. Similarly in rural schemes for the poor we need to segment and target clients and adopt a decentralized, bottom up approach. The schemes should allow for flexibility considering the wide regional variations in our country. The unit of planning and implementation must be the Panchayat. But despite The Panchayti Raj Act having been passed 25 years ago, the capacity of local panchayats has not been enhanced to handle finances or plan local projects and ensure proper governance. Capacity Buildingmustbetakenuponawarfooting. Rural is spread over 3 million square kms and 6.4 lakh villages.Toprovidebasicservicestosuchavastgeographyis a challenging task. It requires a lot of discussion and brain storming to arrive at innovative, cost-effective solutions. But bureaucracies across the world are hierarchical. They do not encourage brain storming and would rather go by the rule book than innovate. Bureaucracy needs to change its work culture and decision making processes. But that is notthesubjectmytalktoday. Civil society particularly the NGO sector is actively involved in the rural transformation process. Till the 80s NGOs were either in advocacy or in innovating appropriate, cost effective models of delivery in livelihoods, education, healthcare and sanitation sectors which the government could then scale. For example the micro-finance self-help group concept was developed by MYRADA in Karnataka. NABARD took it up and spread it across the country by promoting millions of SHGs over the last 2 decades. In recent times more and more NGOs have got co-opted as delivery agents for social sector schemes of state and central governments. NGOs have thus compromised their autonomy by becoming dependent on government funds for their survival. This does not auger well for rural transformation. Simultaneously many international donor agenciesareplanningtoexitthecountrybecausetheIndian economy is growing at a rapid pace and it no longer needs external funds for development. This is threatening the survival of professional NGOs that were dependent on donor funds. NGOs face a challenge today. They will have to reinventthemselvesperhapsassocialenterprises. Social enterprise is a new, hybrid organization that has emerged between the not-for-profit NGO and the for profit private company. Many young, qualified professionals like you are setting up social enterprises which are run as efficiently as private sector companies but like NGOs they work for the poor. MART is a good example of a Social Heart Business Mind social enterprise. We work only with the poor but have been a self-sustaining, profit making organization for 20 years. Harish Hande of Selco is a social entrepreneur. He has a PhD from the US and has set up a solar lighting company to provide affordable lighting for homes of the poor. Dr Devi Shetty’s Nirmal Hridalaya hospital is a very successful, large scale social enterprise. But these enterprises need funds for running their ventures. NABARD and other funding institutions should introduce schemes for funding different stages of social enterprises from idea to pilot and commercialization. I earnestly encourage some of you to start your own enterprisesratherthantakingupajob.Beingyourownboss is a great feeling though running a business is very challenging. My work philosophy is ruling in hell is better thanservinginheaven. 30
  33. 33. The Private sector is a recent entrant in the rural development space largely through the mandated allocation of 2% of profits for CSR. The problem with CSR is that since it does not contribute to the bottom line of the company, it does not attract serious attention of top management. Often a non-performer is given charge of the CSRfunctionbutweknowfindingsolutionstotheproblems of poverty is complex and requires the best minds. CSR initiatives hardly ever get scaled up. What we need to do is to create sustainable business models at the bottom of the pyramid. Project Shakti which MART co-created with Unilever is a wonderful example of a win for all business model. 50,000 poor women who have become dealers for Unilever brands have doubled their family incomes. The company has got deeper penetration into smaller villages where these women live and sell door to door. Banks have benefited because women have taken individual loans to buy stocks and the government has met its social objective of creating sustainable livelihoods for the poor. ITC e- Choupalisanotherexampleofahighlysuccessful,scaledup business model at the BoP. Had these initiatives been implemented by the CSR department of these companies they would have never got scaled up beyond a pilot. What drives the private sector is profit. If the initiative also does wellforsocietyitissomuchbetter. The other way private sector engages with the poor is through the Public-Private Partnership model. So far this model has not really taken off because of the vastly different work cultures of the two partner organizations. Private sector is all about decentralized decision making and efficiency, bureaucracy is about centralized decision makingandplayingitbytherulebook.Thetwopartnersare so busy trying to arrive at an acceptable working arrangement that the poor have been forgotten in the process. You are all students of marketing. You know marketingis all about customer satisfaction. The PPP model does not have the customer anywhere in the picture. For years I have been advocating and actively promoting the 4Ps model of engagement where the fourth P represents people, the local community. After all who is the partnership for? If it is for the people they should be at the centre of all partnerships. The starting point should be to understand the needs of the local community and then design the solution through a co-creation approach and makethecommunitytakeownershipoftheinitiative.Thisis criticalbecausethe private sectorwill surely withdrawfrom the area at some point in time, so will the government. When that happens the community will take responsibility andtheinitiativewillnotdisintegrateashappensoftenwith suchpartnerships. 31
  34. 34. I now come to another aspect of rural transformation, the importance of the town. Villagers visit a nearby town for various needs-mandi to sell produce, bank for money transactions, and hospital for healthcare, college for higher education and company dealer for tractor servicing as also for purchase of durables. So a natural hub and spoke model emerges where people from around 100 villages get linked to the town. Rajasthan has 29 towns with one lac plus population. Jaipur has the highest population of 31 lacs followed by Jodhpur and Kota at 10 lac each. There are 8 towns between 2 and 5 lacs. Starting with Ajmer at5 lac and down to Pali at 2 lac. These towns are spread all over the state except Western Rajasthan which is desert area. The state needs to create Centers of Excellence in these 8 towns with world class infrastructure, skills training and placement facilities. The centre should also provide business and marketing support and make available funds through banks to young people who want to start their own businesses. This move will help to check migration to Jaipur and Kota which are already crowded cities. Village youth will come to these nearby smaller towns for acquiring new skillsrelevantfortheirareasandoccupations. Let us talk now about marketing of products made by the poor. The weekly market or haat is the first market access point. It is an appropriate platform for selling by the poor as one has topay justa coupleof rupees toset up a stall and all saleisoncash.RajasthanhashaatsintheEasternregionbut none in the Western region because of low population density. The first thing the state government needs to do is to upgrade existing haats by constructing raised platforms and shelters for seller stalls and drinking water, toilets and bicycle stand for buyers. The government should also examine feasibility for setting up haats in Barmer and JaisalmerinWesternRajasthan. I now come to something of direct interest and relevance to thestudents.Didanyofyouknowthatthetotaloutlayonall social sector schemes annually is Rs 190,000 crore which is more than the annual turnover of the consumer goods and durables industry at Rs 170,000 crore. These welfare schemes involve behavior change whether it is hand wash with soap before meals campaign, or AIDS awareness or Polio campaigns. These schemes need to adopt Social Marketing approaches for more effective outcomes. I feel every MBA college should offer an elective course on social marketing and governments need to be sensitized to take advantage of this professional approach for implementing social programs. I have defined the new 4Ps of Social marketing The first P in my 4Ps model stands for Purpose. Let me explain what it means in the marketing context. All marketers know what products they sell, the price, trade discounts, pack sizes etc . Most also know how they sell theseproductsintermsoftheUSPorvalueproposition.But hardly any marketer knows why he sells these products. If probed deeper some may answer Profit as the reason. But Profit is an outcomeand cannotbe the Purpose. So it seems the Purpose or belief or cause of marketing is not known to most. If that is true how a marketer can be effective? In a very small way I may share that the Purpose at MART is to improve the quality of life of the poor, whether through corporate marketing or social marketing. Our purpose is central to every decision and action we take. The result is, despite not receiving any grant or monetary support since the inception of MART 20 years ago and working only for thepoor,wehavemadeprofitsyearafteryear. 32
  35. 35. The next P stands for Passion. To establish a strong connect with customers marketers need to have passion and feel compassion. To understand needs of the poor and develop appropriate products we should follow a bottom up, co- creation process involving the consumer and the community. Without Purpose and Passion rural transformationisnotpossible. The third P is about People or society. What we need to understand is ‘what is good for society is good for the government’ and not the other way round. So campaigns and programs must be conceived using a bottom up, co- creation approach involving the local community rather than a top down, one size fit all approach of the government. The last P stands for Partnerships. Rural transformation is a huge task and cannot be the responsibility of the government alone. All stakeholders need to work in a partnership, each bringing a set of skills which are complimented by other partners to ensure a holistic approachtoruraltransformation. Let me end by saying you are fortunate to be starting your working life at a time when India is tipped to become the third largest economy by 2025 after the US and China. You will enjoy the facilities of a modern country. But never forget that the farmer, the construction worker or poor workers in other sectors havestruggled in the heatand dust of this greatcountry togiveyou a hot meal and comfortable homes to live in. The poor have sacrificed their present to giveyouacomfortablefuture.Youoweadebttothemandif you give back to society you will ensure a better future for theirchildren.HelpintransformingvillagessothatIndiacan once again live in its villages as Gandhiji said but this time in alittlemorecomfortandwithmoredignity. Godblessyouall.Thankyou. 33 Pradeep Kashyap
  36. 36. making india an innovation hub at Leadership Summit 2012-IIM, Udaipur Keynote Address 34
  37. 37. ood morning. I am delighted to be here among students and faculty of the youngest IIM. I started GMART, a consultancy firm in 1993. We have worked with dozens of Fortune 500 companies including GE, Unilever, Colgate, Novartis and John Deere and with several donor agenciestoinnovate solutions for emerging markets. My talk will therefore draw examples largely from our real lifeexperiences. The history of modern innovation starts with the Industrial Revolution.Forthelast200years,Innovationhashappened mostly in the Western world for the more affluent North American and European consumers. The axis of innovation hasstartedtoshifttotheSouthonlyfromthefirstdecadeof the21st centuryas Western economieswent into a massive slowdown and simultaneously the BRIC countries emerged asthenewgrowthmarkets. Coming specifically to India we find that the more affluent, metro consumer uses products and brands similar to his Western counterpart. So there is less scope for innovating new products for this category of consumers. On the other hand the bottom and middle of the pyramid consumers have been left out of the innovation cycle all these years. But with impressive GDP growth rate in the last 2 decades, the country as a whole has started to move from poverty to prosperity. The rural income pyramid which had a significant portion of the population at the base will morph into a diamond by 2020. By then the rural poor will shrink from 400 to 250 million, simultaneously the middle income wills well from 350 to 500 million and the rich will treble from 50 million to 150 million. The 650 million middle and high income people will show a great appetite for consumptionandmanyofthemwillbefirsttimeconsumers of brands. I see a huge opportunity for companies to innovategoodsandservicesforthissegment. The next reality we need to understand is that unlike the West which is resource rich, has excellent infrastructure and a small, homogenous population, India is a resource scarce country, it suffers from poor physical infrastructure and has a huge, heterogeneous population. So our approach to innovation will have to be very different from the Western approach. For example in India affordability is the most critical issue. We will therefore have to develop ultralowcostproducts.Mymantrais: • 75% performance of global products at50% price (Nirma vsSurf,NanovsAlto) • More from fewer resources for more people or what is calledfrugalinnovation(TataNano) • Solutions around existing eco system (power outages, poorroads,dustandheat) The single serve shampoo sachet that sells at one rupee is an extreme example of affordability. The one rupee price includes the cost of product, cost of packaging material, cost of transportation, and margin for the channel, advertising cost and finally profit for the company. Such an incredibleinnovationcanhappenonlyinIndia. Innovation will have to be looked at 3 levels - Product, Process and People. I call this the 3Ps framework of innovation. Take the product first. Companies will have to understand the eco system, usage and affordability to be abletodevelopappropriateproductsfortheIndianmasses. Tweaking existing products will not work. Products will therefore have to be developed through a bottom up, community co-creation process and not in R&D labs as has been done in the West. The consumer will have to be an integralpartoftheproductdevelopmentprocess. We partnered Shell Foundation to develop an improved cook stove for the rural poor. We worked closely with the communityand learntgreattruths about cookingpractices. All rural cooking is done sitting at ground level unlike in urban homes where it is done standing on countertop. Hence the height for the rural stove would have to be more. The poor use all kinds of combustible materials as fuel – wood, cow dung and agri-waste. Hence the stove will have to ensure high thermal efficiency across all types of fuels. The opening and design of the cook-stove mouth would have to be optimized considering the different shapes and sizes of cooking vessels used to ensure stability of rounded bottomvessels. All these insights could not have been gathered in an R&D lab or indeed derived from our urban experience of cooking. The improved cook stove has already sold half a million pieces from the time it was introduced in the market three years ago. Globally 95% of R&D funds have been spentonproductdevelopment.Whilstproductisimportant in India too, processes like creating awareness through innovative communication or making product available in remote village locations at lowest distribution costs are equally important. I believe a lot of value is locked up in processes. Companies in India will need to innovate around these processes to unlock value and thereby increase profitsforthecompany. I now come to the third P or the People side of innovation. At the outset I want to clarify that innovation is different from creativity. Creativity is driven by an individual whereas innovation is a team effort. And since our discussion is on Innovation, it requires a high level of motivation among team members; it requires the ability to work in a collaborative mode, calls for a rigor in work as also an 35 Pradeep Kashyap

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