Saturday, November 25, 2006

India today and in the future

The Story today ( excerpt from "In Spite of the Gods : The strange Rise of Modern India" )

“…To me, the new expressways provide an intriguing juxtaposition of India’s multi-speed economy. One of the best ways to observe India’s galloping new economy is to count the number of car brands that whirr past in the fast lanes…Toyotas, Fiats, Hondas, Hyundai, Fords, Volkswagens, Skodas, Mercedes’, Rolls-Royce…But your speed on the expressway is never quite what it should be. Coming far too frequently from the opposite direction are scooters, bicycles, camel drawn carts and goat herds. It is to the side of the expressways in the glaring bill-boards advertising mobile phone, iPods and holiday villas and in shiny gas stations with their air-conditioned mini-supermarkets that India’s schizophrenic economy reveals itself. Behind and around them is the unending vista of rural India, of yoked bullocks ploughing the fields in the same manner as they did 3000 years ago, primitive brick kilns dot the endless patchwork of fields of rice, pulses, wheat and oilseed. Along the way you might also find the glimpse of an occasional factory assembling washing machines or making accessories for automobiles. There are pockets of rural India that are becoming prosperous but they are truly islands. In this almost continuous contrast you observe the two most striking features of India’s 21st century economy: booming service sector in a sea of indifferent farmland…”

Consumer Landscape

• Population will continue to grow, till in 2025 it overtakes China. Nuclearization of households in Urban India will drive a faster household growth rate. However, number of households in India in 2025 will be less than that in China in 2000.
• Urbanization will progress at a very slow pace (29% in 2010 vs. 28% in 2005), compared to China (47% in 2010 vs. 36% in 2005). 10% of households will be concentrated in the Top 35 cities; whereas 71% of households (rural) will remain dispersed in 0.6MM villages.
• It will remain a young population with 27% of the population below 15years in 2025. Not surprisingly, India has the largest baby population in the world.
• Adults living with kids (56%) and Single Adults (22%) will continue as the top 2 household types. Nuclearization of families will lead to significant increase in “empty nester” + “old/ retired” people living without children (19% in 2025 vs. 13% in 2005).
• Though employment in services sector will grow (19% in 2025 vs. 11% in 2005), most people (51% in 2025) will continue to be in agriculture.
• The average household income will keep increasing at 6-7%p.a. The number of “rich” (annual income $10M+) will triple and those in middle income will increase by 50% in the next 5 years. The rich people will be concentrated in the Top cities, while bulk of India will continue to be low income and live in rural areas.
• Housewives will continue to get busier with more of them working outside the house in addition to managing the house. 37% of India housewives work (in 2006) up from 35% (in 2003). This is being led by both urban and rural increases in women working.

Economy Landscape

• The GDP is expected to grow at 6-8%p.a. over the next decade. This will fuel the increasing incomes across India.
• Increased investment in infrastructure can lead to significant changes in consumer lifestyles. Increased investment in agriculture can step change agriculture growth rates, step changing the lives of many rural people. Only 1/3rd of rural India has electricity; electricity consumption in India is 40 index of China and 20 index of Brazil. Retail Landscape
• While HFS outlets will dominate rural India and smaller towns, organized “modern format” retail outlets will grow (20%p.a.) in the Top cities.
• Government relaxation of the FDI regulations into Retail could significantly step change the salience of Modern Retail in the Top cities. Reliance Industries, Food Bazar could become the largest Indian players in Modern Retail. Wal-mart, Tesco, Metro, Carrefour are all looking to set-up/ expand operations in India.
• Wholesalers will remain an important agent in making goods available to HFS stores in rural areas and smaller urban towns.
• Beauty Stores (focused on women beauty products and accessories) are growing 2X the national growth rate of Beauty Categories.
• “Direct-Selling” as a channel is growing at 15%p.a. and is now estimated to be about 600-700MM in sales. It is estimated to cross $1B by 2010. Health and Nutrition accounts for 50% of the channel sales.

Media Landscape

• Television is and will continue to be the most penetrated communication vehicle across urban and rural India.
• Radio is the media vehicle with #2 reach. Given only 1/3rd of rural India has electricity, battery operated radio is an important supplementary medium that we have qualified.• Use of cell phones is growing – while more than half of households in Top cities have a cell phone, only 7% in rural India have a cell phone.
• The penetration of Internet is growing at 8.5%p.a. While 40% of management employees living in top cities use the internet, on an overall basis only 1.8% of India uses the internet. We are learning on this.

Sunday, November 12, 2006

Business Process Transformation

Yes ... I use my blog to store away training notes :-)


The 3 key PRINCIPLES of BPT :

1) Customer Oriented Strategy
2) Process Focus
3) Data based decision making

Any business has to focus on the "customer". We are in business to make money which the customer pays us for meeting his needs. For a business to be successful we need to have the right "business model" and "processes" to support the model. Finally we need to be "data based" to measure if we are meeting customer need and also to identify the root causes / points of failure in case we are not.

The entire supply chain to meet Customer Needs --> SIPOC ( Suppliers, Inputs, Processes, Output, Critical Customer Requirement or CCR )

For any Process Measure we need to consider both its "Mean" and "Variation". Incremental improvements using present technology and processes are usually enough to reduce "Variation" ... but to improve the "Mean" usually necessitates new process or technology.


What : Often there is a disconnect between the perceived notion of customer wants and what she actually needs.

How :
1) Identify the Customer --> Sometimes its not easy to identify the "real" customer. Also its important to "prioritize" the bigger customer if you have multiple customers.
2) Listen to the VOC ( Voice of Customer ) --> Once the customer has been identified its necessary to listen to her ... structured around these 5 dimensions :
Corporate Responsibility
3) Translate VOC to CCR --> Customers may not always be able to articulate their needs in precise measurable terms. Thats why its important to keep drilling for details and mutually align the customer needs in measurable terms. This is an iterative process. A sharp CCR needs to have the following dimensions :
Product or Service Characteristic that needs focus / improvement
Target Value
Permissible Tolerance Limits
Allowable Defect Rates

This approach helps us to work on the "right things first" instead of jumping to concusions about customer needs and execution of wrong solutions.

CTQ : Critical To Quality is also a term used interchangeably with CCR.


Organizations often work in Functional Silos. But the Customer should be transparent to this and organizations thus need to have "Customer Driven" processes. Services and Products are not created by functions but by "Processes" which tend to transcend functional lines.
FDM ( Functional Deployment Mapping ) is a tool to depict the processes. This can be done at various "levels" of detail.

The SIPOC approach : FDM details the "Process" ... do note that each process, at whatever level of detail has Suppliers, Inputs, Outputs and Customers. Define the start and end points before working on the FDM.

The above approach helps us to clearly visualise the present process and thus work on improvements.

TIP : Adopt a Top down approach -->Its always better to start at a Level 1 "Core Process" to get the complete picture. At this level the CCR is clearly visible. Then drill down to Level 2 and Level 3 at increasing level of detail to identify exactly which sub-processes are contributing to the problem.


Why : More objectivity since data gives us the reality.
Again, looking in terms of SIPOC there are Input measures, In-Process measures and Output measures.
From customer's standpoint CTQ measures ( Critical to Quality ) are key whereas the company also needs to focus on CTP measures ( Critical to Process ). Often CTPs & CTQs are in conflict ... higher cost may deliver higher quality ( CTQ ) but the company has a CTP measure to lower costs.

Fishbone diagrams are often used to identify root causes of problems.
Pareto Analysis of the causes identified helps us to attack the key issues.

This brings us to the end of the Basic concepts in Business Process Transformation.

Sunday, November 05, 2006

Looking ahead on the Indian economy

Macroeconomic Premise : "Globalization" happens when countires choose to dismantle or at least reduce economic barriers
amongst themselves. This naturally leads to a "Free Flow" of trade, manufacturing, services, manpower, investment funds all
at varying degrees depending on how the respective governments design their policies.

Microeconomic Premise : Companies are constantly competing to increase revenues ( topline ) and reduce costs ( bottomline ).

Globalization is giving them options to reduce costs like never before.
The above 2 premises in very simplistic terms explain the Global Economic trends we are witnessing. What does this mean for us in India ?

1) In the next 15 years Asia's total share of the global economic pie will move up from current 35% to above 45%. No prizes
for guessing which 2 economies will drive this. While China & India will grow at scorching rates touching 10% compounded, the
US will trudge along at about 3%.

2) The workforce is becoming increasingly Global as "geographic" boundaries fade away ... driven by economic realities and
technology advances. ( In P&G I see increasing numbers of "location-independent" assignments ! ). India by 2020 will
contribute another 150 million skilled personnel to the "global workforce" ( US will contribute only 15 million ). My
personal theory is that the only jobs which will continue to he "location-specific" are the ones which need company interface
with its customers since its hard to replicate personal relationships and interactions. The rest of the jobs need to move to
whichever location gives cost-advantages.

3) Per Capita Income from today's $750 is projected to hit $3500. Just imagine what this means in PPP terms. This is natural
as there is a "work shift" from developed economies to India / China. There will be an "averaging" out of salaries globally.
While salaries in developing markets will see continual increases ... the salaries in the developed markets will see a
gradual decrease ( if the jobs are not directly shifted ).

4) Looking at the big 4 developing countries ( BRIC : Brazil, Russia, India, China ) Brazil is already stagnating since its
not really "low-cost" anymore. Mexico which earlier provided a "low-cost" manufacturing option to savvy US companies is now
losing out to China. In this "free flow" India and China need to be very careful lest some other country hijacks the "cost
advantage" situation like what has happened to Brazil & Mexico. I see this as a relatively low risk given the scale of these
countries and the huge gap in present disparities.