Mr. Shireesh Joshi (ex-COO, Strategic Marketing Group at Godrej) was a guest speaker at Colloquium, the annual business conclave organized at IIM Indore. He shared his experiences in the field of strategy from organizations like Godrej, Airtel, PepsiCo and Procter & Gamble. Mr. Shireesh also discussed how to create an appropriate sustainable advantage and position a product in the value chain. After the engaging talk, we caught up with him for a short interview-
Sonali- You discussed about creating sustainable advantage. How important is it to keep updating that sustainable advantage, keeping in mind companies like Blackberry and Nokia and how to do that?
Shireesh-Your examples prove how important it is to keep it updated. Updating the sustainable advantage is actually a matter of life and death for companies. The point worth noting is that if there is anything you need to update, it has to be in your area of sustainable advantage. This is because, if things get updated in your peripheral areas, they don’t hurt you but if things get updated in your core area and you are not part of that, then you get outdated almost instantly. So, you have to be leading the effort of updating the core area of your strength all the time.
Sonali- Sometimes when the sustainable advantage is lost or is flawed, when should a firm go for rebranding and how should it be done?
Shireesh-I think whether you do rebranding or not, it should be led from a consumer’s standpoint. So, if you feel that over a period of time, what your brand is and what it stands for has started to become a little bit distant from your target consumer and it is not possible to do activities to bring it closer, then sometimes, one way of making a significant change, signaling that change and recreating a fresh relationship is rebranding. But, it must first begin with the consumer and for whatever reasons you do rebranding, make sure to define, in what terms is the new consumer different from the earlier one and in what way their aspirations and expectations are different from the earlier ones. Also, make sure that the brand that you now craft is much more suited to these new aspirations than it was for the earlier ones. A loose description can be let’s say my parent’s generation, they bought stuff that they wanted to last their entire lifetime and they did not expect it to be replaced. Then came our generation, who might want to replace stuff. Next, may be your generation would not even own it, everything might be leased. So, there are very different mindset. As those mindsets and preferences change, then brands must evolve. For example, if I want to replace things frequently then I don’t want to pay for something that is going to last 30 years. So if you tell me that this thing will last 10 years and it costs 100 bucks and another one will last 30 years and it costs 250 bucks, I don’t want the second one although I can see it being justified. So then, the brand will have to go for rebranding because the long lasting quality in itself is going out of fashion. So you have to keep looking in what way the consumers are changing, their needs are changing and then create the brand. In addition, make sure that the new avatar that is created, is in conflict with the earlier avatar, then only you should rebrand. It should not be done just to correct the declining sales.
Sonali- So, when we talk about updating and accommodating change, another thing that strikes me is the usual saying of ‘Fast eats big’. It is because new and smaller firms are more flexible than the old and larger ones due to more complex organizational structure. How does a 120 year old company like Godrej manage to stay flexible and relevant?
Shireesh-So, first of all Godrej has been very careful of not having a centralized organizational structure. There are individual divisions and decentralization. So each division of company is managing one kind of business like Godrej Property handles property business, Godrej Appliances is the appliance business and so on. Then, they look at where are the synergy areas, say if there is a synergy in buying, so when they are buying, they will buy for multiple businesses. So it has been purpose built and should not be just for the sake of managing operations of a large business. The good thing with Godrej is the multiple family members involved who are able to cover all ground of operations between them, without really creating a structure. So, each team is competing with its competitors but that does not mean all divisions have been good at doing that. But the reason that such divisions have not faulted is that they are not centrally structured.
Sonali- Coming back to the strategies, why is it that the same strategies work for some firms and not for others in the same industry? This is in reference to the deep discount model that failed for Snapdeal while it seems to be working for Flipkart, to some extent.
Shireesh-Yes the operative word is ‘seems to be working’ because discount is not really a strategy. It is only for a temporary period during which you can use that to lure customers but you can’t keep giving discounts forever. There is a reason why margins are what they are because that is what make them sustainable. For a period, you can dip into those margins in order to attract customers but it cannot be a strategy because strategy requires you to be able to sustain those margins. Now if you have found a way of doing business that is, let us say, take 5 points of operational costs out, in that case you might be able to consistently beat others till somebody finds a new system that beats yours. But if that is not the case and all you are doing is simply taking products and assuming you might have some efficiency in operations. But efficiency in operations cannot explain the kinds of discounts you see in ecommerce market place. So these are unsustainable and that is only taking place because there is VC funding that is available for the purpose of customer acquisition and building a customer base.
Mr. Shireesh Joshi is the CEO and Principal Consultant at Priism Consulting. Previously, he has held position of COO, Strategic Marketing Group at Godrej and other key positions at PepsiCo and Procter & Gamble. He has a diverse experience in various fields across India, China and South East Asia, among others. He completed his MBA in marketing from IIM Bangalore and B.Tech from IIT Kanpur.