Spencer Johnson's book Who Moved My Cheese is by now a classic bestseller and read and discussed by millions across the world. I was prompted to think of it after a recent interaction with one of the very successful and highly cited entrepreneurs/managers in the US retail industry.
He is the chairman/CEO of a billion dollar enterprise, part owning and leading this retail business by managing "change" very effectively. Reacting to some concern from his senior management that their company sometimes launches initiatives even when they are not fully prepared, he stated that as a way to keep abreast of competition and keep pace with all the changes taking place in business, the company does not have the time to have every initiative perfected 100 per cent before being launched.
He felt very comfortable with the "70 per cent readiness" levels, and was prepared to achieve the balance while "on the job". I just could not help but admire this candidness, and at the same time, contrast with the apparent paralysis of action from some of the erstwhile highly respected but currently struggling Indian FMCG and other sector leaders.
As in our personal lives, the Cheese is moving in business as well. The movement is happening on account of diverse factors, some of which are obvious such as technology; the globalisation and internationalisation of business; freer trade of ideas, services and goods, etc.
In India's context, some of this movement will happen rather dramatically within the next 10 years on account of a very new combination of factors such as demography, literacy levels, international exposure, social behaviour, etc. that will result in a very different kind of consumer behaviour than what we have seen in the past.
For example, replacement life for many products such as automobiles is undergoing significant reduction. For many, the replacement could be taking place in as little as 45 years, compared to 810 or more in previous years. The impact could be significant on businesses that rely heavily on the consumer-based replacement market, e.g. tyres and batteries.
A question that needs to be asked by manufacturers such as MRF and Amar Raja Batteries is if and how to reallocate their marketing/brand promotion spend since spending tens of crore (Rs billion)s of rupees per year on flashing their logos through the mainstream media will certainly result in brand recall but may not translate into purchase.
Similarly, the dynamics of the housing market in India are likely to be very different over the next 10 years. Traditionally, houses were planned and "built" by individuals. They had a clear role to play in terms of even buying cement and steel, sanitary ware, flooring material, kitchen hardware, electrical fittings, etc.
Hence, leaders such as Parryware, Anchor, and those in the steel and cement sectors set up "retail" distribution channels located near housing clusters, and spent substantial amounts and other corporate resources in building brands at the consumer level.
Housing is rapidly turning into an "O.E" market with hundreds of thousands of ready-to-move-in units coming up every year. It is conceivable that in the near term (next 8-10 years), the role of the institutional channel will dramatically increase at the expense of the retail (consumer) one.
The tens of millions of housing units that will come to the market in 10 years will--probably--not need a fresh coat of paint or new bath and kitchen fittings, thereby requiring a paradigm shift for many of the manufacturers serving the housing and commercial real estate market.
Wrist watch companies have already been severely impacted by rapid increase in cell phone ownership. Millions of young Indians now use cell phones for time-keeping purposes as well creating challenges for companies such as Titan.
The travel agency business globally is severely impacted on account of a rapid penetration of the Internet, which allows consumers to bypass the traditional travel agency.
WTO-facilitated market opening makes it more cost-effective in many cases for importing merchandise into India, creating new challenges for manufacturers. The music industry has been missing many buses, including developing strategies to cope with peer-to-peer file-sharing networks and even ring-tone download potential.
The key message, therefore, is that more frequent and sometimes fundamental changes in the external environment need paradigm shifts and quicker response. Doing more of the same as in the past could be disastrous!