Bringing on The New Numbers Game

Mobile Number Portability Promises to Usher in a New Paradigm in Indian Telecom. While New Players would benefit, The Real Advantage would be to the Customers

Mobiles have brought two significant changes with respect to numbers. One is that we do not need to, and therefore do not, remember phone numbers anymore – due to the convenience of address books for communication. On the other hand, our number moves around to so many contacts over time, that the very idea of changing our number fills us with dread, especially with respect to all that we may lose professionally in our immediate and extended network – add to it the cumbersome process of communicating the change. That becomes a natural barrier to customer churn – strategy lord Michael Porter calls it the customer’s switching cost – which has been hugely beneficial to players in this country, particularly the ones who were here first and got the cream. Another particular reason has been the emotional attachment that some people develop with their numbers.

Half of the Indian population is hooked on to their mobile phones, with penetration levels crossing more than 50% of the population. But the burgeoning mobile phone subscriber base every month (around 15 million people are added to the mobile network every month currently) hasn’t been supported with a similar rise in the quality of the network, and that has led to poorer connectivity and a greater dissatisfaction among the customer base. But despite the number of exciting offers that players keep coming up with – that can lead to a better and more rewarding consumer experience – there are many customer who refuse to cross the Rubicon and go to a competitor simply because of the number.

Apparently, not anymore. With the launch of Mobile Number Portability (MNP), the great Indian telecom success story has taken the next leap forward. The much awaited and long pending MNP has seen the light of the day in India thanks to the new Telecom Minister Kapil Sibal. After taking over the reins from the tainted former union telecom minister A. Raja, the first thing that Sibal did was implement MNP in Haryana – and he announced that MNP would reach the rest of India by January 20, 2011. “Everybody is taking the deadline very seriously as the minister himself has declared the deadline this time,” says J. S. Sarma, Chairman TRAI to B&E. What worked was nothing else but Sibal, as for so many years, despite TRAI continuing to recommend MNP, lobbying by the cellular service providing companies ensured that MNP was kept on hold. Operators, through their body Cellular Operators Association of India had been busy lobbying to delay the implementation of the service in the past. The main concern obviously had been that the cost of retaining customers would increase.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
 

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
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IIPM : The B-School with a Human Face

A Case Against Cloud Computing!

Cloud Computing has been Hyped Ever since its Evolution by Amazon. But Inherent Contradictions in the Concept Threaten its Potential as the next big thing in The IT Services Space.

The sky has been overcast in the global technology world for quite some time now, as cloud computing has been persistently hailed by technology analysts as the next big thing to hit the global IT space, almost like the new normal. The scalability and elasticity of the concept is expected to drive massive adoption. Pioneered by Amazon with modernized data centres during the dot com bubble in the US, cloud computing was quickly sensed as an opportunity as it reduced tremendous cost; and ergo, Amazon came up with the Amazon Web Service (AWS) in 2006 with a utility computing base. Cloud computing in generic terms is based on the Internet, whereby software, services and information is provided on demand and pay per use basis. In general, the user does not own the physical infrastructure and rents it from a third party.

In early 2008, Eucalyptus became the first open source AWS API compatible platform for deploying private clouds. Technology research firm Gartner expects global cloud services revenues to touch $68.3 billion in 2010, a growth of 16.6% yoy. Steve Ballmer of Microsoft has gone on record to say cloud is the future for Microsoft. Similar expectations are being raised even from the folks in India. The Indian IT industry – cloud computing supporters tells us – is aggressively looking to tap into the trend and unleashing plans for fast paced growth. All major players are apparently modelling their service deliveries on the cloud. The current local market is estimated to be worth $110 million and the industry is quite optimistic to reach the levels $1.08 billion by 2015, with SAAS (Software as a Service) contributing $650 million, PAAS (Platform as a Service) and IAAS (Infrastructure as a Service) cumulatively contributing $434 million.

On the surface, it seems that cloud computing is all set to steamroll the data centre industry and make legacy systems obsolete. Scratch the surface, and the hype comes off immediately. The cloud, apparently, has some unresolved holes and the challenges seem to be much bigger than perceived expectations in India. The biggest hurdle for the cloud market to develop is the low bandwidth in India (infrastructure, here too!). Cloud requires a regular high speed internet connection and the average internet speed in India is 772 kbps compared to a global average speed of 1.5 mbps; India, for records, is ranked at the 115th position in the world in the 2009 Akami Technology’s report. The ongoing 3G auction would have been seen as a ray of hope, but the players would still require at least 10 years to be able to make a pan India presence.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
 

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

IIPM : The B-School with a Human Face

“Our strategy is to achieve sustainable high quality growth”

In a tête-à-tête with B&E’s Mona Mehta, P. R. Somasundaram, Managing Director and Chief Executive Officer, Lakshmi Vilas Bank (LVB) speaks about the growing importance of retail banking in the Country and the bank’s expansion plans to exploit the opportunities coming its way.

B&E: Lakshmi Vilas Bank outperformed all other South Indian banks in financial year 2009-10 by posting 52.71% growth in operating profit. What are your expectations from the current fiscal?
P. R. Somasundaram (PRS): In FY2010-11, LVB is planning to increase its total business (deposits and advances) by over 30%. And the bank is moving ahead strongly to achieve the objective. It has posted a strong 66% growth to increase its operating profit to Rs.537.30 million. In fact, we expect the current financial year to be significantly better than the last one (in terms of multiple parameters) as we are now leveraging the macro environmental opportunities available through internal transformational steps.

B&E: You just said that the bank is eyeing for a 30% growth in overall business this year. How are you planning to achieve the same?
PRS: Last year, while our deposits grew by 23.28%, advances increased by 19.88%. For us, the key is to achieve an absolute growth, and establish a sustainable trend, which will lay a platform for accelerated growth in future. Growth driven by process changes rather than purely opportunistic steps will determine our strategy.

B&E: You currently enjoy a high net interest margin (NIM) of 3.66%. But with deposit rates heading north under inflationary pressure, how are you planning to maintain the same?
PRS: This is a common challenge for all the banks. But our relationships are strong in the key markets allowing us to pass on the higher cost. Besides, our recent success in CASA (Current Account, Savings Account) build up has helped us to protect our margins. We are also looking forward to widen our funding sources by targeting new markets with shorter response times, and providing personalised services.

B&E: At 3.31% of net advances, Non Performing Assets (NPAs) are weighing high on LVB’s balance sheet. How are you planning to deal with the menace?
PRS: We have been working on it constantly. If you go through our Q1 results, as on June 30, LVB has managed to reduce both its gross and net NPAs to 4.27% and 3.31% respectively from 5.12% and 4.11% as on March 31, 2010. Our target is to bring down the net NPA level to below 1% within the next 18 months and we are on the right track. We are working on process changes and credit monitoring to improve our credit quality. Also, our credit monitoring and recovery efforts had been very reactive in the past, but we are now keen to make it highly pro-active.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
 

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

IIPM : The B-School with a Human Face

“Becoming a Fortune 500 company will take time”

He joined the company in 2001 when it was poised for the typical big leap. Today, PVR Cinemas is one of the largest cinema chains in India, yet not the largest. Nitin Sood, CFO, PVR Cinemas tells B&E, what it took to reach here and what it would be like ten years later by Amir Moin

When it started in 1997 as a joint venture between the Bijli brothers’ Priya Exhibitors Private Ltd and Wachowski brothers’ Village Roadshow Limited, the intent was clearly to be one of India’s largest cinema chains. Though achievements have come a dozen, so have the hits, literally speaking. After incurring a net loss of `12.62 crores an year ago, the giant is back on track with net profits of `5.56 crores for the quarter ending June 30, 2010. Nitin Sood, the financial whiz behind PVR Cinemas, shares his future agenda in this exclusive interaction with B&E :

B&E: Your performance this quarter has been quite well as compared to the same quarter last year. What are your projections for the next quarter?
Nitin Sood (NS): I wouldn’t be able to talk specific numbers but I think from our exhibition business, we should be able to do a topline of `400 crores. As we add on more screens, the numbers would probably increase. Hopefully, we’ll stabilise between 18-20% operating margins, which again would be a very good recovery from where we ended up last year.

B&E: According to Ajay Bijli, PVR’s PAT will go up to 10-12% from the current 5-5.5%. How do you think this is going to happen?
NS: Right now, our business model is such that we incur a lot of cost on the infrastructure. Again, the real cost is also due to the screens that we are periodically adding. These costs are driving down our bottom lines. Some of the new screens that are opening take anywhere between 6, 8 or even 12 months to stabilise in operations, depending upon the location. As the cost gets fractionalised over a larger number of properties, the operating margins would start looking much better. Secondly, we are also considering the sale and lease-back of the real estate that we own because honestly, we are not in the business of owning real estate. So that will further improve the margins.

B&E: What is the concept of PVR film cities?
NS: The concept of entertainment city is that we’ll be doing an integrated retail entertainment format. We are trying to partner with mall developers and where they give a portion of the mall to us and we come up with a full fledged entertainment complex. We are planning to come up with a bowling alley, ice skating ring, food court and a large multiplex.

B&E: Don’t you think that in these ‘entertainment cities’, there already is and would further be a lot of saturation? So what are your expectations in terms of ROI?
NS: I think it’s quiet the opposite because the number of visitations will increase by more than two times as the amount of footfalls that you attract to such a place would be more than the crowd that you would attract when you are running a stand alone multiplex. If we take the example of Ambience mall in Gurgaon, we have our own food court, multiplex and bowling alley. Our learning from our Ambience mall experience is that if you give consumers a bouquet of offerings, then the number of consumers who come to that place is much more than what would normally turn up at a standalone recreational outlet. In fact, a majority of the people coming there don’t just watch a movie but also go for bowling and lunch. Right now, we are coming up with only one entertainment city in Noida in association with Logix Park. But in the future, we definitely have plans to come up with more such entertainment cities. 

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

Is this India’s growth story?

Despite the obvious rationale going against it, steel and cement players in India have had a markedly subdued first quarter. Virat Bahri of B&E analyses the dynamics behind the numbers

India’s much-touted infrastructure surge makes it a market extremely hard to miss for steel and cement players. Yet, the Q1 results for both these sectors would make one wonder if this potential is actually what it is made out to be. B&E analyses the results closely for a more objective view.

In fact, steel majors have had a spectacular run since January 2009 till the end of the last fiscal. But Q1 has been an anomaly. SAIL posted net profit of `11.76 billion, a drop of 11.56% y-o-y. Consolidated net profit of Jindal Steel & Power Ltd. (JSPL) was down by 3% y-o-y for the quarter while sales of steel products were down by 4%. Bhushan Steel saw a decline of volumes by 14.4% to 309,333 tonnes. JSW Steel managed to improve its turnover and net sales by 21% and 19% respectively due to improved sales mix, but semis were down by 66%. Tata Steel, however, was an exception as it posted profits of `18.25 billion over a loss of `22.09 billion for Q1, FY 2009-10. In Tata’s case, revival in European operations was a key contributor and domestic sales remained flat on a y-o-y basis.

SAIL Chairman C.S. Verma said: “Greater availability of steel worldwide coupled with pressure on demand made the market conditions quite testing.” The reasons, actually, emanate from neighbouring China that accounts for around 50% of global steel production and consumption. Monetary and fiscal tightening by China to prevent overheating of its real estate market has created oversupply situation and these products are finding their way into markets like India. Moody’s projects that prices of Chinese Hot Rolled Coils (HRC) are down by around 11% y-o-y, while rebars are down by 8% y-o-y since April.

Talking to B&E, Vinod Garg, ED, Commercial, Ispat Industries, said: “Since import prices are low, lot of material is being dumped. Excessive supply is affecting margins of all players.” Figures indicate that Chinese imports have risen to over 60% of the total. In the week ending March 12, HRC (CR-Grade) price dropped by 5% m-o-m to `32,700 per tonne. Steel imports increased by 116% y-o-y to 973 thousand tonnes in April 2010. The government, however, placed anti-dumping duty on certain stainless steel products from target countries including China in early 2010. Cyclical impact of monsoons also leads to slowdown in industrial activity and buyers tend to postpone purchases. Further, a Motilal Oswal report expects more margin contraction, as it states, “Realisation will fall sharply in 2Q FY11 due to sharp price cut in June, while costs of coking coal will go up further.” Iron ore prices are also up by 90% y-o-y for Q1 at $117/tonne, and are likely to continue that trajectory.

The cement sector also saw pressure on both toplines and bottomlines due to oversupply. Aditya Birla Group-owned Ultratech Cement saw net sales drop by 8.3% y-o-y for Q1 to `17.93 billion and net profits falling more steeply by 41.83% to `2.43 billion. For ACC, net sales stayed flat at `21.67 billion but net profits again showed a sharp drop by 26% y-o-y to `3.49 billion. The results for India Cements were also much below expectations, with net sales falling by 7.8% y-o-y to `8.6 billion and EBITDA down by 65% y-o-y to `1 billion.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

INDIA: WATER SCARCITY

India’s water problem will continue to grow to mammoth and daunting proportions unless an integrated approach is taken. PPP is a great model, provided profiteering is curbed successively.

Though 60% of the population in urban areas depends on the surface water sources, availability and quality are unpredictable. Moreover, population growth is leading to drastic decline in the per capita availability of fresh water. It has gone down to around 2,200m3 in 2000 from 5,150m3 of 1947, and is expected to go down by 2017 to 1600m3 .

In states like Gujarat, the water table is dropping by as high as 6 metres per year. Four decades ago, the water table was at around 30 metres; now it has increased to around 152 meters. The scenario is pretty much the same in Agra. In 1996, groundwater level was 34 metres. Ten years down the line, that dropped to 42 metres. The total cost of environmental damage in India amounts to $9.7 billion annually, as per the World Bank estimate in 1995; of which 59% results from health impacts of water pollution. Also the poor often end up paying 5-10 times more per litre than wealthy people in the same city.

Tackling the situation requires an integrated approach to multiple facets of the water problem. They include tackling the menace of water pollution, ensuring recycling of water through techniques like rainwater harvesting, engaging with the affected population to ensure that their specific needs are well understood, discouraging excesses in terms of water usage and even tackling the class divide that marginalises certain members of the community from access to this invaluable resource. Public private partnerships are the best way out. But a strong regulatory mechanism must also be instituted to ensure greater transparency and discourage profiteering.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine 
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society.... 
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail

Ssssmooch!

Mallika Sherawat is back in Cannes, and this time she has brought a python with her! Hissss is her next film after all, and in order to promote the film Mallika posed and kissed the python before the shutterbugs! Love, Barack is another film she’s starring in and it promises some naughty action, at least as per its poster, which was unveiled at the Festival. Maybe she feels that if her 17 kisses in Khwahish brought her fame in India, a similar trick (with serpents or men) should work in Hollywood too?!

Read more.....

Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine 
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society.... 
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail

Is The World now Ready for The Indian Style of Management?

Theory“I” talks about how Global Management concepts are now getting Influenced Significantly by lessons from The Indian Context, both Culturally and Professionally. With more and more Indians taking up Global Leadership roles across the World in Varied Areas of Society,polity and Industry,is The World getting Enmeshed with and finally Accepting The Indian style of Management? By Arindam Chaudhuri

What should you then call the Indian style of management? And even before that, why should one even accept the hypothesis that the simple ascendance of individuals with a heavy Indian lineage to global positions is the finalistic evidence that the Indian style of management is gaining prevalence in power corridors? Isn’t the Indian “style” atypically laced with the capitulating negative tint of the wheeler dealer variety; of the manager who believes in being effective than on simply being efficient? Yes, that may be true. But even though in discussions pertaining to how Indians ‘manage’ issues, while one might be more prone to straddling the critical cynicism laced fence, look a little deeper, with an honest openness to the happenings around the world, and however much you might wish to, it might not be possible anymore to disregard the slow but sure rise of these very Indians in the power corridors that run the world.

Some say it’s simply the law of averages. Throw a handful of chewing-gums on a wall and simply by the law of averages, a few would stick on. The corollary, shove a few million Indians into Europe and US, and some would eventually become leaders. Well, that may be true too; but only at levels and in groups that are more driven by hard labour than by skill and intellect. The moment one talks about societies based on meritocracy – a factor that drives many Western nations – then all these debates can be dismissively rejected as then, it doesn’t matter whether the individual came from a large demographic group or an insignificant one, what matters is simply the person’s personal capability, capacity and competence.

So while a few years back, one simply boasted of Google having Indians as amongst the largest ethnic groups of workers, today one boasts of people like K. Ram Shriram (member, Google board of directors) and Nikesh Arora (Chief Business Officer, Google), whose names are listed just below the likes of Eric Schmidt, Larry Page, Sergey Brin on their corporate listings. The growing number of people of Indian origin at the helm of leading companies and top B-schools is another sure evidence of this hypothesis being forwarded. Adobe CEO Shantanu Narayen, Citigroup CEO Vikram Pandit, PepsiCo CEO Indra Nooyi, Sun Microsystems co-founder Vinod Khosla, Motorola Inc. Co-CEO and Motorola Mobility CEO Dr. Sanjay Jha and more recently, Reckitt Benckiser CEO Rakesh Kapoor, represent the growing and fruitful aspirations of Indians in global companies. Similarly, South Carolina Governor Nikki Haley, USAID administrator Rajiv Shah, Solicitor General of United States Neal Katyal, Chief Information Officer of United States Vivek Kundra, Satveer Chaudhary in Minnesota and Upendra Chivukula in New Jersey. Louisiana Governor Piyush Amrit (nee Bobby) Jindal top the politico-bureaucracy list too.

The 2000 US Census had already given the initial pointers to this by mentioning that Indian Americans had the highest median income of all groups. A Duke University-University of California Berkeley study showed that from 1995-2005, Indian Americans had started more engineering and technology companies than British, Chinese, Taiwanese and Japanese immigrants put together. All this simply could not have been possible if we were purely considering the gum-on-the-wall theory to assess individual advancement. Clearly, there’s something that Indians are doing right, which is allowing them to advance to leadership positions in various streams of society. And this has to directly do with the management and leadership skills that they are practicing on their teams, companies and peer groups, much of the skills which I am convinced have developed due to their connect with India – in terms of their cultural upbringing, family background, educational focus, objective oriented approach in life and similar aspects.

Read more...

Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

MAD. AVENUE: NOT SO HOT ANYMORE?

Marketing bigwigs globally have been favouring small, closely-knit agencies for their personal attention for sometime now

Watch Kenny Tomlin – his eyes fixed on a huge flat-screen monitor - in his mousy office housed in an equally nondescript business centre in Wal-Mart’s home town Arkansas and you may at first refuse to believe that he’s the CEO of an agency that is betting on bringing in $7.8 million as revenues for 2009. But Tomlin intends to do exactly that with his three-year-old digital agency, Rockfish. Tomlin’s start-up has stacked some big brands into its purse, including Wal-Mart, P&G, Tyson Foods and Hershey’s. During a year when many big agencies were choking on the recession storm that swept America, Tomlin’s lean and unique business model has kept Rockfish Interactive afloat and growing. So why have biggies like Wal-Mart (which usually works with large agencies like Martin Agency and R/GA), chosen Rockfish to conceive and implement their online marketing initiative? Suraya Bliss, Sr. Director for Communications at Wal-Mart Stores gave the answer to Adage in a recent interview. “They helped us address tough issues, and haven’t lost sight of creativity in the process,” says Bliss, adding that Rockfish helped Wal-Mart with “challenges on the back end as well.”

Bliss is not the only marketer harboring such radical sentiments. While the trend has only now begun catching on in India, big marketers in the US have been favouring small, closely-knit agencies that give them personal attention for sometime now. The fact that they also come 15-20% cheaper than the fancy agencies – with large overheads and swank offices – on Madison Avenue is just an added benefit tipping the scales for recession-hit marketers. And that (recession) is another cause and effect syndrome that is prompting a new craze for agency entrepreneurship in American ad-land. Prompted by layoffs, job insecurities or simply personal dissatisfaction at big agencies, these outfits mostly specialise in digital or social media.

But exceptions like P.J. Pereira and Andrew O’Dell are creating waves too. Both of them quit high-flying executive jobs with big agencies and launched their namesake multidisciplinary agency in San Francisco last year. In an interview, the pair told WSJ: “The problem with most existing ad agencies is that they either have a traditional focus or a digital orientation — and either way, marketers aren’t as well-served as they could be.” They pride themselves on their USP of hiring employees with unusual backgrounds rather than advertising experience, including a wine expert, a music producer, a shark wrestler and a Hollywood screenwriter – some of whom have already delivered award-winning works during the agency’s 18 months. Pereira’s strategy: To think outside the box, one must have people who’ve lived in different boxes! And it works because Pereira has a small team that functions in a casual ambience. Point is, global marketers are increasingly getting convinced by the logic of ‘small is big on delivery’ - Pereira O’Dell has already landed hi-flying clients like toymaker Lego, Pony and the University of Phoenix. The agency’s “strong growth, significant client wins and outstanding creative work” has already landed it the title of ‘Small Agency of the Year’ in AdAge’s first such awards.

Agency consultant Michael Gass believes that there has been a paradigm shift in the manner that small agencies acquire business. Breaking popular perception, he argues that now 80% decision makers find their agency and not the other way round. And if pull is hotter than push in ad-land now, then ‘delivery’ is bound to have more weight than candy floss dressings and plush office decors. Going by recent accolades, awards and new business wins, the small guys are certainly ‘pulling’ in the crowd with their cost effective deliveries, and above all, involved solutions for client problems.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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