IntroductionSome forty years ago, the list of the best Indian companies would have been companies from the Tata and Birla groups and some companies like the erstwhile Escorts and undivided DCM from New Delhi. After 1991, when Dr. Manmohan Singh changed the idea of Corporate India from an earlier emphasis on Public Sector companies to private companies and many sectors like telecom were thrown open to the private sector, there was opposition from the Left parties. Years later, the same communist parties in India became quiet and even played ball. Why?
The main reason is that you need new business models. New investments in new areas, the kind of which was unheard of. So, even Kerala, a communist bastion, has now IT parks. This is the investment, that brings in profits not only for the companies, but for several hundreds of thousands of middle-class Indians who have provided thousands of jobs or hundreds of thousands of jobs in the service sector. The emergence of new corporates in the service sector has not only brought in new jobs, but has also given rise to new business models.
The main points supporting successful business models, leading to learning across business models that have now emerged, as a rule, are: a) Information Technology is key to business success b) IT is not a support function but can lead to business transformation c) Honesty and Integrity will always pay for business success d) Managerial competence has to be built across businesses and e) Learning should be institutionalized for continued business excellence. Several examples, across the key lessons, are discussed further.
Information Technology is key to business success This is a very important lesson. The seeds of IT in ICICI Bank were laid down by one giant called Mr.Vagul and later on, by his illustrious successor, Mr. H.V. Kamath. It was these two gentlemen who assiduously built ICICI Bank into a Financial supermarket. The ability of ICICI Bank to transform itself into a highly vibrant organization, providing very good value-added services to High Networth Individuals has made a big difference. This business model virtually segments the retail market as one large market for ICICI Bank, but it has worked. It should be noted that ICICI Bank is not alone. Among the private sector banks, another bank, headquartered in a small town called Karur, some 64 kilometers from Erode, in Tamil Nadu, has invested heavily in advanced IT and has reaped good benefits. It has been able to serve the customers much faster and this has made a big difference. Today, companies such as Big Bazaar, in the service sector has great IT infrastructure for effective monitoring and delivery of services.
IT is not a support function but can lead to business transformation Look around. The likes of Ola and Uber are not merely taxi aggregators. Their business model, which enables thousands of customers to travel at cheaper costs in the metro and other larger cities, is not an ordinary business Innovation. It has not only lead to customer satisfaction but also brought about a massive paradigm shift.
To a limited extent, it has reduced the cost of personal transportation because people tend to not use their own cars but hire these services to go around. Swiggy and Zomato have enabled thousands of housewives to escape the drudgery of cooking and concentrate on their careers. The kind of business transformation that we see all around will be positively lead by IT and will sort of envelope our collective consciousness like never before. Now, global giants like Google and its sister organization provide good money to talented people. Through Google AdSense and Revenue sharing on YouTube. Hundreds of self-made entrepreneurs are now uploading videos on YouTube and making money. Hence, this business model that fetches money to the individuals and influences their lives, has a profound impact on their lives too. So, IT is not just new business models. The business models also touch the lives of ordinary individuals like never before.
This itself is a new business model. It is totally new because the business and it's profit is built entirely on the "customer" touch points. In other words, it depends on a large number of existing and future customers who will buy the new idea. Food reaching a customer, within 20 minutes and also whenever they want it, right up to 11 pm in the night is the core value addition of Swiggy. It does not matter that the food ordered from hotels is nowhere near home cooked food in terms of quantity and quality. Customers swear by Swiggy since it saves a good amount of their time. Now, where is the best alternative to Swiggy? And any big competitor? Forget non-vegetarian food. At least in the vegetarian category, there is an increasing number of players who can deliver an entire lunch with tastes that resemble home-cooked food at fairly reasonable prices. This is booming in Coimbatore and in Chennai. It is a localized service that does not exceed three kilometers. Yet, if someone gets one hundred customers for lunch in that catchment area, the business model works. Once again, the IT support is seen. Booking has to be done online and payment is upfront. Hence, it is a peefect business model. However, it's continued success will totally depend on whether the individual entrepreneur is able to consistently give the same quality. This is a big ask, though.
Honesty and Integrity will always pay for business successWhy are Ratan Tata, Narayamoorthy, Suresh Krishna and Azim Premji, still held in very high esteem? In a country where business ethics is a very rare commodity( DHFL is the latest addition to unethical practices of founders), these gentlemen stand out for their outstanding honesty and integrity. Not a single will be paid as a bribe in these companies. Ratan Tata once gave a Voluntary Retirement Package to his employees and this was calculated on their last pay multiplied into the number of years, even assuming they continue in service.
Every single employee lapped it up. Rock solid ethics does help in business. Such leaders are always held in very high esteem. Reliance Industries may be huge and may be present globally. Yet, it's business model has never been built on ethics. Its method for success has always been questioned. Even the tactics adopted by Jio has been criticized badly.
Managerial competencies have to be built across businessesLook at the Tatas and the Aditya Birla group. Look at Asian Paints and Hindustan Unilever Limited. Look at even much smaller players like the Chennai-based Cavinkare, which has products competing directly with the multinational companies. All these companies operate with highly successful business models. These businesses are run by professional managers who possess formidable leadership skills. They are given total freedom to run their companies, almost as if they own them. They inspire thousands of employees who work under them. This is called "intrapreneurship".
It is also seen that Managerial and Leadership competencies are found in the Indian Public Sector organizations too. For example, BHEL, NTPC, and Indian Oil Corporation are simply world-class and have very good succession planning which is implemented on a systematic basis. Once the systematic practices are in place, the organization
goes from strength to strength.
Learning should be institutionalized for business excellenceDecades ago, Quality Circles were a norm in BHEL. Once it was successfully implemented in one unit, it was made operational in all plants. Deming Awards was good for so many TVS group companies and Mahindra&Mahindra. So was the Sig Sigma practices. In particular, the Tata group and the Aditya Birla group have institutionalized processes where the learning is perfect and flows across all organizational units.
This is a lesson for the success of so many business models. In fact, of late, Indian companies in the service sector seem to be innovating on several parameters. Learning the secret of securing so many savings bank accounts, Kotak Mahindra Bank has introduced a very successful product. This is essentially a zero balance account. Such innovations will become more common now.
ConclusionSuccessful business models have firm ideas on how they will make profits on a continued basis. The main points relating to such business models have been discussed in some detail in the aforesaid paragraphs.
Successful business models are those which not only adopt the new technologies but also change their products and services as per the requirement of the customers. Technologies like IT and automation will help in reducing the processing time and increasing the efficiency but the identification of the exact needs of the customer and provide him with the service at an affordable cost quickly is the mantra that only a few companies can satisfactorily address.
Today the world is very competitive. We have seen the case of China which flooded the global markets with its products in such a large amount that some countries had to resort to restriction on the Chinese imports. So aggressive marketing and capturing the markets is another important point that the business houses must consider. Another thing which is most important in the present juncture is many innovative products are being introduced in the market by the entrepreneurs and some of them are really doing very good but they are in fact killing the potential of some of the existing items and in that context it is necessary for the business entities to understand this threat and find out methods and remedies for such conditions in the market.
A successful business model has to be protected from various directions. There are many external threats to the business today. Technological changes and fast obsolescence of the products and services is a major issue to be dealt with firmly. Digital marketing has replaced the traditional advertising and the companies have to get feel of this new medium for their business expansion and increase of customer base.
Thanks to the concept of our late Prime Minister Sri P V Narasimha Rao who masterminded the globalization concept in India and supported by good people like Manmohan Singh and Chandra Babu Naidu, today we are seeing a new India. I am a witness to this change. I know what the job position was in India in the 1980s and afterward how it got changed. During that time only the total transformation has taken place and people started wealth creation instead of waiting for service in the government sector.
The author described the concept very well. The IT boom in India changed the focus from government-owned companies or public sector undertakings to private undertakings. To be truthful this concept made the meritorious people continue in India. The government sector jobs are having many reservations whereas there are no reservations in the private sector. To a large extent, this has stopped the brain drain.
The importance of managerial abilities has come into limelight and the necessity to get updated in the technological developments has been recognized. A successful business model should be robust and it should withstand various internal and external threats. A corporate should never depend upon a single person and the necessity of knowledge centres in various areas of working is increased. There is a complete transformation and now IT is a requirement not only for software companies but all other sectors also.