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Proton Business School, Global MDP (Management Development Programme)
Mahatma Gandhi Conference Theatre
Proton Business School
Indore, Madhya Pradesh, India
December 26, 2008
Please note that this is not a transcript but the notes Jack Yan relied on for his speech.

Strategy, trends and the marketing man

For the last few years, I have contributed to a series of books by Mitchell Levy. These books attempted to predict the following year’s business trends. And in my business, I rely a lot on trends, trying to pick the next big thing. But this year, it was not easy to come up with a series of predictions for Mr Levy.
   As you have probably studied, when you do an environmental analysis for marketing strategy, you tend to begin with macroeconomic factors. Sitting at my desk in New Zealand, where we get plenty of global media—we even get an Indian movie every week on the Triangle station every Saturday—2008 has been a fascinating year. We watched the world and its media get behind, for example, Sen. Barack Obama’s campaign. Like a lot of things that snowball, it was unpredictable. But it worked because it somehow touched the Zeitgeist.

The bigger trends in the Zeitgeist
While business students are far more sensitive to these issues than others, it is no secret that for the last 20 years, there has been a greater questioning of the capitalist system. Over the course of 2008, more than one person has raised the subject of the fictional Gordon Gecko character, a shady trader on Wall Street. Gecko exemplified excess and greed, the sort of qualities that everyday people balk at.
   Or are they? When Michael Lewis wrote his book, Liar’s Poker, revealing some of the illogical, rhetoric-based decision-making on Wall Street, he expected he could turn students away from being traders. Instead, he began receiving mail from American students wanting to know if he had more tips to trick the system.
   Those students have now grown up and have probably been behind the derivatives’ and sub-prime mortgage mess that has the western world worried. That means there is a vacuum for some form of business leadership to emerge. And that leadership might emerge from India.
   But I am getting a bit ahead of myself.
   The system failed because it was buried in jargon. If ever you head into a field that you do not understand and it is immersed in jargon, it is not a sign that you did not study enough. It is a sign that the profession is insecure and has something to hide.
   In 1987, with the stock market crash then, some blame was levelled at the Black–Scholes–Merton formulas, that encouraged traders to take greater risk than they rationally would. If you could see through this, and raised alarm bells, you might have been ignored because of the way the system institutionalized the behaviour. But rather than abandon the system, the west continued with it.
   We also saw the mortgage mess unfold largely because ratings’ agencies were complicit in renaming insecure assets as AAA-rated bonds.
   When Reader’s Digest did a poll in different countries about their preference for US president, an overwhelming majority indicated Barack Obama. This is not so much because they are well informed about George W. Bush or John McCain. On the contrary. It is part of a worldwide shift from the technocracy because people are beginning to see, in a more connected world, just what globalization is doing to people. They have seen the sweatshops and have exposed them. They see all this is tied in to predominantly US corporate interests, in a corporate system built on arrogance, one that its car industry, in particular, has been built upon. (Ford, one of my favourite subjects, has ignored for years that its overseas subsidiaries designs and makes better cars than its home operation. Even here in India, the Fiesta is a more suitable car for the current American climate than anything Ford sells there currently.)
   If one is the superpower, one has a responsibility to lead morally, ethically and transparently, and with the US’s failure to do so, and with a president whose world-view is based upon a technocratic perspective, then of course there is a shift away from it. The question we must have today is just how much “change” its president-elect represents.

Consumer democratization
So no wonder there has been a postmodern questioning of everything from finance to branding. In the late 1990s, Naomi Klein’s No Logo became a movement in its own way. It is ironic, because to solidify the movement, it had to adopt the practices of branding. Which leads to my next point: the tools aren’t faulty, but the motives behind their use are.
   You can even see the double-edged sword with the internet. Fifteen years ago, it was dominated by American surfers. In my own business, I can tell you that after five years of our being online—1998—70 per cent of the internet public to an English-language site was American. Non-Latin language support on the internet was appalling. It reflected a model of globalization but an inherently western, technocratic one.
   I do not use the term technocracy in its strict sense, which sounds like some sort of engineer’s dream society. I use it in the way author John Ralston Saul has: the sense that corporate controls have overwhelmed individual rights.
   Fortunately, since then, the web has given many people who otherwise did not have a voice a medium through which to speak. Rather than get a technocratic view, one where corporations have been getting their way over the citizens of the host country, or even governments, there are now individual human voices in the global village. Harvard University’s Global Voices project often scours the internet for individual opinions. Al-Jazeera’s Listening Post invites them from people with a webcam—I occasionally contribute myself. And the blogosphere has been incredibly valuable for understanding first-hand viewpoints on topics such as the war in Iraq, and how it actually influences families.
   It has also been excellent in bringing people together, such as my presence here today, which was the result of emails between this campus and a colleague in the US; equally, one of my friends has brought to my attention how brings together western loans and individual businesses in developing countries.
   So the shift online, in a medium that is an interesting microcosm of the “real” world, albeit with more adult websites, does seem to be heading eastward, and that is potentially a good sign.
   The internet no longer has a 70 per cent US audience. The US perhaps makes up a fifth. Red China has overtaken the US. But I have often wondered where India is in all of this. Because there are Indian films on Triangle in New Zealand, and very few Chinese ones.

India in the global context
You may be sensing the sort of picture I am painting today. The west is in disarray, or at least, it is feeling uncertain. It can emerge as a better society if it does its soul-searching accurately. But it will keep sinking if it believes that its current troubles are fleeting and it can sink back into its old behaviours again.
   So we have these forces already at play. You are all not strangers to the eastward shift in influence. If the internet is a representation of the real world, then India is a country growing hugely in stature. It might not dominate online (and I believe India’s overseas web influence needs to grow vastly—the internet is a wonderful way to test audiences), but Indian businesses and events are coming to the fore as far as the Zeitgeist is concerned.
   I do not only mean such international incidents as the terrorist attacks in Mumbai, which occupied news headlines for a week. After a few years of rediscovering Chinese film-making, Indian film-making is becoming more notable. There are many people who have heard of Tata or Mr Ratan Tata. India is no longer a country that just makes Hindustan Ambassadors or Premier Padminis, but the nation behind innovations such as the Tata Nano and the ownership of Jaguar and Land Rover.
   But the shift is not yet complete. Global fascination is still focused a little further east, to the Orient. So something needs to be done as far as marketing strategies are concerned from this country.
   I won’t bore you too much on marketing operations from your textbooks but I will say that branding depends on communicating, symbolizing and differentiating an organization to all audiences. And branding, being the interface between organization and audience, or company and consumer, or even management and staff, therefore becomes a very important tool.
   In the past few years, India has marketed itself admirably. The tourist bureau’s Incredible India campaign does reach us. Your own president has got behind the campaign and mentioned it as well. We know of India’s image as a modernizing, quickly developing country. Even in New Zealand, we have been the target of Indian firms trying to outsource their services. But is this enough?
   It’s perfectly natural to market on a price basis: after all, many Indian companies have succeeded because of this. They have capitalized on some basic factors such as the strong take-up of the internet, the usage of English as the lingua franca of business, and price. But price competition only gets you so far, because it is somewhat dependent on first-world nations being customers. I think we are all aware of a few firms here that have leveraged themselves so heavily on overseas customers that they have found it hard to deal with downturns in the western economy. And that suggests to me that the time is right for India to take on the world, leveraging domestically as well as internationally.
   Global competition necessarily takes several forms: head-to-head, flanking, encirclement or bypassing. The trick is to find a particularly Indian model of doing it, rather than emulate the west.
   Naturally, some things must take a western approach if one is to attain western customers. The way something is presented should look familiar to a first- or second-world customer. Indian firms such as the Tata Group have taken a hands-off approach to their foreign units, which is not a bad thing.
   There were reports this year that American dealers were actually unhappy enough with Tata’s acquisition of Jaguar to raise a formal objection. This is due to their narrow-mindedness and maybe even a sense of envy that India has a world-class corporation playing the acquisitions’ game more successfully than its own company, Ford, could.
   However, I wonder if this is the best way to continue. In time, Proton alumni should be aware of what India can deliver that the present economic establishment cannot.

Red China’s folly
I include Red China as part of the economic establishment, trying to play the technocratic game its own way through price but not innovation. The plundering of Red China’s environmental resources, especially its freshwater, does not do much to the Chinese national brand, or any organizations that depend on not only ‘Made in China’ but ‘Owned in China’.
   China may have bought MG and Rover but has it innovated? Not really: it has followed the model of the west, putting sustainability very low on its list.
   Yet countries like New Zealand and Australia have pursued free-trade deals with a régime that cannot even give its people self-determination, a foundation principle of the UN Charter. It has pursued free-trade deals with a régime that does not respect intellectual property, has a record of wishing to dominate the manufacturing of its trading “partners”, and has a questionable record in human rights.
   Red China does not have a common law system or English as a lingua franca.
   The excuse that its one billion consumers are a market for Australia or New Zealand does very little to convince me that Red China is a valuable trading partner in its present form, when India is sitting right here as a ready-made partner.
   India innovates and protects its intellectual property. India has been more conscious of its ecosystem. India has been spending more to help some of its farming communities, rather than rape the land. Its common law heritage is one that is shared or at least related with the systems of the US, UK, Australia and New Zealand. And while India has not pursued affluence in the way Red China has, at least India will not be as subject to the financial mood swings of the west. It is, as an independent economy, more stable in its growth. I am no economist but I know steadfastness is a better principle than gambling. And being Chinese by ethnicity, I can say we like gambling, sometimes a little too much for our own good. Because that love of gambling comes from another vice, that of greed. Cue Mr Gecko again.

Tackling the immorality through humanism
The logical opposite to a global technocracy is the rise of humanism as a marketing strategy principle. This, in its most basic form, means putting people first. That individuals are stake-holders who should be treated with respect. That their needs are recognized and served. What the political shift in the world this year demonstrates is a quickening of the quest for humanism, and the economic collapses illustrate the same. The marketing model, as it exists, which is top-down, paternalistic and dictatorial, is being turned on its head. While people are soul-searching, there must be some invalidation of the models that have gone before.
   Individuals are being mobilized like never before, and not just in politics, but as economic players. No brand can survive today by being top-down: at best, brand owners are stewards who try to manage the perceptions of their brands held by audience members.
   But why will this time be different, if 1987 gave us no changes, and even 9-11’s effects were so short-lived in the way people behaved?
   This time will be different because the changes in the market-place have been happening over decades. In 1987, only finance was dented, but regular commerce was not. In 1997, the Asian economic crisis was perceived as mostly an Asian—indeed east Asian—affair. After 9-11, the main casualties were dot coms, which had already been disappearing as the bubble burst. These collapses have been mostly contained.
   The pessimism that began with the lack of transparency in an American-led system—if not conspiracy—affects regular people in the US’s main street. It has not been contained. The way those falsely rated bonds have been traded, many times over, has exposed the risk to more people than ever before.
   Your quest will be to find an inherently humanistic marketing model that fills the vacuum.
   And if it rests on being Indian, then I see no harm in that.
   You see, Incredible India is great from your tourism’s point of view, and letting Matt Damon have part of his Bourne films in Goa was a master-stroke for publicity, but there is so much untapped potential for companies relying on a growing, positive, country-of-origin effect in India.
   People would, as my colleague Simon Anholt once pointed out, like their brands to come from somewhere.
   Right now, India reminds me, at least through its cinema, of my native Hong Kong in the 1960s, a country about to break through as a powerhouse, and you, Protons, are well poised to lead the economy when things really do hit it big.
   Aside from Tata, other global Indian firms have come to the fore over the years, but fewer than I expected. Infosys is by no means perfect but it has been inspirational enough to have won a Brands with a Conscience Award from the Medinge Group in 2003. From what I can tell, Infosys holds yoga and meditation sessions, as an accepted part of its culture. A western firm would find this jarring with its act first-care about the people later mentality. Yes, many companies in the west have health plans. But they deal with health problems after the fact.
   India has a culture that prides itself on service. Toyota believes its Indian-built cars are superior to those it builds in China and equal to those it builds in Japan, quality-wise. India obviously is an innovator because everything from Hotmail to the Tata Nano has originated from Indians or Indian expatriates. And these are recognized overseas as having Indian roots.
   If Indian firms are willing to be more transparent, and India’s service industry has actually been a good training ground for that, then they can indeed put up a differentiated front to those in the west that have become too institutionalized and uncertain for their own good.
   Growing through innovation, Indian brands and emphasizing the positive elements of the Indian national image is an admirable strategy to pursue.

Learned misbehaviours
If you ever get to read Michael Lewis’s writings about the US financial industry, you’ll learn that a lot of people within there do not know what they are doing or why they are doing it. There is just a series of coded behaviours and no one remembers the reasons behind it.
   If you look at marketing and advertising in the west, the story is much the same.
   With my work for Lucire, a fashion magazine that I founded, I discovered that some media buyers will buy not based on the quality of a magazine, but on the idea that if their boss has always bought with a certain title, then they, in a risk-averse way, might as well do the same.
   Those that bought with us actually took a chance on us—and I like to think they were rewarded. Lucire begins 2009 being New Zealand’s only cross-media fashion magazine, with print, web, web video and mobile editions. It is the only one that licenses to other nations. Those that chose to not think about what they were doing, and just repeated behaviours, missed out on having their clients look like trend leaders, especially now that one of our competitors, a company far, far bigger than us, has had to withdraw its web magazine operation.
   If you can separate what is being done because of learned behaviours—or should I say misbehaviours—and what is being done because the principles are correct, you have already come a long way in dealing with international business.
   The only way to break the cycle is to communicate with people, and get them as passionate about your brand as you are about it. Because you might just discover that despite more entrenched companies operating in your industry, they may well be helmed by management who do not care or do not remember just what their brands stand for.
   If you are willing to live a brand and to have your team live a brand, then you have the potential to confront far better resourced or more “familiar” organizations.
   Or, for those heading into manufacturing, you can always let your prototypes or your finished product show your superiority.
   Lucire did a lot of the things I am preaching to you today, though I admit that I may have been far too early on some aspects.
   In 2003, we became the United Nations Environment Programme’s first fashion industry partner and aimed to create a Carbon Neutral print magazine the following year.
   This all happened at a time when people did not care that greatly about corporate social responsibility and the environment, and almost no one knew what Carbon Neutral meant.
   If I even look back to 1997, there were people who were unwilling to be featured by Lucire because they did not see the point of the internet—at a time when they did not have an email address.
   Learn from my mistake: if you can, watch the trends so you can not only be first to market, but capitalize upon a trend as it becomes massively mainstream.
   Maybe I didn’t make a mistake. By sticking with our core message we might well be poised to demonstrate that we are a decent, transparent, ethical organization that crosses numerous media.
   And I also knew why we were doing it: because we had a message to share, and a positive one at that.

Transparency—and humility
For India, the next step is to symbolize and communicate your principles to all audiences, internal and external.
   Where it must watch itself is that the caste system does not rest well with the west, which sees itself as progressive even if western organizations themselves depend on more of a hidden caste system, one which has kept real wages so low that a single breadwinner can no longer support a family.
   Transparency over labour conditions, for example, might go a long way. Prices might have to rise but if coupled with a strong communications’ strategy, an Indian corporate brand could begin earning cachet. With our own company, especially with Lucire, people see how the brand has become associated with trend-setting in fashion media. We have used a virtual structure so it does not matter if correspondents are filing stories from their homes in Los Angeles or New York. What we encourage is for people to live the brand: to be ambassadors for Lucire and to exhibit decent behaviours. Contrasting a great deal of the arrogance of the fashion industry has been our humility. Arrogance gets you so far, but humility and openness have earned us allies who are with us for the long term. Arrogance has led to the downfall of many a western firm, as finance and automotive are discovering right now in the US.
   Our audiences, internal and external, see the results of the work—and they appreciate the fact that we have been transparent about what we do.
   Even with our clients we have tried to build in these qualities and push them as far as we can, though I hope that you can appreciate that you can only force clients to do only so much.
   Consequently, we seem rather well positioned for the 21st century.
   We don’t need to change too much about our marketing principles because we had read the trends, recognized at the time what was happening, and we may now be rewarded in 2009 for our persistence.
   Decide on your principles but for those of you who are to remain within India’s borders for your business career, there are far fewer concerns about relying upon your country’s national image. The positives now finally outweigh the negatives.
   I am a self-confessed car nut so let me use this analogy: India’s image is not of an old Badal, Premier Padmini or a Standard Gazel but a Hyundai i10, Maruti or, perhaps more accurately, a Tata Safari. One day it will be linked to a shiny Jaguar or Land Rover—2008 is just a bit early for the image to change.
   Continue on your upward path, but do not lose sight of your identity. Differentiate, symbolize and communicate your brands—and do so proudly.

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