IIPM-India: September 2008

Monday, September 22, 2008

Who dares to be CEO?

Lampert must move himself out of a hands on role in Sears
When investor Edward Lampert acquired Sears via merger

of K-Mart in 2005 and became the Chairman, he thought of ruling the retail world. However, recent developments at Sears Holding Corp. suggest how poorly he misread the whole scenario. At the moment, the retail giant is facing the brunt from both internal & external factors. Apart from economic slowdown, its army of 3,800 stores is dilapidating with every passing day due to rising complaints related to its stores and customer service. Edward announced massive re-organisation plan on January 22, 2008 (new organisational structure composing of five business units – operating businesses, support, brands, online and real estate).

Surprisingly, just a week after the re-structuring announcement, Edward ousted CEO Allwyn Lewis, who he had only institutionalised at the helm two years back from a restaurant company – Yum Brands. He has appointed W. Bruce Johnson as interim CEO. Howard Davidowitz, Chairman, Davidowitz & Associates, pointed out, “It doesn’t make sense to kick start re-organisation without a full time CEO.” Another analyst on condition of anonymity said, “There hasn’t been clear reasoning from the management on why Lewis is being ousted… ”

Lampert is hardly short of ideas, but recently, quite a few have fallen flat, for instance, his ploy to focus less on market share and more on profits. As per company data, net income for the quarter ended November 2, 2007, was a measly $2 million, compared to $196 million for the quarter ending October 3, 2006 (which included $101 million of pre-tax gains). Lampert then admitted, “We are very disappointed with our performance for the third quarter. We cannot blame our results entirely on the retail and macro-economic environments. We have much on which to improve...”

Lampert must now realise that he may have to oust himself now from a hands on role in the company, as his time is fast running out. Bringing in a new CEO is the easiest advise to present, but presents a huge execution challenge. Without that, Sear’s ploy for a more dynamic organisational structure in order to unleash growth may all be in vain.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Saturday, September 20, 2008

Playful networker

With a unique convergence strategy, RCOM now means much more to Indians than a mere price leader. By shashank shekhar
To match the cost of a call to a subsidised government

postcard was pioneering enough. Such ideas, often hailed as proprietary of a few gifted people, predictably came from the patriarch, thereby establishing Reliance Communications (RCOM), a telecom major credited with skipping and climbing the golden ladder that leads to the world’s second fastest growing cellular market. That drew in the hordes flaunting white LG phones with blue-lit screens, which could literally be had by just walking into one of those Reliance stores better known as R-World cafes. Of course, detractors were quick to speculate that Reliance Communications would be all about price leadership and nothing more.

Unfortunately for them, nothing could be further from the truth, Reliance Communications is creating waves in the telecom circles in more ways than one, be it with Anil Ambani’s exemplary network expansion drive, his foray to be a dual service provider (CDMA & GSM) or his most innovative convergence plans that transcend the entire gamut of digital media. In particular, RCOM’s endeavour to build a powerful portfolio of VAS services from the grassroots, is a feat arguably unparallaled in the telecom arena. No wonder, Anil enthusiastically commented while announcing the Q3 results, “The Indian telecom sector is poised at the threshold of a significant growth opportunity and RCOM, as a fully-integrated and converged service provider, is best-positioned to capture this growth.” What makes RCOM so different with respect to its approach to VAS?

“Fortunately at RCOM, VAS is treated as fundamental to our telecom business. Starting from handsets, we ensure that each piece is WAP enabled,” comments Krishna Durbha, Head – VAS, Business & Marketing Applications and Solutions. With commoditisation of voice, as is being witnessed by the industry, telcos have but little choice to tap into the services’ revenue stream that attracts a premium in today’s scenario. But most remain skeptical of introducing new products in the backdrop of thousands of ‘ring tones’ or ‘caller tunes’ and are also appalled by prospects of piracy. A point at which Durbha – salt & pepper haired with serious demeanour – lets out a contained chuckle for, according to him, VAS applications from a Reliance mobile phone can’t be pirated as phones are locked from the factory.

Over due course of time, RCOM has successfully tried out innovative services and to say that it is amongst the world’s foremost VAS providers and that too, to over 10 million subscribers won’t require much authentication. “The number of games downloads that we do everyday creates history on a daily basis,” puts in Durbha. Amongst other models, to penetrate into a larger market, Reliance has introduced a unique concept of sachetisation of game downloads, which Durbha calls as its second innovation, the first being introducing multi-player games on handsets. “We’ve introduced sachetisation as we’re very clear of the fact that in a market that is essentially pre-paid, people would not prefer downloading games for Rs.50.” And thus emerged the concept of “pay per play” that is usually about 2-3 rupees. On the content end, the company has encouraged a large amount of content development on mobile, since RCOM initiated its own Reliance Developer program on the lines of Microsoft. Social networking, the latest from the RCOM stable is creating waves too. Already, networking website Big Adda has been a phenomenon with some 1.5 million users within 6 months of inception.

Another point of focus in RCom’s agenda is to provide more regional content in its offerings. “The more local content you give, the more people will consume,” is the mantra on VAS. While at present, entertainment runs through its very veins, the shift towards utility services in near future is seen as a potential driver for growth. “We’ve gone wide. Now we need to grow deeper,” adds Durbha. Indeed, usage has only gone up with increasing regional content, as people are more comfortable in their native language, especially in case of voice based services.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative