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Impact of Innovation

Just read that interest in dishwasher (DW) search in India has multiplied many-fold. It was not feasible until now to manufacture DWs in India (a mkt of only 60K per annum). The major manufacturers globally are btw, Whirlpool-USA, Haier-China, Electrolux-Sweden, Japan, Korea, German companies, and surprisingly Turkey!! During the pandemic middle income Indians have calculated that it costs Rs 500-800/month to run and maintain a DW. It now uses only 6 to 7 litres water/wash.

So, housemaids unfortunately are having a portion of their work portfolio hacked off, and that too at a time when their husbands (typically taxi drivers, retail workers) have been laid off. They have not been able to send their kids to schools that have demanded tuition fees, and forced them to buy tablets that they simply cannot afford. All these kids have lost a year. I see that software companies in Bangalore have cut down transport facilities and real estate – more WFH – the new norm after covid! which means, its going to be a long time those taxi drivers get their jobs back. Retail is moving online too, so the jobs are mainly for door-dashers! Cloud kitchens are in vogue in the investment community. So, while everything will tase the same, small time chefs could well become delivery boys. Luckily the Government’s new infrastructure thrust should create jobs for labor, so that the vast agri labor force gets employment. But this will take some time for sure. The agri sector is also set to change, with the new laws comes higher productivity and mechanization. Certainly good for the nation to use resources – electricity, water and fertilizer more efficiently. Perhaps the protesting farmers may go back once it is harvest time. But what kind of jobs will they go to? Even manufacturing – the sector that was supposed to absorb rural labor and provide employment is becoming productive with the use of robots and AI. One of my clients, a maker of smart meters and automation has IOT products (great products and a great company btw! and we’re enhancing revenues of utilities – something the government is also focusing on), that makes the large swathes of manpower used to read utility meters redundant. At another level, I also see all the analyst type of jobs going too. Today, I don’t need the skilled service of an investment advisor or stock portfolio manager. I can see all data on my phone, apply filters, choose the criteria to select stocks and invest. Pieces of software that automate processes in organizations are making managers and coordinators redundant. Marketing automation and creative software has already made many a marketing job unnecessary. So, while there is enormous scale and power available to some, there is huge disruption to others.

And, hold on to your seat belts, there is more disruption headed! Previously, when the industrial revolution took place (See picture below- courtesy a youtube video i saw), automobile, electricity and telephone were the technologies that almost happened simultaneously. The next big disruption they say is going to happen shortly (say experts) – given that blockchain, AI, robotics, energy storage, IOT, gene sequencing, electric/hydrogen fuel etc are all happening at the same time. I watched Bitcoin in disbelief, but the more I understand the applications of blockchain, things seem set to change rapidly and it seems true.

I guess, it all depends on where and how we position ourselves for change……..just a stream of thoughts that started from “search for Dishwashers” that i found on ET. But I do hope things work out ok for those affected by displacement.

SMEs should scale using Digital & Industry 4.0 technologies

Problems during strong growth:

Small and mid size companies typically face a number of problems when it comes to scaling using technology. Everything works well when business is steady state. But during a steep economic upcycle like we have now, there is a hustle to rush production and suddenly they are unable to use data effectively to gain visibility; products don’t move out on time, WIP spikes due to problems, product development targets seem to have been missed, they lose customers to quality, they are unable to participate in bids on time. Once they grow beyond a certain size in turnover and people, it is harder to coordinate activities and align everyone’s effort in the same direction. Solution – implement robust systems so that data is collected and made sense of and actions taken based on data rather than on hearsay.

Use technology with care & diligence to scale up – Digital and Industry 4.0:

Up until now, companies may have used bits and pieces of legacy systems or hotch-potch solutions cobbled together in a hurry, whenever they had to respond quickly customer requirements, or worse – do some fire fighting. But today it is Industry 4.0 – we have a slew of new technologies, applications, devices, electronics and IoT solutions that larger companies are using stay ahead of the game. SMEs (Small and Mid-size Enterprises) lack the awareness of such solutions. It is impossible to have in house resources with time, skill and knowledge to evaluate such solutions. The talent in SMEs is typically hired for execution; they is always a hustle and an eternal constraint for bandwidth and time. Perhaps the owners or top leaders with insight across the organization may be in a position to evaluate the returns of implementing such solutions. But they are even more hard pressed to look into this level of detail. Evaluating these solutions requires a degree of knowledge to be able to compare available solutions, features required, marry internal processes with the technology solution, weigh in on cyber security and information security concerns, undertake cost benefit analysis, and most importantly implement all this without breaking the company. Silos within the company need to be broken, processes need to be reengineered and re designed, old ways of doing things have to be stopped, employees need to be trained, everything needs to be explained to them so that they can make sense the broad direction in which the company is headed. At the same time, as data becomes visible and there is more transparency into the process, employees get concerned about their incompetency and their relevance, so this needs to be addressed as well.

Large companies have fared much better in Industry 4.0 and digital:

Overtime, developments have happened in manufacturing, starting with mechanization, moving onto mass production, automation, and then in leveraging connectivity and information technology within the organization. Larger companies have been more effective in moving across these stages and the result –  they’ve been more productive and lower cost producers of goods. In today’s age with IoT and the onset of #industry40 , companies are having to use not only software but also integrate it with electronics and hardware to gain insight into data in real time; then use data analytics to makes sense of all this for decision making.

Larger companies are able to do this quite well. For example, #Asianpaints uses a lot of data analytics when they bring together disparate types of data in various formats (which is quite typical – we have data in so many formats produced by various departments), integrate and present it in the form of dashboards to top management so that decision making is quite fast. They also buy systems from MNC companies to help them control and integrate plant processes.  The information is made available to frontline employees so that decisions are taken swiftly lower down the organization itself. There are number of solutions which straddle electronics, software, process, production automation and quality systems. These solutions are provided by large MNCs in the form of typical operation management software and systems. 

Are the technology solutions feasible? How to go about it?

Many of these solutions are quite expensive and SMEs may not be able to justify the ROI for such technology. But a rapidly changing world and the corresponding disruption in the technology industry has made sure there are a number of start-ups and smaller companies providing solutions similar to the MNCs, and these should be tapped by SMEs in their #industry40 journey. However, this needs a degree of effort, knowledge and research to identify such solutions and marry what’s best for our organization. Technology can’t be plonked in lock stock and barrel; a careful rethink of systems needs to be done, since processes would now be quite different given the use of more data sensors and sense-making using analytics to take better/faster decisions. In a sense, this is no longer the time for jugaad solutions as was done before, but rather needs an application of mind to carefully think through process/systems towards transforming the business using new technologies. This has to aligned with overall strategy as well, so that other departments start to function differently. Only then will efforts be multiplicative rather than just additive. Feasibility of implementing technology and ROI is also important. So bring in the required competence probably in the form of external consultants to ignite efforts that help scale the organization using #digital & #industry40, and overcome difficulties of time, resource competence and knowledge of redesign and change management.

Transform Customer support into a value generating function

Marketing & sales focus on customer acquisition and essentially the buyer. Customer support focuses on the user and is required for customer retention. This is valuable in businesses where customer lifetime value is significant; (ex: we keep visiting amazon repeatedly to shop); Especially, online retailers, automobile companies (who depend on significant revenue through service), hospitals, machinery/OEMs, technology products, SAAS products and other such businesses where delivery, service, maintenance and renewals are important. So, while there is value embedded in the product or solution, there is also the concept of “value in use”. The embedded value comes from the product, performance, price. However, significant “value in use” comes from the continued experience of the product that is often neglected by companies. This can be delivered and enhanced by our Customer Support Service (CSS) function. When CSS can deliver high level of personalization and timely responses to customers’ need for support, there is an enhanced customer experience which is valuable to the customer and this leads to customer loyalty as well as a stronger brand.

Strategic importance

CSS functions are often relegated to the background. There are companies that have been around for decades, and may have thousands of industrial customers, but rarely do they give importance to sale of spares or repeat sales and the experience of those existing customers. Once the deal is done and the tender is successful, the product is delivered, and a minimal level of customer support is provided for the stipulated period.

Due to the fact that CSS functions are typically closer to customers, they develop amazing insights on user behaviour and can actually play a significant role in reshaping the product/solution offering, customer segmentation (say in terms of the way customers use the product) and in evaluating the lifetime value of customers. CSS can also play a major role in product development and improvement, since they have unique insights into usage that others in the organization do not.

Move CSS closer to the leadership

CSS can actually be used to build the brand, customer loyalty, increase customer lifetime value and grow the revenues of the company.  It should therefore, be a strategic function in the organization. CSS should be close to the leadership in terms of reporting structure and close to the customer as well. This will demonstrate its importance within the organization and enable this function to be taken seriously. When leadership and top management decide to take customer experience seriously and start to measure and monitor customer experience, naturally CSS becomes a very important function to deliver these values.

Being close to the customer

The function should be so designed that it should integrate with the customers organization and be completely involved in the usage of products and solutions. The quality and closeness of interaction with the customer determines the quality of customer intelligence that is collected. CSS is therefore in a position to provide strategic inputs to an organization. Customer strategy should be closely linked with business strategy. Customer strategy should also be clearly defined and road mapped (stuff like customer segments, their needs, our unique proposition and value, the customer experience we wish to create, and our internal structure and capabilities to deliver this). All customer touchpoints should be brought under a single umbrella and data that is collected has to be managed to extract insights for necessary action across the organization.

This is therefore about moving CSS from an administrative to a strategic function; moving it from a cost centre to a profit centre where CSS can also be responsible for revenues.  The necessary governance processes and metrics need to be then put in place to manage a sophisticated CSS function.


Customers typically remember the person they interacted with and say “employee’s assistance was appreciated” and place a lot of importance to such human interaction; but companies rarely treat CSS employees as important. We think it is the system that served the customer and not the employees’ approach or reaction which made a big difference.

So, the role of employees needs to be emphasised in CSS. Leadership should play a crucial role here to help employees understand the importance of this role and move them to think about customer experience. This requires a lot of internal marketing and training. Employee experience (in terms of ability and the years put in) also plays a major role in the quality of service delivered. It has been found that employees who have spent more time in this function, as well has employees who have a positive experience of their own job,  are better able to handle customer requests in an unstructured manner and thus provide a superior level of customer experience. Systematic re-training and sensitization of employees to such issues is very important.

Operations – Systems & process

A typical CSS function handles customer enquiries, complaints, merchandise returns and payment related issues. It is quite normal for CSS functions to grow from a rudimentary role to one where large volumes of transactions are handled as the organization grows, resulting in chaos and low service quality.

But there are ways to enhance the effectiveness of CSS by designing robust processes, systems and policies and enforcing them across the function. Rather than tweak existing processes, it is much better to undertake something like a Zero-based design, where we start with the outcome required, and work backward using agile-scrum methodologies to design the CSS function. First get a minimum-viable-design out and then rework and improve from thereon.

Use Zero based design to re-design Processes

The design and structure should also keep in mind cross functional linkages with the rest of the organization. Going in for certifications like CMM service certification is not a bad idea either. It helps bring in a level of seriousness and the required level of discipline in the function. Needless to say, strong management control systems need to be implemented and suitable performance frameworks have to be put in place so that the right metrics are measured and monitored. Hence operational governance is crucial.

Technology & AI

Use of technology is crucial. As the function scales, cost of the function needs to be evaluated. Voice and email are typical tools used in a human transaction. Significant volume of transactions can also be automated, thus increasing accuracy and productivity by using AI tools and technologies such as IVRS and AI chat bots. This reduces the cost of transactions and the load on human operators. Amazon for example, has a very sophisticated machine learning algorithm that provides suggestions to customers based on what they’re looking for. Similarly, a lot of banks have implemented AI chat bots to help human agents in their interactions and these bots not only provide information to customers but also undertake some standard transactions. (We’ll discuss how some companies have used AI in CSS in a separate blog).

Align sales under CSS

For industrial organizations, or even software solution providers selling to business customers, it also makes sense to bring the key account management/ sales team under the CSS function. The key account management sales team can then leverage on the insights of the CSS function to sell to strategic customers. This combination of key account management and CSS actually lends itself to a very powerful CRM or customer relationship management capability within the organization.

Above are some steps organizations can take to transform CSS from a support function to a strategic function that also delivers additional revenues and value.

Is marketing evil or good?

Evil marketing

Well, It’s is just a tool. But it is the marketer and the goods being pushed that really matter. If it’s drugs, or cigarettes, then yes, certainly it is evil. Then there are cases where the marketer started out with a good reputation and has turned malefic. Recently, a very large reputed mutual fund in India that holds tens of thousands of crores of people’s money in trust to invest on their behalf in certain types of funds (allegedly safer!) faced extreme redemption pressure from investors (like a run on the bank); the debt market froze at the same time due to Covid 19; they knew this; the only way out was to immediately inform investors; But instead, they decided to put out advertisements inviting more people to invest in these safe funds. Such marketers (the very top management or leaders) apparently have intentions of profiteering while causing damage to others. They forget their code of ethics in search of profits.

Similar could also be the case of a marketer of organic vegetables who gets overtaken by greed and starts to supply produce that is loaded with pesticide.

Doubtfully Evil Marketing

My doctor prescribing me an expensive antibiotic when I could do with the generic version certainly doubtful. A non-profit doing fund raising, calling me for donations is also doubtful especially when I’m not able to understand what part of the fund is for the cause/outcome and what is being used to fund their extravagant administrative expense.

Essential services around last rites or even coffin makers often have a basic package, a silver, and a gold package. They design the basic package to be so pathetic that people are forced go in for a silver package, since they really cannot afford the gold. All three packages almost cost the same; this is unethical, ripping people off during their moment of distress and agony.

Marketing to greed

The very purpose of marketing is to convert something from a commodity to a brand; or even to skim off the market as much as possible before the product becomes commoditised.  In this category a lot of luxury goods marketing would fall, which typically play on impulses and desires and end up decreasing the financial security of a person, forcing them into unwise decisions. So, if marketing forced some consumers to buy products that they would not have done so otherwise it is evil. But let’s be clear – if this provides some happiness to the buyer, then it certainly isn’t evil marketing at least for the one who enjoyed the product. So, this could be grey for some, and good for others.   

Border line – neither black/white marketing

So, while we may say marketing is evil and it caused people to buy what they would not have otherwise, it could also have made them use a product that impacted their life positively. Take for example cosmetics. Some may say it is evil marketing and forcing people’s psyche into a framework of beauty. But users of cosmetics may feel that beauty is not the end goal, but it is the process and the usage of cosmetics that gives them happiness. If that is so then it certainly doesn’t qualify as evil marketing.  

Good marketing

On the contrary, can marketing be good? Or is it just bombarding us with needless information? Well, as we all saw in the recent pandemic, there was a lot of marketing done by Government agencies and health organization to help protect us from the pandemic. While this may be social, there were also a few commercial advertisements like say a liquid soap company promoting hygiene in this era of pandemics. Similarly, promotion of organic produce or yoga is promoting a product or idea and informing us about something that could be good for us. This could be called good marketing, at least until the marketer’s goodness is overtaken by greed.

So, what should we do?

The marketer is saying they have good products that do something really well, and can make a change in this world, hence they are trying to tell a story, so that people take notice and change and derive value and happiness.

It is also true that if we keep telling ourselves things every day, true or false, it becomes our reality.  Marketing is somewhat like this. I see this in news channels these days. They all feed us with biased news, and it forms the only world view of many viewers to the extent that people start to believe that the one instance with some strong visuals that was depicted repeatedly on media is the only reality.  In all these cases, even those of us in the process, who handle these marketing tools and managing the operations should know we are abetting such atrocities or goodness.

Hence, fundamentally, we need to keep some basics in mind. 

  • We must be really good at what we do
  • good at making something that is of value to some consumers, and
  • finally, and only lastly do we have to be experts at marketing.

We need to be all three to be successful. So, improve the product – “if it is bad”. When we start to really embark on marketing, we realize gaps in our offering and figure out how the product should have been in the first place. We then need to seriously work on the product front. Marketing not only helps us reach out, but also teaches us to improve.

Marketing is not awfully expensive these days, it has more speed, reach and power. But it is just a tool. It must be used wisely. It is not just about using technology or software to be faster. If we send out garbage, we get it back. We don’t want to be doing a lot of wasted digital campaigns and activity for nothing. It has to be about telling a story. Market to the right people. We cannot be everything to everyone. Someone needs to stand apart from the noise and apply concepts. Communicate value. So, get someone to think through the entire strategy, and do it for you. In the era of remote work, access to expertise is easier. The impact comes from our intention to start marketing and improving our product, not form the tools, technologies used in marketing, which is more a matter of detail.

Hybrid Innovation Strategies

Innovation now needs Second wave technologies to be integrated

Digital is no longer about digitizing bits and pieces of workflow in the company to usher in automation and be productive. There is a more serious disruption at play involving innovation in products, business models to transform the entire business itself.  It’s not just using IT, but also adopting many second wave technologies like IOT, AI, AR, and machine learning across areas like product, training, customer support, you name it, to disruptively transform the company. Imagine the scale of transformation at Reliance from a Petro chemicals business to one where consumer/retail revenues started contributing significantly, to another innovative transformation involving Jio – using the power of Facebook, WhatsApp, Enterprise apps, ecommerce, financial payments etc. that is set to unfold (as I write this).

Internal Innovation

Until now innovation was mostly internally driven, where companies have their own R&D departments. The advantage is that such innovation provides a sharp differentiation with respect to the competition. But there is a limit to the talent and speed at which this can be done. It is also too expensive and impossible for smaller companies to embark on.

External Innovation

To keep up with the market, companies have been looking at external innovation with partners such as universities and start-ups and this is a kind of open innovation model. Many large companies adopt the model wherein they invest and allow a start up to innovate, and when successful, the start-up is acquired. There are some large companies that have specific teams scouting the world to meet and evaluate innovative start-ups and finally invest in a certain number of best bets every year.

For example, JLR, Fiat Chrysler and Renault Nissan tied up with Google’s Waymo for self-driving cars. But the product that comes out of something like this would essentially not provide any one company with a cutting edge. It will merely raise the bar for all of them to stay afloat. And, this certainly needs to be done or risk extinction.  We’ve also seen this happen in automobiles (say engines from fiat, chassis from ford), mobile phones (all about the screen/processor/GPU/camera sensor from say Samsung, Sony, Qualcomm) or even TVs. There is really nothing to differentiate many products around us.

Hybrid Innovation for Small-mid companies

Now, the time has come for smaller and mid-size companies to also be innovative and survive. It is impossible to have/fund all the required talent inhouse and innovate internally. Being stagnant and slow will put the entire company at risk. At the same time, it is also risky to partner with external technology providers. I’ve come across companies that rolled their idea into products by outsourcing to outside teams, only to get extorted financially towards the end.  Now-a-days there is a great need to use sensors, IOT, AI, a combination of electronics and firmware to transform processes and products. These are not skill sets that we all typically possess. So, we are forced to use external partners. But it should not so happen that the external partner offers this very same innovation to other competitors, thereby nullifying any advantage that was hoped for. Typically many small technology experts/start-ups look for a use case/ data from a brick-and-mortar company; they look forward to build a solution for the brick-mortar company and then spin it off into a full-fledged product at a later stage. This does not benefit the guinea pig. At the same time, the small external partner may feel short changed if the innovation succeeded and they were not part of the success.

Hence smaller companies need to adopt a hybrid approach. Evaluate your capability gaps, and map out the areas where external innovators will be brought in. Then build precise innovative governing models and metrics to monitor and control the partnership. Have in place an internal team that can absorb the innovation and take it forward from there. Smaller companies could explore a build-operate-transfer model. First transfer the capability and then the team.  Also incentivise external partners to be part of the continued success of the innovation once it succeeds in the market. That way, they will also have a stake in further innovation and support for the technology.

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