After an unceremonious exit from HP, Mark Hurd, credited with making HP the world’s largest PC and server systems company and spearheading acquisitions like EDS and 3Com.  A quiet successor to the more high profile Carly Fiorina, Hurd was the toast of the company till he got embroiled in a controversy regarding a marketing consultant.

HP lost no time in sending him home; equally Oracle and Larry Ellison were quick to defend Hurd and called the decision by HP as equivalent to Apple throwing out Jobs earlier! Oracle, which is a close partner of HP, has now put its money where its mouth is and made Hurd the Co-President.

This is an interesting move; and though as of yesterday, HP has filed a suit, the expert opinion says that HP is on a weak wicket as Hurd was not under a non compete and California law is expected to favor Hurd.

There are many interesting insights to draw from this episode- first, did HP over-react to the incident around the marketing scandal, or were they living by their values? How will Oracle now navigate the tight rope, with HP as one of its closest partners, in making this bold, but not unexpected move? How will this change the pecking order amongst IT companies- for example, will IBM have gained something from HP’s decision?

Welcome  your views and comments………….

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We recently conducted a poll on Linked In to get views on the best way to brand a business unit for an emerging company. The options provided were:

• Ride on the corporate brand (leverage the corp brand)
• Spin off as a separate brand
• Stand out under the corp umbrella (i.e. your branding efforts are independent yet aligned with the corp brand)
• Does not matter

The results were interesting and we got 42% of responses voting for “Stand out under the corp umbrella”, 32% for “Ride on the corporate brand” and 21% for “spin off as a separate brand”.  We got a good mix of responses – across ‘c’ level and management to mid-level people. We found that marketing people were the ones who vehemently opposed spinning off a separate brand whereas some ‘C’ level executives were open to it. The results can be viewed at http://polls.linkedin.com/poll-results/99477/asrgs.

When does it make sense to spin off a separate brand? The example that immediately comes to mind is P&G where the individual brands marketed by the company are probably more famous than the corporate brand itself.  A spin-off makes sense when you want to have a different positioning, attributes etc. for each of your products/services. Case in point – Accenture setup this low-cost entity called Concadia and the reason is to convey the image of a low-cost provider. Now, this would not have been possible under the Accenture umbrella.

Rather, for emerging companies, it would make more sense to remain aligned with the corporate brand – it is highly likely that the brand attributes for new services/products would be similar to the corporate brand and hence efforts need not be invested in setting up a new one. B2B buyers are also more interested in what you offer, your content, delivery etc and hence it makes more sense to focus on these aspects and ensure your brand attributes are consistent across your organization.  Your views on this topic are welcome.

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This is an important  topic in today’s competitive market -Buyers are more demanding and there is lot of pressure to cut costs, improve efficiency etc. Therefore, more than ever companies have to distinguish themselves in the crowd and that is not an easy task. This is where branding strategy comes into play. We are working with an emerging company with expertise in a niche area and helping them brand this business unit.

How does that work? It starts with a complete understanding of the client context – their strengths, weaknesses, challenges etc and this is garnered through interviews with  stakeholders  such as management, employees and customers. With a sound grasp of the internal context, we need to do a similar study of the market. This includes understanding  buyers and influencer behaviour. The idea is to know the market, what it demands and expects and then map your business’ strengths/capabilities with that. Once that is done, the branding path becomes clearer and you will know how to position yourself and what are the vehicles required.

For example, if the market is mature and opportunities exist to provide support services – then, positioning yourself as a value adding player with business and domain understanding will not be of much use as that is not something the prospects are looking at. On the other hand, it will be useful for an emerging market. So, it is critical to understand the market thoroughly and zero in on what their pain points are.

Very often we find companies not performing a holistic exercise of market + internal context. They end up positioning themselves based on their internal context which may not always be effective for the market they are targeting. Today, you have to know your customer intimately, the way their business operates, the industry challenges,  the way they think, the way they take decisions  and so on. Once you know the market you are operating in, it becomes easier to address/engage them. Sometimes, it will require you to change the way you are working  - you may need to acquire different kind of skills and approach the market in ways that you are not used to – this change as usual will be challenging but worthwhile for the market you want to target.

Branding involves not only aspects that are external facing but also aspects that are internal to the company. The branding strategy should be harmonious across all stakeholders and it is not sufficient to just address the customer/prospect community. With a comprehensive approach and sustained efforts, it is possible to make a dent on your target market.

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An article in the Economic Times yesterday spoke about GE, one of the largest outsourcers to India, planning to derisk India and expand relation ships in other locations like China and Latin America.

This is not very surprising considering that GE has been a pioneer as well as a hard nosed buyer. GE has been known for outsourcing large volumes of work at low price points, and on occasion also invest in the vendor. As such, whether to work with GE because of the volume of business or to stay away because of dependence on a powerful buyer who negotiates hard, has been a dilemma for many Indian companies.

Infosys, in retrospect, had a chance to wean away from GE at a time when it was relatively “easier”. Many of the the other first tier players and the top 20 in India continue to do substantial business with GE.

GE’s strategy is to expand its presence in other emerging markets- it was one of the first companies to check out China. TCS set up operations in China to service GE; GE also works with local Chinese players. Now, one reads that GE is unhappy with China’s attitude and is reconsidering its growth plans. That is the risk that vendors have to take.

Likewise, GE has business interests in Brazil and other parts of Latin America, and vendors either need to shore up their presence, or choose to not compete for such business.

At a time when vendors are going global with their operations and buyers (albeit a few), are globalizing their outsourcing strategy, lessons learned from GE would be really relevant.

It would be great to hear your views on this topic.

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Keeping existing customers happy and growing with them is acknowledged as a wiser option than trying to gain new customers. Customer satisfaction studies gain importance in this context as you make an attempt to understand customer’s views, what excites them, what annoys them and what can trigger to expand their relationship with you and so on. Typically, customer satisfaction  studies are conducted at the overall company level. There was an earlier blog on the benefits of a CSAT.

However, there are several more areas where customer feedback can be valuable and here are a few examples -

a. When you want to test market an idea  for a new product/solution/service – organize a dry run among your existing customer base

b. Detailed Feedback on specific processes/offerings

c. Validation of your brand positioning and suggestions from customers based on their experience

d. Mystery shopping – this is relevant for customer-service oriented companies (Banks, call centers/BPO companies) where a neutral party can  pose as a potential customer and give feedback on their experience with a particular department

This is not an exhaustive list but was meant to drive home the relevance of customer feedback. It will be great to hear your experience too.

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This is a questions that crops up every now and then, when analysts and industry observers run out of other ideas to debate! On a more serious note however, it is definitely worth thinking about how mid tier companies should align themselves to face the new market realities.

For one, offering costs lower than larger players, as a sole value proposition is disappearing as scale players are themselves being forced to re-examine their pricing with customers becoming more demanding.

Thus, smaller companies have to think hard and figure out how they can differentiate themselves – through specialized capabilities or more unique engagement models or by targeting segments of market that are relatively untouched or kinds of projects that are interesting but would never run into hundreds of millions of dollars in size ( and hence not as appealing to larger players).

In fact, it is Prayag’s view that smaller companies can more easily fine tune their approach then larger ones – take for instance exploring risk reward models- Persistent has shown the way and started experimenting. Or, developing specialized capabilities – KPIT Cummins is a good example of a company that has made a name for itself in the auto vertical, likewise there are many younger companies like Aujas which is focused on IT security outsourcing.

That said, one must also not forget that globally, the IT industry is highly fragmented and large and small players have co-existed.
Hence if there are companies with limited aspirations, then not changing focus may still allow them to stay where they are.

But, to move to the next league and make a higher impact, the time is now, to reorient the customer value proposition.

What do you think?

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