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.

Popularity: 6% [?]

It is becoming a level playing field with global companies having adapted to the offshore model fairly successfully. The initial cost advantage that Indian companies such as TCS, Infosys and Wipro offered has been eliminated with the offshore delivery model becoming more established. I was comparing the margins of the foreign and Indian players and found a huge difference. While the margins are in the range of 15+%  for Indian players, however, for the IBM’s and Accenture’s it is much lesser. What can be some of the reasons for this gap?

First, the offshore utilization rate is much higher for Indian players – i.e. delivery predominantly happens from offshore locations. Whereas an IBM or an Accenture have a significant presence in India, they still have a significant onshore presence skewing the cost structures.  Second, we have seen that most Indian companies have a more frugal spend culture when compared to foreign players.  Here is one more statistic that complicates the picture further. The revenue per employee for foreign players is much higher than the Indian counterparts. The average revenue realization per employee for Indian companies will be approximately $45K and that of Accenture is $130K.  Now,  IBM and Accenture etc are making more money with lesser people and yet their profit margins are lower – bloated cost structures are definitely one reason.  Can you think of anything else?

Popularity: 7% [?]

The Tiger Woods scandal is not only rocking the sporting world, but also the corporate world. The legendary golfer who, till two weeks ago, had a squeaky clean image and an incredible golfing record, was the natural choice as a brand ambassador for companies as varied as Gilette, Nike, AT&T and Accenture. Take the case of Accenture. They had linked their high performance brand so closely with Tiger’s persona, that now they have had to beat a hasty rereat. Typically professional firms such as Accenture (which has its roots in consulting) do not buidl their brand using their CEO’s image, unlike many other companies in the technology space like a Microsoft or a Wipro or Infosys in India. However, by persisting with Tiger Woods for over 5 years now, they have adopted the same personality led theme.

Celebrity led branding is always risky as one is trying to connect a company’s personality with the celebrity’s “public” image. One has to be careful about skeletons in the cupboard, as the unexpected twist in the Tiger’s tale shows!

In this context, there are risks of branding a company beyond a point using the CEO’s image. We all know the fall out of the Satyam saga, a brand built around Ramalinga Raju. Likewise, even a smarter company like Infosys, may have been slightly caught on the wrong foot when Nandan exited the company as he had been the most visbile face of Infosys since Mr Murthy stepped back.

The moral of the story is that all companies would be well advised to use a mix of methods, and also carefully evaluate “shelf life” of different approaches.

Popularity: 10% [?]

I remember a time, not so long ago, when Indian IT companies would “desperately” try to hire locals in the markets to lead sales and marketing efforts. The rationale was that they understood the market and cultural context better. Made sense! Now, with Indian tier one companies such as Wipro Infosys and TCS firmly entrenched and leading the way with leveraging the global delivery model, the tables are turning, it appears, if a news report in today’s Economic Times has the right data.

The report says that there has been an exodus of sales people from companies such as Wipro and TCS to companies like Accenture and Cap Gemini. This is really interesting because, one could infer then, that those that were hired probably displayed a better understanding of selling the global delivery concept, and two, people from Indian companies who have spent sufficient time in the market would have imbibed the cultural context. Third, it is also a sign of changing perceptions of buyers. Today, with customers looking for value from offshoring, seeing an Indian face perhaps inspires more confidence!

Popularity: 9% [?]

In the world of Facebook and Twitter, people love to hear feedback about themselves.  Not when it comes to the dreaded performance reviews, however!  So, some companies are taking a page from social networking sites to make the review more fun and useful.  Accenture has a Facebook-style program where employees can, among other things, post two or three goals that can be viewed by other employees. There is also a new software from Rypple that lets people post Twitter-length questions about their performance.

These tools are aimed at creating performance reviews that are more dynamic and democratic.  For example,  you could post brief questions like “How did my presentation go?” and email this to peers and superiors. The  anonymous responses are aggregated and sent back, giving you an quick and truthful review.  Under Accenture’s program, you post your short-term and long term goals on your profile page, and your superiors can read the goals and note any lack of goals, too.  The company hopes that this will lead to constant monitoring and adjustment of the goals and avoid the yearly last-minute scrambling to fill out evaluation forms and the desperate recalling of work done over the year.

Though I felt I would be uncomfortable to have my performance goals read by everyone else,  I was reassured to learn that Rypple reports that around two-thirds of the questions posted on its service were from senior employees requesting feedback on their own performance.  So, instead of the traditional top-down performance evaluations of yesteryear, the biggest payoff of these social network-style tools could well be better performance by the boss!

Popularity: 7% [?]

If you have looked at Accenture’s Q1 09 results announced a few days back, what stands out is the sharp dip in new bookings in their outsourcing business – 45% QoQ and 12% YoY. What is more – this is the lowest in the past 5 quarters. This clearly indicates the way of things to shape in the next few quarters. 

How will this impact service providers? We keep hearing about decisions being postponed, price negotiations and project cancellations. To address these challenges, Service providers will have to find creative ways to win and retain clients. TCS for example has offered free transitions and volume discounts to win large contracts. It has won 38 large contracts in the last 18 months and is reported to have 20 more in the pipeline.

In conclusion, the short-term looks gloomy and this period will distinguish between the haves and have-nots in a business context.

Popularity: 8% [?]