Retail Banking in India: The Disruption Cusp

Retail Banking 01

I wrote this piece originally for LinkedIn

A couple of weeks ago it was made public the names – and partnership combinations – that applied for payment bank licenses in India. The list makes fascinating reading. There are corporate behemoths with interest in organized retail, there are telcos, the department of posts and of course banks, with the last mentioned playing the role of a partner in more than one combination. To my mind this is the first step in a wave of disruption that is likely to hit the Indian banking sector in the short and medium term future – starting with retail banking. There are four immediate things that comes to mind

The battle for float

Retail banking was in a large part contributor to the float that banks found attractive. As a customer I was not unhappy with the float because – one, it earned me interest (albeit paltry) and also the liquidity allowed me to make transactions. And the banks were the only institution offering this convenience to me at scale. No longer so – the old order has changeth yielding place to new lest one good custom should corrupt the world. Now there shall emerge a slew of payment service providers (PSP) each innovating with payment products and services to wean the float away from traditional banking pools. Think of it this way – the venue of float is moving closer to where the customer is most likely to use it. Earlier banks would hold the float and sell financial products around it. But a consumer’s use of the money is mostly in non-financial products (the stuff you buy at Reliance Retail for example). And that’s why Reliance as a payment bank wants to hold that float for you and facilitate payment against a purchase by a mere accounting entry in its back-end systems. In the process, Reliance will see a drastic drop in customer acquisition costs and be able to cross/upsell a much wider variety of products to the customer with a small incremental effort. As payment banks flourish, traditional banks that were CASA centric in structure will struggle to maintain profitability. Retail banking business models will have to come back to the drawing boards

Aside: I am surprised why Flipkart did not make the big, hairy, audacious move to apply for a payment bank license. There is a pretty strong case for e-commerce giants in a country as large as ours to participate in the banking system. This line of thought merits a whole post by itself – so let me hold the thought

Micro-targeted products

To give credit where due, Indian retail banks have come a long way in creating product portfolios that caters to different needs and to some extent they have kept pace with their customer’s aspirations. With the upcoming big shift, product innovation will assume blink-and-you-miss proportions. The retail industry, free from the traditional encumbrances of banks, has been way ahead and innovative in segmenting customers and in general understanding them in the context of their businesses much better than other entities. It is this knowledge that will help them in creating products that are micro-structured. A lot of the products will be banking products – like loans for example – but for the banks there will be far more co-creation of products alongwith partners. This is not lost on the banks and that is why their names feature prominently in some of the combination of organizations that have applied for licenses. But the question remains – will banks finally be just left with lending their brand names to products created, distributed and serviced by others? And how does that regime impact bank profitability?

Redefining Distribution

Distribution expansion strategy in gone-by days for retail banks would mean opening up branches. That is well past us. In fact, sometime in the future banks with large branch networks will start considering that position a liability and not much of an asset. Re-purposing branches to pure advisory touchpoints will alleviate some of the pain. Product and service distribution however will assume totally different proportions. The lady at the till of your departmental store will pitch you a customized product at checkout. Self checkout kiosks will pop you an offer different from that the previous person in the queue received. Banks will find many many more possible distribution channels than they could have imagined five years ago. This presents an opportunity for increasing rural participation in consumption of financial products as the lines between Business Correspondents and other last mile human interaction (think e-commerce delivery executives) start blurring. I am hoping some of the retail giants (like Reliance, Future Group and Aditya Birla Nuvo) shall use their existing supply chain relationships to bring into the folds of banking several millions from the un/under banked rural population. Counterintuitive as it may be – technology is rural India’s best bet for financial inclusion.

Pervasive Data Science

Retailers, Telecom service providers and retail banks counted themselves amongst the more sophisticated and heavier users of data science. The business summation impact of these industries (in how they have come forward to enter the payments space) will be far larger than the algebraic sum of their capabilities to do stuff with data. Interdisciplinary learning, already a very important cornerstone in data sciences, will become the driving force behind a holistic understanding the customer and her behavior across products (financial and non-financial), channels, geographies, environment and other key dimensions. Banking will learn from retail, retail will learn from payments, payments will learn from telecom – creating great incentives to share and co-create. For example, churn models, risk-rating models will become richer from aggregating multi-venue data and in general add much greater insight into customer behavior than the existing single-disciplinary siloed approach. The old order – of understanding a person from a relationship perspective shall give way to the new order –understanding a person as a bundle of intelligent, interconnected data points

It is hard not to be excited about these changes sweeping the banking industry and the opportunity it presents to different businesses. A quick analogy to end the piece is in order. India, as everyone knows by now, skipped a generation in the evolution of internet adoption (in non consulting speak, vast number of Indians went from no-internet directly to wireless internet on mobile devices thanks to the vast penetration of internet enabled mobile handsets). It is entirely likely, if the early trends are an indicator, that India shall skip a generation as well in its evolution to a modern digital banking environment

The Curious Case of State Economies in India

Data v OpinionThe political economy debate in India currently has all kinds of battle lines drawn. Market versus Social, Social versus Mixed, Central versus Federal – you name it and the combination of warring parties exist. Political leaders cutting across state and party lines never fail to exploit an opportunity to show how wonderful their corner is – often taking recourse to data (which is a good thing, as the opening quote for this piece clearly demonstrates). The trend for debates – and hopefully journalism too at some time – getting removed from passion and becoming increasingly data centric bodes very well for a vast and diverse country like India. However, for any conclusion drawn from data analysis to be worthwhile a sine-qua-non criteria is definitely acceptable data quality.  Toying around with public data released by various government and quasi government agencies in India, it is alarming to discover that several key indicators, indicators that routinely weave their way in our debates and more importantly – for shaping policy decisions, are rather suspect in data quality

Take a very basic indicator like GDP for instance. This is one bellwether that investors, policy makers, political guardians – everyone – loves to brandish (when the going is good) as a measure of achievement. It is not unusual for representatives from Indian states espousing how theirs grew at a faster clip than another – or for that matter grew faster than the country as a whole. How solid are these claims? Taking data from the Central Statistical Organization, a very rudimentary analysis shows what I’d like to call the curious case of Indian State GDP

Sum of state GDP value NEVER totals the India number. India level numbers are always higher. State GDP total varianceThere is some benevolent God amongst the 300 million worshipped in the country that makes good whatever is the shortfall is to our collective aspirations. The difference was showing a declining trend until the last year came about and created a record high!

And then there is the case with GDP growth rates too. Between 2004-05 to 2012-13, growth rates calculated by summing state GDP has been higher than the India growth rate on three occasions. However, looking at just the top ten states (by GDP size), in the same period the growth rate of at least five of the ten exceeded the overall growth rate of the country. In 2012-13, nine of the top ten reported higher growth rates that what India reported! As you can see from the graph below, other than in 2007 and 2008 when our statisticians got very efficient (or extraordinarily lucky), the difference between calculated GDP growth rate and that actually announced has been quite substantialState GDP growth variance

Other than structural inconsistency, there are wild swing in individual numbers as well. Consider Karnataka, my home state. After clocking a 7.11% growth in 2008-09 (India 6.72%) it plummeted to a mere 1.30% in 2009-10 (India 8.59%) only to rise like a phoenix and deliver a jaw dropping 10.15% in 2010-11 (India 8.91%). Amongst the top ten states Uttar Pradesh and West Bengal show the lowest standard deviation of the GDP growth numbers between 2004-05 to 2012-13

In conclusion we go back to the point we started with. A political or economic discourse, leave alone policy making, cannot be based on data that is this fragile. And this is just one set of cross verifiable data that I have looked at – heaven knows what lurks behind other datasets. As Indian polity becomes modern and policy making gets data-centric, it is imperative that the government increases the volume and velocity of open data and provides (possibly in partnership with the private sector) solid data toolsets for everyone to access, qualify and use the outcome to drive debates. Only through a process of many eyes looking at data, critiques on veracity and wider usage that the quality of information shall improve. Else, extending Jim Barksdale’s suggestion, we might as well go with the most handsome guy’s opinion

A Tale of Two Gadgets

Amazon_Kindle_PaperwhiteADD_2013_35827154_01For someone who’s an avid reader, I came into the world of ebook readers screaming and kicking. The smell of a book, transitioning from the crispness of the new to the musty of the aged, always had a special place in the hall-of-fame of my olfactory senses. Plus the physical action of turning a page, which to me is like a deliberate step forward in the acquisition of knowledge. Not to mention my habit of writing on the fly-leaf a note of where I bought the book (for example, the book Dark Sun, Making of the Hydrogen Bomb by Richard Rhodes has the ironical inscription – Borders, Pentagon City Mall, Arlington, Virginia, 2005). In a manner of speaking, I test drove the Kindle using the app on my iPad 1. The advantages were immediately obvious (no more half suitcase full of books from my US trips, for instance) but I finally decided to buy a Kindle Paperwhite to make it easier for me to read outdoors – a very important use case for me. And that – the Kindle Paperwhite – is my favorite gadget of 2014, largely because it has none of the advantages of a feature rich iPad. Let me explain.

In a world afflicted with almost incurable attention deficit disorders and gadgets making multi-tasking easier, the Kindle paperwhite’s single use-case focus is like the whiff of a new book bright ray of internal hope. The device does just one thing – downloads books over a Wi-Fi connection and presents the first chapter for you to start reading. That’s it. Get done most efficiently the stuff the user is looking to do and then get out of the way. Yes, the device steps in time to time, in a manner very unobtrusive, to adjust screen brightness, dictionary for words to look-up and highlight portions of text – and all these make that single use-case, reading, a much more enjoyable activity. But alas, there is no way to quickly check if that inconsequential email has arrived, if someone has posted a world changing 140 character tweet or if the first cousin’s daughter’s birthday pics have been uploaded onto Facebook. What a sense of liberation. Someone did mention that the Paperwhite carries an “experimental browser”. This is one experiment I’d be very happy to see fail. I have noticed that I fidget around apps much less on my phone after a longish stint of reading on the Kindle. That is the power of simple devices and software in changing user behavior for the better. This is also a great lesson for product designers who often get swayed by the SUV approach to design – pack so many features, bells and whistles that the user gets swayed by their shiny (albeit of little or no use) allusion only to have the core use cases suffer. Thank you Amazon for such a simple device – and yes, Kindle, I’ll get you the leather cover for Christmas – it is a long overdue gift of gratitude

Before I move to the next gadget a quick mention of a simple and (almost) single-use case service I use regularly. If you are into investing – minus the masochism that you are the world’s best fund manager – then check out scripbox. Their single focus in business is to make investing simple. They do all the non-simple work of asset-class identification, research and monitoring but hide it cleverly away from the user. Quick disclosure – the founders are known to me. And I, in my misplaced product management of hosepipe information systems exuberance have advocated several times numerous features and functions that the founders have patiently heard and politely ignored. They ask of every feature – “does this make investing easier?”. And if there isn’t an intuitive affirmative answer, they pass the idea. Try them – you’ll not be disappointed

GoqiiNow to the other device. I wanted to add a gadget to my fitness routine that was smarter than a pedometer. As I do with experimental devices, I was loathe to burn a lot of money for it. Just around Diwali I noticed GoQii was selling their devices on Amazon with a three month contract that brought the price down to my range. I bought one and my nightmare with the delivery started. Long story short, the consignment was delayed and finally arrived at a time when I was leaving town (and in-between I discovered how you can track on Amazon orders delivered but not those in transit). I vented my frustration on Twitter and immediately the COO of GoQii joined in the conversation. Right through the Diwali holiday week, a single customer support rep, aware of the details of the situation, kept touch with me. GoQii shipped an additional consignment to the address where I was about go even when the first was not delivered (the problem was actually with the delivery partner though GoQii never tried to disown the problem by apportioning blame, like Amazon did). When I finally got the gadget, they shipped me two premium straps absolutely free of cost – one each to the two delivery addresses. The product itself, I must confess, is quite buggy – flaky syncing of date/time sometimes, shows distance covered even when idle and the battery drains rather fast. Now all these bugs are fixable with firmware upgrades – and I am sure the company is working on it. But what sets this gadget apart is the exceptional customer centricity that comes bundled along with it. The company is quite famous now and it really could have ignored an irate dissatisfied customer buying the less than $70 device from a partner website. But they did not – their CEO left his personal email ID so I could get this resolved. I never had to use it (if a CEO has to resolve an issue then that to me is good enough indicator that the company is best avoided for business). The lesson in all this is simple – a product with bugs will be acceptable to users if there are other aspects of the relationship – things more permanent in nature than software bugs – that delight

Endnote: That’s it my dear readers – thanks for being with me in 2014. I wish you and your families the best for the season and may 2015 be healthy and prosperous for both the mind and soul. Take care.

Containers and Payload

tangoAny system/tool/platform/product that combines content with workflow has two components. Let’s call them the container and the payload. Each requires something from the other to be of any worth together. And either of the components can be worked on – though not entirely independently – for betterment. But sometimes strange things happen. Take for instance e-mail. The e-mail ecosystem has the client as container and the mail (the stuff we write) as payload. E-mail client developers assumed they had not much control on the payload so they went about making the container smarter. Search, labels, keyboard shortcuts, themes, threaded conversations and so on. Later providers like Mailbox (and I am told Inbox, though I am still waiting for an invite) attempted at taking the payload and infusing smartness into it. But in reality for e-mail ecosystems no matter how smart the containers became, the payload was slowly moving towards extinction. Conversations had started moving away to instant messaging platforms of various forms (IM clients) and delivery mechanisms (like WhatsApp). No matter how smart the container became, the payload was getting irrelevant by the day and those with their necks immersed in the containers (no pun) never saw that happening

This presents a rather interesting situation for those building content and workflow combos. The conundrum – which should be made smarter – containers or payloads? One way to examine this is to ask the question – what would reduce friction between the user and the task outcome? (Just pause a minute to consider that strikethrough. Very often we focus on the task and become oblivious to why the task is performed). Workflow and content combos in enterprise software invariably play to productivity and efficiency. The question for a product manager finally boils down to how can those two be improved

Product managers have different levels of leverage on the container and payload (example, email client developers have less control on the payload. Imagine a mail client asking email senders of recipients to add tags to their text before they can be processed). Control over payload is usually less. And this is where effort should be directed to make the payload smarter over the condition in which it arrives even before we start looking at smart containers. For example

  • Text mining to improve contextual understanding of unstructured content
  • Interlinking of entities for multi-dimensional content
  • Algorithmic understanding of relationships
  • … and so on

As we work through the layers of containers and payload, it is useful to remember that it takes two to tango. And their could be work to do at either end

Private Company Information: The Opacity Conundrum

opaque-glass_w725_h553Anything that does not change hands very often becomes scarce. As much as it applies to things like art, it finds use in things that are otherwise rather fluid – financial data for example. Take the case of private company information. Private companies are not listed and hence do not have any regulatory compulsions to divulge information about themselves – especially their financial performance. A deluge at the supply side  goes on to complicate things – there are way too many private companies for anyone to create a business model to bring their data together. Data vendors have tried to solve for this problem but an optimum solution is still lurking somewhere – undiscovered

Stripped of all frills, scarce data is scarce because – one, the originator does want to readily part with the information and two, any secondary holder does not wish to pass it along. However, there does exist incentives – standalone incentives for both parties to change their going-in stance. For example, a private company may need bank funds for working capital and for that will readily share quarterly sales and inventory numbers with the bank. The Bank (in our definition, the holder of this information) will also share the same information onwards if there is an effort by someone to securitize these working capital loans. So incentives exist – but they are not shared incentives

I believe there is space for creating a clearing house of sorts for private company data. The platform provider – the clearing house that is – must invest in either creating shared incentives or invent shared economics for fluidity to resume in the dataset. In a manner of analogy (not a very tight one, I must warn), app stores are equivalent vehicles that bring the supply and demand side for apps together by creating shared incentives (and economics). As this platform builds up and the dataset becomes richer, the economics will tilt towards transactions that happen on the platform based on the data. This is something that traditional data vendors should understand – the data by itself (like unmined natural resources) have little value. The value of data is unlocked by actions of economic agents and these actions make economics. Facilitating economics will facilitate the fluidity in private company – and other such scarce – information

Apple Pay: We Live In Interesting Times

apple0132After a long break, people following Apple are in a dilemma. Should they focus on the Watch (I hope this is how one should refer to the device) or Apple Pay. The Watch is interesting and has the potential to unravel a slew of use cases and apps for a new device but given that smartwatches have been around for a while makes the other announcement – Apple Pay – more fascinating. A lot has been written already about how it works, how PayPal should be worried and so on – and it is not my intention to add. Rather I think it is about time Apple stopped bothering about personal productivity apps (their Office clone – iWork) and focus on developing financial wellness/wealth management application suites

Think about this – if Apple Pay does take off, the company will cover almost all aspect of spending by its users and have real-time records of that. Not only can it account for these spends – it can weave them into magical apps where users get to know their financial well-being right there instantaneously. Physical well being on the Watch, financial well being on the phone. Think of how you thought of a phone and a watch last month and the pace of change hits you like a train. If I were Intuit ( actually) – I’d be a touch worried (actually more than just a touch). I am yet to fathom how Apple Pay can invade the Enterprise but if it does then I’d be really worried if I were Intuit. Accounting is a slap-on process atop the data that is created in the process of transactions – the real deal is, well, deals. And very soon Apple Pay will have a barrage of advertisers sucking data from Apple’s read-only APIs and pushing deals through to users mining dimensions of their transaction data. That is what spenders care about – deals that help them realize value. Apple Pay might have just started out two days back but it has the potential to disrupt a lot of things beyond just payments

As the <insert your favorite countrymen> say – “we live in interesting times”

Image from TechCrunch


FKAlmost to the date two years ago I had written this article on Flipkart on some strategic choices it had ahead of itself. Startupcentral, a digital platform run by a friend, had carried the article. Unfortunately the platform has now shut down. I thought of reposting the piece just so it does not lose its digital presence (besides, any back-dated forward looking article is always fun to read). As you read this, let me reiterate – this was written in July, 2012


My first brush with this company was in 2010. I had bought a couple of books just a week back from this online retailer I was recommended by a friend, so the name Flipkart was easy to identify on a nondescript white building on Mysore Road, Bangalore. Since then I have purchased few scores of items from India’s answer to Amazon and at the same time seen Flipkart’s business grow leaps and bounds. They added categories at frenzied pace, launched a digital music store (2014 edit: They closed down the store. Speculations abound but my take is that music’s future is streaming, not owning and perhaps Flipkart saw that), improved their customer engagement and embarked on a refreshingly different advertisement campaign. It goes without saying that valuations also continued the gravity defying move, touching a hair’s width distance to the magical $1 billion milestone. The Flipkart Man – one with a navy blue rucksack full of goodies – is quite easy to spot on the streets too

 Every Silver Lining has a Dark Cloud

Dark clouds are never too far away even in the sunniest of skies. Forbes India kicked up bit of a dust with its cover story on Flipkart – first time a mainstream journal focused on the company’s woes – exacerbated in part by Sachin Bansal, CEO, Flipkart writing to the editor to explain his stance (and mild displeasure) and the editor replying to that. Washing dirty linen in public never fails to get a healthy audience and the social media lapped up this brawl. As is true of the myopic social media, everything was forgotten as something more engrossing took over the twiterrati the following day. That however does not trash the question – what will Flipkart’s strategy be to win in this market, which is increasingly becoming crowded with me-too competitors? Retailing, both retail and electronic, has always been a low margin business and nothing suggests that the current batch of incumbent internet vendors enjoy anything but sub 5% margins (over the past five years Walmart has on average had 3.5% margin. Over the same period Amazon has had 2.48%).

Noah built his ark when it hadn’t started to rain – thus this might be as good a time as any to put on a strategy hat and think aloud what could Flipkart do to with its business to pivot into a new phase of differentiated growth (full disclosure: I have nothing to do with Flipkart or its investors. The market situation in the industry was interesting enough for me to take up this exercise)

Tighten Operations, and Everyone Else Too Shall

There is the low hanging fruit of improving operational effectiveness (OE, which often gets mistaken for strategy). Operational effectiveness initiatives hold out benefits so long as competitors do not imitate them. In a nascent industry where disruptive innovation is rare and transparency high, incremental OE benefits wear out even faster. OE pushes efficiency frontiers away and away first for an individual firm and then collectively for the industry (as imitation takes effect) in the process diluting the value one single firm in the industry could eke out from internal tightening. Short term benefits to a firm are surrendered back to the consumers who are the final beneficiary in an OE war – just like what the state is today (everyone does cash-on-delivery, price pressures are forcing higher discounting, customer satisfaction is largely the same – all benefitting the consumer). An OE war results in a company having to run fast and keep running that way just to stay at the same place. On the other hand, strategy distinguishes participants in an industry and bestows on them unfair advantages consequent to doing things that others in the same industry eschewed. So what could potentially be Flipkart’s strategy for the future?

Overnight successes usually last just that one night. Strategy has got to lay out a more forward looking roadmap for a company that spans multiple years (how long into time often depends on internal and external variables). To make things simple, we lay the future out into three phases – Build, Pull Away and Transform. These do not need to – and indeed should not be – distinct phases but rather overlap each other to benefit from positive momentum that each phase builds and hands over to the next

Build: A Solid Foundation is Half the Good Work

In its first phase of transformation Flipkart must build deeper engagement with its customers. It needs to both build a deeper relationship with its buyers and provide those touchpoints that are more omnipresent than the web-based internet

 Loyalty: It is strange that for a service that is not vividly distinguished from me-toos, Flipkart chose not be build loyalty programs. Loyalty need not have just the old school implementation of co-branded shopping appliances like credit cards. Loyalty programs need to be deeper, where someone who has greater wallet spends at Flipkart feels rewarded both monetarily and – more importantly – otherwise. Flipkart Coupons is another loyalty device conspicuous by its absence. As gifting increasingly strives to put last-mile choices back in the hand of the recipient, a loyalty program based on redeemable coupons will deepen association with the customer. Corporations spend a lot of money in fine tuning their Rewards & Recognition programs to make them suitable for the young demography – a space that Flipkart can immediately capture (and since corporations buy coupons in bulk, a part of working capital management can also be taken care of in the process)

Touchpoints: Ecommerce is shifting from the browser to applications that sit on devices. Flipkart can regain its first mover advantage by introducing iOS and Andriod apps that make shopping much easier than on native browsers

Ring fencing customers and pampering those who return for more is crucial in the build out phase. For years, Flipkart has focused on internal effectiveness and not so much on the customer and it is about time to change that. There is also an important mindset change that needs to happen at this phase – increasing value for not only buyers but also sellers who would benefit the most in having access to the Flipkart platform. Outcome of such thinking will play an important part in the late-second and third stage of this transformation

Pull Away: Inorganic Growth and Building the Ecosystem

Exploit Adjacencies: Having built a solid foundation where the customer has been placed at the focus of future planning (in addition to internal effectiveness, which Flipkart has always excelled in), opportunities in adjacencies need to exploited. Category expansion, which Flipkart has been at, is one way to provide buyers all their needs on a single platform and leverage scale. There are adjacent categories however that have already matured into full fledged businesses with similar – not exact – contours.  Take travel for example. Basic fabric of the business is similar – acquire inventories from suppliers, build a technology platform for delivery, squeeze out a bit of margin and deliver the product by careful customer segmentation. Minus the added headache of physical deliveries. Standing where we are, categories such as these are too difficult to build grounds up for Flipkart hence an acquisition is the best route to increase momentum on the ecommerce flywheel Flipkart has already built and set in motion

Build the ecosystem: When a business model has successful equivalents in developed markets, the role of a local strategist becomes easy – import ideas. That is fallacious thinking. How successful will a Flipkart handheld device or Flipkart Web Services become? I have my doubts. What is interesting however is building supply ecosystem where original creators are encouraged to participate on the platform without losing value to intermediaries. Authors are a very obvious target audience in this category, which itself has a very wide range encompassing text books, animated books, restored (and retold) classics, fiction, non-fiction, graphic novels – the list can go on. Besides the content, form has diversified significantly, thanks to bloggers and journalists. Developing relationship with producers directly (building the relationship is not entirely easy) and co-creating products increases the value of the Flipkart platform for those who were perhaps disintermediated or losing too much to make authoring a successful profession (“authors” have been used metaphorically somewhat. This strategy holds good for any original producer of content/merchandise. For example, this can work as well for art and handicrafts as it will for books)

Inorganic expansion and building ecosystems should herald a different thinking process for Flipkart – a line of thinking that transforms the business from being a service providing ecommerce venture to becoming an electronic marketplace and platform. Platform companies (Eric Schmidt named Facebook, Amazon, Apple and Google as the “Gang of Four” Platform Companies) are ones that come with a core and then combine complements from a variety of other providers to add disproportionate value to the service. Platform companies are difficult to build but once done (and there are important technology and business considerations) are long term more successful than pure-play product or service players are

 This phase of pulling away is the most important phase in Flipkart’s strategy, in both design and execution

Transformation: Onwards to Flipkart 2.0

My vision for a transformed Flipkart is where Flipkart is a platform inviting multiple entities to participate not only as part of supply chain, catalogs and consumption but most importantly in innovation. Think of it this way where in a fast-forwarded world Flipkart is a platform for providing online education content to a vast majority of institutions in India. Creators of content will always strive to innovate and Flipkart being a platform will reap the benefits of that innovation without having to explicitly participate in it. On the same platform innovators will bring newer ways to present the content and perhaps another participant will make learning more social

Leveraging scale becomes easier for a platform company. Continuing with the earlier example, investment in building incremental ecosystems can present disproportionate rewards to business outcomes for Flipkart. The same (or very closely related) content for education could be as applicable in Southern Africa as is it is India, opening up immediately vast business potential. The true unlocking of scale can easily happen in a world where Flipkart is a platform rather than an ecommerce service

A large scale program that takes a product or service company and transforms it into a platform play is not simple. For some it could be a life’s dream. But it certainly is a dream worth living. For a company like Flipkart that has already transformed the ecommerce market in India, this could be the second calling for a chance of inclusion in history’s wall of fame

A Final 2014 edit

Flipkart, having just raised a jaw dropping $1Bn should consider two frontiers that will not just transform the business but also extend its core strategy

With its technology backbone and supply chain efficiencies, Flipkart should look seriously at the B2B materials procurement space. AmazonSupply has already a play and the company is breathing down the neck of Flipkart in India. Flipkart may choose to start small – perhaps in the office supply and consumables space for businesses – see how it goes and then make the grand push 

Payments, especially mobile payments, are an area of opportunity where Flipkart can offer a service to not only its own users but as a third party platform (again, an example exists in Ali Pay). This sits nicely with Flipkart’s big push on driving commerce from mobile devices

KYC Is Dead

Deepa Bachu of Intuit has a fabulous post on designing awesome products. (no, don’t skip. Click the link, read the article and come back here. I’ll wait)

I think time has come for product managers (and designers) to stop using the term Know Your Customer. Before you reach for your cudgels to beat me up – my intent is not to stop people from knowing their customers but to get a couple of layers deeper in the engagement. Let’s look at some specific problems with this “know your customer”phrase

  1. The phrase has been bastardized. It happened the moment KYC as a TLA emerged from the fertile crescent of product management and got dragged – kicking and screaming – into the muddy waters of banking. In its most sophisticated form in that industry, KYC is a bunch of entity identifiers and descriptive text about the entity. To be updated at intervals and filed away only to be brandished if a regulator came calling
  2. The word “customer” – I have a problem with. It is very common in my industry of enterprise information and I am sure it happens elsewhere too – the customer is not the user. The customer is the one who disintermediates vendors from the user (example, IT departments strike deals with capital market data vendors and often chooses the most cost effective vendor. The market data users are dealing room staff who do not participate in the choosing process). If it is the user that we care about then we must not confuse her with the customer
  3. The word “know” – I have a problem with that too. I know too many people on Facebook – I care for only a fraction of them. I know many more people on LinkedIn than I could really care for. The word “know” has diluted the sense of affinity in relationships. In its pristine form, Know Your Customer is not really “know” – it is living with him, sharing his daily joys, pains and frustrations. A closeness much deeper than just that cursory “know”

So what should the new phrase be? How about User Affinity (UA). Besides addressing some of the problems I mentioned above, this is a smaller acronym and easily segues into what should be a logical next step – User Experience (UX). UX should build out what UA discovers – that is the relationship

I’ll leave this post here just so you can let me know your thoughts about this new paradigm of User Affinity. In the next post of this series I will look at ways to develop affinity and insights. Till then keep the comments coming

Platforms & Openness

There is a rush currently underway in business to become a platform company – provider of an ecosystem. Platforms make intuitively good business sense. The openness of a platform attracts many more participants who either by their presence or their expertise (often both) enhance the base value of the platform. And the platform always gets paid for the facilitation. Consider the Kindle platform of Amazon for example – writers, publishers, readers using the platform pay Amazon for either end of the reading transaction (Kindle is not such an open platform really though writers can self publish on it – perhaps Salesforce is a better example. But you get the drift)

Primary and most significant cornerstone of a platform offering is its openness. That is what attracts participants and builds out the ecosystem at scale. Viewed differently, openness is also a culture. This unique intersection of culture and business model is what makes successful platform companies. If the internal culture of a company is that of opacity, parochialism and fights over turf it is very likely the company will bring the same behavior in the way they run the platform. This pisses off participants (like Facebook a few years back was alienating “partners” by building out on their core platform what the partners were bringing in to the ecosystem. This is – besides plagiarisation – a culture of turf build out, which leads to a culture where no one shares anything for the fear of the idea getting stolen). Once partners on a platform shy away, there is no way the firm can reap benefits of providing the platform at scale. The consequence is mostly a regression into becoming a product company earning one time license fees

Remember the saying – culture eats strategy for lunch? It is true. If you are aspire to becoming a platform company ensure the cultural revolution of being more open, collaborative and tolerant (even for disruptive ideas) starts happening closer home


Small and Medium Aspirations

Small and Medium Enterprises (SMEs) represent the vast middle earth in the Indian business ecosystem. And as I write this, a gruelling war is getting fought by a multitude of firms to win this middle earth. Win relationships, win mandates, win contracts, win engagements – all so that when these SMEs become adults, businesses who have won now have prominent seats at the table

In a way we think of SMEs as a different class of businesses altogether. During a requirement analysis phase – for building a product or a service – the trap is in hastening to believe that SMEs have very unique businesses issues and try solving them. Quite the contrary – SMEs most often have the same set of challenges that large established players have. So rather than focusing on the challenges of SMEs, a better approach is to focus on their aspirations. Every small and medium business wants to become like – and be treated like – the big guys. The last thing they want is a condescending salesperson turn up at their doorstep and explain how – almost out of pity – they put together a product or solution for them

If a business is serious about serving SMEs it needs to work to help the SME get rid of that very tag. Help the small business to become as competitive – if not more – than the big business. Help the medium sized business break through the growth ceiling. In short, do just two things – one, align to aspirations and, two, help the Davids beat the Goliath (yes, even if Goliath happens to be your client)