DUDE, WHERE’S THE ‘P’ IN MARKETING?!

Plainly put, I had had enough! On paper, our editorial team meeting had started with the premise that we should run the Golden jubilee issue (yes, we’ve reached 50 glorious issues!) with a spectacular array of the top 50Ps of marketing. Obviously, the war had started even before I had entered the battleground! Just when I thought I had ducked the massive war of words (worlds?), the stinging crossfire hit me straight in the guts. Apart from accusing me of focusing horse-headedly on just ‘Ps’, the main accusation was that we were not even considering the most important factor for a company’s growth and shareholder value, namely the concept of Research and Development, which – according to the extremist warriors sitting inside my office meeting room – was the numero uno ‘P’!!! I was forcibly plastered with the names of the top ten R&D spenders in the world – Toyota, Pfizer, Ford, Johnson & Johnson, Daimler Chrysler, GM, Microsoft, GlaxoSmithkline, Siemens and IBM, all excellently performing companies, constituting a mind numbing 15.3% of global R&D spend – as the final proof that it’s R&D and not any ‘P’ that is most important for companies.

(‘When faced with a powerful adversary, run!’ – old jungle saying). I ran! Straight to my research team! And this is what I found! The joint HBS and Southwestern University 2006 ‘Industry R&D Survey’ shows how the total number of R&D spenders in the US, while rising since 1974 and peaking in 1993, have almost regularly gone down year after year since then till the turn of the century. Even the benchmark paper of Dr. Scott J. Wallsten of Stanford, ‘The R&D Boondoggle’, assertively confirmed the same fact that globally, firms have started investing lesser in R&D. And the reason, Wallsten confirmed, was that R&D spenders generally had received considerably lesser benefits than all other firms. BusinessWeek in November 2006 researched the top five R&D spenders in the world and asked the question, “Are there parallels between lavish R&D spending and stock-price gains?” The answer they found was, “Not really!” But what shocked me right through was another hallmark 2006 report titled, ‘The Stock Market Valuation of R&D Expenditures’ by Chan, Lakonishok & Sougiannis of The University of Illinois, who proved definitively that “the average historical stock returns of firms doing R&D matches the returns of firms without R&D... The market is too pessimistic about beaten-down R&D and companies with high R&D to equity market value tend to have poor returns!”

Leave all that, one look at the latest NYSE CEO Report 2008 shows how a huge 57% of global CEOs have refused any increase in R&D spending. Of all CEOs, only 10% thought that ‘New Product Development’ was the most important internal factor influencing profitability! Veritably so, perhaps the biggest hit for the R&D camp was given by none other than a previous supporter of R&D, the famed Booz Allen Hamilton itself, which in October 2007 analysed the top 1,000 R&D spenders globally in their report, ‘Global Innovation 1000!’ (who constitute around 84% of the global corporate R&D spending) over five years. Statistically, the report proved with stupendous clarity that there existed “no correlation” between any performance factor (sales, profitability, shareholder return...) and R&D spend! You could argue for days on the topic, but the killing fact is that not only does WalMart (the world’s largest corporation) not even feature in the top 1,000 R&D spenders’ list, but also that as per York University’s classic January 2008 report, even Big Pharma spends “almost twice as much on promotion as it does on R&D, contrary to the industry’s claim!” Obsessive compulsive spenders in R&D end up devastating shareholder value, sales, profits and other performance factors beyond repair. Sadly, there are still a plethora of CEOs who believe R&D and not a focus on the Ps of marketing can lead them to success.

(‘When faced with a weak adversary, destroy remorselessly!’ – one of my original sayings). Another day, another editorial meeting! What followed was target practice; and I’m proud to say I took no prisoners! The result is this fantabulous issue of 4Ps B&M, which is a commemoration to that inimitable and absolute power of the indomitable Ps of marketing, which are the most critical reasons for a company’s thundering success or pathetic failure. And we have listed 50 of those Ps! R&D – but obviously – doesn’t make it a mile close to this list. The world’s excellently performing corporations have got this equation bang on! If you still haven’t, I’ve got the perfect solution – go ahead, flip the pages, it’s all there...

DUDE, WHERE’S THE ‘P’ IN MARKETING?!

“BECAUSE MY DAD SAYS SO!”

I could never have imagined that it was going to be the start of one of my most vitriolic arguments. The scene was a CEO forum. And the supernova hot debate was driven by one particular CEO, who had his tanks trained on me, while he argued that the Nano and various overseas takeovers by Indian companies were in reality ‘no news’ as India was already a globalised world-class business powerhouse, driven by the huge number of entrepreneurs that India churns out year in and year out. And when I asked him to provide proof, the answer was, “Because my Dad says so! Got it?” His sarcasm was dripping; and I decided to check his ‘Dad’ out on whether India was really a top notch ‘globalised’ business hub!

But first, for the intemperate critics: does globalisation really work? Without even an iota of doubt, yes! Not only for countries, but also for corporations. The monumental neo-IT 2006 study titled ‘Globalization and the Impact on Shareholder Value and Revenues’, which compared the neo-IT SG Index of the 30 most globalized Fortune 500 companies against the S&P 500, comprehensively proved how companies that ‘globalise’ their services “create (dramatically) more value for shareholders than companies that don’t globalise!”And that too an eye-popping 204% more! Even the classic 2006 Accenture report, ‘Expanding Markets: Innovation and Globalization’, showed how “the best performers were 83% globalised, while average performers were only 18% globalised.”

So is India really a truly globalised nation? There perchance has been no better a study historically on globalisation than the Carnegie Endowment and A. T. Kearney exemplar dissertation, ‘The Globalization Index 2007’, which most analytically ranks various countries of the world on a multitude of parameters, finally providing the consolidated Globalization Index (GI) ranking. I’m sure if you were to see India’s final GI rank, much more than your jaw would have dropped! India has been honourably ranked second... from last! It’s mind boggling and unbelievable that countries like Algeria, Bangladesh, Tanzania, Pakistan, Colombia, Kenya, Peru, Nigeria, Sri Lanka, Thailand, Senegal, Vietnam, Morocco, Ukraine, Botswana, Tunisia, Uganda, Chile, Croatia, Panama and innumerable more are miles ahead of India. Despicably, even last year, and the year before that, India had been knighted with the same rank – second last! The index also shows how the rank of India in terms of FDI is – you won’t believe it – sixth from the last! In telecom usage, India is third from bottom! And similar are the various ranks of India across parameters.

So where lies the blundering mistake that India is committing? The answer – though extremely simple – is almost a slap on the face of policymakers. India has miserably failed to encourage the philosophy of entrepreneurship, the most key factor that can radically catapult India’s globalisation quotient, a factor which stalwarts like Ratan Tata, Kumara Mangalam Birla, Azim Premji et al swear by day in and day out, but unfortunately a factor that policymakers and the majority of India Inc. ignore haphazardly! Columbia GSB’s incisive study (Role For Entrepreneurship in India) reports how while the US entrepreneurship system “has been quite successful” for their economic growth, Indian entrepreneurs actually might “hinder economic development!” Even in a place like Bangalore – ostensibly India’s Silicon Valley – entrepreneurs were playing a “possibly negative” role in the Indian economy! And the blame, according to the report, lies on governmental policies. Against this, imagine how the US most shrewdly uses us very Indians to their benefit. The acclaimed Duke University report, ‘America’s New Immigrant Entrepreneurs’, shows how Indian immigrants, over the past 8 years, have filed the second highest number of patent applications (more than 10,200), have founded the highest number of manufacturing/innovation-related service firms in the US (24%), have founded the highest number of bioscience firms (10%), the highest number of software firms (34%) and so on so forth. And America is the world’s largest economy! Of course, there’s huge optimism within India’s entrepreneurship community (Grant Thornton’s ‘International Business Report’ ranks our entrepreneurs’ optimism second highest in the world). But all that would come to a cypher naught if the government and the majority of India Inc. doesn’t wake up to the thundering call of supporting entrepreneurship, a call the exemplary Ratan Tata has already taken too many times, with the latest Nano being the terrific topping. India, dear CEOs, irrespective of whatever you think, is still ludicrously far from being globalised. Even my Dad says so!

“BECAUSE MY DAD SAYS SO!”