Strategos Vol III Edition II

Strategos Volume III Issue II October 2012

Strategy and Consulting Club

Strategos

Marketing1. Managing Marketing Efforts In Dynamic Scenarios 42. Cause Marketing: The Worst A Brand Can Get 9

Finance1. Innovation In Financial Services 132. Water As A Commodity 18

Operations1. Best Practices In Supply Chain Management 222. Virtual Supply Chains 27 Information Technology1. Innovation In Information Technology Services 32

Human Resource1. Emerging Trends In Talent Acquisition 362. Developing Leaders Of Tomorrow 40

Faculty Advisor Dr. R.K. Mitra

Editorial Board Sachit AroraSwati Khurana

Volume III Issue II April 2012

Greetings from Socrates!

Success in any endeavor today depends on the individual’s ability to cre-ate new things, implement new ideas and challenge boundaries. Inno-vation is the buzzword today and any entity that does not change and adapt to the rapidly changing environment is bound to lag behind in the race. However, a lot of support in the form of effective leadership is needed for any innovation to reach the implementation stage. This issue, thus, focuses on the twin themes of leadership and innovation. To start with, we have articles from the domain of marketing about in-novations in the field of advertising and cause marketing. In the light of the global financial crisis, innovation in financial services becomes an imperative and the articles from the finance domain illustrate the same.With the demands and awareness of the customer at an all time high, it is essential for organizations to constantly innovate their operations and supply chains to cater to the demands of the customer faster and in a more efficient manner. The article on Virtual Supply Chains elaborates on how organizations can work together and thrive in the volatile envi-ronment.Finally, any innovation is meaningless till it is backed up by sound im-plementation. This implementation can only be carried out by the right people. Retaining the right workforce is the need of the hour for any organization and the articles from the Human Resource domain try to analyze the emerging trends in talent acquisition and retention.Happy Reading!

Swati Khurana Sachit Arora

Editor’s Note

Strategos Volume-III Issue-II

4

Spoilt for Choices

The scenario today is dynamic. Very of-ten a marketer finds himself at cross-roads, struggling to pick from the many marketing channels available. He has multiple options to cater to the multi-ple segments available. Following figure shows various marketing channels:

Another trend is the outsourcing of mar-

Marketing budget, Marketing Mix, Marketing Channels, and Marketing efforts – clichés that resound in the corridors of every office. As impor-tant as it is to know these concepts; also important is to know how to use them; and measure them.

Managing Marketing Efforts in Dynamic Scenarios

5

keting efforts. Advertising agencies are increasingly coming up with models that allow an organization to fully decentral-ize marketing. Following diagram shows various marketing functions that are be-ing outsourced

Well, there are certainly a dozen points to sustain the benefits offered by mod-ern day marketing options – but there is a downside that is often neglected; the increasing difficulty to keep control, measure and evaluate one’s own mar-keting efforts. With increased number of options and partners involved in one’s marketing activity; marketing clarity is hard to come by.

Over 80% of today’s chief and senior marketing professionals lack deeper understanding in their own marketing measurement, customer relationship management (CRM), and customer data analytics.

In God we trust, all others must bring Data

To do any indicative analysis about the marketing efforts, one needs the cor-responding historic data. The brains that work upon conceiving a marketing model should also plan for the ways to collect critical data. The reliability of data capturing mechanism put in place would reflect as a confidence parameter in the downstream calculations.

Pre-planning for data is the first step to-wards getting a hold on one’s market-ing efforts. It is also important to collect data from all the channels employed for the marketing plan; and that these data be analysed simultaneously. Failing to do so, would result in a skewed analy-sis – which would further skew the future marketing efforts.


6

Establishing Metrics

It is always good to follow a structured approach to measuring marketing ef-fectiveness. Every successful marketing manager would have clearly established metrics based on which he derives conclusions. It is never a good practice to develop metrics on the go, and base decisions upon these in-situ metrics. Given below is the famous marketing metrics continuum model, which establishes the various metrics that can be used, and how it varies from tactical to strategic.

Following is a representation of the various metrics marketers employ to measure marketing effectiveness.[4]

It is quite clear that businesses today employ both tactical as well as strategic metrics to gain insights about their marketing efforts. However, above all these it is imperative that all the members involved in the marketing process follow the same metrics, and have access to the same data. A best practice is to maintain

7

a marketing data dashboard. The dash-board would feature a consolidated view of the relevant marketing data, to those who should have access to it.

Crossing the Channels – At-tribution based Measurement

Return on Marketing Investment (ROMI) has always been a standard measure of marketing effectiveness. However, the disadvantage of ROMI is, in most cases it pertains to only a single channel.

Consider the situation today – a user might be seeing TV, with his laptop open besides him. He might see television ad, and a pop-up ad for the same product. The levels that the modern channels in-termix have blown out of proportions.

Today, customer journey is no longer linear. It involves multiple interactions across diverse media and is influenced by multiple marketing channels. Attribu-tion based measurements track the user behaviour for an action, allowing each channel that played a role in influencing the customer to get due credit. A proper implementation of a marketing attribu-tion model, can give deep insights into conversion value, most influential path that led to conversion, and help prioritize the use of different marketing channels.

Companies are investing in attribution. Marketers are seeking expert advice for the best ways to measure their chan-nels with more precision. Attribution ap-proach can provide a more concise way of measuring true channel and customer performance. And that’s something or-

ganizations are hungry for. To do this, they need help developing attribution models and making sense of all their data.”- Published in The Forrester Wave™: Cross-Channel Attribution Providers, Q2 2012Dawn of Analytics and IT

With the increasing complexity and scale of calculations to determine marketing effectiveness, a portal has opened up for Information Technology to pitch in. To-day almost every main vendor in the IT domain has products that cater to mea-suring marketing efforts, and perform complex analytics on the data.

There are a number of very stable CRM suites which are available in the market, which have analytics modules attached. The leading products in this space are Oracle Siebel CRM, SAP CRM, and Sales-Force. All of these have the capability to track marketing data right from the launch of a campaign, and perform data analysis on the same. Very recently SAP announced their entry into the hot ana-lytics space, with the launch of its new ‘BusinessObjects Predictive Analytics Application’.

“We believe that predictive analytics is no longer just a technology for statisti-cians and professional data analysts. We think it’s the next extension of business intelligence in that it’s officially for every-body in the business,” maintains Jason Kuo, group product marketing manager at SAP.


8

Closing Thoughts

In order to thrive in the current dynamic scenario the marketers need to be pro-active and should make the best use of the various available marketing practic-es. They should try to come up with in-novative ideas and should evaluate them thoroughly before incorporating into the business.

Many of the IT giants have seen this op-portunity and have already started roll-ing out custom products for attribution based analytics.

Given below is The Forrester Wave™: Cross-Channel Attribution Providers (Q2, 2012)

Controlling, which is one of the basic functions of management, will be pos-sible only if measurement of efforts and performance is done. So adopting cor-rect measuring metrics will enable keep-ing checks on the effort, implementing corrective measures, and will ultimately enable the marketing efforts to be more efficient and effective.

Author(s)

Vartika Singh and Soumya Bhat-tacharya are MBA -IB first year stu-dents at IIFT

9

Cause Marketing: The Worst A Brand Can Get

Over the years companies have evolved their marketing campaigns ranging from plain old direct market-ing to now ubiquitous social media marketing. Along the way there were many innovations which forced people and critics to sit up and take notice. One such tool which was a result of in-novation is Cause marketing which en-gaged and empowered the customer and at the same time provided brand affinity to them. Cause marketing can be defined as strategic positioning and a marketing tool that links a company or a brand to a relevant social cause or issue, for mutual benefit. American Express first coined the phrase “Cause Related Marketing” in the 1980s while

raising money for the restoration of the Statue of Liberty in New York City.

The prime example in this case for In-dia had been a legend of sorts Tata tea “Jaago Re” campaign which raised the topic of total participation of an individ-ual in our democratic process and also its various lacunae. The success of it can be gauged from the fact that even now it is known as a flag bearer of cause re-lated marketing among Corporate India and Business school students. What en-hanced its efficacy and reach was asso-ciation with TATA brand which over the course of years is considered as institu-tion which puts the society benefit at large.

Exhibit 1 : Global Cause Marketing Succeesses


10

Cause Marketing at P&G

This goes on to show that Cause related marketing is a tool which if used sensibly can be effectively used to leverage pub-lic opinion for brand recognition. Now FMCG major P&G’s strategy regarding this cause related marketing is interest-ing. Around a year back they had a cam-paign P&G Shiksha in which of every P&G product a customer purchases, a contribution goes to education of under privileged children and there was an aim of opening 20+ schools across India.

The move was sensible considering initia-tives of others but somehow not very in-novative as expected from a global lead-er. There was clash of ideas as another similar initiative was already in place by its rival ITC through its classmate range of notebooks and the brand communi-

cation was clear. The channel employed by ITC to communicate this initiative was product itself. So in a way the product brand itself became brand ambassador and communicated the message. So P&G did not bring anything new to the table in this competitive space.

Now once again P&G is attempting to do same with its Gillette brand. With the launch of its new product Soldier Razor it tried to identify itself as a brand which cares for soldiers of India and tries to connect with soldier spirit of every In-dian. Another step in this direction was the starting of a signature campaign to rededicate Gateway of India, which will then represent the imbibed cour-age shown by our soldiers and also ev-ery Indian in everyday life. Although on the face of it, this certainly looks a good step for product connecting everyone in

Picture 1: TataTea Jaago Re Campaign

11

a single thread , the fundamental deficit lies in its basic premise.A strategic perspective is that all the suc-cessful cause related marketing is de-signed around an existing social/national problem and all the brand communica-tion is centered on that problem struc-ture. This helps in brand connect with people as they feel empowered for that cause and at least psychologically they support the initiative taken by brand which helps in creating an instant top of the mind brand recall.

Gillette’s Initiatives In Cause Marketing

In this case Gillette created a problem structure first (rededication of Gateway of India) which was nonexistent and then created all communication around it. In essence this rededication is not a social or national problem and hence can only

be remembered as one of many market-ing gimmicks.Other flawed aspect from strategic point of view is that even if this initiative, which is designed to enhance communication with people, is a correct strategy then the celebrities or people roped in for this should be identifiable with this cam-paign. So instead of real war time heroes what we see is Arjun Rampal and Neha Dhupia stressing the brand value and soldier theme regarding this step.So coming from a company which was a pioneer of sort in advertising and mar-keting through its sports marketing steps with commercials featuring elite players of every sport, be it Rahul Dravid, Thierry Henry, Tiger Woods and Roger Federer, the roping in of these celebrities surely comes as a rude shock.

And last but not the least the marketing communication which was different for print campaigns and TV ads .In TV ads

Picture 2: P&G’s Shiksha Campaign


12

the primary question asked is “Should the Gateway of India be dedicated to In-dian Soldiers?” But in its print ads, the company urges a rededication to “the spirit of the soldier in every Indian.” This difference in targeted communication and goals which Gillette wants to reach are very ambiguous and clearly shows they somehow want to relate it in any way to their new offering. This creates a clutter in brand offering and subse-quently in customer’s mind which does not help the brand in any way.

The worst a brand can do is to be not clear about its value proposition and al-though this is a road less taken by lead-ers of any product category Gillette cer-tainly chose to take it. We certainly believe that a company like P&G would had certainly done extensive market research and market analysis be-fore launching such a unique marketing plan with so much cost involved, but it can be seen that it was way off in its ob-jective of creating a brand association. The primary aim of directing people towards your brand page and requir-ing them to like your page to support your cause is too old and then the idea of flooding of your Facebook wall with messages from brand once the cam-paign is over certainly does not break any new grounds in innovativeness of the cause related initiatives. The aim of such marketing campaign is to set ide-als and beliefs for mass people. This idea over the course of time will certainly draw attention for its focused petition signing spree but Gillette’s success for this campaign looks bleak.

Author(s)

Suraj Batra is a 2nd year student at FMS, Delhi

13

Innovation In Financial Services

In the current times of challenging eco-nomic scenarios, the sources of funding are getting scarce and cumbersome to avail. Different sectors of economies are losing their faith in the financial services sector amongst growing concerns of an-other downturn. In a bid to pacify these concerns and outdo their competitors, many of the leading financial services companies are integrating their strate-gic planning processes with innovation. They are coming up with offerings to entice the untouched sectors of the in-dustries. Some of the innovations that not only can turn the tide in the financial services companies’ favor but can also address the growing concerns in the cur-rent economic crisis are as follows.

Financial Tools For Climatic Concerns

Off late, the only thing that has been keeping up with the troubles of slowing economy is the stringent environmen-tal regulations. Companies are facing a tough time in improving their bottom lines and reducing their carbon footprint.

The paucity of funding sources has al-ways been a challenge in addressing the huge funds required to battle enviro-

mental degradation. The lack of initiation by the developed countries to address such is-sues has always resulted in a roadblock for the developing nations.

In 2008, the World Bank came up with a new financial innovation and offered two solutions to tackle the challenge at hand – Green Bonds and Cool Bonds.

The bonds are linked to carbon credits and by investing in these bonds; two things benefit the investors: first, the fight against global warming, which is aptly supported by the World BankSecond, the option to hedge their exposure to carbon credits

Green Bonds

Green Bonds are six-year notes that were de-signed in partnership with the financial group Skandinaviska Enskilda Banken. The purpose of issuing these bonds was to raise funds for mitigation and adaptation projects financed by the World Bank. Some of the projects sup-ported by these bonds are the solar and wind plant installations, reforestation and rehabili-tation of power plants.


14

Cool Bonds are five-year AAA notes is-sued by the International Bank for Re-construction and Development (IBRD) and linked to Certified Emission Reduc-tions (CERs) set up under the Kyoto Pro-tocol.

Financial Tools For Handling Health Concerns

Health has been one of the prime con-cerns that affects every country, but seldom has a country come up with an effective plan to minimize the risks as-sociated with the health of its citizen. Ev-ery year many children in the low-income countries are deprived of the vaccination that is necessary to guard them against the fatal diseases.

In 2006, to counter the challenges poised by the risks associated with health, Inter-

national Finance Facility for Immuniza-tion (IFFIm) came into existence. The facility, having assets worth billion of dollars, came up with an innovative plan called the Frontloading Aid. The assets owned by the facility were col-lected from sovereign donors that were legally binding. With passing time, they also introduced bonds, raising a sub-stantial amount from the investors. The funds raised from the investors were used as a frontloading aid, to source the vaccines needed to fight the battle against the diseases.

Till now, IIFIm has been able to raise USD 2.3 billion and has funded various immunization programs and has even supported many countries by provid-ing them with new and essential vac-cines. With funding made available sooner, not only can more people be vaccinated, but also they can receive the vaccines in an optimal time frame.

Figure 1 : Green Bonds

15

Financial Tools For Investment Concerns

The world has been battling with po-litical uprisings and turn-arounds since last few centuries. Investors have always been wary of the political factors, its stability and instability in a country. The economic development of a country is at its ebb whenever it recovers from a war (Afghanistan, Iraq) or a political uprising (Libya, Egypt). The investors are always unwilling to expose their money in such volatile economies.

Afganistan, a country tattered by militant groups and wars, is witnessing such po-litical instability and is posing a risk to the investors associated with it. The country faces reconstruction needs, manufac-turing and even mining activity needs,

which can be met only through huge in-vestments made by foreign investors.

There was an immediate need of a stable solution, which was provided by Mul-tilateral Investment Guarantee Agency (MIGA). The agency started an insurance scheme under the head Temporary Busi-ness Interruption (TBI) insurance. MIGA insures the investors who invest in Af-ghanistan. All the Foreign direct inves-tors were insured against risks of cur-rency inconvertibility, expropriation, civil disturbance and terrorism. This scheme not only protects investors from all kinds of losses but also gives others the con-fidence required to pour in their invest-ments in Afghanistan.

Since 2006, MIGA has issued USD 78.2 million in guarantee coverage for invest-ments in Afghanistan. Moreover, MIGA is the only global multilateral organization

Figure 2: Investment in Rwanda by MIGA


16

by providing funds to the primary sector thus running the economy appropriately.

Financial Tools Against Fam-ine Concerns

In Ethiopia 80 percent of the population is engaged in agriculture, making them highly vulnerable to the country’s chronic and severe droughts. The government’s Productive Safety Net Program provides aid to the chronic food disasters. Gener-ally, the underdeveloped are overlooked. Emergency responses meant for help during extreme droughts are typically too slow to prevent them from having to sell crucial assets such as livestock and equipment; they then become part of the chronically food insecure cycle. This problem has transformed into a huge problem especially for Ethiopia.

To protect against the above situation a solution called as index based risk financ-ing was devised. It was first implement-ed in Ethiopia in 2006; it basically uses contracts with global firms or banks to hedge against specific hazards or events. Data on these hazards are tracked regu-larly and if there is an observation that there is a deviation from average levels, then payouts are triggered. For example: if in Ethiopia had a drought ensued, Axa Re would have paid USD 7.1 million, to be disbursed in cash to as many as 3,00,000 farmers. The Ethiopian index-based risk-financing program makes the govern-ment’s Productive Safety Net Program sustainable.

Moreover, this mechanism involves few-er transaction costs than many other interventions, and avoids false claims.

that insures against political risk, bring-ing otherwise wary investors into some of the environments where investment is most needed.

Financial Tools To Address Farmer Concerns

As we know that there are two types of lending one is secured and the other is unsecured. In secured lending, underly-ing collateral is the source of repayment that needs to be mobilized when some-thing goes wrong. As it is very difficult for the poor farmers to arrange for a se-curity to cover their loans a new financial innovation was proposed known as the collateralized commodity transaction.

In Collateralized Commodity Transac-tion, the money is not lent based on the economic strength but on performance risk. The underlying collateral is the soft commodities that are being produced such as grain, cotton, coffee or cocoa. In this technique the lender relies on the borrower’s ability to conduct profitably the commodity transaction. At the same time lender reduces his risk by exercising his right to sell off a very liquid asset i.e. commodities as soon as he gets a feel-ing that the loan will be defaulted. This whole process is called Warehouse Re-ceipt Financing.

Warehouse Receipt Financing not only helps the poor farmers by providing them with loan so that they can finance their needs but also provides a cover for the lenders. This is a brilliant technique that can serve as a counterpart to micro financing. This technique can also help in the overall development of the country

17

Weather risk is transferred from low-in-come households to global risk-takers.

AuthorsKaran Bedi and Rohit Shukla are MBA -IB first year students at IIFT


18

velopment are critically dependent upon the efficient management of this increas-ingly scarce resource. The water indus-try is poised for considerable growth as convergent technologies & institutional changes combine to address the global demand for clean water.

Long term drivers of water use

-Population growth & urbanization-Degradation of water supplies-Resource sustainability-Climate changes-Geopolitical instability-Aging water infrastructure-Convergent Technologies

Commodity

A commodity is a good whose price is determined as a function of its demand & supply in a market. Well-established physical commodities have actively trad-ed spot & derivative markets. Generally, these are basic resources & agricultural products such as iron ore, crude oil, coal, salt, sugar, coffee beans, soya beans, alu-minium, gold, copper, rice, wheat, gold, silver, palladium & platinum. Soft com-modities are goods that are grown, while hard commodities are the ones that are extracted through mining.

Water Water is the most fundamental constitu-ent of life & will always remain a vital ele-ment for human survival. Like gold & oil, water is a commodity & it happens to be rather scarce. Recently, there has been an increase in public awareness of global water issues. Virtually every country in the world is faced with some combina-tion of water quality & quantity issues that will require significant expenditures for their resolution.

Not only human health but also, envi-ronmental protection & economic de-

Water as a Commodity

19

Current Scenario

About 70% of the earth’s surface is cov-ered in water, but 97% of it is saltwater, which is unfit for human use. Of the re-maining 3%, only about 1% is readily available for human consumption. Rapid industrialization & increasing agricultural use have contributed to worldwide water shortages. Pollution also highlights the need for clean water.

Urban Indian Water Scenario

The rate of urbanization in India is amongst the lowest, but the nation has more than 250 million city dwellers. By 2020 it is predicted that the 50% of In-dia’s population will live in cities that will put pressure on the already strained cen-tralised water supply systems of urban areas. The urban water supply & sani-tation sector in the country is suffering from inadequate levels of service, an in-creasing demand-supply gap, poor sani-tary conditions & deteriorating financial & technical performance.

According to Central Public Health En-gineering Organisation (CPHEEO) es-timates, 88% of urban population has access to a potable water supply. But this supply is highly erratic & unreliable. Transmission & distribution networks are old & poorly maintained, & generally of a poor quality. Consequently physical losses are typically high, ranging from 25-50%. Low pressures & intermittent supplies allow back siphoning, which results in contamination of water in the distribution network.

Investment Opportunities

Many companies are seeking a piece of the water market. In addition to direct stock purchases, some of the larger firms offer dividend reinvestment plans. Firms seeking to profit from water-related busi-nesses include beverage providers, utili-ties, water treatment/purification firms & equipment makers, such as those that provide pumps, valves & desalination units. When it comes to bottled water, the market is growing internationally. On the desalination front, some 100 coun-tries currently rely on desalination for at least part of their freshwater consump-tion needs.

Economic Good

The above developments have called for a good management of water resulting in a sustainable use of water, making wa-ter an economic good. Economically it is a common-pool resource, i.e. there is a finite amount that must be shared in common over a variety of uses & geo-graphic areas.

The classical tragedy of commons arises since users are likely to ignore the ef-fects of their actions on the pool when pursuing their self-interests. Renewal of water is both stochastic & seasonal im-plying uncertainty in its supply. This calls for investments in infrastructure that en-able us to store & regulate water supply. Besides, water cannot be considered as a homogeneous good. There are all sorts of qualities, ranging from surface water to drinking water. This scarcity in water might lead in water being traded in the market as a normal good.


20

Exchange will provide buyers with the opportunity of buying water at the low-est rate & sellers to sell at a higher rate.

The exchange will also be able to avoid counter party risk. Once orders are matched the exchange is liable to ensure that the goods & cash exchange hands with no default from either side. Anoth-er advantage of trading water in an ex-change would be the information avail-able. Lack of asymmetric information will yield to efficient markets where buyers & sellers have full knowledge of the prod-uct & price.

As we can observe from the diagram be-low equilibrium occurs at point where water supplied is W1 & price is P1. Any deviation from the equilibrium price & quantity will bring the market back to equilibrium point, thus making it a sta-ble equilibrium. In case price is above P1, there will be excess supply & in order to sell their good, sellers will start lowering the price until it reaches the equilibrium point again. For price below P1, excess demand will push up the price till the market stabilizes again.

Water: Private Good

Water industry’s activity would consist of gathering, treating, transporting, storing & distributing/collecting water, trans-porting & treating waste water. Water industry is extremely capital intensive & huge investments are required to build dams, develop & maintain networks & factories built to collect & treat water. So, it’s kind of a natural monopoly. The required investments, especially in the distribution networks, are so large that it is unlikely that two firms each with their own network can profitably operate.

A monopolist will hoard water & create a further artificial scarcity leading to fur-ther rise in water prices. Water being an essential commodity will not have its de-mand affected & thus will be sold at ex-orbitant prices. Profit is maximised at the point where Marginal Revenue is equal to the Marginal Cost.

At this point we observe that the monop-olist is producing quantity Q0 & charging a high price of P1. But the actual demand here is Q1; hence a certain section of buy-ers are neglected. Water being a neces-sary good people will be willing to pay any price. Hence water hoarding might happen in the informal market. Existence of informal market will give rise to a black market leading to water inflation.

Water traded in exchange

It is required that water be traded in a market characterized by large number of buyers & sellers. Due to homogeneity, it can be traded at exchanges where there will be efficient price discovery of water.

21

Indices where water is being traded

Some of the popular indexes designed to track various water-related invest-ment opportunities are:• Palisades Water Index• Dow Jones U.S. Water Index• ISE-B&S Water Index• S&P 1500 Water Utilities Index

Government Intervention

Given the huge investments required for technological improvements & the in-stallation of networks, a role of the gov-ernment seems justified. Theoretically government intervention can be in terms of: Subsidies: The government can provide subsidies to households & firms investing in water conservation tech-niques, e.g. a use of storage tank of 30l or above for households, a rain water reservoir for communities etc.

Taxes: The government can tax industries & households on water us-age, if the usage exceeds pre-specified volumes. But this might be considered unfair especially amongst low income households who may start experiencing budgetary problems.

Regulation/Technical Interven-tion: Health considerations require the imposition of high quality standards & efforts aimed at checking whether the standards are met. Regulation of the dumping of waste water by industries is also needed.

Water Credits: Similar to carbon credits, the government can also allocate credit points for low water consumption.

These credits can be redeemed for dis-counts/subsidies, or used as a reserve against high consumption in future. However, the problem of measurement crops up yet again.

Distribution: Water is transported by informal players via vehicles to places which are located far away from water sources. The government can organize this service & carry it out more system-atically.

Conclusion

Recent years have seen an upswing in the demand for investments that seek to profit from the need for fresh, clean wa-ter. If the trend continues, & by all indi-cations it will, investors can expect to see a host of new investments that provide exposure to this precious commodity & to the firms that deliver it to the market-place. Just as with any other investment in commodities or sector funds, wise inves-tors should limit their exposure to water. Generally speaking, highly concentrated investments, such as these, should not represent more than 10% of the assets in a well-diversified portfolio. Limiting exposure to concentrated positions pro-vides some opportunity to capture posi-tive returns while limiting overall portfo-lio volatility.

Author:

Rohit Jain is a Second Year student at FMS Delhi.


22

Best Practices In Supply Chain Management

not only in products but also in process-es involved for sustainability. Product dif-ferentiation is much more transient than process differentiation as products are easier to reverse engineer. But for pro-cess, one needs to work at the root level.

During the time when economy is boom-ing, customers are willing to spend for their increasing demands. In these times; growth, innovation & acquisitions are top most priority of most of the compa-nies. Apart from that due to increased globalization and competitiveness, glob-al markets force companies to maintain competitive prices. So, the need for the companies to have focus on their inter-nal operations & supply management (OSM) as well arises.

Value Addition By Supply Chain Management

The operations & supply management play crucial role in sailing the company through the economic downturns and its aftermath. When the demand for the goods & services reach more or less a stagnant stage, effective supply chain management become indispensable to increase/sustain the company growth. Manufacturing and delivering of goods & services respectively involves many

‘Good quality at a low price’ may seem a good tagline to put on the brochure of a company, but to actually imple-ment that in the true sense requires a strong supply chain management. Ikea, for instance, has maintained its promise of delivering innovative, good quality products at low costs. Substantiating this claim, Ikea has reduced its retail prices by a total of 20 percent during the last four years. Here, the process of driving down costs gets initiated the moment a new product is conceived and it stays for the entire product lifetime. haking cue from one of its product, a 50 cents mug design of which IKEA reinvents it-eratively to increase the number of mugs that can be stored in a pallet and to cre-ate more value for customers purchas-ing it. It has also optimized the speed at which cup can be passed through ma-chines responsible for manufacturing so that maximum number can be fitted into kilns and hence, save the costs.

Recently, it has shifted from wooden pallets to cardboard ones for packag-ing which are much lighter and carry the same load as that of timber. Through continuously improving the supply chain, the essence of creating great value to the customer while reducing the cost of delivering the good is captured. In this world of competitive differential advan-tage, differentiation needs to be done

23

processes starting from delivery of raw materials, storage of raw materials &semi-finished goods, manufacturing, work-in-progress inventory, inventory control, ware houses, distribution, retail-ers and then consumers. Supply Chain management (SCM) is the management of a network of all business processes and activities involving procurement of raw materials, manufacturing and distri-bution management of finished Goods. All organizations have varying supply chains according to their process. SCM adds values to the business functioning by finding out efficient & ef-fective ways to get goods & services to the customer better, faster & cheaper. SCM focuses at the flow of goods and services from one end of the chain to the other through different processes so as

to improve the productivity, efficiency and profitability of the entire process. Since, customers are vital for organiza-tion, hence now organizations are shift-ing its focus from demand driven to value-driven, customer-focused supply chain.

IT Systems in Supply Chain Management

One of the practices in supply chain management improvement involves up-grading the systems in terms of technol-ogy in order to increase the efficiency. On the similar lines, Dell supply chain management system replaced previ-ously used UNIX-based servers with Oracle clusters of Dell PowerEdge serv-

Figure 1: Drivers of Supply Chain Management


24

ers. The production database on Oracle Database was managed by primary and secondary servers. This new system al-lowed easy addition of servers to the clusters to handle increased workloads. It had positive effect on the efficiency, and the data extraction for all material movements’ transactions dropped from almost 5 hours to just 35 minutes for an 88 percent Improvement, while the time for the entire end-of-quarter jobs processing decreased from 31 hours to 23 hours. Dell computers also brought changes to the distribution channel by skipping distribution through retail chan-nels and customizing its products as per the customer orders on internet, making the whole process customer centric. This in turn benefited the company and also value was passed on to the customer in terms of choice.

Inventory Management

Inventory level supply chain management is challenging as it affects both cost and service. Uncertainty revolving around demand and supply makes it necessary to hold inventories for some time so as to better respond to the dynamism in the market. One of the pioneers in inventory level supply chain management is Wal Mart, though its phenomenal growth cannot be just attributed to inventory supply chain management. Wal Mart’s has continuously focused on customer’s needs and put efforts on reducing costs through efficient supply chain manage-ment practices involving implementation of efficient procurement, distribution, lo-gistics, inventory management. Owning to this, company is able to offer a variety

of products at the lowest possible costs and in shortest time. Wal Mart has highly automated distribution centers, which in turn help in reducing the shipping costs and time by significant amount. It also works on the principle of procurement of goods directly from manufactures elimi-nating the intermediaries and passing on the cost benefits to the consumers. Use of barcodes and RFID tags has made the handling of inventory much hassle free. Reduction in Wastage

One of the main considerations in the supply chain management is the focus on reducing the wastage of resources. Based on it, many companies are now following the age old lean production practice. Evolved from the ‘Just in time’ and a step forward from six sigma prac-tice, now there is focus on extreme lean manufacturing. Bajaj Auto has used this to re-organize and redesign its core business processes. The new plant was opened at Chakan leading to few major suppliers to shift in vicinity giving good advantage. It implemented SAP-ERP and supplies were streamlined based on re-plenishment of line consumption. Lean manufacturing has now been extended to Lean IT which focuses on elimination of wastes in IT products and services. Here the wastage is in terms of work which has added no value to product or services like defects or slow application response time.As the world economy is in flux, every company wants to find more ways to ex-ploit and get maximum efficiencies out of their systems, be it product related or services related. Financial supply chain management is one of those areas which is still in nascent stage and evolving. It

25

consists of services that combine data and transactions from trade and pay-ment activities. It provides all informa-tion that is needed to complete the busi-ness transactions to the parties in supply chain. In this supply chain , the main fo-cus is on the ability of banks’ clients to access a gamut of services offered by the financial institutions.

Excessive focus on supply chain manage-ment (SCM) towards achieving maximum benefits and exploiting each resource does not always guarantee success. In-terestingly, none of the “man-made” SCM major disasters (i.e. excluding those which are caused by Mother Nature & factories burning down) happened in the industry after 2000. There can be two reasons; more industry attention towards supply chain issues & other it can be due to the lessons from failures

in the past that led companies to avoid the catastrophic impacts of SCM failures. One of the major disasters of SCM is of Apple in mid1990s.In mid 1990s Apple was among the leaders in market share of deeply fragmented PC market. That position suffered a hit in the last half of 1995 because of supply chain failures. In 1993, the company launched Power Book laptops with excess inventories and production capacity .But Power Book did not performed as expected by Apple & suffered due to high inventory & pro-duction cost. So in 1995, it played very conservatively and launched new line of Power MAC PCs with low inventory & production capacity. That proved very expensive for apple. When the demand for Power MAC PCs exploded, Apple got itself short in production as compared to demand, with customers reporting wait of up to two months. At one point, Apple

Figure 2 : Components of Supply Chain Management


26

in the marketplace by controlling prices and shortening product delivery cycles. But this tool to success needs to be ma-neuvered with tact, and this is what will differentiate the companies from being successful or from failing.

had an order backlog of $1 billion. Ap-ple’s market position in PCs took a per-manent hit.

Supply Chain Management in India

Still there are fields which need atten-tion to be focused on in India for supply chain management plan and its imple-mentation. India has the capability of be-coming a food exporting country. India’s food processing industry wastes around 20 per cent of all foods because of inef-fective supply chain management of per-ishable goods. Indian food industry is in dire need of effective operations & sup-ply channel through which farmers can sell their grains etc to the consumers in India & in the international market too. There is a need to implement best prac-tices in supply chain in developing infra-structure like cold chains, ample storage facilities and transportation.Many developed countries along with strong developing economies in the world are going through economic down-turn. USA is still struggling to bounce back from the sub-prime crisis. European countries are also unable to overcome the Euro-Zone crisis and UK economy has contracted by 0.4% in Q2,2012. In-dia‘s GDP in 2011-12 also moderated to 6.5% from 8.4% in the 2010-11. GDP grow at 5.3% for Q4, 2012, slowest in 9 year. Similarly China’s GDP grew at 8.1 percent during 2011-12, below 9% after long time. These times would be chal-lenging for the companies as consum-ers have resorted to austerity measures, investing &saving instead of spending. To survive through these times, effec-tive application of supply chain manage-ment will play a key role in most of the industries. It can improve competition

Authors

Akanksha Garg and Mayank Gulati are pursuing their MBA from IIFT

27

In the present scenario of enterprises capitalizing on their core competencies, the concept of virtual organisations has become to reality. A virtual organisation can be defined as “highly flexible, tem-porary organization formed by a group of companies that join forces to exploit a specific opportunity”. Organizations have become more focussed on doing “what they are good at” and forming strategic alliance for doing “what they are not good at” with those “who can do it better”. Thus, in an attempt to adapt to the conditions of growing dynamiza-tion and globalization of business, the contemporary enterprises have evolved from independent to economically inter-dependent entities.

Success of the modern enterprises de-pends a lot on their capacity to manage all important supply chains in which they are involved. For an enterprise, apart from the vertical integration, it has become important to decide how much of supply chain they want to own. For example Dell has been operating on the concept of virtual organizations; most of the components in a Dell computer are made by other companies while Dell fo-cuses on its strengths--marketing, cus-tomer support and integration of these components into the final computer products.

Virtual Supply Chains: Thriving together in Volatile markets


28

In this supply chain, Dell Computers is at high level; the company forges strategic alliances with suppliers and other mem-bers of supply chain, fulfilling the orders from customers and providing the ser-vices after the business transactions are over.

The virtualization of supply-chain has helped firms to enhance supply-chain performance by reduction on the ex-penses to build and operate the infra-structure of a real supply chain. Many products have a short life span and to utilize this window of opportunity, vari-ous organizations commit there resourc-es to use their core competencies to achieve common benefit. For example , the UK’s Virgin Group briefly held 5% of the British cola market with just five em-ployees by focusing on the company’s core competence: its marketing.

The Dynamics ?

Under the concept of virtualisation, a manufacturing organization transforms its operations from a single produc-tion site to a networked manufacturing method. Being dispersed, there is con-siderable complexity associated with the method of management of the supply chain and its integration.

The SCM scenario becomes more com-plex as along with internal supply chain of member organizations, there exists another layer of supply chain between the virtual organization and other virtual organizations. When buying a computer from Dell, the virtual organization in-cludes suppliers of various components, the Dell customer service representative, assembly line and assembly crew, the lo-gistic distribution network which delivers the computer and end customer.

29

How it Works?

The objective of SCM for an organisation is to reduce or minimize the costs and achieve sustainable competitive advan-tage in the market. The integration in-volves movement of materials, storage, and control of products across the sup-ply chain. The supply chains can be very complex due to a three layered structure involving high level virtual organisations, under layer virtual organizations and the internal supply chain of virtual organiza-tion.

The integration has moved from tradi-tional arms length approach to the new “virtual supply chain,” which enables cor-porates to focus on their core competen-cies and outsource other capabilities to lower-cost suppliers, no matter where they are located.

A comparison of traditional approach followed in computer industry with a virtually integrated supply chain is ex-plained below:

Under the virtual supply chain, the orga-nizations with different core competen-cies are collaborating to share the real time information to make more accurate forecasts, reduce inventory build-ups and streamline their supply chains to compete in today’s recession hit global market without bearing the burden of maintaining the expensive infrastructure. The virtual concept thus reduces the technology and resource barriers and provides a collaborative environment to compete globally at reduced costs.


30

the virtual collaborators and customers.

Is it all roses and cherries?

In today’s rapidly changing economic environment and increased competi-tion, the firms are forced to maintain low costs through the adoption of focused supply chain strategy. Here, the virtual supply chains may hold the key by pro-viding flexibility and speed. Virtual sup-ply chains allow efficient communication, collaboration and coordination among different organizations working towards a common goal. The collaborative struc-ture of suppy chain in virtual organiza-tions has contributed to reduce the costs and increase the profitability by decreas-ing the time to market and deliver a product.

Nonetheless, the other side the virtu-alization isn’t free from downside risks and flaws. After the strategic alliances are formed a reorganization of business process is needed to streamline and op-timize the flow of goods which may re-quire substantial capital. Since the orga-

Virtual Integration & Cloud

In past, the organizations functioning as individual enterprises under a single enterprise authority domain had to rely on more traditional technologies like an e-mail, phone and fax to exchange infor-mation with their suppliers and end us-ers.

However the concept of virtualisation has transformed the relations to diffused authority domain and has increased the complexity of information sharing be-tween the geographically distributed collaborators. Maintaining a virtual con-figuration requires considerable financial investment for software tools for sharing and processing the information about shipments with suppliers, transportation providers and end users.

This problem can be solved by cloud concept where virtually collaborating organizations use cloud-based collab-orative platform for logistics, trade and transportation. It provides a robust plat-form for closer collaboration with supply chain partners which even companies on a humble budget can pay for. The vir-tual concept with cloud has brought the benefit of efficient supply chain manage-ment to end customers, as cloud based applications for mobiles are being devel-oped.

The distributors and retailers can track the product’s real time movement on their mobiles and can plan the activities accordingly. Real time sales data from the retailers can be collected by col-laborators to schedule their supply chain functions. This leads to considerable cost reduction which at end is beneficial to

31

nizations are geographically spread out, the success of virtual supply chain hinges upon the real time information sharing and improved communication between organizations. Though virtualization breaks the limits of time and space, but the success of virtual concept is highly dependent on the transparency and trust between the participating firms. Es-tablishing the parameters for risk shar-ing, profit sharing, resource contribution is of paramount importance for the suc-cess of virtual supply chain structure.

In spite of the roadblocks, there exists a need for combining the latest in technol-ogy to provide a competitive advantage in the difficult times for global economy. It provides a platform to the organisa-tions to compete without deviating the resources to the areas other than their core competence areas, thus acting as a key to create a unique and sustainable competitive position.

Author(s)

Rahul Balwada is a First Year student at IIM Indore


32

Oxford Dictionary defines the word ‘Innova-tion’ rather innocuously as “a new method, idea, product, etc”. The word, however, makes some kind of profound sense in the words of Steve Jobs when he says “It is what distin-guishes the leader from the followers”. In this era of ruthless competition, Innovation or the lack of it is what makes or breaks organiza-tions. The buzz word in the business world, it has become particularly favoured with the IT organizations. This can predominantly be at-tributed to the rapid technological develop-ments in the IT industry.

As predicted by Gordon Moore, the co-found-er of Intel, the pace of development in the IT industry has been exponential. Besides the growth rate, there has also been a significant reduction in the cost of innovation. In the words of David Verrill, Executive Director of the Centre for Digital Business at MIT’s Sloan School of Management and Co-Chair of the Innovation Showcase, part of the annual MIT Sloan CIO Symposium, “It costs so little to in-novate now. It used to be that you needed to raise tens of millions of dollars and spend a couple of years building a company. Now you can outsource development, host it in the cloud, and be up and running in a few months for a few hundred thousand dollars.” Even as you are browsing through this article, thou-sands of teenagers are programming their

creative ideas into android apps. Thanks to technology, innovation is no longer restricted to the geeky programmers in air conditioned cubicles. The challenge is open for anyone and everyone and that has forced organiza-tions to give it a serious thought.

Understanding Innovation

To begin with we first need to understand what exactly can be termed as an Innova-tion. Experts define three varied degrees of innovations. Organizations generally choose to play safe and focus on incremental innova-tions in existing products and services within existing business models and processes with little or no risk. Again, organizations may choose to take substantial risk and pursue breakthrough innovations while developing new products within existing models or new models for existing products. Very few orga-nizations choose to venture into the uncertain domain of disruptive innovation. Needless to say, the rewards here are as high as the risks.

Innovation Icons - Google

In the pantheon of IT companies, Google would forever be the God of Innovation. In the HBR article on “Reverse Engineering Google’s Innovation Machine”, the authors

Innovation in Information Technology Services

33

There has been a strategic alignment in their organizational goals in order to improve their innovation capacity. They have prudently invested in infrastructure that enables them to support innovation by giving them efficiencies and econo-mies of scale and at the same time giving them the ability to leverage third party innovators in rapidly adding products and services. They believe in the acid-testing of their decisions against the ob-jectivity of data. Besides, they ensure that their obsession for innovation is reflect-ed in their job descriptions. New ideas at Google are often generated by employ-ees in a prescribed system of time allo-cation. Employees have 80-20 breakup of time where 80% of the time is spent on the core business and 20% is spent on projects of their own choosing. Their

have aptly noted that “It excels at IT and business architecture, experimentation, improvisation, analytical decision mak-ing, participative product development, and other relatively unusual forms of in-novation. It balances an admittedly cha-otic ideation process with a set of rigor-ous, data-driven methods for evaluating ideas and has emerged as the creator of new approaches to business and man-agement innovation. ”

Eric Schmidt, Google’s executive Chair-man, in a recent interview talked about the systematizing of innovation at Google and creating a culture “where we ask why things are the way they are, and wonder if they can be done in a different way”.

Figure 1: Google over the years


34

R&D spend is also amongst the highest in the category, and reiterates their seri-ousness with regards to Innovation.

Innovation at Apple

Apple has been the rebel innovator of the industry who has rejected the status quo in the technology bandwagon. It has leveraged on its visionary innovations to position its products at the top of the Maslow’s pyramid. The brand in itself has achieved an iconic status. Quite unlike other companies who rely on acquiring third party innovations, Apple has mas-tered the art of innovation. Its products have disrupted the entire music industry. It has come with entirely new product categories. Its iPhone is reinventing the cell phone business. Apple leverages its diverse ecosystem of employees, cus-tomers, suppliers, partners & global net-works, proven innovation process and a winning culture to build an innovation factory in its organization that generate ideas that simply click. The tremendous growth in its revenues in the past 5 years stand testimonial to the phenomenal success that can be attributed to their “Think Different” approach.

Apple has not restricted itself to prod-uct or process innovation. It has gone a step ahead by introducing innovation into every stage of its value chain, right from supply chain, research and devel-opment, manufacturing to distribution and retail. Besides, its vertical integration has empowered it to develop products which are equipped with its own hard-ware, software and services. This enables Apple to have a better control over its value chain unlike other vendors, who just develop the hardware and get the software and services from third parties.

Innovation in Strategy - Bal-anced Score Card

The Balanced score card is a strategic performance management tool that can keep track of execution of activities and monitoring the consequences arising out of it. Faced with the “Transform or Die” notice, today IT organizations are trying to plan and manage innovation as a core business process. Attempts are being made to integrate it into the busi-ness at both the strategic as well as the operational levels.

Using the BSC, a synergy can be created between the strategic and tactical goals of the organization. BSC is a framework for translating the innovation quotient in the organization’s vision into strategy. It uses four strategic perspectives (refer Framework) to allow the organization to create an innovative, sustainable or-ganization that can adapt resiliently to change. BSC ensures that innovation is not just for the sake of sheer compliance but is more of a core capability that en-ables the organization to redefine their customer value proposition.

The BSC framework keeps a check on the 4 basic perspectives of an organiza-tion and reflects the effect of the inno-vation culture on each of them. This is a powerful approach for companies which choose to address innovation as a stra-tegic theme.

35

Sustainability

The management guru C.K.Prahalad in his HBR article on “Why Sustainability Is Now the Key Driver of Innovation” had pointed out that the smart companies treat sustainability as innovation’s new frontier. He further went on to state that “Traditional approaches to business will collapse and companies will have to de-velop innovative solutions. This will hap-pen only when executives recognize a simple truth: Sustainability=Innovation”. Innovation is of benefit only if it creates value that is viable. In a successful orga-nization, innovation is sustainable and on-going, rather than an ad hoc pro-cess characterized by boom and bust.

Innovation should be applied across the business model to develop a holistically sustainable enterprise. IT companies understand the criticality of sustainabili-ty. Infosys is one company which focuses on sustainability by adopting Green In-novation. It focuses on green comput-ing to improve the quality of life and transform business. From an enterprise cloud to smart grids at campuses, they have piloted several green applications locally.

Author(s)

Swayam Prava Mohanty is pursuing her MBA from Xavier Institute of Manage-ment, Bhubhawaneshwar

Figure 1 : Triple-A Supply Chain

Figure 2: Balanced Score Card


36

force from one department to another

For success of an organization in meet-ing its objectives, goals, mission and the overall strategy, it’s important that all the realms of Talent Management – Talent Acquisition, Talent Development and Tal-ent Assessment & Alignment are prop-erly looked on.

Talent Acquisition

This article will explore the different as-pects of ‘Talent Acquisition’ and how the trends are emerging for the future which is going to shape the way HR Managers look into ‘Talent Acquisition’.Before we move forward, let’s have a clear understanding of the difference between ‘Recruitment and Talent Acqui-sition’. Recruitment can be defined as the process of finding and attracting people for a given job. Alternatively, we can say it’s the process of attracting candidates from available sources to fill a given post. On the other hand, ‘Talent Acquisition’ is getting right people on board from the most efficient sources.

In contemporary times, organizations are following different methods of attracting talent – job advertisements, newspaper

Just think of ‘Sachin Tendulkar’, ‘Lata Mangeshkar’ and all other successful people in their respective domains. What make them stand apart from the crowd? Are their skills which make them rare, or is it their knowledge of their respective field which makes them so venerated. We can simply say it’s their ‘Talent’ which makes them so special.So now the question arises - What is Tal-ent? According to Mckinsey and Com-pany consultants Michaels, Handfield Jones and Axelrod, talent is defined as “the sum of a person’s abilities- his or her intrinsic gifts, skills, knowledge, experi-ence, intelligence, judgment, attitude, character and drive”.

Talent Management

Talent management can be viewed as having a system in place in an organiza-tion where ‘right people are there with the right job’. It means in order to have ‘talented’ people working for an organi-zation, there should be a proper system of getting right people from efficient sources (talent acquisition). Proper learn-ing, training and well laid career plan should be there (talent development) . There should be proper workforce plan-ning and if required, movement of work-

Emerging Trends In Talent Acquisition

37

advertisements, job portals, employee referrals etc. But times are changing and hence an HR Manager has to accept that the need of the hour is to look into the future of Talent Acquisition. Con-sider this, according to the Global Talent Risk Report 2011, to sustain economic growth, United States and Europe will need a more than 25 million and 24 mil-lion workers respectively. The shortage of talent can be well understood by this report which mentions that multination-als consider only 25% Indians and 20% Russian professionals as employable. Hence, it’s imperative for HR managers to know the future trend of ‘Talent Ac-quisition’ and ways to implement them.

Emerging Trends For The Fu-ture

Now we have reached a stage where we can safely admit that how ‘Talented Em-ployees’ are going to be crucial for an organization. It leads us to a point where there will be ways searched by HR Man-agers to attract right talent and reach out to them before their competitor’s do.

Aligning Strategy And Tactics

‘Tactics’ is the term used to refer to a short term plan whereas ‘Strategy’ means hav-ing a long term plan . The future of Tal-ent Acquisition will see an alignment of Tactics with Strategy of an organization. For example, an organization can’t afford to hire a ‘Passive’ candidate now, i.e. a potential candidate who is not interested in a given job in an organization. Also, in same lines an Organization can also not afford to lose an ‘Active’ candidate, i.e. candidate who is right fit for the job

and will be willing to work for the orga-nization in future. Hence, an alignment of Tactics with Strategy will mean that an HR Manager will look out for ways to engage an active employee now (tactics) so that he is prepared and ready to work for organization in future, whenever op-portunity arises (Strategy).

Focus On Talent

In future, organization seem to favour ‘Talent’. It means, in future, there will be relaxation in criterion (e.g. Work experi-ence of 8 years required) for a given job. This also makes business sense, as orga-nizations who have already identified a ‘Talent’ may want to get them onboard even if they are not satisfying selection criteria. So, the future will see an entire shift of focus on ‘Talented Candidates’ and a relaxation in their certain job cri-teria.

Auto Networking & Matching

With the rise of social networking, the facets of Talent Acquisition is going to change drastically. The future seems to be built on ‘Networking’ and ‘Connec-tions’. Presently, recruiters are looking for prospects in popular social network-ing sites like LinkedIn and Facebook. Ac-cording to Jobvite Social Recruiting Sur-vey 2012, 93% of recruiters use LinkedIn, whereas 66 % use Facebook and 54% use Twitter to search employees. It shows that in future, ‘Talent’ will be searched by recruiters via connections where the in-formation available will be Just in Time, i.e. the information about a candidate will be available at a click. So, having a strong network of connections will en-able a recruiter to get the right candidate


38

for the right job.

Employee Engagement

Recruiters are now conducting compe-titions at various levels to attract talent and the successful candidates are of-fered PPI’s (Pre Placement Interviews) or a chance to work in the company as in-terns.For example,. HUL (Hindustan Uni-lever Limited) conducting its yearly event ‘LIME’, a case-study based event where the winners get a certain amount of cash prize along with a chance of PPI. Also, companies are looking at new in-novativeways to engage prospective em-ployees. Reckitt Benckiser, a consumer goods manufacturer, is using Facebook to share company’s news, latest happen-ings and career opportunities.

Such strategies will set the future trend

of getting candidates involved with an organization and it will act like a ‘win-win’ strategy for both the company as well as for the potential candidate.

Emerging Technology

The rise of technologies like video con-ferencing, teleconferencing etc. has now enabled team to work virtually i.e. from different locations. Also, now the recruit-ers have various technologies at their dis-posal which can facilitate Talent Acquisi-tion in future. ‘Video CV’s’ (a candidate is supposed to make a video describing his skills and achievements). Recently, ISB Hyderabad, a premier B-School, added video resume in their admission process. Mobile applications can also be used by the recruiters, in future, in this regard.

Figure 1: Emerging Trends in Talent Acquisition

39

Employer Branding

Seeing a drastic gap between demand (Requirement of candidates by Organiza-tions) and Supply (Talented candidates), employer branding seems the emerging trend for the future. This means that in future, we will see organizations using ‘blogs’, ‘testimonials of other employ-ees’, ‘advertising videos’ etc. in order to project themselves as the place to work in. Hence, unlike the past where the can-didates only seem to enhance their re-sumes, the future will see efforts being put in by organizations to improve their brand image and lure ‘Talented Candi-dates’ to work for them.

Conclusion

Amidst the overall spurt in acquiring tal-ent, the future seems to be skewed in the favour of talented candidates. Orga-nization will use innovative technologies

and all other means at their disposal to get closer to a prospective candidate, who will be the right fit for the company and the job per se. Although, there are plenty of trends that might influence the way Talent Acquisition is carried out, the methods which will be finally implement-ed will largely depend on the overall strategy of an organization and how the emerging trends will help the organiza-tions to efficiently and effectively carry out the process of Talent Acquisition.

Authors

Divyanshu Aggarwal and Priyang Ag-garwal are MBA students at TAPMI Institute of Management


40

Once the talent pool has been identified, the talent needs to be developed and groomed.

The emphasis should be on matters that employees care about most: developing them in a way that stretches individual capabilities, deploying into work that en-gages their heads and hearts, and con-necting with the people who will help them achieve their objectives. Creating the leadership bench strength then be-comes critical. This is possible through development of a talent mindset, devel-oping deep pockets and pools of talent, and differentiating between star per-formers in terms of performance and potential. The motivating aspect comes into play by creating lynchpin positions and rewarding them and providing con-tinuous learning stretch targets. How to identify and select HIPO ?

This is the most crucial step of the tal-ent management process. Organiza-tions must take an active role in identify-ing and cultivating their employees who have the capability and potential to be-come effective leaders.

What is talent? Can it be defined? Talent became synonymous with singing, danc-ing and acting due to the advent of real-ity television-“America’s got talent” and so has the corporate world. The recent upsurge in turnover rates and the unsta-ble economic conditions have made the need for talent more imperative. Unlike their reality TV counterparts, they may not be able to break into a jive, but they are what keep the organization alive!

Wish Upon a Star

In the present scenario where competi-tion for the star performers is heating up, organizations must think of new and innovative ways of talent management. They must know the art and science of how to Attract , Retain and Motivate their high performers.

This is critical as the 80/20 rule applies in the case of human capital as well. 20% of the human capital attributes to 80% of organizational success. These 20% are the star performers or more aptly called HIPO- High Potential.

First and foremost, organisations must identify the segments of the workforce that drive current and future growth.

Talent Management and Developing leaders of tomorrow

41

An organization must develop or set a framework that helps in identifying, developing and deploying HIPO. Then, they must align this framework/ talent management system with HR systems and processes such as rewards & recognition, promotions, career pathing and ca-reer development etc. At last, communicating the entire process to not only HIPO employees but also other employees must be done to ensure transparency and objectivity. Also, com-mitment and involvement of the top management is important. In fact, communication and support of top management are two set of activities which run throughout the process.

Various frameworks exist for identification of talent. Some of the most commonly used ones are:

1. 9 grid potential vs. performancematrix: The employees are assessed on these two pa-rameters: their potential and how they performed. They are then classified into 9 grids. This matrix not only helps in classifying employees, but also gives insights on their key character-istics and areas of development. Accordingly, development initiatives are made for each grid.

2. The BCG matrix: This is an adaptation of the BCG matrix that again classifies employees into four categories. Here, the parameters are capacity to learn and willingness to perform.


42

a player might be injured, so is the de-velopment of the leadership pipeline, re-placement at the crucial positions with-out delay. Various development initiatives ranging from job rotation, management development programs, cross-functional assignments, international assignments, coaching, and training exist and are be-ing used. Some of the strategic initiatives that might help are:

Catching the falling stars

The HIPO’s are the critical resource of an organization and cannot be jeopar-dized. There must be substantial systems in place to motivate and retain them as they are more visible in the internal and external market. So, HR needs to align and redesign the policies and processes

These frameworks are just a few which help an organization in identification of HIPO. Organizations can even design their own frameworks for identifying and selecting star performers. They must en-sure that the identification of talent hap-pens as objectively as possible. Once the talent pool is identified, the next steps are to develop, retain and motivate the HIPO to set up a leadership pipeline.

Developing the leadership Pipeline

Once high performing talent has been recognized, various initiatives need to be in place to help in realization of their potential to create a leadership pipeline. Just as bench strength is important in football because we can never tell when

43

such as rewards and recognition, promo-tions etc. with the talent management system.

Also, the talent management system should be an evolving one and change with the dynamic markets and industry practices.

One of the biggest challenges is build-ing & sustaining a strong talent pipeline.Organizations must build a robust HR system that pays attention to recruiting, employee development, performance management, compensation and reward systems, and retention. From adopting frameworks and best practices to imple-menting them, communication and top management’s support are critical for the success of the talent management process.

Authors

Sakshi Kharbanda and Charu Puri are MBA Students at IMI , New Delhi

Strategos Vol III Edition II

Documents

Transcript of Strategos Vol III Edition II