By Shombit Sengupta
25/08/2009
A company sustains on the strength of its existing people, culture and product, and their relation to the market, from retail animation up to the time the product reaches the consumer’s home. Employees have a certain skill and experience that can be harnessed, just like the jalebi dough is best when it is appropriately aged and fermented.
Fermentation ensures the jalebi fluffs a bit so the sweet syrup flows in it with ease. The syrup supply line of the jalebi maintains its authenticity. Your organizational delivery can flow similarly to maintain what’s vital in your business.
In the human progression pyramid, the base comprises the instinct for survival which ladders from food to the need for sex. These two vital layers indicate strength, violence, peaceful co-existence and physical energy. They are essential for living creatures, whether human or animal.
The third layer is atomic discharge related only to human beings. It is pleasure and ingenuity divided into two: violence leveraging our animal character; or harmony of life which is fundamentally non-violent and could be active or inactive. Its energy is spirituality, the higher equilibrium of human order in body, mind and spirit.
The fourth layer is that of luxury with affluence to enjoy life either lavishly, or in a low profile or economic way. At this layer you have choice.
Intellectual violence grows from different sources: economic poverty, a political cause, hankering for quick achievement, being anti-establishment, or just people indulging their hidden crass characteristics. People capable of intellectual violence are not inferior. They mastermind, sometimes surreptitiously, with superior intellectual acumen; others may have no choice but to suffer the power they amass. Mafia gangsters in the 1930s were such people. They considered their principle to be right for society, although they individually sinned by taking human lives. They even declared that whatever right they may subsequently do, none of them would ever go to Heaven; Hell will always be reserved for them. Your economic affluence may qualify you to be in the luxury layer, but you may choose to live frugally, just fulfilling your survival (food) and need (sex) layers. Alternatively, you could be economically less endowed but a climber that fulfills the dream of affluence with a strong commitment to education. Unlike traditionally wealthy families, the climber has a powerful new economic path in today’s world of technology. In fact everyone can aim to riches now, unless political storms or financial crises destabilize a country’s economy.
What is vital space?
The vital space is basic need that combines the survival and need layers. If an Indian’s vital need of rice or roti is not met, he will never be able to appreciate soup.
If blood is contaminated beyond repair, a person will not survive. The body naturally always rejuvenates its blood, but if it does not flow, a blood clot forms. The vital space in business has characteristics similar to the fluidity of blood. The vital space is a real need which society has to nurture.
Human activity is central to business, so the human progression pyramid is applicable in business. Without fulfilling hunger, man does not think about sex; your business cannot graduate to the pleasurable layer unless your current survival layer cash cow is renovated.
Impatient business houses want to enter the luxury layer of business without solidifying their survival factor. Here’s a typical scenario: Your base business is growing year after year, but low profit demoralizes you. Next door, an emerging business is witnessing high profit. That’s tempting. In a quick, opportunity-grabbing temperament you enter that business to earn high profit in a short span of time.
But wait! Before putting your current business in the back burner, did you check the possibility of its delivering better if an alternative best practice is applied? Is some unrelated business eating into your market, and you haven’t noticed? Is your business obsolete, or have the habits of people changed? To revive an unprofitable business, you need to benchmark the competitive environment, have mental strength and a ‘creative business strategy.’
Strategy is a war term not fully compatible in business. Wars are fought over a limited time, not indefinitely. But sustaining business is the most important factor.
Traditional versus creative business strategy
Traditional business strategy is generic, not practicing anything better than the competitor. But a creative business strategy, also useful at wartime, is a stratagem known only to the top brass. It’s a macro gambit to win the war at the critical moment.
Creative business strategy differentiates you from run-of-the-mill strategy planning. Bringing creativity into business supersedes benchmarking with the best. It’s dangerous to follow quantitative data alone that shows how a similar company became successful under similar market conditions. Instead, assess your individual internal and external environment and consolidate your business by refining your ‘vital space.’
An organization is known by its vital space, its existing market offer that accounts for a minimum 40 percent to 60 percent of its annual revenue. This valuable business source is the company’s foundation. It is connected to the market, trade and partners, consumers and customers. It is the organization’s core competence, the captured essence of which is its intellectual goodwill to expand. The vital space can become so mechanical that organizations often remember just to milk it, not to nurture it.
Instead, hunger for topline growth makes organizations indulge in superficial repositioning, diversifications that are either flavor-of-the-season or unrelated to its vital space. Such topline growth is not real; it just cannibalizes the vital space and totally compresses it.
A shrinking vital space increases the cost of complexity and creates roadblocks to profit and growth. Investor confidence subsequently reduces, and a crisis erupts to acquire high quality professional talent to manage the show. New people often get into new ventures that eat into the vital space, and contaminate it. And this hampers real growth.
Objective of a creative business strategy
The primary objective is on continuously growing the vital space. Mesmerize your employees towards, making it vibrant and dynamic to gain quantum business that sustains.
Yet an organization’s vital space is often its comfort zone. Nobody wants to disturb the everyday routine habits in the organization’s for fear of upsetting the applecart on its way to market. But by not touching it, you really can’t gauge how far back you are stepping. Low price products or services, aggressive competitors, or unpredictable competition driven by modern technology will soon devour your offer. I developed the vital space concept to sensitize organizations to their regular cash cow business. Like a conjugal relationship, vital space needs constant care and attention to remain exciting and fulfilling. The organization’s flirtations with new business is like extra marital sex, only fleeting enjoyment, and trouble thereafter.
Indian companies appear reluctant to create self-struggle for reviving their existing business. Have they comprehended the vast difference in being an assembler or trader, versus being an aspirational, core competence-driven, customer sensitive company? Vital space is the existing consumers’ foothold. Unless you nurture it, you will never really know when and why your consumers change their mind and shift to other offers.
Why is vital space an issue to reckon with?
Because its stake in the organization is so colossal that management must be alerted if it gets a hammering, which it easily can. It should not morph into a Titanic syndrome.
What is the Titanic syndrome? Luxury liner Titanic was considered impregnable. It smoothly sailed the Atlantic waters for a considerable time even after an iceberg punctured it. Everybody on board wanted to ignore the idea of danger. The evacuation action was taken only when the unavoidable danger loomed large before their very eyes.
Vital space contamination is mistakenly considered a minor affair, just like the Titanic’s fatal fissure. But the Titanic did sink, as was inevitable.
Before slow poison engulfs the vital space, an organization should undertake surgery in the form of corporate transformation. This is when an organization’s human resource division needs three simultaneous actions: (a) a microscope to see its defects as large as possible without arrogance; (b) a culture change to absorb the defect; and (c) a telescope to bring its vision nearer.
Real corporate transformation happens when you anticipate your vision. If renovation of vital space is factored in and internalized, the organization’s sustainability will be very powerful and valuable.
The vital space must always watch the radar for decreased consumption. Seize low hanging fruit by vigorous product renovation to change the whole market perception. Your hunger to go in for the next layer of growth is thereafter possible. You will definitely encounter hurdles during renovation, both internally and in the market. This can only strengthen your commitment and knowledge base, and help find the diversification route to build your new creative business strategy.
The next step is introspection for deep innovation. What is innovation for tomorrow’s world? It may not be rocket science; just innovation that can satisfy human life with extreme benefit. Growth that’s driven by vision and an empowered vital space will bring the following positives with it:
• Mindset change of existing employees
• Easier to attract talent
• Increase in investor confidence
• The advantage of synergy
• Resulting in quantum profit and growth
The audacious innovation of Lexus was possible only because Toyota always had Corolla as a cash cow in its vital space. People in industry often remark that diversifications need not link the corporation’s existing value to the new world. They give the example of Toyota having created Lexus as a totally different company to manifest luxury value. This is a totally wrong understanding. Toyota’s first attention has always been Corolla. The earnings from Corolla supported Lexus for competing in the luxury D category. Toyota’s continuous renovation value is so high in consumer mind that it can never pull down the value of Lexus. Rather, Toyota will increase the value of Lexus.
Renovation, vital space, innovation for growth
Real business growth vision comes from renovation that is robust, vital space that incorporates the trend, with innovation as the topping. If visioning is attempted through quantitative generic data and economic analysis, tomorrow’s business will be smoky rather than achievable.
For me business vision must have scalable factors that improve profit and growth. These factors reside in two outstretched hands.
One hand comprises the promise and resources that drive:
• high consumer sensitivity in all operations
• high quality and knowledgeable human capital
• continuous renovation of the existing product
• a highly processed cost design that manages vendors through a single all-purpose window
• consumer perceptive and reliable quality in all deliverables
• high aspiration delivered at any cost in any product or service segment
This leads to a differentiated corporate and brand promise that co-opts channel mindshare and powerfully communicates to the consumer. Through these resources you will, under any situation, be able to make better profit than the industry and keep your promise to the consumer. Good profit at the initial stage will give you robust muscle to grow. Just remember to maintain the scale of consistency and high profitability.
The other outstretched hand is the knowledge and initiative to convert the fast changing environment into an input. This input would have:
• the impact of technological advancement
• influence of changing trends
• global influence
• media influence
• change in job content
• international competition
• government policy change
Expect the result to be behavioral change in the channel, end consumers and the society. Be alert to bring in external qualitative influence for potential business. Innovate by incorporating the consumers’ latent perspective. These are elements that will magnify your growth.
Growth is the future, growth will get you bigness, bigness will take you global, being global you become a true GRC leader. When your resources and the promise are driven by fast changing environmental trends, you will achieve the vision to empower profit and growth.
The author is chairman of Shining Consulting, an international growth strategy consultant for top management. He has also written the widely read management book, Jalebi Management: All stakeholders can take a bite published by Response Books, the business books arm of Sage Publications.
