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Thursday, December 18, 2014

The grapes of drought

Visited California 2 weeks back. Huge drought all over the state apparently. Been going on for 4 years or so. Very likely caused by climate change. Agriculture affected severely, and the Golden State does produce half of the US' fruits and vegetables. Two major storms last week (biggest in 5 years) barely improved the situation as per scientists.

And yet. NO way of knowing there is a drought going on if you weren't told. Almost zero impact on residents' lifestyle. Sure, you are requested not to water your lawns in the interest of conserving water. But that's a cerebral request and a cerebral response by residents. No real pinch felt anywhere, for instance, through water rationing or occasional water cuts. Heck, water runs in all taps 24x7 in the Golden State even in the middle of this unprecedented drought.

Now, I am not complaining about this state of affairs. Far from it. In fact its heartening to know that despite such little impact on real lifestyles, people are driven to think about the drought and respect it. And California is definitely the most eco-conscious state in the country. But the tragedy is that many citizen of the first world, for all their well meaning intent, dont realize the true seriousness of some issues:

What does it mean to be bereft. What does it really mean to live with scarcity? How badly can Mother Earth hurt you if you don't care. 

If all a drought means is that you don't water your lawn (!), then you are obviously going to take time to get sensitized to reducing wastage in general. Forget general sensitivity, even specifically with regards to water, lower lawn watering aside, most places in CA didn't even bother with simple measures like water saving taps or 2-way control shower knobs (temperature + volume). And that is my gripe. This drought could have been a golden opportunity for nay-sayer Americans to experience firsthand the perils of ignoring climate change and favoring a devil-gives-a-damn lifestyle. But we probably remain a long way from giving up reckless insensitive things like gas guzzling V6 sedans and 18 foot long Chevrolet SUVs, non-stop air conditioner / heater usage, and ridiculously excessive use of plastic bags and paper napkins.

Disclaimer: All of my water-related lifestyle observations for Californians are based purely on personal experience at this point

Wednesday, November 5, 2014

SIAM is the state of the Indian auto industry

News is out that two more Indian hatchbacks failed the Global NCAP crash test recently. And not just failed, but failed miserably (0 stars out of 5). One of the two cars is India's 2nd largest selling car model (Maruti Suzuki Swift), and the other comes from multinational player Nissan (the Datsun Go), so its obviously damning news. This is on top of five other popular models that failed with 0 star ratings in January. But despite all this, look at the reaction that the director of the official industry body (SIAM) offers:

"It is just scaremongering" 
"Global NCAP can do what they want. We have our own safety road map that we are going to follow and are already following." 
"...the UK-based agency has not considered that average speeds in India are lower than in the developed world, due to poor road conditions and heavy traffic"** 

Now Maruti Swift & Datsun Go Fail NCAP Crash Tests

Links by Reuters and BBC here and here.

Does SIAM not know that India has the worst road safety record in the world? Granted, passenger car safety is just one part of the entire issue (poor road design and conditions, lax driver attitudes towards traffic rules, lack of respect for vulnerable users like pedestrians or scooterists, etc.). However, passenger car safety is actually the easiest one to fix. Just make airbags compulsory on all cars, or specify minimum structural rigidity for instance - these are not major changes. But this is not the first time that SIAM has tried to turn a blind eye to safety. In the past, the lobby group has actively tried to scuttle moves to improve safety norms or make airbags compulsory - simply because sales would dip somewhat. Agreed, many Indian customers are still cold to the idea of paying for safety, but that's changing rapidly, and anyway the role of the industry body must be to catalyze movement towards a better world, not act as a barrier. Just wish they would get rid of their naked-capitalist mentality and start thinking of total societal good.

By the way, hats off to Honda and a few other OEMs who stay well ahead of SIAM's current (antiquated) safety norms and actually offer Indian customers the same car safety as customers in the rest of the world.

**The tests were done at 64kmph. Now that's a pretty reasonable impact speed for Indian standards. Cars now typically do 80-100kmph on Indian highways, so a collision impact speed of 64kmph would probably be fairly common, especially in head-on incidents. And the point about heavy traffic is almost a joke. Traffic and low speeds is a reality in urban India, not on highways or expressways like the one below (this is increasingly the design spec for India's national highways, which carry 40% of India's people and goods). 

Wednesday, October 22, 2014

Sticking my neck out for a great go-to-market strategy

BharatBenz is the Indian arm of Daimler commercial vehicles, launched in 2012. I have been supremely bullish on their prospects right since I first heard of them in 2011. Here are a couple of links: Link 1Link 2. After some initial stress, they seem to be doing really well now.

In my opinion, Daimler's approach captures nearly everything that a multinational must do when entering a large new market like India:

1) Emphasizing the core offering. Daimler has launched trucks which are a perfect blend - global products that are appropriately engineered for India. These products hit close to international standards, but are not over-engineered either and are actually 'just right' for emerging markets like India. So pricing is not absurd, and the offer actually appears to hit a sweet spot on the performance-price frontier (~10-20% price premium). Further, the trucks are also fairly customized for India. For instance, there is a laser-like focus on fuel efficiency, which is Indian customers' priority #1. Through all the de-specing and customization, these trucks still are an order of magnitude ahead of conventional Indian trucks when it comes to quality and engineering, so that way Daimler has stayed true to its core competence.

2) Building up distribution muscle. Large, complex markets like India require multinationals to penetrate deep via distribution if they are to get out of the fringes and become major players. Daimler has partnered with experienced retailers in all the major trucking hubs of the country. There is still some way to go on distribution, but for a new entrant, they have done a great job on the distribution front.

3) Appropriate investments, management bandwidth, patience. All of the above requires hefty investments, as opposed to a low-cost replicate model that may be relevant to smaller countries. Daimler has made some pretty significant investments into a new R&D center which engineered trucks for India. Maximizing fuel efficiency required months and months of fine-tuning. They spent a lot on a factory in India as well, as on building up the distribution network. And on the management front, Daimler seems to have made BharatBenz a priority at the highest levels, thus guaranteeing high leadership attention. Finally, there is the acknowledgement that a market like India is not a short term play, but is actually a measured bet on long term success in what will become a major future market. Damiler has also astutely planned for the India investment to also reap dividends in emerging markets across the world - BharatBenz trucks will be exported to key EMs including South East Asia and Africa.

These are just a few of the many things Daimler seems to be doing right. The market is pretty strained though (overall CV sales were down ~30% last year), and truckers are taking time to warm up to BharatBenz. Of course they might have also got one or two things wrong during the launch, but overall, they are already #3 in market position, which is amazing (within a year of launch they have leapfrogged players like Volvo and Navistar). The big two are really far away though (Tata and Ashok Leyland together command ~75-80% market share, with Daimler bringing up #3 at ~5%!).

In all, I believe BharatBenz has got a great go-to-market strategy. Let me go out on a limb here and proclaim that they will be a big success in the next few years.

Friday, August 29, 2014

Eating cheetahs

Sailfish. Faster than cheetahs, predators just like cheetahs. Apex predators both. Yet cheetah killing is obnoxious, but sailfish are casually slaughtered and eaten (euphemism: they are 'fished'). No guilt. When will we stop treating ocean dwellers like food, and instead start protecting them? When will a tuna burger be frowned upon the way we frown upon a lion meat burger?

Here is a compelling way of looking at it (Sea Shepherd Conservation Society):

A boat full of dead pandas is alarming right, but we turn a blind eye to a boat full of dead tuna.

Sunday, August 3, 2014

Hello Moto

Just read that Motorola has jumped ahead of Nokia in the Indian handset market. Link here. That is just mind blowing at so many levels.

1) Motorola has achieved #4 in the massive Indian market (by volume), just on the basis of 3 models...2 if you count out the expensive Moto X
2) Motorola did this within a year of re-entering the market. Holy cow! How did they manage the sales & distribution? I know a lot of sales would have come through Flipkart and other e-commerce partners, but worth figuring out how they nailed the physical distribution bit (if they had any offline sales at all)
3) So online channels for handsets have become so significant? Wow
4) Typical price points for large-volume handsets have moved north of Rs. 10,000? (~$200). That's a 100% jump from just a couple of years back
5) How low has Nokia fallen. I mean, they were struggling with smartphones, but couldn't they have at least nailed the low-end of emerging markets with Asha and other models? Just goes on to show how terrible their strategy was to not launch in Android
6) Indian customers were so quickly willing to let go of all their baggage with regards to the Motorola brand. I remember a time when Motorola was seen as a dog brand...didn't matter if they came up with a few good models, their negative brand value hurt them so bad (like Fiat or Chevrolet in the Indian car market right now). Boy has Motorola moved on from those times!

Quite something.

Thursday, July 24, 2014

Offshoring vs Reshoring

There was an interesting article last month in Forbes about how manufacturing costs are really rather irrelevant for niche products. Link here. Makes a lot of sense.

And now we have another interesting case about a similar theme. It's Harley Davidson this time. Link here.

Its good that we have swung back from the extreme. Hope the bandwagon doesn't go the other way now. We already saw Google / Motorola try domestic manufacturing with some of their electronics (Moto X, Nexus Q)...didn't really work it looks like.

Monday, June 16, 2014

Animals and children

The other day I read 'The Crows of Pearblossom', a children's book by Aldous Huxley [minor spoiler alert]. I was curious to read it because of the author, whose dystopian novel 'Brave New World' I really liked. Apparently Huxley wrote this story for his niece, who was 5 or so at the time. Its a pretty nice story with many delightful instances of the protagonists having human characteristics (anthropomorphism). However, it was also a sadly typical tale where a carnivore (a snake in this case) is shown as evil.

That got me thinking, how important it is to sympathetically portray carnivores in children's books/movies. We are all intuitively driven to like 'cute', harmless creatures like rabbits or cows, and its also easy to show them as nice characters / heroes in our stories. Carnivores by dint of their diet, often end up playing the role of villains. They loom over the heroes of the tale, promising death or danger. Their personality then is also logically shown as dark or even outright evil. Isn't it ironic, given we ourselves as humans are biologically omnivores (I know many of my friends could possibly be categorized as pure carnivores given their dietary choices!).

The point is, though its easy as a narrator to show carnivores as the villains, are we not obliged to show them in a neutral / positive manner? Are we not creating an unhealthy fear / dislike for carnivores in our children by painting them black in otherwise shiny white tales? Think about it: children should be taught to be careful around carnivores like snakes, but why should they all consistently dislike snakes but adore say, sparrows?

Humanity has struggled with letting carnivores be in peace for a long time. Its almost as if we psychologically like to destroy other predators (especially apex predators like the big cats, wolves, or large birds of prey like eagles). Part of it is safety, but a lot of it is also just some primeval form of one-manship. Just look at all those photos of kings triumphantly posing with dead tigers. Given our own issues, isn't it time we stopped loading our children with emotional baggage about the supposed wickedness of carnivores?

Disclaimer: I am not saying we deliberately mis-portray carnivores in children's tales, just that we often take the easy route out when sketching animal characters, which ends up priming our kids poorly. Huxley himself idly made up this story for his niece one afternoon, which is quite fine for a one-off. Dreamworks' Madagascar is a good example where the storytellers explicitly played with the dynamic tension of having a mixed set of carnivores and herbivores in the lead cast (scene where Alex the lion starts to crave his friend Marty the zebra as a juicy steak).