Thursday Dec 26, 2024
Thursday Dec 26, 2024
Tuesday, 7 June 2016 00:02 - - {{hitsCtrl.values.hits}}
Over time it has been proved that sports has been a great teacher for business due to the similarity of the behavioural dynamics. Given my exposure of working in the South Asian multinational businesses, my pick of drawing parallels between sports and business is the Indian Premier League (IPL).
Let’s accept it. Though Lalit Modi had to go out of the game as a villain, he architectured one of the most powerful brands in South Asia – IPL – during the toughest economic conditions nine years back. Today the brand is worth $3 billion odd dollars with sub brands like KKR crossing $60 million dollars individually.
When David Warner was asked after lifting the trophy in 2016 what was in store for him and the team, little did he know that the winners’ cheque was worth $ 3 million, making IPL the most electrifying cricket tournament in the planet.
The beauty about brand IPL is that even after the exit of Lalit Modi, the brand continues to do better year on year, which explains the power of this brand in the South Asian consumers’ mind. Let me pick up the lessons for us in the world of business from the 2016 edition.
Virat Kohli took the star-studded team RCB from number seven to be the top team and first to enter the final. He earned the tag ‘the Thinking Captain’ from his peers though RCB lost the final to the more average Sunrisers team, which demonstrated stronger team work
When Lalit Modi was shown the door, many thought IPL would crash. But the reality is that professional management stepped in and even though they had very little media personality, the brand performance has continued to outdo last year’s performance.
The 2016 edition saw record crowds at every match and the top cricketers of the world were grounded in India, travelling across the country, which sure strengthened the brand IPL. The 2016 exposure sure helped rebuild confidence in the brand given that it has been rocked by controversy in the last three editions.
The lesson to business leaders is that even though ‘founders’ tend to play a strong influencing role in our part of the world, just like Steve Jobs, when they depart young, professionals will take the company forward provided a strong brand is built in the market place. An important point to note is that strong brands can withstand shocks and we must practice brand building rather than just focusing on short-term profits.
The best case in point in Sri Lanka is Lanka Sathosa. Battered in the media in the last couple of year for irregularities, yet the brand is garnering a 3.6 rating on the AC Nielsen store equity rating, which is the highest for a retail store brand. Lanka Sathosa will touch 35 billion rupees in the near future with 1:4 people experiencing the brand during the year.
Whilst the IPL brand value can get strong media, an area that needs focus is to check the gains and loss in the last five years. The logic being that the brand must build a set of core users whilst the repeat purchase rate has to be high. If this is not measured, IPL will have a situation where young eyeballs between the ages of 12-15 come into the brand and flirt and move off, which is not healthy. This is exactly what the visionary leader Lalit Modi did not want to happen.
If I am to single out a parallel in Sri Lanka, the best case in point is Ceylon Tea. Research reveals that every 15 years the consumer base for Ceylon Tea keeps changing. In 1960 the top five markets were UK, Australia, USA, Iraq and South Africa. In 1985 the top five were replaced with Egypt, Iraq, Syria, Saudi Arabia and UK falling to No. 5 position at 13.4 million kilograms of Ceylon Tea from the 69.1 million kilograms it consumed way back in 1960. By 2010 the top five countries were Russia, UAE, Iran, Syria and Turkey, which just explains the crunch issue that we are up against.
This could be due to the formation of economic blocks or due to trade agreements or by different tariff adjustments coming to play but, the fact remains that if we had a strong branding campaign this impact could have been mitigated. After a lapse of almost six years finally the $60 million Ceylon Tea campaign will be unleashed. But, sadly the market conditions have changed and now the world demand is moving away from single origin taste pallet to multi-origin brands which are positioned on the platform of the value for money.
I yet remember when the IPL season 2 ran into tough terrain due to the Indian Government wanting to give priority to the election from a security allocation perspective, the then CEO of IPL Lalit Modi very clearly made it known to the world that he would cooperate with the Government and not get into a ‘turf war’ even though billions of rupees were at stake.
At that time as I was working in Bombay and I remember the media reporting that this non-confrontational attitude of Lalit Modi stemmed from his upbringing influenced by his mentor, Sri Kumar Modi. Sri Kumar worked closely with the Government of India, which resulted in the company having the space to venture out to industries like silk mills, nylon and polyester threading, tyre and tube manufacturing which garnered him to set up a multi-billion rupee business.
The relevance to Sri Lanka is that organisations must be closely threaded to the Government policy. This might require the organisations of today to recruit talent who has these rare skill sets to engage the political economy. If corporate Sri Lanka does not understand the changing business paradigm on this front and works in isolation, even with the Yahapalanaya ethos, companies will lose out. In fact this is the first lesson taught at Harvard when one follows executive education. Learn to work with the political economy or get out and allow someone else who has this new skill in the world of business is the new thinking.
In the 2015 edition when Kohli and de Villiers put up a brilliant 215 partnership, the owners of RCB had earmarked the charismatic Virat Kohli to lead the team in the 2016 edition. But, midway the owners would have been questioning their decision as the team was 
way down the rankings. Virat Kohli had other ideas and led the team from the front to win seven games back to back and lead the table in the play offs and become the first team to enter the final.
We saw a similar incident when KKR replaced the goddess status Sourav Ganguly with Gautam Gambhir; many questioned the decision but Gambhir proved the critics wrong by bringing the team right up the rankings in the last three editions.
From a macro perspective, this same cutting-edge decision making is required in the drive to attract FDIs. Whilst this is highly discussed, the fact of the matter is that there are 28 approvals required on average, which takes the approval process requiring a minimum three-year gestation period is what research indicates. Now that IMF has very clearly stipulated reforms in the 1.5 billion cash loan programme, we must use this opportunity and instil structural reforms so that we create a more friendly investment environment. Sri Lanka requires new investments if we are to be the power nation in South Asia.
It may sound a whipped concept but the reality is that IPL 2016 just like any other consumer brand targeted youngsters who make up a big market in the socio-demographic template in South Asia. If one were to do a target customer profile, they were spending two hours at the gym working out, spending time with a group of friends enjoying a juice or watching that favourite TV program at home but now they were following the IPL schedule.
IPL originators identified that the only way to lure this target group is by orchestrating a carnival atmosphere with music, dancers and excitement with ruthless competitiveness that eventually garnered 40,000 eyeballs to the brand.
In Sri Lanka the parallel is the tourism industry. A recent study has revealed that Sri Lanka’s formal tourism sector is challenged with falling ROIs with also most 1,500 properties on offer for sale. Tracking competitor destination marketing programmes it is very clear that Sri Lanka has the potential to rev up to an ARR to $ 200 plus but this will require marketing muscle and focussed thinking together with new product development which is sadly lacking.
Sri Lanka Tourism is yet into B2B marketing via exhibition participation rather than launching the much-wanted global branding campaign to drive brand equity. If we take our neighbour, the Maldives, in the last 40 years they have had only four marketing programmers which means that the selected people were given a window of eight to nine years to perform and allow strategy to kick in the results where ARRs are at $400 and the industry billion dollar industry. We see this same thinking in Tourism Malaysia and Thailand Tourism but Sri Lanka Tourism was once again riddled in controversy last week in the media.
If one tracks back to why IPL has become a strong brand, one of the key reasons is that its founder Lalit Modi got the best talent to back him – be it Shah Rukh Khan, Dhoni, Virat Kohli, Chris Gayle, David Warne or for that matter the best young lifestyle TV presenters. Apparently the franchisees were told to focus their marketing messages on the 10- to 12-year-olds as they would be the target consumers of tomorrow and they also have the power to influence the family. The brand is targeting revenue of 1.6 billion dollars in the next 10 years, which is on track, and is an interesting way of charting the future of a brand.
The best parallel to me in Sri Lanka is the brand Hiru TV that is breaking all barriers and garnering viewership numbers from a focussed programme perspective. The news elicits the highest ratings in the country currently, even though it’s hard core in nature on the political front. Be that as it may, it has won the new age Sri Lankan viewer and hence attracts top dollars in brand advertising. May be a lesson to learn about using disruption to build new brands.
A key success factor at IPL 2016 was that big names did not count. All that mattered was performance. In fact there were many instances where the top names of cricket were spectators. This year’s winners Sunrisers were those with the right attitude with skill. Age was also not a barrier. Sunrisers out-beat the star-studded Royal Challengers which had power names like Chris Gayle, Virat Kohli and de Villers just to name a few.
I like to highlight a totally Sri Lankan brand, Nature’s Secret, which has done some cutting edge work in the market place for the last couple years that has tilted the company to be leading the table on market share. Especially the new product development road map is keeping the brand in step change to competitor activity. Maybe it’s a learning that other brands can also capture.
Whilst we can pick up many lessons from sports for business, the biggest challenge now for the private sector is consistency of macro policy given the challenges we see the Government in power has to face on a daily basis. Apart from the fiscal challenges, the flash floods to last night’s Salawa ammunition depot catching fire are unfortunate.
I read in a newspaper yesterday that Sri Lanka has a Monday to Friday policy; that was a cruel statement but maybe there is some truth to it. The point to note is that this situation does not augur well for Sri Lanka, which needs to attract FDI to cushion off the debt challenge.
