Case Analysis: Get Into The Cockpit!
No one is in charge and everybody is in charge. Nobody knows what is right, so everybody knows what is right, Debabrata Mukherjee
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This is the classic case of where everyone is in charge as the company has not articulated a clear, thought-through point of view. In this situation, everyone, global or local, has an opinion and since there isn’t a clear sense of direction or an argument based on a logical construct with all facts on the table, it won’t be unfair to say that all of them are right (or wrong!) at the same time.
The real issue in this case study on Rani mixie is that all the key players are viewing the situation purely from their individual silos. If we examine the facts of the case in detail, a Dickensian scene seems to be playing out, it seems to be “the best of times and the worst of times”.
When Karan Walia (Elwoods India product management) and Dave Wilkins (global appliances head) met in a dimly-lit eatery at an European airport and decided to at least consider the potential purchase of Rani, the one person who they thought will click his heels in celebratory joy was the man from the South — the currently miniscule but soon to be mercurial South RM.
Alas, no such luck. The South RM is worried as to how he will manage a dual portfolio of Rani and Elsa and feels that buying Rani without folding it into a sub-brand of Elsa is like driving a nail into Elsa’s coffin as far as South is concerned. And the story continues with each individual having his or her point of view (including an European appliance head, Erina Beridze, who is not likely to have adequate knowledge of the Indian market but feels the need to provide a strategic opinion!)
The real problem: Elsa does not seem to be ideally suited to the Indian style of cooking which requires mixing and grinding the ingredients — the heart and soul of the Indian meal. The problem is more exacerbated in the South where there is a local player (Rani) who is an entrenched entity.
So, there is a technology issue.
In the other parts of the country Elsa has made some inroads but there is a long way to go. It is, therefore, an issue of presence in the South, and a depth issue in the other parts of the country.
Hence, there is now also a resultant distribution issue.
In addition, everyone who is buying Elsa seems to be buying it for the non-regular chores — the salsas, etc. This even in the core markets will be a problem as intensity of usage in this category builds relevance and traction. A fringe product will never be able to build a loyal franchise.
And therefore, now there is also a product/positioning issue.
It is important to create the relevant portfolio for a country and not try and fit an existing, unchanged portfolio into the country. In the difference lies the success factor.
While creating the relevant portfolio it is not necessary to abdicate the current portfolio but there should be willingness to upgrade or tweak the functionality of the portfolio of brands or if need be, acquire — echoing Amarinder’s point of view.
For the moment, let us step back and imagine what would have happened if Dave had flatly refused to consider Karan’s suggestion of even looking at Rani as a potential acquisition target. The deliberations would have centred on how Elwoods would make Elsa work for India. Now that an additional variable has been thrown into the mix, no one seems to be able to figure out how a dual portfolio strategy could work in India.
Let us examine two strategic routes for Elwoods (to buy Rani or not buy Rani) with the three lenses of technology, distribution and positioning.
1. Elwoods does not buy Rani.
a) Technology: There does not seem to be any specific IP/technology for Rani... big motor and tough blades... that is it. In today’s world of outsourced manufacturing, this should not be too difficult to replicate. MGBs are commoditised and can be manufactured anywhere and branded and hence easy to build if clear specs exist. This is exactly what Dave was pointing out to Karan. The challenge will be to stay one step ahead as the products become ‘tech infused’. The problem will be the same with Elsa or Rani in this category. Rani has not really tried to go national with the MGB as it was happy being a regional satrap. In this area, the act of not buying Rani might work to the advantage of Elwoods. It could now upgrade Elsa, thus infuse a ‘tech image’. The post-acquisition attempts to upgrade Rani will be pointless.
There is no escaping the fact that Elwoods has a distribution issue in the South. In consumer durables, the product must deliver to the consumer needs and only then you drive distribution. Rani will solve ‘reach’ for Elsa in the South and East. However, since Rani does not have traction in other parts of the country, there is no competitive advantage in distribution. The same amount of money will have to be spent in communicating the product benefits of Rani as it will take to promote an upgraded Elsa.
If they want to build reach for Elsa, then investment is critical, both in product and execution on the ground. These are high ticket value items and just trade deals will not solve distribution. In-store point of sale as also in-store salesmen are critical for influencing; not sure if Elsa is doing this.
Elwoods needs to up their game on fuelling distribution (that seems to be their Achilles’ heel) and not having Rani might be a blessing in disguise.
c) Brand/Product positioning:
Currently Elsa seems to be delivering very well on the non-regular chores. This must change. Whether Elwoods has a Rani in their folder or not, they have no option but to move the brand towards “aspirational but everyday” versus
“Aspirational and occasional”, which is where it lies at present. Apart from ensuring that the functional claims of ensuring a superior product delivery, geared for Indian needs comes alive in every kitchen, subtle “Indian” cues can be incorporated. (wine colour/floral patterns , etc., in lower end and steel finishes in higher end) I must reinforce that this should be very subtle and in no way should dilute the aspirational quotient of the brand.
Now let’s put the rhino in the room.
2. Elwoods buys Rani.
This decision has to be truly long-term and strategic. It is very difficult to reverse decisions like these. This has to be in line with the vision and mission of the company in India and has a direct bearing on the pace of growth.
It also raises questions around organisational culture and capability as is evident in the narrative. Everyone seems to have a different point of view as there is no organisational point of view.
In situations like these, the key decision makers need to look at the data dispassionately, weigh in with their experience from current and related industry, do a thorough financial due diligence and then take a call. And once the decision is made, the entire organisation has to rally behind it and give the decision a chance to succeed.
Yes, “chance to succeed” as against “make the decision a success”. This is primarily because the success of a business decision does not only depend on how appropriate it is but could also be influenced by other factors such as competitive moves, economic environment, shift in consumer needs, etc.
And before the decision is taken, one has to very carefully consider and articulate what the ideal “dual-portfolio” strategy should look like and not leave it open for regional, individual interpretation.
However, you cannot manage these decisions by complete organisational consensus. There are a few parts of the world (I have worked in one of those countries for a few years) where the head of the business takes a decision and the entire organisation falls in line to drive it. All decisions may not prove to be right in the long run but calls are taken and next steps fall into place. Hindsight is always 20:20 and hence sometimes one does look back at those moves with a “We wish we had done it a little differently” feel; but one will never look back with regret that we did not decide and hence someone else stole a march on us.
This is exactly my worry in the current situation. All too suddenly everybody has a point of view. Nobody knows what is right, so everybody knows what is right.
This is the unfortunate case of an aircraft on autopilot without a clear destination. The chances of a crash are imminent. A decision needs to be taken.
The Elwoods management needs to get into the cockpit. Now!
The writer is vice president, marketing & commercial, Coca-Cola India and South West Asia