Differentiate in the market place

Differentiation is the essence of strategy, the prime source of competitive advantage. You earn money not just by performing a valuable task but by being different from your competitors in a manner that lets you serve your core customers better and more profitably

The sharper your differentiation, the greater your advantage. Consider Tetra Pak, a company that in 2010 sold more than 150 billion packages in 170 markets around the world. Tetra Pak’s carton packages extend the shelf life of products and eliminate the need for refrigeration. The shapes they take—squares and pyramids, for example—stack more efficiently in trucks and on shelves than most cans or bottles. The packaging machines that use the company’s unique laminated material lend themselves to high-volume dairy operations. These three features set Tetra Pak well apart from its competitors and allow it to produce a package that more than compensates for its cost.

All successful companies have this kind of well-defined and easily understood differentiation at the center of their strategy. Nike’s differentiation resides in the power of its brand, the company’s relationships with top athletes, and its signature performance-focused product design. Singapore Air’s differentiation comes from its unique ways of providing premium service at a reasonable cost on long-haul business flights. Apple’s differentiation consists of deep capabilities in writing easy-to-use software, the integrated iTunes system, and a simplicity of design and product lines.

You can find high performers like these in most industries. The cold truth about hot markets is this: Over the long run, a company’s strategic differentiation and execution matter far more to its performance.

But differentiation tends to wear with age, and not just because competitors try hard to undermine or replicate it. Often the real problem is internal: The growth generated by successful differentiation begets complexity, and a complex company tends to forget what it’s good at. Products proliferate. Acquisitions take it far from its core. Frontline employees, more and more distant from the CEO’s office, lose their sense of the company’s strategic priorities. A lack of consistency kills economies of scale and retards the company’s ability to learn.

The entire last week was spent in sales reviews, forecast meetings and building a new business model for a new market, where the thought process was to differentiate in the market place.

The outcome of that thought process is this article...

The TCS Story ... and Beyond : Review

When a man who has headed an organisation – and it happens to be India’s largest IT services provider – for 13 years writes a book, you feel compelled to read it to gain a better understanding of leadership and management strategies. The TCS Story ... and Beyond by S Ramadorai does not disappoint in this regard. Ramadorai, who was with Tata Consultancy Services (TCS) for 40 years, has not only given an account of his personal journey and the strategy that TCS adopted but also provided a deep insight into the Indian IT industry, and the beginnings of the offshoring model that has made India’s software exports an over $60-billion industry, and TCS an over $8-billion company.

The TCS story is one of modern India’s great success stories. In this fascinating book, S. Ramadorai, one of the country’s most respected business leaders, recounts the steps to that extraordinary success. The inside story of one of India’s premier corporate institutions, this is also in part a history of the rapidly developing IT software and services industry in India, told from the perspective of an industry leader.

Ramadorai highlights how the Y2K problem created an enormous opportunity for the entire Indian IT industry to expand its client base. He explains how the company went about its vision of becoming a multi-billion dollar firm. In 2003, for instance, around 90 per cent of TCS’ revenues came from IT services. So the TCS core team drew a single bubble and added the text “IT Solutions and Services” on a PowerPoint slide. Five more bubbles followed on the PowerPoint slide: Global Consulting, Engineering and Industrial Services, Asset-based Offerings, Infrastructure Services and IT-enabled Services (or BPO). There we were with six neat bubbles on a PowerPoint slide. “We declared we would grow each of these into a $1 billion plus business,” Ramadorai writes.

Ramadorai also gives an interesting insight into the manpower angle, which is now the strength of the Indian IT industry. Today, TCS has over 200,000 employees (including subsidiaries). And in recent years, excluding the 2008-10 downturn, TCS has recruited about 30,000 people each year. “I am often asked how the induction and training of such a large number of new recruits happens. This is a skill that TCS has mastered, developing a very well-oiled system that transforms young adults into confident and competent professionals ready for a global career,” he writes.

Towards the end of the book Ramadorai has put in his thoughts on education in India and how vocational training has to be brought in and strengthened as that would open up more avenues of employment for the students passing out of the numerous schools and colleges. It would give a different means to livelihood to the millions who today strive to find a job and then try to find satisfaction with whatever job comes their way rather than being able to select a job as per their abilities and likes.

Behind the phenomenon called TCS lies a quest for excellence and an attention to detail—captured in the company’s motto ‘Experience Certainty’—that can benefit any organization. There is a great deal to be learnt from the TCS example, and Ramadorai outlines a vision for the future where the quality initiatives he undertook can be applied to a larger national framework. This is a book that every Indian who is committed to building a better and more productive future must read.