Capt. Raghu Raman | The 32-Minute MBA From Indian Streets | MUST WATCH Management Lessons!
By Micah Moen
Click the subscribe button and press the bell again to never miss a video from josh talk I’m going to talk to you about a part of India that usually we don’t sort of recognize as a formal industry or a formal business and usually it’s referred to in various different reports and documents and Management studies and business schools as the informal industry the marginalized industry But you will see some glimpses of it, I’ll play a short movie for you as an introduction of this unorganized India an Inc I call it India Inc this term is not coined by me. It’s a term. That’s been coined Many years ago, but it gives you a glimpse of That part of India that we kind of are Indian business that we kind of take for granted And we oftentimes don’t even look at them, so let’s begin by just watching a very brief montage of India on ink So in this 30-second clipping you saw a Whole series of activities that happens around us I mean newspapers arrive at home and coconut water comes flower delivery but upon the streets and We forget that this entire Infrastructure and framework which pretty much runs our life on a daily basis is also a former business And we label them as marginalized Informal unorganized sectors over the next 10-15 minutes. I actually want to show you how much of injustice we do By labeling this industry as marginalized Informal unorganized because in every parameter of business metric they very often exceed What we consider to be the tier 1 companies the ones that are listed in Sensex nifty the big giants the unicorns and the branded organizations I Don’t know how many of you are aware that close to 50% of India’s GDP is Contributed by the unorganized industry not by the organized industry by the unorganized industry and those of you think that FDI You know there’s a big celebration that happens whenever i’ve di inflows come in FDI inflows have never exceeded more than 7 percent of India’s GDP ever 50 percent comes from the unorganized industry The unorganized industry employs close to 90 percent of our workforce India has a workforce of about almost 500 million and 90% of that is Employed by the informal industry by the unorganized industry and as I’ll show to you With one example after the other they also perform pretty much in every metric better than Tier one businesses or businesses that we normally consider to be the benchmarks or in many cases the Aspirational companies that we want to join I’m sure many of you must have seen these stores these bookstores these food counters here You see an example of a bookstore on a payment You can actually measure that the per square footage revenue and return of investment That happens in a payment exceeds by several multiples the return of investment that happens in these big malls that you see the shiny malls the the chrome and glass and The branded stores the payment actually delivers a much better rate of return for every rupee that is invested in a business over there These books that you see stacked In the payment you would have also noticed that many vendors carry these books in their hand now those of you who are Marketing students or who are studying? FMCG businesses You’d be taught that there is a whole science in placement of products in the shelf space actually the self shell place is very actively Contested and fought for and there’s a whole design principles that go into it My sense is that the shelf space that you see this old man carrying He has to carry the set of books and certify it by his sweat equity he has to make sure that every book that he adds on which is another 200 grams and Every three to four kilos that he carries on a daily basis and by the way when you carry 3 or 4 kilos for more than a couple of hours It doesn’t feel like 3 or 4 kilos it feels much much heavier matter of fact I tell a lot of my other friends that if you want to know that you have arrived Then you need to find your book in this stack if it is there in this stack then this old man has certified That your book is going to become a best-seller Right now you see a Salesman and he is a sells boy he’s a Salesman sales boy Who is selling flowers in in and you would have seen them in traffic lights and so many other places? This sales boy who has a 30% margin The flower that he sells to you for 10 rupees it costs him 7 rupees to acquire that and he’s got a 30% margin More importantly he can give you a 50% discount on the spot if he likes your face If you try to get even a 5% discount in our organised business if you are trying to implement a 5% discount that decision has to travel all the way up to the CX so in some cases the board level and Then come down from there, and by the time that decision comes the opportunity has already been lost This is an example I want to illustrate to show you how the distribution of wealth in the informal sector is far more equitable than the formal sector, so suppose you eat a plate of idly from a Vendor in a footpath, and he charges you twelve rupees for that plate He keeps only three rupees of that twelve rupees the remaining nine rupees goes into the entire supply chain the people who Watch the utensil the people who grind the dough the people who bring it in an auto rickshaw They are the ones who get it if you eat the same plate of idli in a five-star hotel Which costs you about four hundred rupees? The bulk of that money is kept by the establishment and a very miniscule percentage of that actually reaches into the ecosystem The third example I want to show you is the fluidity with which these businesses operate What you’re seeing over here is a street vendor? Any idea what he is selling he’s selling something for a festival What festival would that be? holy This street vendor and millions of vendors like him They have to change their entire inventory their supply chain their target segmentation their pitch the method by which they sell Every month month and a half, so they actually change their entire supply chain their entire business model More than twelve times in a year now compare that with the business transformation on an organizational realignment that big organizations try to do and I’m given to understand from management gurus That it takes anywhere between five to seven years to implement organizational transformation Which this market does twelve times in a year? That’s the kind of community that they have – the kind of agility with which they can operate If you look at this marketplace my sense is I can see more enterpreneurship happening in this crowded marketplace Then you will find in the Silicon Valley or in incubation centers and let me explain this to you You might have noticed that when you go to these marketplaces Or or or these red lights suddenly a new product will emerge sometimes. It will be a toy sometimes It will be a head massager sometimes. It’ll be a kind of a fountain to clean car Sometimes it’s the national flag on 15th of august or 26th of January Or is this Christmas hatch that you saw a few days ago now try and visualize How much a planning has to go into this entire process of deciding the? Marketing slots throughout the year the supply chain of the equipment that has to come in the the toys that have to be purchased from China brought in over here the distribution that has to happen the simultaneous launch of that product on the same day at every red light at every crossing Unsold inventory has to be taken back the cash flow has to be managed it has to be done or basis of trust because there Are no SA P. No, no business software There is no Microsoft Outlook to make all of this happen and all of this happens seamlessly it happens without any Asset sham without any fee key or NASSCOM or any industrial body Which is supporting it it happens without any T. Rai which regulates the? the business it happens completely Seamlessly with simply the speed of trust and with the innovation that comes literally at a daily basis the Unorganized sector also has some other great advantages firstly. It’s an equal opportunity employer. Whether you’re a man woman child transgender Educated illiterate old young matter of fact many of these people who might mention to you just now Usually find their jobs only in the unorganized sector I mean if you are take a poll of how many companies employed transfer sites or employ a Handicapped people or employ aged people You’ll realize that it is only the unorganized sector Which takes them in adopts them and gives them ability to earn a living when the organized sector Has either abandoned them? Or don’t even look at them you look at how they have to change their synergies literally on a daily basis the Vendor that you see was selling those snacks in the morning he sets up that store in front of Shivaji Park or places where people Are going out and jogging and he sells a different kind of? Snack in the morning in the evening he sets up the shop in front of a liquor store And he sells a different kind of snack so in the morning and the evening he trips his business model. He’ll shift his customers He leverages different synergies in the same city at different times of the day the last person you see on that slide is a tailor in fashion Street, actually he’s a Garments owner shop owner in fashion Street and some of you must have been to Fashion Street, right? Do you realize that there are? identical more than 150-200 Identical stores, there is no difference Yes, right most of the customers who come to fashion Street or many many such streets all over India They’re going to come only once so there is no customer repeatability There is nothing in that 30 seconds or one minute of interaction This tailor has to visualize the size he has to pick out that garment And it has to happen in the first or the second fit Otherwise that customer will move to the next store now that is the kind of agility that’s the kind of? innovation that’s the kind of customer understanding that these people have to do literally on a daily basis I also believe That there are more management lessons in the street out there then in many of the bee schools put together and let me give you This example so some years ago. I was working in a company called first choice, and I had gone to Delhi in Delhi there’s this Pragati Maiden and some of you might have known it and my colleague was also a CEO of another company, and he was using this opportunity in Delhi to brief his local team So his team had gathered around him And he was sort of reviewing their performance or briefing them or whatever and since it was none of my business I was standing on the side, but when I was standing on the side I noticed a street urchin who saw this gang of people and kind of you know walked up to them And he started begging and asking for money So my friend was busy. You know briefing his people and he was getting irritated by him, so he tried to shoo away This kid in it told the kid to go away but the kid ninh go the kid kept standing there and After some time my friend got a little irritated and out a sheer irritation He started looking for change in his pocket and that of course was the cue For the rest of the subordinates to immediately pull out change from their pocket and hand it over to their CEO And so he picked out a coin from the palm happened to be a Five rupee coin Which those days was a very you know a substantial amount of money? And he gave it to the kid the kid was also surprised that he got so much of money But he were very happy And he started running as he was going away a couple of other kids saw that he had got this money and they tried to snatch it out of his hand but he fought them off and he Managed to reach his headquarter so to speak and many sat over there There was another kid with him who obviously was a younger brother And he nudged that kid and he pointed towards this group of people and told him to go and pick. You know try his luck with this set of customers Now I want to point out 4/5 management lessons that these kids know intuitively The first lesson they know is to talk to the decision Even if it is not the decision-maker who gave the money the money came from somewhere else But they knew how to talk to the decision-maker the second lesson They know is persistent space so even if my friend told him to go away first. You didn’t go away He kept standing there because we know that persistence will take third when he got the deal. He knew how to protect it He did not go around announcing it to the whole world so that the competitors would come in and undercut your price and take it Away, he held that very closely to himself and when he reached his headquarter What better example of customer relationship management do you want to see when he tells his younger brother? These are paying customers you should go and get more money out of that It takes roughly about 3 to 5 years to teach these basic principles to management trainees when they join corporates Because typically this young MBA they will go to some fancy title that they see you know vice-president photocopiers or something like that He’ll go to that person that person will say oh, it’s a very good product But we don’t have the budget for it you go back and come back next year And these guys will come back happily to the organizations. They have called us next year They don’t know that when it says no budget. There is always a budget when it says no vacancy There is always a vacancy And if you know how to talk to the decision maker you can get that budget out from somebody may not be the decision-maker These kids know that Because they starve in the night if their pitch is not secure They starve if the the value proposition that they have given is not accepted by the customer It’s not a it’s not a loss of some bonus or some Increment it is going to bed hungry, which teaches them those management lessons One of the most important lessons I think which we need to learn and usually it takes us You know 10 15 20 years to learn this lesson is the lesson of enough this this person you see on the screen his name is Sandeep and Those of you go to were Lisi face. Do you go to one Lisi face any of you yeah in the morning? Morning, okay because evening is a different set of activities. I’m talking about the morning So in the morning you if you go to Berlin see face you see a lot of people running jogging and doing other kind of stuff over there and he sits right next to that point where the ceiling begins and you must actually go and meet this person and Verify what I’m telling you so when you will go to him he sells wheatgrass and wheatgrass is you know organic you know sort of a Supplement which a lot of people consume, and he sells that and he gives that to you for 20 rupees a cup He also has if you notice another steel container kept next to his wheatgrass Apparatus, and you if you ask him. What’s in that? He will tell you it’s neem juice and If you ask him for a cup of neem juice He’ll give it to you you ask him for another cup we’ll give you another cup and then you ask him how much does this? Cost he will tell you this is free Now here’s his rationale. He says that I have to buy wheatgrass and I have to pay money for it, and that is why I Buy the wheatgrass sell it and make money out of it neem is free I just pluck it out of trees and I make the juice out of it And I give it away for free so I asked him. Why don’t you charge for the neem also not 20? You can charge five he says no. I make enough money with the wheatgrass This is something that I give away for free This person has learned the lesson which a lot of us take a very long time to learn What is enough and? How do you define what is enough you define when you have had enough? By having an alternate source of revenue and choosing not to exercise That is when you have arrived in life And you can say I have had enough and to my mind this CEO of a medical Establishment actually does more CSR than some of the biggest hospitals that I’ve ever seen because they do 2% CSR which is mandated by the government he does 50% CSR because he is realized that he’s had enough a lesson that very often in corporate India people learn after 25-30 years after getting cholesterol also all those kind of you know other perks of corporate life That’s when they start realizing that they’ve had Now you might be wondering. I’m a former soldier and Why am I talking about India on ink and business and what’s the correlation between? Being a soldier and talking about this and let me tell you the reason why? These 1 million young people who are going to come into the job market every month is India’s one of the biggest strategic risks These raw energy which is coming into the markets and not finding jobs. You’re all aware that while India Inc may be growing in in in in Sensex and in Nasdaq and several other metrics they’re not creating jobs the Jobs are actually reducing what’s happening because of automation it’s happening because we need to be more competitive artificial intelligence so many other technological changes and actually removing jobs Now if this raw energy which is coming in to the streets It’s not channelized, and we don’t fight the right way to leverage it the right way to find them employment give them what they need Meet their aspiration then this Youth dividend that we keep talking about and you belong to it can actually start turning into a youth nightmare If we have to satisfy the 1 million Young job as aspirants who are coming into our streets every month GDP we’ll have to grow literally at double digits, and we know that that’s not gonna happen because of India ink So what do we need I? Believe we don’t need two or three five thousand crore companies We don’t need two or three unicorns what we need is five thousand two or three crore companies That’s what and how can we do that how can we as citizens do that after all many of us are young? most of you are young, and you don’t have that kind of money, it’s not like you can invest and fund But I propose to you that we can actually start a fund and that Fund is called a VC fund and what does that mean we see when you see and you don’t have to? Give that fund in the form of money. You can give it in the form of sweat equity You can give it in the form of your passion in the form of your ideas in the form of your intellect and let me Give you some examples, which are actually working as we speak right now you see this Thatched Hut kind of a shop, and this is a shop on the way from Bombay to taro bar It’s on the road thought of as a tiger reserve some of you might have heard of it, and this old woman sells What is arguably? One of the tastiest khakhras you will ever eat in your life Now she charges just fifteen rupees for this plate Until the group of youngsters like you had gone to third Oba Happened to mention to her that you know what you can charge close to thirty rupees for it because people from Bombay were travelling are Expecting to pay fifty two hundred rupees, and they’ll be happy to pay it so you’re not overcharging them You are actually under charging them And you can make it to 30 rupees and secondly you should have a board outside your shop which tells people What is available here, otherwise? How do they know and she looks up and she says I don’t know what is the board? What is the board so then these kids actually drew a board on a piece of paper and? Gave that to her and the next time when they went there they found that the shack not only had this board and a mobile Number, but it also had a long line of cars outside and her business had not only quadrupled But her bottom line had also increased by eight times because she’s also Doubled the price one idea one simple element that was implemented And this old woman had an orbit shift in her life Why can’t we do this with all these people who are trying to have a fighting chance against these organized laundries organized? Industries organized bakeries organized food joints this local is-3 Val of yours what why can’t we just go to them? Train them a little bit give them a little bit of capex so that they have a twenty thousand rupee better iron Why can’t we encourage them that we will give our clothes only to these marginalized people and give them a fighting chance I? Live in a place called Prabha Devi and and right in front of my house I see a very organised bakery there many of them, and you probably recognize which one This is and next to that is this old man who has been baking bread for 40 years The tag sign of the the modern bakery says we bake our own bread Suleiman Kaka has been doing it for 45 years. There is no big deal with that Now what does it take for us to give him patronage to go to him and ask him to? Service us instead of going and buying that bread from that industrialized sliced bread cutting machine Infrastructure from where it comes there are hundreds of examples like that where we can actually take out our little bit of involvement our passion and make these miracles happen because I genuinely believe there are more miracles per square feet in India on ink and I want to give you a very very Very poignant example of that and you see in this picture This boy his name is Prathimesh The one whose face is circled now that image and Another boy called Jitu there were these two boys who used to be working in Mahindra and Mahindra And they used to work in Mahindra and Mahindra as office boys they were about 12th class pass and one of them had done his graduation from a night school They used to run about 5000 rupees a month Which is what office boys used to get in the year 2005? Which is where the story took place a b-school from Bombay bellacor you might have heard of it one of the one of the outstanding B schools of India They decided to do a very bored experiment they decided that we are going to pick two office boys Who are barely twelfth class pass and you know? they’re the circumstances the financial circumstances the the the environmental circumstances that they come from the exporter and all of that and They said we are going to put them in our college with 14 mentors. They selected 14 mentors from amongst the students and The tasks given to them mission given to them was you will take these two kids with you Through this two years MBA program, no punches will be poor. No subsidy will be given There’ll be no letdown on the marks or the marking system because they don’t have the privileged background It is your job to train them everything that they don’t know teach them anything that they need to know to Pass the MBA there to teach them ms word excel. They’re there to teach them michael Porter’s five forces in Wada Paau Language and The amazing thing is that not only these two kids graduate from that college They also in the merit list of the sixteen came eleventh and thirteenth which means that they beat their own mentor This is a picture which was taken in 2007 where you see them Standing with mr.. Anand Mahindra Now there are three very important aspects that I want to tell you about this story The first aspect is when they were earning five thousand rupees a month and they were earning 60,000 rupees in annum they were not a customer for a bank they were not a customer for a automotive company they were not a customer for a housing loan They couldn’t be but the moment they got their first job incidentally both of them were placed in ICICI Bank Unfortunately Jitu is no longer with us. He died because of blood cancer but Prathimesh much went on to become Manager and their first starting salary was 6 lakhs so from 60,000 They went to 6 lakhs now. They became a customer for a bank. They became a customer for automotive company They became a customer for Mahindra and Mahindra the second important element of this story is If you go to the US UK or any one of the develop countries And you go to a McDonald’s and you see the person behind the counter she could be doing a PhD In India if a person is behind the counter chances are they’ll remain behind the counter for the rest of their lives the counter may change they may go from a tapri to a Bigger one to a bigger one finally end up in a five-star hotel, but it will be on the other side of the counter These kids who used to serve tea to mr.. Anand Mahindra had tea with mr. Anand Mahindra the jump from this side of the tray to that side of the tray is the biggest jump in India in Any development? And The last point which I think is the most fascinating point is that when these two kids graduated? They not only paid back that 5,000 rupees stipend which was being given to them by the college They had to give them a stipend because they were earning members of their family So they couldn’t do an MBA if they couldn’t take back 5,000 rupees a month Not only did they give that money back? But they actually gave money to fund that to more kids that ability of India running to appreciate someone else’s grief and pull that person along with them is very very different from Corporate India where you edged out other people so that you can go to the top? it’s a completely different philosophy and that is the philosophy that is needed in a nation where the Distribution of wealth is such you can read the latest reports close to fifty eight percent of our wealth is controlled by less than 1% of our population This kind of iniquity in a developing nation in a young aspiring nation is not sustainable We can’t continue to build these ghettos with high walls around it and fences over it and electrical CCTV cameras and and and smart cities. They are not going to solve the problem We have to stop thinking of building smart cities with smarts instead of that We have to start building cities with hearts and to do that we have to focus on India on ink This is Prathimesh today He works for a Tier one bank Here in Thani and he manages a fund of close to about one hundred and seventy crores And what was the cost of this project the cost was financially zero? No money was required be done because they’ve paid the money back the 14 mentors They also learnt a lot about they learned what really happens on the street. How business is conducted What is the? How do people survive on less than two thousand three thousand rupees a month? how is that possible they learned that they learnt the market opportunities at the bottom of the pyramid, so it was a win-win-win-win-win for the entire stakeholders all the stakeholders who participated in this experiment, so What’s the point? I’m trying to make with all of this? I think a lot of young people today and especially You lot and by the way all of you sitting away Anybody is sitting here in this auditorium belongs to point zero zero zero zero one percent of humanity you won the lottery of life You’re born and the Wright family had the right education got the right breaks And you are if you can understand this talk watching it on video Then you belong to that minority who can understand English who’s got a mobile phone with you you you you understand what I’m saying We have a choice our choice Is that we can look at these sexy companies that are listed out there and be aspirational about joining them? And you will join them And you’ll you maybe make a difference maybe make a difference in a large You know organization like that any effort that you put in It’s so I have some friends or some you know interns who come up And tell me you see in this Microsoft Windows version 10 you see this icon I made this icon that says contribute on the other hand you can choose to actually work with India on Inc and There you will have to work directly with the CEO CTO CFO chief marketing officer is the same person by the way You will have to persuade that person to adopt your idea if that person adopts your idea you will see the success or failure of that in literally two to three weeks and the cost of your idea will be paid for by that person either with success or failure if he succeeds He doesn’t orbit shift if he fails he goes to bed hungry that night that is the Delta in which you are experimenting your intellect your education the the The potential that you think you have to be great managers great strategies great leaders. It must be first tried and Implemented in India an Inc because any idea that works in Indiana creates an orbit shift It takes a person who is in a certain economic strata lifts that person from that strata takes that person to a completely different strata Not only changes his life, but changes the life of his coming generations his children will go to a different school They will have different hygiene. They will stay in a different place, and that’s the difference that you can make The way things are right now. I don’t think it’s a choice or a hobby. This is an existing issue in it unless we start focusing on India an ink to start creating the job opportunities to start creating the Of the suction which will pull in some of this 1 million Young people who are coming in then we are looking at a serious exists tential crisis as far It comes to national security as far as it comes to national economy And definitely as far as it comes to having a equitable country. Thank you very much Thank you Thank you. Thank you Thanks Thank you very much for watching this talk I’ll be very happy if you leave your comments down below and please do subscribe to the YouTube Josh channel Thank you very much once again