Yoram (Jerry) Wind, professor of marketing at Wharton school and co-author of The Power of Impossible Thinking and Ranjan Kapur, country head, WPP, discuss the power of mental models on CNBC's new series, Lessons in Excellence: The Power of Impossible Thinking, to be telecast on Saturday April 16, 2005, at 10:30 pm, and repeat telecast on Sunday April 17, 2005, at 8:30 pm, anchored by CNBC-TV18's Anuradha Sengupta.
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Anuradha Sengupta: Impossible thinking is the ultimate achievement as well as the ultimate compliment to the indomitable human spirit. On Lessons in Excellence, Jerry Wind, the author of The power of impossible thinking and Ranjan Kapoor, WPP's country manager talk about timing, knowing when to swap one mental model for another.
Jerry, when is it a good time to change? Do you plan for this or can you change a mental model only when you are confronted with a situation that compels you to think about it?
Yoram Wind: No you should of course. You basically should have a system in place that allows you to continuously challenge your assumptions, challenge your mental models, look for early signals of change in the environment especially vexing of the challenges, how do I detect vexing of the environment. It's like change in consumer behavior, new small competitors entering somewhere else, the beginning of a new technology and obviously I need systems and processes to try to identify these.
Anuradha Sengupta: Ranjan, what Unilever was doing in India these days, you think it is thinking ahead or do you think it is being reactive and it is being compelled to change it's mental model?
Ranjan Kapoor: I think Unilever has been reactive in the past. I mean what really happened was that they grew up in an era of shortages and brands are never built in era's of shortages and their business model was really a distribution business model. The width and depth of distribution and when competition came up and the markets opened up and lots and lots of people came in, I think they tried to expand their distribution, get into rural market, cut costs. That was their model.
It was only in 2001-2002, I think, that they realised the power of branding. That's when they went into the power brand thing and in India I think they have 30 brands. And that's really - it was a reaction, the way they were chipped away at all the time by local players. I think they didn't even wake up the first time when the signal came from Nirma if you remember.
Nirma actually put the distribution - it was a local detergent, Jerry - which produced the detergent in little pits and men and women used to sit there and stir at the detergent with caustic soda. And they put them in plastic bags, stapled them and sent it out. What he realised was that people are looking at cheap products rather than pay for packaging. Anyway, distributors used to come to them, they didn't distribute the product. Nobody (at Levers) recognised that. It was only when they got hurt - so it was reactive to that extent.
Anuradha Sengupta: So if you are saying where corporates are concerned, it is competition that would be one of the stimuli for wanting to change mental models, Ranjan?
Ranjan Kapoor: Sometimes I think it is the competition or your own business closed down or suddenly the whole market changes around you. It changes suddenly as far as you are concerned, actually it's being changing for a long while. Other people's mental models have been able to pick those signals up and as Jerry said, the early warning signals. I think it is important for you to realise that these early warning signals do come, the weak signals do come at you and you have to have your antenna up to pick them up.
Yoram Wind: Looking at the competition is definitely important but broaden your scope. There is no substitute for really understanding consumer behaviour. And its funny how consumers behave, even in small segments. That is where I mentioned the weak signals. Because if you look at the average or the big responses, you are missing the little trends and all new trends start with the small things… There are processes that you can use effectively to try to help you. For example the process of trying to challenge your assumptions. Something very simple, ask your manager to indicate what are the assumptions you make in your strategy and lets challenge each one of them.
Anuradha Sengupta: Ranjan, have you seen some of these approaches? Have you seen Indian companies use any of these?
Ranjan Kapoor: I think if you look at it, there are many who sort of have ridden the wave. You take consumer durable companies, you take electronics. I think if you take MIRC electronics' Onida for example. All the Indian players were dying. That is the only Indian player, which is still there in the top three. The Koreans had come in, pricing was a huge issue, listing of products was a huge issue in the market. Critical mass below which you could not drop. I mean there was no point in dropping volume and he was the first Indian player who cut margin than volume. So he went behind substantial volumes with very low margins because he had to do that and look where he has come out today. Over a million sets a year - I mean he has gone into that space now. I think he is one of the best examples in that area.
Anuradha Sengupta: Right. Jerry, a lot of examples that people throw up as case studies for understanding or successful changing or adapting of new mental models seem to be companies that are reacting to technological changes. So would that be the key driver that would prompt you to shift from one model to another?
Yoram Wind: Technology definitely is a major force but it is not the only one and there is always the danger of just following the technology without understanding how the consumers are going to use the technology and what is the benefit of the technology. Definitely you want to follow technology and understand it but there is a danger of instead of supposed to be on the leading edge, you would be on the bleeding edge, which is not necessarily good for the company on the long term.
Ranjan Kapoor: One example comes to mind but it is again an example of preset thinking and how the world has changed around you. I remember being at Houston at Compaq headquarters - they were our clients once upon our time - maybe 15 or 20 years. Ago. I asked them "What is the smallest keyboard that you'd like to make?" Smallest keyboard would be no smaller than this, because you have to type and your fingers, you know, they are always stodgy and nothing can be smaller than this. So he gave me a figure - 8" x 5". And look where the world has gone. The QWERTY keyboard is on your Blackberry, it's on the T600 and Nokia is now talking about the two-thumb, hi-fi link system.
Why? Because the teenagers have invented it. You'll find that the teenagers can type much faster with two thumbs today… video games. Look at technology on the one hand and habits on the other - here was a company that said, "no, it is impossible". But there was another company that said, "no, it is possible". Impossible thinking can lead to a change in habits and sometimes I think those are where you start observing those things. I don't think Blackberry would actually work if you did not have two thumbs that work in concert.
Anuradha Sengupta: Is it also because of this sort of overlap - almost this head on collision happening between our personal spaces and professional spaces?
Yoram Wind: Yes the idea is to avoid this type of a collision and try to see how can we get a better balance between the two and how we can learn from one another. We have an artificial separation in our mind. There is a great example. Top executive. Woman who we were recruiting as chief marketing officer, a regular rigorous procedure - head hunters - due diligence in terms of finding about the person and keeping in mind that this is basically to find a CMO when the life expectancy of the CMO is less than two years.
She was complaining to us after we discussed her personal life that how difficult it was for her to find a partner for life. "How do you go about doing it?" And she says, "Well I go to bars, I go to museums and other places". Totally random, kind of, to look for a person.
And this is for a partner for life compared to a CMO who is replaceable in a few years and she never made the connection that the two are basically the same types of situations and require similar processes and not really two divergent processes. But she had two different mental models for the two situations and she doesn't understand how critical it is to understand the mental models not only at a corporate level but also at the individual levels.
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