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: If you see Starbucks, when they started this Starbucks concept, you see Seattle was going through this downturn, coffee was a commodity, nothing seemed to suggest that the time was right to do such a thing, isn't it? How would you de-construct that in the light of mental models?

Yoram Wind: That's the other point. I said that we need both so this is the second part which is inside intuitions, visions. Howard Schutlz went on a trip to Italy, was sitting in a café and suddenly it dawned on him, 'Why not create the American equivalent of the café' and that's what led to the creation of the Starbuck experience and the whole phenomenon of success of Starbucks. So you need both. You need obviously the visionary, the person with the insight, the instinct and the intuition who says, "Wow this can be a great idea" and push it. At the same time you also want to have companies develop some processes and approaches that allows them to identify when their current model is no longer appropriate.

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.

Anuradha Sengupta: Jerry, what are the 10 tips, 5 tips to start figuring out how to pick up these signals? Surely there must be a scientific way of doing this. How do you ensure that when you change your models, its just not cut and sting, it's an informed decision?

Yoram Wind: Well, there are many things to do. First of all you mentioned competition and it is very important for us to realise that we have to look at competition from outside the industry. If we go back to the Starbucks example then Maxwell House, that was a dominant brain at that time, probably looked at other coffee manufacturers at that time. They never expected competition from a start-up like Starbucks… look at the phenomenal success of Starbucks.

So, 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. In the US we look at California. Californian consumers are different and very often they are indicative but you need to monitor this and not to discard this type of information. Then 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: So challenging assumptions is one...

Yoram Wind: Challenging assumptions is definitely one. What we talked about before is having processes to monitor the changes in the environment. Whether it is consumer or competition or technology, so processes for monitoring will definitely be one. Another kind of a very powerful approach is what we call in the book " bring the radicals in".

A great example would be, if you think of IBM few years back, the major threat for IBM was open source and the initial reaction at that time when you mentioned open source to IBM and immediately they'd bring all the lawyers and try to sue them. The initial reaction was "How do we go against this animal"? Enormous enemy you have out there. What they did, the research group at IBM brought the major proponent of open source to talk with the research group.

The result of this was that they were able to change their mental models completely and they designed or brought open source and built over it a proprietary product and services they were selling. So bringing the radical in is a very, very powerful approach that one can use. We can go along with a variety of method idealised design for example. Idealised design is a process started by Ross Acoff. A process that primarily says that opposed to the tradition of planning that you have, is here's where we are now and where we want to go forth, it starts with a radical assumption, which says, "lets assume that our business was destroyed last night." Now given everything we know today… no futuristic technology, but what we know "How do we redesign this business without all the constraints and the typical baggage that most business have?"

Anuradha Sengupta: Ranjan, have you seen some of these approaches? Have you seen Indian companies use any of these? Except maybe companies and brands you have consulted in your -

Ranjan Kapoor: If you'll pardon me, can I give you the example of Ogilvy & Mather itself? Because we did a number of things similar to this. I used to call Ogilvy the mother ship and we created these outriders. Cute little nimble ships that used to go out and visit new horizons. And that was how the outreach was born and the outdoor landscape was born because of the mother ship and the outriders. The mother ship cannot change directions. You take a super tanker, by the time you have turned it around, it's gone a mile. So you need these little nimble units.

Anuradha Sengupta: What about companies not in the advertising business? What about advertisers you worked with?

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. Lets think about it.

Anuradha Sengupta: How would you de-construct why it is still there?

Ranjan Kapoor: I think he recognised that the world order was changing. 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 realised that I'd rather 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.

Anuradha Sengupta: Which you saw… the PDA's go through, the different brands and the different companies of the PDA's before the Palm Pilot became a success. Would that be an example of this?

Yoram Wind: Yes, the Palm Pilot would be a great example for a different mental model. All of the other PDA's, they started - Newton and others - all tried to find out the best possible machine that would be able to read your handwriting. And they were cumbersome and they didn't really get it, at least at that time.

Palm Pilot actually reversed the paradigm. They said, it is much easier for people to learn a graffiti type handwriting and they taught their consumers to use graffiti, which is easier for the machine… much more accurate and this was a breakthrough. And, again, the next breakthrough that came was Blackberry. Ok, why can't I provide people with the opportunity of typing even though they type very small scale. Again capturing the actual behaviour of consumers because if you look at the origin of this you will go back to inter- messaging that the consumers especially the teenagers use on the telephone.

Anuradha Sengupta: I'd like you to talk about the GEC story because I think that is a very dramatic case of timing where it comes to swapping mental models because I think a comment made was, "From a brave determination to a wilful stubbornness and a blind refusal to see reality." Its just a step away, isn't it? I mean if he was successful, if Simpson had been successful, we would have been saying something entirely different.

Yoram Wind: That is true. It is a great example. In '96 Lord Simpson took over General Electric, UK, which is different than the one in the US. Inherited basically a very stodgy but a very profitable company. His predecessors Arnold Winestock had a great management system, he ran about a 180 companies based on a very strict ratios…

Anuradha Sengupta: Very rational…

Yoram Wind: Very rational. He was in a less glamorous field. He was in power, he was in defence and electronics and Lord Simpson decided to bet the future on wireless technology, changed the name of the company to Marconi to try to indicate this. He bet the whole farm on one major change and it did not work.

The environment was against him, maybe it was the timing, but he basically went all out after a single vision and the results were disastrous. And he did not have a portfolio of business protecting him in case the bet is not right, nor realising some of the early warning signals that were ready at that time with respect to this industry. And the results were that a company having a share price of over 12 pounds went to 4 pence a few years later and from a huge cash surplus, he went over to a huge debt.

That is one of the sad stories in terms of an unsuccessful one and the lesson for companies is this - if you really have a bold new vision, first of all have enough safeguards around it and, two, don't put all your eggs in one basket and experiment.

Anuradha Sengupta: Sort of incrementally.

Yoram Wind: It's not the - you can experiment on pretty bold ideas but experiment. I'll give you an example of a large company. General Motors, a nostalgia - old company. They are trying to modify now but in the '80's, if you remember they were trying to defend the gains of the Japanese inroads. They were in deep trouble and they realised that their cars were not as good and their production process were not as good as the Japanese and they were not able to change all of General Motors.

So they decided to use an approach by creating Saturn, a separate unit, a separate experiment. The tragedy of this was that once Saturn was successful even though it had a hard time starting, they should have taken the lesson from Saturn and changed the face of General Motors to this. What they are doing now is that they are considering integrating Saturn into General Motors, defeating the purpose. But you can definitely, if you are a large company, a big mother ship that you were talking about, you can definitely try and create those innovative bold experiments and control the risks associated with it.

Anuradha Sengupta: A controlled experiment! Ranjan, any company that comes to mind which is sort of parallel of the GEC example that we have just seen?

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, its 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. In video games. You know the thumbs are going to become huge in the future because these are going to be the over-used organs. But look where technology on the one hand and look where habits on the other hand - 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.

Yoram Wind: I think it doesn't takes enormous technology - but observing teenagers in Europe and this is their early warning system. That is the weak signal. How the teenagers who took telephone which was not designed for this and created this basically for the instant messenger.

Anuradha Sengupta: So some of these things can help people make informed decisions. You know, Jerry, one thing you have stressed in your Power of Impossible Thinking is the individual and how important it is for not just organisations or we in our organisational roles or avatars reacting to the power of mental models but as individuals

Yoram Wind: First of all you have to remember that corporations are made up of individuals and the reality is between 9 and 5 when you are a corporate person. You are still the same person before 9 and after 5 where now you are not a corporate person but an individual. So obviously we deal with individuals here.

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 and 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 - 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.

Anuradha Sengupta: Ranjan, in Indian society I think the arranged marriage is using the same kind of rigours that some times accompanied us in identifying resources?

Ranjan Kapoor: Never thought of it. It could be so. I guess so.

Anuradha Sengupta: I think it is the same kind of rigour. You check whether all the criteria you think are necessary are there. I think you can look at it. That is a new way of looking at arranged marriages in India.

Ranjan Kapoor: Yes, it starts with a classified ad is some newspaper….

Anuradha Sengupta: And you get applications and then it sort of gets whittled down and then you find the perfect person….

Ranjan Kapoor: The, you use detectives to find out about the background of the girl or the boy and…

Yoram Wind: There is only one missing ingredient. You have to make sure that you have the right chemistry and the same is true with the case of the CMO. If there is no chemistry between the CMO and the CEO, it will not work but definitely in an arranged marriage you would like to have the chemistry.

Anuradha Sengupta: Ok, well, we've had some great chemistry on Lessons In Excellence. Thank you for being here Ranjan. Jerry, thank you and thank you for watching.