One day in 1966 while Ranjan Kapur was walking in midtown Manhattan, a black limo pulled up alongside. A man he instantly recognized as advertising icon David Ogilvy, founder of the agency where Kapur had recently been hired, stepped out and greeted him by name. The two men proceeded to have an hour-long discussion driving around the city.
Young Kapur had just joined the firm Ogilvy & Mather after a brief stint at Citibank, where he’d decided he needed a more creative career. His conversation with Ogilvy confirmed that he’d made the right decision.
Q: When did India become more of a business-friendly country, especially for advertising?
A: That changed with the opening of the economy in the 1990s. Two things happened. All these global companies came back, which helped the advertising industry. And the economy grew, which meant the middle class grew rapidly. The Indian middle class is huge; you are talking about 400 million people. As the middle class grew with large disposable income, and these foreign brands returned, it pushed the local brands to improve their quality and services. Competition rose and consumers benefitted.
Q: So at this very fortunate time, Ranjan Kapur comes back to head O&M’s India operations. He had been serving in the very successful Singapore office, but O&M India, headquartered in Mumbai, was not so successful, ranked as the fourth largest firm in the country and heading toward number five. In pretty short order, he built it into the top agency in the country. What did he do?
A: He looked at three major things. One, there was a bit of a myth within his company that “we aren’t big, but we are very creative.” Somehow, being big and being creative were considered to be at the opposite ends of the spectrum. He challenged that assumption. Why can’t big companies also be creative? That was the first mindset he changed. That takes more time than one might imagine because of the entrenched culture in place.
The second thing was empowerment. Every single recruiting decision (in the country) was being done by headquarters. That doesn’t make sense when you are growing at such a fast pace. He learned that in Singapore: Empower the people to take action.
The third thing was this balance he created. He talked about the three-legged stool. Kapur was one leg, the finance director the second, the creative director the third; each had equal power to act. You give enough rein to the creative people so they can experiment. But there is also the business side of the operation, which is making sure clients are getting what they want. It’s not great if the creative people are winning awards but the clients aren’t getting the business results they want. So Kapur managed the organization’s structure by giving enough power to the three groups but no one person was dominant over the others.
Q: As you said, changing an entrenched culture is difficult. One of the first things he did was to lay people off, to make it a smaller organization. To those who stayed, he gave more autonomy and more money. So clearly a signal was given: Don’t get complacent. You have to earn your keep. And if you do, you will be rewarded.
A: That’s right. And people can accept more responsibility if you let them. That was a smart move because the advertising industry doesn’t pay very well compared to consulting, investment banking, and many other jobs. So the question was, how do you attract talented people and motivate them? For Kapur, it was by the monetary incentive, by the nature of the work, and by instilling the ambition and aspiration that we can be number one. It was the combination of those things.
Q: On the subject of brand building, Kapur is very keen on the idea that brands take a long time to build, there are no shortcuts. He says, “One [piece of] advice that I would give is to make absolutely sure that you are not running away from your market to build the global brand. You first build your brand in your home base because then you understand the character of your brand, the virtues of your brand, and understand the core that drives your brand. And if you respect that core can drive any human being wherever they reside, then that brand has the opportunity to become a global brand.”
A: The first question HBS faculty get when we do a custom Executive Education program in China and other areas is, “How do I build a brand?” Because that’s where a lot of value gets created. In many emerging markets, whether it’s China, India, or Turkey, when a local company gets big and has reasonable cash flow, they decide they need to become global. And the way they think about becoming global is to buy a global brand, hoping that the magic will rub off on the local brands. That usually doesn’t happen.
Godiva was bought by Ülker in Turkey. But while the Godiva brand is up at the top in image, Ülker is a significantly lower image brand; the consumer doesn’t see a connection. It’s as if Levi decided to make a fancy Italian suit. I’m not going to believe in the brand even if they make a nice suit, because my image of Levi is of it being very casual. What we see is that the image change happens gradually. You build a Honda Scooter, then a Honda Civic, then a Honda Accord, and then an Acura. There is a lot of theory and research on how consumer behavior and perception changes over time. And that change in image takes 10 to15 years.
Many companies have a difficult time understanding this. They are eager to go to a global market by buying a global brand because they have the cash sitting on their balance sheet. So it was interesting to hear that Ranjan Kapur was on the same wavelength about brand building.
Q: Digital is transforming advertising and some fear that the romance of the industry, the creative passion, is being subsumed by data, analytics, and ROI. Kapur is bullish on digital but sees a big shakeout coming. I suspect you share that vision.
A: Absolutely. A lot of things have changed in the advertising world. Advertising used to be all about how many people I can reach, and how many times I can tell the same story to them in hopes that they remember it. Reach and frequency was the metric and the gross rating point (GRP) became the terminology we all used. With digital, you can target people much better because you have more information about them. I can measure it. I can personalize it—one of my former students built a company that can customize a video for a million different versions. So that part has all changed: targeting, personalization, measurability.
The second thing that changed is that in the old days, the firm told you what it wanted you to hear. Now, consumers learn about a product in different ways—receive directly from the firm through traditional or digital advertising, seek out information themselves through search, or learn from other consumers and social media. Many of these things are out of control of the firm. So as a marketer, you have to start thinking about how you influence the way consumers obtain information and get influenced.
The third thing that has changed is around media buying. For a long time, ad agencies were compensated 15 percent of their media buys. There was a large media planning group in all these agencies. Now you have programmatic buying; the algorithm does all that. There is no comparative advantage in media buying anymore.
So suddenly you need an engineering mind, you need a data-analytics mind, and you need the data scientists who work with Google and Facebook. That’s a very different skillset. Martin Sorrell, who is the CEO of [advertising giant] WPP, has a famous saying: “We’ve moved from the Mad Men era to the Math Men era.”
Kapur came in with a right-brain aptitude, much more of the creative guy, but now companies are suddenly asking for ROI. But you can’t compete with Google on Google’s turf. You still need the creative. So you need to merge the right and the left brain. But combining these two is a challenge.
Q: India has taken something of a rap for not being an entrepreneurial culture. What is the state of entrepreneurship in the India?
A: Indians have always been entrepreneurial in spirit. I remember growing up in India and noticing that people always found a way to get things done. But when it came to jobs, people were risk-averse because unemployment was high, and you were worried what would happen if you left your job to start something new. Also, there were no role models in India, no Bill Gates or Mark Zuckerberg to show us that it can be done. In India, the impression was that, unless you were born into the right family, you just couldn’t make it. Third, the venture capitalists never came to India until recently. They were partly worried about regulations and red tape and whether government would change the regulations. So even if you were willing to take the risk, no investor was willing to support you.
That has slowly changed with the opening of the economy. The floodgates are starting to open now.
Q: For entrepreneurs in India today, what is their approach to starting a business? Do they think local or are they born global?
A: Many start local because India is a huge country. A few years ago I talked to entrepreneurs there and asked them, “Are you simply cutting and pasting the US model of your business to India? Is your version of Uber based on the US model?” And yes, that is how they start. But then they realize the implementation is very different. The logistics are different, the structures are different, the consumer behavior is different. They start with the same business model but it quickly changes by 180 degrees, or at least 90 degrees, in the process of execution.
[This article was provided with permission from Harvard Business School Working Knowledge.]