Purple Cow

Destructive marketing is built in products

Traditional ways of marketing are gone. The old virtuous cycle of ‘buy ads – get distribution –sell product – buy ads’ is now gone for good. So, what is the new way to cut the hyper-clutter and stand out in marketing and sell your product?

Stop advertising and start innovating.

Seth Godin, the marketing guru and bestselling author, explains the new era marketing strategy in a unique manner of a purple cow. Suppose you are travelling to someplace and you see the normal black and white cows that you encounter almost every day. Would you look at them twice? Would you talk to your friends about them? No, right? But, what if it’s a purple cow? The chances of discussing a purple cow are definitely much higher. In the same manner, any product which is remarkably different than the ones existing in the industry will raise curiosity among the potential customers.

Remarkable Product

It comes from people who are making something for themselves.  From here, they are able to project the same for multiple audiences. Here are a few examples:

  • Howard Schultz spent months in Italy, drinking coffee and learning. He was in love with coffee. Thus, Starbucks evolved.
  • Rony Abovitz, CEO Magic Leap, drew inspiration from his childhood fascination with scientific fiction in Star Wars. Later, he started working on augmented reality in his garage in Miami and went on to becoming the fastest Unicorn after first equity round.
  • Ray Kroc, coming from the sales background, fell in love with McDonald’s on his very first visit. Later, during the opening of his first store in Chicago, he emphasised on creating the exact taste of French fries and went on to contact research fellows in many universities to replicate the same Californian taste.
  • At around late 2007, roommates Chesky and Gebbia could not afford the rent for their apartment in San Francisco.They decided to put their loft on rent online(on their own website) with beds for three guests and homemade morning breakfast. They named this concept as Air bed and breakfast which is now known as Airbnb.
  • On a snowy Paris evening in 2008, Travis Kalanick and Garrett Camp had trouble hailing a cab. In order to solve this very obvious and every day modern human problem, they started Uber – tap a button, get a ride. How simple can it get!

Sneezers

Zespri had a daunting task to launch a new kind of kiwi which is golden in colour with an edible peel. Instead of mass marketing the new food in U.S., Zespri took a risk and introduced it in an upscale Latino community. This community is a regular eater of mangoes and papaya which closely resembles the new kiwi but tastes very different. Such niche Latino community had both the time and the inclination to try something new and different. Over a period of time, this Kiwi grew in popularity among Latinos that Zespri (back in 2001) made a business of $100 million worth.

Sneezers are the first category of people on earth who will, willingly, learn about your product, take the risk to try a product, and bear the pain of introducing it to their friends. This way, marketing strategy becomes much more productive and cheaper. Another benefit in targeting such genre of potential customers is that they are always on the lookout for new stuff. This requires minimum advertisements and marketing expenditure. All you need is to be creative enough to come in their eyesight and, automatically, the rest of the story unfolds.

In case, if you are short of ideas,

  • Find the niche market
  • Create the remarkable product in the right way 

Law of Diffusion

Today, even with narrowing down your potential customers through digital means, your marketing efforts can still fail. The reason being you are one of the 50 marketers who is targeting the same individual for the same set of products and services.

Hence, rather than a push marketing, marketers should devise a pull strategy.

 

law-of-diffusion

  1. Left to Right

Most of us are already aware of ‘Crossing the Chasm’ by Geoff Moore. How can’t it be given a serious thought over here? An idea spreads from innovators to early adopters to the early/late majority (sneezers comes before these). The company should target the innovators and early adopters and strategically build the initial marketing efforts around these two categories. Using the typical mass media strategies would not be of much help at this stage.

  1. Marketing Budget Offloading

The maximum sales and profits come from early and late majority people. Only when your product is being accepted by these people, then only you should offload your maximum budget. Many great astonishing products spent most of its capital on mass marketing. Such marketing efforts came too soon before the idea spreads.

Take-aways:

  1. The message that Tiffany’s blue box and Leaning Tower of Pisa delivers, Pantheon in Rome does not. The marketing is not done for a product. It’s built right in.
  2. Greatest remarkable products and companies such as Starbucks, Apple, Disney, Reliance Industries have been started and successfully ran by marketers. From product development, manufacturing to communicating the value proposition, such passionate marketers have their heads involved in the entire product cycle.
  3. When the company becomes big, it loses its entrepreneurial charm and focuses on profitability. Hence, pick the right maverick in your company for product development and get out of his way.
  4. Work with sneezers. Get Permission from them. Alert them beforehand on upcoming products. Work with them to sell your idea to a wider Audience. (Donald Trump utilised such ‘Stakeholder Driven Media’ internet platforms like breitbart.com to spread his ideology to significant yet unique Americans).
  5. If your company has reached a stage, where nothing seems to be working and marketing department is facing the major brunt, talk to your engineers or product developers and customers. Rather than selling what they wanted to sell, new Best Buy CEO, Brad Anderson, listened to customers and realigned the entire strategy based on their inputs. Often, it was hard and longer in approach but produced more results (and, cheaper too), than typical boring ads and staying that way.
  6. Learn from people who have a track record of launching such remarkable products. Dive deep into the fans’ magazines, trade shows, design reviews – do whatever it takes to feel what your fans feel.

 

Author: Rupam Lathwal

PGPM Class of 2017, Great Lakes, Gurgaon

Chairman Emeritus Reconnect 55 “Sincerity”

My dear friends,

Please think if you have ever searched for,

  1. A single term which can be the root of all the attributes you wish to count and evaluate at the time of appraisal of people working with you.
  2. A single characteristic which distinguishes you as an outstanding and successful person?
  3. A single virtue which can revolutionise our national life and character.

It is SINCERITY, SINCERITY, and SINCERITY!!!

Please don’t get surprised to know that-

  1. I have had a professional friend who if promised me a time when he would revert over the telephone; never failed in his life; MTNL, VSNL, be it any service network, never failed him.
  2. A relative of mine was known for his punctuality so much so that people used to correct their wrist watches with his time of reporting to his own high office and other social events.
  3. I have a family friend who has never failed till date to wish me, my wife, my children and my grandchildren to greet us on our respective birthdates.
  4. My wife has not failed even once to feed me on time till date in the last over 40-years of our married life.
  5. My boss in England, suddenly having trouble with his eyesight one day in his office, was to be rushed to the Hospital. Before leaving office he dictated a two page letter regarding my forthcoming visit to Scotland for the concerned person to receive and take care of me and my wife since we were foreigners visiting their country for the first time.

I can go on counting such examples which are propelled by one single characteristic i.e. “sincerity”.

Sincerity encompasses a large domain of virtues

Sincerity means Genuineness, Honesty, Loyalty, Seriousness, Earnestness, Authenticity, Truthfulness, Integrity, Probity, Forthrightness, Bona-fides, good faith, trustworthiness, straightforwardness, openness, candidness, uprightness, unpretentiousness etc. etc. Sincerity comes out of love, respect, commitment and human virtues imbibed within.

Sincerity Vis-à-vis Job Performance & Success

At Reliance Energy Management Institute, Mumbai we once discovered that all the dozen odd evaluated attributes for Job performance like Job knowledge, quality & quantity of output, time management, cost consciousness, planning & organising, initiative, customer orientation & responsiveness etc. were all linked to “Sincerity” at the roots.

Swami Vivekananda once said “Every successful man must have behind him somewhere tremendous sincerity and integrity and that is the cause of his signal success in life. The degree of sincerity marks the degree of success everywhere.”

Sincerity at the focal point of a strong national character: Japanese Example

Let me start from a story that stays in my mind since long. In a Japanese Railway compartment an old lady takes out a needle and thread from her purse and starts stitching a seat cover that had opened up. Someone asked “was it not the duty of the railway authorities” She replied, “it was the duty of every citizen since it was a national property”. The Japan Railway and other connecting subways and systems are well-known for their incredibly punctual schedules. As such, when there is a delay of even “a minute”, they issue late slips for passengers to take to their employers. After all, it leaves a very bad impression if you’re late to work.

It’s not uncommon for people to work several more hours after their contractual quitting time to complete the day’s targeted output. No overtime payments expected!

Japanese tourists pick up trash from around camp sites and rest stops even when they didn’t make the mess themselves. Japanese students clean their schools by themselves for a good 30 minutes each day. Making it your business to keep communal space clean is a distinct mindset emerging out of your sincerity towards the environment.

Soon after arriving in Japan, when Casey Baseel was still getting used to commuting by train instead of a car, he left his bag on the Yamanote Line. As soon as he noticed, he told the stationmaster, who suggested him to wait for 60 minutes until the same train came back around, as the Yamanote is a loop line. Sure enough, when it did, his bag was right where he had left it. Nothing was taken from inside. I found similar things happening with me in London Tube Train!

The latest government survey on national character has found that 83% of Japanese if they were to be reborn, would choose to live in Japan rather than anywhere else though more than 60% said they feel apprehensive about natural disasters.

Sincerity to each other, sincerity to the Community, sincerity to the Society, sincerity towards Environment, sincerity to the Nation, sincerity to the land of your birth-all in one !!

Can we take some lesson to enrich our life?

 

Satyamev Jayate!!!

With Best Wishes and Regards,

Dr. B.S.K.Naidu, BE (Hons), M.Tech., Ph.D., CBI Scholar, D.Eng. (Hon), FNAE, Hon.D.WRE (USA)

Chairman Emeritus, Great Lakes Institute of Management, Gurugram, INDIA

Alumni Speak: “In today’s fast-paced world that thrives on cut-throat competition, a Bachelor’s degree is just not enough to fuel an individual’s ambition.”

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Piyush Kant is the Director of Business Development at GCE Group and is responsible for the Indian and South-East Asian market of the Energy Efficiency Consulting Giant. He joined Great Lakes Institute of Management, Gurgaon, in 2010 in the first batch of the B-School. We recently sat down with Piyush to find out how the PGPM-Energy program of Great Lakes helped him in his career endeavours.

Here is what he had to say.

Tell me about your professional background before joining Great Lakes and also about what made you pursue MBA?

Piyush: After completing my engineering in Computer Science from Kurukshetra University and before joining Great Lakes, I was working with Cisco Systems as a Network Engineer.

In today’s fast-paced world that thrives on cut-throat competition, a Bachelor’s degree is just not enough to fuel an individual’s ambition. If you have a hunger to make it large in this corporate jungle; knowledge and understanding of the intrinsic factors focused on running a business and managing the people is imperative. This is why I didn’t stop after becoming an engineer and went on to pursue Masters in Business Administration.

Q2. So, why did you choose Great Lakes?

Piyush: I had a keen interest and passion of working in the energy sector and when it comes to energy, Great Lakes’ reputation is unparalleled and unmatched. At the time I joined the institute, it was Great Lakes Institute of Energy Research and Management (IEMR) – a one of a kind B-school with a focus on energy sector and its dedicated disciplines.

Q3. How did the two years spent at Great Lakes help you transform as a person?

Piyush: A lot actually. For starters, it turned a carefree man into a responsible one. I learned the true sense of empathy, the power and benefits of networking, traits necessary to become a leader were imbibed into my personality here, and most importantly, I learnt the art of learning from failures, how to overcome my fears and the thin line difference between confidence and foolishness.

Moreover, the institute helped make me a better person as it taught me that no reward is greater than the feeling of giving back/contributing to the society.

Q4. Mention three key highlights of your Great Lakes experience.

Piyush:

  1. Diverse professional background of the students that facilitated learning beyond classrooms
  2. Excellent practical exposure and personal interactions with the world renowned industry leaders
  3. Highly motivated, energetic and experienced faculty

Q5. Which faculty members/guest speakers impacted your education and learning experience the most?

Piyush: Although the entire staff of Great Lakes holds an extremely special place in my heart as I would have never been where I am today without them, but Dr. S.K. Palhan, Mr. Mohan Lakhamraju and Mr. BVR Vamsi (Powergrid Corp India) had the most lasting impact on my learning.

Q6. Describe the peer learning experience at Great Lakes in and beyond the classroom in one word.

Piyush: Can I use two? “Exceptionally Brilliant.”

Q7. Tell me about your current organisation and job role. How do you think going to a B-school has helped you in your career?

Piyush: GCE Group operates in the sphere of financial consulting, audits, industrial safety, energy efficiency consulting etc. It is the largest Energy efficiency consultant on the globe, headquartered in St. Petersburg, Russia. I am currently serving this organisation as its Director of Business Development in the Indian and South-East Asian Region.

As I stated earlier that I have done my graduation in Science from Kurukshetra University, grabbing this job and rising up to this level in the energy sector would have been impossible for me if not for Great Lakes.

Q8. What advice would you like to give to the future Great Lakers?

Piyush: I would like to tell my fellow Great Lakers that – Explore more about yourself, discover what you really want to do and achieve in your life and believe in yourself at all times. Then, start working on your dreams to inspire yourself and keep moving forward. Remember, there is no shortcut to success and there is no such thing as a free lunch. So, always keep working hard for your dreams, spot opportunities, grasp them and keep climbing the ladder, however, slow the pace may be.

Corporate bonds and their indispensability in the Indian Economy

Corporations raise funds either through debt or equity or a mix of both using different instruments available. Securities (tradable financial assets) are a kind of instruments that are a different arrangement/alternative for equity or loan. For example, owner’s equity is the money put in the business by a proprietor, whereas stocks/share equity is the security through which a company raises money by making every shareholder a partner up to the extent of the shares held by an individual/organization. Similarly a bank loan is a simple form of debt, whereas a corporate bond is a security through which company raises loaned-money and owes the principal and interest to its bond holders. Bank loans are non-standard, negotiable and are non-transferable whereas corporate bonds are standardized and are exchangeable. A corporate bond repo (or repurchases) is where a company or a bank pledges corporate bonds with another company or bank to raise money. The pledger agrees to repurchase the bonds at a specified price. To discuss the topic taken up in this article we shall follow a step by step approach to answer the following questions – “Why do we need corporate bonds?”, “Why corporate bond market has not seen success in India?”, “Nature of corporate bonds and the setup in which they are executed”, and “What is RBI doing?” The detailed-discussions pertaining to the rates of interest/returns on bonds and other financial instruments and their implications and attractiveness will be discussed in another article.

Why do we need Corporate Bonds?

Let’s talk about the need of corporate bonds in the context of Indian Economy.

To put things into perspective we start with the banking sector, where the flow (as in distribution) of money starts from, in an economy, as per the needs of individuals and businesses. Central bank of a nation (RBI) controls the money supply and the monetary policy, whereas the Commercial/Retail banks and Development Banks etc. distribute the money in the economy to the public and businesses. If we had to categorize it simply, there are three kinds of lending activities (as per the scale of loans) loans to large businesses, priority sector lending (like Agriculture, Education, SMEs etc) and micro-financing.

The real problem in Indian context is the loans to large businesses can have huge ramifications on the economy. Large companies accounted to Rs. 65.47 Trillion (58%) of the total Bank Credit till March 2016 when the NPAs (Non-Performing assets or Bad Loans) stood at roughly the Rs. 6 Trillion mark. By this estimate if 10% of the loans to the large scale companies were to become NPAs, then the lending banks will soon be out of business.  That’s a huge setback to the economy and would sabotage it. However there are mechanisms like restructuring of loans, writing off the assets etc. for practical purposes. The overall effect is less credit offtake in the economy due to poor confidence level in the business-environment.

FACTS: If we look at the size of corporate bond market in India, it is about Rs. 19 Trillion (14% of the GDP), whereas the bank assets amount to 77% of the GDP and market cap to the GDP ratio is roughly around 70%. At present the corporate bonds are largely issued by financial firms and PSU-corporations and their supply vanishes as soon as it is up for issuance.

 

How corporations might deal with Debt-shortage?

  • Corporations can issue corporate bonds to raise money for their finances in the scenario wherein banks have a limited capacity and confidence.
  • Corporate bonds are similar (not identical) in nature to that of bank loans. These pay regular (yearly/half-yearly) interests (except for zero coupon bonds) and the principal at the end of the maturity period.
  • Like in case of bank loans, the taxation (on corporations) has a different treatment for corporate bonds than equity i.e. corporate bonds are treated as liabilities and the returns made to the investors are treated as interests and hence are not taxable. While returns made to the investors (for money raised) in the case of equity are taxable because investors hold a share of the company’s assets. In case of bonds an investor is investing as a lender. This is further explained using a small caselet wherein a company finances its assets of $10 million using Bonds and stocks with two different capital structures of 40/60 in one and only stocks in another case. The rate of return to investors are found to be 12% and 9.81 % respectively
Capital Structure Bonds/Stocks: 40/60 Only Stocks
Assets               10,000,000.00    10,000,000.00
Sales                 5,000,000.00      5,000,000.00
Operating costs                 3,500,000      3,500,000
Earnings before interest and taxes (EBIT)                 1,500,000.00      1,500,000.00
Interest (10% coupon rate)                 400,000.00 0
Taxable income                 1,100,000.00      1,500,000.00
Taxes (34.61%)                 380,710.00       519,150.00
After-tax income to investors                  719,290.00       980,850.00
Rate of return to investors                  12.0%        9.8%

 

How does this benefit anybody?

  • The impact on the economy is that the liquidity and financial health of its banking system improves with lesser credit-default risk on its account.
  • This arrangement would make corporations more responsible for their actions as their performances are apparently known to the market.
  • If we talk about the investors they get better guarantee of the payments as loans (corporate bonds in this case) are payed back first and then only companies proceed to pay out the dividends. However this is an obvious option for safe investors or HNIs rather than high return seeking investors.
  • As for corporations it can be an effective way to raise long term/short term funds without having to dilute the company control (unlike share equity). It is an effective way to deal with the debt-shortage and the corporations also receive tax benefit.
  • Investors, whether HNIs, pension funds or insurance companies, can have more opportunities for diversification of their investment portfolio with corporate bonds.

Nature of Corporate bonds and the setup in which they are executed

In any exchange based mechanism there are three parties involved:

Buyers: Who buy a particular instrument with certain return expectation in a time-frame.

Sellers (Issuer): Who sells an instrument for monetary exchange in current time with some rate of return in the future.

Dealers: are the brokers/Banks who facilitate the sale and purchase of an instrument; bonds in this case (both seller and buyer are investors). As per Mr. Matt Levine (columnist) from Bloomberg, the dealers although are there just to facilitate or smoothen the process of exchange of the bonds, provide natural hedge to the volatility that could have existed if it was not for these dealers. Why? Simply because a dealer who purchases an instrument might take some time to sell it to a potential buyer. However if it was not for the dealer, a seller would have to bring down prices to get rid of the bonds and vice-versa for a buyer (Dealers provide with immediacy). However a dealer cannot just keep buying when everyone is selling (the contrarian approach). So a dealer would deal between fundamental buyers and fundamental sellers and hence you need fundamental investors for the system to exist and work. Banks are the entities that deal in corporate bonds and their appetite for risk involved in selling and buying of the bonds is limited.

For quick information, various bodies involved are security market regulator, the banking regulator, the credit rating agencies, clearing houses, stock exchanges. Then there are rules and regulations prescribed by each of these institutions.

Why has the corporate bonds market not seen the success in India?

While trying to find out reasons behind this, I discovered a host of reasons in which the whole system (from corporations and government to the banks) is involved.  I referred experts’ opinions available on business newspapers as these sources bring out answers not available in text books and theories and are vociferous about the bitter truth.

Banks: Suppose a bank has a set of poor loans that were issued to the companies performing badly or disastrously. In this situation if the bank has to deal in corporate bonds of such companies and has to participate in price discovery of these bonds, it is in catch-22 situation. On one side they have to trade it at a good price on the other hand they know themselves that the bonds are not really that worth or are too risky. Banks would tend to hide the fact that they have been sitting on large set of poor loans. They are better off giving loans rather than trading in bonds as otherwise they will have to provide this crucial information to the market as per the regulations. This will further bring down the value of these bonds.

Corporations: Corporations performing poorly are already laden with loans and would avoid issuing more debt securities that they cannot sustain. Also they like to keep this information from going public.

Government: The better price discovery resulting from an efficient bond market will expose the full-extent of NPAs (non-performing assets) lying with the banks in the form of over-leveraged corporate loans and securities. This may cause serious problems to both corporates and banks in the short term. Given the short-cyclic nature of elections in India, governments would not want a dent in their ruling tenure.

What is the RBI doing?

Simply put, what RBI is doing is that it is trying to reduce frivolous loan sanctions and pass on the responsibility to the corporations on one hand making the credit offtake much stringent and on the other hand paving way to develop the corporate bonds market.

RBI plans to come up with a category of borrowers called “Specified Borrowers”, who will have total fund-based exposure of the banking system (ASCL-Aggregate fund based Credit limits) of Rs. 25000Cr at the end March 2017. This limit will be brought down to Rs. 15000 Cr. in 2018-19 and to Rs. 10000Cr from the start of 2020. Over and above this limit, something called as NPLL (Normally permitted lending limit) defined as 50% over and above the ASCL will have to be set aside and an additional 3% provision beyond NPLL. The risk weightage to be assigned would be as high as 75%. This means banks would have to set aside large capital for such borrowers, increasing the cost of funds from banks to the companies. Companies that already have bank exposure much beyond ASCL will have to pay a premium for more funds (coming under the “Specified borrowers” category). This would curb the tendency of excess leveraging by corporates and safe-guarding the banking system. However if there was an efficient corporate bonds market, the need for more funds could be fulfilled through raising funds with exchangeable bonds.

RBI has announced its plans to help develop corporate bonds market and we are just a legislation-away from seeing it in effect. Central banks would accept non-sovereign bonds as collateral. Brokers shall be allowed to deal in corporate repos and foreign investors will also be allowed to trade directly. Till now RBI allowed only the bilateral repurchases of corporate bonds making them illiquid whereas it allowed the repurchases (trading) of government (sovereign) bonds.

Liquidity of corporate bonds has been an issue of debate and this is what we discuss next.

The step taken by RBI to categorize borrowers as “specified borrowers” as seen above would direct the corporates to raise funds using corporate bonds. The supply side may shape up but there has to be enough takers who are typically HNIs (High Net worth Individuals), mutual funds, national pension systems and pension funds looking for certain yields. In current times when Rs. 6 Trillion (approx.) of assets with banks are stressed, there has to be a mechanism to ensure the safety of investments. For this, RBI is trying to pool in rating agencies and form a group of credit information companies. RBI is trying to amend laws to avail more information to these rating agencies. As per Ms. Latha Venkatesh (columnist for MINT) this would improve the confidence of investors. Also the bank should underwrite some part of the bond and RBI should progress from accepting AAA rated bonds to A rated bonds to improve the liquidity. While the journey to an operational corporate bond market is a long one, RBI is trying it’s best to create a conducive environment.

Conclusion:  The idea of having a corporate bond market (with good liquidity) in Indian economy is a moot point. It is the need of the time though. This would de-risk banks from accumulating NPAs. Transferring the ownership to corporates and the fundamental investors will make the whole system less frivolous and would avail capital to the responsible companies. The risk gets shared between the investors and brings down the risk of banks that are already laden with NPAs. Effective changes in regulations to remove information asymmetries in market and political-will can only help the situation.

References:

  1. IIM Bangalore, Working paper no: 450. “Corporate Bond markets in India: A study and policy recommendations
  2. Corporate Finance, Stephen A. Ross, Randolf W. Westerfield, Jeffrey jaffe, Ram kumar kakani
  3. http://www.thehindubusinessline.com/portfolio/beyond-stocks/when-ppf-scores-over-taxfree-bonds/article5822812.ece
  4. http://www.livemint.com/Opinion/64IOr9Q0A1GTu7AVGchHqK/Why-no-corporate-bond-market.html

Disclaimer: This study is based on use of information from text books, newspaper articles, internet-trends and observations in general. The data collated through different sources like World Bank, RBI has been duly credited to and are indicative in nature. The author doesn’t claim any ownership or the veracity of figures mentioned. The ideas that have been borrowed have been duly credited to and other self-proposed ideas are inconsequential and meant only for the academic-engagements of the institute.”

Author : Gaurav Chauhan

Senior Research Fellow, Great Lakes

UPI and its Impact on the Mobile Wallet Industry

What is a UPI? How is it different from mobile wallets? Does it have the potential to eat away the market share of mobile wallets?

upi

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UPI (Unified Payments Interface) is an advanced version of IMPS (Immediate Payments System) which do bank to bank money transfer, just by using a Virtual Id/ Virtual Payments Address.

UPI or Unified Payment Interface is a payment architecture with a set of standard app APIs by the Reserve Bank of India in order to facilitate the next generation online immediate payments leveraging trends like increased smartphone adoption, increased app downloads and universal access to data and internet.

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Any smartphone user having a savings or current account with a UPI-partnered bank can download the app to make P2P (peer to peer) and P2M (peer-to-merchant) payments with the use of VPA (Virtual Payment Address).

Thus, in this case, the customer doesn’t need to disclose any sensitive information like bank account number or IFSC code for completing a financial transaction. It eliminates the requirement of entering one’s card details like number, CVV code, expiry date or OTP.

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Virtual Payment Address is just like an Email ID, something of the form yourname@xyzbank, like sonal@sbi or rashmi@citi. No more hassle of entering the account number, IFSC and other beneficiary/payee details. On entering just this VPA and authenticating the transaction with your MPIN, one will be able to complete the transaction successfully in less than 10 seconds.

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UPI’s two-factor authentication makes it safe and only shares the Virtual Payment Address. It doesn’t provide any other sensitive information.

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How can we download the UPI app?

Steps to download the UPI App are as follows:

  • Download the UPI app from 19 participating banks on the below link

https://play.google.com/store/search?q=upi&c=apps&docType=1&sp=CAFiBQoDdXBpegUYAMABAooBAggB%3AS%3AANO1ljJBaXc

 

  • Let’s say we are using Axis Bank’s UPI app. Here’s the welcome screen. SMS will be sent for authentication

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  • Add bank account: you’ll just need to select your Bank & your A/c will show up automatically (based on your mobile number linked with your bank a/c)

 

  • Create a Virtual Payment Address (VPA) which can be sonal@pnb or 123@ubi or pkc@icici or any other name. The suffix will be based on the app you are using. You can create different VPA with different banks pointing to the same account i.e sonal@axis, sonal@ubi or sonal@vijaya can point to one bank a/c, say from PNB

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  • You can even collect money by requesting it from the other person’s VPA

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UPI v/s Mobile Wallets

Currently, there are more than 25 mobile wallets available in market today.

  • Mobile wallets cannot access the UPI Technology on their own because UPI is a cross banking transfer medium and hence can only be accessed by the banks themselves. For mobile wallets to access UPI Technology, they need to partner with some or the other bank. So, in a way for banks which were suffering from the onslaught of mobile wallets, UPI has come as a boon to them that has turned the tables in favour of the banks.

Now, let’s discuss whether UPI has the potential to make mobile wallets redundant in India. Below are some of the characteristics on which UPI and mobile wallets can be compared.

Characteristics UPI Mobile Wallets Conclusion
Transfer Limit Rs 1,00,000/Transaction Rs 10,000 for non-KYC

 

Note: It can be increased upto Rs 1,00,000 post doing a KYC, which very few customers do

UPI will be more advantageous in this case
Transfer to individual and companies Definitely yes In case of wallets, not all wallets can do transfer but yes the major ones like Paytm, Mobikwik, Oxigen etc. allow the transfer to individuals and companies Majorly, both score well in it
Payment at physical stores Any physical store can make arrangements for accepting UPI Transactions In case of the wallet industry, they have to do a personal tie-up with those physical stores like Paytm has done tie-ups with Pizza

Hut, KFC and payments via Paytm wallet is accepted at

their outlets. Similarly, Mobikwik has exclusive tie- ups with Big-Bazaar and CCD

UPI can easily capture this market
Online Payments UPI Can do very well in this Mobile wallets showed their excellence in online payments No Clear Winner here
Cash Back/ Discounts UPI cannot provide any cash back or discounts In case of Mobile wallets, since they have merchant specific tie-ups, they do provide a lot of cash backs and merchant specific discounts Mobile wallets definitely have a great advantage here
Request for payment In UPI, one can ask for money from any person who is registered on UPI network In mobile wallets, few companies are asking allowing request for payment or asking for payment but in their own network UPI has bit of an advantage here
Transaction Cost There is charge of 0.45 paisa on each transaction through UPI No charge is there on transaction in case of mobile wallets Mobile Wallets are the clear winners here
Outreach Possible outreach is larger due to GoI’s Digital India support. Awareness programs and implementation, if executed well, will encourage cashless transactions even in rural and remote places depending on the government initiatives Restricited to marketing and branding strategy of the mobile wallet company and customer segments made aware. However if Mobile wallets work with UPI network they can use it to their advantage. Usually reaching rural places is more difficult for private businesses as it does not make commercial sense UPI has more advantage here

 

There are some Pros and Cons of UPI and Mobile Wallets which have been discussed below:

  UPI Mobile Wallets
Pros ·         Easier to set up and lesser time to execute the transaction.

 

·         No waiting for OTP

 

·         Device independent and form independent. One can use any bank’s app to transfer money in any other bank

 

·         Money gets transferred directly from bank account. We do not required to recharge any wallet or card in UPI

 

·         Marketing might of cash rich banks

 

·         Wallet companies are technology companies

 

 

·         Wallet companies are experts in user interface

·         Strategic tie-ups are increasing day by day and many of them are part of big- ecommerce companies, such as Freecharge is a part of Snapdeal. These help them in extra benefits which they pass on to customers in a way of cash backs, loyalty points etc.

 

·         Other benefits- mobile recharge, Bill Split, micro credit facilities etc which may not be possible for UPI to provide.

Cons ·         Lack of technology prowess

·         No Strategic tie-ups

·         Company dependent

·         Extra KYC for higher transactions

·         Fraud Concerns

·         Too much competition

UPI certainly has more advantages over Mobile wallets but as per the current scenario in India, it doesn’t mean that mobile wallets will become redundant.

In India, which is majorly a cash run economy both can co-exist as of for now. Mobile wallets have to do some tweaking in their business model and they are in a process of doing it. Some examples are listed below:

  • Paytm will soon get their own Payment Bank license through which they can enter in the main stream of UPI and can launch a UPI based Paytm app
  • Free Charge has tied –up with Axis Bank and will provide UPI based transaction on their platform
  • Phone Pe, which is owned by Flipkart, has launched a new app in collaboration with Yes Bank where both the UPI transactions and wallet benefits are there
  • ICICI pockets, which was a wallet by ICICI Bank but wasn’t doing well, has now been integrated with UPI. So, one can have the benefits of both in their Pockets app

We can have these apps integrated with the benefits of both UPI and Mobile Wallets.

 

Author : Sonal Gupta

PGDM Class of 2018, Great Lakes

Chairman Emeritus Reconnect 54 “Directional Shift of Disorders”

My dear friends,

It is commonly advised by the spiritual masters that one should conquer the following 5- Disorders (विकार) to make life meaningful and powerful.

  1. काम- Lust
  2. क्रोध- Anger
  3. लोभ- Greed
  4. मोह- Illusion
  5. अहंकार- Arrogance

Conquering the above is extremely difficult for a normal human being but a directional shift is possible. A few real life examples narrated below can perhaps explain the same.

  1. Lust

The natural attraction between the opposite genders deserves a directional shift to elevate from body-consciousness to soul-consciousness in order to become “Radha-Krishna” or “Meera-Krishna” like adorable couples inspiring true love with no trace of lust. Further, magnetic union of Feminine and Masculine virtues of the opposites can give rise to “Ardhrarishwar” अर्धनारीश्वर – a perfect being.

A directional push to lust can also convert it to passion which can transform any one’s life. Passion becomes a driving force to a great objective in life. Goswami Tulsi Das had a great lust for his wife. Once not being able to withstand separation, he rushed to his wife’s home and in order to reach her room upstairs he ascended through snakes presuming them to be ropes. His wife was horrified and exhorted him that if he had this kind of passion for Lord Rama, his life would be different. This turning point and a directional shift created history.

  1. Anger

In good old days, there lived a poor man Doulat Ram who wanted to get his modestly educated son Ganga Ram employed. He could connect with a person who happened to be a चपरासी – a peon of a British Chief Engineer. When approached, he asked Ganga Ram to go inside and wait for the Chief Engineer. As soon as he arrives he would also come inside and introduce him to the Chief Engineer with a request to give him some kind of employment, he said.

The young boy Ganga Ram went inside and sat unknowingly on the chair of Chief Engineer himself. As soon as the Chief Engineer came back, he was furious. He screamed “what is your capability (औकात), you want to take my position?” Extremely humiliated Ganga Ram became angry but he kept it inside to prove him one day what his “औकात” was. He studied hard, worked hard and toiled upwards in the nights when others were sleeping. Obtaining a scholarship, he graduated from Thomason College of Civil Engineering (now IIT Roorkee) with the gold medal in 1873. Later for his excellent contributions in the field, British Empire awarded him the title “Sir”.

Once “Sir Ganga Ram” was welcomed by the same British Chief Engineer offering his own chair and at that time Sir Ganga Ram reminded him of the event that happened many years ago. The British melted away and said “you are great, Sir”.

Today our national capital Delhi has “Sir Ganga Ram Marg” and “Sir Ganga Ram Hospital” in his memory.  IIT Roorkee has a student hostel “Ganga Bhawan” in his honour.

Mahatma Gandhi in Maritzburg, South Africa was thrown out of the train on 7 June 1893. While Gandhi was on his way to Pretoria, a white man objected to his presence in a first-class carriage, and he was ordered to move to the van compartment at the end of the train. Gandhi, who had a first-class ticket, refused and was thrown off the train at Maritzburg station. Shivering through the winter night on the platform, Gandhi channelized his anger to think “You have thrown me out of the train with a valid first class ticket; I will throw you out of the countries where you have invalid governance”. He made a momentous decision to stay on in South Africa and fight the racial discrimination against Indians there. Out of that struggle emerged his unique version of nonviolent resistanceSatyagraha” (सत्याग्रह). His resolve churned out of anger shook the entire British Empire.

Today, a bronze statue of Gandhi stands in Church Street, in the city centre of Maritzburg.

  1. Greed

Ratnakar was a greedy dacoit who used to loot people and feed his family. He used to even kill people during his loot. Once, Ratnakar tried to rob Maharishi (महर्षि) Narad. Maharishi told him that killing was the worst sin and one has to pay heavily for it. Ratnakar found an excuse to say he was doing it for sustaining his family. Maharishi Narad asked him if his family would share the responsibility for his sin. He affirmed. Rishi said, would he go back to his family and get it confirmed. He would wait for him, if necessary he could tie him to a tree till he came back. Ratnakar did that and rushed to his family and asked them whether they shared the responsibility. None of his family members agreed to share the responsibility and they said it was his outlook how he earned their living. Ratnakar came puzzled and totally shattered. Narad said you are totally finished (मरा) today. In utter repentance he started repeating Mara which meant “I am killed”.

He did it for years in penance not realising that in continuity the pronunciation became “Rama” राम. An ant-hill grew around him, which in Sanskrit is known as “Valmika”. Repeating the holy name of Rama for many years during his self-punishment, he became pious and wrote the first ever poem “Ramayana” in Sanskrit consisting of 24,000 shlokas (श्लोक) and was given the name Maharishi “Valmiki” वाल्मीकि who is revered as the first poet or आदिकवि. Greed directed to self-realisation did wonder of wonders. The inner force remains the same, the direction changes.

  1. Illusion

An Afro-American Mrs. Blanche Rudolph, was a maid having a girl child Wilma born on 23rd June 1940 who had polio (a crippling disease that had no cure) right from childhood. At the age of 4, the doctor told “Wilma would never walk”, her left leg being paralyzed from the polio. From the age of 5, she spent her childhood in steel braces and special shoes. Mother loved her daughter immensely and at the same time lived under the illusion (मृगमरीचिका) that she would always be there to take care of her.

One day her illusion took a turn and she decided to devote herself to rehabilitate the child to make her self-reliant. She started taking her twice a week to the nearest hospital for Blacks 80 kM away, every other day of the week massaging the crippled limb at least four times a day. She shifted her resolve further from making her just walk to making her run and become the ‘fastest woman on earth’.

wilma

My doctors told me I would never walk again. My mother told me I would. I believed my mother

-Wilma Rudolph

On Sept 7th 1960, Wilma Glodean Rudolph became the first American woman to win 3-Gold medals in Rome Olympics becoming the fastest woman in the world at the age of 20, by winning the 100-meter dash, the 200-meter dash and ran the anchor on the 400-meter relay team. She was inducted into the U.S. Olympic Hall of Fame. Wilma G. Rudolph Residence Center was dedicated at Tennessee State University. Wilma Rudolph Boulevard was the name given to the portion of United States Highway Route 79 in Clarksville, Tennessee. A life-size bronze statue of Rudolph stands at the southern end of the Cumberland River Walk at the base of the Pedestrian Overpass, in Clarksville.

23rd June is Wilma Rudolph Day in the Tennessee State of USA.

5. Arrogance

Nations are proud of their virtues. At times their pride can convert to ego and even arrogance. British Empire was once quoted as an empire on which the sun never sets, mainly in the 19th and early 20th centuries. During this period, the British Empire reached a territorial size larger than that of any other empire in history. British started thinking they were great people. It is interesting to know how their feeling of greatness was directed towards a different dimension of their large heartedness. With his nonviolent approach in freedom struggle Mahatma Gandhi forced them to quit India as friends. The following story is quite interesting in this regard.

Coming to know that the Last Viceroy of India Lord Mountbatten’s daughter was getting married, Gandhiji proposed that he would like to send a gift. He got a tablecloth made out of the yarn spun by him personally and handed over to Mountbatten for onward transmission to the couple. The viceroy sent it on with a note “please preserve it along with your most precious jewels as it is made by a person who says that British should leave India as friends. Gandhiji silently shifted their greatness from arrogance of large territorial size of their empire to the pride in their large heartedness!

Satyamev Jayate!!!

With Best Wishes and Regards,

Dr. B.S.K.Naidu, BE (Hons), M.Tech., Ph.D., CBI Scholar, D.Eng. (Hon), FNAE, Hon.D.WRE (USA)

Chairman Emeritus, Great Lakes Institute of Management, Gurugram, INDIA

5 hours and 247 pages: The Seven Day Weekend

5 hours and 247 pages: The Seven Day Weekend

Business team with hands together - teamwork concepts, isolated

 

Last night I opened a book and 5 hours and 247 pages later, the book had broadened my thinking. That book was titled – “The Seven Day Weekend”, authored by Mr. Ricardo Semler.

The best part of reading a good book is that the horizons of the reader’s mind get broadened and he becomes wiser than he was before opening the book. What I realised post this mini-readathon was – 1) I was ready for the scheduled book review session. 2) I got something to read which was insightful not just in terms of business perspective, but also helped me to focus on what I actually want from my professional life and 3) the approach I have had with me actually does exist in the business world and firms do exist and make good profit by implementing the same approach.

The primary reason as to why this piece of work is admirable and inspirational is that the author talks of having chosen employee happiness and satisfaction as the driving force of his business, unlike the more bottom-line obsessed business workplaces.

The author shares his experience of working at Semco (the company headquartered at Sao Paulo, Brazil), where he wants not just him (the CEO), but also his employees, customers, suppliers and community to be happy. The real motivation or the driving force behind a successful company is not growth, not profits, not power, not status, but Happiness.

Along the way, he asked himself, “If the workweek is going to slop over into the weekend, then why can’t the weekend, with its precious restorative moments of playtime, my time, and our time, spill over into the workweek?” The author then provides a roadmap to achieve personal and professional success.

The stressful and many a times overloaded workweek robs us of our passion and pleasure, it destroys family and community stability, and sets up businesses to fail once they have burned out their employees and burned through ever more manipulative and oppressive strategies.

The book describes how managers can turn the repetition, boredom and aggravation of the usual workweek into an environment that is filled with joy, inspiration and freedom.

I do believe that the old way of doing business is sprinting towards its deathbed, and the time has come to re-invent and re-engineer the way of doing business which could be more or less like the Semco’s way, aimed at fulfilling the central purpose of business. Thus, a satisfactory and rewarding life can be made possible for the entire workforce for their hard work. In order to achieve that, it is important to treat co-workers like intelligent mature adults by allowing them to manage themselves. This, as a business model, has worked like a charm for Semco and could possibly be put to use at any organization, anywhere in the so business world that wants to move beyond traditional thinking to a more democratic realm.

While highlighting how flexibility in work time and self-management by employees can work wonders to improve a company’s bottom line, it also narrates how self-organized employee groups can harness extra potential to bring about change in productivity just by eliminating time lags. The book supports encouraging employees to rely on their own intuition and use it in the workplace with a combination of reasoning and experience to reach a decision.

The book is full of stories from Semco’s everyday existence and is a joy to read. Time and again these stories illustrate that one must not opt for the easy way out.

On one hand, it is a thought-provoking guidebook that reveals how freedom and happiness can lead a business to success. On the other, it is an easy, fun to read book as it shares the day to day experiences at the workplace. Also, it is 100% free of MBA-jargons.

Author : Kinshuk Chaturvedi

PGPM Class of 2017, Great Lakes