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Worldwide Is Not World-Class

Momofukus started as a single noodlebar in New York, arguably the toughest food and beverages (F&B) market on the planet. When they opened their doors for business in August 2004, Manhattan already had over 13,000 places to eat. But Momofukus obviously found their niche quite quickly with a reputation that went far beyond New York City. With that they later expanded to locations as far away as Sidney. It is a testament to their obsessive commitment and standards that their 37-year-old founder, David Chang, is the only Asian chef to make it to TIME magazine’s list of the 100 most influential people in the world.

Many businesses have limited locations and a finite set of clients. But a few of them choose to subscribe to exacting standards far above the norm for their business. These could be in design, manufacturing, packaging or customer experience. One or more of these will be of a level far above the demands of the limited catchment that they service.

And at times this could be a virtue. Theobroma in Mumbai is a fine example of a small but rapidly growing bakery business that is obsessed with maintaining its impeccable product and innovation standards. As a result, I suspect, they have a fervently loyal set of regulars who are driving growth through thoroughly well-deserved advocacy. It’s very difficult to play catch up with an obsession like that.

On the flip-side, there are any number of businesses which have achieved international footprint by a combination of scaling and acquisition. We know through hard experience that many of these “global businesses” trade in standards in exchange for market presence. Or at least fail to keep pace with the increasing demands of an expanded play in their rush to conquer new territory. I dare say, the undoing of two of the biggest handset brands had less to do with the advent of Apple or Samsung than a comfortable sense of numbness about what they were serving up each year.

Last fortnight, we explored the cross-border ambitions of Indian aspirants. An increasing number of players, in an ever widening number of categories from metals to automobiles and even consumer goods, are planting their flags on foreign shores. There is an unfathomable urgency amongst these worthies to get going as soon as they land. A ringside view will reveal the need to convince an impatient shareholder that it was indeed worth the investment.

Many of them come apart quite quickly. And this happens primarily for two reasons: either there is little understanding of what it takes to play in more complex environments, or worse, there is a substantial dilution of already existing standards in their anxiety to cover new ground. For example, domestic leadership in Indian telecom doesn’t necessarily equip you for the African market!

Most well-meaning firms struggle with the ability to retain (or build) the exacting standards that are absolutely essential to retain the essential character of their businesses. The  quest for fresh value from new markets, new consumers or even new offerings, are all risks to running performance. It is only the firms that can scale the standards that can overcome the pangs of expanding globally.

The reason why so many of the Fortune 500 still come from a clutch of Western nations is not hard to find. They set high bars. They are relentless about raising that bar and they usually are uncompromising (with the entire ecosystem) about adhering to these in letter and spirit.
Going worldwide is not the same as becoming world-class. There’s a world of difference.

The author, Ramesh Jude Thomas can be reached at ramesh@equitor.com

(This story was published in BW | Businessworld Issue Dated 13-07-2015)

2 comments:

Ashish Bahl said...

Ramesh you make a telling point. We seem to be present the world over but not in the same class as world beaters. Some where we really don't lose sleep on quality delivery. Delivering quality seems to be an attitude of "compliance" for us rather than an attitude driven by commitment to excellence. Which is a pity because we have some fine minds maybe even the finest but the delivery is not upto scratch...
Now that post 2008 Indian companies are waking to the reality that simple buy outs on a global scale is not the simple get big route to go. Airtel. TATA-JLR, ADAG, Mittals, the list is endless have all figured that deep pockets have kept them in play but quality delivery and creative thinking will determine where they go from here.
.....best Ashish Bahl

EQUiTOR said...

Dear Ashish

Thank you for your comment and your generosity. On the back of this article some fairly senior people will shortly be debating how we can evangelize this thinking. Will keep you posted.

Regards
RJT