Aspiration at the fulcrum

After finishing a daylong corporate meeting in Chennai, I went to Marina beach to breathe the cool evening breeze. Suddenly, a huge Audi stopped. The driver emerged, next a khaki-unformed policeman-type man, then the 60-year-old owner wearing a lungi folded in half, followed by his big family tumbling out to the beach. In the West, the Audi is bought for the intangible of personal pleasure, to experience its power, technology finesse and craftsmanship skill. In India rich people buy the Audi, but a chauffeur drives it, proving that high status symbol is enjoyed even as intangibles escape them. Conflict arises here because lifestyles are moving towards aspiration and quality. Aspiration and quality can be equated to human rights, while cost is like a religious sect that follows its own obligatory rules and regulations. If cost is the fulcrum of a deliverable, employees naturally focus on it, while paralyzing their knowledge and entrepreneurial business skills. This may satisfy promoters or shareholders, earn the employee a good appraisal, but it directly affects the brand, reducing it to a generic position. Cost, Quality and Aspiration cannot be compromised in any selling proposition at any price point in today’s digital technology market. In seeking aspiration, the consumer takes quality for granted. No longer is she asking, ‘What’s the price?’ This was her query before 2000 when savings was her top-of-mind. Post 1991liberalization, international brands started entering the country. By 2002, new generation teenagers and the previously deprived-of-choice consumers became exposed to high quality international products. India formally agreed to Trade Related Intellectual Property Rights of WTO, by 2005 markets became flooded with foreign goods. Faced with vast choice, the consuming Indian’s standard became international quality and aspiration. Intense competition brought down price, making it a hygiene factor. The West has always gone against nature’s given conditions, preferring control over nature through science and technology. This made them invent, irrespective of whether they destroyed the planet’s systems in doing so. The human comfort this brought gave rise to the free economy with economic power on one hand and understanding intangibles on the other. It’s possible that India never sought to change the universe as godmen have always eulogized the benefits of living with nature through systems like ayurveda and yoga. So if Indian brands are getting accepted in developed countries, it’s merely for cost advantage. This can be dangerous for sustainability. It indicates Indian industries do not understand how to create intangibles in a brand. Western brands justify high price by weaving in aspiration and quality that people accept to pay premium for. Even if they reduce price, aspiration and quality remain. There’s no question about profitability being priority, but an organization’s sustainability demands continuous consumer bonding. If cost structuring as operational efficiency satisfies you, the consumer’s key aspiration and quality needs remain unaddressed. Quality becomes a mundane jargon manifested in quality policies hung on factory and office walls. Volume brings down cost: Looking at the market through aspiration and quality, you’ll find volume decreases the cost factor. Developed countries in Europe did not factor in volume when they concentrated on aspiration and quality. Consequently products of aspiration and quality got aligned with high cost and became sophisticated premium luxury products. Americans introduced the concept of mass scale consumption of products. The Japanese and Koreans adopted that scale for mass consumption products, but injected it with aspiration as the priority, with quality inbuilt. Price was used for segmentation of the product category into different customer targets. Toyota’s Oobeya: I hugely admire Toyota’s extreme sensitivity to cost, that’s never at the cost of aspiration and quality. Toyota is not the inventor of the automobile but has redefined the automobile’s connect to millions across the world. Let me share Oobeya with you, a new approach to planning and engineering that promotes more innovation, lower costs, higher quality, and fewer last-minute changes. Corolla carries the Toyota DNA of quality, reliability and affordability while evoking consumer aspiration. In 1998, Toyota’s Chief Engineer Takeshi Yoshida took on the task of redesigning Corolla for a price under $15,000. Simultaneously the renovated design was to add high-tech options to win young drivers. Yoshida adopted Oobeya, which means big, open office in Japanese and stands for the power of open minds. It allowed Toyota to cut costs and boost quality. Cross functional teams from design, engineering, manufacturing, logistics and sales came together, tore down silos in engineering and manufacturing, and created more communication among people. ‘We had never looked at a car that way,’ said Yoshida. ‘In the past, each of us had a budget, and we were fine if we stayed under that.’ Subsequently, they realized savings in all areas, big and small. Toyota was making Corollas in North America and bringing the sunroofs from Canada. When logistics told manufacturing that transporting sunroof-equipped vehicles south from Canada cost $300 per car, executives revised the assembly process at a cost $600,000. This unexpected expenditure ended up saving millions for Toyota in the long run. The under $15,000 Corolla was ready in March 2002 with first time right quality unheard of in the automobile industry. The design quality was so perfect that not a single change had to be made in reaching the car to the market. Explains Yoshida: ‘There are no taboos in Oobeya. Everyone is an expert… play a part in building the car…equally important to the process, so we don’t confine ourselves to just one way of thinking our way out of a problem.’ Design the cost: To get the best advantage on cost it is essential to try every method such as outsourcing, various types of negotiations and wisely managing vendors. In the 21st century, those who design their cost factoring in consumer aspiration and quality will become sustaining winners in the future. When you design the cost, you are obliged to design the total deliverable where aspiration and quality become integral. But when an organization engages only in cost cutting, it becomes like a butcher of consumer sensitivity.

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