Episode 079 : Changes that Cause Disruption and Strategies to Overcome with Suman Sarkar

Suman Sarkar has more than 20 years of international consulting experience. He has a proven track record delivering innovative and strategic approaches to the supply chain and sourcing practices with outstanding results. As an author, he understands the power of creativity that will be unleashed if businesses can harness the talent they already have in-house. He’s a partner with Three S Consulting and he holds a Bachelor’s in Mechanical Engineering from ITT Kharagpur, India and a Master’s in Industrial Engineering from NITIE in Mumbai, India graduating at the top of his class from both schools. And he’s also a holder of an MBA from UCLA in Strategy and Finance. The author of the very popular book, Customer-Driven Disruption: Five Strategies to Stay Ahead of the Curve.

Questions

  • Tell us a little bit about your background?
  • Could you explain to us what do you mean by disruption? What is your definition of disruption and why do you make the analogy of it possibly being seen like a death sentence?
  • In your book you spoke about generational shifts, are you able to give us some examples of how you think that has led to major changes in the market?
  • Can you also share with us maybe some companies that you think are doing it right? Some of our listeners, if they’re saying to themselves, what are some organizations that I could look at that I could benchmark maybe some of their best practices on principles that they’re doing to stay ahead of what’s happening and to ensure that they’re meeting their existing customer needs, but also trying to exceed those customer needs in the same process?
  • Could you share with us what’s one on online resource tool, website or app that you absolutely cannot live without in your business?
  • Could you share maybe one or two books that have had the biggest impact on you?
  • Could you share with us what’s one thing that’s going on in your life right now that you are really excited about – either something that you are working on to develop yourself or your people?
  • Where can our listeners find you online?
  • Is there one quote or saying that during times of adversity you will draw on this particular quote or saying and it helps you to refocus and just remind yourself of why you’re doing what you’re doing and where you’re going?

Highlights

  • Suman stated that he grew up in India and there, he came from a very small town and he thinks the only reason I came out from that small town is because he was always interested in figuring out what the root cause of anything and that led him to engineering school. His teachers always used to mention this to him that, “Suman was probably not the fastest kid in the class, but he actually figures out what’s the root cause of anything. And so, he essentially comes up with solutions that are great.” Now, he has kept that trade throughout his life, it kind of drove many of his bosses crazy because he took his time to figure things out, but whatever solutions he came up and his customers loved it, his clients loved it. Many of the things he has done are still being practiced, companies still use it. And that’s one of the reasons why he has had the opportunity to work with large number of successful companies. One of the things he has learned over the years as he’s been working with these companies is that they are not distinct to be successful or remain successful and the primary root cause of that comes from the fact that companies are not focused on customers, they are focused on investors, they are not doing things that will endear them with the customers. And now, since customers are more informed as you know because of internet and computers, smartphones, they’re more informed and they’re more likely to change companies than ever before and the lack of focus on customers is really what’s driving disruption and failure of many large companies. And what we are seeing is the start of a tsunami, not the tsunami itself and this book is a plea for corporates and startups and everybody else to focus when it comes to business, that that’s customers. And the book gets into strategies around how you can meet those needs and what operational capabilities you need and then organizational structure and the details around them, but it gives a background on why he wrote this book.
  • Suman shared that disruption is essentially a complete change in direction and what essentially happens is, there was a demand for organic and suddenly, the demand for organic milk vanishes and people are buying now coconut milk or almond milk. For a farmer that produces organic milk, it’s a disruption to their business, it completely messes up their business because they have no idea how they can now survive or meet customer demand because this is a complete shift that they don’t control, it’s not only happening to the farmers, it’s happening all around us. Retail, a lot of businesses going out of business, closing shop, they are going bankrupt. UCG in trouble and every industry, for example, packaged food industry going down the drain. Many packaged food companies are in trouble and the companies are changing their CEOs. The problem is not around one or few industries, it’s all around us. The question is who is first and who is lost but it’s happening all around. It’s not only affecting the companies, if you take a step back and look at broader view and take it at a country level, you start to see the impact of customer changing needs on countries. For example, all oil demand is going down, the price is falling and it’s already starting to disrupt many economies like Venezuela and other places, we are starting to see that disruption happen. Even Saudi’s are now looking to diversify their economy. The changing customer needs could be a death sentence if you don’t keep up with those leads but if a company does well in keeping up with those needs, they are very, very successful. For example, Aldi, those companies that are struggling with meeting customer needs, they’re all introducing home delivery and sale-driving cars to get products to homes and all that. But Aldi has continued to focus high quality, affordable products and they have captured most of European grocery market, the discount grocers, the biggest grocers in Europe and they are starting to expand footprint in the U.S, they are going to be the third largest grocers in the U.S while grocery companies are focused on delivering to home, Aldi is focused on getting you the better, the best quality product at a very competitive price. And in his town where he lives, he sees a large number of people going to Aldi, where there’s very few go to other grocers. And what it basically tells him is that the companies that are focused on customer needs are likely to be successful, the companies that are not focused on customer needs are likely to find it challenging and more so now because people are very, very well informed than ever before. And basically, that’s what the disruption is all about. If you can figure out a way to meet the needs, then it works for you, if you are holding onto the past, it’s a death sentence.
  • Suman stated that he mentioned just before that there is a tsunami happening. And we’re just seeing the first tsunami and the driver behind this tsunami or the disruption is really the generational changes, the millennials and gen Z’s who are starting to become actually the millennials are becoming the largest buying group in the country, not only in the U.S actually, it’s all around the world, while baby boomers are all retiring. Now, the needs of baby boomers are very different from millennials. Millennials are completely different than baby boomers in many ways wanting to be different. They don’t buy beer and there are many things, they don’t like ownership, they have a large educational debt, so many of them are very conscious about where they spend money and they are essentially looking for solutions that meet their need and they’re ready to throw the old norms out of the window. His favorite is actually in Japan, Japan is a very conservative society, but their are millennials like U.S millennials are very different. For example, they don’t drink as much, if you have not, if you’ve been in Japan, you would see that that used to be the norm in our new generation. They don’t own cars; they don’t like to drive, they don’t own watches, they don’t work long hours in offices. So yes, millennials are very different and if you want to address millennials, you have to completely rethink the strategies and that work with baby boomers and do very differently with millennials. Millennials are very health conscious. He just talked about package food industries, the reason they’re having trouble is because they don’t have healthy and fresh food options for a millennials, so, of course, millennials are not buying from them. The traditional grocery companies are challenged because millennials love fresher, locally grown, socially conscious and all that food and they find that primarily in the farmer’s market. So, the farmer’s market, which is where, the local farmers bring their produce to sell, not the stalls, but these are big markets just like the grocery stores. Millennials go there, it’s really popular with them and they’re the largest growing category in the country, fresh produce category. So yes, millennials are very different and because their needs are very different, it’s a generational change that’s driving the disruption. Millennials are into personalization, and so there are two things that in his mind distinguishes millennials in terms of selling to them. One is clearly they don’t have large disposable income because of the debt they carry and the second one is they like to express their individuality much more than any other generation and what happens with that is the whole concept of personalization coming in the play. So, if an apparel retailer doesn’t have stylists and provide advice on how to dress and all that, how to be unique, those retailers are having a hard time. That’s why you see so many apparel retailers are actually struggling in the face of it. But retailers who offer some kind of personalization are successful. Look at Sephora. Sephora is doing very well with the younger generation because they provide cosmetics that attuned to skin tone and they use the information system, their database to figure out what’s the skin tone of a person and they match the right product and they are doing very well. So, whoever has figured out even a little bit of personalization is doing well in today’s world. And personalization is likely becoming bigger and bigger, completely different mindsets from the large companies to how they work. They’re still making standardized products and trying to sell it to the masses. Even Apple does it, you get three varieties of Apple products and that’s it. And they sell it big based on three cameras or whatever features it is, to sell it to millennials, you have to do things more personalized and you have to talk about how does it help you get the things that you want like photography or things like that, cameras probably don’t make sense to them. So, it’s probably a 180-degree change in thinking required from businesses and otherwise millennials will kind of disrupt them.

Yanique stated that Suman mentioned personalization and the fact that with the generational shift in terms of how baby boomers performed or bought or interfaced with businesses versus millennials and gen Zs. Now, a lot of companies are of the opinion that it’s okay if they lose one or two customers because they can attract new ones. What are your thoughts on trying to just keep the ones that they have already happy?

Suman shared that this is also kind of a talked about in the book, focus on your current customers before you focus on new. Yanique pointed out a very traditional thinking in business. It’s okay to lose in current customers which continue to fill the funnel and that is completely nonsensical because if you look at the research, research shows that current customers are likely to spend more and they are much, much more profitable than the newer customers. And you can look at industry after industry. For example, there was a great article on WSJ on Whole Foods, Whole Foods has grown, what’s unique about it is they increased their customer base, but the profitability and sales per new customer has declined quite significantly. And that’s true for most businesses, if you look at existing customers are likely to be more loyal and likely to spend more and be more profitable because you’re not spending money to acquire them than a new customer. But companies actually do complete reverse way. If you have ever signed up for an internet service in the U.S, you would know the internet companies will give you a discount to the new customer, whereas they will try to increase prices for their existing customers, which is essentially encouraging them to switch or move away and this dislike or dishonesty towards the existing customers is a problem because that kind of creates a disconnect and once the customer moves away, try somebody else’s product, they’re not likely to come back. And there lies the challenge, keeping existing customers happy first should be the first focus before companies spent a lot of money on acquiring a new one. Having a hole in the bucket is not going to help you, the first thing you should do is to patch up the hole before you pull more water.

  • Suman shared that there are many, many companies that do it right. Let’s start with the first one, Amazon does a great job, so does many of the large eCommerce companies like Alibaba and others, they do a great job. He just spoke about AldiAldi is a great example. Southwest is another example; Disney is another example. Chick-fil-A, he talked about how Chick-fil-A quality is great, even in the QSR. McDonald’s can have a space they do very, very well. He talked about some of the international companies like Haier in China. Haier in China has done an amazing job of creating an organization that keeps involving the customers. In the very beginning of the book, Suman talks about an Indian company called, Patanjali, who have introduced this plant, heart-based chemical, consumable products in India and they have challenged the industry leader, Hindustan UniLever, in all categories, and they are now half the size of Unilever in India and they are competing to become the biggest consumer goods company in India. There are examples in every market to look at like the Zara in Europe, that is in a fast fashion world, but has done a great job of addressing customer needs. There are companies in every niche that does very good job and they’re the companies who survive. And all you have to do is to walk around and see where the customers are lining up and buying stuff. Even Apple does a good job, but the problem lately has been Apple hasn’t really figured out the changing needs and they have been trying to sell the same old product, but there are a large number of companies out there that do amazing job of being focused on customers and continuing to evolve themselves to meet the needs of the customers as they change.
  • Suman shared that the one thing that he always uses, and he can’t live without in his businesses is Wall Street Journal. His business is essentially driven on knowing what’s happening in his market, in the industry, in general, and Wall Street Journal, it has been the greatest of the resources that he has, frankly. It gives him not only the perspective of the U.S but also shares information from all around the world. And it’s timely and also, they do a good amount of data collection and research, so, he likes Wall Street Journal, they don’t have a very political bias to it, of course, they have a little bit of political bias, but most of their articles of businesses is very good. And he finds that he spent quite a lot of time reading and understanding what they are sharing about the world and different companies and all that.
  • Suman shared that he reads a lot of science fiction, so, as an engineering student, he spent a lot of time reading about robots and iRobots.

He shared that Isaac Asimov had a huge impact when he was a kid and he wrote a series of books about the future and how the future society will evolve, how technology will evolve, and we do see a lot of things he said is coming true. So, he has been a great, great influencer on him. The book he really like lately it’s called, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by a group in the University of Chicago. They talk about how economics affects all parts of our society. When we think about economics, we think business, but really that drives everything, whether it’s people who are in gangs, whether it’s prostitution but they use the concept of economics all throughout the society and how it impacts every aspect of the society was amazing to him. He really liked that book; he was very interested in thinking outside the box and then thinking of the threads of societal problems and how do you go about solving them was very interesting.

  • Suman shared that he’s actually working on a startup right now. It’s called Pronto Home Delivery and they are in the process of launching this service in Tennessee. It’s a completely new way of looking at how you can service customers particularly, there are segment of U.S customers who can’t go to grocery stores or different stores to buy and all that. And they’re trying to figure out how to do that in a very cost effective and in a very high quality and customer focused passion. And they are launching that service in a few days actually and he’s very excited about it. They had to develop the whole systems and then figuring out the process because it’s a very difficult thing to master, the complexity is pretty high and then having to convince customers to use it is also going to be a challenge. So, if they can pull it off, he’ll be very proud of it.
  • Suman shared listeners can find him at –

www.prontohomedelivery.com

    www.three-s-consulting.com

    LinkedIn – Suman Sarkar

  • Suman shared that there’s one thing that he believes in and that says, “This too shall pass.” So, whether it’s a good time or bad time, he looks at it and says, “Okay, this too shall pass.” One way or another. So, he never presumes or take for granted that the good times will last, or the bad times will last, we just live through it.

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