IAA Young Turks Forum: ‘Chase margin first, volumes next’

The International Advertising Association (IAA) India chapter launched a new event series, the IAA Young Turks Forum, on 13 May. The Forum will be hosted once in two months with corporate leaders sharing insights in interactive sessions with executives under 40 years of age.

Nihal Kaviratne, CBE, chairman, Akzo Nobel India, addressed the audience in the inaugural session.

The session was divided in two parts - insights and interaction. Kaviratne, who is also the director of DBS Group and Bank, presented on the consumption pattern in Asia, with findings from an ‘Asia: Who’s Consuming?’ report done by DBS Group. 

Kaviratne cited findings from the study which was released earlier this year. The report suggests that just as it has done in the last five years, Asia will have to drive its own growth as US and Europe continue to demonstrate ‘subpar growth’. China contributed 66 per cent of Asia’s consumer demand, while India and Indonesia were other important markets, says the report.

The report finds that since the Lehman collapse five years ago, Asia has added ‘1.25 Germanys’ to the economic map in Asia and also that the region’s consumption has grown by 38 per cent at an average CAGR of 6.6 per cent. India is reported to have generated $71 bn of new consumer demand since the third quarter of 2008, 60 per cent more than Japan in the same period. The overarching theme found in the study was that Asians are spending more on things they ‘want’ and less on things they ‘need’. (The terms ‘want’ and ‘need’ being relative w.r.t. to each country in Asia.)

Post this, the floor was opened for questions. He was asked for some key pointers for success. In response, he offered the following pointers: disconnect from the gloom around, have short planning cycles in strained times, maintain focus on gross margin, maintain quality of product and/or service, bring in the ‘right’ people on board, make continued investment behind brands, make cash the priority, forge alliances and partnerships, live by one’s values, and celebrate every success, big or small, together as a company. 

He noted that there exists the temptation to go for options that are ‘low-hanging fruits’ to get the growth numbers up during frail economic times, but strongly advised CEOs to choose against doing so.

Taking about the culture of an organisation being a big asset he said, “The social endeavours of a business shouldn’t just be peripheral, they’ve got to be integrated to the business itself. A lot of people have this notion that you can build a culture just by dictating how it should be done. But the moment there is trouble the first thing that will be cut off would be the CSR. The heart and soul of the company should depend on its social endeavour.”

Between margin and volume, what should receive more attention during challenging times, Kaviratne was asked. He said, “You can’t have both. I would always pick margin first and when I’ve attained those margins I suggest you to fight for the volume.”

To create a buzz around the event, entries were invited to write in a 500 word essay on ‘Leadership in Turbulent Times’ and the winning entry was awarded to a young student Rishikesh Talang.

The evening came to an end with Srinivasan K Swamy, president - India Chapter and VP development - Apac, IAA, felicitating Kaviratne.