Have you heard about “SmartShift”? For those who haven’t, SmartShift is a startup incubated by The Mahindra Group and driven and led by the uniquely talented Ms. Kausalya Nandakumar.
SmartShift is an aggregator for cargo owners and transporters, enabling them to work with each other. Cargo owners can access the SmartShift service through the mobile app (currently available on android), the website or the dedicated call centre. You can learn more about SmartShift on their website www.smartshift.in. Hmmm…. So why am I talking about SmartShift? Actually, I am not. I want to talk more about this interview of Ms. Kausalya with BloombergQuint from Oct 2016. (to understand the article further, please watch the video first)
I found Kausalya a great speaker and an excellent business leader and could not help but draw parallels with some of my own beliefs and understanding about setting up a successful Digital business.
But what is Digital?
Having introduced Digital and SmartShift, let me now try and take you through the various Digital strategy and culture elements that are touched upon here and I will try and demystify those for you.
Elements of Digital Strategy and Culture
Disproportionate value creation: Kausalya talks about being able to create disproportionate value as one of the key aspirations of SmartShift. While it sounds too complex. In simple terms, disproportionate value would mean that the output (revenue, cost saving, time saving, etc.) derived out of the effort is several multiple times of the investment put into the effort. In this case, the business value derived is across multiple stake holders and areas –
Cargo owners – Increased business, better pricing, more transparency
Transporters – Cost saving, increased opportunity to grow business, better visibility on goods transferred, faster transfer of goods
Government – Increased tax collection leading to higher government revenues or lowering of taxes, improved policies
Mahindra – Opportunity to grow its core automobile business, incremental commission revenue from SmartShift, improved understanding of the industry leading to unforeseen growth opportunities in adjacent sectors/areas.
Majority of Digital Transformation or Reengineering initiatives arise because of stagnating growth from traditional revenue sources. Digital provides avenues that were previously unexplored and hence potential to generate disproportionate value.
Digital Platforms: This is a perfect example of a digital platform where Mahindra (or SmartShift) does not own the vehicles or the cargo but have been able to set up a business around the movement of goods by utilizing their experience in manufacturing automobiles and having faced the complex supply chain issues in our country. The biggest asset they utilized to build the business is their domain knowledge coupled with the wealth of supply chain related data they have collected over the years.
Other examples of successful platform businesses include – Amazon, Flipkart, Uber, Ola, Airbnb, etc.
Data Strategy: Today, we live in hypercompetitive world. A successful platform business is almost always data driven and organizations that consider their core business/customer data as a strategic asset are bound to succeed in the digital space. Mahindra seems to have had the right data strategy to be able to drive SmartShift.
Hyper-competition: Hyper-competition is a rapid and dynamic competition characterized by unsustainable advantage. Established leaders are being challenged by new Digital Disruptors across markets and industries. Companies like Mahindra will need to find avenues to disrupt themselves before someone else does. Mahindra can no longer afford to call itself an automobile manufacturer. In order to sustain continued growth, it will need to establish itself as a leader in the transportation sector and not be an automobile company. SmartShift is Mahindra’s attempt towards this goal.
Digital Disruption: Mahindra is using SmartShift as its strategy to disrupt the age old “naka” ecosystem or truck stands as the sole business model for freight transport in India. Digital Disruption is the phenomenon of new age digital first companies changing market dynamics and toppling existing players who fail to transform themselves. Best examples could be Ola and Uber disrupting the established black and yellow taxi service. Another potential area to watch out for could be the new age digital entertainment providers like Amazon Prime and Netflix and how our traditional DTH providers like Airtel, Tata Sky, etc. would compete with them. Note that Netflix and Prime have already disrupted the market in the developed world. But then India is unique in so many ways that you just cannot copy-paste strategies here.
Know Thy Customer: Kausalya mentions that one of the first things they did was talk to the customers (cargo movers and transporters) and understand their need gaps. As a basic principle of setting up a digital business (or any business for that matter), one should fully map out possible stakeholders, probable customer journeys and do a thorough market research to identify gaps in customer demand vs available best options. Identifying white spaces and possible value add is critical for long term success.
A useful insight that helped shape their digital strategy was 70% of their customer base did not have a smartphone and were reluctant to use SMS(text) on their feature phone. This led to a critical decision of setting up an IVRS based phone service to cater to this segment of the target customer base.
Incubation: A new digital business idea needs a different treatment from the word Go. Treatment by means of thought process, leadership support, budgetary requirements, people, and culture. Incubation helps carve out a separate business unit/start-up within the larger organizational setup and is the only way to ensure that the idea is not bogged down by the limitations that typically come with a large setup. It also needs a combination of like-minded, innovative, self-driven people from the parent organization and fresh new people coming from outside the organization. Kausalya at one moment describes how her 20-member team does everything including voiceover recording and taking customer calls.
3 key ingredients of a successful setup include industry/domain knowledge, a fresh digital first perspective and an agile approach. As per Forrester, a “Digital business is a journey, Not a destination.” And indeed, it’s a bumpy ride with a lot of U-turns. Being agile is key to continuous success in this journey.
Market Sizing: SmartShift did a thorough analysis of available data and found that 65% of all commercial transport vehicles operate in top 29 cities. Also, consumption of commercial transport services is directly proportional to GDP and consumption. They based their business plan on these assumptions and target to cover top 30 cities in next 3 years.
Digital business models require a thorough analysis of the available market opportunity to identify the right target customers and business strategy. A good understanding of the domain is key to arrive at more accurate numbers and hence the importance of domain understanding and availability of business-critical data.
Market Dynamics: SmartShift drew parallels in business model from Uber and Ola but were also aware that the cargo transportation is inherently different from passenger transportation. It is different because the customers are different, the providers are different and the competition is different. Also, the stakeholder expectation, the risks involved and engagement model are quite unique in this space. The transporters want the cheapest delivery of goods and in most scenarios, could compromise on speed. While it is important to track the movement of cargo but the chances of mishandling are high and hence insuring goods is critical. Keeping in mind the above differences, SmartShift built a digital platform with embedded reverse auction capabilities, GIS tracking facility, advanced notification features, and goods insurance option.
Partnerships: SmartShift partnered with telecom service providers (for location tracking on feature phones), LendingKart, IOCL and Mahindra Insurance (insurance service provider) on their platform.
Forging key partnerships is important to build a long term digital business model. Organizations intrinsically have a few core skills and focus on building upon those is more important than trying to do everything on their own. Also, having partnerships with players known to excel in their areas of expertise brings in higher credibility in the eyes of the customer.
Omni-channel: SmartShift is available on Android smartphones and a responsive website. Cargo movers and transporters could also connect with SmartShift over phone (thru IVRS). The support is available in multiple languages and in future could possibly include local languages. Important thing to remember here is Omni-channel does not mean all digital channels only. It means understanding the target customer base, their demographic details including economic factors, usage patterns and interaction with your services and ensuring that the customer is able to connect with you through any/all of their preferred channels and still have the expected/similar customer experience.
Customer Experience: Focus on customer helped SmartShift design the platform that provided its customers the features that they most desired and that was not provided by existing means. For example – Most economical delivery through reverse auctioning process, safe and secure delivery through GIS tracking, instant notification for faster business turnaround, transparent and digital transaction mechanism, availability on smartphones and IVRS, multi-lingual support, etc. to name a few. A good customer experience leads to sustained business success as in the case of SmartShift where they have already launched in 2 cities (Mumbai and Hyderabad) and have over 10,000 customers in just a year and growing at over 50% month on month. They plan to launch in 30 cities and have over a million customers in next three years. In doing so, measuring customer loyalty is key to ensure good customer experience and consistently achieve expected results.
Customer Experience is measured as the cumulative impact of a customer’s interaction with the organization/brand across a typical customer journey (pre-purchase to post-purchase customer support and re-purchase). This is typically measured through customer satisfaction analysis across various touchpoints in the journey. Customer satisfaction is measured on 5 key parameters, namely - rational, emotional, sensorial, physical, and spiritual. An organization that strives for the highest level of customer experience (going beyond customer delight) builds a form of spiritual bond with its customers. An example of such customers could be die-hard brand advocates who could go to any extend to ensure success of their beloved brands. Our favorite actor from south, Rajni Kant seems to have mastered this art. There are temples where his fans actually worship him!!!
Diversity: Kausalya is the youngest CEO in The Mahindra Group and already driving one of the most important initiatives that could define the future of her organization. It is heart-warming to hear success stories of our female colleagues like Kausalya and several others.
Team diversity plays a very prominent role in the growth of a new digital world. Digital is all about thinking the unthinkable. Diversity enables a culture of innovation and critical thinking. Growing protectionist feelings across countries could actually be a dampener in our path to a better digitally driven world.
While I tried to cover the most critical elements of a typical digital strategy, there are several others which did not find place in this article. Do follow me on NASSCOM Community and on LinkedIn and feel free to post your queries. I will be happy to answer those for you.