Column : Endgame Kejriwal

Written by Arindam Bhattacharya | Updated: Oct 20 2012, 06:33am hrs
When challengers have taken on incumbents in washing powder, auto & airlines businesses, customers have benefited

It is a strange time for Indian politics. The agenda appears to be set by a relative outsider and newcomer. Switch on any news channel or open the front page of any newspaper, and much of the coverage is taken up by Arvind Kejriwal and his IAC team, a classic case of a challenger attacking the incumbents, offering many parallels with and lessons for the business world.

If we step back and look at what Kejriwal and his IAC team are doing, we see they have adopted a classic guerrilla strategy of someone without many advantages and resources to attack the well-established incumbents. Find the weak spots of your opponents and attack hard and get them to react instinctively, without much thought, the natural reaction of the leader under attack. The challenger then withdraws and keeps everyone in suspense on where the next attack will be launched. They do enough to keep in the limelight and keep their opponents unsettled and on tenterhooks, dissipating energy in waiting to react rather than planning to win.

These challengers, whether they are the kind who operate in the jungles when waging war against the state or in the market when waging war against market leaders, have one thing in common. They change the rules of the game and in doing so often change the game forever. We saw that happen in the washing powder market in India when Nirma attacked the market leader Hindustan Lever, or Bharat Forge in the global truck axle market. Unfortunately, wars are often a zero sum game. They have winners and losers, or end up in a stalemate with no winners. In either case, the overall system, which comprises both the players and their environment, lose. If they are countries, they have to rebuild their economies. And if they are companies, they have to rebuild their profitability.

Sometimes it is very interesting to see that the strategies adopted by the challengers may not be new at all. But, in their hand, these strategies become a potent weapon to change the rules of the game and create advantage for them because of the way they deploy and execute these strategies. In the case of Kejriwal and IAC, the two platforms on which their campaign is being built are aam aadmi and anti-corruption, both of which are not new and have been borrowed from INC and BJP respectively. Some may even claim that they were getting close to their on sale date but in the hands of an inspired challenger, and Kejriwal certainly is one, old and well-known strategic platforms can be transformed into a potent weapon.

If we take this analogy of the marketplace further, we see that both challengers and incumbents can win in such a war. Who finally does is a matter of both strategy, and the ability to sustain the fight. Hindustan Lever took the fight to Nirma with their new product Wheel and regained much of the lost ground. On the other hand, a challenger like Bharat Forge was able to win against the much larger global incumbents and today is a global leader in its own right. To win, Hindustan Levers leadership team showed that it had the maturity to accept that its business model was flawed for the given market segment, and that it had the requisite flexibility to modify this model. It then leveraged its enormous resources to develop a counter-strategy and defended its market leadership. On the other hand, the global automotive component leaders did not show enough maturity and flexibility to play by the new rules of the game introduced by Bharat Forge and lost their leadership position. The same danger also exists for the challengers. They can get carried away by their initial success and overstretch their resources by expanding too fast and/or on too many fronts; thus, they become unable to maintain momentum and perish. Again, there are many examples of such shooting stars in the Indian business arena, who burned bright but dimmed equally fast like we saw with some of the players who entered the low-cost airlines business in India.

Over the last few days, I have had the opportunity to speak to many industry leaders about Kejriwals emergence and the challenger vs incumbent analogy between politics and business. While most agreed that the rules of the game in politics are under attack, there was (not surprisingly) little agreement about whether the challenger or the incumbents will prevail. Their reactions ranged from, "Oh no, this could not have happened at a worst time--just when the economy was starting to move finally," to, "This will probably cause us much pain in the short term, but if it leads to greater transparency of decision-making, then it is not such a bad thing for the country in the long term."

Others saw this as a natural progression in the maturing of our polity, drawing from the examples in business where every time a challenger has attacked an incumbent, be it in the washing powder segment or automotive axles or airlines, the outcome has been a better one for the final customers. Here the customers are the people of India, and I do believe that this current churn will also lead to a better democratic future for all of us.

The author is Managing Director, The Boston Consulting Group, India. The views expressed are personal