Saturday, February 6, 2016

Vartalaap - in conversation with Mr Arijit Ghosh || President || HoneyWell's Aerospace, India || Interviewed by Harsha Daga & Piyush Jain || IIM Shillong || December 2015 edition

Mr. Arijit Ghosh President-Honeywell’s Aerospace India, is responsible for providing strategic direction for aerospace operations, prior to which he led Honeywell’s Defence and Space efforts. Previously, Mr. Ghosh worked at McKinsey & Co. and with the Indian Foreign Services. He also led Shanghai-India Business Association and Japan-India Friendship Association. Mr. Ghosh earned a Bachelor’s of Engineering from Jadavpur University, Kolkata, and a Master’s in Business Administration from Harvard University, USA.

Markathon: What we understand of the aerospace business is that it is purely direct marketing to the clients and it’s a B2B selling, so what according to you is the scope for creativity and innovation in this segment?

There is a lot of scope for innovation and creativity depending upon how how you define these terms. Innovation and creativity that is there in the consumer marketing does not have that much relevance in B2B marketing. However, principles everywhere remain the same. There are certain established ways of selling, certain established ways of marketing a product. Can you go out of the box? Can you think of certain different means of marketing and selling which will ultimately result into a positive impact on your topline and bottomline.  For example, as you mentioned direct selling, so is there a scope for using distributors in the chain? So then it no more remains a direct marketing, it becomes an indirect channel. Maybe some people are able to segment the people and their customers in a certain way  that in certain areas that the distributor is selling more and at a lower cost than what they would have done directly. So that is an innovation. That is a creative development. Similarly you can also think of how can you incentivise your sales force. As typically it is a complex business with complex products, where one person cannot understand all the products. You are selling aircraft engines, avionics, you are also selling landing gears and one person may spend the whole lifetime in understanding the high pressure stage of a gas turbine so in that case how do you structure your sales force and how do you incentivise them become important because different sales persons are going to sell different things to the same customer then you will say it is sub-optimal. It makes sense to have one sales person or one key account manager who looks after one customer. That is what is done in most of the businesses, but here we cannot do that because the key account manager might be selling engine but have no clue about the landing gears. So how do you plan that? There are different ways and means and different compromises that you have to strike which also calls for innovation and out of the box thinking. So it all depends on how you are looking at it.

Markathon: So maybe some things which are very normal for other businesses might turn out to be a great innovation in this segment because the business is such.

Yes. And then there are things which is very normal for other businesses will be completely inapplicable to us. For instance there are some companies in aerospace who don’t spend a single dollar on advertising. They believe it’s not necessary. The stuff that they make have only three customers to tap. Boeing, Airbus and Embraer so there is no need of advertising for that.

Markathon: Coming to your profile where you worked as a consultant where you specialized in B2B marketing, how was your experience being on the other side of the table? And also how was the journey while you were spanning through various industries and finally came to settle in something as niche as aerospace?

There is a fundamental difference in the way your assignments are structured in a consulting and in an operating  business. In operating, the buck stops with you. You not only have to devise a  plan or a strategy but also have to implement it on a real time. That is a bigger challenge than the strategizing piece as strategizing takes relatively less time but requires intense brain power whereas the execution bit takes longer and takes perseverance. So those are two different application of your brain and energy what you aim to achieve is a short burst of intellectual horsepower as well as your long term ability to persevere, stay focused on some things. Discipline in execution is  the key. It is very important. Consultants put focus on the former hence you devise of a strategy but then you are not implementing as it is somebody else’s and if he messes up, it is he who messed up. So you will not be held accountable for anything that you have for that. 

Markathon: Also sir having talked about B2B and B2C, Honeywell offers a wide variety for both the private consumer and also to major corporations. How does Honeywell handle that and how is B2B different from B2C?

See Honeywell is different for different people we have many business groups. So there are products in automation like air purifier that are B2C which we are selling through Amazon and Flipkart and aerospace in completely B2B except a few like private jet owners and private aircraft airplane owners. . Their buying behaviour is governed by consumer like behaviour. So we have a separate division for that because that market is completely different as it’s mainly in US. It’s fairly common there to have an airplane or a fractional ownership of an airplane. They think differently. The purchase or the ticket size of which are as small as 800-1000$ ticket price. For them we have a separate organization and approach this independently without this B2B bells and whistles which have different processes.

Markathon: We were also wondering how digital marketing is used in this sector, as Digital marketing is booming these days. We see many companies use social media and other online platforms to reach out to larger customers so how does a company use this is the aerospace industry?

There are certain things we can do to use this boom to our own advantage by firstly reaching out to your own employees to develop a certain philosophy or culture that you want inculcated in them. Social networking sites are very helpful is these cases. Beyond that in our B2B industry it can solve purposes such as influence public opinion about certain specific features and aspects of our business, like talking about something that happened in India, a couple of high profile helicopters crashed over the last few years which happened because they lacked a system called the ground proximity warning system. What it does is it informs the pilot if there is a rock nearby in the proximity of the helicopter or a kind of concrete structure that will interrupt the movement of the helicopter blade. It could be avoided. Both the cases the pilot did not see or did not apprehend the distance with the concrete/rock properly and so it crashed. So when it comes to Digital Marketing, it could be used to make people aware about such equipment’s, can also be used for redressal purposes. There are things available that can counter these things that could have told somebody in the government to make these things or install such equipment’s in the helicopters to avoid such accidents. This would have helped the pilot, passengers and the supplier which is us in this case. So digital marketing will not be useful as such to tell Boeing as to what to make or about the engine. So directly one cannot sell to its customers but can educate and make people and its consumers aware which will indirectly affect them.

Markathon: We spoke about how we can use social networking to reach to our employees and customers. As a company we know Honeywell ensures that it keeps in mind both the pilots and passengers while making its product, like the proximity system, etc. So how difficult is it to market the product and cater to both the customers at once?

Some things are important to all like safety and being reliable, i.e., being on time is important to passengers, as if you are in on time then more passengers will come to your airlines if they are happy. Like fuel consumption is more important to the airline and not at all important to the passengers as it might help the company reduce costs but indirectly might reduce the flight charges but not directly. As it has to be fuel efficient and then only airlines will buy your aircraft. Different customers have diff needs and so you need to keep in mind all those different needs and try to satisfy all and keep all happy.

Markathon: We were going through a report by Deloitte, where we saw that the number of orders vary from year to year, though they are increasing. So as a strategist and a marketeer how do you anticipate the demand and understand the market?

In the global scenario, it is difficult to anticipate year on year demand especially in the short run. As the global situation varies and so does the market in India. In the long run with quite decent accuracy we can predict the demand for the next 5-10 years. A mean can be estimated with reasonable accuracy but that is also depended on various aspects which gives the company very less lead time to play. May be for business jets it is possible but not for passenger jets. Airline customers have to go and book aircrafts and they have a big lead time. Aircrafts get delivered over a certain period of time. So after getting the order one would know how many aircrafts to deliver within the next 2 years because once you have taken a certain amount of order you cannot take any more for the next year so you have accurate information regarding the next 1-2 years. For 10 year also we can predict somewhat. The main issue is between 2-10 years.

Markathon: As you said that there are various nuances that needs to be thought about and be taken care of, so what kind of research and analysis goes on in Honeywell for the same?

We have got very good analysts that constantly monitor and analyse different data like the airlines plans, order book data, the aircraft OEM service and also how the data are trending in global and regional markets. The passenger growth is robust now which is around 20% per year so they analyse what will be the growth next year and commensurate to that the demand for aircraft. On the basis on 1.5 GDP growth we generally deduce the passenger growth in the Indian Market. Over the long term we can deduce GDP growth. That will enable us to understand how many aircrafts would be needed. Some big consulting companies who have hundreds of analysists do such research and analysis like centre for Asia-Pacific Aviation. We do it for business jets primarily for the global market. Sometimes they are pretty accurate and sometimes there will be some discrepancy.

Markathon: Commercial side of aerospace vs the defence side. Do we have collaboration with the Indian government here and how do you see it shaping in the near future?

The Defence sector follow a very structured process and pattern. Airforce navy, army have certain requirement. First they start with a 20 year plan which is not made public and then they make a 5 year plan which is made public from which we know what the armed forces are looking at. They are looking for a certain type of aircraft not of a certain make but like a specific combat aircraft.  Then you will know who the potential contender’s for it are. So they do not actually collaborate as such with any private sector companies to supply their demand profile. They are deliberated in the parliament and cabinet often and so they become available in the market and then based on that it can have its own forecast of what is required but the forecast are of very poor quality cause at the end in the government the time element is very unpredictable and stretchable and therefore while we can have a broad idea of what they need and they might procure we cannot actually forecast it very well and the accuracy will be low.

Markathon: You have helped Indian companies enter the Chinese market, what do you think from the perspective of a marketeer how is it different in India and China cause as India and China both are developing nations, growing and also the service and manufacturing sectors are booming here so sir what is your take on this?

I was working for the Indian companies in China. The Chinese market is a closed market by design as language and information is a barrier there so Indian companies face a lot of Non-Tariff barriers and I am sure they still face the same to enter the Chinese market. So the best way to approach the Chinese market therefore is to approach it head on. Send your people there (this is what most of the successful companies did to enter the market) and chose one the two options A) take their local company, like Ranbaxy purchased a local company  or b) if you are a supplier to an MNC then tag along with them, go to their Chinese operation and become supplier for that place, these things help a company overcome the initial two years of hardship that one would have to face if they enter it directly as these 2 years are the most difficult times. Once they have spent 5-6 years in China then they know how to get information. Some companies have done it differently but their number are very few. What they have done is they have either found a Chinese partner bought their firm or have got bought themselves.

Markathon: As we know you have been through an MBA yourself so what advice would you like to give to all the readers who have an inclination towards marketing?

See Marketing comes in different flavours some like consumer behaviour, digital marketing, brand management, etc. and some get into B2B marketing so people who have a flair for brand management, consumer behaviour should focus on that in particular but for people who are interested in not so glamorous part, the best way to get into a marketing firm is through a consulting company. From that you can get into a strategic marketing role. That has worked for me and I have seen that has worked for many people. You have to target the right company also.

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