I have had an epiphany. The other day, we were at lunch - a senior Indian business leader, an erudite foreigner who advises CEOs all over the world on globalization, and yours truly. The debate was about the size of the Indian market. 50 million? 200 million? What income level qualifies people to be consumers? Black money, wrong income reporting, and data denial was on the menu. And that was just the starters. I had a feeling of deja vu.
When will we ever break out of getting our knickers in a twist on data about India, and move to acceptance, understanding and insight? Can we accept that the data about India, especially Consumer India, is confusing and inconsistent in what it tells us? And that this is not because we lack a sophisticated understanding of complex data collection or interpretation, or because we can't discriminate between dodgy data and the good data. Yes, we could argue that one needs to be a super sleuth with a PhD in economics to piece together the whole picture from disparate bits of Government data, made available in a most user un friendly format. But we have several of such people around, and brilliantly analytical too. For example, just do a Google search on "income inequality in India" and there's stuff ranging from Abhijit Sen to Surjit Bhalla, analyses from the communist party magazine to capitalism's pink papers, and they all make total sense, though totally contradictory sense. From the same data.
Back to my epiphany. The truth is that all the apparent contradictions thrown up by the data on Consumer India are all true. As Shashi Tharoor has said so well, any truth about India can be contradicted by another (equally valid) truth, that even the words on our Government's crest "satyameva Jayate", "truth will triumph" begs the question "whose truth". It is now slowly dawning on me that the key to a sharp understanding of India, especially Consumer India, not Supplier India, lies in the softer stuff, of figuring out what lenses to use when looking at the data. For example, the communist party lens or the consultant to MNC lens? The lens that celebrates the richest 20% of the country controlling 46% of the income , that is, a country of 200 million people with a per capita GDP of over the magic number of 1200 USD? Or a country with 200 million people controlling 8% of the income, and living on less than a dollar a day? The business lens that celebrates the fact that consumption has grown from 1997 to 2002 by 14 to 40% in various quintiles of urban India and the top quintile of rural India or the political lens that celebrates the fact that rural consumption has declined in the run up to the election year? (Ref Abhijit Sen article). As Churchill said, if India is more of a geographic idea than a country, then everyone needs to conceptualise what is their target India, and act accordingly. And avoid the energy and time draining trap of debating whose lens is the "truth lens". It is like the poem of the elephant and the Blind Men of Indoostan. Just because someone has seen something does not mean that someone else could not have seen something quite different - in the same elephant. The "numbers speak for themselves, uniquely", brigade will have probably thrown up by now, at this dose of philosophy, instead of a discussion on data. But the real strategic value extracted from numbers is in knowing what strategic lens to look at them through, and more important, in how to think about things.
Now for that even more abstract question, how to think about what the Consumer India data is telling us about the Consumer India opportunity. Many years ago, Dr AS Ganguly, then chairman of ICI, said in his Chairman's speech "One of the more prominent topics preoccupying corporate India as well as foreign investors is the real size and promise of the Indian consumer market. The most widely quoted estimates have put this market size between 150 and 200 million consumers……..Following some marketing disappointments, downward estimates have gained prominence……could be as small as 20-25 million consumers……the shrinkage in estimates …..based on consumption and purchase of a certain class of goods represents a severely restricted sample…….such arbitrary downward estimates of numbers does not truly reflect a state of restricted opportunity, but rather non exploration of opportunities that the rest represent and whose needs for purchase and consumption continue to remain unsatisfied……". And the answer then, as it is now, is in creating the right business models, comprising the right price performance points, and more importantly the right cost structure and delivery mechanisms to be profitable with a demand structure that comprises a lot of people spending a little bit each, that adds up to a lot. Cell phone and two wheeler marketers now say that when the cocktail of regulation readiness x consumer readiness x supplier readiness x price drops comes together, profitable growth does occur; and that once a reasonably large base of consumers who already own exists, replacement demand driven value growth is not insignificant either. Retailers are feeling optimistic too, though supplier readiness is yet to peak; and micro credit and self help group providers are saying that the third and fourth quintiles are very responsive customer segments, will the regulators please do the obvious things needed for the supply side of this business to take off? CK Prahalad, in his new book, says that we can look at the bottom of the pyramid as a profitable market to serve, provided we think of different kinds of business models to serve it - and this thinking seems to be exciting more serious thinking all around, even if not action as yet. But I do believe that experimentation around this idea is beginning to happen.
So I guess the epiphany I have is that data, like beauty, is in the eye of the beholder, and that the Indian opportunity lies in BOP (Bottom of the Pyramid), as it does in BPO (Business Process Outsourcing).