Creating Value in Business I NISSMAT I

Hello, good evening, all the delegates of the session, the learned speakers. I am Paul Singh, chairman of NISSMAT. On behalf of NISSMAT I welcome you all today this evening on this very, very important subject, as you know, value creation in business. The webinar is an international webinar. The chairman will tell you how many countries are taking part in this webinar. I'm sure that after the deliberations are over, you will have many takeaways and many points. Go back home, discuss, ponder and evaluate and then adopt.

Before we proceed further, let me say a few words about NISSMAT. The National Institute of Safety Security Management Technology was established three decades ago in 1990. It started with simple safety security subjects. With the passage of time, it adopted certain more subjects, important subjects like loss mitigation, loss prevention, risk mitigation audits, and attained a place of honor, and the teams trained by our NISSMAT, they undertook a number of audits, risk mitigation audits of multinational forces. Recently we started having a think tank and a research center. The idea is that NISSMAT aspires to be the foremost corporate training institute and a sort of think tank organization in the field of security, safety, management and applied technology in the globe. Thus it has started the process of creating research and inviting erudite scholars and professionals for these international webinars on important subjects.

Today's subject, as you know, sir and ladies and gentlemen, is about the value creation. What is the value creation will be dealt at length by the speaker. I'll only add one or two words as opening sentence or opening words, that a healthy profit of an organization does not equal to valuation, value creating valuation in business. Profit and valuation are quite healthy; cashbook does not mean your business has value to prospective buyer. The value to prospective buyer has to be created with the passage of time through certain means, certain ways, certain measures, which our speakers will elaborate. Now, sometime I say that value is created by establishing recurring and diversified revenue streams. Sometime the value can be created by not being dependent on only one textual person but variety of persons from whom you can intake. Sometime you can increase the value by a strategic planning. Sometime you can strengthen systems and structures of an organization and create value.

As I have been dealing a lot in the intellectual property right, the value is created by the multinational organization. I'll just refer to one small instance. For example, Hindustan Unilever has created its value. Sunlight soap or Lux soap is sold in the market, but the wrapper is more important in which it is wrapped. That is the point — the soap inside is of course of value, but they see the wrapper and then they purchase it. The unethical elements, those who do not have any value in their organization, they start creating certain duplicate or pass off wrappers, pass off products identical to these products, but actually they are not actual products, so thereby they are under certain laws, IPR etc., held for pass off. But what I am trying to say — they are trying to create profit, but multinational firms have created a value for their product.

Same is the case with many artists. Same is the case with many writers. A writer at a point of time can create value by virtue of his own intrinsic talent or by virtue of certain environments, or I would call it certain environment which pertains to literary work or pertains to artistic work. That value which has created with the passage of time comes to the forefront. I remember vividly that quite some time back one very, very prominent author, T. S. Eliot, he suggested critical analysis, critical creative analysis. No — critical and creative are diametrically opposed, at that time it was said, but with the passage of time such a value has been created that today critical creative criticism has become part of the literature. So that is how the values are created. Now to provide quality education program, research facility, consultancy in its own qualitative manner in the field of security, we want to create value for NISSMAT, and for creating this value for NISSMAT we are getting the help, we are getting the aid, we are getting the association of our scholars who are coming here and telling us something as to how is the value creation.

Ladies and gentlemen, with these words, I'd like to say a few words about our chairman, Mr. Panchi Talia. Mr. Paw Tal is an ex army officer. I just like to say that when he resigned from his service, army service, as a young officer, some friends, they were wondering whether his decision was right or wrong. But he had that passion to achieve something, and he achieved. He defined, I would call it, he defined success for himself, and defined success by his passion, by his focus, by his persistence, by his ideas, and ultimately moved forward. Today Mr. Bhanjit Alwalia, as you know, is a chairman of Alwalia Holding Private Limited, is a pan India company and has under its belt a number of other companies like Premier Consultancy and Investigation Private Limited, India Skills Private Limited, Tax Course, and this is a very important — they have created a platform for assessments which is world recognized platform. Then they have got Premier I and other innovative integrated serverless technique through cloud.

National and international recognition he has obtained while in the private sector also, as a past chairman of the Council of International Investigators, as a governor of Asian Professional Security Association, as a governor of Central Association of Private Security Agencies, as well as he has been awarded Malcolm Thompson awards for his excellent services by the Council of International Investigation. Mr. Pon Alwalia is now going to moderate this session and take the session forward. I request Mr. Po Alia to come over or take the session forward, introduce the speaker and let us start with the program. Thank you very much.

Thank you very much, sir. Let me just begin by — you know, I'll take a minute to introduce the president of the organization so that we all get a context in which we are working. Mr. Sepal Singh served in several Indian states in India as a senior police officer. He raised a new force called the Rapid Action Force to deal with communal riots in India. It was the first of its kind in India and he was its first chief. He raised from inception and headed the Internal Security Academy which was founded in Rajasthan in India to train senior administrators, police officers and high echelon public servants on internal security, law and order. In recognition of his outstanding services during his service career he was decorated with the President's Police Medal for distinguished service, the Indian Police Medal for meritorious service, Police Special Duty Medal with bar, Sena Medal and a number of commendations and rewards.

After retirement, in private business, he was recognized for his service by the president of India in 2009 as the security personality of the year. Then in 2011 the home minister awarded him the Donachara award. Then the governor of Punjab came forward in 2012 and presented him with a scroll of honor, which is a very rare prestige given to anyone. There's an organization called Asian Professional Security Association in which he was awarded the lifetime achievement award, and in Bangkok another police organization recognized him as a lifetime achiever in Thailand. He's a masters in English literature. He's a graduate from the Punjab University. After that he served in a Swiss pharma company establishing the Swiss brand in India. Post partition he helped his father to run his business, which included running the cinema hall in Ludhiana, and before joining the police service in 1962 he served as a lecturer in the University of Punjab.

He has post-retirement been involved with the skills training, making national occupational standards for the NSDC. He was chairman of the committee to work out the star rating for the private security industry with the Quality Control Council of India. He's an adviser to the Asian Professional Security Association. He's the honorary director general of Central Association of Private Security Industry and the Private Detectives Association. His face is well known in the country as a dynamic security professional who has appeared a number of times on national TV. His interviews, his press briefings have always received wide media coverage. So ladies and gentlemen, this is the president of NISSMAT.

Now I'll take a minute to introduce Mr. Gautam Mahajan. You know, it's very difficult to introduce people like Mr. Mahajan in a short span of time. His achievements are tremendous and I would just sort of highlight the ones which are more prominent. Mr. Gautam Mahajan is a graduate from IIT Madras and he's an institute merit scholar. Then he did his masters in mechanics from the same institute and PhD from Illinois and MBA from Suffolk University. Currently he's a president of Customer Value Foundation. He's a thought leader in customer value and value creation. He mentors the Value Creation Alliance. He's the editor of the Journal of Creating Value. He helps value creation centers in Denmark and at the University of Maryland and a value school in Japan. He holds 18 patents which are being used worldwide.

Gautam worked for 17 years in the United States for a Fortune 50 company. He has mentored and developed CEOs, executives and consulted for several multinational companies which include Alcoa, Dupont, Continental, Reynolds, GTE, and in India, Birla and Cbridgeidge. He has authored six books including the best-selling book called How Creating Customer Value Can Make You a Great Executive. He has been the president of the Indian-American Chambers of Commerce. He's the chairman of the Plast India committee. He's the vice president, All India Plastic Manufacturers Association. He's trustee of the Plastics Institute in America. He's a member of the US India think tank. He's chairman of US India Economic Relations Forum. Amongst his honors, he's a fellowship from the Harvard Business School. He's honored with distinguished alumni award by the Illinois Institute of Technology. He has delivered talks in the US, Europe, Middle East, South Asia and Pacific Asia. He has lectured in IITs all across India. Ladies and gentlemen, I now present to you Mr. Gautam Mahajan.

Thank you. Can you hear me? Yes. Yes, we can. Okay. Let me just start with a small — can you see this? No, not yet. Now can you see the screen? No, not as yet. Now can you see the screen? No. No. You see the screen now? Yes. Okay.

So I'm going to talk about value and customers and how you change mindsets, and I have this picture here because about 11 years ago Tata Chemicals, among other Tata companies, adopted customer value. So what I'm talking about is not something that is pie in the sky or not known or not used. So now, how do I stop this? I need to stop sharing the screen, if you don't mind. Can you help out, please? There should be a stop share. Now are you still seeing the screen? No, it's gone. Okay, good.

All right. So, let's get started. I'm going to talk about only two points because creating value is a huge subject, and that is: the first one is what is value and why important for you, and the second is customer circles, which is a bottom-up approach. So you know, all of you know that costs are going up today and prices are coming down and it's becoming more and more difficult to do business. So you have to cut costs while making sure that the customer gets satisfaction. This to many sounds like a costly proposition. Most companies find this paradoxical. Yet companies like Singapore Airlines found this was easy. Making fewer mistakes and doing what the customers liked and giving them value is the way to go. And the cost of mistakes and annoying the customer is significant. It takes money and your time to correct problems you started for the customer. No wonder Singapore Airlines is profitable.

So my advice to you is to do the right things for the customer and create value for him. And we'll talk about what value is. And then you start to wonder, you spend money on the customer, why doesn't it work? And then the answer comes back that satisfaction itself does not lead to loyalty. Satisfaction is temporary and you really need to create value to create loyalty. Also you'll find out that there is poor followup, not enough focus on the customer, and generally this customer is not the priority of the CEO — making profits is — and very often you follow the wrong procedures and there are no mindset changes but training for skills and processes. So we have to change all of this, and value creation is a mindset.

So at the end of the day you have to create customer value to get ahead, and to do so you have to understand that the role of executives and people is to create value for employees and customers and thereby for shareholders. The role of an executive is not just to be a good administrator or a good efficiency expert, which is what the MBA schools teach. The CEO down have to be involved in understanding and creating value, and therefore they have to start with a customer strategy to get everyone involved. So let me ask how many of you have a customer strategy, or how many of you have heard of something called a customer strategy. So that's one thing that we'll have to do if you want to get and create customer value. Then you have to form customer circles, which is a bottom-up approach, and I'll talk about it later. And you have to remember that creating customer value goes far beyond experience and quality and leads to increased loyalty and increased market share. Measuring value allows you to create more value effectively, and quality people should become value creators.

There is a mistaken notion that people buy based on price or satisfaction. They may be satisfied or not like your price, or they may like your price but not be satisfied. More than that, as I said before, satisfaction does not create loyalty. So, let's take an example of a restaurant you go to all of the time, and one day the food is terrible. What do you do? You call the manager and say, "Look, we come here every week and today the food's been terrible, so please correct all of this." But you don't stop going to this restaurant even though you were dissatisfied. And let's say you love flying by Indigo, and one day the Indigo flight is late and they lose your baggage and you're very, very unhappy. Are you going to stop flying Indigo? But the same day you come back by Air India, that you don't normally fly, and it's perfect. It's on time, they're very nice to you, and you're very happy. Will you switch to Air India? No.

So remember, people buy from you, or your customers, only because you create greater value than your competitors. This is a competitive world and people are comparing you to your competition. So I'm going to take a trivial example of giving a guard to American Express or Citibank. You require a more polished guard who learns about the bank and its customers and how to treat them. The other day I got three missed calls from a Gurgaon number. I called back and yes, it was American Express, and I told the guard who picked up the call, I got a missed call from this number, and he said this is not possible because no one else is in the office — obviously offices are empty now. By saying this, that it was not possible, he made me a liar. But you know, I feel sorry for the guard because the real problem was Amex. Amex should not have been using this number as an identification. They actually should have been using some other number. But if they were using this number, then the guard should get to his boss and say you should talk to Amex and make sure that this does not happen. And I'll tell you how, later on, these kinds of things can take place and how you can correct them. So these things happen sometimes because of carelessness, sometimes because of not caring.

Walter Vieira was a very famous marketing guy, the marketing guru in India, and I are publishing my seventh book called Customer Value Starvation. It talks about value starvation we customers get. What is value starvation? These are things that irritate and frustrate a customer. For example, I stood in line for breakfast at a fast food restaurant in a mall. When my turn came, the girl behind the counter said, "I cannot serve breakfast because it is past 10:30 a.m." It was only 10:31. I said, "I was in line." She said, "But it's past 10:30." So, I left and went next door and these people served me breakfast. So, they lost a customer. Isn't this rigidity of rules causing us to lose control? We have to learn not to say no. We have to learn not to be rigid. We have to learn to communicate. We have to learn to work in a team, and we have to learn to find solutions and create value, and above all avoid value starvation.

So let me first define value. What is value? Is it price or is it quality? Value for money means price consciousness, and many of you use that word, and money for value is the opposite. People are willing to pay for something that they like. Value creation is executing proactive and conscious actions that increase the overall good and well-being and the worth of ideas, goods, services, people or institutions, including society and all stakeholders like employees, customers, partners and others, and value waiting to happen. I'll tell you what value waiting to happen is later on. Worth — I use the word worth — is the juxtaposition of benefits and cost. And cost is not price alone, and I'll show that, and it includes effort and price justification or value proposition. Customer value is generally the value you create for your customers divided by the value your competition creates for its customers. So it's always measured against competition. So it's not just you, but it's your competition that's involved. This means we have to create more value for the customer than competition.

And when we measure value, it breaks up into costs and benefits. Can you see this? Can you see the screen? Yes. Yes. Yeah. So value is 100%, and it breaks up into cost and benefits. And cost breaks up into price and non-price. So I have cost, and how important is the cost to your customer? Just think about it. Is it 70% or is it 30%? Or how important are the benefits to your customer? Are the benefits 20% or are the benefits 80%? And price, of course, you know what price is, but what is non-price? Sometimes, especially in B2B, you have to justify your price. You have to tell the customer why are you paying me a little bit more for something that is really worthwhile. And non-price can also include things like the effort that the customer has to take, or it can include the respect for the customer and things of that sort. And the benefits are as seen by the customer. It could be your product and service. It could be your people. It could be your brand. It could be a whole bunch of things. So if you take into account what you pay and what you get, you can then understand what the customer sees as value. Have you got that? Yeah.

So let's keep moving. I'm going to show you — just trying to share the screen again with you. Okay, this guy speaks very fast, so be a little careful. We'll have a chat about it in a moment.

There's no such thing as a product that's too expensive. No such thing as a product that's too expensive. A customer tells you a product is too expensive, you're talking to the wrong customer. You think if anyone walks into Lamborghini and says, "But a Toyota is less," Lamborghini will tell you, "Then go to Toyota. Why are you here?" True fact. I'm the most premium price speaker in South Africa. I charge in South Africa more than any other speaker in the market. My office will also tell you price is not a negotiation I have with my clients. I never talk price. I talk value. Anytime you find yourself talking price, know that now you are not an entrepreneur anymore. Never talk price with customers. Talk value. Don't talk price, talk value. And the difference between the two is perception. So I'm going to come back to this in a minute.

I need an example. What do you do, man? Makeup artist. You're a makeup artist. This is fantastic. What's your name? Cindy. Cindy. Love your hair. You think that would work on me? It wouldn't work? Your hair color on me? It would. It would — red. It what? Red. So, what I will say, how much do you charge per hour? I charge per face. So, I'll say I have never in my life charged per face. That's really cool. How much per face? Ah, I love people like you. You are so cool. Can we case study you for a bit? Is that okay? Yes. Right. So let me see — she charges 800 rand per face and it takes you 45 minutes to an hour, at the end of which we have a face. Right now, Cindy, how many customers have come to you and said, "Can you lower the price?" A part of you. What do you do then? You lower the price, right? No. What do you do? I say, "No, I can't," and go to someone else because that's my time, that's my skill, and that's my product. Never say no. Why? Cuz then you walk away from a sale. The fact that I came to you means I'm interested in buying.

So, what you got to figure out — this is a great sales technique — what you got to figure out is how to make the customer feel bad for not buying. The minute you say no, they don't feel bad, cuz then they're like, "She's arrogant," and they walk away. Never say no. No is a word you should try never to use in a sales process. You got to find a way of saying no without saying no. And then you got to find a way of saying I'm not the problem, Mr. Customer, you are. Okay. So, let's try this. Can we model this? I'm coming to you. Hi. Can you do my face, please? Yes. Right. I have a budget of like 420. Yes. Okay. You mean I can charge you 850. Sorry, what? I charge 800. No, I wasn't asking how much you charge. I said my budget is 420. Okay, I can refer you to someone else on my list. Oh, you can refer me. Okay, cool. Give me the number. Take the number. Walk away. What have you just said to me? No.

Can I play you? Try. Good. I have a budget for 20. Of what? 420. 420 is your budget. Where are you going? To a wedding. Going to a wedding. You're going to a wedding? Oh, wow. Is there going to be like friends there? Yeah. Are you married? No. You have an ex. Watch this thing. Just watch. All right. So, your ex might be at the wedding. What's it worth to you to make sure that your ex sees you looking the best you've ever looked? Is it? I mean, look, you want to pay me 420, I charge 800. The difference between the two is 380 bucks. What I'm trying to work out is if making your ex feel bad is worth 380 bucks or not. Cuz if it is, then I'm the person you come to. But if looking any kind of way, whether you see your ex or not, is not important, then I'm happy to find you somebody who can do it for 420. What did I just do? I changed the conversation from price to value. Now, in her mind, the anchor is not price. The anchor is this bloody ex. Yeah. All the time. Shift the anchor. Shift the anchor all the time. Yeah. The price — price is the conversation people have absent of value. The minute someone mentions price, it means that there's no value. It means you've commoditized what you do. Never talk price. Always talk value. Does that make sense? You want to try it again? It's a cool exercise, right? Okay.

Did that make sense to you? So you got to remember that if you start talking price, that means you have nothing else to really offer the customer, and therefore I would suggest that you start to look at things differently. So you must change your attitude. You have to keep asking, how do I attract the customer? How do I keep him? How do I service him? And what can I start to do differently? From the video, you learned not to say no. Do not turn your customer away. Do not annoy your customer. Create value for him.

And what is value waiting to happen? Value waiting to happen is problems looking for value solutions. All of your customers have some problems or other. And if you become aware of what their needs are and what their problems are, then the customer has problems waiting for solutions, and if you can give him that solution, then you are far ahead of the game and you are going to win that customer. So that is what value waiting to happen is.

So let's look at value added services. Know your customers and being able to identify them, know their needs, fulfill them to the best of your ability without forgoing your primary task. So I'll give you an example. I was staying at the Taj President in Bombay and I left the hotel to catch a flight to Delhi. Halfway I realized I'd left my laptop charger in the room. In a panic, I called the hotel and spoke to the duty manager. Can you check if my charger is still in room 217? He said, "If we find it, can we send it to you by courier, and it will cost you." I said, "Fine, but do you have the charger?" To cut a long story short, he never told me if they had found the charger. So, I hung up and redialed again and managed to talk to the general manager, who put me on hold for a minute and said, "Yes, we have your charger and I will arrange to get it to your house in Delhi within 4 hours," which they did, and they got a loyal customer. So you can see that you can actually do things to create value for the customer.

And your communications must be good. So the customer must comprehend what you're saying, not you. If you know what you're saying, that's fine, but if the customer doesn't know what you're saying, it's useless. So telling a customer in Singapore, these are the RBI rules — how the hell is he supposed to know who RBI is? So you have to worry about all of these things.

And then you need to start customer circles, which is a group of your frontline people who sit with one or two decision makers. The purpose is not to train. Remember, training is for dogs and education is for human beings. If you want to teach rote things, train: stand, salute, polish your shoes. If you want to change mindsets, then you have to educate and start customer circles. The first thing you do in a customer circle is to build the self-esteem of the frontline people, because they really get butchered by the customer, and you must build their self-esteem. Then you get them to talk about what they should be doing. You get them to talk about why customers get angry. They should talk about why customers feel good. And you never tell them what to do. They will come back and tell you what to do. And since they're telling you what to do, and it's 90 or 95% of what you would have asked them to do, they take ownership of it and then they run with it.

So if the people in the American Express example were in a customer circle, they would have gotten together and they would have said, you know, I got this call from someone and he was quite upset that the call had come from there but there was no one to take the call, and then the senior staff says, okay, what happened, and they understand it, and then they say we will talk to Amex and make sure that Amex does not give this number when they are not present in the office. So these are the kinds of things that happen in a customer circle.

And to really get ahead you must know the six A's. Six A's are: awareness — you must be aware of things around you; you must have an attitude, not just say this is my job, I'm just doing my job, you have to go beyond that; you have to anticipate; and you have to have agility; and obviously you must have ability; and you must be ambidextrous — be able to do more than one thing at the same time. Be aware of things around you. Notice, be aware of customers and their needs and well-being. Anticipate problems and customer needs. Be agile, move fast, and be willing to change. Have a positive and great attitude. Avoid value starvation. Remember, you make the difference. Remember, you are important. People notice something different and notice you're trying to be helpful and useful and that you're creating value. The message is you have to be better than others if you want to win and keep customers — not better in your eyes, but in the eyes of the customer. So you must understand the customer's perception of the value you create. You do this by talking to customers, by doing research, and you can even measure something called customer value added. Will you make a difference today? Will you have a customer strategy and will you form customer circles? The force is in us. Use the force in the organization for customers and to create value. Thank you.

Thank you very much, Gautam. Excellent takeaways for, I think, majority of us who are listening. And now I'll take a minute to introduce our speaker from Israel, Dr. Moshe David. He will be speaking to us from the famous town of Haifa in Israel. Moshe has been involved in customer quality for more than 35 years, and as you know, Israeli customer service is probably the best in the world. He established and managed Israel's first customer service department, revolutionizing the field in Israel and showing an ROI of 177% in complaint handling. Moshe is an adjunct lecturer of marketing and service management in the Technion, that's Haifa in Israel, as well as a faculty member at the Haifa campus of the academic center. He is also an associate editor of the Journal of Creating Value. Moshe is committed to improving the level of service quality, customer centricity and value creation through articles, lectures, research and consulting. He received his PhD from Texas A&M University in 1998. He's also associated with the Journal of Consumer Satisfaction, Dissatisfaction, and Customer Behavior. Now over to Dr. Moshe David.

Thank you, sir. Thank you. I'm a very, very busy person and I still have time for my six grandchildren. I'm going to do a share screen. Can everybody see my screen? Yes, we can. Okay, very good.

So, what I want to talk to you about is value destruction, and coming after the words of Gautam Mahajan, it is a very difficult task to outdo. So, I'm going to try by looking at the flip side of the coin. Okay? And what I want you to do is I want you to give the customer a hammer. This is a picture of a grandmother. Her name was Mona Shaw. And in 2007, she revolutionized how we look at business, how we look at value creation. Because after getting the runaround from Comcast for a couple of months, making appointments that nobody showed up and not answering the phone, Mrs. Shaw decided to take her husband's hammer and went down to the Comcast headquarters and started swinging it at computers and telephones and screens, asking them, "Are you listening now? Are you listening now?" Because nobody would listen to her before. And she is my hero.

And we have to give the customer a hammer. Not a physical hammer, but the idea that the business needs to have a safety valve somewhere — I'm sorry, somewhere where the customer can turn to when the bureaucracy takes over, because dealing with the bureaucracy is something no customer enjoys doing. So, no bureaucracy. And if there is a bureaucracy, I have to make sure that the customer has somebody they can go to that will be willing to listen to them. Because today she took a hammer; tomorrow she's leaving the company, social media. We do not want that to happen.

So, we set up our complaint department. But complaint handling has only one job. It's to keep the customer coming back, and most complaint handling departments do not do that. This is a loss of revenue and this is a waste of resources. So if your customer handling department is not giving the customer a good reason to come back, you are not going to become a customer centric organization. It's impossible. If I can't handle a complaint, how can I be customer centric on a daily basis?

Okay, so let's look at this for a moment. We all agree that organizations want the most profitable customers. That makes perfect sense. But let's flip this a moment and look at it from the customer's point of view. The customer is looking for a supplier who will offer them the most value added. And this is something Gautam talked about. Okay, I have to look at the value that I'm giving the customer relative to the value that they're already getting from the competition. And if I cannot be the supplier of choice, if I cannot be the one giving them the most value added, then I am not going to get the most profitable customers. It is that simple.

So how do we become the supplier of choice? We solve customer problems. Not company problems, customer problems. Okay? I want the customer to come to me and say, "I have a problem." This is my chance as a company to fix that problem. So what do we do instead? Research has shown that out of all of the complaints, only one-third of those complaints are functionally the organization's fault. And the other two-thirds, some of it the customer is at fault and some of it there are outside circumstances. But only one-third of complaints functionally belong to the organization. What does most companies' complaint handling department do? They have to look into the complaint. Let me check on that. And as Gautam pointed out, as soon as I say, "Let me look into that," I am calling the customer a liar. The customer said, "This is what happened. Please fix it." "Let me look into that for you." The other two-thirds of the complainers are very frustrated.

So, we have to go back to the basics. And the basics are very simple. I have a leaky bucket. And if I look at the bucket as my total customer base, I'm all the time pouring water into the bucket. The water is the new customers. But I don't notice that I have holes at the bottom of the bucket. These are the customers that leave, whether they complain or not. Well, if they're leaving now, I have to pour more water into the bucket. And if I just turn my head for a moment, the bucket is half empty. I have to pour even more water. But that costs a lot of money. It can cost somewhere between five to 20 times what it's going to cost to keep the customer satisfied in the first place. So, gentlemen, plug the holes in the bucket. Find out why the customer is upset. I have never come across a customer that called for no reason. I've never come across a customer that called me on the phone at a customer complaint office and said, "Hi, Moshe. How are you doing? How's your day?" No, they always call with a problem. It may not be my problem, but it is a problem. Find out what is bothering the customer. Fix it, and you have earned a customer for life.

Why is this a problem? Because most service failures, most service destruction, value destruction — they're not failures. They have been designed into the system by misguided choices that managers have made. We designed the system to fail the customers. That is not very smart. So value destruction — we're looking at the cost of leaving value added on the table, and it can be intentional. We charge customers extra money, service calls, support fees, whatever. More importantly, value destruction can be unintentional. Long wait time. Why do I have to wait on hold for 30 minutes for the organization to answer me? Why is their time more important than my time? Firmish efficiency is a big problem. Efficiency is not efficient. I want effectiveness. I want you to fix my problem. I don't want you to be efficient. I am ready to pay more money to get the value that I want. If I, the customer, am ready to pay more money for what I want, there is no need for efficiency. I am paying for it. So give me what I want. Okay?

And a lot of times we're looking at poor instructions, poor communication. It's very clear to me — well, you have to fill out 1223 and bring it back to me. I don't know what form 1223 is. Okay. So, poor instructions, poor communication leads to a lot of these problems. It's not efficient for the company to explain to the customer — it takes more time — but that's what is going to add value to the customer, and that's what's going to save the customer time and keep the customer coming back.

Okay. Most companies have that interactive voice response. Press one for. Press two for. It's cheap. It's efficient. It was designed for managers, not for customers. I can never figure out what button I am supposed to push. I spend more time on the phone. I guess which button I'm supposed to push. I have to listen to promotions that I'm not interested in because I am mad at the company. I can't find the appropriate button. I can't find a live representative. And every moment that I'm on hold, it increases my customer distress. Well, that's just the interactive voice response. I haven't even gotten to the representative. Let's look at the customer representative. What are we measuring? Time per customer. So, the representative wants to get through the call as fast as possible. So, he's not helping me. He's trying to get off the phone. Who decides first call resolution? I have called the company back several times and they've told me the call has already been resolved. And I said, who resolved it? I still have a problem. Customer rage surveys in the United States — it takes on average 4.4 phone calls to get to resolution. That's not 4.4 phone calls, that's five phone calls. Okay. 20% of customers claim a lot more phone calls. Less than 20% say it was resolved on the first call. And 80% of customers say they were not happy with the resolution. This is not a happy customer.

So let's solve the problem. Let us first of all get the call from the customer and say, I'm so sorry that happened to you. That is unacceptable. Let me help you fix the problem. Okay? Now, it could be that it's my fault and it could be that it's the customer's fault. At this point, it doesn't matter. What matters is fixing the problem. Once the problem is fixed, I have built up trust with the customer. Now, I can ask the customer, why did this happen in the first place? What led to this happening? And a lot of times it is the possibility of miscommunication, and make no mistake, miscommunication is a company problem. We did not look at it from the customer point of view. Everything is so clear from our point of view. We forget that sometimes there are two sides to every coin.

Okay. So, I want to prevent future complaints. If I can prevent future complaints, how much money am I going to save by having less people call me in the future? So, why don't I poka-yoke the system? I want to constantly be looking at fixing problems even if the problem is not the company's fault. How much is that worth? How much is it worth to the company? How much is it worth to the department? How much is that worth to customer acquisition and retention? Why do companies advertise? We advertise to get new customers. Well, why do I need new customers? To replace the customers that left. What would happen if less customers left? Then I would need to acquire less customers and I would need to advertise less. Advertisement is the cost we pay. It is the tax we pay for mediocre service, for not giving the customer what they want. Talk to your customers. Find out what they want. I ask my students, I ask my managers, when was the last time somebody called you to find out what problems you were having and how they could help you solve them? I wait a lot longer than five seconds. The silence is deafening. We don't do it. Okay, that is a problem.

Fix the customer first. I'm sorry that happened. That is unacceptable. How can I help you fix it? Now we fix the problem. This is our opportunity for customer retention, for value creation. Measure the ROI of customer centric complaint handling. Measure the ROI of complaint handling in general. Very few companies can tell you what that ROI is. They're not measuring it. And if they're not measuring it, they're not doing it. When the customer succeeds, the organization succeeds. It's that simple. The customer comes back. Value creation is very, very profitable by using complaint management. Okay. And that's why I said customer centricity starts with complaint management. Okay. It is the ultimate voice of customer. We talk about customer experience. We talk about voice of customer. We are not doing it. Okay. If my customer succeeds, if I helped my customer succeed, that costs money. It's not efficient. But I have earned that customer for life. That is how I succeed. Okay. Complaint management is the best way to ensure customer centricity. And the best thing about it, it is our decision. We can start today. That would be my message to you, and I look forward to helping anybody start their journey today. Back to you.

Thank you very much, Moshe. I think it's been an excellent sort of talk and there are many takeaways that people would have from you, and at least NISSMAT will be reaching out to you very, very often, and to you go for help to sort of make us succeed even more and more. My pleasure.

Before I introduce Mr. Vishnu Sultana, I'd like to take a minute to acknowledge participants from various countries across the world who are listening in at this point of time. They are from Zambia, United Kingdom, the UAE, Saudi Arabia, Nigeria, Israel, Ivory Coast, Canada, Bhutan, USA, Pakistan, Singapore and of course India. Thank you very much for all being present here today.

Mr. Vishnu Sultana is a chartered accountant and a company secretary. He has three decades of experience working with multinational corporations across the world. He started his career in Eastern Europe as a financial controller and has grown into board positions in multinational companies and in several Indian companies. He's a pioneer in building companies. He has acquired companies in India, Singapore, Australia and the United Kingdom. He has raised funds for international markets and has led the strategic and financial functions of listed companies. He adds values to organizations through financial competencies. He has been associated with several companies in Singapore, in Australia, in the United States, United Kingdom and in India. He was last year awarded as one of the 100 best CFOs of India for his exceptional caliber and contribution to adding value to companies through financial management. He's the founder of his own company called AKMV Consultants, where he adds values to emerging companies by building strategies, creating joint ventures and raising funds. He's a writer of professional articles. He's published in several magazines. He takes keen interest in academics and provides guidance to candidates who are taking competitive exams. Over to Mr. Vishnu Sultana.

Thank you, sir. Thank you very much for giving me this opportunity to deliberate and express my thoughts into the value proposition and how can we create value in business. And I think the series of discussion was quite sequential, in a way that Mr. Mahajan very eloquently has expressed his views that how do we build the sales forum, how do we bring the customer in and convert into a transaction and sales proposition, and Mr. Moshe has expressly cleared that how can we retain the customer and how can we satisfy the customer through our resolution mechanism. So here my topic that has been given to me is how to create the value through merger and acquisition. So I will be mostly focusing on the creating value through inorganic growth. Before I do that, I have got some very small presentation of three, four slides, and after that I will express some of my experience which I've got while acquiring the companies and meeting these strategic investors and private equities all around the world. So I'm just sharing my screen. Can you see? Can you all see my screen, sir? Yes. Yes. Absolutely. Yeah.

So this is the topic that has been chosen by NISSMAT today. This is just a publication. This is a brief introduction about AKMV which has already been circulated by our chairman. This is how I define the value creation in an organic world. When we say value creations in the boardroom, we say that the value creation, we mean to enhance the benefits to all stakeholders. When we mean all stakeholders, we mean investors, the private equity, the equity holders, the investors, the customers, the people, the supplier, ecosystem — we are talking about the entire ecosystem including the environment. An M&A is the most desired business opportunity or action that we can take to enhance our value proposition fairly quickly and robustly.

But before we go into the M&A, as we know that M&A is a very serious decision and very few companies are able to take this decision in their life cycle. There had been success story and there had been the failure also. An example of Motorola, a giant of its own time, could not succeed through M&A and they had to pass through a tough time because of certain bad acquisitions. So whenever we go into the boardroom and people talk about inorganic growth, they talk about their competition — that our competition has gone up because of multiple acquisitions and so on. Then we normally ask, is that the driving force towards us, that because our competition is acquiring companies then only we should acquire the companies, or there is a pure value proposition of an acquisition? Because acquisition has always come with its own strength, which we'll learn in a few minutes of our time.

So when we go to the whiteboard and we ask why acquisition — it is an absolute necessity. If it is an absolute necessity, we must do it. JPJ juice has criticized some of the CEOs of the large companies of the world that you have failed in retaining your position because you were complacent in the boardroom. So not making a decision for acquiring the companies in the demanding time is also being criticized, and when we become hyperactive in the world of M&A, that is also very counterproductive. So according to me, when you are looking for an acquisition, either on the buy side or on the sales side, then the pricing, the need of doing that action must be very clear, must be identified, the value must be measurable — that this is the reason we want to come into an action which is outside your routine business activity. According to my assessment of the situations, in the last five, six years I have accomplished more than a dozen transactions and almost all of them are running very successfully.

So we normally go and ask to the board and to the respective CEO why, what is the need. Somebody say that I want to enlarge my geography. So if they have already created their market position in India, they want to go to the other part of the world, which is understandable. So because there is an ambition and they want to fulfill their ambition. Either it could be a size — I am a reasonably good size of the business but I want to increase my size, I want to consolidate my business. That could be a business strategy where I want to create synergy by eliminating my competition, or I want to enhance my value through other means. It may provide me some unique capabilities in terms of technology. Maybe there is some patented technology. I give you an example. I was working with Verint, an Israeli company, and we were looking for a company which was in Hyderabad, and the company was pretty small, and I was given the job of doing the due diligence. So I was doing the due diligence and I said that the price that you're offering is pretty high, but they were giving that price because they were getting some unique technology, and if you could have combined that technology, our revenue or client satisfaction has gone up. But in spite of that pricing, which I criticized, the company did not come to us. They say we don't want to sell.

If there is any cost synergies — like we have multiple offices in the same cities, can we synergize the cost? In this competitive world where we cannot increase the margin, because customer says that this is what it is and business is in the shape of commodity where we cannot command a price, or we cannot propose a value that customer says okay, I'm satisfied with your values so I'll pay you more price, then we look for the cost synergies. And that is also one of the ways of acquiring companies, where we say okay, by acquiring companies there will be cost synergies, and through that cost synergies we can deliver the better ROI and of course the better result to all stakeholders. Here one thing I would like to emphasize, that unless business makes profit, you cannot satisfy your stakeholder. So in order to satisfy your stakeholder and the environment at large, you have to make profit. That is the basic command of any business that we are doing. We cannot be doing a business with a pure socialistic mind. We have to make money.

In acquisition based to acquire some clients — there are some clients where you say the business is very good but you cannot, you know, transfer the client agreement, you cannot assign it, but we know there is a perennial revenue, so we acquired that company because we want to acquire those clients. But when we do that, you know, culture, the soft things become very important, as has been advised by the panelists, my senior panelists, that the culture of the organization also becomes very, very important. We should not acquire a company where we feel that the company's fitment is not culturally with me. I have witnessed some of the situations where the Indian company acquires outside the world and we try to handle the European management through the Indian style. It doesn't work. So there's a cultural misfit.

The valuation should be done fairly rightly. Here I would say that there are lot of independent valuers, value service providers, who provide the value based on their assessment of the situation and the Excel sheet that they run, but in the boardroom I always go and request that look, this is the value that has come through analysis, but is it the value that you look in your gut feel — that if you get a company at this value, it will be a right proposition for you and you should be able to get the ROI? Because independent valuers sometimes are not aware about the external environment, and we as a business leader are aware about those external environment. Normally in valuation we miss those things.

Do we have sufficient funding? I have seen many companies who want to acquire but they don't have the sufficient money and they don't have a source to raise the sufficient money. Can we convert that money into the existing company in such a way where the credit can be improved and the banks are able to lend us the acquisition funding? So many companies, they do the acquisitions at the risk of their own business. We normally advise, ring fence your existing business. So even if something goes wrong to the acquisition pre-integration level, at least your business that you are doing now is risk-free or has been reasonably ring fenced, so that it does not affect your business.

The most important thing in acquisition where the acquisition fails is the absence of the integration team. We acquire the company, the company becomes our baby. We share the boardroom. We share the management. We share the desk with our acquiring team. Or either way, either we are a seller or we are acquirer, we start rubbing our shoulder. But we do not know how to do the integration. As an acquirer, sometimes we lose the patience. We say that we are the acquirer, you are going to listen to me. The acquiree says, look, we are also the management, we know how to run the company better than you because we have run this company in so many years. So that becomes very important. In most of the companies where acquisition fails, it is because of the lack of the integration team or because of the lack of competency.

Post integration, we should also have the capability to manage the transactions, because normally you don't buy 100%, you buy sequentially through the put and call options based on different valuations. So do we have the management capability to manage the transactions post integration? Consider innovation, people, ideas and brand. These are very important things, has been also said by my co-panelists, that whenever we are doing that, we should consider: are we going to acquire some innovation, are we going to acquire some people who can help us in meeting our objective of the business, the people who can take us to a different level, ideas and the brand. Brand is very important because brand attracts your pricing and customer positioning. And any other issues that may be needed to be answered must be answered by the board, and the chairman of the board should be very conscious and he should not be, you know, carried away by saying that look, we want to acquire the company for a factor that is non-business friendly. We should be very careful.

As a process, I'll define it briefly. I know that everybody who are available there have done some sort of transactions in their life cycle, so they're aware, but I'm just touching it. The moment we know that there is a requirement of the company and we define the commandments — these are the commandments through which we want to acquire or sell our companies — we identify the need, we define the need, we define the target, that these are the suitable targets for us. Sometimes our investment banker helps us in finding the targets, and sometimes we name the target because we know the business — that these companies, if we acquire, could bring a value proposition to us, or if these are the companies we could sell, it will be better for us because those people are nice, culturally there is a free mind, we will not have a problem.

Transaction advisor initiates discussion with the target, as friendly as possible. We should not go with the capacity, if you are acquirer, that we are acquirer and you are an acquiree, so you should behave according to my whims or desire. It doesn't happen. We were doing a transaction in Singapore where we felt that we are the acquirer and they should come the way we want them to come and they should be guided by us. It doesn't happen. The first evening we were discussing the term sheet, and the second morning we had to sign the term sheet, but that did not appear. We made frantic phone calls, but it did not get response. So we should be very careful whenever we do that. Execution of term sheet — it should be very, very meticulously discussed, because execution of the terms is normally finality of the transactions. It clearly defines what are going to be our commercial behavior. It does not define how are we going to manage our relationship, but it definitely defines what is your main commercial terms and condition.

Then we complete the due diligence either way. If we are a buyer, we appoint a due diligence team; they conduct the due diligence. And if you're an acquiree, we support the due diligence team of the buyer, where we feel that look, this is the best way to handle the due diligence process. Due process normally takes two to three months to complete, because after the finding of the DD there are a lot of Q&A that needs to be answered. Negotiate and execute the transaction documents. Here you should have a very, very fine lawyer to be on your side, either you are acquirer or acquiree, who understands the business and the effect of business going forward, so they can guide you how to structure your transactions. Achieve closing — there is a process for achieving closing — and then commence integration and derive value. So this is the normal life cycle of a transaction.

The third point, as I have sounded caution and everybody, my senior panelists, say the caution: whenever we do so, M&A is extremely, extremely serious event, and it should not be done in a hurry or haste without a thoughtful process. Normally when we go into the market to acquire a company, we prepare ourself, our team and the boardroom at least two to three months ahead. When we put the trigger button, almost every unanswered question we try to answer in our mind, into our thought process. When there is a conflict between the discussion table, we note down those conflicts and we try to find a solution of those conflicts, rather than saying that, you know, those conflicts are immaterial. Every conflict or difference of opinion could be material, and since it is a serious transaction, we should give due value and due regards to all these differences of opinion.

First of all, after we do the acquisitions, we should create an integration team that should include members from the acquirer or acquiree company also. Normally, we find that as an acquirer, we try to be very opaque with the acquiree company. We do not want to give the respect to the management that they are entitled to. So, we say we are the boss and now this is our integration team and you help us in integrating this team. Ladies and gentlemen, sometimes we can miserably fail. I give an example in the same company, Verint. Verint was about a billion dollar company and they decided to acquire a global company called Witness Systems. That was also $1.2 billion company. It was bigger or larger than Verint. It was a global acquisition having presence in 40 countries, and I was looking after India. The moment they announced acquisitions — I do not know what was there in the background — but all the senior management of all the countries, they left the same day. So when I was handling the Indian operations, there was no CEO, there was no CFO, there was no marketing director, and we were not appointed as the signatory of the company. So a NASDAQ listed company was getting challenged by a vendor, that I cannot serve you the tea because I do not know who are the management now. So it was, you know, critical situation, because we as a company, as an organization, we did not anticipate that this can also happen — that an American company coming into the Israeli umbrella, they felt threatened and they felt that we cannot work under the Israeli management, and they decided to leave.

Define the activity, time based. We need to jot down all the activities. Define the person who is accountable to accomplish those activities in the time bound manner. We need to introduce a very strong follow-up mechanism, where if something is not being fulfilled in a time bound manner, then we must understand the reason why this is not being handled or completed on time. What is there which is holding our hands, and we should resolve it as quickly as possible. Because I will repeat it, as it is a very severe section — one activity, two activity, three activity can create lot of optics and frustrations where the high money is on the stake, on the table. Be focused to the objectives. Don't go here and there when people say we liked it, we did not like it. When we do an acquisition, we do it for the objective. So objective should derive all our actions, not our emotions. Once we know that this is the objective of acquisitions, anything which is not supporting to the objective should be dealt carefully so that it does not distort or disturb the objective.

I as a person feel, and whatever I've experienced, that whenever we are opaque, we are not very transparent, the grapevine takes over the management decision and it creates unnecessary frustrations into the people, mostly in the acquired company, because they do not know. Normally in acquisitions we do the rationalization of cost; that includes the employee also. So unless we communicate, we are very transparent to the people that we are going to bring in our umbrella — we should be extremely, extremely transparent. If we have to err, we have to err on the side of transparency. I am not saying you should disclose the information which are prohibited by law or from the management sensitivity point — it is not the right time to disclose — but all the employee related issues, customer relations issues, vendor related issues should be disclosed to all who are there. The mantras that I have learned and I always teach to the people: that you communicate, communicate and communicate. Unless you communicate with the people, your own people and the people who are coming, they will be suspicious about the action that we are taking.

Continuously keep updates to the board and all regulatory bodies. Just allow me one minute. As a management, when we run the company or we run the process, we always require the blessings and support of the board and also of the regulatory bodies. So whatever is to be communicated to the board or to the regulatory bodies — if we are listed or it is an international transaction or whatever it may be — because today the environment is fairly, fairly regulated. So whatever we do, government wants to know it. Regulatory body wants to know it, because they also want us to be transparent with the public at large. We need to keep a very strong eye — I call it an eagle eye — on employees as well as clients and other bodies who can, you know, come into our fore, including the press, including the media. Sometime they come and they ask very tough questions. Then your competition — Competition Commission of India, CCI, also comes into the picture. Are we doing something with a dubious intent, or, you know, elimination of the competition for a dubious reason? All those sort of things have to be handled very carefully.

Financial rating may take a dip, because whenever we are acquiring the company, the acquisition also comes with a string that there is a risk behind it. So normally, rating agency should also be kept updated that this is the objective of the acquisitions and my existing business is ring fenced or they're going to get the advantage. So they do not become panicky or revisit your rating, and if the down rating happens, the financing will come into a pure — you know, it will give you a lot of disturbances. Harness the benefit of synergy as much as we can. We should harness the benefit of synergy. It could be cost synergy. It could be customer synergy. It could be idea synergy. It could be technology synergy. Post acquisitions, the most important thing is that we should sit together and find a way to bring 2 + 2 is equal to six. Here the rule of mathematics gets challenged. If we are not able to make 2 + 2 is equal to six, it means somewhere we are not doing the right thing, or maybe we need to go back or hit the whiteboard again and discuss it.

Provide priority to soft issues and keep the management intact. These are very important, ladies and gentlemen. The cultural issue is very important. We will fail in any acquisitions if we do not handle the soft issue, the cultural issue, the employee issue, the customer issue. Sometime customer also want to know that the company that is acquiring another company, do they have the competency, do they have the real technology, do they have the bandwidth to handle our need or not. And recomposing of the board as per the terms of the agreement or as may be needed. Sir, do I have five more minutes? I wanted to share some of the examples. You got just a minute and a half left.

So I'll just share one very interesting example, although two examples we have shared. The third example that I want to share is that when we were trying to do a joint venture with a company in Saudi Arabia — it was not an M&A because that was restricted — and when we did anything, there was a license requirement in Saudi Arabia. I'm forgetting the name of that license. And we were told that we can get the license in two to three months, and it took us three years to get that license. Through that license we could have invested in the company in Saudi Arabia. So the point that we are trying to make: sometimes if we ignore even these small issues, it can, you know, derail your plan. The plan that you wanted to execute in 2021 will get executed in 24-25, and these are the things that we need to be very, very careful when we make this decision. And I strongly believe and I strongly recommend that the company should be open to the synergetic benefits by way of M&A collaborations, and there's a tremendous opportunity to create value. Thank you very much, sir. Thank you very much for this opportunity.

Vishnu ji, thank you so much. And I would like to sort of take a minute. I have several questions that have been thrown up by the audience, but I'll just ask one question because we just have time for one. How do you create a culture of value creation in an organization? Gautam, if you could have your views on this. You're muted, Gautam. You're muted.

As I said earlier, the culture comes by first having a customer strategy, and that you're serious. You're serious about the customer. There was a question in the chat channel and I'll just read that because it has to do with your question. It's also equally important to have policies and guidelines in place. Policy of appeasement nullifying systems and procedures in turn is counterproductive. Now this kind of a question shows that there is no customer centricity, because whatever policies and guidelines you have in place must be customer friendly. They cannot be company friendly alone. We look at the convenience of the company. We don't look at the convenience of the customer. So the first thing in customer centricity is: what is the convenience of the customer? How do we get the customer to do things conveniently? So we need the customer strategy because we want all the top people in the organization involved. We need a customer circle so that all the bottom people start to think about the customers. And when everyone in the organization is thinking about the customers, designing things from the point of view of customers, then this will happen. And as Moshe pointed out, there are mistakes that the company makes that are corrected for a specific customer. These mistakes have to become systemic. Systemic — that means you just don't change that for one customer, but you change it for all the customers.