Thanks for the comment Ona! Interesting to know that PIA is also in a similar state.
Thanks Professor! I would say privatization is the easiest way to turn it around. If only they’d sell it to Tatas! The second best way is to have good leadership at the helm who can boldly take decisions with minimal interference from the government. The rest of the stuff like route optimization,demand planning, marketing it well and restoring the brand image should be fairly standard!
It is fascinating that Trader Joe’s is offering higher quality and higher salaries while positioning itself as lower cost by optimizing inventory and supply chain. In general retail itself is a competitive industry, and this is a tight rope business model which requires constant real time monitoring of profitability and quick tactical execution to retain relevance , profitability and competitive edge. A very insightful article, thank you.
Thanks for this post Sudip, what a fascinating, socially disruptive for-profit business models. I wonder how far this can be replicated to suit a different geography like India. Standardization of teaching instruction is the biggest quality challenge that schools even like Harvard face, and I would support their scripting model. Are there any other metrics for measuring their performance, and how do they rank in those, like student attrition rate? Government schools in India provide meals as this is the only incentive to get students to stay the entire year.
Thanks for the excellent viewpoint Charlie. Interestingly, the privatization of the airline has been a hotly debated topic since 2008. The privatization view point holds that the government should not be in such an industry which has fierce competition and thin margins as it requires tough and quick decisions that often is not possible by the state machinery. Also, the government ended up making conflicting decisions as it did not impose regulations on the entry of foreign players and has created competition for itself,which is a feature absent generally in public industries like the Indian Railways. However the roots of the country lies in socialism, we were ardent socialists until the decline of the Soviet Union, and while private capital is largely taking off in the country, it is still viewed with a lot of suspicion and is subject to several bureaucratic check points. The biggest argument for non privatization is connection of non-profitable routes and social obligations during the time of crisis or war. Given these and the recent improvement in financials from Air India,the government has currently ruled out any discussion on this front.
Interestingly, Air India was started privately by the Tata group and was forcibly and unfairly acquired by the Government post Independence, Mr.Tata himself learnt it from the news. The Tata group is keen to buy it back and so are several other players. However, a private industry expert heading the airlines (as opposed to someone from the bureaucracy) is the only thing that the government is looking into.
Mobile payment is one of the hottest emerging industries and I am fascinated by such meaningful business models that operate at the bottom of the pyramid. This is becoming big in India too and is slowly helping to bring in more people into formal banking institutions given that less than 40% of India’s population uses formal banking systems currently. Given the ease of scale, low investment, rapid adoption, there seems to be too much competition in this space. Apart from first mover advantage, what other competitive levers do you think M-pesa can pull to ensure continued sustenance?
While Insurance companies always being at loggerheads with patients is the statues quo, it is excellent that Care More has managed to break that divide and come up with a business model that provides aligned incentives for all the stakeholders. Cost efficiencies through preventive health care is a difficult business model, and I like how they have created alignment with operations by providing transportation, customized electronic records, support groups (which play a pivotal role in behavior change) and in-house monitoring of patients. But, is their focus on preventive health care a means to lowering cost, or is their focus a low cost health care model itself? If we remove the effects of deliberate cost cutting measures such as expanding only to areas where negotiation is possible, deliberately limiting specialist care etc, is their “cost reduction through prevention” alone sustainable on its own?