Tuesday, July 29, 2008

What I Want our English Training Business To Be..

It is that time, which inevitably must come in the lifetime of every entrepreneurial business, when one feels assured of the continuing survival of the business and faces decision time - whether to continue doing the same thing and stay within the zone 0f comfort, or to leap out to unknown, chasing a target that appears unattainable at the time. The business of Direct English in India has reached such a point: No one can deny the merit of sticking to the basics, protecting the margins and continue doing what we are doing, especially in the backdrop of the uncertainties in the global financial market and weakening business confidence. On the other hand, we are at a point where we have gained enough business knowledge and accumulated successes and failures, to be leveraged into a chain of learning centres across India - sitting still today will let this moment pass.



This is what made me set aside this afternoon to think what I want Direct English to be. The unusually hot last few days in London isn't what one will grade as an ambient environment for such presumptive thinking - I am only running the operations and ultimately the policy will be decided by the owners of the business - but I shall still need to make an attempt to present my own views on where the business should go.



To start with, I have extremely high regard for some of the Indian IT training companies - like NIIT and APTECH - which have done a very good job over last three decades and enabled millions of able men and women to support India's IT progress. These companies have established sophisticated business practises, employed very able people, pioneered education franchising models and successfully built businesses with international reach. With their intervention, Indian training market has also matured - I sure recall the days when computer training used to be done in quack shops [I was employed by one of them] - and a number of able managers and education businessmen emerged through the process.



However, this huge achievement of NIIT and APTECH [I do believe that there is insufficient appreciation of their achievements in the international business community] was built around a clear gap in the market. The formal education sector in India, mostly state-funded at the time, failed to anticipate the expansion of IT industry in India and offer suitable courses to aspiring graduates. Both NIIT and APTECH emerged in that gap, first by holding hands of global content publishers [NIIT of NETg and APTECH of NCC, UK], and slowly built their businesses following what I shall call the 3C cycle - of Content, Capabilities and Channel. This means, they took a global content publisher to enter the market, and built their Capabilities. They then extended this Capability to a Channel - a network of pioneering franchisees they appointed - which extended their reach and further enhanced the capability. Finally, they turned their attention to Content, NIIT by winning orders from NETg to write content on new software platforms and APTECH by gradually building a team and replacing NCC content and certificates with their own. But, throughout the process of growth, they maintained this 3C cycle feeding their growth, Capability expanding the Channel, the Channel leading to create Content and the Content furthering the Capability.



The times are different now - agreed. The speed at which businesses operate today has changed. The customer expectations have changed. But, it will be correct to say even if the velocity of the business has changed, the dynamics remain the same. And, my assumption is that the 3C model will still hold valid for building an education business in India.



However, while we may look at the 3C model as a possible way of building the Direct English business, there is one significant difference: We are in the English Language training business. NIIT and APTECH operated in the context of a clear market gap. We can also extend that theory further, in the context of global training providers. I am told that all major English Language training companies in the world comes from non-English speaking countries - Wall Street from Spain, Berlitz from Switzerland, for example. The reason isn't very difficult to guess - clear market gaps allow a company to grow and consolidate in the home market quickly, building competitive capabilities.



We shall, however, have no luxury of such clear market gap. English has always been the language of business and inter-regional communication in India. English is taught in Indian schools and most of higher education is delivered in English. It is hard to find an Indian professional who does not know any English. Previously, I have made statements that English training business in India will be about 'unlocking the English' in Indian citizens, meaning that our principal deliverable will be to empower professional Indians with English speaking capability. The commercial realities also drove us to price our courses at the premium end of the market - of course, our offering is unique and world-class [I have an aversion towards that word, but I am using it in the right sense here] - and I also stated, publicly and privately, that our target audience are those people who know English already. In essence, we identified the market gap in terms of knowing and speaking English.



Today, after operating in Hyderabad for almost a year, we have done well. We got students exactly as we predicted, who paid a premium fee and was very satisfied in the end, and bought more courses, referred more students and even bought our franchise. We were seen as a High-end English Training provider, mainly by corporate customers, who started sending larger and larger groups of learners our way.



But then, this is decision time for us. Do we continue to do what we are doing, and remain a 'high-end'/high class/ premium English training provider? Do we focus on bridging the gap between knowing and speaking English, and work with those who know English already? This is exactly what our systems, infrastructure, people and processes are designed to do. This is our safe corner, where we can remain.

However, at the same time, we are painfully aware that this is too narrow a space and the 3C feedback cycle will never appear for us. We shall exist - serving similar customers through a limited channel with limited content - for next however many years this can go on. That is, till a competitor throws us out of the cosy corner and assumes leadership in the overall English Language training market.

An useful education was reading an old marketing classic - Ted Levitt's Marketing Myopia - where he talked about how companies wrongly define their business and allow competitive space. He took the example of Railroad companies, which, instead of thinking TRANSPORTATION as their business, defined their business as that of RAILROADS. So, they lost their businesses to Bus and Air and all other transport companies as they came. Levitt points out that this mistake is due to Product Thinking instead of Customer Thinking, seeing the world and the opportunity through the prism of the product one has rather than what the customers are expecting out of it.

A lot of that will apply to our thinking at the current time. We are blinded by the product. Of course, we have worked on this product for so long, and hence can't see this in reverse. But if I allow myself a moment to step outside this thinking, a clear picture of the opportunity emerges: The Inner City. I am talking about the 'hidden' cities of India, which stands in the borderline of agrarian and urban India, the 500 or more inner cities. This is the aspirational space in India, where English Language is both a ticket to an exciting future and a key to unlock the social status. This isn't new, of course - this is no discovery. The inner cities are asserting themselves lately, on TV Reality Shows and in the Indian Cricket Team. They are taking the full advantage of the democratization of opportunity - due to Internet [which is bringing the outside world to them], due to Satellite TV [which is bringing them to the outside world]. The young graduates of these smaller cities are reaching the big metros in thousands, manning its call centres, banks and insurance companies. This is the space we must belong to.

This will, of course, mean getting out of our comfort zone. Inner cities, despite their people wealth and aspiration, get less than their share in India's prosperity. They are still poor. However, this is the gap - the opportunity - and if we can tweak the business model, a winning formula will emerge. Refer back to the history of IT training yet again, and the credit goes to APTECH - who broke the thinking mould that the smaller city graduates can't afford quality IT training - this started the IT training revolution in India, so to say. [NIIT caught up later - in 1997] There are many other famous example of unleashing the power of inner city, none more impressive than Wal*Mart surely. And, this really it is - we are in the business of enabling students pursue the career they want - and the inner city is the space for it.

Back to Ted Levitt - we are not in English Language Training business, we are in the business of enabling the students realize their potential. I have said this before - English was once, back in the colonial times, the language of oppression in India; we wanted to make English a language of possibility, of opportunity, of freedom. This makes the thinking so much more clearer and the purpose so much more worthwhile. This will call for a radical redefinition of our market and call for reorientation of our product: But, so be it - it might just make sense to step out of our corner now and meet the opportunity halfway.

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