Harmony at Work

An interview with Sandeep Bhushan, Chief Operating Officer, Mint – HT Media, Delhi

Tell us about your roles and responsibilities in the organization.

I work for a business paper called Mint, which is a publication from the HT Media group. Mint launched 2 years ago in partnership with the Wall Street Journal. It’s very early days for us. We are a 15% share player in the business newspaper category, by revenue.

My role is Chief Operating Officer, which means I am responsible for the top line and the bottom line. Therefore various functions work with me in chasing the top-line and then managing costs to deliver bottom-line as per plan.

In any good newspaper, editorial doesn’t report into business. I handle the business part, and we work very closely with editorial because good editorial product gets us great readers, which we then monetize those eyeballs, in a manner of speaking, to the advertiser.

How has the economic downturn affected your industry?

Sandeep Bhushan, COO

Media across the world is pretty much free-to-air, meaning consumers don’t pay. It’s the advertisers who pay for the bulk of the content that we consume. We are hugely dependent on advertiser revenue, which means advertising budgets and the confidence of companies to advertise is really the function that determines our life and our profitability.

When the downturn happened, the first thing that got cut, from any corporation’s point of view, was first the marketing budget and then the salaries, because actually these are the only two discretionary items that you have. You can’t cut your office in half. You can’t get raw material price reduction quickly. So, advertising budgets were pulled back.

Media amplifies the effect that industry is going through. When things are positive, if GDP (gross domestic product) growth is 10%, media typically grows 30%. When GDP growth is down to 2% or 0, which means nobody expects growth, then media growth is -30%. So the moment everybody said, “industry is not going to grow,” they just cut their ad monies. Therefore the newspaper industry, and the business newspaper industry, in the worst part of the last 2 quarters of the previous year were down 30% on volumes.

What changes did your company have to make?

We have been building the business over the last two years. When the fire happened we were almost perfectly placed to tackle it. So there is bit of externality that worked in our favour. We had just received “certified readership numbers” bang on the day the world collapsed. These survey results told the world that we have a 25% readership share. Our advertising revenue share was 5-7%. Now, that’s exactly the way it works – you get readership, then you get the money. So we came into the fire with the momentum of saying, “hey listen, you didn’t think we had lots of readers. You were giving us 5% of your dollar. But we have 25% readership share. Start paying us for it.”

Also, in this industry the big guy had 75% of the revenue, we had 10%, and the others had 15%. So the big guy was the first choice, and he was very extremely expensive. Over a period of time, because of his monopolistic situation, his pricing was way out of tune. But that was not visible.

When the downturn happened and choices got re-evaluated, we came in as a very credible second alternative. We had 25% readership share, and the bulk of our readership is solus, meaning they don’t read the other guy. So our pitch to the advertiser was, “You no longer have 100 to spend. You have 50 to spend. Spend it on these 25% unique readers.”

Also, the paper is structured as very premium positioned. So we said, “this is a more effective dollar to spend. You’ll get only 25 out of 100 readers—but 25 of the best ones.”

Now the market collapsed pretty fast, and this was worse than we ever expected. In the rest of the industry, people started cutting very significant costs on the product. We did not cut product costs. We held the product pretty much the same. For example, the number of pages is a critical indicator because paper is a critical cost factor. We did not chop at all except in one little supplement. So our pages dropped by 5-10%. The competition’s pages dropped by 25-40%, and that was visible.

We just managed our backend. We did not take a salary hike. We cut variable pays. We rationalized overall teams. We said, “How can we be more productive?” So, within the marketing department, we are significantly understaffed. But we have learned how we can stretch. All of us work way more hours. Literally.

In summary, I think, first, we had a credible proposition. No business can ever shy away from that.  Nobody puts money in your product or proposition unless it is real and credible in helping them reach a goal that they have as your customers – whether as an advertiser or a subscriber or whatever they may be. You have to have a real product. We had that. When the stress came in we did not at all cut product delivery. We cut internal costs of delivering that product. So lots of people stretched.

You didn’t cut jobs?

Sandeep with a colleague

Very marginally. Industry’s forced attrition has been 10-20%. In our case it was sub-10%. And that was achieved by not filling roles – rather than cutting ongoing ones. Again, since we are in a growth phase, we are looking to fill roles – which in this situation, we did not. In marketing for example, there’s one role that’s gone empty now for 10 months now. We are just figuring out a way to live without that. We now believe that we’ll get that role if we now climb the next step on the ladder. All of this growth has come without that role.

And I think we came out looking smarter as a team because we were optimally sized. We hadn’t grown too large. Now, I don’t know if these lessons can be straight away taken to a company that’s in a different scenario or of a different size, but certainly this was our learning for our business.

We are quite happy with the results. We currently have the highest market share we’ve ever had. We are close to giving cash back to our mother company faster than any newspaper has in the history of this country. We have reader loyalty, which is very significant. And that actually goes back to way before the whole recession gig. Our thought was: create a product only if you understand what the readers want. Then you get true differentiation and true loyalty. Our readers have stayed with us.

How did you make the pitch to your people that “we are going to work these many more hours, so your family time is going to be less?”

When we asked people to stretch, I think the principle was not about “there is a problem out there and therefore let’s change.” The principle was “we’ve got the biggest growth opportunity we’ll ever see.” My personal experience – and I am not very experienced – is that people just have to be passionate and involved in their business situation and the opportunities it presents, and they will stretch.

Yes, a couple of times the explicit question has been asked, “till when?” And the answer is, “until we put the cash in the business – take it or leave it.” That’s been my personal attitude to anybody who has had those questions. I’m saying this is the way to go because this is our opportunity to really build the business.

Also, I think the context of the industry is very clear. There were clear job losses and there were clear salary-cuts. We did neither. When you do neither, you are actually making a very strong commitment, saying, “we believe that this optimal team will now stretch to deliver the extra 10%”, rather than prevent the loss of 10%—which is what you are trying to do by cutting jobs.

If you were to actually walk around and speak to the three and a half member marketing team that we have, or the sales guys, they look back at the last 9 months as a time they’ve really added value to the business and to their own bio-datas. They are the very proud owners of the numbers I’ve just shared. Readership is up to x%, market share and advertisers is up to y%, and that’s a case study. In my career of 12 working years, this is my best year. There is just no doubt in my mind.

I think that’s a principle that holds good across levels in any situation and in any organization—forget boom or bust. People should be working for an enterprise that they are proud of. Our people actually believe that we’ve created a world-class product not seen in this country before. They are very passionate about it. They crib like hell when we drop our standards in anything at all. They see that giving this thing its rightful place in the sun will give them very significant rewards: personal, professional, visibility to their peer group, etc. So they just give, and that’s been our momentum. There is virtually zero negativity at all in this office. So, I think that is the larger play of how teams work together. If we don’t care about we are doing, we shouldn’t be here. If we do care, then I think we just pull.

Having said that, one is conscious that you can’t stretch people beyond a point. People are able to take time off to do this for a certain period, and then other responsibilities call. Currently we are setting up plans to increase our number. In fact we are beginning to recruit now in sales, because opportunities are coming in, and to harness these opportunities, we need a corresponding structure. We are not building back to a number that we wanted to have. We are building to a number that we believe we can achieve.

What advice would you share with younger people – for example, those who are about to graduate right now or within a year’s time?

I think there is consensus now that the worst is behind us. I think recruitment is back—not to previously planned levels—but there is opportunity. So, the picture is not gloomy.

In India the supply of good quality students was way lower than the demand. Now the demand has cooled off just a bit, and the supply has increased over the last 4-5 years with lots of structures to get out more and more professionally qualified kids. So, I think there’s been a little bit more of a sensible equilibrium that has come to the market.

So, for somebody graduating now: Life will be much better next year than if you graduated in the last 9 months, because companies are going to come back. However, now there are far greater rational expectations from both sides on what the roles and expectations are. I think in the short term some people may not be able to find the perfect jobs because of the situation.

For example, there was a young lady who had graduated in the worst phase last mid-year. She wanted to do marketing for consumer goods. There were absolutely no openings in consumer goods. There were many companies that had taken this opportunity to just clean out. Whether it affected the bottom-line or not, they just said, “this is a good opportunity to get rational” – and I think that’s a good thing. We should just be rational about cost structures. So when her choice was to work with an NGO , my advice to the lady was go and work with an NGO. I said, “choose the NGO which exposes you to consumers in any way.”

About 70-80% of consumer goods in India are bought by people with salary levels you and I don’t even know or don’t meet. So, I said, use that experience to work with these groups of people to understand what they’re really doing—whether you work in a self-help group or in a rural organization that’s working with people in education or health. For consumer goods industries, understanding rural and bottom-of-the-pyramid consumers is a critical differentiation going forward. So when you come back to consumer goods, you have spent your time learning that skill. You have not learned the functional skills of the consumer goods company: how to create a great brand or how to create a great sales strategy. But you have learned this. And that’s a complementarity they will absorb you with.

Suppose you’re an MBA and you want to work in finance. The finance industry is not in the best ever shape. But there are a million companies having small treasury operations, because every small company handles cash. So you could be the big guy in a small company working with just a 2-member team but actually dealing with sellers of cash-management products. So you’ll be pitching, “hey Citibank, hey HSBC, hey State Bank, come and tell us what you can do for us.” You are building that learning. Remember that in a small company you are at the edge, meaning you’re actually having a customer/vendor interface, which is where you learn really—not on the inside. Make those skills. Three years later when again in India supply will be lower than demand, you’ll be alright.

So, it’s just about realigning your expectations of short-term rewards but not your expectations of short-term learning. In India all of us want to find jobs by age 21 because we don’t want to take breaks. But in a 30+ yearlong career, you’ll be okay.

            What are these?

Tags: business, cost cutting, downturn, mba, mint, productivity, recession, success, wall street journal

This entry was posted on Friday, August 21st, 2009 at 3:39 pm and is filed under interviews, leadership. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.