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until the beginning of the nineties, I remember that quality was a brand advantage. Packaging spoke of "a quality
product from Hindustan Lever". And the phrase " a TATA product"
immediately signaled trust.
Just
after liberalization, the good professors Demming & Baldridge made their
presence felt in India. Any number of companies since then, have strutted their
ISO credentials. So product quality was no longer a brand differentiator.
However,
even today this is not a hygiene element. With truckloads of cheap imports and
small local products on offer, we do tend to instinctively create a basket of
"quality" options before we buy. This is particularly true in the
case of assets.
When
we buy a house or a car, we take pains to buy only from companies known to
deliver consistently, and at high standards.
In order to to
maintain high standards, brands build the intent, the processes, a plan and a
ruthless commitment to implement that plan. Firms that have set high standards
demonstrate these effortlessly. We can't possibly associate inconsistency or
low standards from IBM, a Honda or a P&G.
But
are high quality brands only about only about products and consumers alone?
Remember when your grand dad presented you with your first set of TATA Steel or
Hindustan Lever shares. Did you wonder why he didn't give you an unknown but
rapidly rising mid-cap?
These
were called Blue-chips. Not because they provided high returns but because they
were dependable, transparent and set very high standards. Why isn't there an
ISO for shares then? Why doesn't TQM apply to these assets?
Obviously
an Apple did not become the most valuable firm in the world only because it was
innovative, brilliant or charismatic. It is valuable because it is, dependably
all of the above. Which is why the stock is not regarded with as much esteem as
before Mr. Jobs' untimely demise.
Why
is the TATA brand more valuable than any of its individual product brands?
Hardly because of any sterling performances. But they are still considered to
be the most dependable and credible bunch of business leaders this country has
seen.
This
allowed them to transform themselves from a traditional, conservative,
middle-class confederation of businesses into an aggressive global
conglomerate. In doing so, it was essentially the TATA brand that helped to
raise money for acquisitions, to bring in the most renowned business partners,
to acquire top class global talent and most of all to be a desirable acquirer.
There
was no stroke of genius in this. They simply adhered to old fashioned values
for ever; long before words like governance entered the lexicon of business.
It’s
time for investors to demand ‘quality’ from their share transactions as much as
much as from their cars and cell phones.
A business often means more to a shareholder than does a brand to a
consumer.
I’m
sure you have seen enough companies that offer unpredictable, and sometimes
unpleasant surprises in terms of ROI.
