Manish Gangwar: Thank you on behalf of team ISBInsight for taking the time to talk to us. You have been a prolific researcher in the last decade. It is often alleged that academic research is too theoretical and has little practical use. Can you tell us as academicians how we can bridge the gap between theory and practice?
V Kumar: The traditional reward system in the academic world rewards rigour, theory and advancing knowledge. Never has the focus been on where or how this knowledge can be used in practical situations – for companies to produce new products, increase sales, make more money or to engage customers.
Today business schools are going through a revolution. University presidents and business school deans have rallied around the idea that business school research should have an impact. And the impact is defined as rigour and relevance plus new insights.
Relevance is the key thing. What researchers do typically is to think of relevance as a managerial implication paragraph they can add after they complete the study. That is completely unacceptable. The researchers must motivate the research problem right from the beginning. They have to demonstrate that the problem is pervasive in the business world. They should ask who will be interested in finding the answers to those problems. How they are going to implement the solution? Relevance should be integrated throughout the paper as opposed to introducing it as a patchwork element. The patchwork approach is the reason why you see a problem today in terms of the gap between what academics do and what the practitioners demand.
Today business schools are going through a revolution. University presidents and business school deans have rallied around the idea that business school research should have an impact.
Most of the research published in top-tier journals are actually done in developed market contexts. Often managers in the emerging markets are quite sceptical about its relevance in their setting. What are your thoughts on that?
The reason why you see so much research on developed markets is first due to the availability of data. Second, most scholars are in the developed markets because that is where they are trained and their skill sets are nurtured. Third, journals also focus more on developed markets. So, given the triangulation of these forces, all favouring developed markets, there is no way for emerging markets to leapfrog.
We must attempt to encourage researchers to think about emerging markets from three perspectives. First, do the problems they see in developed markets apply to the emerging markets? If yes, do you solve them in the same way? If no, how do you reformulate the problem to suit the context? Is it even possible to reformulate and solve the problem?
For example, if you take a detergent product category for Procter & Gamble, how do you price it and how do you distribute the product? In the developed markets today, you have distribution saturation. Every store carries the product. Price is very well understood and controlled. But in emerging markets, the price is something that must be periodically changed for the product to thrive. Most importantly, distribution is limited to 35-40% of the stores. So even if one manufacturer drops the price, another manufacturer can retaliate by increasing distribution instead of fighting on the price. This is a very interesting scenario that emerging markets offer. Therefore, it is encouraging to look at.
In the developed markets today, you have distribution saturation. Every store carries the product. Price is very well understood and controlled. But in emerging markets, distribution is limited to 35-40% of the stores.
But the difficulty in emerging markets research is access to data. Companies are unwilling to share the data. They fear not knowing how it may be used. That is where institutions like the Indian School of Business (ISB) and other institutes of management can structure collaboration and exchange of ideas with businesses. That is one way to do it.
Another way to do it is through immersion. For example, take a local student or a Professor to spend time with companies in emerging markets, trying to understand the problems to solve. Then come back and solve them.
The third way is to collaborate. Multinational companies are very interested to understand how to apply their learnings from developed markets to emerging markets. They are open and ready to give data. We did a study measuring the customer lifetime value for one of the major fashion retailers in the US market, about eight years ago. Last year, we replicated the same study in 30 countries for that fashion retailer. We were again measuring the lifetime value of customers. Did we use the same model in both the cases? In a way, yes. But did the drivers work the same way? Absolutely no. Why? Because there were culture-specific factors, economic factors and some unique characteristics of countries which played major roles in varying the effects of the variables.
What would you suggest to academicians who may wish to collaborate with firms to make their research more relevant?
I think the model that ISB or any management school can follow, first, is to bring in the industry executives as clinical faculty, maybe part-time or full time for a while. They come in and understand what we are capable of as academics and how we can engage with them on collaborative research. Second, the faculty can go to these companies, spend some time there. But both these are time-consuming.
So the practical way may be to have local students go and spend time in the industry as an immersion strategy, understand and obtain the data, solve the problem. Or if the firm is not willing to give the data, then sit there and estimate the models within their database system so that there is no fear of data leak. In emerging markets, privacy concerns are the primary reason why firms are not willing to share data. There are no formal regulatory bodies that govern such data use.
With the NITI Aayog, researchers from IIMs and ISB could start studying data from the Aadhaar card and other initiatives at the government level to link it to process behaviour. For example, we have a collaboration with the company Loyalty Rewards, which provides a combined loyalty programme for multiple retailers and vendors. They have so much transaction data that they have decided to collaborate with ISB faculty to mine the data. We can now come up with a loyalty reward index today which predicts the purchase value of customers in the next quarter and in the next year. These are leading indicators. These are just the beginnings of how academics can collaborate with the business world and enhance value for both.
You have worked with firms quite extensively. When researchers engage with firms they find that the managers are more interested in prediction models. They want to predict how the future is going to unfold or what they should be doing. Academic research is more about understanding the causality of why something is happening. So how can researchers balance these two perspectives — cater to the firm’s requirements and yet retain academic rigour?
It is a balancing act. The way it works is that companies want models so that they can implement them. These models need to be simple for them to understand, handle, replicate and reuse. With all their rigour, academics try to show to the business world that they have the best model. If businesses feel that they cannot use the model because no-one understands it, the research loses its value. That is the predicament.
If businesses feel that they cannot use the model because no-one understands it, the research loses its value.
At the Centre for Brand and Customer Management at Robinson College in Georgia State University, we do the academic work the way it is supposed to be done and publish in top academic journals. Then we publish an accessible version in the Harvard Business Review or Sloan Management Review so that managers understand the simplicity of the model and can implement it. While academic studies model all sorts of statistical issues, such as endogeneity and heterogeneity, when it goes to the business world, we just give them what matters.
Say a model does not show any difference between store types, whether drug stores, convenience stores or grocery stores, all of which sell packaged consumer goods. But if you are relating sales to price, academic rigour would require that you model all the differences and account for the fact that price elasticity varies across these stores. The manager says I don’t care. I just need to understand what happens if I drop the price across all these stores. So, at an overall level, they want to understand, am I going to make more money? Whereas, academics ask: have I advanced the literature?
The manager says: Am I going to make more money? Whereas, academics ask: Have I advanced the literature?
Both can be done. It is just a matter of whether the academic is willing to go the extra mile after publishing the academic article to address business concerns or integrate the business concerns in the academic article. If they show that they can do that, then the companies will be willing to share more data.
Today we have collaborated with over 150 companies globally. Maybe, for the first 20 companies, I chased after them. The next 130 chased us. Or rather they came to us and asked if we could solve their problem.
Showing a model that is beneficial to both worlds can go a long way. Especially in emerging markets, a lot of new insights are needed and companies are looking for academics to help. In fact, academics in emerging markets like India, China as well as in Brazil go to the industry and train a lot of executives. I have seen in-house training happening a lot more in the emerging markets than in the developed markets.
Why? The main reason is that in the emerging markets, the value system within the organisation is to put out fires today. They may not be that willing to let people go out and learn given the work pressure. They want everything happening in-house. But that comes at the cost of interacting with people outside their industry and understanding how this problem is viewed in other industries.
Can there be a different solution? Academics can go in and give that multi-industry perspective in in-house programmes. They can explain this is what we did for the hotel industry or the airline industry and now we can do this for the car rental industry.
What message would you like to give our alumni and other managers on how they can collaborate with the school?
Over the last 15 or 16 years, ISB has graduated excellent talent and that talent is running corporations today in India and all over the world. The ISB community and alumni can do three things for the academic world. First, come back and engage with academics. Ask them questions. Whatever you are facing in the business world, come back here and tell them. This is what I am facing. What do you think of it? What can you say about it? How can you help me answer this question?
Second, encourage academics to come and visit your organisation and also understand how you work. Why this is important is because what we teach in the classroom has to be relevant to the students when they graduate and go to the workplace. Often, there is a gap in what we teach and what is needed in the marketplace. So, if you encourage academics to come and spend time and to understand and fill this gap with the right content, then that can ease the bridge between the academic and the practical world.
What we teach in the classroom has to be relevant to the students when they graduate and go to the workplace. So, if you encourage academics to come and spend time and to understand and fill this gap with the right content, then that can ease the bridge between the academics and the practical world.
The third thing that is very important in the academic world is that there is a constant evolution of knowledge. You need to keep pace with it. So how do you do this? Come back for executive programmes or continuous learning courses or even mini-certificate courses. Demand from ISB that they offer these kinds of modules so that you understand. As a simple example, tomorrow’s world is going to be run by Artificial Intelligence (AI) and robots. Today’s business world is not ready for it. So you, the ISB alumni can get a deeper understanding of how this is going to work. Come back to ISB and give back to ISB. It will go a long way.
Thank you. We are glad that you could take out some time to talk to us.
Regents Professor and Richard and Susan Lenny Distinguished Chair in Marketing, Professor V Kumar also heads the PhD programme in Marketing at the J Mack Robinson College of Business, Georgia State University. He is also the Executive Director, Centre for Excellence in Brand and Customer Management at the Robinson College of Business and the Editor-in-Chief of the Journal of Marketing (2014-2018), Professor V Kumar has also been selected as a Fellow of the American Marketing Association. He is recognized as a Legend in Marketing and has written over 250 articles and 25 books. He has received over 25 Research and Teaching Excellence Awards and 18 Lifetime Achievement Awards, among many other awards and honours.