Interbrand's Lindermann: Bringing the rigour of accounting to the art of brand management

Surely, you've heard of interbrand, the London-headquartered brand consulting firm that is now part of the Omnicom Group? Annual brand valuation-that practice accounts for under 20 per cent of the firm's revenues-surveys for Business Week magazine have ensured that most people have. Jan Lindemann, a buttoned-down former banker from Chase Manhattan's M&A advisory who heads the brand valuation business was in India in the third week of August to speak to marketers and CEOs in Bangalore and Delhi on the importance of brand valuation, a sort of in-the-dark promotional exercise. Interbrand has forged an alliance with Bangalore-based brand consulting firm Equitor whose CEO Ramesh Thomas is almost evangelical in his fervour to ''take brand valuation to the boardroom''.

Lindemann is a left-brain, right-brain hybrid. He studied history, politics, and philosophy at first, then moved on to business and economics. He painted a bit when he was younger-he is still in his mid-30s-and was part of a punk-rock band, Diamond Dogs, in Berlin. Lindemann was lead vocalist and keyboard player of the band that was inspired and got its name from David Bowie's 1974 album of the same name. The band didn't really go anywhere-''We cut a video, and that was that,'' shrugs Lindemann-and M&A advisory it was for the German who now works out of London (Hangover: he collects lounge music).

It was during his stint at Chase, in Frankfurt, London, and New York that Lindemann got his first close look at brands. He must have liked what he saw, for when he moved after seven years in the bank (in 1996), it was to Interbrand, courtesy a friendly head-hunter. ''I didn't really know what the job would be,'' he confesses. ''I just thought brands would be an interesting subject.'' But his background, Lindemann Stresses, is just right for the job. ''We analyse qualitative and quantitative data and express it financially.''

There's no disputing the math, or the logic behind Interbrand's brand valuation exercises. ''Tangible assets aren't as hard as people think they are,'' laughs Lindemann and goes on to give the example of how some Japanese companies still value their real-estate assets at 1980 prices, although the market has since collapsed. ''The value is a tenth that and this has happened in 20 years.''

Is India ready for brand valuation? Fad-conscious as Indian managers are, the answer would have to be yes. Only b v isn't really a fad. Interbrand views it as a management tool. ''Modern management works by numbers,'' explains Lindemann. ''The brand should be aligned to a company's financials-it should drive value.'' They said the same thing about EVA (Economic Value Added), but not too many Indian companies have been willing to go beyond the calculation.

Coming as the market is, out of a period of irrational exuberance, a brand is also a better measure of a company's intrinsic value. The conservative banking industry is swinging around to that point of view too. Last year, RHM, a UK-based foods major, and one of Interbrand's first brand-valuation clients, raised around $700 million (Rs 3,430 crore) in debt, effectively by securitising its brand. Lindemann is convinced we'll see more such deals. It's likely India will also see more of him: he has visited India several times, both on business and holiday and actually done some work for the Tata Group. As for right-brain fulfilment, that may have to wait: Lindemann is writing a book on, what else, brands, and that will be followed by another on luxury brands. ''That can be more artsy,'' he grins.

VC WATCH
Munificent Angels
The second quarter brings some respite to venture capital and private equity funds.

Last year was bad for venture capitalists. The first quarter of this year (April-June) was no better. Then, suddenly, between July and September the market changed. Veecees may have around $1 billion (Rs 4,900 crore) lying around, waiting for the right company to come along but things are definitely looking up. The angel-bonanza of the quarter went to ChrysCapital, which effected a profitable exit out of it-enabled services company Spectramind. The firm, which made close to $83.4 million (Rs 407 crore) when Wipro acquired a 66 per cent stake in the company has now invested in another IT-enabled services company Transworks. "Our objective is to look at players who operate in specialised domains," says Ashish Dhawan, Managing Partner, Chryscapital. Transworks is one such: it operates in the specialised customer relationship management domain.

Gone too are the days when veecees scouted for companies in which they could invest a million or two. Today's deals-of-choice are large ones, between $8 million and $20 million in size. The reason? Small investments make for poor exit options. And the companies seeking angel-aid are doing it the smart way. Mumbai-based call centre Epicenter is raising money in small units. "We are raising just enough capital to meet requirements; there is no sense in diluting equity fast", explains Vijay Rao, CEO, Epicenter. To sum it all up, both start-ups and veecees seem to have suddenly turned rational. Oops, the fun is gone!

-Vinod Mahanta

INTERVIEW
"Understanding Customers Is The Next Step For IT In Retail"

As the European Managing Director of Kurt Salmon Associates, a top retail consultancy, Jean-Louis Simoneau heads one of the most challenging regions on the global retail map. In India recently, he spoke to BT's R. Sridharan on the changing retail landscape. Excerpts:

Is there a new kind of consumer emerging globally because of political and social uncertainties?

I wouldn't say the consumer has massively changed. But they are looking more and more for quality, services, and a real differentiation in what they are buying.

Is there some kind of a retail saturation happening in developed markets like the US, Japan, and Germany?

One thing is clear: we will not see the kind of growth that we have experienced over the last five years. But there is room for growth for the good (retailers). There will be shrinking markets, and there will be new markets. But if you are doing the kind of things you were doing five years ago, then you are over.

The use of IT in retail has largely been restricted to supply chain and store inventory. Is there any move towards sophisticated customer relationship management?

You are right. Traditionally, retailers have been good buyers. But now there is a realisation that working on the demand side-that is, understanding the customer-is the next step. Working on the demand side is more difficult. It's not just a matter of data models or datawarehouse. But it's a matter of thinking through customer service. What does it mean when you are a hypermarket or a supermarket, or what does it mean when you are a speciality store or luxury goods retailer? It means different things to each of these retailers. In Europe and the US, we see more retailers spending their business process reengineering and it spend on understanding the customer and linking the expected demand to their inventory. And around that there's room for awful lot of efficiency.

JONES-WATCH
What Recovery
An A.C. Nielsen survey says India, and other Asian countries, can cease talking of a recovery for the next year.

This survey of 8,000 respondents has news, both good and bad, for Indian companies. First, the good stuff: almost 73 per cent of the Indians surveyed believed the global economy would recover within a year; the regional average was 45 per cent. However, that doesn't mean Indian consumers will be more willing to open up their purse strings-not with concerns over job security, terrorism, even a war with Pakistan looming large. The sentiment, as they say, is down.

-Shailesh Dobhal

MIGRATION
PetExpress
Pets travel first class.

Man's best friend: Travelling in style

Cramped cages, no one trained to handle a medical emergency, and unreliable delivery schedules have made life hell for anyone who has ever had to transport a pet. Now, Jetex Ocenair, a Kolkata-based freight-forwarding company has the answer: a premium logistics service focused on pets. Jetex will use special crates imported for the purpose and trained handlers will accompany the pets to the point of delivery. The idea came to Jetex Executive Director Jaideep Raha when his dog died last year and he was looking to import another one. "I realised (then), how inadequate the facilities for taking care of pets were". The service isn't cheap: apart from freight, pet-owners will have to pay handling charges of 200 per cent and a refundable deposit of Rs 1500. For instance, it would cost Rs 4,500 plus deposit to transport a fully-grown Labrador from Kolkata (where the service is currently available) to Mumbai. That isn't cheap, but with most pet owners willing to pay that little extra to ensure their best friend's comfort, Raha hopes to do business worth Rs 1.8 crore ithis year And that's just cats and dogs.

-Debojyoti Chatterjee