Championing a Turnaround

Venky Mysore, CEO, Kolkata Knight Riders

In its first three seasons, Shah Rukh Khan’s Kolkata Knight Riders (KKR) was the worst-performing team in the Indian Premier League (IPL), failing to qualify for a single play-off. At the time, Venky Mysore ran the Birla Sunlife JV in India. A chance meeting with KKR Co-Owner Jay Mehta spiralled, within 24 hours, into an offer for him to run the franchise. Baffled at first, he decided to take the plunge. (It did not hurt that cricket is Mr Mysore’s first love – at one stage, he almost became a professional cricketer, having played in the Ranji Trophy.) A year and a half later, the radical changes he brought in – removing its captain, and selecting a whole new team on the basis of skills, not brand-value – won KKR its first championship. A second championship came two years later, in 2014, and today, KKR is the ‘winningest’ team in the IPL. Buoyed by all of this, Mr Khan soon decided to hand charge of Red Chillies Entertainment, his film and visual-effects business, to Mr Mysore, who has brought sweeping changes there, too. His experience managing businesses centred around India’s two ‘religions’ – cricket, and Bollywood – yield valuable takeaways that apply equally in other settings.

Start with individual accountability

Replacing an iconic leader was the beginning of the renewal process…

…but this also meant ‘shifting the blame’ to the new CEO

After 3 years of continuous losses – both on-field, and in terms of the bottom-line – it was clear that something had to change, and there was no better place to start than at the very top. The problem was that KKR had an iconic captain, Saurav Ganguly, who was adored by KKR’s home-town fans. When word got out at that KKR would not be bidding for him in IPL4 – every three years, all players get auctioned afresh – people started burning Mr Khan’s effigies on the streets of Kolkata. Initially, he got cold feet, but then decided, in consultation with Mr Mysore, to pin the blame on the ‘new guy’. The message Mr Khan sent out, in so many words, was that he ‘did not know’ how to run a cricket franchise, and that all decisions would now be made by the new, professional CEO.

Be honest and transparent – but also respectful

Allow people to maintain their dignity…

…help them realise their full potential…

…but also be honest

Over the years, the one key lesson Mr Mysore has learnt in terms of dealing with people is to treat them with dignity and respect – but also in an honest and transparent manner. He hates the word ‘fire’, and believes that no one is necessarily ‘bad’ at something – just that they may not be the best fit for a particular role, at a particular time. Helping them realise their full potential, while preserving their dignity, is top-most on his mind. When he went to meet Mr Ganguly, he conveyed very clearly that KKR was looking to go in a new direction, and would not be retaining anyone. Mr Ganguly heartily agreed, not realising at first that he would not be retained, either. Mr Mysore had to spell it out, and the meeting ended abruptly. Subsequently, the two have become close friends, and the difficult but honest messaging of that first encounter has only.

Think different

Starting from scratch, with no holy cows…

…people would be selected on their skills, not their name…

…and the results were often counter-intuitive

Having decided to release the entire team, it was back to the drawing board – so Mr Mysore asked KKR’s coach and support staff to pen down their ‘dream team’. 80% of these lists matched – and in fact, they overlapped with those of every other team. Since everyone would start with the same purse, KKR could not compete on price. Instead, Mr Mysore decided to assemble a team built not around marquee names, but specific skills – a solid opening batsman, a left-handed player with a strike-rate of over 150, a middle-order player around whom others could build an innings, spinners, pace bowlers, and so on. For each skill, the aim was to have 4-5 options, which involved hiring a software company to build a database of some ~1,300 players, each coded by skill. The options it threw up were, in many cases, counter-intuitive: several players, for example, had better T20 batting stats than Yuvraj Singh, who was everyone’s top-of-mind-recall name. At first, Mr Khan was unsure of following this system, but he came around, and in fact, chose not to attend the auction, allowing Mr Mysore an entirely free hand in the process.

Build happiness, and purpose

New players need to feel at home…

…and existing ones need a sense of (renewed) purpose

Happy teams – and especially those that have a sense of purpose – are productive teams. With new players coming in every 3 years, it was important to invest in team-building exercises, where players would really get to know each other on a personal level. This takes a great deal of conscious planning. At another level, with the competition only intensifying each year, it is important to create – and maintain – a sense of purpose, always raising the bar. When KKR reached its first final, in 2012, the management surprised the players with video messages from their families, not all of whom would be able to attend the game. The clear take-away – ‘play for a reason’ – created a deep emotional connect, and possibly pushed the team to win the championship.

Renew the business model

Building a new brand identity…

…ring-fencing brand KKR from brand SRK…

…engaging fans by being innovative…

…tapping multiple revenue streams…

…and going global

With the ‘on-field’ side of the franchise now under control, it was important to address the business side, as well. Kicking this off, a new brand identity was created, built around three logos – those for the masterbrand, acronym, and icon. (Crucially, Mr Mysore worked in parallel to ring-fence KKR’s brand from Shah Rukh Khan’s, so the two would not compete with each other.) KKR also found innovative ways to engage fans, such as through its ‘Knighting’ ceremonies, which get ‘broadcast’ via multiple channels; an app that allows people to ‘cheer’ for their team even when they cannot physically attend a match; and downloadable, personalised posters.

What has helped sustain the business is a variety of revenue streams: home-game ticket revenues (KKR almost always fills its stadium, and earns from merchandise and food sales, as well); tie-ups with other brands, including its principle sponsor, Nokia (the IPL offers huge brand exposure in terms of combined media time); and a share of the media rights. Recently, KKR has also launched a series of sub-brands in other cricket leagues – including the Trinbago Knight Riders and the upcoming Cape Town Knight Riders – that both leverage and strengthen KKR’s brand value. As a result of all of this, the franchise is now highly profitable, becoming the IPL’s most valuable brand.

The IBC will help free up the banking system to grow, but sustainably

Thus, instead of just mopping up the existing losses, the government opted for the IBC and forced banks to write down their bad loans. Fortunately, just 50 cases account for most of India’s aggregate NPAs, with 12 cases making up for 25% of the total. This made it easier to tackle the problem. Admittedly, there has been a fair amount of pain but the IBC regime will eventually enable the banking sector to start expanding again. 30 years from now, banks will be far bigger and cleaner than would otherwise have been possible.

A new monetary policy framework

Interest rate-setting now has a single, explicit aim: keep inflation in check...

...and can no longer be used to prop up the Rupee

In a similar vein, the NDA has created a new, rules-based framework for monetary policy. An independent Monetary Policy Committee (MPC) has been established, with several members who are independent even of the RBI. Their task is straightforward: keep inflation in the 2-6% range, preferably around 4%. For an economy accustomed to decades of 8-10% rates, anchoring inflation at much lower levels required painful adjustment. Moreover, since the RBI could no longer use interest rates to drive the Rupee, exchange rates are no longer relevant to rate-setting except where they have a second-round impact on inflation. The payoff has been significant: a 500-600 bps structural – as opposed to cyclical – drop in inflation. In the long term, this will permanently reduce the cost of capital. In turn, this will spur investment and capacity creation, thereby further dampening inflation.

A new tax culture

GST and demonetisation signal that the rules of the game have changed on tax compliance

When everyone drives in the right lanes, traffic moves faster. Similarly, if everyone pays tax, rates can come down. To help move India towards a new, lower-tax environment, the NDA has pursued policies that should be seen as creating once-in-a-lifetime culture change. With demonetisation, the Prime Minister in one shot signalled that the ‘rules of the game’ had forever changed, and the GST builds further on this.

...and learning by doing

Instead of wasting precious months and years planning and forecasting, the NDA’s approach is to move forward on reforms, and fix things as issues crop up

A key element of the NDA’s reforms approach is to quickly put in place broad frameworks and later make adjustments by learning. In an uncertain environment, where feedback loops are often immediate, this is better than trying to predict every problem in advance. Any policy will have unintended consequences but the only way to bring major change is to ‘just do it’. With the GST, many urged the Centre to hold back on implementation claiming that the system was ‘not ready’ to handle it. The reality is that while there were teething problems, they were not along the lines that experts had predicted. No one anticipated, for instance, that a particular error-correction button on the website would malfunction or that refunds to exporters would be such an issue. Yet, once the dust had settled, what India had achieved was the most fundamental transformation of its tax structure. In time, all the issues with the GST will get tackled and the system will only get better.

What to expect post 2019

On the cards: radical reforms in a host of areas

A second term for the NDA will bring even more sweeping – some might say painful – change than has the first. Internally, the government is clear that major reforms are necessary in a vast swathe of areas, from the functioning of the judiciary and the bureaucracy to contract enforcement, urban land use (specifically, towards taller, denser cities with strong public transport) and education (in terms of curriculum as well as the functioning/ location of universities). What is required in many places is major surgery not first aid. The disinvestment process will also get revived, including the sale of Air India. Certain subjects – particularly land and labour – are in the domain of the states, but wherever possible, the Centre will keep pushing the envelope, often in radical ways.