Reliance JIO V/s AIRTEL – which one is better investment idea?

Thursday, May 18, 17

Reliance JIO V/s AIRTEL – which one is better investment idea?

Greetings from Hitesh! Thanks for appreciating our post talking about TEJI in World Market due to deceptive liquidity measures. Today I am going to talk about RELIANCE JIO and AIRTEL.

Reliance JIO:-

It makes me proud that MUKESH BHAI topped the FORBES list of GLOBAL GAME CHANGER. His daddy talked about KAR LO DUNIA MUTTHI MAIN. He must be happy seeing his son topping the list.

Reliance Jio has come out with DISRUPTIVE business model and all the companies in the TELECOM has gone for a toss.

Following JIO’s offer – Airtel and other operators have also started matching the JIO’s offer. Will they be successful? Will they outsmart JIO? Let me take you to the management science and help you understand what is the way ahead.

How TRANFORMATION OCCURS?

It seems that everyone these days is looking for a disruptive business model. But a business model is only one part of the equation. Equally important is the mental model behind the business model, as well as a measurement model for both. It’s the combination of mental, business, and measurement models that allow real transformation to occur.

Let me share an EXAMPLE of AIRLINE industry:-

The airline industry is a cautionary tale of what happens when companies emulate new business models without bringing over the associated mental models.

For over 40 years, Southwest Airlines has been a disruptive force in the airline industry, creating an entirely new category and a record 43 consecutive years of profitability. Traditional carriers like United, American, and Delta have a wide range of fares with multiclass cabins, heterogenous fleets, and hub-and-spoke routes. Southwest’s innovation was to focus on low fares with one-class cabins, homogenous fleets, and point-to-point routes.

From the start, Southwest cofounder Herb Kelleher saw his competition not as other airlines but as alternative forms of transportation, whether cars, buses, or trains. He wanted to enable people to fly who wouldn’t otherwise have been able to. Therefore his mental model was not how to gain market share from other airlines, but how to create a completely new market for air travel.      (When asked – who is your biggest competitor – CEO of COKE had said WATER and not PEPSI).

(DHIRUBHAI wanted people to talk at the cost of POSTCARD. His son made it FREE. AIRTEL did not have such a DREAM. JIO started with PAN India LICENSE while AIRTELL Added in piecemeal).

This wasn’t the only difference in mental models between Southwest and traditional carriers. Kelleher is known for saying: “I tell my employees that we’re in the service business, and it’s incidental that we fly airplanes.” Other carriers fly airplanes that carry people. Southwest serves people using airplanes.

In the early years, other airlines tried to copy Southwest’s business model with efforts such as Continental Lite, Ted by United, and Song by Delta. All of these efforts failed. The carriers blamed poor execution. When Continental shuttered Lite, then CEO Gordon Bethune said, “It wasn’t implemented in an orchestrated way.” The deeper reason was that a new business model was implemented without a new mental or measurement model.

Let us look at Indian Experiences:-

We had DAMANIA ARIWAYS, then came DECCAN and then KING FISHER and SHAHARA. JET is still the leader and if you study the JET success – you will find that it is a combination of MENTAL MODEL / MEASUREMENT MODEL and BUSINESS MODEL.

What is happening in the times of TECHNOLOGY?

Many companies have “platform envy” and are trying to emulate the network-based business models of companies like Uber, Amazon, Airbnb, and Paypal. But before you start copying their business models, let the example of Southwest be a lesson. Copying a business model without copying a mental model will lead to disappointing results. You have to change how you think before you can change what you do, and then change what you measure to close the loop.

Indian poster boy was FLIPKART and SNAPDEAL tried to copy the same. Today SNAPDEAL is being merged to FLIPKART.

Consider the recent announcement by Volkswagen that it plans to overtake Tesla in the electric car race. The head of VW’s brand said that the company will have “leapfrogging cost advantages” thanks to its MQB platform, a modular architecture for building cars.

VW is replicating Tesla’s business model but with the wrong mental model. VW thinks of itself as a car manufacturer that uses technology. Tesla, on the other hand, thinks of itself as a technology company that manufactures cars. VW would say its cars have sophisticated computers. Tesla CEO Elon Musk has said of the Model S, “It’s a very sophisticated computer on wheels.”

This difference in mental models generates very different measurement models. With a manufacturer mindset, the car industry is heavily focused on measuring changes from one model year to the next. By contrast, Tesla’s technology mindset has it thinking in terms of software releases and downloads rather than model years and shipments. Musk has said, “Most cars don’t improve over time. But the Model S gets faster and better.”

GE shows that legacy companies can adopt a new mental and measurement model with a change in business model. CEO Jeff Immelt has said, “We’ve made the decision that we’re going to try to be both a platform company and an application company…. We want to treat analytics like it’s as core to the company over the next 20 years as material science has been over the past 50 years.”

GE recognizes that a networked business model requires a networked organization. Vice chair Beth Comstock is focused on transforming GE into an “emergent organization.” GE is also using very different metrics for its platform businesses. The key metrics are assets on the platform, rather than margin or revenue growth. This is appropriate for a platform business, as it measures capacity for exponential growth in the future rather than the results of incremental change in the past or present.

There are opportunities to bring new thinking to every industry and function. For example, most retailers are merchants using technology. Amazon is a technologist empowering merchants. Traditional retailers obsess over incremental metrics like same-store sales that are tied to business goals. By contrast, 80% of Amazon’s metrics provide feedback on how well it is helping customers achieve their goals. ( read above TWICE).

The digital revolution is forcing every company to move from business models focused on products and services to those that leverage networks and platforms. This shift requires dispelling myopia, embracing new organizational models, and unlearningold habits. It’s a fundamental change in how you think and what you measure. But once you align your mental, business, and measurement models, you will be well on your way to a successful digital transformation.

How does this APPLY to SMALL INVESTORS?

It is easy to buy stocks what RAKESH or BUFFETT buys. It is easy to STEAL somebody’s TIP and buy stocks without telling him. It is easy to follow FREE MEDIA ADVISE then having a personal investment consultant.

The missing LINK is MENTAL MODEL and MEASUREMENT MODEL of RAKESH or BUFFETT.  You don’t have that and when you don’t have that you can’t become RAKESH though you buy his stocks.

How we TRAIN our investors?

We try to help our investors with the MENTAL MODEL and MEASUREMENT MODEL along with the BUSINESS MODEL of RAKESH and BUFFETT over a period of time. Our sole focus is on how we think when we approach investment or trading. Thinking leads to better ACTION and better ACTION LEADS to 100% better RESUTLS. 

Over the last 25 years the clients who have grown with us and made tons of money are the ones who have seen our FEES as investment for better future rather then COST in PRESENT times? How you think will always matter in life and in investments.

Just be with us for 3 years and see the magic in your life and finances.

Have a GREAT INVESTING.

Follow me on Twitter @hiteshmparikh and join me on WhatsApp on +91 986 942 5399.

Live With Passion…. Invest With Passion.

Hitesh Parikh