A calling in business

From Sri Lanka to Europe and grocery shop to international corporation, Allirajah Subaskaran, Founder and Chairman of Lycagroup, has remained agile and adaptable, creating an 8,000-strong business with a family feel. Interview by David Woods-Hale

Can you tell us about your career to date, outlining some of your biggest challenges and achievements?

I was born in the town of Mulllaitivu, Sri Lanka, to a working-class family. 

I am from humble origins, having lost my father at a young age and being brought up by a single working mother as a result. During my childhood, Sri Lanka experienced internal conflict caused by a civil war and my hometown was a major conflict zone. My family decided to emigrate in the hope of finding safety and increasing our chances of having a positive future.

In 1989, I followed my brother to Paris and was joined shortly after by my mother and sister. After some time, my family, led by my older brother, opened a restaurant. It was entirely family run and it was soon joined by a grocery shop. We began selling calling cards for people who wanted to phone abroad. Initially, a distributor was providing us with
the calling cards to resell. However, they stopped providing the cards, creating a sudden vacuum. My brother recognised that there was a demand for the product and identified the opportunity for us to distribute the cards ourselves.

As this venture developed, instead of selling cards produced by someone else, we started producing and distributing them ourselves. By 1997, our market had grown from just Paris to a number of countries in Europe, and we found ourselves, led by my brother, travelling from Paris to many European cities.

After marrying in 1999, my wife and I decided to move to London and continue the business; in 2002, I started Lycatel, a telephone calling card company. 

By 2006, with advancements in technology and the emergence of the mobile virtual network operator (MVNO) market thanks to government regulation, there was a void to be filled. This is how Lycamobile came to be.

Due to our price positioning and the global movement of people, the company has been able to expand rapidly and now, 10 years on, we are operating in 21 countries and have become the world’s largest international MVNO and the market leader in international prepaid mobile calls. 

We have also expanded beyond the telecommunications space, launching a range of complementary businesses servicing different market segments, including LycaMedia, LycaHealth, LycaFly and Lycaremit. 

In my younger days, I didn’t have any plans for the future. I always focused on seeking out and seizing the opportunities available to me. This approach has been fundamental to the growth of Lyca Group over the past 10 years and is something I continue to live by now. 

What does your role as Chairman involve?

In the early days, we were very focused on the day-to-day business activities and tried to be spontaneous, seizing every opportunity as it came along. 

Now, while I play a very active role in everyday business activities, my priorities as Chairman involve developing a long-term strategy that will ensure we are delivering the best services to our customers and meeting their ever-changing needs. This involves thinking outside the box and introducing innovative and complementary ideas, as well as looking for big investment and expansion opportunities. 

Part of my role has also been about building a strong team from the ground up throughout the business. I believe in the need to diversify a company’s power base and I know the business would not be where it is today without the work and support of my management team. These individuals play a vital role, overseeing the development of the business as we continue to innovate and grow. 

What has fuelled the growth of Lyca Group over the past 10 years and what are your next steps? 

Lyca certainly looks different now than 10 years ago. Geographical expansion has been a long-term focus and strategy of Lycamobile, in particular as we work towards our goal of reaching 50 million customers by 2020. We are now present in 21 countries around the globe, ensuring we are the largest MVNO by geographical footprint. This means we are able to offer a cost-effective service, and we are constantly innovating to meet the needs of diverse markets, geographically and across sectors and communities.

Some of our recent product launches have seen us breaking into new territories to bring our low-cost calling, messaging and data services to emerging markets such as Tunisia and Macedonia, and we have plans for further expansion into six new countries this year, including Ukraine, Serbia, Russia, South Africa, Sub-Saharan Africa, Eastern Europe and South-East Asia. The market context in these regions presents numerous challenges that we have continued to tackle through focused innovation and building meaningful relationships with partners.

To meet the needs of a rapidly developing global community, we have also needed to innovate, not only by launching Lycamobile’s services into new territories, but also by expanding our range of services into new business sectors. 

Today, it isn’t enough for families to be able to contact each other; they want to be able to transfer money to each other, watch the same shows, listen to the same music, and share in each other’s everyday lives. It is along these lines that the Lyca Group has evolved. The Lyca Group is now a multi-national corporation delivering low-cost products to more than 15 million customers, not just in telecoms but also across technology, media, financial services, travel and transport, healthcare and entertainment.

We have bold ambitions, and have already launched a number of new products and services in recent months, including Lycalotto and ChilliTickets, which we acquired earlier this year. Ultimately, we want Lycamobile to be an industry leader in the technology, media and telecoms (TMT) sector and for the group to be a well-established brand, synonymous with connectivity, trust and affordability.

What are the challenges and opportunities you’re facing in a VUCA world? 

We are operating in a highly competitive environment that is becoming increasingly saturated. 

Our flagship brand Lycamobile is faced with the entrance of businesses from a wide variety of sectors, which are showing an interest in launching MVNOs, be it post offices, football clubs, social-media start-ups, multilevel marketing groups, banks, and non-for-profit associations. 

In addition, the sector is rapidly changing with new technologies coming to market, and new regulations being brought in to manage them.

We need to ensure that we are always offering a differentiated service to our customers. We have done this not only by expanding our existing MVNO business into new geographies, ensuring we are able to offer a cost-effective service in the market today, but also by diversifying the business, offering our customers a range of complementary offerings that meet their needs. 

Do you think it’s possible to have a long-term strategy in business, or is success based on agility within the marketplace? 

In this volatile environment, I believe it is important to focus on a long-term strategy and core product offering, ensuring it is delivered consistently, with the highest possible levels of service. 

At Lyca, this means being dedicated to driving forward our ambitious growth plans and customer acquisition target. However, it is crucial to ensure this long-term strategy is never static and continuously reviewed. We must continue to have an innovative, dynamic and entrepreneurial approach that will allow us to react quickly to changing technology, customer needs, and the developing economic and political climate. 

We would not have got where we are today without this ethos. We have always been committed to staying ahead of the game, and so must remain dynamic and adaptive and push forward into new areas and markets that others haven’t, adapting to our external environment accordingly. 

What do you see as the trends impacting most on employers’ strategy globally? 

We are predominantly a technology-focused business and must compete with some of the world’s largest tech companies, to source and retain people with the right skills to drive the business forward and remain on top of the recent technological advancements. 

By fostering employee growth and development, we aim to create an environment where our staff are able to thrive, feel supported, become adaptable to different situations and want to remain loyal to the firm. Despite being a company with more than 8,000 employees, we retain a strong family feel, with everyone invested in the success of the business and experiencing the same highs and lows together. Everything we do at Lycamobile is about connecting with people and bringing communities together, and that’s also our attitude towards our employees. 

How do you ensure there is a culture of innovation throughout the organisation? 

Ensuring a culture of innovation within the group is crucial as we continue to develop high-quality products and services to meet our customers’ varied needs. 

Lycamobile is proud to be a market leader in our industry, and a large part of that is down to our commitment to staying ahead of the game by pushing forward and moving into new areas or markets that others haven’t. Not only have we been able to capitalise on this approach, but we’ve ensured we are delivering the best services to our customers, by continuing to meet their ever-changing needs.

We are dedicated to supporting, developing and nurturing the next generation of senior management, so hiring the right people at all levels of the business is vital, ensuring we maintain and foster the company values of trust, connectivity and innovation. It’s important that despite being a company of 8,000 people, we’ve maintained an open atmosphere, where staff at all levels feel comfortable putting forward ideas, big or small, which are supported, discussed and explored. 

You’ve moved between borders throughout your career. How have you been able to adapt?

I’m not sure how rare this trait is; the movement of people is as old as the world itself. However, having moved from Sri Lanka to Europe to escape the civil war at an early age, I’ve had to learn how to quickly and purposefully adapt to new cultures, markets and contexts in both my personal and business lives, and this certainly hasn’t been easy. But, over the years we’ve managed to transform these survival tactics into a set of core skills which have become the foundation of Lyca’s success and the key to running a successful global company. 

These skills – agility, flexibility, being relationships-driven – are not only the skills that we drive every employee to have, but also enable us to adapt our products and services across borders, and build strong and constructive relationships with partners across our operating regions. 

Lyca Group has employees in 21 countries – how do you ensure there is
a consistent mission and culture?

Working across such a diverse range of markets, it’s important that we uphold the clarity of our mission to connect communities and bring people together through a range of high quality products and services. To ensure that this message is spread across all our operating regions, we have a strong culture driven from the centre of the Lyca Group. 

Our management team is committed to travelling across the different markets to lead negotiations, build lasting relationships with our partners, and place people who share Lyca’s values in key positions.

Do you feel optimistic about the future of business in the age of the ‘new normal’?

As a group, we continue to adapt and evolve to market developments and new environments and are excited about plans to ensure the continued success of the Lyca Group through a programme of expansion into new markets and sectors. 

Reports have shown that the MVNO market will continue to grow in the coming years and we aim to be at the forefront of that growth, with plans to have 50 million people using Lycamobile by 2020, focusing on Africa, Asia and South America for growth – huge, largely untapped markets for MVNOs. We know we can make a real difference to people’s lives by bringing cost-efficient, high-quality products and services to help them better connect with their communities. 

I certainly feel very optimistic about the future. 

Exploring the digital marketing revolution

To create and communicate superior customer value, marketers must now combine traditional advertising with social and digital tools, argues American marketing guru Philip Kotler, in an interview with David Woods-Hale

You’ve written Marketing 4.0? What has changed since Marketing 3.0 was published in 2010?

Marketing is undergoing a digital revolution. We published Marketing 3.0 seven years ago to help companies broaden their view of how computers and the internet impact marketing theory and practice. We stressed the importance of meeting the needs of women, young people, and ‘netizens’ in carrying out company marketing activities. 

Today there is a need to pay attention to the growing role of social and digital media. Social media – such as Facebook, Instagram, Pinterest and Snapchat – create an increasingly connected world and they stimulate greater communications and sales to a wider world. Digital media is enabling artificial intelligence (AI) and the ‘internet of things’ (I0T) and increasing the rate at which robotisation and automation is penetrating business. Our aim in Marketing 4.0 is to illustrate the growing role and impact of digital marketing. I’ve also described this ‘new marketing’ in my 15th edition of Marketing Management

How can Marketing 4.0 help in bringing marketers up to date with the current skills required – from traditional to digital?

In the past, consumers made purchase decisions largely in retail outlets, whether in an auto dealership or in a large department store. Some consumers also used the telephone or mail order catalogues. Today, a growing number of consumers are making more of their purchases online via online retailers. In-store retailing is facing a major decline: witness, in the US, the news of Macy’s closing many stores, clothing store The Limited going out of business and shopping centres in deep trouble. 

Consumers still go into stores to sample and touch the product and then use their smartphone to see if they can a better deal elsewhere. Many retail shops are evolving into ‘showrooms’, partly charged by the company to its advertising budget. Business-to-business transactions are being increasingly conducted with digital media. Most companies list their product catalogues on the internet. Purchasing agents are happy to compare prices on the internet and are less interested in accepting sales calls. All this points to the need for companies to acquire social and digital skills before they are outclassed by more sophisticated digital competitors.

You describe ‘shifting power dynamics’ in the market. Can you explain this in more detail? 

Power has been shifting from the advertising giants who used 30-second commercials to inform and persuade consumers, to savvy consumers – who rely on their friends and acquaintances, plus online product ratings, to make their brand choices. Power has moved from companies to consumers. Companies must now develop fresh pictures of how consumers journey toward making their final purchases. It’s no longer a journey from a 30-second commercial to a purchase but from a stimulus on the internet, or from a friend, to a search for further information, to a purchase. Marketing 4.0 discusses the key steps in consumer journeys and the various touch points that will have an impact on the final purchase decision.

You explain how the rules of marketing regularly change, but this time the very customers have changed – and this is revolutionary – can you talk a bit more about this?

The basic maxim of marketing hasn’t changed. Decide on the consumer need your company wants to meet and the individuals who strongly have this need. Create a solution that meets this consumer need better than any competitor can meet it. See your job as one of creating superior customer value and communicating this value in a superior way.

What is revolutionary is the need for the company to incorporate social and digital tools to carry out this work. Companies need to collect ‘big data’ about individual consumers who have specific needs and apply sophisticated marketing analytics to arrive at consumer insights that can be converted into compelling consumer value propositions.

How do cyclical trends in the economy affect marketers? More specifically, if demand-led growth is on the decline, what single marketing effort is the most important to avoiding a loyal consumer defecting to a competitor?

Buyer behaviour obviously changes in times of market growth versus market decline. When a recession, or a fear of recession, occurs, consumers will intelligently reduce their expenditure and move towards lower-cost products. Every competitor will have a choice: increase the value of the offer, or cut the price of the offer. Normally it makes sense for the company to retain the price and better document and confirm the offer’s superior customer value. If superior value doesn’t exist, the company either has to add more value (for example, free shipment) or cut its price.

Do you think the original elements of the traditional marketing mix will still be relevant in 10 years’ time? 

The marketer’s main toolkit remains the 4Ps (product, price, place, and promotion) and STP (segmentation, targeting, positioning). Each of these elements undergoes modernisation all the time. Product includes packaging, as well as service products. Place is being redefined into omni-channel marketing but it is still place. Promotion is including digital and social communication alongside print and broadcast media. I would welcome a new marketing framework if it promised to address marketing decision problems in a more decisive way. Until then, most companies will use the traditional framework in preparing their marketing plans.

How will creative and media agencies need to evolve over the next five years to keep up with the pace of technology? 

The agency of the future will develop skills in both traditional and digital advertising. This would be better than hiring separate traditional and digital agencies because companies must connect traditional and digital advertising. A 30-second commercial may need to include a digital address showing where viewers can go for more information. The job of the ‘full-service agency’ is to find synergies between the two types of communication, so that 2 + 2 = 5, not 4.

Do you think that the chief marketing officer (CMO) role will be replaced by a combination of chief tech officer and chief analyst, or is this still a viable career path?

I’d like the CMO position to continue to manage the integration of all the elements that will impact on customer demand. The CMO should spend at least 50% of their time working with the other ‘chiefs’ in the company. The real value of the CMO will be realised when he or she is included in all the strategy planning. It would be unwise to confine marketing to designing tactical moves. The CMO is in the best position to foresee where the particular market is going economically and technologically. The CMO’s staff must include an excellent digital person and technology person. 

Do you think marketing and HR may evolve into one business function, as people leadership and organisational branding become increasingly connected, with shared goals and purposes?

I would prefer the heads of marketing and HR to work very closely together but remain separate functions. The CMO is highly interested in seeing that HR hires very service-minded people. In the hotel business, Marriott says that the first job is to hire the right employees and then the customers will come. The CMO should support the HR person to gain a sufficient budget to hire excellent employees, not just average employees. The evidence is strong that excellent employees have a productivity impact that is several times that of average employees.  

Do you think that zero-based budgeting for marketing, based on the Unilever example, will be widely adopted, to make marketing entirely accountable? How can value be measured throughout all channels since tracking is harder offline? 

Zero-based budgeting for marketing means starting each year with no budget allocated to marketing, until marketers propose specific marketing spend – along with the evidence that results will exceed costs. This is in contrast to normal budget setting where the budgets of the past year are the starting point, raised or lowered slightly. We acknowledge that some past marketing expenditures were not productive, and that from time to time, it is worth reviewing each major budget item to decide whether it should be eliminated, decreased or increased. 

The problem with zero-based budgeting for marketing is two-fold. Many campaigns need continuity and they shouldn’t be cut off before they have achieved their full impact. 

Also, it is increasingly difficult to assess the financial impact of a particular digital tool or a particular marketing channel in an increasingly complex and interactive world. 

Zero-based budgeting is a highly impractical tool for yearly budgeting. However, I grant that it could raise marketing efficiency by being introduced every few years.

Do you believe leaders across all disciplines and functions need to change their mindsets to succeed in a volatile world? 

Today’s world is increasingly characterised by volatility, uncertainty, complexity, and ambiguity (VUCA). Donald Trump’s election as US President has greatly contributed to VUCA. If Hillary Clinton had been elected (she won the popular vote by 3 million votes), we would arguably not be in a VUCA world. Events would have taken their normal course and businesses would carry normal expectations. 

But Trump sends out tweets in the middle of the night, many of which attack companies, journalists, judges, pollsters, or the voters themselves. These attacks are a sign of paranoia. Many business leaders have to think twice about any move for fear that the president will call them. Consumers are worried about their health benefits and they are no longer certain about social security and Medicare. They, and businesses, are spending their money more carefully, which slows down economic growth.

My answer to that? Business leaders must change their mindsets, in light of Trump’s erratic behaviour; he issues executive orders almost daily. His behaviour has been copied by populist leaders abroad with the effect of introducing even more instability into the world economy. 

Are there marketing skills that all MBA students and graduates need to thrive in a VUCA business world?

Most Business programmes are training their students in social and digital skills. They are also making students more aware of the effects of climate change. Professors are increasingly criticising shareholder value as the measure of business success and replacing it with stakeholder value as a more comprehensive measure of business performance. Marketing students graduate with a broader view of the factors that affect corporate image and reputation than previous Business School graduates. 

And finally, do you feel optimistic about business adaptability as the
world becomes more uncertain but also more connected? 

Business literature increasingly emphasises company agility and responsiveness to rapidly changing conditions. Companies need to monitor technological trends, political debates, and economic issues. Companies such as Unilever, Starbucks and Amazon show incredible business adaptability. But many companies are still coasting and need a few more shocks to wake up. My hope is that an increasing number of companies recognise that growing income inequality will hurt, not help them, and that they need to take a more expansive customer benefit and welfare view of what makes an economy strong.

Philip Kotler is the SC Johnson & Son Professor of International Marketing at the Kellogg School of Management, Northwestern University, Evanston, Illinois

Professor Kotler received his Master’s Degree at the University of Chicago and his PhD Degree at MIT, both in economics, conducting post-doctoral work in mathematics at Harvard University and in behavioural science at the University of Chicago.

He is the author of 57 books and has published more than 150 articles in leading journals. He was the first recipient of the American Marketing Association’s ‘Distinguished Marketing Educator Award’ (1985) and has received a host of other accolades, being inducted into the Management Hall of Fame in 2013. 

Kotler has consulted for such companies as IBM, General Electric, AT&T, Honeywell, Bank of America, and Merck in marketing strategy and planning, marketing organisation and international marketing. He has travelled throughout Europe, Asia and South America advising companies on applying economic and marketing science principles to increase competitiveness, and governments on developing the skill sets and resources of their companies for global competition.

He has been Chairman of the College of Marketing of the Institute of Management Sciences, Director of the American Marketing Association, is a member of the Board of Governors of the School of the Art Institute of Chicago and of the Advisory Board of the Drucker Foundation. 

He has received a number of honorary doctoral degrees from several international organisations.