Cricket Business Strategy from MTI
In unveiling MTI's 11C Cricket Business Model, MTI Consulting CEO
explained the rationale for a strategy model for the 'World's Hottest
Sport' as described by Forbes.
"The business of cricket is estimated at US$ 4 Billion globally,
growing at 15 per cent per annum and could be easily classified as a 'FMCG'
(fast moving consumer good). Not only does it touch the hearts and minds
of over two billion consumers worldwide, it accounts for a significant
proportion of consumer television and web surfing time as well as the
enormous amount of casual consumer chat! It is argued that this form of
unscripted entertainment is capturing share from other forms
The business of cricket is estimated at US$ 4 Billion globally. |
of leisure and entertainment. It is now opening up new frontiers,
from Afghanistan to Argentina, from Canada to China and from Namibia to
the Netherlands.
The innovation curve has just begun, with the likes of IPL Twenty 20
series, and it is expected to capture an increased share of the
consumers and the advertisers' wallet. Many in the industry still see it
as a competitive sport; consumers see it as a form of entertainment;
cricketers see it a viable career; above all it is among the most
competitive and dynamic industries, that rivals many conventional
industries.
Given the many facets of the cricket industry (players, spectators,
TV viewers, sponsors, advertisers, boards etc), it requires a holistic
business strategy framework, that can benefit from proven strategy
formulation models, yet does not fail to capture the essence of
cricket."
MTI's 11C Cricket Business Model has been developed as a framework
(with relevant tools) to help cricket authorities to analyze, strategize
and realize greater heights for cricket as a business
Currency, community and champions
The strategy formulation process starts by analyzing cricket's
performance (in a given country or territory) - based on the end results
by which the success of the industry must be measured. In the case of
cricket, this includes three equally important success criteria i.e.:
n Currency: How much funds has cricket been able to attract from
consumers via ticket sales, television viewing, sponsorships and
endorsements and converging segments like memorabilia, coaching etc. The
argument being that the better satisfied consumers are, the more time
they will spend 'consuming' cricket and this in turn means a greater
share of their wallet towards cricket.
n Champions: How has the country performed in this globally
competitive industry, as measured by the team and individual
performances, which influenced the 'Currency'. There is a direct
co-relation between a country's performance at sports and the 'currency
factor' it attracts.
n Community: Unlike some conventional industries, cricket (and most
sports for that matter) has a strong social aspect that is interwoven
into it. Therefore, it needs to play a role in linking citizens and
different cultures while promoting healthy values.
At this stage of the strategy formulation process, based on specific
KPIs (Key Performance Indicators), the country's historical performance
is analyzed and provides the basis of setting the vision and goals for
the next 1-3 years (which is done at the end of the process, where by
these three components of the model is re-visited again).
Competition and collaboration
The consumer has a finite amount of time, discretionary income (and
passion) that different types of leisure activities compete for. Some of
these could be between sports and some from other forms of
entertainment.
For instance, TV ratings and ticket sales of Bollywood movies dropped
during the IPL. It could also be between different types of sports, for
instance the decline of cricket in the Caribbean attributed to the
intensified marketing of Baseball and Basketball in the Americas.
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MTI
Consulting has conceptualized, researched and published MTI’s
11C Cricket Business Strategy Model as part of their thought
leadership initiative. The model provides a strategic planning
framework for cricket as a business and is ideally suited for
cricket authorities around the world. The development process
used a blend of sports business models and best practices in
business strategy models, benefiting from strategy work carried
out by MTI in over 40 countries. |
Cricket as a product needs to be constantly researched and evaluated
if it is providing value to consumers and if competitive activities and
sports are making inroads. Based on these findings, like in conventional
industries, the product (in some cases the brand) needs to be
fine-tuned, this is an on-going process. As in the case of West Indies
cricket, it may take many years to see the consumer impact on the game,
however once this happens it will take as many more years to reverse the
trend. So the key is on-going research and feeling the pulse of the
consumer who consumes this product on a daily basis.
Given that a significant part of cricket consumed is still between
countries (unlike Soccer), the 'production' of cricket requires the
collaboration of two or more countries, hence this calls for the need to
factor in all the bi-lateral and multilateral negotiations between
boards at this stage of the process. Like in soccer, with the advent of
the likes of IPL, the type of collaborations will change, and this needs
to be monitored and factored into the strategy formulation process.
There is bound to be competition within different formats of cricket -
competing for the consumer's cricket dollar.
This effectively is the way in which cricket is 'consumed' and
equates to product development in the conventional sense. It includes
everything from six-a-side to Tests and all forms of experimentation
with the core product, from referring umpiring decisions to day-night
test matches. The findings from the competitive scan (above) and the
expert opinions (effectively the R&D / Innovation lab) will be the basis
on which existing products are fine-tuned and new products developed. If
this is carried out on a continuous process, it will signal the
challenges well in advance - well before it hits the bottom-line of
cricket. For instance, the alarming low level of in-stadium spectators
for test cricket could have been signaled by such timely research and
analysis. The module on Consumption will focus on how cricket is
'consumed', beyond just in-stadium spectators and television viewing.
Potentially, it can cover a diverse range of applications, from web
applications to degrees in cricket management to a cricket version of an
American Idol, where raw talent can emerge outside the formal school and
clubs. Put it another way, 'Slumdog Cricketers' (no insult meant) - in
the words of Steve Waugh.
Cricketers and chain of supply
The modules on core formats and consumption will help determine the
demand for cricketers - based on the demand for cricket - very much like
a typical manpower planning exercise in a business. Like in the movie
industry, the stars (the cricketers) hold the key to
'cricket-entertaining' audiences, which determines the financial health
of the industry. The module on cricketers will intensively focus on the
total development and welfare of the cricketers, applying relevant human
resources management principles.
The appearance of your favourite and successful cricket star on
'stage' is the end of a long supply chain process, which starts with
identifying talent as early as toddler-stage and grooming them through
the process and ensuring their welfare through to retirement.
The module on chain of supply will cover all the aspects that support
the total development of the Cricketers and will include aspects
relating to coaching, education, infrastructure and even a cricket
culture in the society.
Capital
Given that cricket has no equity investors in the conventional sense,
it has to use the power of its brand (this includes that of the country,
the authorities, the players, the venue and the cause) to generate
capital, the threshold for which substantially increased.
At this stage of the strategy formulation process, every opportunity
to en-cash the power of cricket is pursued, in addition to the main
revenue streams of television rights and sponsorships. A battery of
financial analytics will be run at this stage that measures the power of
'Brand Cricket' and how it is translated to the bottom-line.
Cricket Authorities can also wear the hat of an investment banker and
ask the question 'What do we need to invest to win the World Cup
(Champions) and achieve a quantum increase in revenue (currency) and
what will be the ROI?'; for instance a Cricket Bond or other financial
instruments that can be traded in capital markets. The emergence of the
Virtual Cricket Stock Exchange of India could well be the fore runner.
Control
Finally, the other ten components of the model need to be proactively
and interactively managed, not just administered. The organizations
responsible for managing cricket need to align their structures,
competencies and processes based on findings from the other 10Cs. Here
there is a case for cross-industry learnings, while recognition of
technical specialists with hard core cricket experience. |