May 08, 2009

When Differentship MET common sense, Part Two

(The concluding part of a two article series aimed at driving Marine Education and Training –MET- towards excellence)

Differentship management’s training establishment is on schedule for completion in two months time. We believe it is now time to make our MET plans public.


Put simply, our aim is to see our training institute rank amongst top ten globally within four years. We will do this by appropriate funding towards facilities and faculty, building partnerships with regulators and industry and insisting of an uncompromising path to excellence from our trainers and administrators.

We are not opening a training institute to just make money, but to provide, in an economically sustainable manner, excellent Marine Education and Training to seafarers. In order to do this properly, our intention is to plough back almost all the profits from training back into the institute.

We believe that advantages to us, and our brand, will accrue because we will graduate the best trained mariners possible. While this may seem like a collateral advantage to some, to us this advantage alone will erect a high wall separating us from the herd. This entry barrier will be invaluable for the Differentship brand. In any event, the pursuit of excellence, is, actually, the raison d'être for our institute’s existence.

As with our HRD policies rolled out recently, the training institute will be run in an ethical and professional manner. We will not make promises we cannot keep, and we will be fully transparent. The question of making our plans public, at this stage, was carefully debated internally. In the end, we are happy to make these public; we do not mind that this will put additional pressure on ourselves to excel.


• Differentship presently owns all the equity in this project.
• Our expectation (and target) is a Return on Equity (ROE) of 15 percent.
• Although we will start fully equipped in June, a minimum of 90 percent of the annual profits will be ploughed back into the business in the form of capital expansion plans every year for the first four years. Our desire is to scale up quickly and to invest in the future instead of skimming profits from training today. Initial investment will be recovered in seven years, assuming prudent reinvestment of the 10% profit retained.
• Capex plans will include elearning platforms, high technology simulators and other such modern resources. We believe that the mandate of reinvesting a huge chunk of our profits for Capex will automatically create barriers of entry for newer institutes or others seeking short term profit. We know that a high ROE on a low asset base does not mean too much anyway.
• We intend to charge owners or trainees market rates for training. We see no reason to charge less; our differentiating factor will be quality, not cost or quantity.
• We now declare that we are open to other likeminded partners who may be interested in equity participation in this project, since this will push our ability to scale quicker. However, we will retain majority shareholding and all operational control. We do not want to outsource our commitment to excellence to anybody.
• The overwhelming majority of employees of the Differentship training institute will be permanent and will be awarded cashable equity in the institute for every completed year of service. Annual bonuses will be paid to everybody based on their contribution towards excellence.
• Salaries will be 15 percent higher than market wages at the institute.
• With existing owners of the 50 odd ships we have under management excited about this initiative, and with great interest shown from other industry quarters, we do not see any issues in raising demand.

Some Key operational decisions have been arrived at after much thought. Some of the more important ones are:

• We have two customers: ship owners and trainees. Our endeavour will be to provide excellent service to both.
• The Differentship Training Institute will be run ethically and with complete transparency.
• We will seek to promote ethical professional behaviour to all our trainees during course delivery, because we are dismayed at the present low levels of ethics and professionalism across all segments of our industry.
• We will seek to collaborate with other large institutes to engage the Directorate General of Shipping towards a MET compliance framework that is robust and practical.
• Advisors, Directors and key personnel will be appointed and retained only if they share our vision, because we do not want people who are content with promoting the business model currently prevalent in the industry.
• We have developed an online learning delivery system and will integrate it into our training from the outset. Although some training is enhanced by group discussion and face to face peer involvement, we believe much training can be undergone from within the comfort of a trainee’s own home. The advantages of cost savings in travel, hotel accommodation, faculty and paperless training are obvious. Other positives, including higher employee satisfaction and course curriculum and material that can be quickly modified cannot be ignored. We intend to make Elearning a large part of our future initiatives, and have already tied up with two of the largest providers of maritime training software to push this aggressively.
• We will employ visiting faculty to the minimum. One exception will be where a high end technical curriculum makes availability of a full time faculty difficult. The reason for preferring full time faculty is simple: we have less control over quality with visiting faculty and greater administration headaches. We do not want sailing Masters or Chief Engineers to teach for a month or two part time, unless they have something unique to offer.
• Distance Learning Programmes, where they exist for fresh Cadets, have been overhauled. Frankly, the present DLP quality is below par and unacceptable. Our DLP concentrates on practical education during the trainees’ sailing period and reduces on board academic study. We believe that the time for arcane academic pursuits is during preparation for competency examinations and not at sea.
• Realising that on board trainers do not grow on trees, we have identified, within our own fleet, suitable trainers and have completed a shortlist of sailing officer educators across all ranks. These officers are capable and interested in imparting some of their knowledge at sea to the next generation. We propose to introduce a mentorship programme wherein such officers will be themselves trained and then involved in training younger colleagues whether they are at sea or ashore. Juniors will be encouraged to keep in touch with their mentors by email and otherwise. We will try to schedule a rotation that has mentors sail with their ‘wards’ at least once. As far as possible, mentors and juniors will be paired if they belong to the same country, city or geographical area. Mentors will get a small allowance as compensation for involvement, though we feel that this contribution is actually priceless. We will also use our mentorship programme to identify future faculty, and, if necessary, mentor the mentors towards that end.
• Our selection process for faculty and administrators will be strict. We do not intend to retain anybody who has a low commitment to MET or is seeking a semi retired life with low involvement. There are enough institutes that employ deadwood; we do not see a reason to add ourselves to that list. Frankly, we will compensate much better, and so will not accept second best.
• Pre Sea Cadet courses will be planned carefully and monitored strictly. We notice that many institutes have faculty that do not work in tandem, resulting in confusing and uncoordinated course delivery. Pre Sea trainees deserve to have a well knit course that explains basic concepts to them clearly and indelibly; instead they are often taught by a gaggle of visiting and permanent faculty of varying competence and uncertain commitment in an ad hoc manner.
• As of last month, we have stopped the practice of using Cadets for routine clerical work at sea. Time saved is being put to productive use, including on board training.
• All company employees attending add on or company sponsored courses will be invited to bring their families along. Although family travelling expenses will be borne by them (at least in the first four years), these officers will be paid an appropriate daily allowance to cover local expenses if the training is outside their city of residence. We feel that this is only fair.

Addressing motivational Issues

We see this as a key reason for the present low quality of training. We are convinced that overcoming low motivation is key to imparting excellent education.

First off, we believe we have largely addressed this issue as it pertains to institute faculty and on board trainers already. We believe that our model of better compensation coupled with strict quality control of faculty is well workable. Although we know that our mentorship model has still to be road tested, we also know this: so far, nobody in the industry has tried to identify on board trainers internally, or even vaguely tried to make on board training a serious and professional affair. For the first time, we have.

Secondly, we do not believe that motivational issues with raw trainees attending pre sea programmes will be problematic. Those of us at Differentship that have been involved with MET know that these youngsters yearn for quality. They are keen to learn and establish themselves in the industry even if they are already planning to quit sailing within a decade. Their parents have spent hard earned money or have taken loans for training. In our experience, many are then frustrated by the quality of education offered to them at present training institutes. It is a poor excuse to point to education in India in general and say that it suffers the same malaise. It is also cowardly for an institute to hide poor educational quality behind certificates, ISO compliances and domestic and foreign associations. Most of these trainees want cake. So far, they are being given bread instead.

We do admit to facing a bigger challenge when it comes to add on courses, whether statutory, company sponsored or otherwise. This, we feel, is largely because most of these trainees are industry hardened cynics who have suffered poor standards of MET throughout their professional careers. We have spoken to many of our officers; frankly, many of their comments on post sea courses, including revalidation and upgradation courses, are too embarrassing to repeat in polite company.

We do believe, however, that the proof of the pudding lies in the eating. The same officers we spoke to have singled out certain institutes where courses are conducted well and expressed satisfaction at having received good value for their time and money. Therefore, we are hopeful that these officers will be motivated, even if gradually, to take full advantage of the excellent training that we will offer to them.

In any event, we know this too: Our desire to impart MET of a quality not seen before in India is visceral; we know that this is the way towards excellence and competitive advantage. We know that excellence is a habit. We intend to make it ours, even if some in the industry do not demand it, or indeed even recognise it yet.

Therefore, to the sceptics out there, we repeat what the restaurant cook told one of us in Livorno: “You don’t know what good lasagna is, because you haven’t eaten ours yet”.