An entrepreneur’s journey is often about the never-ending pursuit of foreseeing what others do not anticipate. Based on information gathered from interviews with 1300 entrepreneurs, we’ve handpicked for you, eight unique tactics that you must consider adding to your arsenal.
“If you’re going through hell, keep going” – Winston Churchill
This cover story is about tactics.
It is about the thought process of an entrepreneur, one who goes through ups and downs, solving problem after problem, hoping to see the light at the end of the tunnel.
It is about the men and women, who leave their cushy jobs, with ambitions to change the world and make the big bucks exponentially faster.
These are some tactics adopted by people who after years of toil are elevated to celebrity status, often reserved for film stars and sports personalities.
Here’s a peek into 8 unique tactics adopted by entrepreneurs that played a crucial role in shaping up their professional and entrepreneurial journeys to eventual success.
The eight tactics
The approaches we’re talking about here will make a lot more sense to you when we see it in the perspective of what is the exact opposite of these tactics.
HIGHLY EFFECTIVE APPROACHES
Accepting the contrarian view
Business is not a sport
Simplifying complex tasks
Stability rather than growth
Finding an anchor
The importance of difficult
Competing on new metrics
Business is about beating competition
Complicating simple tasks
Growth first, all else later
Tackling the low-hanging fruits
Running a marathon alone
Postponing the difficult decisions
Competing on the usual parameters
TACTIC #1: THE CONTRARIAN VIEW
In the 1970s and 80s, the manufacturing sector in the country was essentially people-driven. At the time, Bharat Forge, today one of India’s largest metal forming companies employed over 2000 low-skilled laborers. But Baba Kalyani, the leader at the helm of the company, knew something was wrong. It was a challenge to maintain consistency and quality with reliance on so many low-skilled workers. Moreover, outside of India, technology and automation paved the way for leadership in the sector.
In 1988-89, Kalyani took the strong call of offering a voluntary retirement scheme to all 2000 workers, and hired 600 new engineers, who would lead the transformation of Bharat Forge. Innovation became the new mantra, replacing a low-cost workforce.
It was a drastic step, considering it was the late 80s we’re talking about here. Several market analysts and business writers were critical of Kalyani’s move. However, in hindsight, we know the move paid off extremely well. Today, Kalyani Group is a US $2.5 billion conglomerate with manufacturing facilities across the globe and is India’s largest exporter of automotive components.
This anecdote is a classic example of a leader who foresaw the future and implemented a strategy that was contrarian to what the whole manufacturing sector was doing.
Fast forward to something more recent.
When Zoho, the SaaS Company, started the Zoho University to hire and train school children from Tier-2 towns to become software engineers, it seemed like an impossible dream. Sridhar Vembu, the founder and CEO of the company, however, knew in his gut that it was a good move. “College was a waste of time,” he thought, especially if the student ended up going to a low-end university. His premise was simple: let us hire people who have the willingness to learn and the passion to succeed, and teach them programming. What started off as a small experiment within the company, is now a clear cost differentiator for the company. Moreover, Vembu had given an opportunity for people who didn’t have access to such jobs, transformed their lives and in return, earned their trust.
Having a contrarian view, with a clear thought process and reasoning, may just become the differentiator your business needs.
TACTIC #2: BUSINESS IS NOT A SPORT
Amazon’s Jeff Bezos said, “I don’t care about competition, because they don’t pay my bills.” He said this to reiterate the company’s focus on customer-centricity and doing everything it takes to win the customer’s loyalty.
However, we live in an era, where a ‘winner takes all’ approach seems to have become priority for entrepreneurs, especially in new age sectors. Companies like Google and Amazon have left their competition far behind, letting younger entrepreneurs believe that beating competition is everything.
Interestingly, in a conversation with Fast Company Magazine, Larry Page of Google repeatedly mentioned how comparing one self with competition can hurt more than help. He said, “Competition is the creation of the media, but that is not the way he looks at Google.”
The point is, in sport, to win you have to beat somebody. However, in business, you can co-exist with competition and do very well for yourself by serving your customers well. Of course, it’d be foolhardy not to track your competitor’s strategy. The most often stated example is that, if you’re in e-commerce, you cannot play unless you raise the big bucks. The loss-leader approach will kill profitable, yet smaller players, and one needs to keep an eye out for such tactics.
Our favorite quote at The Smart CEO Magazine on this subject of competition came from Narayanan Vaghul, the former chairman of ICICI bank.
“I have learned one thing; the moment you set yourself an objective of overtaking a competitor or capturing a particular market share or maintaining a particular growth rate, something gets into your head and your thought process about the business goes haywire.
In the battlefield, there are broadly two theories: the broad thrust strategy, which was supported by General Bradley and President Eisenhower, and the narrow thrust strategy, which was suggested by General Patton and Montgomery. The narrow thrust strategy was to go straight to Berlin and attack Hitler there. The broad thrust strategy meant you move forward on a broad front – you move gradually along the flanks as well. The danger with the narrow thrust strategy is that your flanks are open and your enemy could come in from the flanks and attack you. Instead, if you protect your flanks, move in from the right and the left, you reach your destination a little slower but the risks are lesser. I, for one, prefer the broad thrust strategy. I prefer to create a foundation and then move.”
Tactic #3: SIMPLIFYING COMPLEX TASKS
There is a lot of literature on keeping things simple. Ironically, the phrase is so often used; we think it is easy to keep the operations of a business simple.
But with the advent of new age technologies, including data analytics and social media, there is a lot of information to analyze. As a result, we tend to complicate the simplest of tasks.
For example, the jury is not yet out on how much data analytics can help product development lifecycles. Apple, the outlier, doesn’t use data analytics tools to make product development decisions. Instead, it uses the imagination, creativity and the minds of Tim Cook, Jonathan Ive and rest of the team to conceptualize products. It also uses insights gathered from the Genius Bar, the customer service desk in Apple stores. People, rather than data analytics tools, are at the center of the company’s product development process.
When we interviewed AirAsia India’s CEO Mittu Chandilya for a cover story in The Smart CEO, he gave us a glimpse into Tony Fernandez’s approach to operating in various geographies in the complex aviation industry. At a 30,000 feet level, AirAsia’s operations have two distinct teams; on one side, they employ aviation experts to deal with the asset-heavy aspects of the operations including aircraft operations, maintenance and financing; on the other hand, they operate like any consumer-centric business focusing on marketing, customer service, ticketing and flight operations. There’s a clear demarcation between the complex processes of operating an airline business and the consumer-facing aspects. Such clarity helps the consumer-focused teams not worry about the intricacies of aviation.
This, of course, is easy to strategize, but implementation can be hard. AirAsia’s USP has been its ability to enter new geographies, and take this demarcation with them, as they launch.
TACTIC #4: STABILITY IS MORE IMPORTANT THAN GROWTH, SOMETIMES
When online furniture retailer Urban Ladder launched in January 2012, it entered a Greenfield space, which had two other recently formed startups, Pepperfry and FabFurnish. Founded by Ashish Goel and Rajiv Srivatsa, the company took a leaf out of Jeff Bezos’ playbook and focused so much on the customer. In a talk at The Smart CEO-afaqs! Brand Owners’ Summit in Bangalore in June 2014, Srivatsa spoke about how the book titled ‘Delivering Happiness’ by Tony Hsieh, served as the Bible for the company to shape up customer-related processes.
In the early days, they realized they scaled up too fast and decided to slow down. The focus was shifted to building high-quality furniture for only three cities – Bangalore, Mumbai and Delhi – before scaling up geographically. From a marketing standpoint, it focused on only Facebook campaigns and stayed away from any other marketing spends.
The idea was simple – build the foundation, capture a loyal customer base that would spur word-of-mouth, get business processes sorted – before scaling up.
Of course, today, the company has scaled up operations to 27 cities across India, raised over US $77 million and counts Mr. Ratan Tata as an investor.
However, the early days were not about scaling up. It was rather a deep, maniacal focus on customer experience, with the backing of business processes that allowed the founders to scale. In fact, within a year of founding, the company scaled down operations to stabilize, before scaling up.
While it is still early days for Urban Ladder, larger companies that have operated for decades realize the importance of stabilization from time to time. In the same interview (quoted earlier) we conducted with ICICI Bank’s Vaghul, he explained to us how the bank resolved various challenges that arose out of furious growth.
He said, “Overall, we (ICICI Bank in 2008) were growing at a furious pace. When Chanda (Kochhar, the current managing director and CEO of ICICI bank) was appointed, we had a clear strategy. We said to ourselves, growth is not all that important – building a strong foundation is crucial. It requires courage for a company that was growing at a furious pace to come down and say, I am going to control growth and the focus would be stabilisation rather than growth. We decided we could correct our cost of funds. This happened in the last of the strategy meetings I presided.”
“In light of all the experience I’ve had over the years, I would say that growth is not necessarily the main objective always. However, it would be foolhardy not to grow furiously if there is a vacant space and you have the tools handy to deliver in an area. You cannot blame Steve Jobs for selling so many iPads. But very rarely in your time, you get a product that can capture the imagination of people in such a sweeping fashion. For a large percentage of businesses, growth needs to be there, but not furious growth.”
TACTIC #5: TACKLING PROBLEM-AFTER-PROBLEM
I am going to take this opportunity to replay an interesting conversation (in March 2013) I had with R. Thyagarajan, co-founder of the Shriram Group, which today manages assets over Rs. 90,000 crore. I explained to him about the magazine’s vision of inspiring people to startup their own businesses and then equip them with the right data, information and knowledge to help with decision-making. In response to this, with a very straight face, he said, “So, you want to get more and more people into trouble.” He went on to explain: “Entrepreneurs are constantly solving problem after problem. When I used to work for someone else, I thoroughly enjoyed it. Now that I am a businessman, I realise I am dealing with one problem or the other almost every day.” In a typical Thyagarajan-style, the conversation was loaded with anecdotes, tongue-in-cheek comments but tremendous insights drawn from several years of experience.
At Shriram Group, Thyagarajan’s focus has always been about hiring the right set of people to grow businesses. “It is people building, as opposed to business building that I focus on. After all, it is about passing on the problems we face to other people!” he said.
The key takeaway from this conversation simply is, identify the key problems in the business and then identify the right people to tackle these problems. Different entrepreneurs and leaders, use this approach with their own variation. Vinod Khosla, the renowned Silicon Valley investor, calls it the approach of “hiring to solve key risks”. He wrote a white paper narrating how identifying the key risks in a high-technology startup and then hiring the right people who’ve tackled similar risks makes a huge difference.
In our cover story interview with Mindtree’s Subroto Bagchi, he explained to us the idea of building scale. He said: “Think of your enterprise as a continuous effort to create infrastructure. Build the physical infrastructure with love; build the intellectual infrastructure (of which systems and processes are a part) with the future value in mind and build the emotional infrastructure based on the idea of legacy.”
“I have dealt with the idea of scale extensively in my book, The Elephant Catchers. In it, I argue that the first step is to get comfortable with the idea of scale. Then you need to know what factors help you scale and hinder from a customer angle. As you go along, you have to scale your intellect. That is all about tapping into knowledge beyond your self. You have to scale your reputation; reputation is capital. You also have to scale people because business is an inanimate thing; businesses don’t go anywhere, people do. So, you have to scale your people. Then, of course, is the issue of scaling your own self as a founder-leader-entrepreneur-human being.”
Essentially, the idea of tackling ‘one problem after the other’, means that you need to build the right infrastructure and right set of people to take on these challenges.
TACTIC #6: FINDING AN ANCHOR
We’ve read several articles that mention that entrepreneurship is lonely at the top, especially in the early days. Founders would do well to tackle this loneliness, by roping in an anchor. This anchor could come in various forms and shapes: for some, it could be a mentor; for others it could be an investor, a colleague or even an anchor customer.
For CRISIL, the credit ratings company, having ICICI as the anchor played a crucial role in attracting top quality talent, retaining them and going through the tricky early-phase of building a ratings company in the license raj period.
For Urban Ladder, it was Kalaari Capital, which invested US $1 million in seed capital when business operations hadn’t started, that was the anchor. Early-stage entrepreneurs would do well in finding that anchor; an entity or individual one can turn to for support in both good times and bad.
The classic example of a leading business leader finding an anchor late in the game is the story of how Dilip Sanghvi, founder and CEO of Sun Pharma and one of the richest people in India, roped in Israel Makov, former CEO of Teva Pharmaceuticals, as the Chairman of Sun Pharma.
Sanghvi relinquished his position as Chairman to bring in Makov for his astuteness and experience. Fortune India Magazine, in a cover story, wrote about how Sanghvi separates the role of a manager and an owner, and his ability to make dispassionate decisions that are good for the company. The story gave us a glimpse of how Sanghvi reached the top of India’s pharmaceutical industry through many, many such decisions.
Once an entrepreneur decides to find an anchor, it is important to find someone worthy of the tag. For this, there needs to be an alignment of ideologies between the entrepreneur and anchor, and the intention to build a long-term relationship.
TACTIC #7: THE IMPORTANCE OF DIFFICULT
In our interview with Vaghul, he said: “In several cases, failures of businesses are attributed to the inability to make decisions, especially tough ones, at the right time.”
More often, these difficult decisions are about people, ones you worked with closely for several years. Entrepreneurs fail to make these difficult decisions and it hurts them in the long run.
Ed Catmull, the co-founder of Pixar Animation and the author of the book Creativity Inc. said: “Telling the truth is difficult, but inside a creative company it is the only way to ensure excellence.” In the book, Catmull talks about the importance of candour in the creative workplace.
Essentially, what Vaghul and Catmull are suggesting here are somewhat related to each other. Most difficult situations at entrepreneurial ventures come up because of lack of transparency, especially when it is people related. If we can make it clear that frankness and candour are appreciated at the workplace, it’d go a long way in avoiding such problems.
For every entrepreneurial success story we hear, there is a backstory filled with challenges, tough situations and the need for an entrepreneur to make the difficult calls.
In several of our interviews, we have requested entrepreneurs to share details of such difficult situations. But, since it often involves people who’re very close to them, it becomes very difficult to share the details.
Ben Horowitz, co-founder of Andreessen Horowitz and one of Silicon Valley’s most respected entrepreneur-turned-investor, has authored a book titled “The hard thing about hard things”. It goes into reasonable detail about how Horowitz saw first-hand how various entrepreneurs came up with solutions to problems with no easy answers. It is a must read for the budding entrepreneur.
TACTIC #8: COMPETING ON NEW METRICS
Ask Krishnan Ganesh, founder of Growth Story and a serial entrepreneur who has built and exited four successful ventures, and he’ll often repeat his preference for Greenfield ventures. “This is obviously not the only way to start a business, but my preference has always been to look at areas where there are no large players,” he said, when we interviewed him in 2013.
Ganesh believes the advantage with pursuing such opportunities is that it gives him the opportunity to shape up a completely new sector. With Tutor Vista, Ganesh pioneered the concept of roping Indian tutors to train students in the US and Europe on the Internet. Today, through his Growth Story platform, he has backed companies like BigBasket.com, which is now already India’s largest online grocery player in a very short period of time.
The idea of pursuing Greenfield opportunities is not applicable only to startups. At Godrej & Boyce, when the team at the Innovation Center was conceptualizing Godrej Chotukool, the personalized cooling device, the leadership team made a conscious call, not to directly compete with existing competition. They identified the various key metrics that refrigerator brands competed on – like cooling ability and volume – and consciously chose to differentiate their product radically.
Godrej Chotukool in its new avatar was positioned as a personalized cooling device that was a work of art. Every Chotukool could be customized by the buyer and it would be ‘made to order’ with his personalized artwork on the front door. It didn’t have a compressor, was cheaper and it could be a personal cooling device in one’s office or bedroom.
The advantage of competing on metrics that are uncommon is that, it gives you a strong product differentiation from the outset. However, it is crucial that the metric in question is of value to the customer.
Disclaimer: This story is a classic example of second-hand knowledge. It is written based on observing entrepreneurs we’ve interviewed for The Smart CEO Magazine, and how, many successful entrepreneurs have used each of these tactics in their journey. Additionally, these tactics have stood the test of time; meaning, they have been adopted by leaders of companies that have existed, very successfully, for decades.