AUGUST 2012
It's Complicated!
Sell more stuff, and your business gets bigger? Maybe not. Page 55
Excellence in corporate governance is easy!
The Magazine for Growing Companies
The of PoPower Does sing yo
lang ur bo ua dy leadgee spell r? Page 58
Kavin Bharti Mittal
on his “unique� venture Page 32
4 innovative ways
to fix your talent woes Page 38
Excellence in
corporate governance is easy! The magazine for growing companies
Persistent Systems, the `1,000-crore IT products firm is considered one of India's best-governed companies. Its founder tells us how every CEO can achieve that feat. Page 24
August 2012 | `150 | Volume 03 | Issue 07 A 9.9 Media Publication | inc.com Facebook.com/Inc
Anand Deshpande, founder, Persistent Systems
@inc
August 2012
contents
32 The Dream Start-Up
photograph by subhojit paul
Kavin Bharti Mittal wants to revolutionise the mobile internet space. Is his “unique” start-up destined for success?
This edition of Inc. magazine is published under license from Mansueto Ventures LLC, New York, New York. Editorial items appearing on pages 10, 12-13, 19-21, 53-61 were all originally published in the United States edition of Inc. magazine and are the copyright property of Mansueto Ventures, LLC, which reserves all rights. Copyright © 2009 and 2010 Mansueto Ventures, LLC. The following are trademarks of Mansueto Ventures, LLC: Inc., Inc. 500.
on the cover dr. anand deshpande, founder, persistent systems. photographed by jiten gandhi in pune. Cover design by Anil VK. imaging by anil t.
August 2012 | INC. | 1
contents
24 The Deshpande Decree Dr. Anand Deshpande,
founder, Persistent Systems thinks excellence in corporate governance is easier than entrepreneurs think. He should know—Persistent is considered one of India’s best-governed companies. Deshpande shares his Top 10 Commandments.
August 2012 Breeding Profits B. Soundararajan’s Suguna Foods has helped over 18,000 poultry farmers across India benefit from contract farming.
48 How I Did It B. Soundararajan
Was launching a public issue in the current global recession madness? Not for Speciality Restaurants’ Anjan Chatterjee.
His father’s constant urging led him to start his own business right after high school. With a small sum of money borrowed from family, B. Soundararajan has built Suguna Foods into a `4,200crore poultry business.
68 I Wish I Knew Then...
by amrita roy
as told to rashmi menon
as told to meenakshi kumar
34 Cooking Up An IPO
TAKE Solutions’ Srinivasan H.R. has struck gold with his 11-year-old company. His secret sauce—listening to his gut.
38 Talent Innovation
Four companies turn their worst talent crises into their best hiring sprints. by cooshalle wilson
by shreyasi singh
2 | INC. | AUGUST 2012
Photograph by jackson J.
contents
August 2012
13
06 53 19
05 Editor’s Letter
06 Innovation
How Violet3D gives a new meaning to being “unplugged”
09 Launch
Viewpoints: Don’t dither. Fire when you have to. Research Corner: Why guilt may make you a better leader On a Roll: Study reveals India’s women entrepreneurs are raring to go The Inc. Data Bank: Who is hiring and what job seekers want A Skimmer’s Guide to Resilience: Why Things Bounce Back, by Andrew Zolli and Ann Marie Healy
13 Get Real
By Jason Fried We’ve decided to retire a profitable business. Are we nuts?
4 | INC. | AUGUST 2012
16 Passions
For four months a year, Gaurav Taneja heads to the football field to coach budding football stars
19 The Goods
The best video chat services Keyboards for your phone and iPad High performance earbuds A mouse for on-the-fly presentations
Guidebook, No. 7
Find out how to streamline your supply chain in our guidebook following page 30.
Strategy 53 marketing Sponsorship deals for niche sports deliver more bang for your buck 55 sales A sales guru on what fast-growth CEOs don’t understand about selling 58 leadership Fake it till you make it—or the art of power posing 60 design A packaged food maker swaps healthy for convenient—and gets a new brand identity. 62 elevator pitch PescaFresh delivers the “freshest” catch from the sea. Can it net in `10 crore?
64 The Way I Work
Shailesh Davey, co-founder of Zoho, finds an unmatched joy in looking for and “polishing” semi-skilled undergrads for his 1500-people office in Chennai.
editor’s letter
MANAGING DIRECTOR: Dr Pramath Raj Sinha Printer & Publisher: Anuradha Das Mathur Editorial managing Editor: shreyasi singh assistant editor: Sonal Khetarpal feature writer: ira swasti intern: aditi annapurna DEsign Sr Creative Director: Jayan K Narayanan Art Director: Anil VK Associate Art Director: Atul Deshmukh SR Visualiser: Manav Sachdev Visualisers: Prasanth TR, Anil T & Shokeen Saifi Sr Designers: Sristi Maurya & NV Baiju Designers: Suneesh K, Shigil N, Charu Dwivedi, Raj Verma, Peterson, Midhun Mohan & Prameesh Purushothaman C Chief Photographer: Subhojit Paul Sr Photographer: Jiten Gandhi community team assistant product manager: Rajat gupta Sales & Marketing senior vice president: krishna kumar (+91 98102 06034) business development Manager: arjun sawhney (+91 95822 20507) assistant regional manager (south & WEST) rajesh kandari (+91 98111 40424) Production & Logistics Sr General manager (Operations) Shivshankar M Hiremath Manager Operations: Rakesh upadhyay Asst. Manager - Logistics: Vijay Menon Executive Logistics: Nilesh Shiravadekar Production Executive: Vilas Mhatre Logistics MP Singh, Mohd. Ansari OFFICE ADDRESS nine dot nine mediaworx Pvt Ltd A-262, Defence Colony, New Delhi–110 024 For any queries, please contact us at help@9dot9.in Published, Printed and Owned by Nine Dot Nine Mediaworx Private Limited. Published and printed on their behalf by Anuradha Das Mathur. Published at A-262, Defence Colony, New Delhi–110 024 printed at Tara Art Printers Pvt ltd. A-46-47, Sector-5, NOIDA (U.P.) 201301 Editor: Anuradha Das Mathur
Resolve + Resilience = Rewards Jacqueline Novogratz is that rare person who makes the incredibly difficult seem effortlessly easy.
Novogratz heads Acumen Fund, a patient capital investing firm that has pumped in $73 million into 65 social enterprises serving the underprivileged in India, Pakistan and Africa. The banker-turned-impact investor writes about her experiences in the autobiography The Blue Sweater, which I am now reading. Despite the harsh tales of genocide victims in Rwanda, abject poverty in India, and the challenges faced by her teams and the entrepreneurs she has invested in, Novogratz brings to her stories a disarming sense of humour and positivity. Her achievements are hard won but she makes you feel that if you believe in your goal as strongly and stay on the course—you can do it too. It is that quality which Dr. Anand Deshpande, founder of Persistent Systems and our cover story this time, seems to possess as well. Pune-based Persistent Systems is a software products firm which breached `1,000 crore in revenue in FY 2011-12. It seems poised for greater glory with global acquisitions and offices. More importantly, Persistent stands out as an example of excellence in corporate governance. According to the Institute of Company Secretaries of India, Persistent is one of the five best-governed Indian companies along with biggies like Union Bank, GAIL and ONGC. It is a remarkable feat for an entrepreneurled venture. Yet, Deshpande seems nonchalant about how he seeded his 22-yearold firm with these best practices. As he puts it, “It’s not tough to make this a culture at our offices even though we have more than 6,800 employees. When you have a focus and you communicate it from the first day, values entrench themselves.” His suggestions on how to make companies beacons of great governance is a must read. I hope you will find it useful.
Shreyasi Singh shreyasi.singh@9dot9.in August 2012 | INC. | 5
innovation
Companies on the Cutting Edge
“Ideally, your grandma should be able to install a home theatre system in five minutes.” —Ashish Aggarwal, co-founder, Snap Networks
6 | INC. | AUGUST 2012
Violet3D
Snap Networks
Unplugged magic
When audio architect Ashish Aggarwal gifted his friend a home theatre system a few years back, it took his tech-savvy friend almost a month to install it. Adding to that inconvenience was the hassle of creating a whole new acousticssuitable room for the equipment. That got Aggarwal, who had co-founded Snap Networks, a Bengaluru-based tech start-up, thinking if a simpler solution was possible. In January 2011, Aggarwal developed Violet3D, a wireless home theatre system where the speakers can be directly screwed into a light bulb holder or plugged into any electric source in your living room without cables snaking up the walls. Unlike other wireless systems which give a different sound experience in different parts of the room, the space-sensing microphones of the Violet calculate the size of the room and the listener’s location to automatically adjust the settings on each speaker for a uniform sound experience. Violet has already sold 6,000 speakers globally, and is now available at 130 retail outlets. It is priced at `65,000. A prizey tune Violet was among the 10 best global designs of the Chicago Athenaeum Good Design Award for 2009. The man behind the nine-pin or trophy-like design for the speakers is world-renowned industrial designer Michael Foley.
Photograph by s. radhakrishna
The kit The Violet3D comes with these: Wireless speakers A transmitter A wireless subwoofer Speaker specs Amplifier: 40W RMS Frequency Range: 160 Hz (-3dB) to 22 kHz Size: 4.2” Diameter, 6.5” Height (no base)
reported by Aditi Annapurna
ARE YOU READY TO BECOME A CIO? APPLY FOR INDIA’s FUTURE CIOs
Go to www.next100.in
2012 If you think you are ready to play the role of a Chief Information Officer, prove it to your peers and superiors. ITNEXT will help you echo your aspiration. NEXT100 is an awards program from IT NEXT magazine that identifies senior IT Managers who have the skills, talent and spirit to make to the top slot - the CIO. The process starts with a call for self nomination. The nominees then participate in a series of exercises that test their techno-commercial and management skills. The evaluation and selection of award recipients is made by a prestigious committee of technology and business leaders who judge nominees on career accomplishments, professional expertise, skills and potential to be a CIO. The culmination of NEXT100 is in an awards night that celebrates the NEXT100 CIOs. The ceremony will be held in December 2012
IT IS NOW YOUR TURN TO RISE ABOVE THE REST. YOUR TURN TO CALL THE SHOTS. YOUR TURN TO BE THE NEXT100. PRINCIPAL PARTNER
TECHNOLOGY PARTNER
NEXT100 awardees will be profiled in the NEXT100 book which will be sent to India’s top 1000 CIOs. EVENT BY
News. Ideas. People.
launch
viewpoints
Fast Fire
“ Procrastinating on firing people always leads to the question— why didn’t we do this a long time ago?” Deepinder Goyal, founder of Zomato.com, the leading restaurant guide, can rattle off many great recipes, including one to help other entrepreneurs perfect their “firing” flourish. He recently blogged about his step-by-step firing filter that he uses to evaluate which employees have stopped contributing to the growth of the company, and should be asked to leave. Goyal’s rules vet people on four key elements—ethics, respect, attitude and skills. Most people who have been asked to leave four-year-old Zomato, he says, have failed either the ethics or the attitude litmus test. “Parting ways is good for both the employee and the company. Asking some people to leave has resulted in a very healthy organisation and they’ve got an opportunity to look for alternative organisations which have a culture and role they fit in.”
Photograph by Subhojit Paul
august 2012 | INC. | 9
launch
Feeling Guilty? Good. Why guilt makes you a better leader research corner Great leaders are usually defined by their triumphs— their visionary strategies and smart decisions. But new research suggests that a person’s ability to lead may have a lot to do with how he or she deals with mistakes. The Findings
The Methodology
In the first of three experiments, researchers asked participants to rank the leadership abilities of hypothetical people on the basis of written personality assessments and responses to a survey that measured feelings of guilt and shame. One survey question, for example, read, “You are driving down the road and you hit a small animal.” This was followed by what researchers considered a guilty response (“You’d feel bad that you hadn’t been more alert while driving”)
10 | INC. | august 2012
or an ashamed response (“You would think, ‘I’m a terrible person.’ ”). Participants said the hypothetical people with the most guilty answers made better leaders. In the second study, participants completed a survey that measured their ability to feel guilt. Then, they split up into groups of four or five to engage in two exercises. In the first, they developed a marketing campaign for an imaginary product development firm. In the next, they were told to pretend a plane had crashed in the desert, and that their group represented the only survivors. Each group was asked to come
Guilt Beats Shame After reading how people would react to mistakes, participants ranked each person’s leadership ability on a scale of 1 to 5. Those who reacted guiltily to mistakes were deemed better leaders than those who expressed shame.
up with a survival strategy. At the end of the exercises, the participants evaluated their teammates on the basis of leadership qualities. The people who scored the highest on the guilt test were deemed the most capable leaders by their groups. In the final study, researchers reviewed leadership evaluations of 139 M.B.A. students and then surveyed the students to see how prone they were to feelings of guilt and shame. The students’ propensity to feel guilt was highly correlated with how supervisors and peers had ranked their leadership skills.
The Takeaway
When hiring managers, ask candidates about how they dealt with and what they learnt from mistakes. “The way people express themselves when they mess up is an important cue about how they’re going to be in a managerial position,” says Schaumberg. Business owners can nurture guilt by creating cultures in which people feel comfortable taking responsibility for their mistakes. Provide opportunities during company meetings for employees to acknowledge, say, a bungled sales presentation and to lay out steps to correct the problem. —J.J. McCorvey
3.5 ratings of leadership ability
In a recent study, researchers found a link between how guilty people feel when they mess up and how well they perform as leaders. Becky Schaumberg, a doctoral candidate at Stanford’s Graduate School of Business and coauthor of the study, says this is because strong feelings of guilt are associated with a heightened sense of responsibility. “Guilt-prone individuals are really sensitive to their obligations, so they follow through on those duties,” she says. Guilt is different from shame, says Schaumberg. In her view, a guilty person focuses on correcting mistakes. People who are ashamed, on the other hand, just beat themselves up. “When people experience guilt, they want to fix the bad thing that they did,” she says. “Shame is very self-focused.”
Guilt Shame 2.5
very low
moderate
very high
illustration by Prameesh Purushothaman C
Technology
Ahoy, Ladies!
90%
Why the glass is half-full for Indian women entrepreneurs
1 in 10 say
it’s a strategic component of their business.
According to the Women’s Global Entrepreneurship Study, conducted by Dell, women business owners in India are more confident than most of their global counterparts. Dell had commissioned this research to coincide with its third Dell Women’s Entrepreneur Network (DWEN), a travelling conference aimed at fostering women entrepreneurship. The New Delhi edition, hosted in June, was DWEN’s third outing after it was launched in Shanghai in 2010.
90% 24%
a startup business for women entrepreneurs in India. The other sources are:
43%
Savings
Family members
25% Friends
21% Business acquaintances
74%
say their needs are more complex than they used to be.
7% say their technology needs have not significantly changed.
9%
say their needs are less complex than they used to be and their technology has scaled down.
When asked about expectations for business growth, Indian women entrepreneurs anticipated an average of 90 per cent over the next five years, in sharp contrast to, say, women business owners in the United Kingdom who forecast only an average 24 per cent growth for their companies in the next five years.
Funding Personal savings is the top source for funding 46%
say technology supports basic day-to-day operations.
33% Banks or credit unions
17% Venture capital firm
90%
women started their business while maintaining their day job.
How they handle technology needs: an outside 67% Use company a freelance 30% Use technology specialist it 26% Handle themselves a dedicated 25% Have in-house team Women’s Global Entrepreneurship Study
august 2012 | INC. | 11
launch
You’re hired
Creating Jobs
Contract Workers
Jobs added in the private sector in April:
Portion of employers who plan to hire contract or temporary workers in 2012:
(down from 201,000 in March)
(up from 28% in 2009)
119,000
36%
CareerBuilder/Harris Interactive
ADP National Employment Report
Who did the hiring: Companies with fewer than 50 employees: 49%
Average hourly rate for online contract workers, by country:
Bank of America Small Business Owner Report
$16
$14 $14
Pakistan
Reduce headcount: 13%
$17
India
Add more workers: 31% Maintain current levels: 56%
$18 $18
Russia
United States
How owners of companies with fewer than 100 employees plan to adjust employee headcount over the next 12 months:
Canada
Companies with 500 or more employees: 3%
United Kingdom
$19
China
$20
Companies with 50 to 499 employees: 48%
Philippines
inc. data bank
A skimmer’s guide to the latest business books
Elance
Entering the Work force
Background Checks
Where 2012 college graduates would prefer to work:
Portion of employers that have rejected a job candidate because of the person’s social-media activity: 34%
At a small or medium-size business:
At a large corporation:
27%
39%
In the public sector:
At a start-up:
19%
4%
At a nonprofit:
11%
What 2012 college graduates say is their top priority when looking for a job: Job security:
Salary:
33%
23%
Company size:
Health care and other benefits:
3%
The top four reasons those candidates weren’t hired:
1. They posted inappropriate photos or information 2. There was evidence of drinking or drug use 3. They had poor communication skills 4. They badmouthed a previous employer CareerBuilder/Harris Interactive
Sticking Around
Share of workers over 60 who say they will be able to retire within: One to four years: 49%
nine or more years: 11%
23% Company culture and perks:
18% Simply Hired
12 | INC. | august 2012
five to eight years: 29%
never: 11%
CareerBuilder/Harris Interactive
—Compiled by Andrew Shafer
The book: Resilience: Why Things Bounce Back, by Andrew Zolli and Ann Marie Healy; Free Press. The big idea: Given that the slings and arrows of outrageous fortune are more or less unavoidable, organisations and other systems should be designed to recover quickly from dramatic disruptions. The backstory: Zolli curates PopTech, a forum about innovation. Healy is a playwright, which accounts for the book’s effective use of metaphor to explain complex ideas. Forget the tests of time: Complex systems—the authors use the banking system and coral reefs as examples—are often able to withstand repeated shocks. Zolli and Healy urge leaders not to assume that this can continue. With every assault, the margin for error narrows. If you read nothing else: Chapter Six includes a fascinating discussion of risk compensation, which holds that individuals have set comfort levels with risk, and when circumstances start feeling too safe, they take greater chances to return to those levels. The authors propose that when leaders fail to define how risks should be assessed, employees revert to often dangerous assumptions about how much risk is allowable. Rigour rating: 8 (1=Who Moved My Cheese?; 10=Good to Great). The lengthy notes section offers multiple sources for facts. The authors trekked through the Palestinian territories to reenact an experiment aimed at repairing trust among fractious parties. —Leigh Buchanan
Get Real BY
Jason Fried
Jason Fried is co-founder of 37signals, a Chicago-based software company. He abhors stasis.
It’s Time for You to Go In 2009, we launched Sortfolio. It earns us $200,000 a year. Now, we’re retiring it. Are we nuts? Lately, we’ve been taking inventory at 37signals.
Over the past eight years, we’ve built more than two dozen apps. Some are available to the public; others are for internal use. But all of them need to be online and available 24/7/365. This means we’ve got a lot of balls in the air. The more balls in the air, the less time each one spends in your hands. And you can’t make something better if you aren’t constantly touching it. So I recently decided that if we can’t dedicate the time to make a product better, it’s time to shut it down. Coasting on—or worse, ignoring—a product isn’t something I ever want to do. We created an “end of the road” list of products that we haven’t worked on in a long time. Among them: the Ta-da List, a free web-based listmaking app that we created in 2005; Writeboard, a free online text-editing program; and a few others. We like all of them, but none are essential to our business today. So we decided to retire them. People with existing accounts can keep using Ta-da List, for example, but we’re no longer offering new sign-ups. The same is true for Writeboard. Another product on our list is Sortfolio—a visual directory of web design firms that we created in 2009 to help small businesses find designers. Design firms can list their services for free or pay $99 a month to upgrade to a more prominent premium listing. Sortfolio is unique on our list, in that some users pay for it. In fact, it generates actual revenue and significant profits—some $17,000 a month, or more than $200,000 a year. Nonetheless, we decided it was time to let it go. Say what? you’re probably asking. What entrepreneur voluntarily parts with a profitable service? Isn’t making money the whole point? Are we crazy? Plenty of people think so. When we announced on our company blog that we’d either be selling or retiring Sortfolio, the Comments section went nuts. “Why not just hire someone to run it?” some folks asked. “Just keep running it and give the money illustration by Raj Verma
away to charity if you don’t want it,” suggested others. Some commenters offered advice on how we might integrate Sortfolio into our business. But here’s the thing. Sortfolio may be profitable, but it’s far less profitable than our other products. As a result, it gets far less of our attention. And given the way things are going, it’ll get even less TLC in the future. Sortfolio is standing still. And anything that’s standing still is atrophying. That’s not good for us and it’s not good for users of Sortfolio either. Sortfolio needs an entrepreneur who wants to invest time and energy into it— something we just cannot do. We’re a small company with a small team, and we have to use our resources wisely. So we put it up for sale. We posted the revenue and profit numbers on our blog and offered to provide any information requested by qualified buyers. We priced it at $480,000. For a service that generates $200,000 a year in profit with virtually no work, we think that’s very reasonable. If it doesn’t sell by July, we’ll be taking it offline. Sure, there were other options. Like some of the commenters on our blog said, we could have hired someone to work only on Sortfolio. But the truth is that helping connect design firms and small companies just isn’t part of our core focus anymore. Sortfolio will be a much better business in someone else’s hands. The bottom line: Profits aren’t everything. Sometimes you have to prune your winners. That way, you can focus your attention on your bigger winners. Follow Jason Fried on Twitter: @jasonfried. AUGUST 2012 | INC. | 13
PASSIONS
Life Outside the Office
“Business is also about coaching and managing a team of high-performing players.”
16 | INC. | AUGUST 2012
Gaurav Taneja
Gaurav Taneja used to be a football junkie while growing up in army cantonments across India. But it was his four-year-old son who reignited his passion for football in 2008. “I’d see my son go to sleep with a football tucked in his hand,” he says. Since then, the co-founder of fabulloso!, an online curated store, has scored another goal with his new avatar of a football coach. The soccer dad spends four hours a week, typically from November to February, to coach a team of six to 10-year-olds from the Delhi International Football League, a children’s league managed by parents. “There’s so much to learn from their natural instincts to bounce back,” he says. But the real joy is in witnessing their love for the game. “Being with children, and seeing their enthusiasm for the game is so refreshing. It helps one understand there is more to life than just work.”
Football Coaching
His soccer Gods Player: Lionel Messi Club: Real Madrid A game called business “Just like in football, in business too you have to see who should be playing at which position and what is the opponent team’s strategy to succeed. It’s not just about coaching but planning to win the match, or in business, to close the deal.”
photograph by Subhojit Paul
reported by Ira Swasti
Your Business Toolbox
The Goods
Face Time, Any Time The best video chat tools Nothing beats face-to-face interaction—even when the people who need to communicate can’t get
together. Luckily, video chat services are making it easier to connect with colleagues from a home office, a hotel room, or even a park bench. Here are four options to consider. —John Brandon
best for
Chats on the go
Cisco WebEx Meetings This app, available for iPhones, iPads, and some Android devices, lets you videoconference with up to seven people using a Wi-Fi connection. You can view a list of attendees and hold private text chats. During our test on an iPhone, audio and video quality were excellent. cost: The app is free; to host meetings, you need a WebEx Meetings account, which starts at $19 a month.
best for
Low-cost collaboration
Skype Premium A good option for video chats on a desktop or laptop computer, Skype Premium lets you hold conferences with up to nine other people. You can share documents and present slide shows by uploading files or sharing your screen. Sound and picture quality were excellent during chats with three attendees but degraded on a call with 10 people. cost: $9.99 a month per user, or $60 a year per user. illustration by manav sachdev
best for
high-quality conferences
Cisco TelePresence EX60 Cisco’s 21.5-inch LCD monitor comes with an HD camera and a touchscreen phone. You can hold conferences with up to nine other people on a variety of video services and share your screen. Audio and video quality were outstanding on a call with 10 people. cost: $9,000 for the hardware, plus $99 a month for unlimited domestic and international calls.
best for
Life-size calls
Biscotti Not a fan of small screens? This tiny, 1.5-ounce device, which has an HD camera, can turn any high-definition television into a video chat hub. The device mounts to the top of a TV and uses Wi-Fi to make calls. After setting up contacts, you can use the remote to call one other Biscotti or Google Talk user. During our test, video was clear but a bit dim. cost: $149, which includes unlimited domestic and international calls. August 2012 | INC. | 19
the goods
Products + Services
Type Cast Finding the right keyboard for any task Your tablet’s touchscreen is truly a
thing of wonder—that is, until you need to type out anything longer than a quick note on it. And although laptops do pretty much everything a desktop can, there’s nothing ergonomically correct about typing head-down on a laptop keyboard all day. A separate keyboard could be your solution both for more efficiency on the go and less pain at home. Here are four to consider getting your fingers on. —Adam Baer
best for: Frequent travelers
This 9-ounce wireless keyboard folds in half, forming a sleek unit the size of a paperback book. It opens easily, with the pop of a button, and features large, flat, plastic keys bigger than a MacBook’s. It types softly and easily for a portable device, and it includes special function keys (Power Off, Cut, Copy) and mediacontrol keys. The Bluetooth connection was stable and responsive in our test and never disconnected. A leather carrying case and slide-out smartphone stand are included. The device runs on batteries only. cost: $79.99
2 0 | INC. | august 2012
Belkin Keyboard Folio for iPad 2
best for: iPad fans
This rechargeable Bluetooth keyboard comes with a grippy faux-suede iPad case that you can fold to configure for typing or viewing video with the keyboard hidden. It weighs 1.3 pounds with the case. The plastic keyboard, which also includes media Play and Pause keys, feels somewhat cramped and flexes under firm pressure. We had no problem with disconnecting or slow response when using Bluetooth. An included cable lets you recharge the keyboard via the iPad. cost: $99.99
Logitech Wireless Solar keyboard K750
best for: Eco-conscious
Matias Tactile One keyboard for iPhone & pc/mac
desk workers
best for: Multitaskers
This thin, glossy desktop keyboard has two panels that charge the battery as you work, even inside—an office light provides enough juice. A free app gives detailed information on charge levels. The slightly moulded, springy, and quiet keys are comfortably spaced, and you can adjust the keyboard angle using two foldout stands. Almost 4 inches wider than the keyboard of a 13-inch MacBook, the K750 includes a full numeric keypad and all the basic media keys. Made of PVC-free plastic, the device connects wirelessly via a small receiver (included) that plugs into a USB port on your computer. cost: $79.99
Featuring deeply set, wellmoulded, loud-clicking keys, this keyboard has an old-school sound and feel. It’s superresponsive, with just the right amount of resistance. It also features a rubber-padded holder for your iPhone (Android phones are also supported). You can connect via Bluetooth to your phone and toggle between it and your laptop, taking the torture out of typing long text messages while being heckled by the iPhone’s auto-correct feature. The Tactile has a comfortable tilt, sports a traditional numeric keypad, and connects to your computer using an attached USB cable. cost: $200
Photo by photos.com; courtesy company (4)
Verbatim 2nd Generation Bluetooth Mobile Keyboard
Products + Services
the goods
For Android devices
Klipsch Image S4A Music sounded rich on these earbuds. Calls came across loud and clear, but people on the other end heard some background noise. Like the other models here, the S4As have a microphone on the cable. They come with three sets of tips in different sizes and a cable remote that you can customise with an included app. cost: $99.99
Now Hear This Souped-up earbuds for talking and tunes
Still using the earbuds that came with your smartphone? If so, it may be time for an upgrade. We tested four high-performance models designed for a variety of mobile devices. Here are the results. —Adam Baer
for iphone and ipad
Etymotic hf3 Our top pick for noise isolation, Etymotic’s earbuds fit snugly, sealing off outside sound. They come with a carrying case, four pairs of tips in different shapes, an earwax filter, and a three-button remote on the cable that lets you play and pause music, skip forward or backward, and adjust volume. During our test, calls came across loud and clear, and music was surprisingly rich, with just the right amount of bass. cost: $179
must-haves
An easy way to create online privacy policies john marbach founder glider new york city
for iphone and ipad
Bowers & Wilkins C5 In-Ear Headphones These comfortable earbuds, which sealed off outside noise almost as well as the Etymotics, stay in place via adjustable loops that perch on the inner ridge of your ears. They come with three sets of tips in different sizes. Voices sounded clear during calls, and music sounded vibrant and natural, with adequate bass. A remote on the cable lets you play, pause, and skip songs, adjust volume, and take calls. cost: $180
for bluetooth devices
Plantronics BackBeat Go Plantronics’s wireless earbuds can connect to a variety of Bluetooth devices up to 33 feet away. They come with tips in three sizes and rubber loops to hold the buds in place. Sound quality surpassed that of many Bluetooth headsets, though music sounded richer on the wired models we tested. The rechargeable battery lasts for 4.5 hours of talk or music time and has controls for taking calls, skipping tracks, and adjusting volume. cost: $99.99
When I launched my company, which makes a web-based e-mail management dashboard, some users had concerns about the kind of data we were collecting from them. Earlier this year, I read about Iubenda, a web app that generates easy-to-understand online privacy policies. I decided to give it a try. After creating an account, I browsed a list of services and checked off the ones we use to collect data, including Google Analytics. Next, I typed in short descriptions of how we use each service. The app generated a code, which I embedded in my website’s HTML to make a Privacy Policy button appear on the bottom of the homepage. When you click the button, a simple policy pops up, with bullet points stating what kind of personal data we collect and how we use it. Users can also click a button to see a full version of the policy. I use Iubenda’s pro version, which costs $27 a year and lets me list an unlimited number of services on our policy and make changes whenever I want. Now, I don’t have to worry about scaring away potential customers because of privacy concerns. —As told to J.J. McCorvey
Courtesy subject; courtesy company (5)
peripherals
A mouse that does double duty Weighing less than 1 ounce, the matchbox-size Logitech Cube serves as a wireless computer mouse and a controller for presentations. It works like a standard surface mouse for moving the pointer on your computer screen, but you slide your finger up and down the Cube’s touch-enabled panel to scroll and tap the centre of the panel to right-click. To switch to presentation mode, pick up the Cube and tap to advance a slide. To go back, flip the Cube over and tap. During our test, precise movements were tricky because of the device’s small size. We wouldn’t recommend it for everyday use, but it could come in handy for business trips and on-the-fly presentations. cost: $69.99 –A.B. August 2012 | INC. | 2 1
Des
D
Well Poised Entrepreneurs shouldn't wait to be big to make governance a focus. "Begin from day one," says Anand Deshpande.
2 4 | INC. | AUGUST 2012
The
hpande
ecree Dr. Anand Deshpande founder, Persistent Systems,
has every reason to strike a confident pose With revenues recently breaching `1,000 crore. what he's proudest of though, is persistent systems being recognised as
one of India's best-governed companies. here's how he got there. As told to Shreyasi Singh Photographs by Jiten Gandhi
August 2012 | INC. | 2 5
According to the Institute of Company Secretaries of India, Persistent Systems has for two consecutive years been recognised as one of the
top five companies in India for excellence in corporate governance, along with giants like GAIL, Hindustan Unilever, Union Bank of India and ONGC. It has won similar awards—for corporate governance, investor relations and corporate transparency—from organisations like
Thomson Reuters and The Asset (a finance publication for Asian corporates). Corporate governance is a niggling area of concern for many Indian corporates. Yet, Deshpande believes it's a focus entrepreneurs can easily master. Find out how.
1. Don’t wait to be big. Start now. From the day Persistent started, we have been very clear that some ethical and legal issues are beyond discussion and compromise, and that we must always stick to them. Even when we were a year old or so, we would constantly remind ourselves that our aspiration was to be a big, enduring company. People often wrongly believe that corporate governance and other such weighty issues aren’t important for small companies. We never subscribed to that view. We never wanted to be arrogant or ignorant about something that could come back and hound us. Right from the very first day, we were very conscious that we didn’t want to have any grey areas in the context of ethics and governance. Because the entire founding team came from middle class backgrounds, being totally above board was very important to us. Today I know we were absolutely spot-on then. Corporate governance can’t be an afterthought. It’s not retrospective—a company should not wait for external funding, or going public to embark on this journey.
2 6 | INC. | AUGUST 2012
THE Deshpande DECREE
2. Don’t be short-sighted There will always be ways and methods wherein by paying a small sum of money, companies can expedite paperwork, or speed up regulatory approvals. We never used those shortcuts, and yes, it did take us about six to eight months longer than we’d hoped to start at. In the long-run, that's worth the wait. I personally went to many government offices several times. Also, we never used any agents for our documentation—even for preliminary paperwork at RBI or Registrar of Companies. When you use agents, you are in some way legitimising corruption. I've found that if the founder goes himself, it's more difficult for functionaries at these offices to ask for bribes. I credit my father who was with me when we began the company for some of the things we did then, including creating the Software Exporters Association of Pune, a forum of software companies. Collectively, we told tax and other officials that we would follow their rules to a T, but we wouldn't grease palms. This worked superbly—both in bringing together software companies, and giving us all the combined strength to say no. Your value system should be clearly articulated and seeded in from the beginning, the rest is just about ensuring everyone follows.
3. Share, share, share!
4. Get a real Board—now!
We’ve had fiercely independent directors on our Board We began sharing our financials with our ever since we were a 40-50 people company. Having a employees around 1997-98; we were then smart, vigilant Board is a huge asset. Otherwise, how do just a `10-15 crore company. Our balance you know that you’re getting it right? How do you make sheets were available on the web page for sure that you’re getting fair feedback on your processes, numbers and ethos? In fact, having a good Board is the everybody to see, after each quarter. All our one thing I most strongly recommend to younger entrequarterly budgets were also released on the preneurs. However small a company, it must have a Board company website within three to four weeks that meets often, and actually discusses financial matters. of the conclusion of the quarter. It's someAs you grow larger, having an independent Board is critical thing that we’ve continued to do for to achieving corporate governance standards. But how do you create the past 15 years. Today, as a listed an independent Board? How do you company, our results are mandated “We made our identify who should be in it? Clearly, to be declared, and presented to the financial results you need to find people who are Board. That wasn't a big change for willing to spend time on the comavailable for us when we went public. But even pany, and who have a soft corner for either you or the company. That when we were much smaller and everybody to see on doesn’t mean you fill it with family completely privately-held, we would our web page nearly members. It’s actually important to present our audited financial steer away from that. Too much results to our robust, independent 15 years back. family presence only leads to more board quarterly and annually. Every difficulty in decision-making, and Persistent was just the members end up not really company can, and should do that. a `10-15 crore doing any work. Remember to get those Actually, things changed more for us after people on the Board who have a good company then.” we listed on the stock market in April 2010. reason to be there. At a session I Before that, we even had our customer attended at the Infosys campus in 1997 details available online. Now, according to or 1998, Mr. Narayan Murthy spoke about this. It's something I still remember. His simple advice on organising a confidentiality and other regulatory rules, great Board was to look at the three or four people workwe have to hold back some information, but ing as different function heads of your company—the CFO, we still share as much as we can. To add to the head of marketing, the head of HR. These roles usually my point about beginning your governance form an organisation so it’s good to have a Board that is regime now, it’s actually easier to share distributed along these areas of expertise. Functional expertise can be very valuable in a Board. information when you're smaller. August 2012 | INC. | 2 7
Milestones
Persistent Systems has stood out for its consistent growth. A quick stroll down its journey towards becoming a leading Indian IT company:
1,000
1990
Persistent Systems was set-up; became the first company registered in Pune’s Software Technology Park
2000 1999 100th employee joins Persistent
5. Don’t get misled into thinking this is difficult.
The first Asian Company to receive funding from the Intel 64 Fund
Many companies feel that setting these best practices—getting a Board going, having quarterly audited results—is a huge time investment, and/or very difficult to do. I don’t agree with that at all. In fact, things become more difficult when you don’t comply with rules. When you do a vigilant job of settling quarterly financial reports on time, accounting becomes easier and more manageable at the end of the year. Otherwise, the numbers are larger and the process more time-consuming. Plus, it makes great business sense to have quarterly numbers audited by independent directors. It strengthens the company—you know where you are, what you have to do in the next quarter, and where you need to go. 2 8 | INC. | AUGUST 2012
2004
Reaches an employee strength of
2005
Ranked as the 22nd fastestgrowing Indian technology company as per Deloitte's Technology Fast 500 Asia Pacific Ranking & CEO Survey 2005 Report
6. Let employees keep you honest
Because governance has to be self-regulated, especially in smaller companies, I always say that founders and CEOs, in this case, should look at their employees to be their primary stakeholders. Make your employees your equivalent of a shareholder, and give them access to all the information you are required to make public when you are a publicly-listed enterprise. I know some entrepreneurs worry that being really honest with employees can be counter-productive, that teams can get discouraged or demotivated by bad news. Even when that is so, I believe honesty works. Think about it. People who are easily discouraged when the going is tough are people you shouldn’t have in your company, anyway. After all, building a company is about teamwork. When everyone works as a team, you can’t hold back information, and not wish to share. My experience has been that most people appreciate honesty and transparency. If people run away because of a bad quarter or year, let them go.
`1,000 crore in revenue Classified Product Development Specialist by Forrester Research, Inc.
2006
2010
2007 Achieved revenue growth of `300 crore
2012
2008
Persistent Systems goes public
Annual turnover crosses `400 crore; winner of Nasscom Innovation Awards 2008
2011
Added a facility in Grenoble, France
8. Go beyond hygiene 7. Separate family and business income
Corporate governance isn’t a limited concept. It doesn't end with having a checklist of audited results and Board meetings. That’s like taking a shower. You do that without thinking about it every day, don’t you? It's about following a set of ethical systems for all things that each person in the company does, each time, every day. In spirit, that’s where it really begins. At Persistent, we have our own set of goals for the future. Conceptually, of course, we are fine with where we are. But, there are a few areas of debate. For example, one of those questions is whether the chairman and the MD should be the same person. Right now, I’m both chairman and MD. Should we separate that out? Our regulators believe that we should. Another is rotation of directors and auditors—these are done to ensure that people Corporate don’t get used to the process. We governance goes are also debating what should be beyond audits.” the responsibilities of the management team and what should be the responsibilities of the Board, and when or where they can overlap. Clearly, the Board members look over the company but they can't be expected to run it on a day-to-day basis because then they become executive directors. This is a conflict that one sees in companies all the time. We are conscious that we must both maintain, and demonstrate our commitment to best practices in this area as well.
A big part of the equation of corporate governance, especially because India has so many family-run businesses, is that people don’t separate family and business income. It's very easy for these grey areas to crop up. “It's like taking a Often, many entrepreneurs use shower. You do that company profits for personal purposes, sometimes not even without thinking, realising how it might affect their companies. The problem is don't you? of emotional context—entrepreneurs don’t see their personal interests as separate from the company’s interests. This begins to create a whole bunch of complexities that owners assume they would be able to settle after a certain time, but setting things right in hindsight is more difficult. There is no reason to create these unnecessary complications. It’s critical that founders realise what belongs to the company, and why their salary and entitlements are separate from it.
August 2012 | INC. | 2 9
THE Deshpande DECREE
The trusted lieutenant Vivek Sadhale, company secretary and head, legal and investor relations of Persistent Systems, has been the key driver of the company’s corporate governance efforts for the past 12 years. Sadhale says establishing these principles was a breeze in Persistent Systems because of the leadership's focus, and goes as far as to add that India would be a better place if one could clone Anand Deshpande. Here, he recalls some personal highlights of the corporate governance journey: 1. When I began working here in 2000, we were looking at incorporating a company that was a subsidiary of Persistent Systems. Dada (Deshpande's father) asked me how much time it would take me. I told him the paperwork would take about 15 to 21 days, but if we needed it earlier, there were other means. He clearly told me not to do anything that we shouldn’t be doing. For a professional, hearing the top management talking like this is very important.
“Everyone puts in
`1 in a jar every time he or she takes a personal photocopy here.” —Vivek Sadhale
2. When we had our IPO, we were running against time. We closed our IPO on March 17-19, and we could effectively hold our money for 21 to 30 days. But in the first road show we had in Mumbai, Anand had very clearly said we would return every oversubscribed pie before March 31. Our allotment was done on March 29. We returned the money on March 30, ahead of time. 3. In November 2005, when Norwest and Gabriel Venture Partners invested $18.8 million in Persistent, virtually every big VC had put a term sheet to invest in us. The decision was about who we picked, again a testimony to the company that didn't even employ a banker to do this.
9. Be Self-Motivated Whatever stage of the company you’re in, corporate governance has to be your internal goal. It must continuously be championed from within the company. Up to a point, corporate regulators can work but really all they can possibly do is create a checklist for you. There will still be a hundred ways by which promoters can get around that, and several other means to deceive the public and the market. There can be no end to how rules can be broken. In the end, it’s about taking on the initiative to adopt ethics. Honestly, it’s a bit like following traffic rules and telling the truth in your daily lives. The onus of following and staying true to them lies on us. A company needs to function similarly. 3 0 | INC. | AUGUST 2012
10. Have zero tolerance for breach of code We didn’t find it difficult to make sure this culture was an intrinsic part of Persistent even as we grew rapidly. Today, we have 6,800-plus people across 22 locations in three continents. Because our communication and focus has been clear, our employees understand that when they work with us, they should not entertain demands which are unrealistic and unethical. We tell anyone who is joining the company that if they have any ideas of doing things the wrong way then it’s better that they don’t work with us at all. Culture comes from encouraging people to do the right things. And, being uncompromising on that. For example, we have an Employee Code of Conduct, and if you breach that you’re no longer a part of the company. It’s an unquestioned rule. Slowly, this becomes part of the system. It’s actually not that difficult to do if you’re clear about it from the word go.
07
Everything you need to know to run your business in today’s economy
: : : : : : : : : : : A monthly guide to policies, procedures and practices
Remove booklet along dotted Line
Streamline a Supply Chain A behind-the-scenes look at product or service delivery shows the medley of inputs that goes into bringing products and services to customers. Smart management of inbound supplies is vital for a business to succeed. Timely inflow of materials in the right quantities, appropriate information and sufficient finance ensure outbound despatches are on time and are responsive to customer needs, which in turn grow the client base and profits. In contrast, inbound shipments gone awry can mean order cancellations, not to mention a loss of face and client exits. Managing umpteen suppliers on the inbound side and distributors and clients on the outbound side is no mean feat. Proper systems and technology are essential to supply chain efficiencies and cost optimisation. Consistently measuring supplier performance helps as well. The Aberdeen/iSource Business Supplier Performance Measurement Benchmarking Project shows that establishing standard metrics and procedures to measure supplier performance can improve it by at least a fourth—in the areas of quality, on-time delivery, price, total cost, contract compliance, lead times, and overall responsiveness. Read on to get wise about methods to streamline your supply chain, cut your turnaround time and grow your bottom lines. —Charu Bahri
Vol. 03 No. 7 | inc. guidebook
07
streamline a supply chain : : : : : : : : : : : : :
Know What You Work With Map the chain: Pinpointing the sources of raw materials and information, and following their onward journey till a product or service reaches the customer is the first step towards a lean supply chain. “Mapping the flow upstream and downstream at a micro level helps identify the root cause of inefficiencies,” says Rajesh Kakkar, senior director VSME (Lean), Anand Automotive Limited. Analytical tools can facilitate value stream mapping, as the process is called (see resources). For accurate mapping, it is essential to interview every person touching the material inputs—from the moment shipments enter the premises until despatch. “Supervisors are often unaware of the gaps in the system— time-wasting manual processes and interventions that make the chain bulky,” adds Kakkar. Such mapping results in comprehensive details of supply chain sources and costs, inventory levels, their storage and usage location and their flow or usage rate. Review components: A critical review of the supply chain shows up components that could be made more efficient or eliminated from the flow. For instance, materials can usually be procured cheaper from local sources. According to Kamal Meattle, CEO, Paharpur Business, “Local procurement speeds up inbound supplies and can cut out a middle-man. It also reduces the business’ shipping footprint and cuts fuel costs, transfer charges, import duties etc.” Siddharth Paradkar, principal, logistics, Tata Strategic Management Group, adds, “Local procurement provides for greater control on parameters inc. guidebook | Vol. 03 No. 07
like response time, inventory management, travel, culture and language issues, training suppliers on quality and company standards, protection of intellectual property, logistics costs, hence enabling lower total cost.” Other adjustments could include faster shipping to shorten order-cycle time and lower inventory levels and optimised inbound and outbound packaging sizes to meet customer needs while saving on transportation costs etc. Inventory management procedures must also be streamlined to
Line up alternative suppliers to handle potential emergencies. control supply chain costs. “Else, the cost of material and working capital deployed to maintain extra inventory can wipe out the savings from negotiating cheaper trucking or warehousing rates,” cautions Paradkar. Factor in contingencies: Careful evaluation exposes weak links in the supply chain. While some of these could be improved upon, there may not be any immediate replacement available for a strategic supplier with production limitations. Businesses must learn to work within these boundaries. “Anticipate their timing and order accordingly,” suggests Srinivasan Saragapani, general manager, India Supply Chain, Timken India Limited. Flexibility should be built into the supply chain to tide over unforeseen situations. Wherever possible, line up alternative suppliers to handle potential
emergencies. “A concrete Plan B can compensate for the failure of supplies,” adds Saragapani. Networking and market research could help identify cheaper sources. Consistent communication with suppliers and logistics partners is vital as well. Saragapani says, “It is a means to build strong relationships with suppliers as well as to learn about their operational emergencies that can cause supply interruptions.”
Invest in Technology
Define payback: End-to-end supply chain management solutions cuts the flab from the entire process of goods delivery, starting from demand forecasting through manufacturing scheduling, procurement, warehousing to sales and merchandise returns. Setting baseline performance measures prior to investing in efficiencyenhancing ERP systems ensures the highest returns. “For starters, clearly define payback,” says Kakkar. “Quantify the deliverable outcomes, be it a reduction in the supply chain cycle time and the turnaround lead time or an increase in bottom lines.” Qualitative parameters like customer satisfaction should also, as far as possible, be measured quantitatively by tracking related indices such as order fulfilment time, the number and value of reorders, etc. Consistently monitoring performance against the baseline measures helps improve the usage of technology. Drive internal efficiencies: Appropriate technology can boost internal efficiencies and improve internal communication, especially in companies where raw materials account for a large chunk of the input costs.
Yogesh Sharma, vice president— developments, The 3C Company, a construction company, advocates using technology to schedule production (in their case, construction), evaluate the total raw material requirement at each stage of a project and negotiate better product pricing. Adopting better inventory management enables the best use of cash flows while ensuring that plants receive the right quantities of material on time. This converts into timely production and delivery. Work towards full visibility: Besides improving internal processes, technology can tap into bigger opportunities lying between businesses. “The best deployments aim at eliminating silos between organisations and creating
responsive systems that reduce manual work and analysis wherever possible,” says Kakkar. The internet has also made it easier for businesses to plug in logistics partners and achieve visibility during goods transfers: in-transit shipments can be tracked by running queries on online warehousing and transport systems.
Measure Supplier Performance
Define payback: Authors of Re-Engineering the Corporation, Dr Michael Hammer and James Champy say, “You can’t improve what you can’t measure.” Consistently measuring supplier performance helps identify glitches and make improvements. The aim is to reduce the total cost of ownership of supply relationships,
products, and the entire supply chains. In spite of a widespread understanding of measuring supplier performance, only about half of the enterprises in the Project had established formal procedures for the task and many only reviewed the suppliers’ accounting for the largest portion of spending or supplying a critical product or with whom they shared a strategic supply relationship. Measuring and evaluating the performance of the entire supply base is essential to control costs, maintain and enhance quality, and gain competitiveness. Suppliers performing below par should be provided assistance or training to improve or be replaced. Adopt these practices and see your streamlined supply chain positively impact your business targets.
Vol. 03 No. 7 | inc. guidebook
07 04
Headline repeats streamline a supply here chain dummy : : : headline :::::::: :::::::::::::
Tips to Improve
Use these suggestions to get a better grip on your supply chain: Establish a clear business strategy: Efficient supply chains are found mostly in companies that have a clear and flexible business strategy and an operating model designed to implement this strategy and achieve a balanced set of operational objectives. So focus on business strategy. Planning and execution: Better forecasts and the coordination and integration of planning and execution can help to avoid wastage and overstocking of materials. Collaborate with supply chain partners: Collaboration helps build strong relations with suppliers and promotes trust about the quality of raw materials. It should cover joint decision-making and problem-solving as well as sharing information about strategies and production plans with each other. Optimise existing assets: Before investing in new technology, evaluate assets that are not being optimally used. Fine-tune existing business processes to get more value from these applications. Maximise the benefits from investments in technology: Develop an IT road map showing how new investments support business goals to make the most from investments in IT. Invest in a modular solution that can be deployed step by step.
Notes:
Integrating Supply Chain Information Systems Integrating a business’ supply chain solution with its upstream suppliers and downstream distributors and customers helps to manage the complex flow of multiple components. But when each participant’s technological systems and competencies differ, it poses a challenge to integration. However, Rajesh Kakkar, senior director VSME (Lean), Anand Automotive Limited, says technology should not be seen as a prerequisite to integration. “Smaller companies may not be able to afford best-in-class supply chain solutions that are capable of being integrated. Sharing relevant information about your production schedule and inventory consumption pattern with your supplier is all that is needed because that is what is achieved through system integration.”
Resources Learn about supplier performance
measurement, at http://www.lyonsinfo. com/_resources/Aberdeen_SPMS_ Report.pdf Sample free trials of supply chain
mapping software, at http://www. leanpilot.com/download.html and http:// www.smartdraw.com/downloads/ Use the Centre for the Low Carbon Futures ‘Supply Chain Environmental Analysis Tool’ (SCEnAT) to map your supply chain, at http://scenat.com/
inc. guidebook | Vol. 03 No. 07
The Dream Start-Up Can Kavin Bharti Mittal code in superstardom for Bharti SoftBank? B y S h r e ya si S i n g h
I
t’s difficult not to feel a twinge of envy for Kavin Bharti Mittal. Of course, there’s his entrepreneurial lineage—his father is Sunil Bharti Mittal, founder of the mega Bharti Group. Young Mittal undoubtedly has a world of opportunities available to him. But, there’s more. For somebody who is just 24, he also seems to have incredible clarity, of what he wants to do with his life, and the impact he hopes it will create. So, instead of joining Bharti Group’s flagship company Airtel, Mittal heads strategy and new product development at the year-old Bharti SoftBank (BSB), a joint venture between the Bharti Group and SoftBank, the Japanese internet company. Much like Mittal refers to it, everybody at BSB also calls the new company—formed to
3 2 | INC. | august 2012
work as an incubator in the mobile internet space (a passion for Mittal) —a start-up. Ground-up entrepreneurship, Mittal confesses, excites him, more so because he has tasted that thrill with AppSpark, the mobile apps start-up he founded while at university in Imperial College, London. Mittal and his friend hacked an app—MoviesNow—to escape the boredom of their college course. At one point, the app clocked in more than half a million users. Now, KBM, as he is known, wants to recreate that success many times over in India’s emerging mobile internet space. “There’s nothing like starting a new company, building a new application, and seeing how the market responds to it,” Mittal told Inc. India’s Shreyasi Singh in a conversation in BSB’s new office in Gurgaon. The
office, with its row of blue and white bean bags, large glass windows, walls devoted to photo quotes from sporting and business legends, and open-plan seating, seems straight out of Silicon Valley. Didn’t we say this was a dream start-up? What are BSB’s objectives in India? KBM: We think that India is where the
United States was in 1995-96, or where China was in 2003-04 in terms of internet but the big difference is that India is a mobile-first economy. That 800 million people come on the internet through the mobile phone is a massive opportunity. But, nobody is really doing much for this mobile-first segment. So, when we started off BSB, we thought—how can we build products that can have an impact on people’s lives? We knew to do that we had to build for that mobile-first Photograph by Subhojit Paul
the dream Start-up
education to do. Fundamental things like username and password, understanding what MBs and GBs mean are all lost. People buy data in pre-paid sachets here, and different networks will have different pricing. What you get from Airtel for a certain amount, is different from what Vodafone might give, and so on. In addition to that, distribution and business models are very different in India, so as an entrepreneur in the Indian market, you have to be able to tackle product distribution. That’s a very complex task. One has to innovate on business models to be successful. Hiring the right people has been a big challenge. I spend nearly 50 per cent of my time interviewing. That is critical—your company is only as strong as the minds working on it. In a business like ours, the best guys in the industry are 20X better than the average. Finding such people is not easy. For instance, it took us six months to hire our first recruit. Does India have the coding talent to produce great apps? KBM: It’s not that talent isn’t there, just
segment. We’ve identified a few problems in this ecosystem in India, and we want to solve those. What are those focus areas? KBM: Our focus is the social, gaming and
e-commerce space. We want to be device agnostic and operator agnostic. We already have very good relationships with Airtel, Vodafone and other operators and we’ve launched two products including Hike and Hoppr. Hike is the ubiquitous messaging platform that works on feature phones, not smartphones. It has a huge potential as messaging is a key communication tool. Hoppr is a locationbased mobile platform. What are the main challenges of a mobilefirst economy like India? KBM: First, there is a lot of consumer
that there isn’t an ecosystem to support it. In the last 15 years, the US has been outsourcing talent from us. But that talent and user interface talent are two different things. In the US and UK, there are more smartphones, so more people are playing the games, so things are more viral. India has a very small user base. But I think that’s going to change in the next few years. Also, Indian engineers don’t have enough perspective. But we know it is engineers who make applications. At BSB, we hire mostly engineers. Take the Hike team, for example. It’s got me, and 15 other engineers. Still, I don’t let anyone do the user interface (UI) coding but myself. As a CEO of a startup, you have to drive design, technology and strategy. That’s very important. You keep referring to BSB as a start-up but when you have the backing of giants like Bharti and SoftBank, are you really a start-up? Why is it important for you to position the company like that?
KBM: Yes, we’re backed by Bharti and
SoftBank but if you look at the structure of the company, we have four companies under BSB. BSB is really a mother company, an investment circuit really, that puts in money into each of our four verticals for a year. That way, Hike and Hoppr have limited capital. We are actually start-ups. That’s what drives us all because there’s nothing more exciting than starting a new company, brainstorming on new ideas, announcing it to the markets, and seeing how the markets respond. We’re that unique mix of big company and start-up—we have Bharti SoftBank’s backing in terms of funding but we won’t put good money behind bad money. We have to deliver great products. The difference between BSB and other start-ups is that because we have funds, we promote the star enterprise sort of idea. That’s a very unique combination. Personally, I think the most exciting part of the initial stage, especially in a dynamic space like mobile internet, is the speed you get. You can launch an application and tweak it every week. That speed is what makes the entire process so exciting for me. It’s also good for the Bharti Group. If you look at it as a group, it’s a fairly traditional group with interests in telecom, construction, insurance and retail. I’d say this is Bharti’s first non-traditional enterprise, and for the group to be remembered five years down the line, it’s very important for us to be in this kind of business.
How confident are you of success? KBM: Right now, like any other start-up,
our chances of success are as low as the next start-up. We’re still in very early days. We don’t know what it’s going to become. People keep saying that it’s a Bharti company and it is bound to be a huge success. But, hold your horses, we’ve not done this before and funding doesn’t guarantee success. It’s the team, the vision, the product and how you sell to the market. We have to get each one of those right—only then do we stand a chance. august 2012 | INC. | 3 3
Cooking up an IPO For Anjan Chatterjee, founder and managing director of Mainland China and Oh! Calcutta, it was a long cherished dream to see his company’s shares trading on the stock exchange. Here’s how he served up his company, Speciality Restaurants’ much-watched public listing. By Amrita Roy
3 4 | INC. | AUGUST 2012
“It’s a huge challenge to make a promise and keep it. An IPO is not about accumulating public wealth. It’s about performance;
it should be driven by need (to grow), not by greed.” Anjan Chatterjee
founder and managing director, Speciality Restaurants
“The biggest learning I had was
what not to do rather than what to do,” says the man behind some of the best known fine dining restaurants in India, including Mainland China and Oh! Calcutta, as he recalls his experience of steering his company through its initial public offering in a less than favourable market condition. In May this year, even as global markets fell, Anjan Chatterjee’s Speciality Restaurants (SRL), valued at over `175 crore by revenue, sold 11.73 million shares in three days during its maiden share sale. Pulling this off was clearly no mean feat. With this listing, 20-year-old SRL became the first Indian fine dining restaurant company to float shares in the open market. Not surprisingly, the master restaurateur celebrated the milestone by cooking a lavish meal for his family and friends at his bungalow in Lonavala. Chatterjee confesses he’d been marinating his IPO dreams from the first
day he began serving up fish delicacies at his debut restaurant—the 32-seater Only Fish—in Mumbai in 1992. Today, SRL owns eight restaurants brands, including popular names like Sigree, Just Biryani and Sweet Bengal, besides the flagship Mainland China, and runs 82 restaurants across India. The ingredients for this impressive scale were meticulously measured for, even in the beginning years. “We had built this organisation carefully with a bigger picture in mind—of being a listed company one day. It’s been my life’s goal really,” explains Chatterjee, a hotel management graduate, and later, an advertising guy, who opened up his first restaurant on the behest of friends who didn’t want his cooking skills to go to waste. But, from his first kitchen in Only Fish, Chatterjee knew he’d found his calling—to build a restaurant company that was founded with sound business fundamentals, yet gave foodies a great eating experience.
That dream began to seem more and more achievable when SAIF Partners invested `90 crore in SRL in early 2008. By October 2010, their IPO road map began to take serious form. Less than two years later, in May 2012, SRL went public, raising `182 crore from the issue. Despite the public issue being launched at a time when the markets were particularly choppy, and against conventional wisdom, SRL generated substantial investor enthusiasm and was oversubscribed 2.5 times and nearly 4.7 times in the qualified institutional buyer (QIB) segment. To Chatterjee, those three eventful days were like being tossed on a high fire. As he kept watch from the “war room” at Kotak Mahindra Capital’s office in Mumbai, nothing seemed to be going to script as global markets fell. On the last day, however, institutional investors and HNI buyers lapped up the last of the stocks, ensuring the issue was actually oversubscribed. AUGUST 2012 | INC. | 3 5
Cooking up an IPO
Food Chatter Madhu Menon
The listing stirred up some exciting bursts of flavour in India’s bustling restaurant industry. Some top foodies sample what Speciality Restaurants has to offer, and believe how its stock fare might even change India’s restaurant industry:
Chef, restaurateur and restaurant consultant, Bengaluru “The SRL listing is a good start and augurs well for the food and beverage industry in general. However, it’s too early to say anything definite about its impact. It will depend on whether SRL can maintain its success. Having said that, the restaurant business is very high risk and banks and other investors are loath to put in big money. So this IPO should boost investor confidence in the sector. So far, SRL has done a good job of establishing popular brands and maintaining standards. But it has taken them the better part of two decades to achieve that. Restaurants cannot expect to have that kind of success overnight. Anyone wanting to follow in their footsteps and launch IPOs will need to have investments to the tune of `50-100 crore. Perhaps, a company like the Chennai-based Oriental Group which owns brands like Benjarong, Le Chocolatier, The French Loaf and Zara may also go public if the SRL stock does well a year from now. As we say in the restaurant industry, the proof of the pudding is in the balance sheet.”
Of course, post-IPO, both the stakes and the responsibility have got higher. “It’s a huge challenge, to make a promise and be able to keep it. I feel honoured that so many investors have trusted us. We have to work much harder. An IPO is not about accumulating public wealth. It’s about performance. It should be driven by need (to grow), not by greed.” Yet, it must have been tough to allay scepticism that SRL was being a fool to forge ahead with its public issue when the stock markets were so volatile. Several analysts questioned the timing, especially because bigger companies like Samvardhana Motherson Finance and Plastene India were compelled to 3 6 | INC. | AUGUST 2012
Sonia Mohindra
Restaurant consultant, Delhi “Traditionally, the hospitality industry has been dominated by the organised hotel sector. The restaurant sector is the more unorganised, informal one. That has been changing over the last few years, and the success of SRL’s IPO will help the industry further. For most big players in the restaurant sector, F&B is not their flagship business. These are mostly large corporate groups which are also present in the hospitality industry. Speciality is a departure from that norm. Unlike Jubilant Foodworks or Lite Bite, it was self-funded until recently. It has a proven ability to create multiple brands. But it’s not a quick-service restaurant like a McDonalds so the risk factors are greater. Yet, it has managed to carve a niche for itself, and maintained a level of consistency in food and service. That’s admirable. I do see other restaurant chains launching their IPOs in the next few years. This is a sunrise sector. But, a lot depends on human factors—service, HR, brand management. So, consistency at a mass market level is very difficult to achieve.”
withdraw their public issues due to poor response. There were doubts around SRL’s price band as well. The company had kept it at `150, which experts considered too expensive. By then, Chatterjee says he couldn’t look back. Despite the volatility, he believed SRL had its IPO recipe pat down. “The way our road shows went gave me a lot of confidence that we had a good offer. There was no question of turning back.” That’s critical, he says, for all entrepreneurs thinking of the IPO route—to be clear about both your objectives, and having the confidence in the value you bring. Confident though he was, the response—“way beyond our expecta-
tions”—took even him by surprise. “I’ll never forget the last day of the listing all my life.” Yet, the master chef confesses there were still some flourishes he wishes he could have perfected, including marketing the IPO among the 1.5 million foodies that patronise SRL restaurants across India. SRL’s retail investors quota was only half-subscribed. Now, it’s time to look ahead though. With its cash pantry stocked up, SRL’s focus is to increase their footprint, and tap Tier 2 and Tier 3 cities across India to drive growth. There are also longer-term plans to increase their presence overseas. Oh! Calcutta and Mainland China already have outlets in Dhaka and Beijing respectively.
Your customers are on Social Media! Where are you? Social Media Workshops Build Brand, Generate Leads, Acquire Customers
Special 20% Off
100+ Workshops • 500+ Brands • 2000+ Participants
Bangalore
Aug 7-8
Rs. 15,000*
Mumbai
Sep 13-14
Rs. 19,900*
Delhi
Sep 20-21
Rs. 19,900*
HOW TO REGISTER?
Call Karan Gulati at 09716034040 or write to karan@digitalvidya.com
* (+12.36% Service Tax)
Key Promises • Why care about Social Media? • Leverage Facebook, LinkedIn & Twitter for Brand Building, Lead Generation & Sales • How to create Social Media Strategy? • How to measure ROI of Social Media? • Tools for successful execution of Social Media
Who Should Attend? • CXOs • Sales & Marketing Professionals • Digital Marketers • Entrepreneurs • Brand Managers • PR & Communication Professionals • Media Buyers & Planners
Corporate Workshop? Contact Pradeep Chopra at pradeep@digitalvidya.com FE W PA S T AT T E N D E E CO M PA N I E S
+91-11-28051522
www.digitalvidya.com
3 8 | INC. | AUGUST 2012
Talent Case study
Innovation Trouble finding the right person for the right job at the right time? Think out of the box. It is possible to win the war, and attract, nurture and retain good people with some smart thinking. Learn from these four companies—they did just that, and laughed their way to HR heaven. By cooshalle wilson IllustrationS By shigil n August 2012 | INC. | 3 9
Case Study
Aztecsoft
Tell a good story. Brew your advertising with targeted quirks. Bengaluru-based Aztecsoft was a pioneering high-end product engineering and testing services firm. In 1999, three years after its inception, Aztecsoft realised it was being overshadowed by wealthier competitors, especially when it came to attracting highly-skilled mid-level and senior employees. This talent crunch could halt their ambitions, the company feared. To counter the problem, Aztecsoft launched a targeted branding campaign, which was employee driven, and came up with a series of creative outdoor and online advertisements.
1
THE BACKSTORY
Aztecsoft was started in 1996 by V.R. Govindarajan and S. Parthasarathy in Bengaluru. Far from being just another software company in the IT jungle, it was a pioneer in introducing Bengaluru to a new category of high-end services— product engineering and testing. Things were going well when three years into operations, the company decided to scale up and diversify its services. The company then had around 100 employees but it urgently needed to add another 100 highly-specialised, super-skilled people to bolster their mid-level and senior cadre.
4 0 | INC. | AUGUST 2012
THE PROBLEM
2
Aztecsoft heavily relied on personal networks, recommendations and word of mouth to recruit people. But once these traditional recruitment avenues were tried, the company realised it simply wasn’t pulling in enough people for interviews, which limited the pool of talent they were effectively selecting from. The problems weren’t unlike those faced by many new companies. First, not many people knew Aztecsoft existed. Plus, the company could not afford to dole out the perks other technology giants in the Bengaluru area were giving out. Yet, it was hunting for the best of the best talent. “We were very confident we could convince any candidate to work with us. Our problem was how to first get such people to our door,” recalls Govindarajan, the company’s co-founder and CTO. The founders knew they needed something out of the ordinary to announce the company’s existence to the world, and draw some serious eyeballs to Aztecsoft.
3
THE PLAN
Parthasarathy decided to try a state-wide branding campaign to be unveiled in three phases. They roped in Enterprise Nexus, a local advertising firm, to strategise and implement the campaign. In the first phase, hoardings and billboards were to be put up in all popular techie hang-outs in Bengaluru. Spun around “the quality of work” offered at Aztec, this module was designed to target senior computer programmers. For the second phase, the company decided to launch a complex online puzzle every week on its corporate website, and give out prizes to whoever solved them. In the last phase, the company focused inwards to build an employeecentric culture. An internal newsletter was designed, which apart from chronicling the buzz around the office, was the primary platform for all employees to stay up to date on the latest—recruitment news, policies, online puzzles and the billboards erected.
4
Case Study
THE AFTERMATH THE DECISION
5
During the first phase, Bengaluru was dotted with attention-grabbing Aztecsoft hoardings and billboards which targeted technical people who specialised in decoding computer programming languages. These ads made Aztecsoft the talk of the town. The second phase proved to be equally successful as the news of the website puzzles and the associated awards spread. Traffic to the company website spiralled, bringing in more publicity and attention. By then, Aztec’s bold hiring policy—to focus on the smartest tech talent—had become very clear. As Sam Nathan, the then vice president of business development, puts it: “Aztec was out to hire nerds and we made no bones about it.”
In 2000, the company put into effect the first phase of its recruitment programme—the outdoor billboard campaign. Since the company wanted to use brief, crisply-written messages in code to excite technical minds, it encouraged its employees to come up with funny, quirky messages based on programming languages. Some popular oneliners that resulted were: “XML. Certainly not my T-shirt size— Subbu Aztecian”, “Referential Integrity is not something you associate with politicians—Anand Srinivasan Aztecian”, “FIXML is not a request to pour a Patiala peg”. The Category: Software outsourcing company ran this Founded: 1996 campaign sucEmployees: 2,100 plus HR challenges: Attracting cessfully for nearly highly skilled senior and three years. Once mid-level employees, improving employee the external engagement and thereby branding was employee retention completed, AztecSolution: Engage employees to develop an innovative soft embarked on three-tier advertising plus the second phase recruitment campaign of its recruitment programme—to engage employees in forming a talent pipeline by identifying potential, passive candidates who would win the extremely difficult technical puzzles the company posted on their website. brief profile
6
THE TAKEAWAY
The company no longer had to draw out its potential employees, and “pitch” the company to them. Candidates saw Aztecsoft as a fun company doing some great work, and were attracted to this culture, even if some of them had to take pay cuts when joining. Within a year of the campaign’s launch, the company saw its strength grow from a mere 100 to more than a 1,000 people. Within the company too, employee engagement rose to an all-time high as existing employees were involved in the recruitment campaign at every step. Employee attrition was almost zero while the company was running, clearly showcasing that employees were so engaged that they did not want to leave. Both the billboard campaign and the online puzzle campaign helped the company identify and build a talent pool of both passive and potential employees that showed interest in the company through its advertisements. It was possibly the recipe to the company’s strong strides. By 2008, when Aztecsoft was acquired by MindTree, it had released 1,600 products and had grown to a team of about 2,100 people. August 2012 | INC. | 41
Case Study
ARAVIND EYE CARE SYSTEM
Grow your own talent pool. Look inwards, not out. Aravind Eye Care System (AECS) is globally known for its efforts in curbing the spread of blindness in India. However, little known is its persistent fight to retain its core staff. After hiring generic doctors from the industry, which resulted in high attrition rates, AECS decided to convert all its hospitals into part-time medical colleges to train doctors and paramedics. Eventually, AECS stopped advertising all together, preferring to absorb all its postgraduate students, as “they are more in tune with AECS’s work culture and ethics”.
1
THE BACKSTORY Dr. Govindappa Venkataswamy created the first Aravind Hospital in 1976 with just 11 beds in his rented house and a dream to treat poor, sightless Indians free of cost. Three decades later, the hospital has flourished into a chain of one of the largest and most successful eye care facilities in India. AECS, as we know it today, includes more than the six well-known Aravind hospitals and their 4,000-odd bedding capacity. AECS also offers its patients a bouquet of inexpensive services such as eye exams, surgeries, health care training, eye research and even in-house eye products. The efficient service of its doctors and staff has brought down the number of blind people in India by 25 per cent between 1990 and 2002. 4 2 | INC. | AUGUST 2012
2
THE PROBLEM
AECS’s recruitment problems were three-fold. The first was to attract simple and humble (and talented!) doctors like Dr. Venkatswamy, another was to hire a helping and loyal paramedical staff to support these doctors and the third was to retain the group’s core staff over a number of years. To resolve these challenges, the management tried numerous strategies, one of which was to hire doctors and paramedical staff from the market as and when needed. The results, however, were far from satisfactory. “Slowly, as doctors brief profile and staff began to leave within Category: Pharma, a year or two of joining, we eye care services realised that the new staff was simply not at home with the Founded: 1976 work culture and values at Employees: 3,000 plus AECS. If anything, they felt out HR challenges: Control high of place and uncomfortable by attrition rate of generic doctors the clientele they were and retain in-house trained required to serve—the poor doctors and paramedical staff and the disadvantaged. It was Solution: Hire only in-house then that we realised that to students, offer them numerous flourish, we must grow organgrowth opportunities and retain ically and not just exponenthem by treating them with tially,” says Dr. S.R. respect and dignity Krishandas, human resources head at AECS.
THE AFTERMATH
5
Since the campaign was launched, the attrition rate at AECS has been close to zero. “Rarely do our people leave us because they are unhappy. In fact, in the last couple of years, doctors and staff who had left Aravind years ago for better pay have come back to us,” says Krishandas. Today, AECS does not need to
THE NEXT STEPS
3
As a result, the management decided to take four steps to ensure that the quality of its staff and services was not compromised. First, it decided to focus on bringing in and training young, fresh talent from the industry and offering them continuous growth opportunities. Secondly, it decided to double up all Aravind Hospitals as part-time schools and workshops where these doctors and their support staff could study and practice as much as they wanted. Third, it decided to shift focus from hiring new talent to retaining its core group of talent. Finally, in the context of the fact that the medical community in India has always suffered from a serious deficit of skilled and trained paramedical staff, AECS decided to create numerous community outreach programmes targeting rural areas and their socially disadvantaged population who after vigorous training, could become trusted, trained paramedical staff.
4
THE DECISION
AECS took students from all over India and trained them at various Aravind Hospitals where they were not just encouraged to practice, but to pursue their interests—whether that was research in AECS’s international lab or specialising in more than one area. They were also given the responsibility of training their paramedical staff, a leadership responsibility they cherished. The community outreach programmes involved two-year paid training of girls fresh out of school, wherein apart from medical care, they were also taught soft skills. Once trained, they were hired by Aravind Hospitals. Finally, to ensure their core senior doctors and staff didn’t leave in a hurry, the company paid its doctors high salaries without performance-based incentives. The management also instituted a retention bonus for putting in five years of work with them which kept increasing after every five years of work.
“Rarely do people leave us on account of being dissatisfied. Many doctors come back to us.” advertise when it needs to hire. As the volume of patients has increased so has the number of courses offered at Aravind Hospitals (45 long and shortterm courses). AECS simply dips into its pool of doctors and paramedics who are already in tune with the hospital’s work ethic and culture, and absorbs almost 80 per cent of all its postgraduate students and almost all of its in-house paramedical trainees.
THE TAKEAWAY
6
Having an in-house resource pool of skilled personnel has helped sustain AECS’ finances. According to Dr. Krishandas, around 26 to 28 per cent of the company’s overall expenditure is on salaries. “We hardly mind that, as it has helped increase our productivity, our reach and ensured that our model of health care stays cost effective,” he says. So, his appeal to every company facing talent retention issues is: show respect to all your employees and treat them with dignity. “It’s the real reason why people who join us don’t leave.” August 2012 | INC. | 4 3
Case Study
Sunil Hitech Engineers
1
THE BACKSTORY
When financial constraints prevented Ratnaker Gutte to pursue college after school, he worked as a daily wage labourer earning just `5 a day. Fuelled by ambition, he slowly climbed the power industry ladder donning many hats including that of a helper, welder, fencer and foreman. Finally in 1954, while working for a local power contractor, he was told his employer had left a
2 THE PROBLEM
Create talent. It’ll help you be an institution.
Sunil Hitech has carved a name for itself in the field of power plant construction and maintenance. But running a specialised business such as this comes with a huge challenge—a serious difficulty in attracting, hiring and retaining its senior technical and management manpower due to the dearth of specialised institutes for the same. To solve this problem, the company decided to create the Institution of Construction and Operations Management last year.
4 4 | INC. | AUGUST 2012
SHEL plans to contribute 10,000 MW for the country by 2015. But a significant factor that may scuttle its ambitious plans is the lack of skilled technical manpower. As the company’s Annual Report for 2007-08 noted, “The success of the company’s proposed expansion into BoP projects will be largely dependent on acquiring and retaining technical expertise”. Consequent annual reports of the company have pointed how these and other linked HR concerns such as staff attrition and competition for senior management and skilled engineers could affect the company’s operations. There is a deep-set problem of the lack of adequate manpower in the power sector itself, as another annual report points out, “Looking at the tremendous growth rate planned in the power sector, developing human resources is one of the biggest challenges. Also, the number of engineers available is abundant but those with experience are quite scarce.”
4
project incomplete. The client company wanted Gutte to form a team and take over. Since then, Gutte has never looked back. And thus began Sunil Hitech, which was converted into its present avatar Sunil Hitech Engineers in 2005. Today, SHEL contributes more than eight per cent to India’s overall installed power generation capacity and does everything from erection, fabrication and commissioning to testing and full maintenance of power plants.
3
THE NEXT STEPS
To get a head start in choosing its employees, the company decided to be more closely involved in teaching and training potential employees at all levels. So it joined hands with a leading local engineering college to start an intensive four-week training programme for almost 50 existing employees. The company also made a new HR policy of hiring at least 40 engineering students from the same engineering college every four months, to ensure that the company never ran short of talented manpower. However, on realising that the cost of training a smaller batch of students was more than anticipated, Sunil Hitech decided to open its own inhouse power training institute to coach potential employees.
Case Study
THE DECISION
Sunil Hitech set up I-COM or the Institution of Construction and Operations Management in 2011 in Nagpur. As the deputy manager, human resources, Aniruddha Pande explains, “Our requirements were not being met by the generic engineering graduates coming our way so we decided to train engineers suited specially for power plant engineering, management and supervision.” The one-year course offers all students free residential stay, conveyance facilities, on-the-job training, specialised modules in computer, soft skills development, a stipend of `10,000, and possible recruitment in SHEL.
brief profile
Category: Power sector construction and maintenance Founded: 1998 Employees: 2,340 managers HR challenges: Attracting, training and retaining skilled senior and middle level employees to manage construction sites and offices Solution: Catch this kind of talent early, set up an in-house school imparting power industry specific knowledge and hands-on training to all existing and potential employees
6
THE AFTERMATH
5
For a long time now, the company has seen almost zero temporary disturbances at project sites as a backup workforce is ready and can be easily relocated. Also, Sunil Hitech no longer has to worry about filling its vacancies as every year trained students from the company’s in-house training school join the company. “Till date some 80 engineers from I-COM have found their way into Sunil Hitech. This arrangement has proved beneficial for us and the students, and enriched the power industry in terms of skilled and trained manpower,” says Pande.
THE TAKEAWAY
Establishing a training institute for a continuous supply of workforce does not translate into every student being hired by the company though. As Pande explains,“We only hire if we have to, as our priority will always be to promote in-house talent and expand their job profile. This works both as an incentive and as a reward, while keeping the attrition low”. August 2012 | INC. | 4 5
Case Study
HCL Technologies
Get the pecking order right. Employees come first. HCL Technologies was an established name in the field of IT services for close to 30 years, before stiff competition, laxity and economic downturn resulted in an exodus of employees, customers and revenue. To get back to the top of their game, Vineet Nayar, the then CEO and vice chairman of the company, decided to implement a unique Employee First, Customer Second policy to empower and engage employees. The objective was simple—to ensure employee became more productive, and that HCL Technologies was propelled back to its former leadership position. Seven years on, the EFCS policy has turned the company around, drastically reduced attrition and boosted the CPGA of the company by 25 per cent in the last three years alone.
1
THE BACKSTORY
Introduced to the world after its IPO launch in 1999, HCL is today an established and well-respected global IT service provider known for its innovation, value creation and “transformational outsourcing”. As of now, this Noida-based company offers its clients a wide variety of services that range from remote infrastructure management, engineering and R&D services, BPO services and lastly, software focused IT solutions.
4 6 | INC. | AUGUST 2012
2
THE PROBLEM
Around 2005, after years of being on top of their game, HCL Technologies started showing signs of laxity in spirit and practice, which resulted in a sharp fall in profits and the number of customers. This, coupled with the emergence of stronger competitors such as Wipro, TCS, Infosys and the then ongoing global economic downturn, finally brought the mighty IT giant to its knees.
HCL crafted an Employee First, Customer Second initiative to reverse exodus and attrition. The situation turned so bad so fast that the company started witnessing a mass exodus of senior management, and attrition rate peaked. In fact, vice chairman and CEO of the company, Vineet Nayar, too considered leaving it all behind and starting an NGO. However, it was only on the insistence of Shiv Nadar, the HCL chairman, that Nayar chose to stay on and set things right.
Case Study
3 4
THE PLAN Nayar decided to introduce numerous short and long term clean-up programmes within the company. To begin with, a panel was set up to look into selecting candidates via online networking platforms like LinkedIn. The new EFCS strategy was detailed and launched. HCL believed that this focus on people inside the organisation began with empowering employees with knowledge, resources and infrastructure in a work environment that nurtures innovation. This, in turn, would lead to maximising returns for customers, as empowered and motivated employees tend to offer better value in their engagements, directly influencing customer satisfaction.
THE AFTERMATH THE ROLL-OUT
In 2005, the EFCS strategy was implemented at HCL. To begin with, a Smart Service desk was set up to resolve employee grievances, be it broken flushes in the bathroom or delay of salary slips. Through this desk, employees could hold any manager accountable by opening a “trouble ticket” against him or her. Apart from this, a review programme was initiated which allowed employees to review their managers’ work and post it on the company’s intranet. The company brief profile also introduced an annual Category: IT service “Employee Passion Founded: 1999 Indicative Count” through Employees: 88,000 plus which employees could HR challenges: High identify and measure their attrition across the board passion quotient, giving following a lean phase left the company nearly the company an idea of paralysed how happy or dissatisfied Solution: Empower and their employees were. engage employees by Lastly, the company putting them before customers, as happy and introduced a one-of-itssatisfied employees create kind high-level Retention more value for customer Council that worked to service maximisation retain the company’s star performers. The roll-out of EFCS introduced an unconventional, bottoms-up management style at HCL, and changed things at the company’s very core.
5
In terms of attracting new talent, the company’s selective use of networking sites ensured that it got quality talent across the board. Last year, HCL used LinkedIn to hire 60 per cent of its senior-level executives, 40 per cent mid-level staff and 20 per cent junior staff. Thanks to Nayar’s clear vision and step-by-step implementation of the otherwise tricky EFCS philosophy, the company doubled its market capitalisation and tripled the number of its $100 million customers in the past three years. It also has the highest revenue per employee in the IT sector now.
6
THE TAKEAWAY
Overall, the company’s EFCS policy has helped in terms of retention of its senior and core staff, as empowered employees are now happier and more content, bringing down attrition rates over the years. The company is now viewed as a trusted, transparent and democratic organisation by its employees. As Shami Khorana, president, HCL America aptly sums up, “Since the Employees First, Customer Second strategy was introduced, our 90,000 transformers have seen themselves as the fundamental source of the company’s value, constantly generating new ideas and becoming the drivers for new business growth.” August 2012 | INC. | 47
HOW I DID IT
The Ambition Breeder B. Soundararajan Suguna Foods
From a small village in Tamil Nadu, B. Soundararajan and his brother have come a long way in setting up their `4,200-crore poultry business, Suguna Foods. It began innocuously enough with Soundararajan’s father urging him to begin a business of his own right after high school, and his mother giving him `5,000 as initial seed capital. Today, Suguna is a leading poultry, poultry vaccine manufacturing and poultry nutrition company. It’s also credited for popularising the concept of contract farming in Indian poultry. Suguna works with 18,000 farmers in 14 states across India, and also has operations in Bangladesh and Sri Lanka. Yet, Soundararajan says they’re only just beginning to tap the potential in the market. It’s a task he hopes his family’s next generation can now take up. As told to Rashmi Menon / Photograph by Jackson J.
I was born and brought up in Ganapathipalayam, a small village located 70 km south of Coimbatore, Tamil Nadu. My parents used to teach in the government school in the village which had classes till high school. I studied there too. I remember cycling for five kilometres to go to school. In 1978, when I finished class 11, my father
suggested that I start something of my own. He felt that if I continued on to college, I’d graduate and get myself a safe, comfortable government job and never start something on my own. As a teacher, he knew the limited earnings a salaried job could provide and did not wish the same for me.
4 8 | INC. | august 2012
Since we had 20 acres of ancestral
agricultural land, I decided to venture into farming. However, instead of growing cotton, a crop most villagers planted, I focused on vegetables because I wanted to do something different. My parents lent me the money to get started. For the next three years, I did vegetable farming. It wasn’t profitable. In fact, I incurred huge losses. With debt piling up, I decided to join my cousin’s agri-motor manufacturing company in Hyderabad. Her company manufactured motors in Coimbatore, and wanted to set up distribution and marketing channels in Andhra Pradesh and other states. I travelled across Andhra Pradesh and Maharashtra to sell these products. I
Hatching Profits
A pioneer in contract farming, B. Soundararajan relieved debt-trapped farmers from the need for middlemen, to build a `4200crore poultry business.
HOW I DID IT
entrusted the farm to my younger brother, G. B. Sundararajan. In 1983, after working for three years in my cousin’s company, I cleared my debts. I returned to the village right after. By then, my brother had ideas to take our farming activities further. He wanted to venture into the poultry business. I joined him. Our mother loaned us the `5,000 we needed to make the chicken shelter and buy the chicks. In 1986, we began our poultry trading firm. We would buy feed from the manufacturers, chicks from the hatcheries and supply them to farmers. We did brisk business for a few years. But by the turn of the decade, the returns started diminishing. It was a sluggish market. We had an outstanding revenue of `8-10 lakhs but the farmers who owed us were struggling, and we could not collect much from them. The idea of contract farming began to take
shape around this time. Instead of cash, we thought the farmers could repay their debts to us in service. We mapped the whole agricultural market process and found they were unable to make money because there were 14 cost centres and several middlemen who ate into their profits. Every time one more link was introduced in the process, margins dipped by five per cent. We thought we could devise a system which would reduce the cost centres from 14 to just four.
So, we launched the contract farming
model with three farmers from my village. We provided farmers the feed, chicks and vaccines. They only had to invest in infrastructure. We took away 11 input costs from them, and after 40 days, we bought the chicks from them to sell in the market. This way, the farmers received a steady income every month. It took us around three years to recover the outstanding amount from the farmers.
Gradually, word got around. Other farm-
ers saw the benefits of the model and wanted to join in. Till 1997, we continued to work this way. We made satisfactory 5 0 | INC. | august 2012
profits but in hindsight, it was a business driven by the need to survive. Honestly, our understanding of the market was still pretty basic. We only realised the potential of the business in 1997 when the company began generating about `7 crore in turnover. We had 30 people on the payroll and about 35 farmers on contract. We realised that we had to bring in professional managers to help us grow further. Both my brother and I were instinctive entrepreneurs but we needed management depth if we wanted to really grow. Hiring the right people enabled us to set up branches across Tamil Nadu. Within the next three years, our revenues jumped to `100 crore, and we managed to build a
There is still a lot of scope in this industry, and a place for everyone to grow. Looking back, I never imagined we would be as big as we are today. We had no mentors, business plans or risk analysis capabilities. We’ve only dreamt big and planned ahead in the last 15 years. More than anything else, I’ll credit my par-
ents for the confidence they showed in us. In educated, middle-class homes, families often discourage young people from starting out on their own. In the many management colleges that I’ve lectured in the past few years, I’ve often told students not to postpone their entrepreneurial plans. My father was right—once you get a job,
“I’ve often told young students not to postpone their entrepreneurial plans. Once you get a job, you fall into a comfort zone. Don’t worry about capital. Successful businesses are created not just by money but ideas.” network of 2,000 farmers. In 2000, just as we were beginning to plan our expansion to other states, the then Andhra Pradesh Chief Minister Chandrababu Naidu took notice of us and invited us to implement the contract farming model in the state. We started from his home district of Kuppam, Chittoor, and from there, steadily added a new state or two every year. Today, we work in 15 states with 18,000 farmers. None of this was easy, of course. Setting up
in new states isn’t easy. This growth phase was one of the most difficult periods for the company. We faced a lot of resistance from middlemen in several states. But, we overcame them due to our farmers’ support.
When we began, the competition in the poultry business was almost next to nothing. Now, there are many small businesses emulating our model but it still isn’t intense. Competition doesn’t worry me.
you fall in a comfort zone. Soon enough, you get married and settle down. After this, taking a risk to give it all up to start a business isn’t easy. It’s better to jump into it early. Don’t worry about capital. Successful businesses are created not just by money but ideas. In April 2012, we rebranded ourselves
from Suguna Poultry to Suguna Foods. The shift was inevitable as we were moving into livestock and aqua feed and launching retail outlets that offer ready-to-eat meat products. We currently have 100 stores in South India. I believe there is a big market for this—future generations will not want to cook every day, nor will they have the time to do so. Also, with microwaves available in most homes, frozen products will become a consumption norm. Demand for frozen food will go up. So, poultry has become one of the divisions in the business now.
HOW I DID IT
A major impetus in our expansion plans was the `110-crore investment made by International Finance Corporation (IFC), the private sector arm of World Bank in 2006. We were looking for equity groups to fund our expansion and since IFC and our wavelengths matched, we invited them to come in. It is essential that your vision matches with those investing in your company to avoid a clash of interests. Our work involves a lot of complex, unor-
ganised activity. A unit has to be visited every day and supplied with feeds, chicks, vaccines, etc. Every week, our technicians visit farmers to collect or deliver things. With so many levels of logistical activities taking place simultaneously, it made sense to take the help of technology. We introduced technology to increase the efficiency of our business way back in 1990.
We felt that the skill development in the
poultry industry was poor. There were no dedicated poultry institutes in the country. We are about to start a poultry college in Udumalpet near Coimbatore this year. The institute will train persons who’ve completed high school with technical skills required by the industry and create the layer between farmers and marketing staff on the ground level. About 7,000 people are required in this role every year, who can manage supply of chicks, feeds, vaccines to the farmers, ensure the farmers follow all quality measures and collect the grown chicks from them. Suguna has about 5,500 technical support staff in incubation and feeding sections. My biggest achievement has been enriching the families of our 18,000 farmers, especially because we’ve been able to give them financial stability. That means the most to me. Of course, I was thrilled when an institute like IIM Ahmedabad did a case study
on Suguna Foods. But seeing a farmer’s standard of living improve because of our contribution is much more gratifying. I remember visiting Puri once where our team had arranged an interaction with 180 farmers. I met the farmers near a river under a banyan tree, and each of them had great experiences to share about how contract farming had changed their lives. As first generation entrepreneurs, we’ve grown the company to this level. Our next generation will need to think harder about how to expand; they’ll need to concentrate on strategic areas. Till now, I haven’t felt that Suguna Foods has made it big. Yes, we’ve definitely come a long way but we are nowhere close to reaching saturation point yet. Going forward, we intend to scale up our core business beyond India, and are also evaluating new businesses in food and agriculture, which are unrelated to our core business.
Marketing Sponsoring niche sports can earn big bucks for your company this page Sales Why high sales don’t always mean great business page 55 Leadership Fake it until you make it. Posing like an effective leader can actually make you one page 58 Design A brand makeover from healthy to simple got this packaged food maker selling off shelves page 60 The Way I Work Zoho co-founder Shailesh Davey believes in second chances. He gives his employees the freedom to experiment, commit mistakes and then correct them. page 64
Elevator Pitch
Will PescaFresh net a `10-crore catch from investors? page 62
strategy
photos by photos.com
Marketing Can’t afford the NFL? Sponsoring niche sports costs less but still packs a punch Of all the peculiar places businesses advertise, a man’s backside may top the list. But in the world of mixed martial arts, it’s the most visible space on a fighter’s shorts. For sponsors, that makes it the money spot, and, according to Bobby Harris, founder and CEO of BlueGrace Logistics, it’s worth every penny. Sponsoring a Nascar team or having the company logo on the Green Monster in Fenway Park may be the dream of every sports-loving business owner. But for most, the hefty price tag for a major sports sponsorship is out of reach. Niche sports, by contrast, can offer a worthwhile marketing experience at a fraction of the price. “Dollar for dollar, you just can’t compare the value,” says Harris. Since it was founded in 2009, BlueGrace Logistics, based in Riverview, Florida, has sponsored more than 20 fighters. Why MMA? Harris got the idea to sponsor fighters after a chance meeting with Ultimate Fighting Championship light heavyweight August 2012 | INC. | 5 3
strategy
winner Jon (“Bones”) Jones in a hotel lobby in Las Vegas. Not yet a big fan of the UFC, Harris didn’t know what to expect from someone who gets kicked in the head for a living. So he was pleasantly surprised to find that Jones was a smart, charismatic guy, who, Harris says, “holds himself like a champ.” That got him thinking. “I wondered how much it costs to endorse someone in the UFC,” he says. As it turns out, not all that much—at least compared with other sports. According to Jones’s agent, Malki Kawa, CEO of First Round Management in Doral, Florida, it can cost as little as $10,000 to sponsor a fighter for one night, and an annual contract starts in the low six figures. That’s not pocket change, but it’s a fraction of what a Nascar deal would cost.
with the ability to tolerate the violence.” For BlueGrace, which manages freight hauling and shipping for companies, MMA was a perfect fit. The company’s marketing department did some research and learnt not only that UFC fans are predominantly male, like BlueGrace’s clients, but also that shipping managers in particular are highly likely to be UFC fans. What’s more, UFC fighters’ bonuses depend on their social-media activity, which makes them some of the most Facebook and Twitter-savvy athletes around—and great ambassadors for your brand. Kawa, who works mostly with clothing and fight equipment sponsors, had never signed a logistics partner. “I thought, considering this isn’t a sport where FedEx wants to be, why not take a chance on BlueGrace?” he
company’s logo. “That secondary marketing was completely unexpected,” Harris says. The newness of the sport also enables sponsors to have more-personal relationships with their fighters. Each of BlueGrace’s fighters promotes the company and interacts with its customers on Twitter and Facebook. Athletes with an annual contract do even more. Last year, Alves not only wore a Santa hat for the photo on BlueGrace’s Christmas card but also held a meet and greet at a BlueGrace career fair and hosted Harris and 75 BlueGrace clients in his hotel suite the night before a fight. “He was so gracious,” Harris says. “He created great memories for a lot of our customers.” The sponsorship is fun for employees, too. For some, it’s even been a deciding factor in choosing to work for BlueGrace. KJ
Wide World of Sports Marketing
Costs vary depending on the athlete, venue, and amount of media coverage, but even niche-sports sponsorships can top the million-dollar mark. Below, Larry Rothstein of sports marketing firm Source Communications offers some advice on four hot but affordable niches and the demographics they can help you reach. Equestrian “This demographic would be 35 to 54, skewing female, with a household income well over $150,000. It’s very suburban.” (Cost: $15,000 and up per event)
Bowling “It’s an excellent fit for bluecollar men, 50 and over. It’s on ESPN, but it’s a much lower cost of entry than other televised sports.” (Cost: $20,000 and up for local events) Women’s Golf “It’s enormous in Europe and Asia, so it’s great for companies that are thinking globally.” (Cost: $50,000 and up for local events)
Surfing “It’s very niche, very young, and it doesn’t get much TV exposure, so it’s better for guerilla marketing, where you’re promoting on-site.” (Cost: $25,000 and up per event)
Of course, nontraditional sponsorships aren’t for every business. UFC fights can be shockingly violent and may not project an image businesses want to be associated with. Larry Rothstein, president of the New York City-based sports marketing firm Source Communications, says business owners need to consider worst-case scenarios. For instance, when Rothstein took over Amtrak’s sports sponsorships, he pulled the company’s Nascar deal. “I never wanted to see a crash happen with Amtrak’s name on it,” he says. “MMA sponsorships are for companies 5 4 | INC. | august 2012
says. In April 2011, he set up BlueGrace’s first sponsorship deal, with Ben (“Smooth”) Henderson. Since then, BlueGrace has sponsored all of Henderson’s fights and signed annual contracts with two of Kawa’s other UFC clients, Carlos (“Natural Born Killer”) Condit and Thiago (“Pitbull”) Alves. Those deals guarantee BlueGrace logo placement during a certain number of fights, but they actually deliver much more than that. BlueGrace’s fighters, for example, have appeared on Fox and in the pages of Maxim magazine, all while sporting the
McMasters, an avid UFC fan, was choosing between a position at BlueGrace and a rival when he learnt of the sponsorship. Not only did McMasters feel it was a smart marketing strategy, but, he says, “culturally, I knew I’d fit in.” He’s now VP of corporate development and marketing. The attention the company gets from the sponsorships surprises even Harris. “We do so many things to provide value, but you want to do business with us because we’re sponsoring fighters?” he says. “Whatever works.”— Issie Lapowsky
strategy
Sales Solving the Sales Conundrum Figure out how growth and sales interact The relationship between growth and sales seems easy enough: Sell more stuff and your business gets bigger. But it’s not quite so simple—and a failure to understand that could be the difference between success and failure, says Jeff Hoffman, founder of MJ Hoffman and Associates, a Boston-based sales consultancy. Hoffman, who teaches sales at Harvard and MIT, and works with companies large and small (he recently created a sales-training program for Google), recently spoke to Inc. magazine executive editor Larry Kanter about what salesconscious CEOs need to understand to navigate today’s market. What’s the biggest thing CEOs of growing companies don’t understand about sales?
When you’re going through periods of high growth, the sales are coming in in such a frenzy that it can almost seem as if every deal is happening a different way—say, through a referral, a marketing event, a lead, a list, etc. A CEO can easily come to the conclusion that there’s a randomness to the growth. And that’s very dangerous. Why is that?
Because even in the hottest markets, there are trends and shapes to the sales process that can allow you to determine what your optimal customer acquisition looks like. And that is critical when you start to scale your business. So it’s not just a question of finding customers and selling them things and then finding more customers and selling them more things. There are generally significant events that occur in a relationship between a buyer and a seller. In the business-tobusiness world, it might be a meeting or a product illustration by manav sachdev
demonstration. In the business-to-consumer world, it’s a clickthrough or a request for information. For a business owner, it is very important to understand which of these events have the greatest impact, which ones really accelerate the sales process. You want to be collecting data on every step of every sale and looking at that data, and constantly fine-tuning the process. August 2012 | INC. | 5 5
strategy
In practical terms, what do you advise entrepreneurs to do?
I like to think in terms of an abbreviation that’s been around for years—AIDA, or attention, interest, desire, action. No matter what you’re selling, you have to guide a prospect through each of those emotional states, and each one requires a different focus, a different language, and a different strategy. In the simplest terms, you want to make sure that you’re building your process so that each of those letters is being represented. So how are you getting your customers’ attention? Is it through a website, word of mouth, through buying lists, through a directsales organisation? From there, how do you get them interested? How do you communicate why they should give you their attention? Maybe it’s through demos or free trials or testimonials. Then it gets even harder—most young companies have the biggest hurdle getting from interest to desire, getting someone to go from understanding what you do to actually wanting it. And even if you can create some kind of event or process around that, you’re not done. You have to have another strategy or event around the customer actually buying. Now, all these things can happen on one phone call or one meeting or one visit to your website. But all four of them have to be contemplated. And in your experience, that does not happen?
In other words, how many interests does it take to get someone to actually desire your product? Imagine you’re selling high-level enterprise software that has a starting price in the millions of dollars and takes 18 months to sell. Imagine the power if you can start to shrink the time between interest and desire by 10 per cent. The same holds for products or services with much shorter sales cycles. A-I-D-A makes sense, but it strikes me as being as old as selling itself. You can imagine the same calculus going on in the mind of a rug merchant in the Grand Bazaar in Constantinople. But here we are now, in 2012, in a very tricky marketplace.
You have to be more surgical than ever. There is a tremendous amount of consumer fatigue. People are subjected to a tremendous number of attempts, being made by all kinds of organisations, to get their attention. At the same time, the buyer has a variety of ways to self-educate and even self-buy. In the old days,
“I often coach people to think less in terms of selling than learning. Once Jeff Hoffman, founder of MJ Hoffman you approach your and Associates prospects and customers from the point of view of ‘what can I learn from you,’ you will feel anxiety start to melt away.”
Generally, people make educated guesses. But what’s really important is that you start asking, What is happening here? Am I getting too much drop-off at a certain stage? Am I seeing a bottleneck at any particular point? Do certain events speed things up or slow things down? Capturing these things in real time is the difference between companies that have high growth, stumble, and then die and companies that have high growth, maintain it, and continue to grow exponentially.
the sales organisation owned the whole process. Now, a customer can make decisions and purchases with no company involvement at all. The salesperson’s ability to touch the customer has changed. So you have to be much more creative.
You talk about capturing and responding to this data in real time. How do you do that?
Does this require a different kind of salesperson than we’ve become accustomed to?
There’s a wide variety of CRM and automated tools available. But even without technology, you need to make sure that you’re recording the activity aligned with each of those four stages. So if you believe that the best way to get the attention of a customer is through a database and outbound calling, you have to capture your team’s efforts. It could be as simple as tracking every call in a spreadsheet. But you need to generate numbers that allow you to calculate your conversion rate. Because there are two ways to take advantage of a sales process: you can increase the volume of activity in each of these four stages; or you improve the efficiency of each of these stages.
I think it may. When I was coming up in sales, the classic great rep was that kind of C student who had three jobs to put himself through school, who wasn’t book smart but was street smart. But I’m seeing a lot of companies doing things differently, moving the profile to someone with extraordinary intelligence. In the current environment, the best reps may be those who are curious, can expand a meeting to talk about things that they may not have been prepared to talk about, who can learn from customers and can get deeply engaged. And those people probably are not the old-style reps.
5 6 | INC. | august 2012
strategy
How do you get someone who is reluctant to sell to embrace sales?
I often coach people to think less in terms of selling than learning. Once you approach your prospects and customers from the point of view of “what can I learn from you,” you will feel anxiety start to melt away. No one wants to talk about what a salesperson thinks will work. But prospects do want to talk about what they think will work. Salespeople need to indulge that. I wonder if the negative impressions many of us have about salespeople stem from the way they are compensated. If the bulk of your pay comes from commissions, doesn’t that add a kind of intensity or even desperation to the process?
Ultimately, sales commissions are designed to inspire what most people have difficulty doing—closing. Who would subject himor herself to hundreds of no’s a week, many of them in a rude fashion, if he or she didn’t also have the promise of great earnings? Now, there are different ways to structure compensation. Some organisations are beginning to tie compensation not only to the sale but to the life cycle of the
customer—which mitigates the impulse to get bad deals, just to get a deal done and collect the commission. Speaking of deals, many companies seem obsessed with the big deal: identifying it, chasing it, closing it. And then moving on to the next big deal. Is that a problem?
It’s sexy—you’re the big whale hunter. We all want to know if you closed Ford, if you closed Hilton. It’s a big brand, and there’s also the hope that it can have a domino effect and lead to more sales. So organisations put a high value on these whales. But I often advise companies not to make a big investment in the whale hunting. The most profitable space for many organisations is the next tier down—the large midmarket account space. A $1million deal looks better than a $100,000 deal. But if the $100,000 deal can be closed with four steps and the $1-million deal takes 30, which is the better path to success? So I often advise people to go after the big whales but do it judiciously. If you’ve determined that in your market there are 100 big whales and 10,000 midmarket opportunities, you should spend your resources in the same ratio.
strategy
Leadership Strike a pose One way to become an effective leader: Sit, stand, and posture as if you are an effective leader
The Power of Posing Changing body position changes hormone levels, says Amy Cuddy.
We know how leaders are supposed to look. They stand straight and tall. They are physically expansive, radiating confidence and power. In fact, taking on such physical attributes can actually make people feel more leader-ish, says Amy Cuddy, an assistant professor at Harvard Business School. Cuddy and two coresearchers are studying “power posing”—an exercise for charismahungry leaders who want not only to appear more confident but also to be that way. She spoke with editor-atlarge Leigh Buchanan about mastering the physical side of leadership.
What led to your interest in the relationship between posture and power?
There’s often a gender grade gap in the M.B.A. classroom in the sense that men appear to outperform women. And one thing I noticed is that the women don’t sit the same way as the men. They’re much more likely to have their legs crossed and their ankles wrapped. The men are more likely to sit with their legs spread, their shoulders open, arms sometimes draped around the chair next to them. When they want to get in there, they lean forward and stick up their hands. We’ve known for a long time that the postures assumed by many of the men are associated with power. So your posture reflects how powerful you feel.
How did you test your hypothesis?
We brought people into the lab and had them spit into a little vial to get baseline testosterone and cortisol levels. Then some of them would do high-power poses for two minutes and some would do low-power poses for two minutes. Then we gave them $2 and the chance to roll a die and win $4. And we had them answer questions about how powerful they felt. After 15 to 17 minutes, we’d take a second saliva sample.
You pose powerfully; you perform better; you feel more confident and powerful; then you perform even better.
I wondered what would happen if you forced students to change their posture. Would that lead them to participate more? Can you fake it until you make it? There’s evidence from social psychology and research on facial expressions that suggests it’s possible. When you force people to smile and to contract the muscles in the face that are involved with smiling, it makes them happier. That’s called the facial feedback hypothesis. But what happens below the neck conveys a lot of information, too. Is there a known physiological basis for that?
We looked at testosterone, the hormone associated with dominance, and cortisol, a hormone that is released in response to stress. In primatology, the belief is that individuals born with the highest testosterone become the alphas. But it’s also true that if an individual is forced 5 8 | INC. | august 2012
to take over the alpha role, within a few days, his testosterone has gone up, and his cortisol has gone down. And if you get pushed to the bottom of the hierarchy, your testosterone goes down, and your cortisol goes up. That makes you much less disease resistant and more likely to get picked off. Some social psychologists at the University of Texas have found that the most effective leaders have both high testosterone and low cortisol. You don’t want hightestosterone, high-cortisol leaders. That person is going to be defensive and very reactive to stressful decisions. He or she will be less likely to make good decisions.
And the results were?
The high-power poses caused a decrease in cortisol of about 25 per cent and an increase in testosterone of about 19 per cent. The low-power poses increased cortisol about 17 per cent and decreased testosterone about 10 per cent. On the gambling task, 86 per cent of the high-power posers chose to take the risk, compared with 60 per cent of the low-power posers.
Was it the same for men and women?
Both showed the same pattern of changes. Is there a minimum amount of time people need to power pose in order for it to take?
We advise people to do this before they go into a situation where they need to appear confident. Normally, what people do before they give a speech or go into a sales meeting is sit in a chair, hunching over their notes or their iPhone. That’s the opposite of what you should
strategy
be doing. You’re making yourself tiny. Instead, you should be walking around the hallway, putting your arms up. Sit at your desk and put your feet up on it. Stand on your tiptoes with your hands in the air. When you go into a sales meeting, you want to be as squared off and tall as you naturally can be. If you’re sitting down, you might consider not crossing your legs. If the chair has arms, rest your arms on those arms. That will help prevent you from crossing your arms or wrapping them around your torso.
What Does Dominance Look Like? We asked Amy Cuddy to describe four classic power poses:
“This is a classic expression of feeling powerful in the moment—it causes you to physically expand.”
“The body language naturally projects dominance. It’s unusual to see a woman in this position.” The CEO Oprah Winfrey
How long does the effect of power posing last?
That is an empirical question we will be trying to unravel. At this point, we can say pretty comfortably that the initial effects seem to last 15 or 30 minutes. I think the more interesting question is whether or how it becomes self-reinforcing. You pose powerfully; you perform better; you feel more confident and powerful; then you perform even better. At the same time, people respond to that confidence and performance boost and give you feedback that further elevates your feelings of confidence and power. Does there come a point, if you maintain the poses long enough, that testosterone and cortisol simply assume the optimal levels?
I’m not the best person to answer that, because I’m not an endocrinologist. But I don’t think it’s likely that your hormone levels are going to change permanently. What might be more likely is that once you learn that feeling, you can achieve it mentally without doing the poses. It would be interesting to answer the question: Can you close your eyes and picture yourself in one of those postures and get the same effect? How important is the physical sensation of confidence or power to being a good leader?
It gets into this idea of embodiment. For example, people who hold a warm cup behave more warmly. When you hold a cold cup, you behave more coldly. That was in a paper published in Science a few years ago—it’s good science. So feeling yourself in a position of power and confidence can give rise to behaviours that reflect that. You fake it until you make it. What is the effect of power poses on risk tolerance? Is there a concern that people might experience irrational exuberance postposturing and make unwise decisions as a result?
It does increase risk tolerance. But for the average person, it’s still well within the normal range. Only a small, pathological percentage of the population might be pushed over the edge.
The Performer Mick Jagger
I suppose that people naturally have different levels of testosterone and cortisol. Is that what underlies the argument that some people are born leaders?
It may be partly that. Is this something that should be taught in leadership development programmes?
The Loomer Lyndon Johnson
“Johnson was 6’4”, and he used his stature very thoughtfully—to both intimidate and seduce.”
The Classic Wonder Woman
“She’s really opening up. The feet spread, the hands on the hips. She’s taking up space.”
It should be part of leadership development. But the people who could benefit the most are not necessarily the people who end up in an M.B.A. classroom. It’s the people who are powerless and suffering because of it. Two days ago, someone invited me to talk at a women’s shelter about this. That’s my greater hope. If a leader’s problem is over-confidence, or if he or she is arrogant and impatient, can assuming postures of submission help?
I’m sure it could. But how would you convince someone like that to actually do it? August 2012 | INC. | 5 9
strategy
The Logo Before launching The Healthy Pantry, Lauver was prediabetic and 40 pounds overweight. Because his own transition to a healthier diet inspired him to start the business, he wanted the logo to scream health. He posted a request for a logo on CrowdSpring, an online marketplace for crowdsourced designs, and paid $400 for this one. “We felt it really spoke to a healthier you,” Lauver says. “But, it turns out, most consumers assume healthy food doesn’t taste good, so it pigeonholed us.”
Keith Lauver never thought much
about packaging. He didn’t have to. His company, The Healthy Pantry, was a mail-order service that sold allnatural, quick-to-fix boxed meals to subscribers—and mail-order consumers don’t have to be enticed by a flashy package. But in 2010, Lauver, who is based in Red Lodge, Montana, decided that the best way to expand his company was to get his products into grocery stores—and it became clear that he could not succeed without an entirely new brand identity. So he hired the Boston-based marketing firm Marlo Marketing/Communications to craft a box that could sit comfortably beside products such as Hamburger Helper and Rice-A-Roni. The new brand debuted at the Natural Products Expo in March 2011. —Issie Lapowsky
The Box In the early days, Lauver designed the labels on his home computer and placed them by hand on plain white boxes. It wasn’t until Lauver began pitching grocery stores that he began to worry about how the product looked. In one meeting, a grocery store manager said, “ ‘Keith, you’ve got the ugliest box I’ve ever seen,’ ” Lauver says. That’s when he started hunting for a designer.
The Imagery Initially, Lauver marketed The Healthy Pantry by throwing at-home cooking parties. The events generated strong word of mouth, which became the basis for the mail-order business. Because neither parties nor mail-order meals require compelling packaging, Lauver was able to get away with using images from iStockphoto.com that looked similar to his recipes.
Expert opinion Where is the logo? The new design is an improvement, but I think they’ve degraded brand awareness. They have information immediately above and immediately below the logo. That’s a big no-no. The package needs to create awareness for the brand from 20 feet away. This doesn’t do that, but if you cover the very top of the box, suddenly the logo jumps out much more powerfully. R.J. Murray, principal, Murray Brand Communications, San Francisco
6 0 | INC. | august 2012
Manufactured, not homey On the original, the food looks more tasty. On the new package, the food looks simple and convenient—but they lost the sense of tastiness. The fact that the overwhelming colour is almost fluorescent doesn’t say natural and homey; it says manufactured. Food looks more delicious when it looks real and a bit messier. Giving the photos a sense of place, like someone’s kitchen, would make a big difference. Debbie Millman, president, Sterling Brands, New York City
spread: Boxes: kelly kollar (4); Experts: Courtesy subject (4)
Design Swapping healthy for convenient A packagedfood maker goes all in and changes everything
before
AFTER
The Brand During in-store demonstrations of The Healthy Pantry’s products, Lauver found that most consumers valued convenience more than health. So he and Marlo Fogelman, whose Boston marketing agency focuses on consumer products, decided to undertake a complete makeover. The two brainstormed words and phrases associated with convenience, eventually agreeing on the name cooksimple. The logo is very similar to Real Simple magazine’s, but Lauver’s lawyer said the odds were low that the magazine would take action.
q&A
A General Mills brand guru on the art of selling food Elizabeth Nientimp is the director of brand design for General Mills, where she oversees packaging for household names such as Hamburger Helper, Green Giant, and Progresso. Q: How is design for food different from that for other consumer goods? A: Food elicits visceral human responses—hunger, craving, enjoyment. Food packaging needs to deliver on all of these fronts.
The Directions To make the recipes look as simple as possible, Lauver and Fogelman included photos of all the additional ingredients people need to complete the recipes. “It’s shocking how few people know how to cook anymore,” Lauver says. “As silly as it may seem to put a picture of a pot on the box, I wanted to make it look easy enough that my 7-year-old could do it.”
The Imagery The photo on the box, Fogelman says, is “the money shot. No one’s going to buy this because it’s called cooksimple. They’ll buy it because it looks tasty.” Fogelman, who took on the project in exchange for equity in the company, insisted on hiring a food stylist and food photographer, who worked for three days shooting seven entrées.
strategy
The Box Lauver and Fogelman toyed with the idea of using a can, a pouch, or a round canister, reminiscent of Quaker Oats. But in the interest of simplicity, they returned to the box. Cooksimple’s goal is to present an alternative to items like Hamburger Helper. “We wanted it to be mainstream,” Fogelman says.
the bottom line
Before the redesign, The Healthy Pantry had 35 grocery customers, most of them small natural-food stores. Since cooksimple debuted in stores in April 2011, that number has grown to 1,600, including 675 Safeway and 26 Whole Foods locations, and average sales per store have been growing nearly 3 per cent a week. Mail order now makes up less than 5 per cent of revenue.
It looks like a ’70s cookbook When you look at the logo on its own, it’s great, although it does remind me a bit of Real Simple’s. Against a white background, they could have this beautiful, contemporary, Lean Cuisine–esque presentation. Instead, it looks like a ’70s cookbook. If they had made the box as simple as the logo, they could have upgraded to a high-quality, new, relevant product. Ian McLean, president, McLean Design, Walnut Creek, California
Q: What are the most important considerations when designing food packaging? A: Three things. First, make it simple. Resist the urge to tell consumers everything about your brand on the front of the package. Second, make it special. Understand what makes your brand unique, and own it. Finally, make it personal. Know your key consumers and what motivates them; let them see themselves in your brand. Q: What can marketers of nonfood products learn by studying a box of Hamburger Helper? A: They can learn the importance of telling a story. Hamburger Helper is all about helping families create great meals. The sense of place, tone, presentation of the food, even the character Lefty, all do their part to tell the story. By leveraging design to tell a richer story, rather than filling a basic need, a brand can focus on being valued and delighting its customers.
A bit bright I think the brand refresh was a success. The messaging on the previous package was all over the place. This one is easy to read. The directions on the back are clear and concise. But I don’t agree with the colour palette they used. The photography takes up two-thirds of the packaging, so it’s the main speaker, but the bright colours on the boxes take away from that. They might want to explore more neutral colours. Ed Johnson, principal, BIG Design, Fremont, California August 2012 | INC. | 61
strategy
Founder:
Sangram Sawant location:
Mumbai
Launched:
2005
employees:
60
Products:
Pomfrets, Crabs, Lobsters, Prawns, Sharks, Squids Number of stores:
2 shop-in-shop retail outlets + a home delivery model
customer base:
15,000 homes (home delivery), 4,00,000 customer records captured for sales and demand forecasting 2011 Revenue:
`5 crore
2012 Projected revenue:
`10 crore
FUNDING SOUGHT FOr:
Expanding home delivery format and opening up retail outlets in Tier-1 cities
6 2 | INC. | AUGUST 2012
Elevator Pitch PescaFresh offers seafood from the shore to the door. Will investors fork up `10 crore? The Pitch: “The marine production and consumption industry in India is a `50,000-crore market, yet the consumer remains underserved. We want to relieve seafood aficionados from the dread of visiting a stinky fish market, jostling for price or fussing over freshness, cutting or slicing. We offer a wide range of hygienically processed varieties like oysters, tiger prawns, crabs, cuttlefish along with premium products like the Himalayan trout and fresh salmon imported from Norway. Customers can place their orders over the phone, or buy from retail outlets like Tata Trent and Aditya Birla Retail’s More hypermarkets. We receive products from more than 25 fishing harbours and have a robust supply chain covering the west and the east coast of India, ensuring seafood is home delivered 365 days of the year. We ensure only the best is delivered to your doorstep in specially-designed boxes and fillet to custom requirements.” —As told to Neha Gupta
The Experts Weigh In GET THE SUPPLY CHAIN RIGHT
WORK ON FRANCHISEEs
tweak the business model
The idea of delivering fresh and not frozen seafood with the option of customisation and the promise of a hassle free delivery will certainly find many takers. The key differentiator however will be their ability to provide fresh produce once they scale up operations. With chronic issues in supply chain set-ups in India, they will need to optimise their warehousing capabilities, delivery and wastages. Also the return of the packaging material can be a major cost and would be labour intensive. If PescaFresh is able to manage its supply chain and deliver with consistency, they are sure to have a loyal following.
Fresh seafood, especially in the land-locked areas represents massive latent demand and Pesca is a great platform to capitalise on this. It is essential to get the quality control in check and build out the systems in each of the expansion cities. The real uplift will eventually come via franchisee stores. However, even at that point, the supply chain and distribution should be centralised so that quality is never compromised. Price competitiveness will be one challenge and to pull customers, Sangram can try free tasting or sampling events and promotions like “the deal of the week.
The model seems to be dependent a lot on logistics and supply chain. That’s an issue which has many challenges, especially with a highly perishable product line. Also, regular consumption of seafood at home is a relatively regional phenomenon. In most other parts of the country it is largely an “occasional” out-of-home consumption food item. Most consumers shop at local seafood markets for the freshest and also bargain on the product pricing. Yet, the promoter has done very well in building a high-quality network and has created a good niche. But success on a national scale is still untested.
PAWAN RAINA, CEO, Impresario Hospitality, Mumbai
KARAN MOHLA, analyst, IDG Ventures, Mumbai
G. S. BHALLA, CEO, Horizon Group, Delhi
Fishy Fun Will Sangram Sawant’s mantra of the “freshest” catch tempt investors to pool in money?
Photograph by JITEn Gandhi
August 2012 | INC. | 6 3
strategy
The Way I Work | Shailesh Davey, Zoho
“When you ask a team member to do a task, first explain why it needs to be done.” When TechCrunch, the popular tech blog, says your company’s biggest competitor is Google, you know you’ve arrived and Zoho, a global technology company, finds itself in that lucky spot. Shailesh Davey, the company’s co-founder, along with this three other co-founders boast of a suite of 26 online productivity, collaboration and business applications that have caught global attention. Today, Zoho has around 1,500 people in its main development centre in Chennai, and over six million users. An accidental entrepreneur almost (Sridhar Vembu, Zoho’s other co-founder sold the idea of a tech start-up to Davey in 1996 when he was on his way to an IIM interview), Davey is a blend of tech tycoon and old-world habits. Despite the fancy apps on his iPad and iPhone, he prefers to use a pen and paper to chalk out his to-do lists. He also loves scouting out unconventional routes of hiring, and helping young undergrads polish their skills. As told to Ira Swasti | Photograph by Aahana mahtani 6 4 | INC. | AUGUST 2012
I am a morning person. I wake up around 5.30-6am everyday and head for a workout. My
On The Move Shailesh Davey takes the bus to office every morning and most of the day’s planning happens on the way.
two sons, one in Class 5, and the other in kindergarten are up by then and I usually help them with their homework before getting ready for office. I have a breakfast of porridge and fruits every day. Around 9am, I take a public bus to office. I always carry a copy of The Economic Times to catch up on the news during the half hour it takes me to reach work. Most of the day’s planning takes place on the way as well. I jot down my to-do list on a loose piece of paper. Even though I have an iPad and an iPhone, I am not much of a gadget freak and prefer to use the good old pen to make my list. Mornings are the most productive part of my day. I assimilate the maximum information then and prefer to read all technical and analyst reports first thing when I reach office. That helps me get a feel of where the market is going. August 2012 | INC. | 6 5
strategy
Everyone in the company works on Zoho Mail. But I don’t like to keep my e-mail on for a long time because they just keep pouring in. I check my e-mail once every two hours, otherwise it interrupts my flow of work. As a rule, I definitely check it once in the morning and once before leaving for the day. There are no cabins in Zoho. It’s an open plan culture with around 1,500 employees in the Chennai office. One set of people comes in at around 8am and leave by 6pm, and there’s another set which comes in by 10am or 11am. We’re a bit flexible with the timings that way though I am not a big proponent of working from home because that does not work for a product-based company like Zoho. We have small teams of around 10-20 people and a lot of knowledge sharing happens on the spot. We like our people to get immersed in that, just turn around and talk to the person sitting next to you. That is not possible if you’re working from home. There’s also a lot of India-US interaction that happens because two of our cofounders work from there. The benefit of having so many co-founders is a large knowledge pool where each of us can work on an individual aspect of business independently. But you need to share a good chemistry with your partners for this kind of an arrangement to work without friction. Ours has been great because we’ve known each other for years. We’d started the company with around 10 people in 1996 and most of them were family and friends. We have let the requirements of the market help us figure out how to divide the work amongst us. Since the primary market of our product is in the US, Sridhar and the team there focus on marketing and business development while we in India provide engineering and product support. Sridhar and I touch base once in two days with our teams in India and the US. He talks to the product managers almost on a continuous basis through phone, chat or Skype. A lot of signals are sent from there which need to be assimilated in the products here. That is one of our key USPs actually because the support is handled by the people who develop the product and because the product is closer to the developer, they get a faster turnaround on support—a very good way of telling the market that the product is developed and supported by the same people. We’ve put most of our products on the web for free, the idea being that people will try it before they buy it. We don’t spend a lot on sales and marketing, and we tell the customers that whatever we save by not spending on sales and marketing is passed on to them as the benefit of low price. Another reason for our low pricing strategy are our unconventional hiring techniques. Even though we were from the IITs, we
never went back to the IITs to hire. We chose to go to the Tier 2 and Tier 3 colleges to look for unpolished diamonds, if I may use that phrase. A lot of service companies wouldn’t hire these students because their oral communication skills aren’t great. But we are a product-based company so it doesn’t matter much what you speak as long as you’re good with Java and C++. We even conduct our interviews in Tamil, their local language, so that the candidates feel comfortable interacting with us. In the current technology landscape, whatever you learn is outdated in three to four years anyway. So when we interview a person, we look for a high interest level in learning something new and applying concepts to new problems at hand. He or she doesn’t even have to be a computer engineer—any branch of engineering would do. Most of the people working here are first generation engineers. Their parents have usually worked in agriculture and weaving jobs.
S
6 6 | INC. | AUGUST 2012
till, it is very difficult to gauge a person in a 30-minute interview. So we have something called the incubation programme where we give people who may not fit in directly a chance to learn a programming language for a month. And then we observe how they function for three to four weeks before deciding whether to hire them. There’s a food analogy that I like to share about this. Basically, instead of asking people how to cook, we ask them to prepare the dish and taste it. We get a lot of customer feedback on our online forum called the Zoho Discussions that is hosted on the Zoho website. You can quickly glance through it and get an idea of the mood of the customer. People also use social media a lot these days to give vent to their feelings. I don’t vigilantly track that but sometimes, on a weekend mostly, I’ll search through Twitter, Google Trends and Facebook Alerts to see what people are saying about us. We also have a separate social media team that monitors these platforms. Being active on the social media today means customer engagement for your business. If someone’s tweeted something good or even bad about the product, the team informs the customer support guys and they may intervene and reply. If it’s an urgent issue, we fix it immediately. If it’s just one customer asking for a certain feature, we may reply saying, we’ll build it into the product roadmap but we don’t know when we’ll roll it out. Because on the product management side, it’s not just important to know what to do, but also to realise what not to do. If the customer is asking for a certain feature, we see if it’s a customer-specific feature or a market-specific feature. If there are enough customers in the market asking for the same feature, we work on it, develop a beta version and ask them if it meets their requirements.
strategy
That is why product managers keep a track of their products on you’re on the edge. It’s much like a race. Things change very fast in each of these forums and unless there’s an escalation where the cus- the technology space, and you need to stick your neck out and bet tomer wants to speak to me directly, I don’t prod my team about it. I on one horse. If it loses, you have to quickly pull back and move onto like to be more of a mentor to our employees than a manager or a boss. another. Honestly, innately, I’m a more structured person. I’d really We have around 40-50 teams working on a diversity of products. All like to be more unstructured and adaptive to change. the discussion or brainstorming on products happens on an internal I leave for home around 8-8.30pm, if there are no calls with the Zoho forum for employees. We have both company-level and team- US lined up, that is. Before I leave office, I cross out my to-do list. I level forums where discussions are conducted over chat. Once an idea just love the visceral feeling of striking off tasks that were accomgets generated and is allocated to someone, it becomes a one-to-one plished from my to-do list before leaving, and then that paper goes conversation in person. One of my primary activities as a mentor is to see what good practices are happening in a team and dissipate that information to the other teams. Every job in the company comes with an 80/20 rule—80 per cent of the job you enjoy and 20 per cent of it you have to do, even if you don’t. Another philosophy I always follow and ask my team mates to follow is—when you ask people to do work, first explain to them why they have to do it. Don’t just give them a command, tell them the reason why they should do it. For instance, if you want something done by the system administration, tell them you have a meeting with a customer at five o’clock in the evening which is why you need that applicationset up. If he or she knows the customer is involved, they will go overboard to do it perfectly. Penning It Down Working in a tech company hasn’t turned Davey into a gadget freak. Just I usually have a late lunch at before leaving office, he strikes off his to-dos written on loose paper with a pen. my desk around 2.30pm. Postlunch is a good time to lay out directions for people and resolve issues. I schedule all my meetings into the dust bin. On my way back home, I usually encounter traffic and one-to-one interactions with my teams between 3pm and 5pm. and catch up on more reading on my iPad. I make sure all my readIn discussions, I don’t like people who lose their temper easily because ing is done before I get home. I don’t like working at home; that time anger should not play a role in a real dialogue. If I find such a person is wholly reserved for family. In the tech world, you have to make a around, I send him or her some online links on anger management. choice between work and life. If you’re running a manufacturing Because we’ve grown organically, people have stayed with us for business, when things are done, you may run the business on autoa long time. I give enough freedom to my team mates to commit pilot. But, you can never really go slow if you’re in the tech field. mistakes and then come back to correct it—the freedom to experi- Things change too fast for you to get complacent. Which is why ment with products and features, that is. It’s okay to make mistakes perfecting work-life balance on a daily basis becomes tough. as long as they are not internalised or repeated. The lessons they So, I look at work-life balance in a weekly context. From Saturlearn from the mistakes they committed are reflected in the new day evening till Monday morning, I don’t check my e-mail at all. products they develop and you can only reap those benefits if peo- If I’ve had a rough day in office, I like to pick up some PG Wodeple stay long enough in the company. house or Roald Dahl before going to bed. At 11pm, I am ready to In the technology industry, most of the money is made when hit the bed and look forward to an early start next morning.
“I love the visceral feeling of striking out my to-dos.”
August 2012 | INC. | 67
I wish I knew then...
Srinivasan H.R., vice chairman, TAKE Solutions When he founded TAKE Solutions in 2001, Srinivasan H.R. was confident he was in the right place at the right time. His experience in supply chain management in Shriram Group, SembCorp Logistics and Temasek Capital had helped him figure out that a business built on providing technology solutions and services for supply chain management held great promise. Today, TAKE Solutions, which has offices across US, Europe, and the Asia Pacific, is raking in profits— revenues for FY2012 were pegged at `718.9 crore. Sri, as he is fondly called, shares some lessons he learnt in the course of his 11-year-old entrepreneurial journey. It was during my stint at SembCorp Logistics, Singapore, when I first realised the immense market potential of the domain knowledge I had gained. But I didn’t seriously think of starting my own company then. It was later when I was at the Shriram Group that my mentor, R. Thyagarajan, chairman of the group, felt I should become an entrepreneur. It was something I had been feeling too and on his prodding I took the plunge in 2001. It was the worst time to start a technology company—the dotcom bubble had burst and many companies were folding up. But, we went ahead. Our gut worked because we made a sizeable profit of `40 lakhs in the second year itself. I knew this was possible because of the team that worked with me. Retaining good technical talent is always a challenge. But we managed to make them feel like owners in the company, and that worked. While other companies battled attrition, we were able to retain people. That was my first and most valuable entrepreneurial lesson—respect and trust your people. We allow our people to grow. In fact, much of TAKE’s leadership comes from within. For example, our current CFO, Sho-
6 8 | INC. | AUGUST 2012
expectations. From then on, I’ve trained myself to trust my instincts even more. Similarly, TAKE’s entry into the Malaysian market through a JV went against my instinct. I knew it wouldn’t be the right thing for us to do. Yet, we went ahead, but three years later, we had to exit Malaysia. Capital is extremely essential for a fast-growing business. Again, my mentor, R. Thyagarajan would always tell me to respect capital. It’s a lesson I learnt well when we had to go out and raise capital. Our first round of funding was an amount of `2 crore. Post that, the only time we Gut Wise Srinivasan H.R. has trained himself to stay raised capital was during our IPO true to his instincts, especially when hiring. in 2007. Ever since then, I have made it a point to be frugal and bana N.S., took a two-year stint in an opera- handle money with extreme responsibility. tional business role in East Asia heading our That’s something I have made sure even our geography. We wanted to demonstrate our employees understand as a core organisacommitment in giving key people opportutional value. We clocked in close to `85 nities to manage entire business units. crore profit in 2012, and are a dividend In fact, I strongly believe in my instincts paying company now. That earns us an when it comes to most business decisions, enormous amount of shareholder trust. but especially when it comes to hiring. It’s —As told to Meenakshi Kumar important to get the right vibe; many of our key people have been chosen like that. A few years back, I hired somebody against my gut feeling. That person didn’t live up to my