An evening with Dr BVR Mohan Reddy

On August 6th, we had a very insightful session “Reflections of a Technology Entrepreneur” by Dr BVR Mohan Reddy, the founder of Cyient, earlier known as Infotech enterprises.

About Dr BVR Reddy

Dr Reddy did his graduation at JNTU Kakinada and then went on to do his masters at IIT Kanpur and University of Michigan. He also holds four honorary doctorates. Dr Reddy was the NASSCOM chairman during 2015-16 and the chairman of CII (southern region) during 2008- 2009. He is currently the CII Education council chairman. He is a founding director of T Hub, a leading incubation centre in the country. Dr Reddy is also on the boards of IIT Hyderabad, IIT Roorkee and Administrative Staff College of India. He is on the Local Advisory Board of the University of Michigan. Dr Reddy received the Padmashri in 2017 for his contribution to Trade and Industry. Dr Reddy has also received the distinguished Leadership Award from the American Society of Mechanical Engineers and lifetime achievement awards from HYSEA and HMA. Dr Reddy is also a distinguished alumnus of IIT Kanpur.

Introduction

Dr Reddy started off on a note of satisfaction that even after 30 years his company Cyient is profitable and growing steadily. In 2020-21, Cyient generated about Rs 4000 crores of revenue and PAT of about Rs 400 crores. The company has 300 customers and has 12,000 associates. That is tremendous progress considering that 30 years back the company started at Dr Reddy’s home with four people sitting at the dining table. Today, Cyient is doing work in 47 different locations employing people of 27 nationalities. Based on his experience at Cyient, Dr Reddy then went on to explain what the building blocks of a sustainable organisation are.

Exponential acceleration in technology

Dr Reddy set the context by talking about the exponential acceleration in technology. Computer connectivity along with fundamental changes such as next generation genomics, biotech, advanced materials, automation and energy have transformed the business landscape altogether.

Computers and storage have progressed a lot in the last few decades. The famous Moore’s law predicted that processing power would double every 18 months, leading to lower costs and smaller size of the chip. The actual doubling has happened even faster than predicted by Moore’s law.

When it comes to the power of connectivity, it is no longer people talking to each other. It is also about things talking to each other and things talking to people. That is what IOT is all about. Today there are about seven billion people in the world of whom some 5 billion are connected. But there are many more things than human beings. So, the future potential of connectivity is indeed tremendous.

God gave us five senses: feel, see, hear, smell and taste. Computers today can do all these things.

The power of sensors has increased tremendously as they have become miniaturised and cheaper. Sensors today can collect all kinds of information. This information if properly mined can enable us to take real time decisions. That is why data is called the new oil.

Dr Reddy then spoke about how these new technologies offer exciting prospects for the benefit of humanity. Human imagination is the only limitation to applying these innovative technologies.

Dr Reddy gave the example of agriculture. Who would have thought 30 years back that technology can transform agriculture? Today, using drones, some 64 distinct characteristics covering crops, soil, ambient conditions etc can be studied. These drones can take pictures of a large farm and identify where the pests are located. Then another drone can go to spray pesticide exactly where there are pests. This ensures that the farmer does not waste too much money spraying pesticides on the whole farm.

To take another example, thanks to technology, individual learning paths can be created. This will make learning more inclusive and accessible to even the ordinary and average students.

Dr Reddy spoke about the exponential growth of tech companies. Today when it comes to market cap, of the top 10 companies, 8 are tech companies, the exceptions being Saudi Aramco and Berkshire Hathaway.

Then Dr Reddy spoke about the rise of technology disruptors. The most successful companies today have disrupted traditional business models. Technology provides a path for new ideas to bubble up. Netflix did not exist till recently nor did ecommerce companies. Or take the case of Tesla whose concept of car is vastly different from the traditional IC engine-based vehicles. Tesla is a platform for mobility. Tesla cars do not have an IC engine or gears and other mechanical movements.

Dr Reddy also pointed out that thanks to acceleration in technology, the average life span of companies is reducing. In 1915, it was 90 years. After about 25-30 years, it became 45. By the 1970s it was about 26 years and by the late 1990s, this it was about 19 years. Currently, the average life span is only 14 years.

How do we differentiate ourselves?

Dr Reddy mentioned that there is a need for every company to differentiate and keep doing whatever is required to maintain the differentiation. Cyient’s original vision was to provide technology services. But over time, Cyient has moved away from providing services to building products and offering solutions. If the earlier vision was to design, now it is to design and build and offer Industry 4.0 solutions. Cyient today participates across the value chain: innovate, design, engineer, build and support. The software defined radio is a good example. Intellicyient offers 6 kinds of solutions ranging from Asset Management to Smart Factories.

Best Practices at Cyient

Dr Reddy then spoke about Cyient’s PPT strategy. The customer is always at the centre of the triangle. The Ps stand for people, product and process. T stands for technology, tools and training. Dr Reddy mentioned that differentiation comes from people. Today’s technologies are not asset heavy. But we need people to exploit their full potential.

Dr Reddy also emphasized the importance of knowledge management. it is okay to make mistakes once. But we should not repeat the same mistakes. This is where knowledge management comes in.

Cyient has also deployed the latest technology within the enterprise. The company has put in place a robust, flexible, modular, global technology infrastructure.

All employees in Cyient are called associates. They are inspired by the vision of designing together for tomorrow. What this means is that people get a chance to develop futuristic products. At the same time, it is important to leverage the whole ecosystem which includes employees, suppliers, customers, and partners.

Cyient believes in getting the right people with right skills and values and providing them access to on demand learning. The strategy is to create proactively pools of people with the required digital skills to provide solutions to customers. Cyient emphasises its Values First principle: F - fairness, I – integrity, R – respect, S - sincerity, T- transparency.

Cyient also understands the importance of building the leadership pipeline. The company emphasizes development of leaders from within.

Cyient also values diversity and inclusion. Dr Reddy believes that a 50- 50 gender mix is desirable for prosperity within the company, society, and the nation.

Continuous innovation

Cyient has come up with the concept of the Idea Tree. In every offshore development centre, one of the walls is painted as the Idea Tree.

Employees are given post it slips. They can write their ideas on the slips and paste them on the wall. The leaves are collected every week and reviewed by senior leaders. If the ideas are promising, they are taken to the next stage and the colour changes. Otherwise, the mail is sent to the associate explaining why the idea cannot be taken forward. Thanks to the Idea Tree, many innovative ideas have been monetised.

Dr Reddy explained that his company often surprises customers with the level of quality.

Innovation has also become a part of the company’s DNA. Open innovation, corporate venturing, M&A are some of the strategies employed by Cyient to tap into new ideas.

Dr Reddy gave the example an aircraft engine manufacturer. About 22% of the innovation and 25% of the design have been enabled by Cyient engineers. Working with the customer, Cyient has developed 12 co- patents. Thanks to the work of Cyient, the client has benefited to the extent of $75 million over 6 years.

Customer centricity

Dr Reddy explains to entry level engineers that it is not the company which pays their salary but the customer. That is why loyalty and commitment to the customer are so important. Cyient takes client satisfaction very seriously. It collects feedback from customers 3 times. First feedback is collected on how a project has been executed and then periodically the progress is monitored using ongoing feedback. In addition, external consultants do an annual survey where some 1000 people are interviewed and detailed information is collected about what is going on and where there is scope for improvement.

A customer centric culture means it is important to understand the strategy of the customers and their spend priorities and accordingly improve the value proposition for the customer. Dr Reddy gave the example of a customer with whom Cyient has a 21-year-old relationship. The client has given business worth $ 1.4 billion so far. This client could have gone to any other vendor but it has chosen to work with Cyient. To be in this kind of a privileged situation, it's important to demonstrate the highest levels of customer centricity.

Deciding where to play

Every company must be clear about the space it wants to occupy. Cyient uses two criteria to decide where to play. The first is winnability which essentially means the current scale of the offering and the strength of offering. The second is attractiveness of the business which means the size and growth.

Six key competencies for Cyient leaders

• Shaping the future
• Champion talent development
• Lead change
• Be ambitious for excellence
• Drive as an entrepreneur
• Build collaborative partnerships.

These competencies are an integral part of leadership development and talent reviews at Cyient. Dr Reddy feels that the last three competencies, excellence, entrepreneurial mindset and collaboration are very important today.

Q&A session

The Q&A session was moderated by Prof R Prasad and Prof Sudhakar Rao.

On how he became an entrepreneur

Dr Reddy recalled that once in Class 7, when he scored low marks, his mother expressed great concern, severely rebuked him, and even mentioned that she would send him back to the village for farming. His mother pointed out that if his sister (now a medical doctor) was the first student in her class, why not he? This had a very positive impact on Dr Reddy and it became the turning point in his life. He became an excellent student from that point onwards.

What motivated Dr Reddy to start thinking about entrepreneurship was his reflection on the purpose of his life. We have no control over when we are born or when we die but between our birth and death, we have a lot of scope to contribute. Dr Reddy asked himself what his contribution could be and he began to look at entrepreneurship as a way of contributing to the world.

On how Cyient has progressed along the value chain

Cyient started off with a vision of providing engineering services to the global market. But in the early 90s, India had a poor image and was even considered to be a country of snake charmers. The country also had a poor reputation for IP protection. As a result, Cyient decided to operate at the lower end of the market and began to offer digitisation services. Operating at the lower end of the market, it was difficult to scale due to the heavy dependence on manual operations. But still Cyient was able to put in place process innovation and ensure 99.5% to 99.8% accuracy in the maps it prepared compared to the SLA of 98%. The clients were very impressed.

Then, by combining process innovation and engineering capabilities, Cyient started to offer engineering services by the early 2000s. But the company did not stop with engineering services and decided to enter manufacturing. Cyient now designs, manufactures and supports various products.

Dr Reddy mentioned that it is important to continuously excel to improve. Companies have to learn to be different from the past. They have to be ahead of the curve. They cannot afford to continue to bask in the past glory. Looking at the past is like looking at the rear view mirror. That can only be for a small proportion of the time. To build a sustainable organization, we must look at the future.

On digital transformation.

Digital transformation is today's reality. All companies must create a digital road map. They cannot wait too long to get started. The good thing about digital investments is that they can produce very good outcomes. The ROI is very high.

More broadly speaking, Dr Reddy felt that everybody today must become more efficient. For example, farmers must improve the use of pesticides. Digital technologies are helping them to reduce the consumption of pesticides by 60%. Pesticide companies are also realising that they have to proactively help farmers to optimize their pesticide consumption.

Can India produce a company like Facebook or Google?

Dr Reddy expressed his optimism about India's future. He believes that India has the potential to produce world class companies. However, they may be different from what Facebook or Google does. The fact that Indian CEOs like Sundar Pichai and Satya Nadella have contributed so much to the tech industry means that Indians have the potential to create value. Of course, an ecosystem is needed for people to contribute but overall we should be optimistic.

On identifying the right technology to bet on

Dr Reddy had a very simple piece of advice. Entrepreneurs should not look at a technology and then search for a problem to solve. They must look for a real problem. Then they should bring in the best technology to solve that problem. Everybody cannot be an Apple which tried to figure out what customers might accept without doing market research. It is usually a better idea to understand what customers are looking for and then give them the product or service. Of course, having understood the problem, we must bring a distinctively unique solution so that we can capture the market. Another important point is the addressable market. If a product can only serve our locality or our city, it is not enough. On the other hand, if the product can serve the whole world, that means there is great potential. We should come up with a differentiated solution but keep refining it on an ongoing basis.

Lessons from the West

Western countries have provided enormous support to employees to help them build new skills. The government also has made heavy investments in various technologies. The U.S. government for example has invested in various defence technologies. One of Cyient’s important clients allows employees to get reimbursed without any limits for courses they do.

In this context, Dr Reddy mentioned that while it is important to invest in R&D, it should not be research for the sake of research. Dr Reddy sits on the boards of several leading academic institutions. His message to them is that research should be beneficial to mankind.

Technological obsolescence

All technologies will become obsolete at some point of time because something new will come up. So we must keep an eye on how new technologies are evolving. Then we should integrate them with our product or service offerings. We should not lag behind on the curve but try to lead. We should also leverage open innovation in a big way. It is impossible for us to know everything. So we must keep our minds open and look outside for more and more ideas. Open innovation and collaboration are the way to go.

On the role of marketing

Marketing comes only much later. The key issue for any business is value creation. The key question to address is: What is the value for the customer? An entrepreneur should ask how the customer will recoup the investments in the service or the product.

A great idea by itself cannot attract customers. Entrepreneurs should understand the customer’s pain points. They must try to appreciate the customer’s value proposition and then create value accordingly.

On failure

Dr Reddy mentioned that we learn out of failure and it is important that we should celebrate learning from failure. Only 5% of entrepreneurial ventures become really successful. More than 70% fail. So there is no need to be disappointed if someone fails. The very pursuit of entrepreneurship builds professionalism and creates a lot of knowledge. It is unfortunate that Indian culture does not tolerate failure. We tend to look down upon failure. That is probably why entrepreneurship has not developed in India as much as it should have. Only when we learn from failures and celebrate failures we become an entrepreneurial nation.

On the role of higher education

Student centric experiential learning is clearly the way forward. Today the students’ attention span is very limited. Students also have various options to learn 24/7. So teachers have a different set of responsibilities compared to the past.

One idea being explored is the flip classroom. What was done in the class earlier is done by students at home. And what was done by the students at home is being done in the classroom today. Another concept is fractal learning. Instead of offering 4 credit courses, students should have the option of choosing a one credit module and then move on incrementally to complete the remaining credits depending on their interest.

It's also important for educators to embrace a holistic approach. Technologies keep changing. Social issues and legal issues are also becoming more important. Consider an accident made by a driverless car. Who should be held responsible? is it the person who owns the car? Or is it the person who has designed the car and so on? So an interdisciplinary approach has become extremely important.

Another point which Dr Reddy emphasized is that knowledge and skills should not be considered in isolation. They go together hand in hand. Simply reading, memorising and reproducing something in the exam is not enough. What is important is the ability to apply that knowledge. So internships and apprenticeships are extremely important.

Online education

Online education has come to stay. However, online education by itself is not enough. The most likely scenario is blended learning and some form of hybrid education. The teacher will continue to have an important role to play at least for the foreseeable future. But we cannot go back to the Gurukul days when the teacher was at the centre and was the sole repository of knowledge. Today, teachers must create value in the classes they take. They must enrich the students’ learning experience. They must promote interactive learning. They should have modules which run for not more than 12 minutes at a time. They should have regular Q&A sessions during the class. They must encourage continuous peer learning and evaluation.

On ICFAI’s Online MBA

Prof Prasad explained that student centricity has become extremely important today. Students have high expectations but do not have the time or attention span. The learning material must be interesting. If the first minute of the module is not interesting, they will not move on to the next minute. Rather they will withdraw and do some last-minute preparation before the examination. The ICFAI Online MBA believes in small learning nuggets ranging from 2 minutes to 15 minutes. These micro learning modules consist of a story, concept, and activities to promote application orientation to the extent possible. The curriculum promotes personalization and encourages working executives to apply what is taught in the classroom, in their own context.

On dealing with the pandemic

The pandemic came out of the blue and was completely unanticipated. Some companies have fared well while others have done badly. The companies which have done badly have not done so because of poor leadership. It is entirely because of the circumstances. Consider travel and tourism. No amount of leadership could have protected the revenues of these industries during the pandemic. The tech companies successfully shifted to work from home and this has resulted in much higher output than working from office. However, each company must have its own strategy. It is important to emphasize both life and livelihood. We should minimise the stress and be optimistic that the end will come soon. The situation is still grim. We know from experience that pandemics do not die down in one shot. They come in waves. But at the end of it, we will come out successfully. In general, it would be correct to say that those companies which are sensitive to the environment are doing better.

We thank Dr. Vedpuriswar for bringing out the highlights in the form of this note