Evolving from the First Gen Business - Lessons for Entrepreneurs and Intrapreneurs
On May 14, we had an engaging webinar by Mr Devendra Surana, a leading Hyderabad based entrepreneur. Mr Surana is the CEO of Bhagyanagar India Ltd and an alumnus of IIM Bangalore and runs a charitable hospital. Mr Surana shared his insights and perspectives on what it means to be an entrepreneur and on what goes into building and running a successful business. The session was moderated by our R Prasad and Sudhakar Rao.
The webinar started off with a short presentation by Mr Surana sharing his experiences and key learnings. This was followed by a Q&A session.
Entitlement vs responsibility
Mr Surana was born in an affluent family. He recalled that as a child, he never had to ask for anything. Everything was given to him on a plate. But as he grew older, he realized that he had to move away from an entitlement mindset to a responsibility mindset. Yes. He was getting everything he wanted. But going forward, he would have to leave entitlement behind, discharge his responsibilities well and take good care of his stakeholders.
Celebrate failure
When Mr Surana joined his family business in 1988, it was a thriving business. But in 10 years, all the revenues he had inherited from his father had gone. Fortunately, he had anticipated this and launched several new projects such as fibre optics and telecom equipment. Some of them succeeded and created new revenue streams for the business, while others failed. Read More
Multitasking is the enemy of great work
Many entrepreneurs think it is their birth right to multitask. While there may be more than one idea on the drawing board, it is important to be focused. At a given point of time, if we try to do many things, our productivity will fall. In this context, Mr Surana pointed out that games on mobile phones are the biggest productivity killer today.
Work on the business vs work for the business
Working for the business means following instructions and maintaining the status quo. Most people get stuck in routine tasks. But the job of an entrepreneur is to improve the business by thinking of new products and new ways of running the business and improving the efficiency and productivity in the long run. We have to work on the business to remain competitive. Read More
Delegation
Leaders cannot succeed if they do not delegate. One person alone cannot build a business. We need an entire team. But as we all know from practical experience, delegation is easier said than done. It is difficult for leaders to give up control but unless they do so, the business will not grow.
Mr Surana offered useful tips on how to practice delegation. It is important not to interfere even when there are some problems or mistakes are made or if some losses are incurred. If we intervene, delegation will fail and decisions will be pushed back to us.
On occasions, the team may approach us for an important decision. Then we should decide immediately without procrastination and explain the rationale.
Mr Surana has learnt the art of delegation from well-known people like Mr Warren Buffett and Mr Anil Agarwal. Warren Buffet’s to do list has only 3 items. Similarly, all of us should trim our to do list. Mr Anil Agarwal of Vedanta believes in delegating with the power of ignorance. If we do not ask for too many details, the team will feel empowered. This way Mr Agrawal can concentrate on 5% of the activities he thinks are critical to the success of the business.
Mr Surana emphasised that the biggest constraint for the growth of a business is not people or money, but the bandwidth of the person at the top. That bandwidth has to be freed up by delegation.
Creating value for customers
It is important to keep creating value for customers. Mr Surana uses a framework called QCDS (Quality, Cost, Delivery, Service). Sometimes, customers may not be prepared to pay the premium we expect. But still, we should go ahead and create value. The business will recover multiple times the costs incurred in the long run.
Mr Surana added that we have to go beyond customer satisfaction, customer delight and customer happiness to making the customer lazy. Even before customers ask for something, we should be able to give it to them. Value must be created not only for customers but also for other stakeholders such as employees and the community.
Q&A
On Indian entrepreneurs
Prasad started the Q&A section with an intriguing question. We currently have one of the highest rates of new business formation and also one of the highest rates of entrepreneurs closing shop. Why is that so?
Mr Surana responded that we Indians are entrepreneurial at heart. We have a high intellect and can think through a new idea and a potential business model quickly. We have the jugaad mindset which helps us to improvise and accumulate resources. But on the flip side we are not good at putting in place systems. That is probably why many businesses run into problems at some point of time. As Mr Surana put it, a good entrepreneur has to be an unlikely combination of a poet who can dream and a baniya who can save the last penny.
The pace of change today is rapid and the window to tap an opportunity has become short. That is why creation and closure of businesses has become an integral part of the corporate landscape. This creative destruction cannot be avoided.
Responding to a question later, Mr Surana emphasized that when jugaad leads to a better way of doing business, it should be institutionalized so that the knowledge is shared across the organization. This will also reduce the impact of attrition.
Prasad raised another interesting question. Many Indians feel there are good opportunities to start a business. They also seem to have the capabilities. But most do not start a business because of the fear of failure.
Mr Surana responded (and recalled the point he had made earlier in the webinar) that as a society, we do not have the concept of celebrating failure. Failure is a big stigma in our society. If a business fails, friends and family members look down upon us. Unless this mindset changes, people will be reluctant to become entrepreneurs.
One needs passion to give up a cushy job and start a new business. Ironically enough, someone who struggles to find a job may have a strong incentive to become an entrepreneur. It is when we are fighting with our backs to the wall, that our true entrepreneurial qualities come to the forefront.
Some entrepreneurs are born while other are made. If one is part of a business family, it is easier to become an entrepreneur. Business is happening all around you and even at the dinner table! So, the kind of apprenticeship and mentoring that can be obtained from a very young age is valuable. Of course, even if one is not born into a business family, these things can be learnt later in life. And whatever be the situation, entrepreneurship involves moving forward amidst uncertainty with all the data needed to make investment decisions not being available upfront.
On joining a family business
These days, many students are hesitant about joining their family business after completing their professional education. This is a case of “the grass is greener on the other side of the fence”. In many cases, it is a great idea to join the family business. The risk is less as there is no need to start from scratch. There is an existing platform on which we can build.
In any family business, if there is a good understanding between the present and earlier generations, each appreciating the strengths of the other, a lot can be achieved. (This point came up in the earlier webinar by Prof V Raghunathan.) The previous generation has the experience and put in the hard work while the new generation is bubbling with ideas.
Young MBAs need not dismiss their family business as boring and traditional. They can always try to reengineer the business, scale it or even flip it. They can introduce some of the best practices of ecommerce, to take an example.
In Mr Surana’s case, his family exposed him to the business from an early age. Mr Surana has encouraged his son to do an internship in the factory. These are practical ways of helping the new generation to understand the family business better and hopefully nudge them to join the business. Mr Surana again emphasised that the new generation should not think they are entitled to inherit the family business. Rather, it is their responsibility to take the business to the next level.
On financing new businesses
In general, it is not easy to get bank funds for new businesses. They have to depend initially on friends, family and venture capital. Banks will come much later, once the business is ready to scale. The general rule is that when cash flows are uncertain, equity is preferable and as cash flows become more certain, more debt can be used. It is also preferable to work with investors who have a longer time horizon and who will also invest time in mentoring the entrepreneur.
On doing business during the pandemic
Exchange of ideas is an integral part of growing and running a business. For this, interaction with people is needed. The pandemic has made this more difficult. This situation may continue for another 6-12 months. On the other hand, the pandemic has encouraged new businesses that are aligned with the needs of the day like social distancing and ecommerce.
On encouraging intrapreneurship (entrepeneurial thinking within organizations)
Indians are entrepreneurial by nature. In large organizations, to encourage employees at lower levels to act like entrepreneurs, we must give up control and delegate more. We should not ask too many questions if something goes wrong. We must celebrate failure.
Top executives in organizations should model the right behaviours when it comes to innovation and risk taking. They must encourage and institutionalize the right kind of jugaad. Cutting comers is not the true spirit of jugaad. Getting more done with less resources is.
Corporate executives should read about entrepreneurs and watch Ted videos to learn from their experiences. Even one nugget can make a big difference to the business.
What can MBA programs do to encourage entrepreneurship?
Mr Surana started off by saying the real role of a B School is not to teach theory but to teach students “how to learn to learn”. B Schools should impart a clear message to students that they should not be afraid of learning new things.
Entrepreneurship cannot be taught though the key tenets and principles can be explained in the classroom. What B Schools can do is to inspire students to become entrepreneurs through projects and direct interactions with great entrepreneurs. Case studies on entrepreneurs can also be a powerful way of inspiring students to become entrepreneurs.
On enabling women entrepreneurs
Responding to a question, Mr Surana mentioned that women entrepreneurs are second to none. They usually have a higher emotional intelligence compared to their male counterparts. They understand how people exactly feel. In business, EQ is far more important than IQ. What is holding back women are issues like safety. They are not as mobile as men and sometimes find it difficult to travel across the country. Moreover, in a male dominated society like India, many men still have difficulty in accepting a woman boss.
Concluding notes
R Prasad explained that our attempt is to dovetail the ICFAI Online MBA program with the journey of building an enterprise and launching innovations. A project in the fourth semester aims at helping students showcase all that they have learnt. Our online MBA program leverages thousands of micro and nano cases, to trigger the imagination of students. And as Prasad emphasised, imagination is more important than mere knowledge.
We thank Dr. Vedpuriswar for bringing out the highlights in the form of this note
