Wednesday, December 13, 2006

Entrepreneurship: Envision the Future

Entrepreneurship: Envision the Future ----rajesh jain
The last year has seen a wave of entrepreneurship unleashed in India. This was fuelled partly by the dotcom frenzy and partly by the dramatic increase in venture capital money available in India (investments up 7 fold to USD 700 million in 2000, expected to at least double this year). Yet, knowledge-driven entrepreneurship is relatively new in India and in its first wave. It is not something may have been through, and there aren't many associations (formal or informal) one can turn to.
Entrepreneurship is a lot more than just getting an idea and starting a company. It is the tougher choice, not the easier one. It requires a great deal of sacrifice. The odds of failure are incredibly high (9 out of 10 startups will fail within the first two years). To succeed, one needs an incredible amount of dedication and a generous degree of luck. But this is one journey where the joy is as much in the ride as in reaching the destination.

In this week's series of TechTalks, I will draw upon my experiences in having been an entrepreneur (more failures than successes!) and present some of my learnings. What is presented here is applicable not just if you are starting or running your own company but also where you are working, so you can make the project you are doing more entrepreneurial to be benefit of yourself and your employer.

Perhaps the most important aspect of being an entrepreneur is developing a vision for the future. You need to build an understanding of the business you are in, a mental map of the players, the companies and the trends in the marketplace. This is not something which will happen overnight, but requires an immense amount of reading and thinking.

Very few people actually take the trouble of understanding the industry they are part of. You need to develop this thinking as if your life depends on it (doesn't it?) so you can place developments as they happen in this map, and even anticipate what is going to happen. This envisioning of the future also lets you paint a picture of tomorrow's world to your employees and customers, and enables you to see trends in the industry faster. Write CK Prahalad and Gary Hamel in "Competing for the Future":

Competition for the future is competition to create and dominate emerging opportunities - to stake out new competitive space. Creating the future is more challenging than playing catch up, in that you have to create your own road map. The goal isto develop an independent point of view about tomorrow's opportunities and how to exploit them. Pathbreaking is a lot more rewarding than benchmarking. One doesn't get to the future first by letting someone else blaze the trail.
There is not one future but hundreds. Getting to the future first is not just about outrunning competitors bent on reaching the same prize. It is also about having one's view of what the prize is. There can be as many prizes as runners; imagination is the only limiting factor.In business, as in art, what distinguishes leaders from laggards, and greatness from mediocrity, is the ability to uniquely imagine what could be.

Other people and companies may have more resources, more money, more everything, but what you have as an entrepreneur is your vision, your imagination, your passion. Define what will be, define tomorrow, envision the future. And then make others play according to the rules you set.

'I have an Idea!'
Once you have a vision of tomorrow's world, the next step is to build a plan to create that future. In doing so, Ideas form a very important part. Ideas are like Lego blocks - they can be assembled in many different ways. At the same time, Ideas are not everything. We get Ideas all the time. The problem is that we all get too fascinated with Ideas. In fact, it should be just the other way around. All Ideas are in general good. Its what you make of these Ideas that separates winners from losers, leaders from laggards.
I tend to view Ideas as commodities, to be shared with everyone. Only if you share will you get new inputs, fresh insights from others who may have a different perspective. This is how Ideas get refined. But too many of us tend to keep our Ideas to ourselves, thinking they are the Ultimate Things. Only if you discuss your Ideas with others, only if you present your Ideas to people different from yourself, will you get viewpoints which can add depth to your thinking and provide varying ways of getting to that future. It is important also to expose yourself to various situations which can stimulate thinking - it could be reading different books, meeting people you've never met before, visiting trade shows and conferences, and just reflecting in a different environment on what you've been thinking.

As you sample through different Ideas, what plays an important role in prioritising Ideas, along with your vision for the future, is your Gut. Many times, it is very hard to explain why you feel in a certain way about something. It's a topic on which little is known, but a recent article in the Harvard Business Review by Alden Hayashi sheds some light:

Over the years, management studies have found that executives routinely rely on their intuitions to solve complex problems when logical methods simply won't do. In fact, the consensus is that the higher up on the corporate ladder people climb, the more they'll need well-honed business instincts. In other words, intuition is one of the X factors separating the men from the boys.
Our emotions and feelings might not only be important in our intuitive ability to make good decisions but may actually be essentialTruly inspired decisions seem to require an ability to see similar patterns across disparate fields. A CEO who possesses that ability can craft a perfect strategy by detecting patterns that others either overlook or mistake for random noise.

When you think about Ideas, do not think in the short-term. Keep a time horizon of a few years in mind. You are not trying to get into a 100-metre race, you are running a marathon. (This is what many of the dotcom entrepreneurs forgot as money was spent freely, businesses had no differentiators and the only goal was to cash out in a few months.) In fact, the lesser the money that you have available, the harder you will think about being different from the others, and the more innovative you will actually be.
Ideas need to get converted into two tangibles: Target Markets/Customers and Products/Services.

Target Markets and Customers
Vision of the Future and Ideas are good. But at some stage, we need to convert that into customers who will pay us money. This constitutes the target market. Two excellent references for thinking about high-tech markets are Geoffrey Moore's "Crossing the Chasm" and "Inside the Tornado."
Let's first begin with Moore's definition of what constitutes a market:

a set of actual or potential customers
for a given set of products or services
who have a common set of needs or wants, and
who reference each other when making a buying decision
The last point above is very important and something we tend to forget. Customers (individuals and corporates) tend to talk to others before making a buying decision. This word-of-mouth element is very critical. It is what helped us at IndiaWorld build the readership for Samachar without ever advertising it! Create something that people like, and they will tell others about it. Advertising can only get people once to a website, it is the quality of the site itself and its attractiveness which will get them back again - and again.

More talks about the Technology Adoption Life Cycle, and the different market segments which exist: Innovators (Tech Enthusiasts), Early Adopters (Visionaries), Early Majority (Pragmatists), Late Majority (Conservatives) and Laggards (Skeptics).

The strategies to be followed to target each of these segments is quite different, and in some cases, the opposite of what was used to target the previous group.
Opportunities and markets do not go away, so it is not critical to necessarily be the first to target specific segments. What is important is to do it right. It is very important to understand the mindset of the customer. Many times, we create things and imagine markets where none exist - because we fall in love with our Idea or technology. One has to be realistic. Inertia is one of the single biggest challenges that you will ever encounter - and it can work both ways: for you if you are the incumbent, and against you if you are trying to wean people away or change their habits.

In the case of IndiaWorld, what made a big difference in our early days was my experience of having been in the US. I had lived as an NRI for 4 years, and NRIs were our initial target market. When I had to make the choice between creating a narrow service (say, focused on business) or a broader news, information and entertainment service, I chose the latter despite advice to the contrary from many people I met. My thinking was that a "thali" approach would work well with NRIs who had no more than 5-minutes for India everyday and we wanted to maximise the portion of that time that was spent with us. Only later did we specialise into verticals.

Products and Services
The make-or-break for an entrepreneur is the actual product/service offering. Here again, the package of offerings and the sequence has to be just right. One way to think about products and services is the disruption they can cause. If there is one word which should define what you do, it is Innovation. A good source for thinking about disruptive technologies is Clayton Christensen's "The Innovator's Dilemma".
Christensen discusses disruptive technologies and their impact on markets and companies. Disruptive technologies are "innovations that result in worse product performance, at least in the near-term, and bring to the market a very different value proposition than had been available previously." He goes on:

First, disruptive technologies are simpler and cheaper; they generally promise lower margins, not greater profits. Second, disruptive technologies typically are first commercialized in emerging or insignificant markets. And third, leading firms' most profitable customers generally don't want, and indeed initially, can't use, products based on disruptive technologies. By and large, a disruptive technology is initially embraced by the least profitable customers in a market.

Innovation and Disruptive technology are what you as an entrepreneur must be thinking of. How can you be innovative in what you are doing: how can you 10-10-10 the market: 10x cheaper, 10x faster and 10x more reliable that whatever exists today.
How can you also work on the fringe markets initially so that you can build a credible customer base to allow you to attack the mass-market? To do so, there has to be something disruptive about your technology; incremental enhancements are what the existing players will be doing anyways so you do not stand a chance against them.
Another important point when thinking abourt products and services is to think of, in the words of Geoffrey Moore, is the "Whole Product." Early adopters may go with part solutions because they want the latest and newest gizmo, but the mass market wants to improve productivity, it wants a complete solution. The whole product is defined as "the minimum set of products and services necessary to ensure that the target customer will achieve his or her compelling reason to buy." This also means that the product must satisfy all the requirements of at least one niche market segment, rather than have everything for nobody.

Going back to our IndiaWorld example, when we launched as a cricket site in 1997, we made sure it had everything that a cricket fan(atic) would ever want: daily news, live coverage of matches, statistics, scorecards of all Tests and one-day matches, records, interactive queries, and a plethora of cross-links. It ensured that the site was a complete package, a "whole product" - enough to ensure that the visitor would came back for more!

Money and Other Matters
This column is a collection of some random thoughts related to entrepreneurship.
One of the things uppermost in the mind of an entrepreneur is how to raise capital. Luckily, in India today, there is no shortage of capital. The best way to raise capital for your business is by being profitable. Having less money can make you think harder - not just about using the available resources better, but also coming up with out-of-the-box ideas and focusing hard on the things that matter. Also, control your costs from day one. Even if you have raised capital from outside, treat it as if your own hard-earned cash.

As an entrepreneur, what can be your biggest strength (especially in selling) is your "infectious enthusiasm." People need to see your passion for the business: that is what can help you stand apart, and bring it in that extra element of luck which a business needs. For entrepreneurs, there is no separation of personal and business lives. Life is business, and vice-versa. That is the kind of commitment which will needed from you and your team to make the venture successful.

When you are building a business, do not think of exits. You should only be building a business if you believe enough in it to run it for the rest of your life. If an opportunity for an exit comes, "think from the head, and not from the heart." Making money has to be an important objective, but if you run after money, it will not come. Build the business as a labour of love. Make it the best thing you've ever done. No half-measures, no short-cuts. Your passion must reflect in every aspect of the business. And then, leave the rest to God.

What the Nasdaq and BSE Sensex do is irrelevant to your business. Technology makes it so much easy for us to be aware of what is happening worldwide. Awareness is good, and in fact important. But do not become obsessed with the markets. Focus on your business. Even if you want to list on the public markets, it is an event which is likely to three or more years away, and what the market will be then you do not know (or care about) at this point of time.

Make sure you have good legal advice from the start. You will need to sign agreements, do partnerships, and so on. Some of the things you do in the early stages of your business may come back to haunt you at a later point of time. So, be careful and seek good advice at every stage. The investment will be well worth it. In the same vein, stay away from "marriages of convenience" - have confidence in your own abilities: if you cannot make it happen, no one else can.
Take some time off periodically - not necessarily vacation, but some time when you can think on what you are doing. A typical day in the life of an entrepreneur is very reactive: there are so many unplanned things which happen, so many fires to be fought daily. It does not give much time to think about what you are doing. That is why it is important to, firstly, have a deep understanding of the market space in which you are operating so you can make decisions quickly, and, secondly, to take time once in a while to reflect on the changes which are taking place. You can also use this time to expose yourself to different situations, so there is new learning which takes place. Remember: you are the eyes and ears of your company, so everyone looks at you for the vision and direction.

You also need to accept that you cannot do everything. This means being open to ideas and suggestions from others. Listen to people and then make up your mind. Also, make sure you manage the relationships with your employees, customers, partners and vendors well. Being a small company gives you the advantage of adding in that personal touch - which can make all the difference.

In taking risks (and entrepreneurship is about making bets), you should be prepared to fail. Failure is the best teacher, as long as you can learn. Imagine and be aware of the worst case scenario. Know when to call it quits. No one creates a business to fail, but in the event that your business does fail, get ready to start all over again: make a clean break from the past, and focus on the future. There is always some good which comes out of everything.

In today's India, ideas and capital are not in short supply. If there is a shortage of anything, it is innovative, disruptive technologies from people who understand the marketplace and are willing to think deeply about the future. Best of Luck!

India News ( - Tech Samachar

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