Introduction
Becoming an Entrepreneur is the latest fashion. Though it is fashionable, a lot of pre-launch preparation and a continual appraisal for course correction is needed only if the fashionable disposition were to become a norm.
This article tries to present the Nitty-Gritty of good Entrepreneurship.
Farcical vs Factual:
There has been a very popular case study discussed in the Marketing Management Classrooms mostly in MBAs. It is about the infamous advent of Gillette into China in the 1970’s. The venture of Gillette was a complete failure. The company reportedly lost about $One Million those days. The intrigue is not about the quantum of investment that got burnt but the quality of decision making that was behind the burnout.
The failure has been attributed to three major reasons:
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The Chinese did not want to let in a foreign company into their Supply Chain despite the attractive offers of incentivising the inclusion handsomely by Gillette.
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The old habits of reusable traditional blades were preferred by the consumers to the Razors offered by Gillette.
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Chinese men did not have enough facial hair that grew rapid enough for a razor to be used with attractive (for Gillette) frequency.
When the above factors of failure are given a close examination, the first two reasons can be discounted as a miss by inefficient market researchers that possibly did a failed prelaunch fact-finding or due diligence.
However, the third point that Chinese men do not possess enough hair is anybody’s guess. It is baffling to believe that this particular fact was completely ignored or not factored at all in their strategy.
It can be anybody's guess that the amount of brainstorming meetings and subsequent meetings that would have ensued before the advent until the point of investment making. It is quite incredible to even imagine that such a fundamental blunder could ever happen.
It is fallacious to think that this anecdote is one in a lifetime occurrence. This is because the data on the number of startups that fail tells almost the same story. Only 10% of Startups survive to see their 5th year.
One of significant causes for startups to go off market is the wrongly conceived market proposition. Sadly, many startups seem to have churned mismatched products (like the Shaving Razors for the Chinese men) or outdated ones or have seconded in the market while a predecessor has already been languishing in the marketplace and has gained the first-mover advantage.
Farcical assumptions were the guiding lights as against simple facts. Not adopting a real bottom- up approach seems to lead to the implosion of the startup failure.
Excessive Self - Love is Perilous even in Business
The biggest conundrum that needs to be studied at a granular level is the love of the founders for their Products or Services. It becomes perilous when the love is misplaced even in business. The more the assumptions and presumptions on the acceptance of the offering by the target market the more calamitous it is. It is dangerous obviously not only because of the imminent financial issues but also because of the intrinsic denial on the Startup leadership to take a detached but pragmatic approach to the concept of the startup in question.
Gillete’s anecdote is one well known example and the data on the Startups of today and the recent past indicate that there can be scores of such blunders in the name of misplaced love and affiliation.
Aspiring Startup founders must understand that being resilient is one thing and being pragmatic is another. If the resilience is backed by pragmatism then the startup is all set for growth.
Course Correction Commencement:
The beauty of a technology lies in its ability to facilitate scaling. As microprocessors become smaller and smarter, new technologies will always emerge. However, mere Technology does not sell a product. No product sells by itself unless it is an elixir of sorts; an unprecedented panacea of all woes.
When analysed, there are only a handful of startups that have impacted positively such as the e-hailing Companies, Online Merchandisers that have moved first and hence have gone on to capture the imagination of the customers. They are able to be in the business because of their offerings’ proximity to the customers needs. Getting close to the customer to feel the pulse is the bottom-up approach needed.
Continual Course Correction through Risk Management:
The biggest conundrum for entrepreneurs is the “not knowing of what they do not know”. There have been many failed predecessors of that have been unable to resolve the above Conundrum.
Kodak did not know that the technology called Digital Photography is arriving to eliminate its monopolised rule of the Photography film and Camera equipment market. Similarly, Nokia did not foresee the Android reign hence got derailed. Nokia’s coffers did not play the balancing act for the strategic blunder. This important eventuality brought about a learning that Cash is not a Cure-all while good strategies and Strategic Risk Management are.
On the other hand, Infosys’ capping it's revenue from the Y2K Projects to 30% at the sametime asking its executives to look for non-Y2K business for meeting the remaining 70% is a Masterclass in Strategic Risk Management. When others were busy looking into the crowded Y2K space, Infosys cleverly navigated its course by setting off to areas where the focus from other competitors were bound to be lesser due to their engrossment with Y2K Projects. It facilitated lead by leaps and set the course for growth and market capitalisation for Infosys.
Introspecting into the lessons learnt from organisations that have either failed or have successfully negotiated the risks that they encountered during the traverse, it becomes evident that startups should have an accent on Riskds and Risk management without much dilution of the returns if they were not to be jolted by a bolt from the blue.
Focus should be laid in getting the fundamentals set in terms of adding value to the customer by solving at least a major problem of theirs and scaling it up from there while having an eye on profitability.
Footnote:
Business is a confluent amalgamation of various disciplines such a Management, Leadership, Sociology, Commerce, Psychology, Decision Making etc. An optimal balance amongst the above constituents have to be achieved in order to remain sustainable.
Aspiring Entrepreneurs should focus on staying on course while staying relevant and work backwards from thereon. Garnering more customers should be the focus first than mustering more investors by attractive pitching. If the foundational dynamics are strong, growth and investment traction will happen naturally and reverse may not work at all many a times.
Therefore, all aspirants should to get to drawing board to plan first failing which the end of the journey is inevitable. It is because the difference between successful companies and the not so successful one lies in the ability to manage and leverage risks.
About the Author
Prof.(Dr) Narendranath Uppala is an exponent across multiple domains with profound international experience. The areas of expertise are Business, Business Communication, Enterprise-wide Risk Management, Academic Management, Leadership Coaching, Human Capital Development, Linguistics, Sales & Marketing and ERP. He is an International Speaker and speaks often on Business, Leadership, Emotional Intelligence, Transactional Analysis, Communication Strategies, Risk Management, Academic Research on many National and International forums.