Tuesday, October 7, 2008

my beautifully articulated vision statement for my company, startups

my friend vasanth, sent me this quote from Aldous Huxley which he found in 'small is beautiful'. i have shamelessly borrowed it as the vision statement for my company, startups. thank you vasanth.

the quote is : startups is involved with 'ordinary people doing profitable and intrinsically significant work, of helping men and women to achieve independence from bosses, so that they may become their own employers...'

many people have asked me what is my biz model, and i say my biz model is to facilitate your biz model. youngsters come to me saying they have a damn good idea, they want to be mentored into building a biz around it but they have no resources to pay me for mentoring. and i tell them i dont take any fee. because at this stage of my life i have the luxury of working with entrepreneurs of all shapes, sizes, and hues, without worrying about money because my driving force is to create a mass movement in entrepreneurship in india. with 1.2 billion people, our hedgehog concept is that every indian should be an entrepreneur, creating his own microsoft, britannia, body shop, landmark, zee and disney, as opposed to being employed in them.

so when potential entrepreneurs want me to mentor them in cleaning up their idea, writing a biz plan, structuring their company, evolving an understanding of who they are and where they want to go, if my involvement is episodic, i dont charge at all. if they want me to work with their teams on a sustained basis, commiting x no of hours of physical presence per week, then i charge my fee as a 2.5% -5% stake in the company. never so far have i taken cash upfront as a consulting fee. i work with 24 clients today in different verticals, different stages of incubation, different capex requirement, and the only thing common to all of them is i am available as a resource for them in whatever manner they need my help.

my dream is to make india become that famous 'land of opportunity'.

Wednesday, September 17, 2008

biz plan contd

Section VI financials :
many entrepreneurs tell me that this is where they come to a grinding halt. the problems they face are two fold: one they are not finance guys, hence have no clue how to put this section together ; two, even if they have a smattering of finance, they find it difficult to project sales, costs and bottomline over a five year period.

Gone are the days when banks insisted on a 1+2 year projection; most funding agencies like to see five year projections of P&L, cash flow, capital deployment and return on capital deployed. their reasoning is very simple. all of them, without exception, like to exit within 3 years with minimum 30% return. very rarely do VC's hold on to their investment beyond three years. There has to be an overwhelming reason for them to do so.

if you have a clear idea of your biz concept, especially if you know for sure what is your target segment, extrapolating that from the universe is not a big deal. there are any number of MR agencies that have conducted demographic surveys and that data is available.

if you have clarity on how you want to go about creating your biz product and reaching it to the market place, then working out production and operational costs should not be rocket science.

if you have estimated your resources correctly, it should be easy to identify what your total capital outlay is, out of that how much are you bringing to the table and the balance that you need to raise. it is absolutely imperative in today's context that a certain percentage of the capital required is brought by the promoter himself. gone are the days of only 'sweat equity' that the promoter brought to the table either by virtue of his experience or knowledge. he cannot hope to attract external funding unless he has invested a sizeable amount himself.

the size of your biz determines whether you are going the debt route or the equity route. interestingly, if your capital requirement is large, VC's are your best bet as VC's will not look at anything less than a $50 million requirement. Larger the cap required, better your chances are in attracting VC's into your biz.

Irrespective of who is the funding agency, what everyone looks for in the biz plan are :
the biz idea
the management
the financials
and the logic in the thought and implementation process.

i have seen biz plans where the capex required is about 200000 INR, but the financials project breakeven after 2 years! i have seen biz plans which inflate topline so irrationally that even the promoter has a hard time lying consistently about it! I have seen biz plans which list risks so perfunctorily, it is almost as if they are listing them becasue they have to fill up the risks column!
the logical flow in the biz plan, from concept to implementation, is its biggest asset and nowhere else does it reflect so blatantly as in the financials.

Monday, August 18, 2008

Section V contd

Particularly since the dotcom bust, funding agencies have started to scrutinise the management team. The first to come under the scanner are the promoters. If the company is promoted by a single entrepreneur, the upside of that is that the first round of due diligence has to be around him, his socio-cultural-economic background, the reasons for which he is planning to embark on this entrepreneurial journey, what are his psychological and economic drivers, and most important, is he planning to become an entreprenuer for the right reasons (there are people who become entrepreneurs when they are pink-slipped by their organizations, do not get suitable job offers post leaving and then take on something temporarily till such time a job of their liking comes their way. these are the wrong reasons).

the downside of a single promoter is that he has to hire the variety of skill-sets that are required to build the organization. and as we have seen earlier, most entrepreneurs make mistakes in this. they hire people who are available, not because they are the right people. when CEO's tell me that people are their biggest assets, i tell them: you are wrong; right people are your biggest assets, wrong people are your epitaph.

when there are plural promoters, the upside is that amongst the promoters themselves there is a variety of skill-sets that could be complementary and augur well for the organization. but i must caution all of you on one aspect. sometimes people come together to found companies because they are good friends or they worked well together in their previous company, or because they were all fired together and they became partners in adversity. whilst being good friends or knowing each other may be good, it does not guarantee a good bench-mark in co-founding. i have known companies that were promoted by best buddies and fell by the wayside within one year of operation because they discovered that being friends and being co-founders were two separate ball-games and the presence of one did not underwrite success in the other.

irrespective of whether it is one promoter or multiple promoters, one unassailable fact is that when you start putting the management team together, it is very important to get it right. the first who... and then what prinicple has to be followed religiously. you need people on board who are powered by the biz idea, who are energised by the other members of the team, who are invigorated by the thought of building a biz, brick by brick.

you need people who board the bus because they are attracted to the people already on the bus. where the bus is going is irrelevant, who is on the bus is most important. if people board the bus because they are attracted by the destination, mid-way through, because of changes in the eco-system if the direction has to be changed, they will not only be most unhappy, they will not let you change the direction. which could mean the death knell for the organization.

sorry for the break!

i have been traveling, on work, for pleasure, i have been in the midst of writing a learn-it-yourself-guide to entrepreneurship, so blogging has taken a back seat. many of my students have been entreating me to resume, so here i am. we will continue with how to write the biz plan, watch out for the blog by the end of the day.cheers.

Wednesday, May 28, 2008

biz plan contd

Section V Management team

it is very important to put together a good management team in place, right from the word go. most entrepreneurs tend to hire people with lesser competencies simply because they are available at a lesser price. what then happens is that when the organization grows and the people who have been hired cannot grow with it, two scenarios are likely :-
either they have to be left by the wayside in which case all the time, money and knowledge invested in them by the entrepreneur simply goes waste; or the fact that they fail to grow with the organization can actually stop the organization itself from growing. both are unhappy scenarios for the entrepreneur.

the second show stopper is when the entrepreneur refuses to delegate to people with better competencies than himself. most entrepreneurs tend to be very possessive about their ideas and their biggest failing is that they believe that firstly they are as good at implementing as they are at ideating, which of course is a big blunder. secondly they believe that since it is their idea, nobody can do it better than them. which is an even bigger blunder.

successful entrepreneurs recognise early on that they cannot be good at everything, understand what they are good at and stick to doing only those jobs they are good at, and hire competent people to execute those jobs that they are good at.

this is how an entrepreneur build his team. i have heard entrepreneurs lament often enough that they cannot attract talent as startups dont have brand equity. this is true. but what is also true is startups, more than others, need evangelists in the team, people who believe in the biz as much as the entrepreneur does. obviously in a startup you cannot attract talent by paying more because in any case you are strapped for cash; nor can you attract on account of your name or credibilty, because those are yet to be built. so the only way you can entice people to work with you is to look for such people who are moved by ideas, who are willing to give up conventional comfort for the sake of a tremendous idea. ideas should not only move businesses, they should move people too, all stakeholders infact, customers, employees and investors.

as i keep saying, ideas are the starting point of all businesses.

Monday, May 5, 2008

biz plan, contd

Section IV Operations
in this section, it is important to describe in detail how you propose to create the product and reach it to your customer. if it has to be manufactured, you will have to mention location of factory, why you chose that location over other locations, - eg, is it cost beneficial or is it convenient from raw material perspective,- whatever your reason for choosing that particular location.

Eg George Lucas made Star Wars a profitable enterprise because he shot only a small part of the film in the US and bulk of the shooting was in UK, using local crew. at that time it was standard practice for Holloywood to move its entire crew from US to locations where they were shooting. and that used to add to the humungous cost of production.

Lucas did a number of inventive things to keep costs low because he was forced to. after nearly every Hollywood studio had turned him down, at the Cannes festival, Lucas had approached 20th century fox who agreed to fund the venture provided Lucas shot within the prescribed budget. Lucas agreed as he was desperate to make Star Wars because knew it in his bones that the entire series would be a runaway hit.

for instance, after the day's shooting Lucas would courier videocasettes back to Hollywood everyday for processing. even in movie distribution, they were very innovative. eg in Haiti and Mali, distributors were encouraged to sell movie tickets for vegetables as currency and then convert it to dollars! such out-of-the-box thinking led to almost 40% of revenue to come from outside US markets.

the movies were huge successes in Japan and Germany because Lucas saw to it that there was good quality dubbing. his logic was that the themes of the series were universal and were not culture-specific.

they went all out to convert to all home-viewing standards as there was no single international standard.

big time property licensing was initiated, eg Darth Maul, Princess Amidala, Jar Jar Brinks.

Pepsi printed the characters on its cans.

Tricon distributed the merchandise in its restaurants.

The Phantom Menace, which was a prequel to the trilogy was the first ever movie that was globally released in 1999. and by the year end, it had grossed $417 million in ticket sales, second only to Titanic.

all of these initiatives put together brought down the per viewer cost.

the choice of location could also be influenced by taxation laws, proximity to markets, availability of labour, government subsidy, etc. Eg the SEPZ may become the location of choice for the myriad benefits it offers to software exporters.

bio-diesel manufacturers may choose locations based on transportation access, warehouse convenience etc that may have a huge impact on the costs of operation and therefore their competitive edge.

in this section, you may also describe the entire logistics of reaching the product to the consumer. and this in turn is based on the sales channel that your company has identified for it, the length of this channel and access to the end user.eg Samsung sells its washing machines through dealer network which in turn sells it to the end user. Bingo snacks are shipped to distributors who in turn despatch them to retailers who in turn sell them to end customer. Dell sells its computers directly to customers on line.

this section basically deals with the entire process of obtaining raw material, manufacturing the product, and reaching it to the customer.

in my next blog,we will discuss Section V which is about management structure of the organization

Monday, April 21, 2008

a comment

someone has left a comment that one area that has to be de-mystified is how to write a fool-proof biz plan. all i can say is, nothing in life is fool-proof, so why expect a biz plan to be?!! a biz plan mitigates the risks, from the unknown, the unpredictable and the unforeseeable. nowhere does it aspire to eliminate the risks completely. sometimes the best laid plans bomb in the market place due to the most innocuous reason. new coke bombed not because there was anything wrong with the taste or the marketing effort, but simply because the coke customers were inexplicably possessive about its original taste. sometimes products run away with the market for no apparent reason at all. in late 90's the success of stencil brand shirts is a good example of this. biz plan is a blue print, not a warranty for success.

biz plan contd.

Section III, Part B Marketing Plan
Evolving the Marketing Plan consists of the following five steps:-
•Analyzing opportunities
this is a composite analysis in the sense you are looking at not just creating a market for your product but you are looking at every available opportunity to increase the size of the market. a good example is air deccan, by dropping airfares, it created a whole new market of air travelers, but by making air tickets available at unconventional places such as gas stations, it increased the market spurred by sheer convenience.
•Selecting target segments

target segment as i said in my previous blog is that segment of the potential market that has the money to buy, is willing to buy, has access and most important, is buying. it is very important for the marketer to identify this correctly. eg a cheese- laced snack to be launched in China. like Cheetos for example. there may be willingness, they may have the money, and the product may be accessible, but chinese people will not buy this product as most of them as a race, are lactose-intolerant. it therefore becomes important for the marketer to have already incorporated this detail from his Market Research findings in the product launch stage.
•Designing marketing strategy
This is an activity that refers to understanding the industry in which you are located, the competitive environment and your target segment, based on which you will develop your pricing and distribution strategy. you may want to 'do a maggi' to get penetration in the early days, especailly if you are a prime mover; you may consciously lower the price vis-a-vis competitors' in the early stages, especially if there are well-entrenched products and lowering the price may be the only way of breaking their strangle-hold; or you may consciously keep premium pricing, particularly with luxury products in the conspicuous consumption space.

you may also look at newer ways of reaching the product to the customer. a brand show-room, more visible theme shelf in super-market, unconventional outlets, mail order, etc.
•Developing marketing programs
marketing is all about creating, communicating and delivering value. all three have to be in sync. eg cheers detergent of P&G was a hugely successful product in the US whose value proposition was that it worked equally well in hot and cold water and caused tremendous sudsing. all their communication in the US reveolved around these two value propositions.when they launched in japan, they continued to use the same value propostions, but to their dismay they found that the communication seemed to be falling on deaf ears.

market research subsequently showed them the error of their ways: in japan people are used to using cold water only, so the value proposition of hot and cold water made no sense. second, in japan, they add fabric softener to water along with the detergent which prevents sudsing. so the second value proposition also made no sense! cheers had to be re-launched changing the entire communication platform.
•Managing the marketing effort
marketing has to be a sustainable activity if the company is determined to build the necessary biz traction. there are several aspects to marketing,- market, environment, both task and broad, and communication. it is also a dynamic activity, market shares change over time and space, market shares change with marketing program inputs, market shares change with definition of the market itself. eg in the early days, it was alright for coke and pepsi to define their market as cola market. but over time, there has been a need for them to redefine their market and today Robert Isdell, CEO of coke has the wisdom to say that it is not pepsi who is their competitor because it is not just the cola drinker who is their customer but anyone who drinks! which may include soft drinks, juices, coffee and tea, carbonated water and still water!

how the whole marketing mix is managed and how well it is managed is what has to be delineated under this heading.

we will discuss Section IV which is all about Operations in my next blog.

Wednesday, April 16, 2008

biz plan contd

Section III Marketing

this section is in two parts: Section A is all about Research and Analysis .

you try segmenting your market, ie from the universe, you try and arrive at your potential market. typically for a marketer, potential market refers to that segment of the population which has the money to buy your product, is willing to buy your product and has access to your product. eg blackberry. this product's potential market is corporate executives and professionals who are on the move, who have to remain in touch, who can afford it because the price is not a factor at all, considering the convenience (in many cases, the company may provide it) and have access to it.

Available market, on the other hand is that segment of the population which has money, is willing to spend, but is denied access to the product. eg for the new pub in town, everyone who likes drinking draught beer is potential market. but youngsters under 18 years of age, even though they may have the money and may be more than willing, law denies them access on account of their age.this constitutes available market. and this market is as important to the marketer as it constitutes future potential market.

notionally, everyone who has money, is willing, and has access, is your potential customer. but it is not necessary that someone having all three will become your customer. eg bajaj pulsar motorbike. considering that it costs 50-60k , it would be fair to say that the potential market is young urban, educated men who have just started working, who are earning well enough to be able to afford Pulsar and who are consicous of making a style statement.

but not all men who fit this profile will actually buy Pulsar for the simple reason they may decide to buy a car instead on the grounds that it is unsafe to ride two-wheelers in traffic-congested cities. the target market for Pulsar therefore would be those who have money, are willing, have access and will buy.

it is therefore very important in the biz plan to segment the market in terms of three things:
potential market
available market
target market

Next is about the marketing environment. who are the players in the market, are you a prime mover, in which case your marketing communication has to not only talk about your product's value proposition but educate the market in terms of the concept itself. eg when sanitary napkins were launched in india. not only was there a need to elucidate product QSP (quality, service, price) but also address the issue of why a sanitary napkin was better than the conventional cloth.

an analsyis of the marketing environment will give you an idea about how big is the market likely to be, what can you expect realistically your share to be, and going forward, what the market trends will be. in technology products, for instance, the shelf life of the product tends to be limited and changes in technology makes the product obsolete and to remain in the market, constant innovation would be imperative for the marketer. eg mobile phones.

Market segment, size, share, marketing environment analysis, - all these have to be determined thoroughly well before launching the product. Large organizations have their own market research agencies or captive resources to conduct necessary market research. smaller companies, particularly start-ups will obviously not have such luxuries and can outsource market research.

the latest trend has also been involving market research agencies right at the product development stage so that customer feed back can be incorporated on the drawing board itself and product tweaked to suit customer requirements. the launch of divya bhaskar newspaper in ahmedabad is a good example of this. the dainik bhaskar group which owns this product decided on a census survey and the product, including its pricing, look, and feel, was the result of customer feedback. the idea bechind the census survey was to rule out any possibility of error as the newspaper market in ahmedabad was a well entrenched one with very strong dual players. interestingly, the marketing department had predicted that on the first day of the launch, they would be able to sell 250,000 copies and their homework was so thorough they actually sold 251000 copies!!!

in my next blog we will address Section B under Marketing.

Thursday, April 10, 2008

components of biz plan

Section I- Executive Summary
a brief introduction to the biz concept, and what is unique about it, the opportunity that gave rise to it, the skill-set of the entrepreneur and capital outlay. All of it should not exceed 800 words.

Section II - General description of the biz
this is elaboration of Section I. It gives the industry background in terms of size, competitors, maturity of industry, whether there is any government regulation, market characteristics, pricing, technology, what drives the demand, etc.

in this context, the biz that you are thinking of should be highlighted, what is your value proposition, is it in terms of product, price, or superior technology, or location economics (availability of the crucial raw material in plenty in a particular region that may drive down costs), what is your QSP (quality, service, price) commitment vis-a-vis the competitors, and how do you plan articulating the value proposition to the market place.

this is also where you will articulate your vision and your mission statements. who you want to be and how you plan to become who you want to be. and the milestones. milestone is a beautiful word in management. it gives you the opportunity to break into the short-term, the goals that you have set for your organization, long term. if your vision is to cross the million dollar mark in the first year, then it has to be appropriately broken into four quarters. each quarter, you can review your progress, if you are lagging behind, it gives you the opportunity to play catch up in the suceeding quarters. and every milestone that you reach gives you an opportunity not only to look back but to look ahead at the next milestone.

it is therefore imperative to set realistic milestones. not unachievable, yet not easily achievable either.

most important, this is the section where you articulate what is the value you are creating for the customer, how do you propose to deliver that value to the customer, and how you plan to communicate that value proposition to your customer,- all this in the backdrop of your understanding of what the customer wants.

it is important to understand what value the customer is looking for. Xerox when it enetered india offered excellent value to the customer in terms of copy quality, which was as good as the original, at Re 1 per copy. there were no takers because the market was not unhappy with the ordinary quality that it was getting from other copiers at 25 paise. the market simply was not ready for superior copy quality proposition. it took xerox three years to educate the market on the importance of good copy and how it enhanced company image and conversely how a bad copy adversely affected it. then there was no looking back.

we will continue with the other components in the next blog.

Wednesday, April 2, 2008

biz plan

a biz plan is a written document that gives in detail everything about the new venture, product, industry, market, money, technology, people, growth, risks, returns. in other words, the entire story. as the entrepreneur sees it. in effect it is the entrepreneur's canvas and how he paints it as he visualises it. it is the most personal statement an entrepreneur can make.

the biz plan serves two purposes. one, in documenting his vision, the entrepreneur is actually ironing out inconsistencies, flagging problem areas, pre-empting road blocks, introspecting into his own competencies and skill sets, laying the cards on the table with respect to resources, re-visiting his own commitment levels, and communicating his conviction.

the second equally important purpose that a biz plan serves is, as a road map, once the biz kicks off.it is an excellent reference scorecard for the entrepreneur to keep going back to, to see whether the biz is on track as planned or has veered off track. the danger is not just in under-performance vis-a-vis the biz plan. it is equally dangerous to be caught in the throes of unplanned growth because it is only a matter of time before the biz starts floundering in the absence of processes and systems that have not kept pace with the growth. most entrepreneurs have a bad habit of convincing themselves that their company is too small right now and once the company grows, they will put systems in place. what they dont realise is that, that itself becomes a show-stopper for growth.

any which way you look at it, an entrepreneur cannot embark on his entrepreneurial journey without a biz plan.

i have known a number of entrepreneurs who say that they have a damn good concept and therefore they dont need the biz plan. my young friend ashish singh says 'i dont have a biz plan, i have just developed a site' !

i have known people who say: i am not borrowing money from anyone, i have invested my own earnings, so why do i need a biz plan.

i would say all the more reason, my friend, you need the biz plan as you dont want to lose your hard-earned earnings without one!

a friend of mine, vaidi almost got upset with me yesterday when i asked him if he has ever made a biz plan. he has been in biz for a decade now and is still plagued by all the problems that start-ups usually have to contend with. i was genuinely curious to know if he had put together a biz plan, because to my thinking, if he had, he should not have had so many problems in the first place!

the biz plan is known variously, depending on the context it is prepared for. if it is meant for funding purposes, it is called a project report, a loan proposal or an investment prospectus.

the biz plan document is a tool that makes the otherwise arduos entrepreneurial journey a little less hazardous, a little more predictable, a little less prone to luck and other inexplicable elements and a little more prone to activity-oriented result and result-oriented activity. it certainly does not eliminate all the vagaries of the market place. but it sure does give the entrepreneur a distinct upper hand in being better prepared for them.

the best prepared biz plans may mean nothing if the typical pitfalls are not avoided. the pitfalls are, unrealistic projection of sales and growth, unreasonable time frame in expectation of return,
sub-optimal resource utilization, lack of commitment on the part of the entrepreneur, no sense in mile-stoning, no market niche, no internalising of the basic concept and methodology of biz.

in my next blog, we will see what are the various components of the biz plan.

Thursday, March 20, 2008

the opportunity plan leads to a biz plan

once you have validated your opportunity plan and you are convinced that the opportunity can be translated into a viable biz, the next logical step for you is to write the biz plan.

the biz plan is a mission- critical document both for actualizing opportunity and for raising resources. it is also the road map for the entrepreneur to successfully manage the new enterprise, once it is off the ground.

"It is well established that you cant raise money without a business plan… a business plan is a work of art in its own right. Each plan, like every snowflake, must be different. Each is a separate piece of art. Each must be reflective of the individuality of the entrepreneur. Just as you wouldn’t copy someone else’s romancing techniques, so should you seek to distinguish your plan for its differences" – Joseph Mancuso

Joseph Mancuso draws attention to three things - one, that you definitely cant raise funds without a biz plan, because unless you are investing your own money, whichever agency you approach for funds, the first question that you will be asked is 'have you written the biz plan?'.

two, no two biz plans are similar, hence copying somebody else's biz plan defeats the purpose. even within the same industry, biz plans may be different depending on the skill set the entrepreneur brings to the table and the vision that he may have for his organization. hence all biz plans have to originally written documents by the entrepreneur.

three, there are agencies that speicalise in writing biz plans but this is an absolute no no because it is the entrepreneur's responsibility to paint his idea on the canvas as he visualises it and not direct someone else to do the painting for him. as he articulates his idea, not only does clarity emerge, but his passion will also come through and that is the most important entrepreneurial characteristic that needs to shine through the biz plan document.

Wednesday, March 12, 2008

opportunity plan

we have seen that literally anything can throw up new opportunities. but not all opportunities can be converted into profitable biz ideas. therefore it is important to draw up an opportunity plan to see whether the opportunity under consideration is worth pursuing or not.

many times we get carried away by the imagined potential of an opportunity, either because there is some sentiment associated with it or we dont see the downside of it.

whilst evaluating an opportunity plan it is very important to be in possession of all facts pertaining to the biz idea, completely objective in analysing its risks and returns, and make a surgically precise decision without emotional overtones.

a typical opportunity plan should answer the following questions:

what gave rise to the opportunity?

because the answer determines the risk, reward, size of market and life cycle for the opportunity. eg when the Miss World contest was held in Bangalore, India, many years ago, overnight, there was a huge demand for over a 1000 chaueffeur-driven cars for three days. the reward was huge because no price was too high; the paegent organisers were willing to pay whatever was asked. the risk was very high too in that once the service was provided, the organisers would disappear; i know of one company that provided cars and drivers that insisted on payment in advance to mitigate the risk. the life cycle for the opportunity was extremely small and transient and the people willing to exploit this opportunity had to be really sharp on the uptake.

the next obvious question is: what market need does this opportunity fill?

are you the prime mover, in which case, perhaps some amount of educating the market is needed and therefore has to be incorporated into the marketing communication.

are you the second entrant? in which case you have to make sure that you do all the good things the prime mover did, not do any of the mistakes the prime mover did, and above all, offer an impeccable value proposition to make sure customers came to you and didnt stay back with the prime mover.

other questions that you will need to address are, will this opportunity give you a product leadership position or a category leadership position? eg, coke is a product leader, P&G's Pampers is a category leader because it created a market called pampers in the diaper market.

Monday, March 3, 2008

how to write a biz plan

sorry, have not posted any blog for the whole of february, been traveling, am in the thick of the teaching term and a number of interesting clients in different verticals at different stages of incubation have needed my attention, so blogging took a back seat!

before we understand when, how and why one writes a biz plan, lets go back a bit and understand what is the starting point for all entrepreneurs. we have touched upon this already in one of my blogs, the starting point necessarily is ideation.

but strictly speaking ideation is not the starting point. what is the opportunity that gave rise to this ideation, is really the starting point of what may be termed the 'entrepreneurial process'.

opportunities are all out there, all around us, some of us spot them, most of us dont. those of us who do go on to ideate from these opportunities, build a biz around the idea and become entrepreneurs. many of us may be staring at the opportunity, but we dont ideate either because we have developed a 'rhino skin' when it comes to feeling 'opportunity vibes'; or we are too cocooned in our comfort zones to even imagine an entrepreneurial opportunity.

for those of us who can look at opportunity in the eye, there are four distinct steps that need to be followed before the venture is created :

identification of opportunity
evaluation of opportunity
writing of the biz plan
creating the biz enterprise

the first step, which is identification of opportunity, is perhaps the most difficult one. it means that your antenna should be ready to receive the signals, 24/7. because anything may throw up an opportunity.

it could be new technology. eg last year during the cricket world cup, cricinfo developed software whereby they could show cricket in animation as it happened on the field, real time.

it could be on account of market shift. airtel has become the largest retailer of music because more than 60 % of music are mobile downloads. digital music has halved the market for physical music.

it could be a change in government policy. the telecom policy in india for instance made it possible for mobile telephony as well as landline telephony being opened up to the private sector.

it could be competition. a matchstick manufacturing company in brazil wanted to export its products to japan and when they couldn't do it cost competitively in the matchstick market, they entered the japanese market with chopcticks and gave run for the money to local competitors.

it could be change in the consumer need. urbanization and concretisation of living spaces has reduced the greenery one can afford to have around one's homes, but artificial plants have managed to satisy the need for colour and zero maintenance. so a new need for artificial plants has come about and a new opportunity has been created..

in other words, anything can throw up an opportunity; the cause also determines the size of the market.

Tuesday, January 29, 2008

people are drivers of intrapreneurship

thanks hari, you are absolutely right, it is a good first step for an organization to look at inducting new people who can look at the organization from the outside, which means more objectively, diagnose the problem and recommend solutions. you basically need fearless thinkers, fearless in the sense of those who are not afraid of trying out new things from fear that they could go wrong and get blamed. typically the new broom sweeps clean simply because it does not know yet, otherwise; as it ages, it starts coming up with more and more excuses as to why it cant sweep clean with nary an attempt at ensuring it.

not all organizations have the luxury of letting go of old people and bringing in new ones ; most organizations have to try and work around their existing resources, which means dealing with calcified mind-sets too.

Years ago I used to be the Marketing Manager for India's leading financial daily which had a small circulation base, but because the costs were low, they made profit just on subscription and did not need a rupee's worth of advertising. i remember the uphill struggle i had when i first recommended that we look at advertising from hospitality, travel, and executive lifestyle products, all the naysayers ganged up on me and said : these people wont advertise with you because all their ads are in colour and you dont have colour.

in all innocence i said, so let's have colour. and everyone reacted as if i had uttered something sacriligeous. colour? no way. colour means frivolous. our paper is for the serious-minded business men, how dare you introduce colour and make it into a girly newspaper!!

also a market research agency had conducted extensive survey and had come to the conlcusion that introducing colour in a financial daily was tantamount to committing harakiri. so colour was an absolute no no!!

fortunately i had a boss who wasn't exactly adventurous but probably wanted to be indulgent (she will see the error of her ways soon enough!!), so he said go ahead and launch colour, i will give you three months' time to make a success of it. if you dont, i would like you to put in your papers. i was young and brash and i took up the challenge.

in one month we earned our entire annual budgeted revenue. and the whole organization then woke up to the potential goldmine that they were sitting on. needless to say, colour was launched, it stayed, it succeeded to such an extent that today it is unthinkable that there was no colour just a few years ago in this financial daily.

and i left two years later to think more unthinkable things in other organizations!

Monday, January 28, 2008

I for intrapreneurship, I for implementation

There is an excellent ad of IBM on television these days. The guy goes on and on about how I is for ideation, I is for innovation and I is for invigoration. and she says I is for implementation and he looks crestfallen and says I knew i forgot something very important....

No amount of ideation, innovation can invigorate an organization unless the ideas jump off the drawing board on to the market place. Implementation is the key driver. Every organization is necessarily led by sales and any intrapreneurial initiative in any aspect of the organization eventually translates to more sales. that's the way the biz works. and unless intrapreneurship is backed by implementation, which means that not only should organizations commit time and resources to implementing, but the whole team should buy in into its implementation, ideas and innovations will remain empty shells, like forgotten curtains, flapping in an abandoned house.

Thursday, January 17, 2008

need for intrapreneurship

thanks hari for the comment, here's my reply.

whilst the entire organization may feel that there is a need for intrapreneurship, it is only top management that can decide whether to go in for it or not, because as i said in one of earlier blogs, the top management has also to commit resources to introducing intrapreneurial measures as well as seeing those measures through to their logical conclusion.

before espousing intrapreneurship, one crucial decision that management has to take is, from the organization's perspective, what is/are the reason/s for doing so. is it that traditional methods of biz have lost their effectiveness, is it competition which is growing both in number and in sophistication, is it rigors of global competition in one's own backyard, is it new technology which is making the old production process redundant, is it that the world over, giant companies are right-sizing so as to improve productivity and therefore profits and for you to be left behind would be suicidal ?

what is your organization's reason is the first question that needs to be addressed.

the answer is easy if there are some visible manifestations of a down-trend. eg if profits have dipped, if more customers have 'voted with their feet" (an english phrase meaning customers have moved to competition), if the topline has stopped growing and has even taken a dip, if costs have gone up, and every input of capital is yielding less and less return.

many organizations are willing to embrace intrapreneurship as a course-correction tool when they are able to see such visible downturns.

the point about intrapreneurship is that organizations dont have to (and should not) wait for the southward trend to be visible before embarking on intrapreneurhsip. Anne Mulcahy, CEO Xerox said it is very hard to embrace any new intiative when nothing visibly has gone wrong, if it aint' broke why fix it, but that is absolutely the right time to do it, because things havent careened out of control and change management will then cost less both in terms of missed opportunities as well as resources.

hari, to sum up, your vendors have to do an introspection to first identify what ails them and why and if these two questions are answered it should not be very difficult to answer how to redress them.

Thursday, January 10, 2008

so who are intrapreneurs?

intrapreneurs need not necessarily be ideators or inventors but they are the ones who definitely turn ideas into profit. without ideas, there is neither entrepreneurship, nor intrapreneurship. ideas are the core in both activities.

intrapreneurs are necessarily a committed lot. they commit time, money , conviction and passion. it is not just enough that they have conviction or passion, it is equally important that they have the capability to infuse the same throughtout the fabric of the organization. in this sense, intrapreneurs are also 'team aggregators', they bring disparate people together and bind them with 'we feeling' with the organization, so much so that every employee begins to feel ownership, take responsibility, herald change management, and behave in a manner as if it is his 'own' company.

intrapreneurs also wear a number of different hats, from being functional specialists, they morph into 'project mangers', dabbling in macro management. by definition therefore they move away from a single functional responsibility, say marketing or finance, to a larger P & L role. intrapreneurs thus become strategy specialists and successful strategy implementation demands that they become macro managers.

Thursday, January 3, 2008

is intrapreneurship same as TQM, continous improvement, etc

thanks hari for 'commenting' on this, TQM or any other quality initiative is not equal to intrapreneurship, but one of the ways of bringing in intrapreneurship into the organization. let me explain. let's say an organization located in Brazil is manufacturing match sticks and wants to export to Japan because it is keen on having japan in its market roster. let's say this initiative is a non-starter as it cannot compete with local matchstick makers in japan in terms of cost. so the Brazilian company decides to manufacture, what else, but chopsticks! and it puts in place best in class practices, as a result of which it is able to compete very effectively with local chop-stick makers who up until now had the japanese market on a platter and hence had stopped innovating.

you get my drift? the Brazilian company heralded intrapreneurial initiative into its organization by using quality tools to check-mate competition in a new market. as a result of this intrapreneurial effort, the company now has a new market, a new product and a new, cost-competitive organization.

it is not necessary that intrapreneurial initiatives should be always macro, in the sense, in every aspect of the organization. it could be in product/service, it could be a new way of looking at an existing market, or developing an altogether new market, it could be in an employee loyalty programme, it could even be a simple administrative process. a company doing away with the idea of a telephone operator answering the phone and introducing IVR to facilitate communication with customers, employees and biz partners is as much an intrapreneur as let's say a company that re-orients its customer or employee focus, or introduces an altogether new and disruptive technology.

Wednesday, January 2, 2008

what is intrapreneurship

it is pretty much the same as entrepreneurship, except that it occurs within an existing biz structure. entrepreneurship refers to a start-up, a new venture, whereas intrapreneurship refers to restructuring existing biz as a survival strategy. the organization takes the initiative and commits resources to create and empower a team which will think and behave like entrepreneurs (meaning as if it is their own company as opposed to them working 'for' a company).

The upside of this is that it is already an up and running existing biz with its own biz momentum, its own market, its own product mix and of course its own infrastructure, so intrapreneurial effort is focused on creating an empowered 'intraprise'. as with enterprise, ideas are the starting point of all intraprises too.

the downside of this is that because it is an existing biz, battling the entrenched dogmas ('this is the way we have always run the biz; it worked well for us in the past, so why should we change it now?") tends to be highly energy-consuming. and sometimes, thwarting. and most times, frustrating.

it is not true that companies look at intrapreneurship when they start doing badly. good organizations are those that are good change managers. and good change managers are not just those who 'react' to change; they also pre-empt and prepare for change. so intrapreneurship becomes an integral part of an organization's DNA, pretty much like its vision and mission statements.