Successful Entrepreneurship

Munish Thakur

Successful Entrepreneurship

Successful Entrepreneurs-Innovation

• Steve Jobs-----Mac/Ipod/Iphone• Sam Walton----Rural Retailing• Karsanbhai Patel----Washing powder for masses• Bill Gates----OS for masses• Brin and Page----Free search• Narayanmurthy----Pioneered IT and GDM• Capt. Gopinath---Making average Indian fly• Chetan Bhagat--- New Genre of Books

Successful Entrepreneurs-Innovation

• Kurien----Brings White Revolution• Kiran Mazumdar---Enzymes (Statins)• Dr. VP Reddy----Hepatitis B• Cyrus Poonawalla (Serum Institute)---Polio• Dr. Govindappa Venkataswami, Dr. V---Arvind

Eye Hospitals• Baba Kalyani----Made Forging cost

competitive• Estee Lauder---Cosmetics for High end

Successful Entrepreneurs-Innovation

• Kishore Biyani----Massified the retail in India• V.G.Sidhartha (CCD)---Brought Coffee experience to

Indian markets• BV Nagesh----First mover in the organized retail space• Shahnaz Hussain---Personal beauty solutions• CK Ranganathan (Cavin Kare)---Sachets• Sunil Bharti Mittal---First private player in the basic

telephony and mobile space• Howard Shultz---Coffee Experience• Ray Kroc----Standardization

Innovation

New- CapabilitiesLuck is a dividend of sweat, more you sweat the luckier you get

• Steve Jobs-----Aesthetics, Arts, Calligraphy• Sam Walton----Knowledge of retail and Rural area• Karsanbhai Patel----Knowledge of chemicals• Bill Gates----Knowledge of BASIC• Brin and Page----Wrote search algorithms when

Ph.D students• Narayanmurthy----Knowledge of IT/US markets• Capt. Gopinath---Knowledge of flying in Army• Sidhartha Rao---new advertising media and

content

New- Capabilities

• Kurien----Knowledge of Cooperatives, Management• Kiran Mazumdar---Knowledge of brewing(Statins)• Dr. V P Reddy----Engineer with heavy focus on process• Cyrus Poonawalla (Serum Institute)---Prior knowledg of

Venoms• Dr. Govindappa Venkataswami, Dr. V---Doctor again• Baba Kalyani----Made Forging cost competitive- An

Engineer from MIT• Estee Lauder---Cosmetics for High end ---Knowledge of

chemicals and retailing

New -Capabilities• Kishore Biyani----Son of Marwari, ran a retail shop• V.G.Sidhartha (CCD)---Son of coffee farmer and hence

knowledge of coffee• BV Nagesh----Travelled frequently abroad• Shahnaz Hussain---Family Tradition, Training• CK Ranganathan (Cavin Kare)---Sachets, Plastic Business• Sunil Bharti Mittal---Sold Wireless sets before market

opened up• Howard Shultz---Worked in a coffee chain• Ray Kroc----Worked with fast food chain

Why are capabilities important?

• Perceive opportunity• Fight Competition• Provide confidence• Help attracting money• Help attracting employees • Give meaning to resources

What about drive?

• As believed by many, it has aided entrepreneurship rather than being the cause of entrepreneurial success

• Aid: Augmenting capability, combining resources and impression management

• Walmart moved from rural to urban…Infosys moving to consulting….Steve Jobs from computing to mobile

What about Motivation?

Lesson1

Motivation

• Steve Jobs-----College Drop Out• Sam Walton----Rural Aspirations• Karsanbhai Patel----HLL’s elitist approach• Brin and Page----Drop outs and need to prove• Narayanmurthy----Lower middle class and

need to prove• Capt. Gopinath---Dream of flying and make

everyone fly

Motivation

• Dhirubhai---- Rich vs. Lower middle class• Kiran Mazumdar---Could not get a job in India• Cyrus Poonawalla (Serum Institute)---Appalled

by high prices charged by MNCs• Dr. Govindappa Venkataswami, Dr. V---Appalled

by high prices and willingness to give back• Estee Lauder---Always wanted to look more

beautiful

Motivation

• BV Nagesh----Always wanted to join army• Shahnaz Hussain---Bored because of

confinement• CK Ranganathan (Cavin Kare)---Had been part

of lower middle class himself and poor at studies, sibling rivalry

• Sunil Bharti Mittal---Was written off as a small time entrepreneur

• Howard Shultz---Working class background

Are dynamic capabilities enough for innovation?

Answer: No

Was it possible for Steve Jobs to create apple just because he had very good

knowledge of aesthetics?

Organization- Innovation• Organization and Management of Resources– Human– Physical– Financial

• Very difficult to get these resources• Acquisitions of these resources depend on extent

of development in the markets• Development of markets would decide whether

capability, resources or opportunity would become dominant factor for successful entrepreneurship

Resources

Once you have capability, you know what to deliver and how to

make best use of resources

Resource Organization

• Karsanbhai– Human Resources: Family and Relatives– Financial Resources: Local Banks– Physical Resources: Friends and Acquaintances

Resource Organization

• Arvind Eye– Human Resources: Village girls/Young Doctors– Financial Resources: Acquaintances and Friends– Physical Resources: Alliances and Acquaintances/Mkt

• Sam Walton– Human Resource: Small Town– Financial: Acquaintances and Friends and Local Banks– Physical Resource: Better local resources utilization

through Hub and Spoke Model

Organization

Lesson 2

Capabilities and Resources are brought together by entrepreneurs to create organization

Are capabilities and resources enough for entrepreneurial success?

Answer: No

What about Opportunities?

Opportunities• Had Chetan Bhagat been successful without huge IIT/IIM aspiring

population?• Had Arvind Eye became successful if there were no people with no

cataract Problems?• Was it possible for Sunil Mittal to succeed without liberalization?• Could Narayanmurthy have succeeded without going to US?• Could GDM have succeeded in fluctuating currency markets?• Could McD. have succeeded if both spouses were not working?• Could Henry Heinz have succeeded without opening up of Railroads

and Airways?• Could Walmart have succeeded without increase in rural

opportunities?

Capability and Opportunity

Lesson 3

Capabilities have to be compatible with opportunities

Convergence of Divergence (Trade Offs)

• Capabilities should bring two domains together• IT and Aesthetics in case of Steve Jobs• IT and Agriculture in case of E-Choupal• Process Engineering and Medicine in case of

Arvind Eye• Chemical and Knowledge of common man- Nirma• Rural markets and retailing• Engineering plus Cost Consciousness in case of

Bharat Forge

Convergence of Diveregnce

• Ray Kroc- Food and Standardization of Assembly Line

• Search Engine and Adword and Adsense• Shahnaz Hussain: Ayurveda and

Commercialization• Capt Gopinath: Flying and Lower Middle Class• Ranganath: Cosmetics and Lower Middle Class• Shoppers’ Stop: Retailing Rising Upper Middle

class in India

Four Concepts for Successful Entrepreneurship- And Conditions under which these factors would play a

role

Essence of Successful Entrepreneurship• Dynamic Capability: the essence of entrepreneurial

success - Necessary Condition• Resources and Capability complementarily: The

essence of organization formation-Sufficient Conditions

• And Capability opportunity compatibility: Essence of sustainability- Sufficient Conditions

• Entrepreneurs are ultimate strategists as they maneuver around the alleys of opportunity structures with capabilities that they possess.

Value Delivered

Value PropositionDelivered

Business Model

Capability and Resources Opportunity

Organizations

• Is innovation restricted to entrepreneurs?• What about organizations?• Can innovation be systematic- is a big

question?

Sources of Innovation

Peter Drucker

More innovations

• AMUL• 3M• Apple• P & G• Reebok• Google• E-Choupal

Innovations

• TATA Nano• TATA Swach• Bharat Forge• CavinKare• Project Shakti• Airtel• Mopeds• Maruti800

Organizations

• Parry India Agriline- Core-Dect and Agriculture• Microfinance• Biocon- Statins• Shantha Biotech- VP Reddy, Hepatitis• Serum Institute• Direcway• Gyandoot –MP Government Initiative• Akshaya-Kerala government Initiative, BHOOMI:

Karnatka Government Initiative

The Unexpected

1. The Unexpected-success

• Mini Mill rejected by Steel Mills• Antibiotics in Pharma Industry La Roche• Laboratory instruments used for Industrial use• Nylon discovery by DuPont• IBM book-keeping to library-Mainframes• Matsushita and TVs• Viagra• XLRI Satellite and possibly GMP program

The Unexpected Failure

• Affordable Housing in India• Honda’s failure in US market

Reasons

• Management too much focused on problems• Inability to assess the problems• Inability to look at “beyond present

customers”

What to do?

• What would it mean to us if we exploit it?• Where could it lead us?• What do we have to do to convert it into

opportunity• How do we go about exploiting opportunity?

Incongruities

2. Incongruities- “What is” and “what ought to be”

• Incongruities in economic Realities, perceptions and expectations– TATA Swach– Steel making, But not in paper making– Carnation– Amul– Washing Powder and Nirma– Ocean Freighter and Containerization– TV and rural space in Japan

Process Needs: Necessity is the mother of invention

3. Process Needs Examples

• Photography- Glass plates replaced by cellulose films- Eastman Kodak

• Electricity Industry and Bulb by Edison• AT&T, demographics and switchboards• Linotype and newspaper• Japan reflectors- I-wasa reflectors• Cataract operation, ligament and enzyme-

Alcon Lab

3.Process Needs require five basic criteria

• A Self Contained process• One weak or missing link• Clear definition of objective• Specification for solution can be defined

carefully• Realization that there ought to be a right way.

4. Change in structure of Industry

4. Industry and Market Structures

• Publishing industry changed after internet.• Retail industry changed after malls.• Automobile Industry- Model T, Petroleum

Panic and entry of Japanese in 1970s, Volvo, BMW and Porsche, Hybrid Engine now.

• 2G to 3G Motorola lost its leadership, Nokia emerged.

• Airtel emergence after liberalization.

4. When is structure likely to change?

• Rapid growth of Industry• Industry doubling its volume• Convergence of Technology that has been

hitherto considered separate• Regulatory changes• If activities are changing

5. Demographics

Children

Elderly

5. Demographics• Mobile phones in India• Motorbikes in the country• Rural Population and Wal-mart• Insurance for elderly• Old-age homes• Urbanization and Space• Children Clothing and Nuclear Family• Fast Food• Educational Explosion/After school/Coaching• Fashion Industry in India

6. Changes in PerceptionIs glass half empty or half full?

6. Perception- Facts do not change but meanings do

• Salesman in Africa• Computers can be beautiful• TVs sales and rural population• Encyclopedia and Working Class• Airlines industry in India- A way of looking at

middle class- Air Deccan• IT industry and employable youth in the country• Hilltops and Rural Tourism/Ecotourism• Time is very crucial in perceptions

7. New Knowledge

7. New Knowledge

• Scientific Discoveries and inventions• Most Talked about, least successful• Very difficult

Coming together of different knowledges

• Gasoline Engine and Aerodynamics- Airplane• Hybrid vigor and genetics-Hybrid seeds• Audion tube, binary theorem, design concept

of punch card, program a feedback-computer• Newspaper-editorial independence and mass

circulations. Paper type-setting, mass literacy

New Knowledge

• Nylon: organic chemistry, X ray diffraction, high vacuum technology and WW shortage

• Management: Economics, Mathematics, Technology, Sociology, Psychology, History etc. in the context of organizations