| A summary of the talk
delivered by Mr Subroto Bagchi, COO, Mind
Tree Consulting Ltd at the Leaders Speak
lecture series on “The High Performance
Entrepreneur” held on 5th July 2007
at Chennai.
A talk by the great guru and COO of Mind
Tree Consulting on ‘The High Performance
Entrepreneur’ was a mind blowing experience
and intellectual treat for the 200+ audience.
Mr Subroto Bagchi began by profiling an
entrepreneur. According to him an entrepreneur
- has love for money
- has self-confidence
- has a sense of freedom
- is hard-working
- is goal oriented
- is flexible
- is opportunistic
And above all has
- no ego
So the issue is: what is it that can be
done upfront, so that we can genetically
engineer the HIGH PERFORMANCE ORGANISATIONS.
First of all, we need people to build the
companies for all right reasons and not
for all wrong reasons.
Now let us look at the wrong reasons first.
We three are good friends and we want to
start a company. Just because we are good
friends, and you think you can build a company,
it does not work that way. If you are good
friends, just have beer and have a nice
time. We are 10 of us who started Mind Tree
Consulting in 1999. You would be amazed
to know that we, the 10 of us admired each
other professionally but not as beer drinking
good friends. The family of the 10 founders
has never met before we started the company.
Some co-founders have not met each other
also.
Next you must have love for money! Today,
Azim Premji would not have built what he
has if he had no love for money? He loves
money passionately. Narayana Murthy loves
money, but he will not admit it. He loves
money because of money’s power to
do good things for people. The leading factor
is creating enormous amount of wealth. So,
it is very fundamental that you respect
money and love money.
‘High performance entrepreneurs get
excited about the big picture – a
larger vision and then the pieces begin
to fall in place’.
While choosing a team ‘Look for proven
competence, ability to multi-task, transparent,
with high level of personal integrity and
mutual trust. They should have the ability
to question each other and disagree with
a sense of resilience and humour’.
Now that you have got the vision, it is
time to build an A-Team. How do you actually
build an A team. The most important thing
is to look for proven competence and ability
to pull weight. It is not about the 3 good
friends we talked about or your brother-in-law
or your sister-in-law. The most important
thing is the proven competence. You have
a competence and will you be able to pull
weight. Why are we talking about pulling
weight here? Because lot of things will
go wrong. And in a large company when something
goes wrong, there are other elements in
the company which re-configures them so
that the momentum is maintained.
HIGH PERFORMANCE ORGANISATION is one where
the core team has to be constantly questioning
each other. That is unnerving for many friends.
So when I decomposed the situation and told
them that it is ok to disagree and it is
not the end of life and it is important
to disagree that the pieces came back together
again. So it is very important to have comfort
in disagreement, resilience and of course
a sense of humour.
Now, having got the A team which is the
core team, it the time for settling the
companies DNA and the mission and values.
Let us put some meaning to each of these
words. DNA is who you are. Every individual
has his unique DNA in this planet. That
is what defines who you are. So if you do
not know the DNA of your company, or do
not give it a DNA, then that company will
never be differentiated. That will be a
“me too” company and “also
ran” company and there is no place
for “me too” and “also
rans” because the same principles
of evolution will apply to them and they
will be under the genetic stress to collapse.
It is very important to define what the
DNA of the company is. In our case, we decided
that our DNA would be “imagination,
action and joy”. So every individual
in Mind Tree is required to understand what
imagination is, what action is and what
joy is. Our 360 degree feed back is based
on “Customer satisfaction” and
more importantly when we do our people perspective
study once a year, we ask the people how
is the company doing on imagination, action
and joy. So, this is something that people
may think of even with their eyes closed.
Then it is time to define the “Mission
Statement”. Mission Statement is the
statement which tells broadly where we are
going.
Next is writing the business plan. ‘First
the executive summary, followed by the business
context, the core values, positioning and
business overview.
Now is the time to write the business plan.
What happens is that you could see that
we have come to five, or six or seven well
defined steps till now and we have not yet
written the business plan. The most important
thing about the business plan is that it
will tell you why you have a half baked
idea, why it is not the right time to start
the business that is the most important
contribution of the business plan. I meet
so many people who say “I want to
start a company”, The best way to
eliminate 50% of those people is to say
“Have you written a business plan?”
“No, No, I have all of it figured
in my mind!” No. Have you written
a business plan? No. I have already talked
to people and they are willing to join me
in the business! No. Have you written a
business plan? The guy will say, “If
you say, I will”, “Ok. See me,
after you write it”, the guy will
never come back. There is some magical thing
about the business plan. It is very simple.
It starts with an executive summary, you
have to write a little about the business
context, core values and objectives, positioning,
sales marketing, how and what will you make,
whom you will sell to why should he pay
money for that, how you deliver that, what
kind of organizational structure you will
have – these give you a reasonable
understanding of what risks you see. But
there is something magical, mythical about
this that people can’t write it. Very
important, do not write business plan to
impress anybody. The business plan is you
talking to yourself! If you write a business
plan that is meant to impress people, firstly,
people will be smart enough not to be impressed,
if you mislead some people, it will come
back to haunt you. So, I would keep two
things in mind: one, I should do this with
great honesty to myself because it is a
great opportunity for me to discover problems
that are inherent and then when you write
the business plan, you discuss with the
venture capitalist, you discuss with the
banker, you discuss with other people, they
would find out holes in it.
The next step is seeking the right investor.
Mr Bagchi differentiates between ‘smart
capital’ and ‘dumb capital’.
Dumb capital is when the investor does not
question you. He accepts everything. Whereas
‘smart capital’ investor is
one who questions when things go wrong.
Also Mr Bagchi says that the ‘colour’
of money is very important. So if “you
are buying money which is black, green or
white” remember if you have the wrong
colour of money, there will be wrong expectations’.
Now you are ready for an investor. Usually,
people will say, “Oh! I got this great
idea. Next thing is you want an investor.
Look at the number of things I am telling
that you need to do right before you look
for an investor. But, the point I am trying
to make here is today, you know, you don’t
have to chase resources. It is very different
from what it was earlier days. Today, ideas
are not changing resources, resources are
chasing ideas. So, you actually have a choice
of who you will take money from. The persons
from whom you will take money will actually
have a biting influence on the character
of the company and the destiny of the company.
It is very important therefore to understand
the difference between few things. One is
smart capital versus dumb capital. When
we started the company, what went wrong
was that lot of people came forward and
said that “please take my money: and
then the real estate guy comes, who has
got extensive connections in the Middle
East, and he says that, “Please take
money from me, and you can get any valuation
you want. You know, that is not smart capital.
That guy cannot sit on my Board and give
me a hard time. I need a guy who will not
only give me money, but is able to actually
pin me down my accounting, pin me down on
my governance process, pin me down on my
strategy. So, if you take dumb capital,
there will be dumb expectation down stream
also. When you take smart capital, where
you not only get money, you get the capability
to question you. When we started the company,
everything was looking rosy. And when the
down turn happened after 9/11, if we had
had dumb capital, the dumb investor would
not have cared about it and would have said,
“let me just run”. Thank God,
we had smart capital that those people understood
that both good times and bad times are temporary
phenomenon. Color of the money is very important.
There will be one guy who will say, “Give
me part of the company and here is some
black money for you”. So, whether
you are buying money which is black, green
or white, it is very important that if you
have the wrong color of money, there will
be wrong expectations from you as well.
And there will be people who will offer
you money saying that “I will not
interfere”. Rather let the people
interfere. Lack of interference is not good
for a company. Mutual expectations must
be very clear. I know there is lot of people
here from family run organizations and so
on, and some rules are probably different.
But if everything is equal, I would not
take money from family or friends. Because,
again it is very difficult to have a professional
clinical relationship as far as money is
concerned.
‘Attracting and retaining talent is
very important. Pay careful attention to
the first 40. Right from job description
to explaining the downsides. Have a transparent
compensation and benefit structure. And
above all ‘communicate’ on a
one to one basis’.
Now it is time for attracting and retaining
talent, the kind of things you need to do,
pay attention to the first 40 people. Treat
the first 40 people coming on Board like
co-founders. We have taken the personal
pain in choosing them, explaining the business
plan and again this is where writing of
business plan becomes important that you
are not doing something without meaning.
You are telling people that “Read
this 80 page document which is my life’s
entire thinking” and then they endorse
that as against endorsing you.
If you do all these details for the first
40, then each of those will take care of
the next 10, you will find the 400 people
in the organization are all aligned in the
same direction. Write the job description.
Actually, the 40 could have been thirty;
I would say that in our case, for example,
I would know the first 500 people by name.
And the first 40 people, I would know everything
about them.
Listen to the voice of the customer. Choose
the customers right look for trust. A sense
of equality. A win-win situation.
The very important point. Now you can go
and seek your customer but seek your customer
right. One of the things that I would like
you to remember is that “any customer”
is not a good idea. Our customers’
brilliance rubs on us and customers’
mediocrity also rubs on us. If you hang
out with the wrong kind of customers, not
only will you lose some of your shine you
will also have a huge opportunity loss.
It is very important to choose customers
right. Yes, it is true that angels come
through providence, but it is important
for the organization to have a shared understanding
as who is our ideal customer. What kind
of value do we seek from the customer? In
MT, we try to tell people, Look, we should
first look for techno managerial value add,
trust, sense of equality and commercial
win-win.
We need to manage our money well, as I told
you, you should love money and if you don’t
love money, don’t get into business.
But be frugal; please don’t pay yourself
out of business. One of the things I always
look at, when I look at the Balance sheet
of a company is who the highest is paid
person in the company. Just because you
are the boss, you cannot be the person who
is paid highest in the company. The highest
paid person should be the most competent
person in the company. The person who brings
in greater rain making capability should
be paid the most.
‘Love money. Be frugal. And above
all get the best auditor.’
Get the best auditor in town. Not your friend.
What is best is not the matter of convenient
interpretation. What is best is my business,
my process needs, what kind of credibility
this individual brings, will I feel proud
if I show the certified accounts signed
by this person and want to go raise in second
round finance from a New York Wall Street
banker, will that banker look at that and
say “I trust it”?
Then Mr Bagchi talks of ‘Building
the brand’. Choose the name and visual
identity right. It must be consistent with
DNA, Mission, Vision and Values. He says
‘An enterprise is like a river. Seeing
the source one cannot imagine the confluence’.
‘Be emergent – bend and flow’.
Now is the time to focus on the brand. Brand
is the intrinsic worth that you are communicating.
While doing this, it is important to think
through many things. We actually went to
a company called “Name It” a
company in California, gave them the business
plan; this is why writing the business plan
is very important, and said “Read
this business plan, read the vision mission
and values. What name can we give this company?”
Why did we do that? We did that because
we had the vision that this will be a global
company. You give a sanskritised name, for
example, which makes all of us feel good,
particularly my father-in-law who is a Sanskrit
professor, but you know, it will be a mouthful
in Wall Street. Or the word may mean some
ugly things in French. In today’s
world, you need a name that is culturally
scaleable, a name that actually suggests
subliminally, semantically the same value
across the world.
On why start-ups fail Mr Bagchi has this
to say ‘Either founders break-up or
the enterprise runs out of cash or technology/customers/geo-overdependence
or poor governance’.
Well, few reasons, why start ups fail. Number
one, Founders break up. Most start ups fail
within the first one year, not because of
technical reasons, not because of financial
reasons but because the Founders part ways.
Why do Founders part ways? They did not
invest, in the first place, in articulating
a shared vision. Different people came for
different reasons to build the company.
Somebody wanted to get rich quick. Somebody
wanted personal glory. Somebody had some
other motivation. So, if you do the upfront
value clarification that kind of issue does
not come up. Enterprises run out of cash,
people try to raise money too close to the
money running out. The moment the first
thing that a potential investor does is
to ask how much money do you have in your
kitty and does a mental maths, the moment
the guy realizes that the money is for two
more months then starts arm twisting you.
It is very important to raise money ahead
of time – not raise too much money
and not raise too little money.
Mr Bagchi says that we must learn lessons
from the Indian IT industry. ‘To be
world class begin and end with quality.
Focus on what you know rather than who you
know. Leaders, he says exemplify personal
integrity.
Number one, to be world class, we need to
be careful with quality. We need to actually
engineer quality even though the customer
is not asking for it. In India typically
we deliver good quality but quality orientation
is what you ask. We need to create a quality
standard that the customer has not asked
for. Focus on what you know and not who
you know. In North India, the most important
starting point is who knows who, not who
knows what. We don’t want to build
the company on the strength of who knows
who. We need to build the company with who
knows what. We need to have an abundance
mindset. I think the way that the Indian
IT industry succeeded could not have happened
without an abundance mindset. There was
no scarcity mind set. You know when Mr Narayana
Murthy started Infosys and he inaugurated
the first building, that time the concept
of shared wealth creation was publicly unknown
and he said that his goal was by the year
2000, we should create 15 millionaires.
It was taken as an inspired, partly idiotic
statement, but you know what, actually he
did it and outdid himself and look at what
has happened. I don’t think Infosys
would have become what it is if Narayana
Murthy had said “I would like to give
90% of wealth to myself”. The industry
has paid its taxes. You haven’t yet
read in the paper that Mr Narayana Murthy
or Azim Premji have been raided. I don’t
know about the future what will happen.
It is a hierarchy free industry. I think
leaders exemplify personality. The people
who want to work for you don’t want
to come and join a start up which is less
exciting. People don’t want to try
a mole hill. They want to try a mountain.
We need to create deep inclusion. Organisation
resources are not my resources. In India
particularly we have the proprietor mind
set, so the company car is my car, the company
guest house is my guest house and my children
can come and do whatever they want to do
with the company resources. Once Siddhartha
(CEO of Café Coffee Day) had taken
me and my daughter for dinner and after
that we went for coffee in a Café
Coffee Day. I was so pleasantly surprised
at the end of the transaction. The waiter
came, gave him the bill, and he paid cash
for the bill and walked off. Of course,
the entire Café knew that he had
come. There were no attenders hovering around
him. He was treated just like another customer.
They did not know that he was coming. We
had dinner. Suddenly on impulse we decided
to have a coffee at Café Coffee Day.
He was not given any special importance.
He was treated like any other customer.
The outstanding thing about the Indian IT
industry is that it is the story of ordinary
people who have done extraordinarily well.
Captain Gopinath (CEO of Air Deccan), is
as ordinary as he looks. You saw the picture
of his home, his parents etc. The industry
is proof of the concept that even in a country
like India, you can build high performance
organisations
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