DICE OF DESTINY
The career defining gambles that CEOS took that transformed their fortunes forever
Career-changing bets are what
leaders are all about. Some succeed, many don't. For those who do, it's a
gamble on the future of a business with their character writ large. In India, too,
business leaders have demonstrated character that has stood the test of time.
Just like Vineet Nayar, Vice Chairman and CEO of HCL Technologies, whose world
was falling apart with recession rearing its ugly head in 2008. "We were
at a crossroads with two options facing us — follow everyone else and cut
costs, sack people or be counterintuitive, see an opportunity in the crisis and
accelerate," he says. At HCL, Nayar saw a blue ocean opportunity opening
up and believed that "the doors will never again be left so open by our
peers and this is the time to focus and grow through market share churn in a
slowing economy". Not only did Nayar pick up total IT outsourcing
contracts coming up for renewal, he also increased investments on customer
focus and motivated the workforce with the homegrown 'Employee First' policy.
"We gained market share, mindshare and talent share and created a momentum
behind HCL, which continues even today," he says, adding, "if you
believe in the right strategy, the momentum takes you...we found that momentum
in customer unhappiness and vendor de-focus and it created a perfect storm for
us to invest rather than cut costs as most of our competitors were doing."
That year, HCL Tech made a total investment of $700 million, with the
$440-million acquisition of the UK-based SAP heavyweight, Axon.
Globally, business leadership is replete with instances of career defining bets. In his book Tough Calls from the Corner Office: Top Business Leaders Reveal Their Career-Defining Moments, Harlan Steinbaum, former chairman and CEO of Medicare-Glaser, one of the largest retail pharmacy chains in the US narrates stories revealed by top business executives about the single most important business decision of their careers. In an interview to Knowledge@Wharton, Steinbaum says defining moments are usually characterised by greater risks, more potential downsides or better rewards, if any.
Kiran Mazumdar-Shaw, Chairman and MD of Biocon took that risk when she started her company in 1978. A trained brewer and maltster from Melbourne University, Mazumdar-Shaw set up an entrepreneurial company from her garage in Bangalore when she didn't get a job. It turned out to be a career-changing bet, since there was no biotech firm around then. While the main challenge was related to her qualifications in fermentation science, the hurdles were numerous. For one, she was a woman entrepreneur with an untested business model. No bank wanted to lend to her and she also found it difficult to recruit people for a startup. Besides, there were technological challenges and very high import costs during the days of the License Raj (pre-1991). "I was faced with a huge credibility challenge as nobody understood biotech but I was determined to overcome all of that," says the 59-year-old biotech czarina. She claims that
the big gamble she made in 1978, has today given her the confidence to launch several other bets on drug innovation as her company tries to develop an oral insulin therapy and novel molecules for cancer and diabetes.
Like Mazumdar-Shaw, another Bangalorean, Captain GR Gopinath, founder of the now-defunct Air Deccan, too had major hiccups setting up India's first low-cost pie in the sky that he ranks career-defining. But the most telling incident was perhaps his decision to ward off the big daddy of private aviation Jet Airways in the country by going on an aircraft-buying binge. As Jet started a price war, Gopinath realised the only way to win the battle was to scale up rapidly. "We bought 45 aircraft in 45 months, and though we were bleeding, Jet suffered more as they tried to counter us." Though Gopinath won the battle, over time managing the company became a major challenge due to spiraling ATF prices, parking issues, etc. Eventually, he sold the airline to "derisk the investors' money". As Steinbaum notes, "Sometimes our most significant learning experiences come from our failures, not our successes."
If Mazumdar-Shaw and Captain Gopinath saw starting up as the biggest challenge in their career, Swati Piramal, Director of Piramal Healthcare, placed her big bet on an acquisition. "The biggest bet I've taken in my career was when I decided to buy Hoechst Marion Roussel India's research & development centre in 2000," says Piramal. In the drug discovery process, only one out of 100 compounds discovered actually find their way to commercialization. Despite the caveat, Piramal persisted and didn't even bargain over the price on the negotiating table. The Rs 20 crore deal proved a boon for Piramal Healthcare as buying the Hoechst facility put it at least five years ahead in the R&D game. The drug discovery centre in Mumbai had ready infrastructure, 100 scientists, and most important, a library of microbes and bacteria samples gathered from all over India. "A large proportion of the compounds that we are now in the process of commercialising, have come from this collection," she pinpoints.
What Piramal did in the new millennium, Baba Kalyani, Chairman & Managing Director of Bharat Forge, attempted in the 1980s. While Piramal went in for an acquisition, Kalyani decided to modernise his plants and put in new technology without any external help in 1989-90. "In the 80s, we had tried our hand at exports and realised that we were unable to meet the quality requirements in Europe. I decided that we needed to be highly automated. At that time, I decided to invest about Rs 140 crore into the upgrade — it was a huge amount; greater than our annual sales," says Kalyani. It proved a risk worth taking because if Kalyani hadn't made that decision in the 80s, the company would have been much smaller today.
If Kalyani took a strategic bet to modernise his plants in the 80s, Nokia India Managing Director and Vice-President D Shivakumar considers Nokia's being a category catalyst to be a career-changer for him. Last June, when he launched Nokia's range of dual-SIM phones, two years too late, the market was skeptical. Today, Nokia is the market leader across price bands in dual-SIM mobile phones. "We were late in entering the category and decided not to treat the dual SIM as a commodity, and that gave confidence to the trade and the ecosystem," says Shivakumar, who initially relied on the confidence of the Nokia brand and backed it up with consumer trends and data points to surge ahead of the competition. Besides, like Novak, Shivakumar too shocked the system by launching Nokia's range of dual-SIM phones in Tier III and IV towns, instead of the commonplace metros. "It was all about traffic arbitrage as we saw greater traction in those towns," says Shivakumar.
Steinbaum calls such momentous decisions 'defining moments'. And these moments can either work on instinct or be researched, as in Shivakumar's case. Is there a formula
for arriving at such a decision? "The best way to make a defining-moment decision is to study all the facts, learn everything you can about the circumstances you're in, the
pros and cons, the cost-benefit analysis, and then make your decision. It's really got to be thought out," advises Steinbaum.
Indeed, much thought went into Founder Chairman of Adani Group Gautam Adani's decision to move into port infrastructure in 1998 with its Mundra Port in Gujarat. At that time, no Indian banker understood how to finance ports. Everything was in government hands. "For our part, we were a trading company which had never even built a building, let alone a port. Sometimes, you have to endure a lot of pain when you enter a business early," reminisces Adani, who never believes in waiting once he sees an opportunity. The ports business ran at a loss till 2003 but has since had 36% CAGR. The turnover of Adani's port in 2011-12 stood at Rs 2,500 crore.
For Rana Kapoor, Chairman & Managing Director of YES Bank, though, it was more of a professional dilemma when he started Rabo India Finance in 1998 as a minority partner after 18 years of being a banker with Bank of America and ANZ. "The venture was built against all odds. The Asian crisis had just occurred, the slowdown followed suit and India Inc. also hadn't taken off. Rabo also didn't have brand equity in India. So it was a demanding period for entrepreneurship," says Kapoor, of the venture that lasted 5 years and 6 months.
While most entrepreneurs in India consider kickstarting their enterprises as a career-changing attribute, given the hardships, few like Piramal, Nayar, Shivakumar, or Kalyani take out a leaf from operations that has left an undying impact on the business. Sachin Bansal, CEO of online retailer Flipkart, took such a call three years into the business. He considers his decision of expanding into categories other than books in 2010 to be the gamechanger. "It wasn't a sudden decision as we always wanted to be grow horizontally rather than remaining niche players. But we also were worried about scaring away customers. People initially told us that Flipkart was over, that we weren't being true to ourselves. Still, when we got the bandwidth to diversify into more categories in early 2010, we went for it," he elaborates. That bet paid off in more ways than one and Flipkart is today the country's leading online retailer vending almost everything under the sun.
While most talk about getting into a business as their definitive bet, for some getting out was the big gamble. Walt Disney Co. India MD Ronnie Screwvala believes his 2011 decision to sell UTV Software to Disney is the most significant bet he has undertaken. "One had worked hard at creating UTV into a brand and it will be a great challenge to build such a well loved global brand like Disney in India. Besides, having a listed media and entertainment company did not allow one to look at a five-year plus horizon," says Screwvala. So as he essays the role of an entrepreneur in the all-new Disney UTV India, his parting shot could well justify the bet he has taken -"Founders in India are too obsessed with control and don't know when to let go to the next level….I think I've made a big bet but the right decision."
Globally, business leadership is replete with instances of career defining bets. In his book Tough Calls from the Corner Office: Top Business Leaders Reveal Their Career-Defining Moments, Harlan Steinbaum, former chairman and CEO of Medicare-Glaser, one of the largest retail pharmacy chains in the US narrates stories revealed by top business executives about the single most important business decision of their careers. In an interview to Knowledge@Wharton, Steinbaum says defining moments are usually characterised by greater risks, more potential downsides or better rewards, if any.
Kiran Mazumdar-Shaw, Chairman and MD of Biocon took that risk when she started her company in 1978. A trained brewer and maltster from Melbourne University, Mazumdar-Shaw set up an entrepreneurial company from her garage in Bangalore when she didn't get a job. It turned out to be a career-changing bet, since there was no biotech firm around then. While the main challenge was related to her qualifications in fermentation science, the hurdles were numerous. For one, she was a woman entrepreneur with an untested business model. No bank wanted to lend to her and she also found it difficult to recruit people for a startup. Besides, there were technological challenges and very high import costs during the days of the License Raj (pre-1991). "I was faced with a huge credibility challenge as nobody understood biotech but I was determined to overcome all of that," says the 59-year-old biotech czarina. She claims that
the big gamble she made in 1978, has today given her the confidence to launch several other bets on drug innovation as her company tries to develop an oral insulin therapy and novel molecules for cancer and diabetes.
Like Mazumdar-Shaw, another Bangalorean, Captain GR Gopinath, founder of the now-defunct Air Deccan, too had major hiccups setting up India's first low-cost pie in the sky that he ranks career-defining. But the most telling incident was perhaps his decision to ward off the big daddy of private aviation Jet Airways in the country by going on an aircraft-buying binge. As Jet started a price war, Gopinath realised the only way to win the battle was to scale up rapidly. "We bought 45 aircraft in 45 months, and though we were bleeding, Jet suffered more as they tried to counter us." Though Gopinath won the battle, over time managing the company became a major challenge due to spiraling ATF prices, parking issues, etc. Eventually, he sold the airline to "derisk the investors' money". As Steinbaum notes, "Sometimes our most significant learning experiences come from our failures, not our successes."
If Mazumdar-Shaw and Captain Gopinath saw starting up as the biggest challenge in their career, Swati Piramal, Director of Piramal Healthcare, placed her big bet on an acquisition. "The biggest bet I've taken in my career was when I decided to buy Hoechst Marion Roussel India's research & development centre in 2000," says Piramal. In the drug discovery process, only one out of 100 compounds discovered actually find their way to commercialization. Despite the caveat, Piramal persisted and didn't even bargain over the price on the negotiating table. The Rs 20 crore deal proved a boon for Piramal Healthcare as buying the Hoechst facility put it at least five years ahead in the R&D game. The drug discovery centre in Mumbai had ready infrastructure, 100 scientists, and most important, a library of microbes and bacteria samples gathered from all over India. "A large proportion of the compounds that we are now in the process of commercialising, have come from this collection," she pinpoints.
What Piramal did in the new millennium, Baba Kalyani, Chairman & Managing Director of Bharat Forge, attempted in the 1980s. While Piramal went in for an acquisition, Kalyani decided to modernise his plants and put in new technology without any external help in 1989-90. "In the 80s, we had tried our hand at exports and realised that we were unable to meet the quality requirements in Europe. I decided that we needed to be highly automated. At that time, I decided to invest about Rs 140 crore into the upgrade — it was a huge amount; greater than our annual sales," says Kalyani. It proved a risk worth taking because if Kalyani hadn't made that decision in the 80s, the company would have been much smaller today.
If Kalyani took a strategic bet to modernise his plants in the 80s, Nokia India Managing Director and Vice-President D Shivakumar considers Nokia's being a category catalyst to be a career-changer for him. Last June, when he launched Nokia's range of dual-SIM phones, two years too late, the market was skeptical. Today, Nokia is the market leader across price bands in dual-SIM mobile phones. "We were late in entering the category and decided not to treat the dual SIM as a commodity, and that gave confidence to the trade and the ecosystem," says Shivakumar, who initially relied on the confidence of the Nokia brand and backed it up with consumer trends and data points to surge ahead of the competition. Besides, like Novak, Shivakumar too shocked the system by launching Nokia's range of dual-SIM phones in Tier III and IV towns, instead of the commonplace metros. "It was all about traffic arbitrage as we saw greater traction in those towns," says Shivakumar.
Steinbaum calls such momentous decisions 'defining moments'. And these moments can either work on instinct or be researched, as in Shivakumar's case. Is there a formula
for arriving at such a decision? "The best way to make a defining-moment decision is to study all the facts, learn everything you can about the circumstances you're in, the
pros and cons, the cost-benefit analysis, and then make your decision. It's really got to be thought out," advises Steinbaum.
Indeed, much thought went into Founder Chairman of Adani Group Gautam Adani's decision to move into port infrastructure in 1998 with its Mundra Port in Gujarat. At that time, no Indian banker understood how to finance ports. Everything was in government hands. "For our part, we were a trading company which had never even built a building, let alone a port. Sometimes, you have to endure a lot of pain when you enter a business early," reminisces Adani, who never believes in waiting once he sees an opportunity. The ports business ran at a loss till 2003 but has since had 36% CAGR. The turnover of Adani's port in 2011-12 stood at Rs 2,500 crore.
For Rana Kapoor, Chairman & Managing Director of YES Bank, though, it was more of a professional dilemma when he started Rabo India Finance in 1998 as a minority partner after 18 years of being a banker with Bank of America and ANZ. "The venture was built against all odds. The Asian crisis had just occurred, the slowdown followed suit and India Inc. also hadn't taken off. Rabo also didn't have brand equity in India. So it was a demanding period for entrepreneurship," says Kapoor, of the venture that lasted 5 years and 6 months.
While most entrepreneurs in India consider kickstarting their enterprises as a career-changing attribute, given the hardships, few like Piramal, Nayar, Shivakumar, or Kalyani take out a leaf from operations that has left an undying impact on the business. Sachin Bansal, CEO of online retailer Flipkart, took such a call three years into the business. He considers his decision of expanding into categories other than books in 2010 to be the gamechanger. "It wasn't a sudden decision as we always wanted to be grow horizontally rather than remaining niche players. But we also were worried about scaring away customers. People initially told us that Flipkart was over, that we weren't being true to ourselves. Still, when we got the bandwidth to diversify into more categories in early 2010, we went for it," he elaborates. That bet paid off in more ways than one and Flipkart is today the country's leading online retailer vending almost everything under the sun.
While most talk about getting into a business as their definitive bet, for some getting out was the big gamble. Walt Disney Co. India MD Ronnie Screwvala believes his 2011 decision to sell UTV Software to Disney is the most significant bet he has undertaken. "One had worked hard at creating UTV into a brand and it will be a great challenge to build such a well loved global brand like Disney in India. Besides, having a listed media and entertainment company did not allow one to look at a five-year plus horizon," says Screwvala. So as he essays the role of an entrepreneur in the all-new Disney UTV India, his parting shot could well justify the bet he has taken -"Founders in India are too obsessed with control and don't know when to let go to the next level….I think I've made a big bet but the right decision."
In India,
like everywhere else, career-changing bets have magnified leadership attributes
that are hard to come by in normal circumstances. Every success, or even
failure, seems to be born out of an adversity. While Capt. Gopinath, Rana
Kapoor and Kiran Mazumdar-Shaw had issues starting up, Vineet Nayar, D
Shivakumar, Gautam Adani, Sachin Bansal, Swati Piramal and Baba Kalyani
resorted to a mid-course correction. For Screwvala, selling out to a
multinational production giant after bringing saliency to the UTV brand turned
out to be his defining moment. But in their own way, they took the most
momentous decisions in their careers, albeit in different phases, that has left
an indelible impact on businesses. As a parting shot, it may be worth recalling
one of Margaret Thatcher's most unforgettable lines, essayed superbly by Meryl
Streep, from this year's biopic The Iron Lady - 'If you take the tough
decisions, people will hate you today, but they will love you in generations'.
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