Building the company of the future

An exclusive entrepreneurs’ roundtable with Ram Charan.

It was an engaging roundtable of entrepreneurs before the Ernst & Young Entrepreneur of the Year Award. As the who’s who of India Inc. spoke, Prof Ram Charan highlighted five elements to ready businesses for the future.

“The first is, if there is no customer, there is no business. It has been known for 10,000 years. So, first entrepreneurs need to be able to see customer needs. The second is the tenacity and determination of the leaders to see how to serve those needs against all odds. Then comes the part of getting the right people who can come in to carry on with that determination. As they grow, they build the social engine, so it spreads. But all of these have to be connected to innovation and external environment. Last, but not the least, no leader is great unless he creates other leaders,” said Charan.

He felt the boards can actually become a competitive advantage for the future. They can add value both by giving feedback and by questioning the decisions.

The key point is to have the CEO work with the board and have a candid dialogue on an ongoing basis. The board needs to balance strategy as a concept and the aspiration of the CEO.

On the role of regulators, Charan said, “Regulators need help too. They also need information and knowledge. So, industry leaders need to build the bridges to engage them in a dialogue. It would help them to present their point of view and alternatives based on facts and knowledge exchanged via this communication bridge.”

M Damodaran, former chairman of Sebi, agreed. “Regulators and the regulated universe should not see themselves as being on opposite sides of the table. Both have to deliver value to make things stable for everyone. Regulation cannot be ad hoc, there has to be more certainty which will come from continuity.” Continuity would come from understanding and anticipating the environment, he felt. Future-proof businesses have to contend with the controllable and non-controllable variables. Marico CMD Harsh Mariwala said, “It is a mixed bag and you can only work towards countering the uncontrollable factors. For example, during inflation, we try to price products low. At Marico, we focus on lower priced SKUs such as those that cost Rs 5 and are more likely to remain in the consumer's basket. Or, we try and knock off features not needed and bring the price down.”

As the session drew to a close, Ram Charan pointed out the strengths of the people in India, reasoning entrepreneurship had a lot going for it. “Entrepreneurs are alive here. The people here know how to fund risk. Fifty years ago, this was not the case. The educational institutes create bright, dedicated people. There is also concrete evidence that our people are great at creating new business models, models that can even be exported for use in other countries.”

India's people strength is its competitive advantage, according to Charan, because, “their mental capacity to innovate is critical since things become commodities very quickly.”

“To win in life, don't ever let differentiation diminish,” he concluded.