DARE - Because Entrepreneurs Do

Competition is rife in the industry today. With new companies joining in, it is about time the existing ones took steps to stay ahead in this race. Read on to find out how.

We have all seen this time and time again. There is a company that makes a bold entry into a space, and with enough time, research and investment they breakthrough and then the floodgates open. Suddenly a new industry and vertical is born, the media acknowledges it and creates an environment where hundreds of companies are born to compete in every dissected vertical of that marketplace. Tough luck.

Vijay Anand

The Strategy of the Giant
India is a country where demand is being created in such a pace that the economy is not grown, but dragged into its size by the sheer momentum of the desires, aspirations and needs of the populace. While there are companies striving to break into the market place, there is a sense of lethargy as organizations grow to not renew themselves over time. The founding team grows and moves out and a management team that grooms the company through its growth phase and perhaps prepares it for an Initial Public Offering (IPO) comes in place. And the thriving enterprise officially becomes an incumbent player in that vertical.

The key for organizations as they grow, to sustain themselves to become a brand and company that people can relate to, is in the ideology of reinventing itself. The concept while it sounds simple can be a bit of a tricky proposition. You can be rest assured that if you ever try to reinvent a company’s goals and missions, there is a real good chance that the board might fire you. Reinventions have to be done ahead of time—not as a reaction to competition getting too close; and to commit such an act when the company is doing well and on a pathway takes a lot of effort.

Consider how HCL reborn with a new brand is challenging the entire industry; the way organizations are managed and even repositioning the company’s value proposition is a testament to this act. It takes guts,
grit and the ability to be able to convince your board that you will take them through.

It is my opinion that India is a market where the next 25 years are going to witness tremendrous growth, and the value propositions and the very demographic that we are targetting will change along with it. To put it very mildly, it will be like shooting a moving target. Reinvention is not  an option, it has to become part of the strategy.

Here are six tips if you are a growing, or large organization that would like to retain its leadership:

1. Set a vision for the company that goes past the goal of building and taking a product to market. Envision the future.
2. Bring your employees and the board to the reality of tomorrow and the vision of the company.
3. Make it a mandatory process to open up communications within the team for suggestions about new product roadmaps and processes.
4. Hire, if not buy talent: Acquire companies that are smart and working in your space. It is not always possible to innovate everything internally, hence acquire fresh blood from time to time.
5. Keep the founders around: While industries and offerings change, the thought process that triggered the initial ideation process for the first line of products is pivotal when you reinvent your company and vision. While you bring the new team onboard, also create a means to keep the founding team around.
6. Revel in your constraints: If you are a successful company, create artificial constraints without becoming bureaucratic. Constraints are the best means to foster innovation for emerging markets.

The Strategy of David
On the other hand, as India grows, markets \that never seem to exist before are burgeoning all around us. Markets are getting segmented further and further and given the size of the population, it still offers a means to build offerings towards a targeted segment making businesses viable.

If you are a startup, you are constrained by everything — talent, time, resources and yet there are going to be companies who threaten to enter into the market you are in with much of the things you do not have.
Here are six tips for startups to stand up against competition:

1. Do your own groundwork—what makes a company unique is the capability of the founders to be able to look at a problem, its interpretation and the solution they come up with the domain knowledge they possess. While people can steal and imitate the prescription, the process as to how you arrived there is a hard one to replicate. It is uniquely you. No first iteration of the product ever survives the marketplace; as such, when you need to get to the drawing board to iterate what you have build and the problem you wanted to solve, you obviously have a better leverage. Market research data and anything that you read can be good indicators, but the strong recommendation would be to get your hands dirty by getting as close to the source as possible.
2. Do not race against time—It has never been in the history of any company that they have raced against time with a competitor and got a product out that works, or has been successful. You only have two options when serving a market, either to lead or to follow. If you are leading think way ahead of the pack; if competitors are closing in, you aren’t ahead of the pack, make a call to either follow or raise your standards. Samsung as a company is a great example of being a follower and taking on the big guys. While companies like Sony have been leaders in their sector, Samsung has managed to replicate cheaper, better variations of their offerings and has built a significant marketshare in their shadows
3. Do not catch up, overtake—One of the things that startups are rather good at is working overtime, hoping to build a product that is better than the offering of a competitor. Common sense would tell you that if the competitor built the product over ten years with a team size of 200, no amount of overtime is going to do justice to be able to deliver a product that has more features and better than the offering that is in the market. Differentiate and take a short cut. Build a product which is either significantly different or which has less features and can target the demographic which is currently being ignored by the existing offering. This pretty much explains why investors and experienced entrepreneurs hide away from Me-too offerings.
4. Invest in the team—You will have to build a team and its skills but persist to hire anyone that will raise the average IQ of the team by some level. With a great team, anything is possible.
5. Iterate, again and again—The strength of a smaller company is in its ability to change things quickly. If you are not a company that can leverage that luxury which is available for a very short period in its existence, you are not making good use of it.
6. Work with Partners—With reference to my article on Exits in the previous issue of Dare (July 2010), the startup ecosystem is quite nascent in India and is evolving with the process as to how we innovate. Larger companies are part of the ecosystem to fill in the missing pieces of what smaller companies cannot do —as such work with them. A successful partnership in most cases leads to an acquisition and that is an experience every entrepreneur should be a part of.

India, in my mind, is in the time period as where the United States was in the 1980s. This is the time period where retail chains and the era of McDonalds was in full bloom. We are looking at a very similar situation in India. The key realization is also that the catching up of almost three decades from 1980s to 2010 will happen within less than a decade here in India. Opportunities will bloom but so will the time period within which the demographics we target remain what they are, they will also evolve. Evolve along with them, or we go the way of the dodo.
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Vijay Anand is a serial entrepreneur, the founder of Proto.in, and the Vice President (Incubation) at IIT's RTBI. He tweets at @vijayanands.
To write to the author, please send an email to dare@cybermedia.co.in with the subject line 'Vijay Anand'.
Disclaimer: The views expressed here are that of the author and do not represent the magazine's.

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