DARE - Because Entrepreneurs Do

One of India’s great modern entrepreneurial success stories is the Bharti group, started by self-made entrepreneur Sunil Mittal with an initial capitalization of 20,000 rupees. In 14 years, the growth engine of the group, Airtel, has become one of the world’s fastest growing telecommunication companies and has joined the small set of iconic Indian companies that are well-known globally in management circles.

Today, even as Airtel continues to grow apace, other ventures within the group are building new businesses in areas such as retailing, financial services, and food processing.

Because of this spectacular growth, Bharti faces a fundamental challenge: how to preserve the entrepreneurial spirit that built the enterprise when the company’s very success makes it a large, complex organization? Simply saying “Let’s stay entrepreneurial and run things just as we did in the old days” won’t do, but if creeping bureaucracy isn’t fought at every turn, it’s impossible to retain either the spirit or the people who made an enterprise great. How can we evolve an entrepreneurial culture as a fast-moving startup develops into an economic giant?

At Bharti, the answer is “We want neither professionals nor entrepreneurs to lead this enterprise—we want professional entrepreneurs.” When those within Bharti Airtel speak about a “PE ratio”, they aren’t discussing the price-to-earnings ratio. Their own definition of the PE ratio is a barometer of their sense of ownership and a can-do legacy, a professional-entrepreneurial (PE) culture that starts at the top with Mittal.

Sanjay Kapoor, Deputy CEO of Bharti Airtel, Asia’s leading integrated telecom services provider asserts “The PE culture has indeed been Sunil Mittal’s conviction. Mittal realized that he couldn’t scale up past a point unless other stakeholders imbibed an entrepreneurial spirit. Entrepreneurship has been a linchpin behind every success of Airtel and the PE culture resonates not only within the company, but outside too, to our strategic partners”.

Eleven years with Bharti, Kapoor recounts the evolution of the PE culture. “When we started, entrepreneurs were managing the company and so we had an Entrepreneur-Entrepreneur culture. EE was apt through our early days but not sustainable. When we started to scale up, we changed it to EP (Entrepreneurial-Professional) with entrepreneurs taking the lead and professionals following them. This was important, because we had to build a large company. Now, we are at the PE stage, where professionals are doubling up as entrepreneurs to build the future”.

What does PE (professional-entrepreneurship) mean to senior professionals within Bharti?
Ajai Puri, heading Airtel’s DTH (Direct to Home) business, comments, “It is all about empowerment and as a part of the PE culture at Airtel, every leader tries to get the best out of people by exciting, empowering and challenging them. It is a very structured way of passionately consuming everyone”. CIO of Airtel’s mobile business, Amrita Gangotra agrees that, “Entrepreneurship is in the very DNA of Bharti Airtel and it encourages professionals like us to think fresh”.

According to Sanjay Kapoor, who heads the Mobile, Telemedia and DTH businesses of Airtel, “The spirit of entrepreneurship is about being passionate about what you do and your drive to do something unique.” The PE culture lends speed particularly when the stakes get bigger”, he adds. And on entrepreneurial traits, he shares that, “The body language and out-of-the-box thinking are two obvious traits that I look out for. Through a conversation, if the person shows little fear for failure and a willingness to take chances, then the person is entrepreneurial by nature and can be trained to fit better into our PE ethos”. Taking entrepreneurship to another level, Kapoor reveals, “In our training and appraisal process, the entrepreneurial spark is a dimension that is measured. Bharti Airtel hires from FMCGs, cola companies and the banking sector, and they join because they are motivated to be a part of this entrepreneurial drive at Airtel”.

At the management of Bharti Enterprises, where Airtel is the flagship brand, Akhil Gupta equates entrepreneurship with innovation. Gupta, who is associated with a range of strategic, financial, mergers and acquisitions of the Bharti group notes, “Innovation is the responsibility of our management, the directors who direct Bharti on the board. They have to lead it as they have the insight into the company’s needs. The value proposition and the benefits and risks of an entrepreneurial innovation are put forward in simple terms for the board’s support.” He continues, “The board will help mitigate risks, and they support innovation regardless of the environment they work in”.

The PE plus factor:
In a survey conducted by the Wall Street Journal, Airtel was nominated as India’s most innovative company. The PE culture at Airtel has made the organisation change-agile, a prerequisite to implementing innovative ideas. Executive Director N. Arjun, who drove the launch of Airtel’s recent DTH business observes, “Airtel is large, but we have the soul of a young company. Across businesses, including emerging ones like DTH, people are given a free hand so that they don’t get bogged down by processes. Bureaucratic delays haven’t crept into the system.”

Ajai Puri, who took over the DTH reins from Arjun two months back, agrees: “Two documents, the annual operating plan and our COC (Code of Conduct and Values), serve as boundary guidelines. We don’t cross these two.” He elaborates, “The PE ratio was introduced to keep alive the essence of entrepreneurship. However this ratio varies at different levels of operations and the maturity of the business. So it tilts more towards entrepreneurship for emerging businesses like DTH where the slate is clean and we have to cast our own stones. We have to take a call on how we want to conduct our business and build the business model. While building from scratch, it demands greater ownership but we can afford to take more risk. Speed and our ability to action our decisions are of essence. Constant experimentation, happens more frequently, challenging the status quo. But in a more mature business like mobile services, the stakes are high, and we have to be more process oriented”.

Kapoor points out that an empowering ecosystem is developed around the PE culture. “Each of our telecom circles across geographies is headed by a CEO. Decision making for each circle is done entirely at their level”. This encourages effective problem-solving too, Puri says:, “As decision making goes down the chain, the problems get appropriately addressed closest to where they arise. Sometimes in large organizations if the problem is at level 10, it gets sorted at level 1, by which time it changes colour and texture and the solution is bound to be less effective. We operationalised the decision-making process. I often tell my team, ‘Come to me with a problem and a solution, not just the problem.’”

But while functioning in a large workforce, how do these professional entrepreneurs avoid a wasteful ready-fire-aim approach? Arjun explains how they steer clear of it: “Once the brief is given, operating teams are allowed to run with it until they are reviewed. When DTH started in March ’07, clear objectives were laid down. We wanted to be market leaders through product superiority. A SWAT analysis was done and we tried to benchmark ourselves against the best in the world. We tried to pick good practices from other players in the industry. For example, our customer installation manuals, training modules and processes were picked up from others and tweaked to our business requirements. We meticulously listened to the voice of customers to understand the underlying pain points. And these reviews gave us a clear idea of where we stand and where we skip. For example, when DTH is installed at new customers’ homes, we conduct audits, sometimes unannounced audits, which then serve as group learnings. Since the launch of DTH, our customer surveys have consistently scored in the top-box”.

Managing her role as Chief- IT Operations and Governance at Airtel, Amrita has a similar observation to make. “We aim for flawless execution by being process-oriented. And by institutionalizing our standard operating procedures we run our business professionally, not in an ad hoc manner. So this balance is the key to our success”, she says.

The PE culture tends to view disruptions as opportunities. Amrita Gangotra recalls, “Products such as Easycharge and HelloTunes increased market shares and bottom lines. We tried to stay focussed on raising aspirations of our customers and not on providing a ‘me-too’ response to competition”. With respect to innovating to stay on top of the curve, she adds “Innovative ideas are not necessarily about starting from scratch or about having to re-invent the wheel. We have introduced new products into India after tweaking them to the needs of the Indian customer. From being a mobile company we became an integrated telecom services provider after we brought in long distance operations to India for the first time”.

Consequently, the PE ratio across this leading integrated telecom services provider has seen the genesis of effective change management, empowerment and innovation, giving Airtel the competitive edge in the industry. At the forefront of the telecom revolution, Airtel has an aggregate of 100 million customers.

Airtel ‘expresses itself’ through PE:
Not weighed down by the side effects of change, Bharti has come up with new solutions to old problems, newer versions to existing solutions, new solutions to new problems and paradigm shifts. It has been the first telecom player to outsource functions such as IT, network, call centres, distribution and, more recently, tower companies. It boldly re-invented its business model.

Akhil Gupta, Deputy Group CEO & Managing Director of Bharti Enterprises and a Director of Bharti Airtel Limited has been the architect of Bharti’s pioneering outsourcing deals. He speaks candidly about all the free thinking that went behind their IT outsourcing: “Outsourcing is not a fashion statement. We had to articulate clearly what activities we could do ourselves and what we would have to outsource. The question we were asking ourselves was whether we needed to do all activities ourselves. Traditional wisdom was about outsourcing non-core activities. We looked deeply and thought that was complete rubbish. Outsourcing has nothing to do with core or non-core. The questions were: First, who had deeper domain knowledge? Was it in-house or was it with someone else? Second, who had better economies of scale with that activity? Third, who will attract better human capital for that activity? When we went through this in depth, we had astonishing results. In IT the answer was simple: We could never have the same domain expertise as an IBM, Wipro, Infosys, etc. Top telecoms have finally agreed that we don’t have as much domain knowledge as they do. Economies of scale were also obvious. IBM makes their own high end servers and deals with same software vendors across the world. And it is common knowledge that talented professionals like to work for IT companies, not those that apply IT. So it became very clear that IT was a function better outsourced”.

With its world-class services built on leading edge technologies, Airtel’s growth is attributed by Kapoor largely to its partnerships and collaborations. He says, “We encourage people with ideas and would like to work with them on a flexible basis either through revenue sharing or as investors”.

Gupta, involved from the start in the growth of Bharti in the telecommunication services sector – both organically and by way of various acquisitions, speaks about what drove their thinking towards the creation of the largest tower company . “We didn’t do anything different with the towers”, avers Gupta. “When we looked at passive infrastructure, we realized domain knowledge could not be within telecom since by definition telecom is a marketing outfit, run by marketers. But there was no external agency that had this domain knowledge. So we decided to create a separate company that could acquire this knowledge. Economies of scale were clear since this would be their only job”. Explaining the win-win behind this shift from a CapEx to OpEx model, Gupta adds, “I am convinced the tower companies we have created is very entrepreneurial as we got three fierce competitors to join hands to create great value. The business model is rare because in very few businesses, the company gains when the customer pays you less! Profits come from sharing infrastructure among many operators, so the customer gets to pay lesser than before, and yet the company makes a profit”.

Bharti’s PE culture encourages solutions by turning a perceived problem on its head. Puri, only six weeks in his new role as the head of DTH speaks passionately about expanding the DTH market in the same way that mobile technology when introduced in India brought a rush of subscribers from rural India, which had been deprived of an access to fixed lines. “If we make a paradigm shift in the way we view our market, we would have three segments: TV cable market as mentioned earlier, cable-dark market (homes that have colour TVs but no wires/cables) which can be provided a satellite dish. And finally, there is a market also in that segment where there is no TV. This third category has a deprived consumer, not necessarily one who can’t afford it but has inadequate infrastructure. DTH is provided via satellite and so a person in the remotest village can become our customer if we offer them lower value packages or Top-Ups which we have just recently added to our offerings”.

In Kapoor’s words, Bharti’s next big transformation will be yo move from its share of telecom wallet to share of overall wallet”. Puri expands, “For Bharti Airtel, the big transformation would be that mobiles will be much more than just a voice instrument. Business can be done through mobiles. Music, social networking, M-commerce (pay your bills, transfer money), M-Entertainment etc. will make sure that the mobile phone will be a life partner! And then there is the convergence of the 3 screens--Mobile, laptop and TV--which is expected to happen in the coming months. Internet connectivity can be provided to a TV set either thru GSM or broadband technology. So an Airtel customer could watch TV on a laptop and browse the net or send SMS on TV. If you were playing a game of chess on TV and had to leave it half way, you can continue it on your way to office on your mobile and the cheque-mate at your office-break on your laptop!”

Perhaps the least astonishing fact about Bharti Airtel is that one of its core values is ‘Making it Happen’. It’s impossible to make things happen in a huge enterprise using the same logic and processes that worked when the company was young. But the professional entrepreneur culture that pervades Airtel and its sister companies provides the compass that keeps the group on track. Every leader at Bharti wants to look in the mirror and say “I’m still an entrepreneur”—making entrepreneurship their profession, and spreading that sense of professionalism to others, is how the company keeps the feel of a venture while it grows.

Each of the company’s businesses aspires to become the leader in its sector within India. The ultimate destiny of these enterprises will then be to grow abroad. Just over the horizon lies the next challenge for Bharti—instilling in a global enterprise the ethos of the professional entrepreneur, conceived and forged in India.

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