Sometimes, failure forces a person to search in areas he had overlooked or dismissed, finding greater opportunities than he would have realized had his original plans succeeded
With her rich media background, Irawati Gowariker has led strategic communications for the IT arm of HSBC and ANZ in India. Irawati now ‘dares’ to go beyond large multinationals to tell the story of some Indian entrepreneurs.
Because India has so many talented people, competition is often fierce, particularly in the educational system. Indian children strive to be the best of the best, and often what separates those at the apex from those barely a rung below is a single mistake, a small error. With so many contestants reaching for excellence, Indians learn from a young age that nothing less than perfection will do in the tournament of life.
Although rivalry breeds excellence, it can also produce an unintended side effect: fear of failure. When a tiny slip-up can close the doors of opportunity, people may become excessively conservative. They focus too much on avoiding blunders instead of achieving greatness. Worse yet, they never learn how to recover from failure because they have spent their lives avoiding the experience.
Risk-taking and occasional failure are part and parcel of the entrepreneurial life. Entrepreneurs who never fail probably are not acting boldly enough. Sometimes, failure forces a person to search in areas he had overlooked or dismissed, finding greater opportunities than he would have realized had his original plans succeeded. And, as Friedrich Nietzsche famously said, “What does not kill me, makes me stronger.”
The lessons of failure can be difficult to learn because most entrepreneurs prefer to talk about their successes. We asked three successful entrepreneurial leaders to talk with us about their brushes with failure in the past and share the insights they have gained. Their message: they and their companies are stronger today than they would have been had their life experience consisted of an unbroken chain of triumphs.
For example, consider the career of Suhas Lunkad, the Chairman and Managing Director of Rohan Builders (I) Pvt Ltd, a flagship company of the Rohan Group. Today, this fast-growing construction company has a turnover exceeding Rs. 450 crores and is reckoned amongst India’s top civil contracting companies, with headquarters in Pune and regional offices in Bangalore, Delhi and Dubai.. Lunkad’s strength as an entrepreneurial leader derives not only from the company’s many successes, but from an instructive, unsuccessful attempt to break into a new line of business ten years ago.
“In the late 1990’s, after Rohan Builders had completed some very successful construction projects, I was passionate about exploring a new line of business,” Lunkad says. “I wanted to leverage the demand for high-end technology in very large scale integration (VLSI) design to offer chip designing services that would enable us to create miniature devices with a diverse functionality. This excited me enough to want to siphon profits out of Rohan Builders to start my new venture, V3 Logic with a team of highly-trained chip design engineers.”
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The new venture attracted a team of highly-trained chip design engineers and set up state-of-the-art centres in Bangalore and Pune. However, despite four years of effort, the team was not able to clinch a business deal. It turned to training for software engineers, but only a handful of Bangalore-based companies required such high-end skills, and the dotcom bust further reduced the demand for training in very large-scale integrated circuit (VLSI) design. “Unfortunately, as I didn’t have adequate knowledge of VLSI, I could not guide them on customising our services to become more attractive to prospective customers,” says Lunkad. “We had already sustained losses for four years to the extent of Rs. 3 crores, so I had to decide to pull the brakes and think this through objectively.”
Would Lunkad and Rohan Builders have been better off had he never pursued this dream? Perhaps not, as the subsequent success of the company has much to do with the lessons Lunkad learned from its foray into high technology. “Closing down V3 Logic brought renewed energy into my plans for construction, a core competency for the civil engineer in me,” he explains. “Rohan Builders started to take on profitable construction contracts outside the state of Maharashtra for the first time, in Orissa and in Assam.”
Trying something new taught Lunkad what he and his company truly did well and guided the future growth of Rohan Builders. Lunkad comments, “To focus on my core competency was the biggest learning for me, and being a civil engineer, my core strengths are in construction. So after making a mark in real estate, we also saw success in industrial construction and infrastructure projects and successfully expanded. Not only do I know the market better, but I have a clear understanding of the level of customisation and value-addition required to make a success of my construction projects.”
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The dotcom bust also tempered Jawahar Bekay, today Chief Strategy Officer at Collabera, Inc., formerly known as GCI, Inc. Between 2002 and 2005 he was CEO of Planetasia, one of Asia’s pioneering Internet Professional Services companies and led it through a near-death experience. “In a short span of time, we reached many milestones in high-end internet professional services and attracted top class talent across industries,” he recalls. “Our ever-increasing customers were dotcom companies around the globe and our service quality underpinned our success in these boom times.” But when the dotcom bust, 9/11 terrorist attacks, and a global recession struck in 2001, he reminisces, “Almost overnight, many of our customers ceased to exist and along with them went large unrecovered revenues of Planetasia.”
Crisis brought out the management team’s underlying strength and welded it together. With a staff of around 600, “we had a great brand, a great team and very few customers left and very little money to boot.,” Bekay says. “All that counted were our combined skills.” The team had to cut the venture’s burn rate dramatically, and the only solution was to shed valued employees. It also had to look for new customers that were not dotcoms, then build additional capabilities to serve these new clients.
“It took us two plus years to tide over these turbulent times but we came out tops,” Bekay states. “The efforts we had invested in strengthening our stakeholder relations came to play through these challenging times. We were able to piggy-back on the core values that Planetasia stood for. It’s a testimony to our reputation and relationships that there we stayed clear of acrimony of any kind with all our stakeholders. Venture capitalists, banks and investors demonstrated conviction in us and put our down phase to the technology meltdown rather than any mismanagement.”
Learning that might have taken 5-7 years was compressed into a much shorter time frame because the firm had no choice. In the firm’s halcyon days, says Bekay, “Our growth trajectory had us sometimes turning back clients because we were saturated with orders from the internet players.” Because of the dotcom bust, the firm had to explore new markets and form new strategies in short order. “We would have added new market segments and capabilities eventually but the recession only propelled us towards this evolution in a short time frame,” he notes.
For Shekhar Pimplekhare, Managing Partner of Club Oasis in Pune, failure uncovered previously overlooked growth opportunities. A former chief officer on a ship, he joined his father, also a seafarer, in entering the hospitality industry in 2001. Pimplekhare senior had been refused membership in a social club in Pune, and the father-son duo bought ten acres of land along a hillside on the outskirts of the city, intending to create a social club offering sports facilities along with recreation. “My father and I dreamt of seeing champions emerge after training our badminton court and the swimming pool,” Shekhar recounts.
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Aiming to attract sports enthusiasts who were looking for a getaway with their families, the Pimplekhares invested heavily, building high-quality facilities such as a swimming pool, gym, indoor badminton court, tennis courts, miniature golf course, and billiards tables along with a scenic estaurant overlooking the city of Pune. But few bought lifetime club memberships even though the
proprietors saw the Rs. 50,000 fee as reasonable for the amenities provided. “We had not hit the bull’s eye,” Pimplekhar summarizes.
Maintaining the facility led to financial strain, so the partners had to find a solution quickly. Lowering the fees would have compromised the service levels to which they were committed. There was a silver lining to the clouds: the restaurant business was growing steadily. “The drain on our resources made us revisit our business idea, and we decided to do away with the lifetime club model, as it was not working for us,” Pimplekhare remarks. “I have always been passionate about running a restaurant, and the effort we had invested in service, ambience and the quality of our cuisine and our beverages worked well. We decided to bring our restaurant to centre stage such that the sports facilities would support the restaurant and not the other way around. A more promising model that was diametrically different from the original model evolved.”
Would these three entrepreneurs have been better off had they never encountered failure? All agree that overcoming a setback proved to be a blessing in disguise. Says Lunkad, “Had V3 Logic been as successful a venture as Rohan Builders, I would have experienced the thrill of knowing that I could diversify in a completely new line of business. But chip designing is a very specialised area and with my limited knowledge of it, I would have always been in it on the back foot.” Adds Pimplekhare, “The lifetime club model would have been a more interesting venture and a fulfilling one on the personal front. But this original model had a downside: it didn’t factor in the rate of inflation. Having morally committed to a lifetime membership, we would not have experimented with a more lucrative option at a later point in time.”
Each leader can also point to important lessons from adversity that fueled later success. Notes Pimplekhare, “This experience has taught me the importance of flexibility. The drifting Pune population has responded better to year-long club memberships, and we also introduced day-long packages for groups.” Adds Lunkad, “Even now, as Chief Strategy Officer I am particularly cost-aware and my plans are made with a more holistic view about markets. I learned to be conservative about cost outlays through boom times and bad times both and to never lose sight of all those less obvious factors that could possibly jeopardise your business. I also realize how important it is to have your people with you and let them trust you as the management. People double up as an army of defenders.”
Knowing when to persist and when to admit failure and try a new line of attack is also a skill the three entrepreneurs honed through their brushes with failure. Says Bekay, “Dwindling markets and negative cash flows are clear indicators. We pulled through the recession because we charted a recovery plan which started to show results.” Adds Lunkad, “Try to decide consciously on a certain period of time past which you will have to take those hard decisions.” Echoes Pimplekhare, “The motivation for most entrepreneurs is the excitement of starting and creating something new, more than the money alone. But I would encourage entrepreneurs to analyse input versus output and keep the emotions out of this analysis.”
What counsel can these veteran business builders offer for those who must cope with the stress of unexpected setbacks? Says Pimplekhare, “Keep trying something new if you feel you have failed. Ask yourself whether you are a quitter or whether you are going to keep trying till you succeed.” Notes Bekay, “Such challenges are part of the game, a fact any entrepreneur should keep in mind. Take it in stride and learn from every failure whether small or big.” Elaborates Lunkad, “Through hard times, I ask myself ‘Will it help me at all if I stay on in it?’ and this often reduces the stress of failure. If the gestation period you experience seems to make you go into losses, learn to put a full stop. By not flogging a dead horse, you will be able to conserve your energy when making a new start.”
All three entrepreneurs note that failure did not cause them to become more conservative. Says Lunkad, “My risk appetite has not reduced but I take calculated risks.” Adds Bekay, “Despite the market and trend analysis that we get done, I trust my gut too. I think my gut feel got enhanced. My experiences of the time have made me more conscious about bigger decisions and I reflect more than earlier.”
Overall, running into a wall proved a more positive experience than negative for these three leaders, and they suggest that failure in nothing to fear. Says Bekay, “Sometimes these situations can’t be avoided. Try not to run away from it. You might still fail, but if you are confident that you have done your best, it’s ok as long as you learn from it and it makes you a better person in what you do, going forward. More often than not, you will overcome things and actually succeed.”
Pimplekhare feels much the same, counseling entrepreneurs, “Don’t give up easily. Modify your business venture to suit the prevailing market demands. Keep re-inventing till you hit the right idea otherwise you would hit dead end. There is no guarantee to success but never stop trying.” Summarizing the lessons he has learned, Lukad advises, “Always make the time to analyse along the way so that you can take right decisions. Don’t lose your thinking cap. And let your revenue inflow be the best indicator of things to come.”
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