The fortune of an organization hinges not only on its products but (more importantly) on its inherent strengths across functions—from human resources to customer care and R&D that fuels sustained innovation.
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| The lack of adequate underlying systems or customer fronted support can have only one consequence: dissatisfaction and eventually desertion, of customers, employees, partners, investors and so on -Prof. R Srinivasan
Associate Professor, IIMB |
This is well known; still many fledgling businesses continue to die young because instead of investing on those organizational strengths, entrepreneurs spend most of their time obsessing over their “dream product or service,” the one “big” idea that inspired their start-up.
Put simply, many entrepreneurs invest too much on products and too little on building organizational muscle. Their businesses are unlikely to survive largely because they do not do enough to build their support and service systems that are needed to deliver on the (often exaggerated) promises they make about their products and services to woo customers.
The lack of adequate underlying systems or customer fronted support can have only one consequence: dissatisfaction and eventually desertion, of customers, employees, partners, investors and so on.
This trend is particularly true of smaller organizations where the customer service department is often the weakest link.
It is critical for entrepreneurs to realize what their specific skills and competencies are, and what their weaknesses are. For instance, a great enterprise could be built around a great product idea that the entrepreneur developed and nurtured, but the entrepreneur might not be good at customer service that the product so critically needs to succeed.
The essential fact is that young entrepreneurs are wont to overlooking the importance of building all-round organizational abilities, which are important for a) delivering world class services and b) building value across functions. They, therefore, fail to sustain their growth, build brands and/ or establish relations in the marketplace.
These businesses are too caught up with developing the one product or service that made them famous, instead of building robust, world class systems that could hold them up at even if that one product failed—and, equally support them through their transformation, from a single “wonder product” company to an Innovation Enterprise: an Apple or 3M that churns out wave upon wave of innovative products over generations.
In other words, the nemesis of young entrepreneurial organizations is that they do not always recognize the fact that it is not enough to build a single fantastic product: to succeed in the marketplace the product needs to be backed by world class services. And to retain your edge in the long run you need to create an organizational machine that feeds on innovation and continually rolls out exceptional products and services—almost by default.
In the absence of specialized lines of service to lend focused attention to different functional areas, the entrepreneur as the only recognizable face of his organization ends up becoming answerable for everything and more devastatingly to everyone: customers, partners, suppliers and employees on every little issue. This usually results in all-round dissatisfaction, leading to loss of customers, employees and so on.
It is true that even those entrepreneurs who recognize the need for building world class services in their organizations, are often unable to do so simply because it is difficult to find people with the right capabilities. A support manager at a products company must, for example, be both knowledgeable about his products and equally savvy at handling customers. Such people are hard to find, sure. But given how critical it is, enterprises must never rest until they have found them. Because the fact remains that inferior support is the biggest and the most common reason for the pre-mature demise of many a brilliant start-up.
A perfect example of this is an online business that entered the travel and tourism space with what seemed to be a brilliant idea. On its portal people intending to tour India could define what exactly they wanted to do or see in the country and expect to be served with a package customized to their individual needs. Further, the business promised to take care of every requirement of the tourist when in India, end-to-end.
Conceptually this was an idea worth dying for. But when it came to delivery it did not work. Reason? The company simply could not find the number of experienced agents required to “support” such a complex project. The company signed up with local tour operators who provided a different tour guide at each destination. The challenge here was that each guide needed to have a complete understanding of what the traveler actually wanted to do at that particular destination. But during the handover from one guide to the other there was a breakdown in the communication process and the whole thing went for a toss leaving the customer highly dissatisfied.
Product organizations face similar problems. An IT organization comes out with a great new product and sells it to top brass clients. At this point the contact person at the IT firm must clearly inform the client about the departments or people who need to be reached for addressing different kinds of issues or queries. Since, many small product-obsessed companies do not boast of such specialized service functions, the buck stops with the entrepreneur for even the smallest customer related question. For many of these questions the entrepreneur may simply not have the answer or there may be issues for which he may simply not be able to provide the support the client expects. In such cases client dissatisfaction is a certainty.
The best way forward for a small organization is to invest in building a robust organization armed to provide world class support to every service, especially those facing the customer. Each query must go through proper channels and be resolved by specialists instead of landing up at the entrepreneur’s table. This is tough for both the smaller entrepreneurs who want to have complete ownership and control and do not trust their second tier leadership, as well as their clients who perceive to have given the project to/ engaged the entrepreneur and not to the enterprise. This practice leads to unrealistic expectations from both ends, and finally customer discontent.
There are three cardinal rules that entrepreneurs must follow to grow their organization rapidly.
One: They must clearly identify their own skill sets and then invest in people with other complementary skill sets necessary to drive the business.
A classic example would be Roy E. Disney. As a heir apparent to the Walt Disney organization, Roy Disney decided to bring in professionals to run the company, and decided to stick to animation the one area he was passionate about and understood well. Result: Roy built a hugely successful organization around animation films.
Successfully managing a modern business involves expert handling of multiple disciplines and specialties: no single human can possibly have expertise across all those areas. Understanding one’s limitation (and levels of incompetence) is what can ultimately help entrepreneurs sustain organizations and brands. Once an entrepreneur knows what his role is in his organization and hires experts to handle the other roles,
he is on the way to building a winning organization.
Two: Every product/ service should be managed as a program, with a definite life and value. There must be a clear idea about the longevity or life cycle of their products and accordingly how much value the organization can gain from them and for how much time, should be defined. For example, if the life cycle of a product is 10 years then the entrepreneur ought to be able to estimate the revenue it could generate over that period. At the end of its life cycle, every product needs to be rejuvenated, rebuilt, or even killed.
Three: They must accord considerable importance to service quality. Everything that is sold to customers has three components: product, service, and information. There is nothing that is pure product, or pure service, or pure information. The value is in providing the appropriate mix of products, services and information to the consumers. In many cases, people do not balance these three. For example, many organizations turn out good products but in the absence of service and information quality they perform poorly.
In sum, entrepreneurs must realize that by delegating they are not really losing control or ownership. Letting go can actually catapult an entire organization up the quality ramp, resulting in vastly improved products, services and information. It should end in creating a program for the product/ service offering.
Bottomline: To succeed, Entrepreneurs must stop playing God. Give up to Grow Fast or More.
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R Srinivasan is Associate Professor of Corporate Strategy & Policy at the Indian Institute of Management Bangalore. His research focuses on rapid growth firms, and he jointly coordinates the Management Programme for Entrepreneurs and Family Businesses (MPEFB) at NSRCEL, IIMB.
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