Attracting and retaining talent in manufacturing SME’s: challenges and how to overcome them…

I was speaking to a CEO of a family owned manufacturing business. Her biggest bottleneck for growth was not investment, but the resources. Their plants they are located in non-metro, their products are well received by both domestic and international markets. However the most exacerbating challenge has been finding and retaining the right talent. Even if they have been successful in hiring a good candidate, spousal considerations would see the resource walking away to denser pastures. For those running their businesses in metros the challenges remain same.  A defence technology company with their plants in Electronics city Bangalore finds attracting shop floor and dirty your hand innovation oriented engineers come hard by when deluged with offers from software counterparts. If they have been successful in hiring, guiding and training them, just when they are turning to be valuable they find the resources moving onto higher pay pockets and join larger brands including MNC’s.  In short, many of the manufacturing SME end up being the training shops for larger companies to poach industry prepared resources. Major challenge is not just to attract junior resources, but also middle and senior management. Unlike IT and other industries, crossover to manufacturing is limited because of perception and other issues.

Manufacturing SME face several challenges in hiring entry level resources. Biggest hurdle is expectation mismatch.  For the theoretical knowledge most possess and limited practical experience, meeting their expectations on pay front is a challenge. Second is locational flexibility. Many of them would love to work in Metros and better equipped areas.  Third is the employee growth prospect, especially exposure to foreign markets, an incentive their counterparts in IT and other services industries have an access to.

On the middle and senior management front, paucity of next line of leadership is a major issue. While many companies have various types of employee development programs, very few of them help in creating a pool of leaders. A challenge grapple is how to turn career “managers” from short-haul oriented, self-centred individuals to leaders.

Entry level hiring and retention is best addressed by adopting one of the following. Create a 2 or 3 year fellowship to attract students from challenged backgrounds and less endowed college campuses.  Design fellowship program to include induction, in class training, cross function training and on the job training. Incentivize junior resources with adequate compensation during the fellowship period. Move the resources after one quarter of fellowship training to design and shop floor and place them under the guidance of a committed senior professional. This is a proven strategy to attract and reduce attrition at lower levels. The complete program has to be conceptualized and positioned above the Apprenticeship Program, Ministry of Labour to reduce management cost of administering the program, gain flexibility and attract right resources. In parallel, offer short-term projects to graduate and undergraduate from nearby institutes as a part of their regular curriculum and for their long-term projects.  Ideally choose a less endowed institution that is yet to make a mark and is finding placements records difficult to achieve.   Success of these programs depends on planning ahead what courses to engage with and what specific projects would have higher ROI. This is not just an effective strategy to engage junior resources, but would prove quite useful in exploiting open innovation. Identify key areas of technology challenge and offer them as a contest where faculty and the students from various institutions can participate. Smarter manufacturing SME can align their requirements within the ambit of several government programs on innovation and industry-institute interactions. Such an approach can also yield higher branding opportunities for the company at no cost and succeed in attracting the right talent.

Middle and senior management capabilities can be best served by growing leaders internally or using other platforms such as “Faculty immersion”, or “interim Manager” programs. Attitude to learn and own are the key elements when selecting internal resources for leadership development. Growing internal resources requires thorough planning, and high intensity of follow through. Identify and develop potential leaders, look for obvious signs of quality of work, sense of ownership of team, quality of feedbacks to colleagues, penchant to DIM (do it myself), initiative for breaks with team, etc.   Assess their skills and capabilities, and identify right intervention strategies. Support them with mentors (either internal or external). Alternately, move them to different functions and expose them to other markets or Executive programs.

Many institutes and colleges goad their faculty to gain valuable practical experience and enliven their class room with rich industry knowledge. Faculty immersion programs works best in quality, scheduling, materials, and supply chain and marketing areas. Offer willing faculty appropriate fee to incentivize them to learn and transfer the skill internally.  Explore opportunities to get federal and state funds for plant and quality improvement programs such as ISO certifications and others so that cost for the company can minimized and faculty involved is better incentivized. Externally funded programs also offer the additional advantage of no cost marketing.

Many qualified and able professionals may have retired from active duty, but can be extremely valuable sources of leadership and capability development for SME. Devise programs to on board willing and able experienced professionals as “interim general managers” or “Interim leaders”.  Define explicitly the hand holding they would do for your internal resources, prioritize maximum 2-3 areas where they would be involved and outcomes that may be achieved. Celebrate the milestones achieved, involve them in capability development and expansion. In the end, attracting and retaining resources in manufacturing SME requires the company to be creative in its recruitment methods and flexible in the immersion and exploitation of the skills.  Rejig your HR from a passive support organization to proactive outcome driven function. Enable mechanisms to engage and exploit open innovation.

Dr T R Madan Mohan

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How to improve your execution excellence

Strategy making is a grandiose and heady affair, but by itself does not guarantee successful outcomes. While many attribute successful outcome to grand strategy, seasoned professionals realize execution excellence is what determines the quality of outcome. Execution excellence is a result of loads of commonsense and stick to basics program. In all its simplicity, a solid execution excellence is all about plan-do-act-review and revisit of efforts required to meet the outcomes. Reams have been written about planning, review and control acts of effective execution. I would rather share insights gained by working with some of our client organizations. From a business program perspective, always choose just 3 or 4 objectives that matter to your company. Chasing too many objectives would prove to be counterproductive. Define how each of these objectives would be measured both in terms of financial and non-financial indicators. Also remember, some of the measures may be long term, may emerge only when certain priorities are fulfilled. Align your senior management roles and vision with their respective objectives. Do not attempt to formalize too many things. Processes and systems are fine, they should not be rigid and stifling the initiative and creative solutions that need to emerge at various levels. Communicate to all involved in the transition, the outcomes, expectations and the head rooms (remember Murphy’s law) so that there is enough flexibility to fail, learn and grow. Bean counting beyond a certain level may be an excellent academic big data project, but may not have high ROI from company’s perspective. Ensure the process and systems build allow one to manage root causes broad enough to impact revenue and customer satisfaction.  Communication is the biggest culprit that can affect execution excellence. Insufficient communications, iterative communications with changing goal posts and too implicit communication affect the outcomes. Contradicting communications from senior management and conflicting directions during the midcourse have derailed many a successful programs. Get communication strategy right from how and what to inform, how and whom to influence and finally how to gain advocacy for program must be thought through in detail. Ensure adherence and buy-in from all senior management about communication strategy. People are the key to execution excellence. Some many exit the program citing long haul of change, some may not know how to transition to new role and expectations and so on. Effective use of praise, promotion, handshakes and pat on back for failing and emerging strong must be employed at all levels. In many a program, it is certainly the wins at middle and lower ends that define the momentum of the program. Ensure small wins and headwinds are celebrated. While many companies commit the training and support required for the people, inability of the senior management in letting go of B & C responsibilities hurt the outcomes. Create inclusive mechanisms such as executive council or Program committee to broad base ownership, innovation and results management. Successful working of these mechanisms is key to execution excellence.

Dr TR Madan Mohan

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Making Crowd Branding work……

Crowd branding is a unique method to reach a large number of peoples at a very low cost. Crowd branding works when a large number of peoples congregate for a short period, often for religious or other interests. In countries like India which has more than 100 festivals in a year where more than 100,000 people congregate, crowd branding offers a unique platform to reach out and engage with customers. Events like Kumbh mela, Sabarimala or Pushkaraulu are mega congregations where the number of peoples attending may dwarf the population of many small countries. Kumbh Mela, a festival which happens one in 12 years has more than 100 million peoples thronging the banks of River Ganges and other tributaries. Similarly, Sabarimala, a hilly place in Pathanamthitta District of Kerala State in India, has about 40 million peoples visiting the shrine annually. On the grandeur scale is the shrine of Tirupathi in Andhra Pradesh, the second richest religious institution in world. It attracts 50,000 devotees on regular days and 6 -10 times the number on special occasions. Local festivals like Chath in Bihar or Velankanni attract about 2 million people. It is not just religious events that offer a platform for branding. Events like New Year or Christmas witness large crowds around Taj Hotel in Mumbai and Marine Beach in Chennai.

Crowd branding is a high visibility and high impact option. Companies could pursue direct product experience or indirect product experience to reach out to customers. Direct product experience involves offering smaller samples or products for free. For example, a tooth paste manufacturer can offer smaller packs of tooth packs for brand recall and association. Companies can purse surrogate or indirect product branding approaches. For example, a cement company can provide water or sanitation tanks for convenience of the attendees.

Let us look at examples of direct and surrogate branding strategies used in India. Many companies adopt direct branding approach by giving samples and free gifts. FMCG companies offered sachet packets of their products, or discounts. Tata swatch water purifiers installed 300 water purifiers for Kumbh Mela. Similarly, Marico provided Rs 1 Parachute sachet packet. Likewise HUL provided odomos creams to pilgrims who comes to kumbh mela and Coca cola offered 150 ml of cola at Rs 5 similarly HUL offers vim soap for Rs 4. Godrej provided hair die salon to pilgrims who comes to kumbh mela likewise Shanthi oil installed free oil massage sector to pilgrims who comes to kumbh mela.

Companies could pursue surrogate branding in multiple ways. Surrogate branding could be fashioned around the “event” or something that is of regular use and not necessarily associated with the event. For example, Amutajan made 16 feet statue of lord hanuman with dummy amurtajan boxes. HUL (dalda Oil) presented an image of a god in sand with their brand name. Eternit Everest cements provided tents and roof shelters to pilgrims who come to kumbh mela. On the other hand, telecom companied offered branded Umbrella’s, and light holdings at night times. Vodafone provided scarfs with their logo to make indirect branding. Ranbaxy provided hanuman chalisa to pilgrims who visits kumbha mela and sponsored free transport on boats for people traveling from one river bank to another.

For companies to exploit crowd branding start with customer experience cycle during the event. Identify what physical infrastructure may be required, what hygiene and health related requirements would be accessed, what crowd control and management systems need to implemented to help them have a safe and complete experience. Using service mapping tools such as blue printing helps in gaining a complete view of the customer experience cycle. Within the customer experience cycle, some requirements may be highly repetitive and commonly consumed, while some may be needed only for a shorter period and consumed by few selective population. Highly repetitive events include access to water, sanitation, food and transport. While selective requirements may be healthcare, or crowd control experiences. Identify within the customer experience cycle what would be moments of truth with higher impact and one that is closer to your product/service. Aligning branding artifact with the moment of truth is key to effective crowd branding.

Selection of branding artifact plays a key role in the effectiveness of branding. Branding artifacts can be personal or group based. Branding artifacts can address critical services or non-critical services. Branding artifacts can be context dependent (i.e., related to the particular event) or context independent. A tooth paste manufacturer offering a sample tooth paste is using a personal artifact that could be used everywhere. A cement manufacturer may offered free rides or free group housing. Such an offering would be group based. A pharmaceutical company can offer free health care center and ambulance services, which are critical and personal in nature. A telecom company can provide a public address system and location based identification for missing persons. Such an offering could be context dependent and critical in nature. Healthcare, travel and personal loss related services or artifacts offer longevity of WOM, while food and hygiene related may have shorter WOM. While men and women do involve in crowd branding, it is women fold who tend to carry the artifacts back home. Whether brochure or religious books or other artifacts, care must be ensured in designing it useful and colorful from the other gender perspectives. Marketing professionals must consider the investment, impact and reusability of artifacts before they choose a particular approach.

Sai Vinoth T R

Photo Courtesy: Desktop HD photos

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Practices that help you build unique organizational culture

In a globalized economy, amongst the key resources that differentiate a company from others and sustain its competitive advantage is actually people and its culture. A company’s culture can be a source of sustainable competitive advantage, as it is rather difficult to imitate. A company culture also has a major impact on the value generation. A superior organizational culture can help in retaining people, broader knowledge dissemination and offer cost advantage due to learning. Culture is defined as a pattern of shared basic assumptions that the group learns and has applied in internal and external situations which has worked well to be considered valid and, hence, to be taught to new members as the right way of perceiving , thinking , and feeling in certain situations. In an organizational context, it is a system of shared meanings held by the employees that lets each organization differentiates itself from others. Culture includes traditions, customs, values, rules, habits and practices that company knowingly and unknowingly creates and sustains.

Practices are codified artifacts that anchor values and customs, standardize and institutionalize beliefs and rules across the organization. Practices involve both explicit and implicit communication artifacts. Practice may include usage of standard operating procedures (SOP), manuals, rule books, cultural events, functions, etc. Practices like a rigorous process of hiring– seeing to it that the employees are good cultural fit can help in making a small company successful. A lot can be learnt Southwest airlines where each employee however skillful and well qualified he or she is, is first tested for being the right cultural fit. Southwest believes in filling its company with A players. It believes that it would rather wait to hire an A player or a B player (who has the potential to be an A player) than just be in a rush and hire a C player. Hire slow and fire quickly seem to be the mantra around which best-recruitment practices are designed.

Coaching and mentoring practices are the practices that many companies employ to transfer skill and knowledge across the system. They are an effective way of developing leaders of tomorrow. At Solstice mobile, a Chicago based IT company, employees meet with their mentors on a one to one basis to discuss personal and professional development. These sessions helps in guiding employees in discussing their careers thereby focusing on both personal and professional development. Apart from coaching sessions, emphasis can be laid on knowledge sharing sessions. A knowledge sharing session is where each employee is given the opportunity to share his or her knowledge on a specific tool, technology, process or concept which he or she has personally used at work. This not just lets the employee share what they know but also gives them the platform to share their experiences. Knowledge sharing sessions can also help employees identify their strengths and weaknesses and work on them accordingly. At SMEs each week, on a specific day, a knowledge sharing session can be allotted where employees get a platform to share their knowledge with other employees.

If there are two things most companies seem to be realizing of late, is performance evaluation and performance awards may not be effective way in building cohesive organization. Deloitte and several other organizations are ditching formal annual performance systems and awards to one that continuously tracks the progress of an employee and helps them to improve themselves. Some companies have moved away from “Employee of the year” “Contributor of the month”, “Achiever of the year” awards that while can motivate few, can unnecessarily demotivate and demoralize many others. Many companies are moving to peer recognition to recognize good work by their colleagues. An organization wide Peer recognition program can enable departments who have worked with each other, contributing to each other’s progress an opportunity to recognize efforts. It gives employees a chance to express what their co- workers mean to them. For instance, Square Root, an IT company based out of Texas, gives their employees the chance to recognize their colleagues who embody their four core values (Think big, Do bigger. Be customer inspired. Partner. Thrive.) regularly. Employees use a platform called Bonusly, where they give out points to one another, tagging one of the four core values. These points can be redeemed for everything from gift cards to their favorite restaurants to GoPro cameras. Square Root also gives weekly shout-outs to employees who receive kudos during their Friday announcements. A similar system can be introduced into small and medium companies where employees can recognize their colleagues based on their good work and can tag them on the basis of core values.

A recent survey of CEO’s revealed over 80% felt that most training programs had no clear business value. Companies are realizing staff development does not mean fancy executive development courses across well maintained institutes or immersion programs across some countries. Smarter companies are realizing lots of training can be free, internal resources driven and more valuable if outcomes are tracked continuously.

Employee engagement is another euphemism in many companies for annual day, birthday celebrations or some cultural events. Smarter companies are realizing employee engagement has to move beyond tokenism to immerse and institutionalize an organizational culture. Many self-funded small companies which do not have access to large amount of capital as their fatter cousins who have raised VC funds, implemented deeper engagement practices built on local culture. In being able to implement all these functions, it is essential for the human resources team of the organization to look at itself beyond just being able to do an administrative role. It has a considerable responsibility of coordinating with the various departments of the company and implementing and reviewing these practices.

An SME too can build a great culture through incorporating some unique practices. Only in incorporating these practices, it must follow certain steps


  • Have a thorough understanding of your company- Understand what your organization is all about. What business is it into, what industry is it into, what kind of people does it need and with what Skill sets and how is its present state of performance. It is essential to do a thorough analysis of what the company’s current situation is. Rooting out the problem area is necessary.
  • Benchmark it against some of the best in class practices- Look at some of the best places     to     work practices. What do you need and what could you possibly apply to your company? Understand how it could fit into your organization- Evaluate in terms of cost and return. Will the employees really benefit?.
  • Implement – Customize those practices as per the need of the company. Don’t blindly follow the practice of any organization. Tailor-make it to the needs of your organization.
  • Review and Feedback– Post implementing the practice, it is essential to gauge the results of the performance of the practice. Are the employees happy? Is the introduction of this practice really helping them? Do a reality check to know something needs to be modified.

Sindhu Raviraj

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Coaching employees in small and medium (SME) companies

“A good coach will make his players see what they can be rather than what they are” goes the popular adage. Every company needs good coaches. Coaches can be internal or external. Coaching and mentoring is often confused to be one and the same. A coach is usually a subject matter expert who engages with a person or group of persons for a specific task. A mentor on the other hand works with the mentee with no specific outcomes but for long term transformational change. Coaching sessions happen in a structured manner with a dedicated amount of time set aside for coaching. Mentoring on the other hand does not have fixed time or agenda. Coaching happens for a specific purpose and done in an official or formal manner as assigned to both the coach and to the people assigned to the coach. Mentoring is more informal and done at a personal level. The purpose of coaching is developing people for a specific task and the timeframe for coaching may end post successful completion of the task. Mentoring happens more from the angle of personal development. It could go on for longer than a year.

Coaching of employees in SME companies is important because of two prime reasons. Given the limited resources and remunerations, if not VC funded, most of the companies have limitations in attracting the top notch resources. Unlike their larger counterparts, SME have unique challenges of growing talent and control attrition. For many SME growing and investing in a loyal employees has more bottom line impact that hiring from market. An employee with long term associations would have imbibed the organizational culture, and hence the transaction costs of bonding, and monitoring as they move to newer roles would be insignificant. Coaching in the context of small and medium companies especially can work wonders in creating star performing leaders and employees. Coaching works in stretching the leadership base in the company and create a pool of second and third level ownership.

Like all organizational interventions, coaching must follow the process of select, sieve, invest, support and disengage stages. In the first stages, SME management select the individuals who show promise not just on technical stuff, but are prepare to the long haul the company is envisaging them in the newer roles. Selection should be based on 360 feedback and psychometric tests to arrive at a smaller set of potential candidates.  Rolling out a coaching program must be done with an aim of making it helpful for the participant employees in their practical situations at work. Since a coaching program is task specific it is important that the program tackles all the identified improvement areas is necessary. It is essential to make the coaching program activity based and include role plays, simulations, etc. A coach may come across several instances where an employee performs well during activities like simulations, real life situation cases, etc but when it comes to execution in the actual situation, they may fumble. Their ability to sense and respond may be not be at best in real life situations. This is where the coach must intervene, develop situation specific frameworks the employee can relate too, ask them to maintain a learning dairy so that they could monitor their progress to various stimuli.

Coaching is a process change. A coach has to plan for the initial engagement, winning of trust and acceptance and plan for disengagement.  Coach should move from how to stage to when and why of response and stimuli so that the transfer of skills and experience is sustainable and long term impacting. The trust, empathy and personal touch are key factors that play an important role in coaching outcomes. Lastly, both coaches and management must be prepared for less than 100% outcomes and setbacks.  Employee attrition, their inability to own and walk the long haul or organizational changes lead to less than expected outcomes. From a SME perspective, investing in a coaching program rather than splurging $$ on generic training programs help in motivating employees, and identify new layers of leadership.

Sindhu Raviraj

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Corporate venture funds (CVF) route to innovation and market.

Corporate venture fund (CVF) is the investment vehicle created by companies to invest in external companies including startups. A recent CB Insights report mentions that corporate venture funds invested about $12.31 billion in 2014 and they outnumbered traditional VC in many markets including mobile, healthcare, etc. The reasons to set up VC F are many. From an “open innovation” perspective, investing in outside agencies provides more opportunities to benefit from innovation, than investment in their own R&D.  Often it may be even cheaper way to access emerging technologies and resources, thus help company gain from faster response. Investment in external agencies can help the corporate to de-risk investment and resources, even if technology changes or market changes happen. Another major advantage unlike the internal R&D which may be plagued by the internal organizational dynamics, a startup can pursue the technology development without any risks of failure or constraints persistent in the parent. Consider the case of research labs that were created under quite a pomp and show by many software companies. While their initial efforts were laudable, they lost steam in the run up. Attrition of key people at top, inability to drive “outside-company” innovations, and risk-averse, process-support nature of their key businesses have thwarted these centres from becoming innovation engines, but poor super-centre of excellence an euphemism for domain heavy/process heavy resources. In software and pharmaceutical industry, CVF is an approach to access to competitive techniques and increasing the heights of patent walls for the parent company. CVF, as companies such as Intel, Eli Lilly discovered could be used to spawn the ecosystem technology development to drive their core product revenues. Similar to corporate diversification strategy, CVF makes sense when: 1) it is a related technology, 2) offers access to state-of-the art technology, 3) provides deeper access to geographic markets, and 4) provides access to a consortia. From an IT service company that has created a CVF, an investment into say a product backed by Irish Baking association or a IoT applications that helps read HMR readings of equipment makes sense. For a CVF to be successful sticking closer to the parent company markets, creating platforms for transfer of knowledge and skill sets from the funded companies and the parent, pruning investment that has gone sour and continuing to check risk averse behaviour is paramount. While CVF provides innovation leverages, parent companies must independently pursue alliance programs as alternate routes to engage other market players where no CVF investment has happened to de-risk themselves from dependency and alienation of other players.

Dr TR Madan Mohan and D. Balasubramaniam

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Setting your ward to “succeed in family business”

Family run businesses are a significant segment of any nation’s industrial structure. 5% of US GDP is contributed by family businesses and 35% of Fortune 500 is family owned. They generate close to 50% of employment and 59% of all new job creations. In India 95% of business are family run, and 30% of BSE listed companies are family owned. These companies product more than 6000 products, contribute to 45% of manufacturing output and 40% of the total exports of the country.  Just about 20% survive a first generation transfer and over 65% of the succession plans go awry.  Succession has not been smooth affair within large companies like Tata’s and Mahindra’s.   Success of succession depends on the planning and execution.   Insights from successful entry and succession of wards into family business show there are some common principles that can be easily adopted.

While planning, entry at right level and mentoring are important, setting up wards with the right gamification principles ensures success.

  1. Do not burden the successor with constant reminder on results, instead focus on outcomes.
  2. Obsession with results can induce an undue pressure on the successor and induce her/him to focus on short term gains. Remember succession is an opportunity to rewire your business, and let somebody who is going to own and run the business in future unearth suboptimal approaches, bring fresh perspective and drive down the cobwebs.
  3. Limit praise, only for genuine reasons.
  4. Undue praise, which happens every day for no significant output, takes the charm out of appreciation. Overusing praise may make the successor believe less of you and less motivated
  5. Encourage them to take risk and experience failures
  6. Nothing teaches like the dirt on their own hands. Allow successors to fold up their sleeves, trip, fall and raise up to live with the experience.
  7. Allow them to solve the problems in their own way and learn
  8. Encourage them to go to the bottom of events, what happened, why it failed, what could they learn and how they would do it next time. Senior family members must dawn the role of mentor on the sides rather than leader on the dias if succession has to be successful
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Growing leaders internally: what works and what does not

One common challenge in organizations of all colours and size is paucity of next line of leadership. While many companies have various types of employee development programs, very few of them help in creating a pool of leaders.  A recent survey of employee engagement spend indicates less than 10% of companies find returns from the employee engagement and development significant. A challenge grapple is how to turn career “managers” from short-haul oriented, self-centred individuals to leaders. Leadership is all about imbibing and living with sense of ownership, intense commitment for outcomes not just results and sense of urgency in reaching the outcomes.

Examples of failed leadership development experiences in many companies indicate three common challenges. Early push of an employee into a leadership position when he/she was not sure about the haul is the first cause of failure.  While the management may have identified the potential of the individual to be leader and pushed him/her to the pedestal the individual may have certain apprehension.  Capability or commitment required for the long haul of company’s growth, or utility of the job itself may inhibit the individual from embracing the new role. If the employee happens to come with an expiry date (an euphemism for an employee who stays in a job to a particular period so as to meet certain pre-requisites for a certification or industry experience), thrusting her/him with the leadership may not work.   Leadership experiments fail if they clear assessments are not carried out. Before even thrusting an individual to a leadership role, identify her/his strengths, values, positive orientation towards the future and overall satisfaction with the job and organization. Second area leadership development programs fail is insufficient exposure to challenges and associated experiences.  By placing the  individuals in cocoon and not allowing them to struggle in the new role limits their learning on the job. Finally, leadership development fails if continuous assessment of current skills and capabilities and gaps are not done.

Growing leaders internally is a process that requires planning, high intensity of follow through, and freedom to emerge from failures. Leadership engine can be sustained by adopting following principles.

  1. Identify and develop them early: Most successful internal leadership programs quickly identify leadership potentials and others very quickly. Look for obvious signs of quality of work, sense of ownership of team, quality of feedbacks to colleagues, penchant to DIM (do it myself), initiative for breaks with team, etc.
  2.  Leadership at all levels: Internal leadership program must not restrict to a certain layer of organization, but rather be pursued as a common program across the organization. Internal leaders can emerge at various levels and the program must be flexible enough to identify and sustain leaderships of various forms. Leadership at some level may be highly task oriented, structured, process oriented, while leadership at another level may be one of managing unstructured, complex and volatile environment.
  3.  Assess their skills and capabilities, and identify right intervention strategies: Identify their life goals, self-esteem, creativity, optimism, happiness, personal strengths and motivation of the individual. Identify their natural leadership styles and design appropriate intervention strategies.
  4.  Support them with mentors: Internal leaders require mentors who could be from the company or outside. They act as sounding boards, motivational support and dogma sinks.
  5.  Rotate: Nothing works like a comprehensive view of the organization for would be leaders. Job rotation or a new geography broadens the work experience.
  6.  Push them to network smarter: Internal leadership program can be successful only if strong network outcomes are defined and orchestrated.  Goad the identified individuals to connect with their peers in professional forums, industry events, seminars and think tanks. Encourage them to express and reach out in the social media, by curating and directing their content appropriately.
  7.  Expose them to experience, and allow them to struggle:  Internal leadership development must have 3 quarter plans that help the individual gain practical experience of leading and managing at the newer plane.  If failures or setback happens, allow the individuals to mull over and gain from the experience. While setting them to win is important, the win must be cherished as self-gained.
  8.  Help them to do self-review: Internal leadership program thrive if platforms and process to self-review without the stigma of failures or low outcomes are encouraged. Create a informal self-review mechanisms where the individual can elicit the feedback, discuss and digest and push the agenda of improvement by themselves.
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Customer funded startup: are you scaling rightly?????

India is the third largest startup country with 3,100 startups after the US which has 4,500 and the UK with 4,000 startups. While no statistical data exists, anecdotal data indicates 1 in 4 wrap up in the first year itself, 36%fail in the second year and 44% fail in the third year. Probability of failure increases if the product/service is a break through, has no external capital to support the growth or entry barriers are high.  In recent years, venture capitalists, angels and incubators have supplanted the startups with much needed capital. In the midst of chaos, there are startups that for various reasons want to grow with self-generated funds. They prefer to grow organically, gain from each customer win and experience and sustain the firm. Customer funded startups tend to preserve cash from each customer win, focus on optimization of resources and multi-skilling, and drive the growth incrementally.  Unlike their richer VC funded cousins, customer funded companies usually have their offices in backyards, hire people for their attitude, often hire from smaller schools, extensively rely on positive words of mouth to access newer customer. Customer funded startup founders major focus is on enabling great customer experiences at affordable costs.

From our analysis of customer funded startups, there are three broad stages of scaling up. First stage, is when the “relevance” needs to be established. In the initial stages, startup must play hard to prove why it can deliver better value and experience compared to an incumbent. The focus in this stage is all about smartly packaging winnable features compared to incumbent. Most customer funded startup find this stage is challenging, but albeit surmountable.

The next scale up stage happens around 6–14 months. Armed with their first customer experience, they need to assimilate, and standardize the offering so that it can work in various other settings than the initial customer environment. Customer funded startups go through this stage in an iterative “learning by doing” approach, eliminating some that did not work, ironing out the sticky corners and shaping the edges better so that the product/offering meets broad acceptance. In this stage, most customer funded startups, to gain broader experience pick orders that may not be right ones for them. Startups suffer when the engagement cost enlarge because of too much customization for the new client or they have chosen to work with a client with high transaction cost (both bonding, and monitoring costs). Many startups suffer are yet to figure out what resource to be assigned for which projects.  It is not uncommon to find their A resources working on projects of low margins!. Most of them suffer from utilization mentality rather than effectiveness. Another challenge customer funded projects find at this stage is picking up orders without a good analysis of costs and margins involved. Some do not even do a back of the envelope calculations and rely on their gut feels. Priority list of customers are not explored, no focused account mining is adopted and sales is at best reactive.  Key to scaling up in this stage is to know what customers to be dropped, what resources to be allocated when, automation efforts and reduction of overheads, and right costing. Startups have to adopt rigorous accounting principles, sales plans and reporting structure. Decisions related to industry specific versus industry agnostic or how to prioritize key customers and how to align functional process so as to enable the company to work seamlessly at higher scale need to be considered.

The next stage of scaling, emerges around 34-46 months. This is the most difficult one. At this stage, startup’s focus is more on “institutionalization”. How to ensure the culture that sustained them till this stage is preserved and extended, how to identify and encourage next level of leaders to emerge, how to formalize unique organizational practices, how to identify “intrapreneurs” who would own and drive the innovation and change, where to formalize the process and so on. And if it does have a lot on its plate already, how is execution of work going to happen?  Do they have a dedicated set of people who believe in the company’s culture, execute and deliver? Companies have to adopt some standardization and routines, bring in some formalization, even some positive bureaucracy. These are required to bring in both allocative and technical efficiency of operations.  To succeed in this stage, customer funded startups now must learn to wear the mask of the very “incumbents” they were attacking.  Evaluate the efficiencies of process and the scale at which they work, move away from optimization but focus on efficiency,  formal reporting and review to encourage decision making and ownership. While learning and aping from the “large incumbent”, the key is to understand what to assimilate, what to preserve and what to shed quickly.

Sindhu Raviraj

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Five principles of “scaling up a start-up”

Start-ups are darlings of media and investors at the moment.  While many attract huge valuations and grab headlines, many of them bite dust or fade away.  Hoping you have built a start-up, how well it grows depends upon adopting few fundamental scalability principles.

First principle is checking the fundamentals. Validate your product/service is robust, and customer segments are there to encash.  Evaluate whether you have ironed out market fitment, you are relevant to customers segments that are likely to grow and spend. Finally, you have resources in terms of people and infrastructure to support the growth.

Second principle is to formalize process, and the culture you want the organization. Template and automate the surround process.  Detail the culture and align everybody in your current organization to own and drive the initiatives.  Identify and handover the management to entrepreneurs within the organization. Automate or outsource HR and related process. They save a lot of your time and energy.  Create process and systems for an organization 10X times than what you are, not to meet current requirements.

Third principle is to charge marketing. Bring in high voltage less investment drives, right from campus drives, free rides on techcrunch or IEEE or respected incubation platforms. See if you can ride on the ecosystem of OEM’s, educational institutions, HNI’s and angels.  More free vehicles better it is.

Fourth, keep your sales engine simple and stupid. Hire for their attitude than double degree MBA’s.  Bring in a centralized sales operations role that reviews and drives sale to success. Define incentives that are idiot proof.

Finally, but most critical is evaluate well prepared is the organization for your absence. Are there enough people who loose their sleep if delivery are not met or client meetings are missed.

Unlike what mercenary VC’s think, scalability is all about creating a homogenous unit. Scalability is all about creating an entity that breathes and lives a vision, follows common system and process, people and plans.

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