Read about Map my India's short story in TOI which was started by Rakesh Verma. It explains a significant challenge of an entrepreneur that I missed articulating in my first blog of five challenges: How to produce money outcomes? One of my entrepreneur friend pointed me this miss of mine !
A corporate professional can use his niche skill ( be it programming, designing, recipe building, or training) and expect his organisation ( intermediary) to convert his output into a 'business result'. While his organisation 'synthesises' rest of the resources to do the conversion, the professional gets his money through skill market. An entrepreneur, on the other hand, has to encounter this challenge all by himself/herself.
Further, he faces different challenges at different times, necessitating different strategies. Initially, the challenge is of producing immediate 'result' from the planned idea. This is the challenge of Exploration. Like Rakesh Verma's case, he got his first assignment for his 'software service' company from Tata Steel at Jamshedpur. That kept them in the business. Another entrepreneur i know started with a product idea from software service for students. Some entrepreneurs encounter a stiff challenge at this stage itself. They move from one 'service' to another 'service', never consolidating their skill base, and therefore struggling for a long time. Sooner or later their business model ( of getting new customers plus delivering service to them on consistent basis) gets consolidated. If it fails to produce results, the entrepreneur may just exit.
Second stage of this challenge faced by an entrepreneur is being able to do what one wants to do. This is the challenge of Consolidation in a specific direction. At this stage, the challenge is to find what one should do and then 'let go' the old business idea,if required. If one is lucky, one can extend the initial business idea of 'exploratory' stage further. This is what happened with Sanjiv Bhikchandani from Naukri. Online diversification of recruitment idea helped him extend his business model further. However Rakesh Verma faced a stiffer challenge. He and his wife had to decide what to do and then 'invest' all the money in one 'basket' to make it happen. As initial customers tend to 'determine' the path of an organisation, letting this go is very difficult. Rakesh Verma invested in GIS solutions, when maps were not produced in India, and then proceeded to invest all his money ( 2 crores) in it. Sometimes, entrepreneurs take long time to find their new business model. I know of a Trainer who is currently going through a tough period of this transition. After running his well-oiled 'Corporate training' business venture for a long time, he is trying to move into new business model that is completely untested in Indian Market, SME consulting.
Third challenge is the challenge of 'Growth' beyond a particular scale. This is a stage where most entrepreneurs falter, because it demands too 'different' skill-set. I am currently working with a first generation entrepreneur who has made significant inroads with his new business model in real estate business. However, as the challenges of growing a 'small set up' into an 'organisation' to sustain the 'growth' demands too many changes for the entrepreneur team, very few entrepreneurs manage to negotiate this hump.
The skill required in each of the three stages is so different that many entrepreneurs do not move from one stage to another. They get stuck in one stage. First stage is facilitated by 'Management' knowledge taught in MBA colleges. Many would-be entrepreneurs therefore ask me if they should do MBA before venturing into something. MBA knowledge is useful; but only for moving into 'Exploration' stage, i tell them. For producing outcomes in other stages, MBA knowledge alone is not enough, as entrepreneurs have to bring together the new skill-set (that is not available with them) and mind-set ( that requires too big a change for them).
Exploration stage skill is so different that some entrepreneurs only specialise in this. These are called as serial entrepreneurs. They bring their set up to stage of growth, sell their stake and walk away for others to take the company to next stages. In US, which flourishes on new ideas, venture capitalist and PE funds nurture this community of explorers. Now a days, even fresh MBA's start their venture with VC funding.
We shall explore the challenges at each of these stages in this blog.
Yesterday, i read about Subhash Ghai, the successful film director in Bollywood. His career case is good example of developing a unique business model to succeed. As a young director, he found difficult to get 'stars' to work for him. He therefore developed a new business model: Write a script where he could rope in older hit stars ( like Dilip Kumar, Sanjeev Kumar) and new budding actors ( like Jackie Shroff), add musical element in which he was good at, and create a bankable movie.
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