Partnering is toughest for entrepreneurs

 Vaitesh is a very good software programmer with more than 5 year experience. He worked with a friend for developing a software product in billing services, earned good money from selling it to a customer, and is trying to sell it to other customers. He met Unmukt, a 7 year experienced professional, who had started his company in services. Unmukt had some background in software programming. Unmukt and Vaitesh met. Their common friend suggested that they could work together and create a 'bigger product'. Vaitesh however rejected the idea saying that his product framework is 'very innovative' and requires a 'different approach' to selling. 

You will find many individuals like Vaitesh. On the surface, it seems that the root cause of not collaborating with a partner is only inside Vaitesh. But i have observed many entrepreneurs, like Vaitesh, refuse to partner with others primarily due to four reasons:

1. Fear of getting swindled by others: This fear is genuine, but when one reacts to this fear, one's emotion is using him. If one things objectively however, one can take several preventive and corrective actions to negotiate this fear. Preventive actions like knowing the person fully before committing to a partnership, increasing the stake in the partnership in a step-wise manner instead of one-shot, and other legal actions are possible. One can also take corrective precautions ( legal and otherwise) to reduce the damage that may happen when all the other possibilities fail.

2. Ignorance of Contribution of different experts to the success of a entrepreneurial unit: This requires understanding the value chain of a product, the business model of a product. Without understanding the value chain, Vaitesh cannot appreciate the importance of 'Sales or Marketing' in the business model. In 'developing a software product business', Vaitesh does not understanding the importance of sales function. This business model' ignorance causes many entrepreneurs to 'delay' their success, and in worst cases, also trigger their failure. Vaitesh is one example.

3. Misunderstanding of what one can learn through experience: This misunderstanding stems from the ignorance of how people develop knowledge and skills in any area. When they develop a technical product, they understand the value of 'technical expertise'. But when someone is selling a product, they think that 'selling' is just going to customers, suavely talking to them, and making them buy the product with promises and words that may or may not be fulfilled. Many entrepreneurs believe that 'selling skill' can be developed by anyone with some application of patience and practice. Sometimes, they themselves try to learn it.  Sometimes, they try to hire some smart people and expect that 'sales' will zoom, often ignoring the complexities of customer.

Misunderstanding the development of sales and marketing skill is perhaps one of the biggest reasons of entrepreneurial failures. Vaitesh is not alone in having this misunderstanding. I have seen experienced entrepreneurs who are novices in 'sales and marketing' skills'. Not only their progress is blocked due to this ignorance, but even their survival can get threatened sometimes !

4. Inability to talk and reason with strong willed people: When strong willed people work together, they naturally have differences. Individuals often find it very difficult to sort out these conflicts and therefore end avoiding each other. Instead of using the differences to surface the different underlying assumptions of the conflict, entrepreneurs tend to suppress them. Instead of benefiting from the complementary approaches two individuals bring, entrepreneurs seek consensus sacrificing the quality of decision making. Instead of using conflicts to learn different viewpoints, they seek individuals which have same viewpoints that decrease their chances of success. Entrepreneurs often do not learn this skill of using diversity and instead seek homogeneity which, although looks good on the surface, does not help in a deeper way.

Summary

Are you also avoiding partnering in your business because of the above four reasons? If you are, it is time to review your thoughts and do it differently. Remember, in every business that has produced stupendous results, it was the partnership that took it to different heights. It has been proved beyond doubt that partnerships have created more and better businesses than single-owner businesses. Be it a partnership of Steve Jobs and Steve Woznaik, or the partnerships in Infosys, or the partnership of Hewlett and Packard for HP, partnerships flourish better mainly because of last reason: the diversity function. 

Funding Help for entrepreneurs

Once you have a business model that is scalable, then it is time to find funders.Venture funds and angel funders typically help an entrepreneur in providing funds at this stage. This method of funding is very prevalent in western countries, and has come into vogue with the popularity of internet. However today, venture funds are also popular in more established sectors like Manufacturing and agriculture.

Unlike bankers, they do not require any security of land and assets, but they do a thorough review of proposal and promoters before funding. Bankers are useful when you have a good asset base, but these funders are useful when your asset base is not as strong, such as  in service companies. And more importantly, these funders also act as Mentors and give you access to their network and knowledge.

Why do they fund small units? They share the risk with you and therefore ask for a equity share in your company. They get their return when your unit becomes large and its market value has increased. Either they sell their equity stake to another investor, or wait for public issue to monetise their investment. Because they ask for equity stake, earlier you ask for funds, higher is the stake they ask. Conversely, later you ask, lower is the stake they will ask.

You will find two types of funders.One is a Fund Manager who has collected the money from the investors, and another are the investor members whom you have to approach directly.

1. Getting funds from Investor members directly

In this model, you have to give your proposal to a committee of one of these member networks. This committee short lists the proposal and then informs the members. Each member then takes an individual call on whether he or she wants to invest. Individual investment is about 50 lakhs, while total investment could be in the range of 2-3 crores. Because the cost of managing an investment is high, they will like to invest at least 2-3 crores. You will find it very difficult to interest them if your money requirement is lower than that. Three large networks of members are

• Indian Angel Network ( about 200 members) 
• Mumbai Angels ( about 150 members) 
• Harvard Angels , the India Chapater of Harvard Business School Alumni Angels ( 25 members) 

3. Getting funds from Fund managers

In this model, corpus is created by getting money for high network individuals. Many such funds are available. As each fund is created for funding specific type of companies, such as in agriculture or in internet, it is important to find if the fund you are talking to has the mandate to fund your type of products.

For instance, Nexus Venture Partners funds, funds technology and internet companies, while Matrix Partners India has been funding internet and mobile sectors.  Seedfund funds, the oldest fund, provides funds to different type of companies, with as low as 50 Lakh to an entrepreneur.Today, numerous funds are available for funding in education, health sector, and agriculture. So if your unit belongs to one of these sectors, you will have many options to search money. Google for the sector, and you will get a list. After that, talk with someone who has used that fund, and you will get real information.

On the other hand, if you need help, write to me on my gmail id. I shall be able to guide you to the right consultants who work in this field.

Managing customer acquisition requires different type of thinking

In the last blog, we say how the dynamic interaction of two loops - customer acquisition and customer servicing - affects the survival and growth of a new unit. Here we will understand the uniquely different challenges of one loop, that of customer acquisition, and how we unknowingly create our own difficulties by using same 'type' of thinking that is useful in dealing with other loop of Customer servicing.

Two chains in customer acquisition loop

Many entrepreneurs overlook the fact that customer acquisition loop consists of two chains: Marketing (which converts suspects into prospects so that they come to the doorstep) and Sales ( which converts the prospects at the doorstep into a customer). Some entrepreneurs see these two conversions as one, and therefore take wrong actions.

Marketing chain

If Tata Motors is targeting families above incomes above 12 lakhs pa in the population, Tata motors will give  advertisements in the newspaper, sponsor programs for families, or put banner on the roads to convert these suspects ( the families of incomes above 12 Lpa) into prospects who want to buy Tata Manza. These 'marketing' activities allows an entrepreneur to convert their targeted suspects into a possible prospect. However, this marketing system has many holes. Because of these holes, unexpected events can suddenly happen and can break the cause>effect relationship. For instance, if the families of 12 Lpa do not happen to read the advertisement in newspaper for some reason,Tata Motors will not be able to get enough prospects after giving the advertisement.

Sales chain

Sales on the other hand has a relatively less transparent ( less holes) boundary. Because of this, an entrepreneur can predict the relationship between cause and effect with more assurance. Tata Motors, for instance, can hope to convert the prospect (  family of 12 lakhs per annum) into a customer with more assurance, because they can provide all the necessary information and assurance to the family once it comes in the showroom. The sales chain therefore is more 'predictable' than marketing chain.

New type of thinking required by entrepreneur

On the other hand, Customer servicing ( be it production, quality, and delivery) is even more predictable and controllable, because it is within the close confines of a factory or building. In customer servicing, for instance, an entrepreneur can take an action, see the reaction, and change the action  in next iteration. This environments are called short-feedback environments. They enable one to learn from the feedback and constantly improve. Short feedback environments are quick learning environments. Learning to play tennis and cook is easier because it is a short-feedback environment.

In contrast to customer servicing, the feedback time in sales environment is extended. One is therefore not sure 'which action has caused what consequence'. For instance, one is not sure why a prospect refused to buy Tata Manza, despite having enough money? Learning in such delayed-feedback environments is difficult because one needs a different type of cause>effect thinking.

In marketing environment, this feedback is even more confusing because 'more interactive variables' enter in the crucible. When less than expected prospects come to the showroom after the advertisement, one is not sure of the reason. Because such environments are delayed+ interactive variables-feedback environments. (In technical language, these are called messy situations.) One is not sure if 12 lpa families read the advertisement and disliked the features of Tata Manza? Or did they not read the advertisement at all? or did they get more attracted by a discount scheme of a competitor of Hyundai which was launched at the same time? Or was it a effect of a big accident of Tata Manza that happened a week before the advertisement? The interactiveness of various variable create a confusing picture and one is not sure of what is causing which consequence. This requires a different type of cause-effect thinking?

What does an entrepreneur need?

This different type of cause>effect thinking is called as Systems thinking. Systems thinking enables an entrepreneur to deal with marketing and sales environments that have indeterminate cause>effect correlations. Systems thinking is very useful to deal with such messy situations. It teaches them to carefully arrive at conclusions without oversimplifying. In influencing transparent system like marketing, it teaches them to coordinate many actions together to produce a output and not just hope that a banner will influence the customer. It helps them take decisions that are more 'accurate'. It helps them identify the risks they are taking so that they can take those risks consciously.

Without Systems thinking, an entrepreneur cannot decipher marketing environment and sales environment. One way to reduce the complexity is by relying on industrial products alone. If an entrepreneur sells  industrial products to few customers, which are limited in number, he can considerably reduce the complexity of marketing environment on the one hand, and manage the resultant minimised complexity of sales environment.

However, without using systems thinking, entrepreneurs often make mistakes in managing even this minimised complexity. For instance, they will increase the capacity to meet peak load of two customers ( who contribute 80% of the output), without worrying about the high cost of low capacity utilisation that will result when output reduces to normal or below normal levels of output. Or they will depend on one customer without getting any 'premium' for 'sacrificing' the flexibility. Or they will invest on the promises of the customers which will never come through.

Summary

Although marketing and sales environments requires an entrepreneur to learn 'systems thinking', an entrepreneur also needs to learn 'systems thinking' even to manage 'large scale' environment of customer servicing. Once the factory becomes large, the relation between cause> effect become thin and tenuous. They become messy situations. For instance, increasing the salary does not result in increased motivation? Or hiring professionals does not reduce the turf wars between production department and quality department? Or training employees do not lead to increased accountability? Or team performance is not proportional to individual competency?

In other words, once factories and operations become large, an entrepreneur needs systems thinking even to manage these internal environments !

As an entrepreneur what challenges are you facing? Have you learn the right type of thinking to deal with messy situations ?

Is your business model attractive ?

Last week, I met Arjun, a smart entrepreneur, working in a rural area.

Arjun is a second class science graduate who passed out in 2006. He joined a company in Nashik which designed and supplied water purification plants for industrial and domestic clients in urban towns to provide potable drinking water. He joined as a service Engineer who serviced these clients around Nashik. Because of the 'small' nature of the company, he got involved in everything: Selling it to client, designing a plant based on the quality of the input water, installing the plant at the client's site and then servicing the client after the delivery. 

Because of his extensive reach in rural area, in 2009, he started his own unit of designing water purification plants for rural clients, which his company was not willing to service. Today, in 2012, he has a base of 80 clients growing at a compounded rate of 25%, with an employee base of about 6 graduates. 

What was right about this business model which helped Arjun to stabilise his new company, with practically no upfront investment, in a span of 3 years? A business model  with its two interacting loops - investment loop and resource loop - together determines the attractiveness and the unique challenges it throws to an entrepreneur. 

Investment loop

Every business, be it running a running a mobile services company like Airtel, making and selling cars like Tata Motors, or running a company like Arjun's, primarily requires investment in two sides of a loop: To get a  new customer ( i.e Customer Acquisition) and To service that customer ( i.e. Customer Delivery and Servicing). Both sides of the loop are co-related. For instance, servicing a customer, if done well, generates lot of 'repeat' sales with an existing customer or more word-of-mouth customers, which in turn reduces the need of investing in the customer acquisition. 

When a new business is launched, an entrepreneur has to invest time and money to get new customers with a certain value proposition. For instance, Arjun's value proposition to his customer was " I will deliver you water purification plants at your location to convert your available water into potable water at the price of x". Sometimes you have to deliver higher value at higher price, or lower value at lower price. In other words, customers from different segments require different value proposition. 

But, once the customer is found, he has to be delivered the 'promised' value. If the promised value ( be it low or high) is delivered,  the customer is satisfied. Satisfied customers help you get more new customers either through word of mouth, direct referrals, or through endorsements. ( For instance, if a Sarpanch of a village installs a  waterpurification plant, that becomes an endorsement!) In Arjun's business, he also had to service the customer after delivery, because the water purification plant may need repairing and maintenance. This after-delivery servicing needs more investment but also enables one to generate a constant revenue stream. Many businesses like selling soaps and stationary, for instance, do not need this servicing. 

So when Arjun launched his business in 2009, he invested his time and money in getting new customers, but once he got them, he also had to invest in delivering and serving those customers. This is an investment loop which pulls entrepreneur's investment ( of time, money and resources) in two directions, often causing lot of agony for the entrepreneur. 

When a business starts, in the initial period, the proportion of investment between customer aquisition and customer servicing is say, 70:30. As the business matures, the proportion shifts to 50:50 and further to 30:70. Different businesses have different dynamics though. For instance, in a product like colas, the proportion may remain as high as 60:40 even after maturity. While in a water purification plant of Arjun it may shift to 30:70, as the old customers start bringing in new customers. In Industrial products, manufacturing ancillaries of Automobile or two wheelers, it may be as lopsided as 10:90.  In some businesses, huge investments may be required in both sides of the loop for a long long time. For instance, mobile service providers like Airtel and Uninor. Such businesses therefore make huge losses for a long time and must 'plan' for the losses !

For an entrepreneur to be successful quickly, investment loop has to be favourable. This means that the proportion of investment between customer acquisition and customer servicing should ideally shift from 70:30 to 30:70. (Please remember that 10:90 is not a favourable proposition, because it causes over-dependence on one customer. Witness the recession spiral in automobile ancillaries when automobile demand drops.) This is what happened in Arjun's case. With a small team, he naturally focused more on servicing existing customers. He was lucky to have no competition during this time. If he had competitors, his new customers would have been captured by them. But, as he had no competiton, he could wait for old customers to fetch him new customers. This time allowed him to deepen his skills and capabilities in Customer servicing, which in turn allowed him to get new customers. Once he started generating 'surplus' (not profit), he could then invest in increasing his team size, which in turn allowed him to spend more time and money in new customer acquisition. Now the investment loop was favourable for Arjun.

Resource loops

Arjun was also lucky to have another favourable loop: the loop of training new graduates>  retaining them once they are skilled to get returns from them. Many entrepreneurs suffer from this unfavourable resource loop. They get raw resources ( graduates), train them, and once they start delivering the revenue, these trained graduates leave because they get better compensation for their skills in the skill-market. In Arjun's case, this did not happen due to several reasons. One, skills required in his team were not of very high order. He could therefore hire new graduates and make them do 'routine' parts, and slowly learn the 'difficult' parts. Two, because there were not many competitors in water purification sector, these resources stayed with him for three years, which was enough for him to get his investment loop running. (This year, Arjun has lost one key trained resource!) Morever, as he picked up 'rural graduates', they tend to stick to 'known company', rather than find  another 'employer'.

Summary

In the initial period of starting a business unit, an entrepreneur has to be smart enough to make these two loops favourable for him: One is the Investment loop and another is the Resources loop. Almost all business models have unfavourable factors that make them less attractive; they have to be made attractive by the smart entrepreneur.

The investment loop may be unfavorable because of external factors: high competition for the same customers, or inability to reach customers at low cost because customer is fragmented, or because the investment required in servicing is too high or the customer payment cycle is too long. Or  it can be unfavorable due to internal factors such as inadequate resources even to do the basic work, insufficient investment even to accomplish one side of loop such as customer acquisition, and inability to understand the dynamics of the loop.

Similarly resources loop can be unfavorable because of external factors: competition in skill-market, alternative choices for the resources, time required to train the resource is too long. It is unfavorable due to internal factors: Inability to share revenues with key resources, inadequate understanding of how to do the training when the skill is difficult, or insufficient use of processes to manage the delivery ( thus making the delivery prone to many costly errors). More often than not, it is the resources loop which pull down the entrepreneur.

A smart entrepreneur intuitively understands the dynamics of these two loops to survive the initial difficult stages of an enterprise. If an entrepreneur fails to read these signals, no amount of intelligence and willpower can help him. If however, he is able to 'read these loops' in his business model, he not only can survive the initial growth pangs of a small company, but can grow the enterprise rapidly.

How is your business model?

Conserving Willpower is the most important skill for the entrepreneurs

If you see how your mental energy is dissipated in making small choices and avoiding distractions, you will appreciate that, for an entrepreneur, conserving willpower is a single most important skill that can make or mar his enterprise. This is especially true for service sector entrepreneurs, who can constantly change their offerings with little investment.

Manufacturing sector entrepreneurs at least are limited in their choices because of the fixed investment they make in machineries, but service sector entrepreneurs do not have this constraint. Service sector entrepreneurs include website developers, Software solution providers to shops and other small units, Software support units for small businesses like shops, doctors and schools, stock market service providers, hardware support maintenance units, training and coaching classes of different varieties. Even freelancers like trainers and researchers are also service sector entrepreneurs and therefore encounter the same challenges of these professionals.

No sooner one business offering stops producing intended result, say in three to six months, they start another one. With their mental energy consumption being the highest due to the constant choices they make, these entrepreneurs constantly err in taking these big decisions of altering business. Shifting from say conducting a class for diploma students to starting a coaching class for engineers is just a matter of printing another pamphlet for them. Or shifting from serving one class of customers ( say doctors) to serving another class of customers ( insurance agents) is just a matter of starting a sales campaign. They have very little mental energy to weigh the implications of their business models, evaluate the competition in another segment, or map the value addition that can be done in the delivery model.

For service sector entrepreneurs, such big decisions are simply a matter of 'braving it out' and 'hard work'. They simplify their choices by assuming 'one has to take risk to earn money'. They have little time to acknowledge that psychologists have discovered in their research that 'successful entrepreneurs are those who risk the least'. These entrepreneurs do not realise that their single most 'valuable resource' is their 'time'. And apportioning that time has to be done as diligently as apportioning money. Instead they will do multiple activities in a given 10 hour day and expect to produce result from multiple activities. For instance, i know of a talented freelancer who is engaged in three different business models simultaneously in a day: doing astrology ( being an engineer he is a first rate astrologer), doing journalism ( he has taken a degree in journalism) and also doing real estate deals. What result can you expect from these dissipated efforts?

Sometimes, due to inadequate willpower,  these entrepreneurs suffer a much more deeper imbalance between short term results and their deeper intentions. If they start earning money from 'x' activity which is however not tapping their deeper potential, they find it difficult to transition it to another 'y' activity which will actualise their potential better. This transition from x to y requires them to make multiple choices and stick to them for a long time. Unable to muster enough mental energy for doing so, they are unable to initiate the new activity which will help them fulfill their deeper potential. Slowly and surely life is drained from them, and they wonder why money is not giving them 'happiness'.  Although they became entrepreneurs ( or researchers or trainers) to develop their deeper potential, they end up suffering with the same illness: Enough money but with little satisfaction.

If you do not want to end with the same illness, you have to learn to conserve your Willpower !

Can you run your enterprise on excellence?

I was reading Vidhu Vinod Chopra's interview on his style of film-making. Please do not pay attention to his contrarian views, but listen to his style.

"Ferrari took us four years to write, 3 idiots took us 3 years" , Vinod Chopra said in his interview. He further added that 'Munnabhai MBBS III is in writing for last 3 1/2 years, but he is not willing to start it because the script has not yet come out well. Please remember that with Vinod Chopra's background, if he makes a film, he can collect 100 crores in first three-five days.  What makes Vinod Chopra work on excellence, when others run after money?

Take another example of Aamir Khan. Here is a man, who could have earned huge money, by doing more than one film at a time. But he refuses to do more than one film at a time, lets go opportunity to earn money in his 'hey days'. Film industry actors 'justify doing as many films as they can' because their shelf-life is short, as they say. But what makes Aamir Khan not worry about his shelf life, when other actors behave differently?

If you think that I am giving big celebrity examples only, let me give you a simple example of an entrepreneur. Let us call him Vikas. He is an entrepreneur in Nashik. Started his first unit supplying to Foundry manufacturer in early 1990's. Went through huge difficulty during recession. Now runs a unit of wire. Employees from 1990's are working with him still. ( Please remember that entrepreneurs find it difficult to retain good people !). Vikas follows highest standard guidelines of managing hazardous material called REACH. Has no target set for his unit, other than producing excellence. What makes entrepreneurs like Vikas practice excellence in business, where entrepreneurs do anything to justify 'business'?

What do you find common between Vinod Chopra, Aamir Khan and Vikas? They practice excellence, and believe that it will fetch them the desired revenue. For them, Money is means to end, not an end by itself. For them, money is a byproduct of what they do, not the end by itself. For them, doing something 'right' is more important than doing something 'ok', even if that ok is acceptable to the majority.

More importantly, they have one important quality. They are not impractical and unrealistic zealots who practice 'quality' for the sake of 'quality'. Instead they understand the constraints of their excellence and are willing to work with it. For instance, Vidhu Chopra knows it takes so long to make these films and is willing to live with that constraint. Even when he makes a movie like Eklavya, he knows that the audience is not ready for it and is willing to wait for it. Or Vikas is ready to work with limited customers to ensure that his quality is 'paid' the right value.

Like others, they do not blame people and customers for not 'paying' them enough for their quality. Instead they are contended and wait for the right opportunity to come. This ability to wait for the right opportunity separates them from the herd. Instead of chasing money and projects, they chase 'excellence'.

I know of many individuals who have managed to chase excellence without chasing money. Money just followed them. It requires a specific mind of mindset and a 'set of skills' to do it. Do you have it in you to chase excellence in your field?

Is AI a failure of business model?

Read a very interesting article on Air India written by G. R. Gopinath, founder of Air Deccan, that explains the misfortunes of AI. If you have read the blog on 'what is a business model' you will appreciate this article better. We had also discussed Airlines as a case scenario in this blog. Please read this before you explore the understanding of business model here.

Here are some of the significant highlights:

1. AI is overstaffed. It has high employee to Aircraft ratio as compared to other airlines. For instance, AI has 475 employees per aircraft as compared to the only profitable airline  Indigo which has 70 employees per aircraft.

2. You will assume that high employees may be utilised to increase the aircraft utilisation. Unfortunately AI has the lowest figure of utilisation which is 30%.

3. AI's total cost per available seat km ( CASK) - which is an industry benchmark to measure airline inefficiency - is the highest in the world. It is four times Indigo and five times Air Asia's.

Is this enough to indicate that it is a failure of business model? Yes and No.

No, because technically speaking, any company should manage its business model smartly, be it Government owned or privately owned.

Yes, because when competition comes in, the management has to become very 'flexible' in responding to the market conditions. It is this flexibility that cannot be imparted to Government company. Be it in Telecom, Banking or Airlines, once the industry is privatised, Government-managed organisations always seem to suffer because they cannot take business decisions, that in retrospect may look 'biased and mistaken'. The right decisions are therefore postponed, and unlike in a monopoly environment, the company has to pay the price for its delayed decision making.

For instance, as G.R. Gopinath has suggested, that AI has some good business options even at this time. For instance,

- AI has a massive investment in Maintenance, repair and overhaul ( MRO) of Aircraft. It has also high employees because it has one of the best maintenance facilities. AI can bifurcate this operation from the rest of AI, like what Lufthansa Airlines did, and earn very good income from its operations. Will AI be able to do this because of its nature - Government managed entity?

- AI has got huge investments in real estate. It can be sold to pay off the employees who can be given a golden handshake thus reducing the cost of the airline per aircraft to a manageable proportion. Will AI do it?

British Airways and Lufthansa Airlines, the two Government airlines, who went bankrupt managed to take the above decisions. Will AI manage to do it?

Instead we hear that Indian Government is pouring even more money ( about Rs 30,000 crores) in AI. This is like putting more and more money, to recover the already-lost money. This is a psyche of a gambler because of which he loses everything. Not a psyche of a shrewd businessman who may feel emotionally, but still has to take a rational decision at the end?

What do you think? Is AI a case of failed business model or a 'poorly executed' business model?

Are you using interdependency in your career?

Today, i was reading the news in the Times of India about the Norway case where Norway Government had taken a formal custody of two children , 1 and 3 year old, from their Indian parents. 

Whenever i discussed this news with the various friends in the last two months, everyone strongly suggested that "Norway Government is biased and is completely wrong in taking the custody of the two children". Lot of 'unattested evidence' was also mentioned such as the family saying that 'their children had been taken away because of cultural differences - such as, the fact that the children were fed by hand, or that they slept with their parents." Whenever i argued that there could be 'another view' or 'fact' that we are not aware of, my argument would be summarily dismissed.

Why am i discussing this case on the career blog? Because, our tendency to see things in black and white (single dimensional way) blocks us from using the 'interdependency' that is prevalent in our society today. Our society is so interdependent that, instead of running away from it, it helps us more if we can utilise that 'interdependency' for our benefit.

Successful entrepreneurs are masters in using interdependency  in their careers; they find and exploit this interdependency, instead of shunning away from it. If you are not using it in your career, then your tendency to see things in single dimension in relation with people is blocking your path.

When you view relations between people in single dimension, you always believe you are always 'rational, smart, and right while others are 'stupid, arrogant and irrational' whenever you are in conflict with others.With regards to the issues between people, you always conclude that " there is only one right answer", that "any rational person can see that your view is right" and if someone does not see it that way then " he must change his view'. It is always 'their problem'.

With this single dimensional view, even when you see a conflict between Norway Government and Indian family, you view Norway Government as 'arrogant and high handed' while Indians as ' right and rational', perhaps because we are all 'Indians'. In the conflict between Norway Government and Indian family, only one view is 'right and rational' and if other person ( in this case the Norway Government) can change its view, the conflict will be settled. A person with single dimensional view will not even wait for any evidence to conclude something else, like all my friends did.

Successful entrepreneurs, on the other hand, behave differently. They have a multi-dimensional view of people and their relations. In every conflict, they assume that 'a situation has multiple dimensions' because of which one may see something which other misses and vice versa. Due to these different 'angles', even reasonable people may disagree on something. They therefore believe that other people who disagree with them ( or in conflict with them) may also be as rational and right as they are. They do not attribute traits like 'stupid, irrational and arrogant' to others, nor to themselves.

For instance, in the case of Norway Government, they will 'assume' that Norway Government may be right because it is seeing something which they have not seen. Now it has become public that the parents of these two Indian children do not have a healthy relation with each other and they have filed for divorce. Now we know that Norway Government did not publicly said anything about the parents, because 'this information was confidential' and public disclosure of such information may may 'hurt the children when they grow'.

Besides using interdependency in their relations, this view also pervades the personal lives of these successful entrepreneurs. As we have discussed in this blog, even their personal view about themselves is 'multi-dimensonal'.They believe that even their motivation and confidence has multiple dimensions; it is true only in a specific dimension ( or context).

Most corporate professionals learn to use interdependency because the colleagues and bosses make them realise that their 'single dimensional views' may be wrong. But if you are an entrepreneur, you do not have colleagues and bosses to tell you that your 'views' may be single-dimensional. What are you doing to capitalise on the interdependency inherent in the society?

Entrepreneurs are lucky in developing their skills

Kanpreet is an excellent IT developer. He developed a product for schools. He had to decide whether to spend his time/efforts on 'selling', 'delivery' or 'product development'. He chose to remain in delivery (70%) and product development (30%) and develop his skills in these two areas. Is Kanpreet's approach right for his business? 

Graduates working in corporate constantly face a question "what should i do next", because they are trading in a skill. Entrepreneurs like Kanpreet, on the other hand, never face this question because they are trading in the 'product/service' that requires multiple skills. Instead, entrepreneurs have to work backwards from 'what is required' to sell the product/service and then attempt to fill the gaps in skill through their own skills or by bringing someone else.

This ends-driven approach of entrepreneurs of developing skills is far more efficient than the means-driven approach of skill development followed by corporate professionals. Corporate professionals try to learn any skill in the hope that it will 'fit' with some unknown future requirement. You will therefore find them spending considerable time in developing new skills such as learning Excel, ERP software, foreign languages, communication or time-management. But as they rarely get time to 'practice' those skills, they remain 'certificate' skills. On the other hand, entrepreneur's ends-driven approach of developing skills is very efficient, because they 'practice' the skill immediately after 'learning'. And because practicing immediately synthesises 'why' and 'how', one learns the skill quickly.

Despite having an advantage over corporate professionals, an entrepreneur like Kanpreet still faces four critical questions in skill development:

1. Should he develop an existing skill that will increase his 'strength' or a learn a new skill to compensate for his 'weakness'

A more efficient way is to develop the skill that will increase his strength further instead of learning a new skill. Kanpreet seems to have followed this approach, as he was excellent in IT. And as we have seen in Vinay's case, it is not easy to focus on one skill.

However, if the skill is critically required for the 'business unit', one should find a 'partner' with that critical skill. If for instance, 'selling' skill was critical for Kanpreet's unit, he would need to find a partner who is good in selling. If that is not possible, find an alternative person with that skill, even if high salary has to be paid for the person. Only if these options are not feasible, one should try to learn the new skill. And while learning such a skill, it is better to find an 'expert' who will 'coach' instead of learning by reading a book, because, the risk of failing is high as an entrepreneur.

2. Fill the one-time skill-gap by using consultants 

One time skills are required for a business unit from time to time. They are required for a business to grow from one stage to another. Many entrepreneurs, unable to fill this gap, either sacrifice growth or make several mistakes in negotiating their growth.

For instance, when a business unit has to grow in size, one needs the skill to understand 'what is required to grow the business in volume' (called scaling requirement) and how to fill the gap given the constraints. This is one-time requirement that should be ideally filled by hiring a consultant. Please remember that the scaling requirements of a business unit are just not physical and financial, but are also mental. Filling the mental-gap is more difficult than filling the financial gaps !

Or when the unit is seeking external funding, it has to institute several regulatory and managerial practices to comply with the norms. A consultant is ideal to fill this one-time skill gap adequately.

3. Which non-core 'small' skills should he learn

An entrepreneur may have to learn some 'small' skills because they 'enhance' the core ability of entrepreneur. Typically these skills could be presentation skill, communication skill, skill to hold meeting, skill to delegate, skill to use accounting figures to take decisions or even skill to strategise.

While learning these non-core skills, an entrepreneur has to ensure that the skill is not just learnt in a 'class' but also 'practiced' afterwards. It requires far more effort to use the skill in the entrepreneurial unit, than to just learn the skill in a class.

4. Which Core skills should he learn

As we have seen earlier, the skill to 'understand a business model' of your industry is a core skill. An entrepreneur does not have any option in learning this skill. A MBA teaches this skill, but given the time constraint, doing MBA requires too much investment of time and money. Entrepreneurs should ideally earn this skill either through a business consultant or a coach.

As an entrepreneur, what are you doing?

Why do we face difficult career challenges today early in life?

I met Mandar, a different type of entrepreneur, in a town near Pune.

Mandar has been working in a software industry for last 5 years, working in a well paid job. After 5 years, he decided to start something of his own, because he wants to be in the town where he has lived and do something 'meaningful'.Now it has been 6 months after he started his new venture which has undergone several 'changes' other than the intended ones. He has been facing stiff challenges. Why do professionals face difficult challenges in their lives today than their fathers?

Today's professional faces many more career challenges than their fathers because of two reasons : altering aspirations and increasing options. 

Altering aspirations

My father, who worked for 46 years, in one company never believed that the job should also provide 'job satisfaction'. He could not finish his diploma because of lack of funds. For him, only one reason for having a job was to earn 'money'. Because he was fighting for food and shelter, his aspirations never went beyond that. 

On the other hand, because he provided me with the qualification ( of becoming an Engineer and MBA) and the necessary minimum 'shelter', my aspirations had changed in my first job. I already was aspiring for 'job satisfaction' after 5 years in my job. Today's individual seek 'job satisfaction' immediately after the first job. 

Some individuals with a well developed 'reflective mind' ( type 2 mind) seek even more. At the age of 30, i helped one of my coachee 4 years back in fulfilling his aspirations of doing something in the field of education, by working for a NGO in education, while simultaneously earning enough money to sustain himself. Have you heard about Narayanan Krishnan, who had been shortlisted for an elite job in Switzerland, whose life course changed after a chance visit to a temple?

Aspirations have changed in the young generation because the increasing prosperity is compelling them to think of 'what will they do with their life' much earlier than their than their fathers. Our fathers did not face that question early, because it took them their entire life to secure their family with food and shelter. We are fortunate ( or unfortunate, depending on how you see it) because we have to face this challenging question very early in life. And more importantly, these aspirations are fuelled by the increasing opportunities that are offered by the global world.

Increasing opportunities of the global world

The global world had brought the opportunities to the doorstep. Today, you can sit in your home, and serve a customer sitting in US because of the internet. I know of  'teachers' who teach mathematics to US students by connecting through internet.

The global world has also brought in multiple options to work: part time, full time, or even on project basis. Neha, left her job to take care of the child for three years. And now she works part-time from her home, as a clinical researcher, so that she can fulfill both her aspirations: of being a good mother as well as being on the top of her profession. Like Neha, everyone today has a different 'definition' of job satisfaction. There is no universal definition. And the opportunities in the market are also helping us realise these 'definition', so to say.

The world of NGO has become so professionalised, that one can 'contribute' to the society without sacrificing 'money'. I have several friends of my age who work in NGO and therefore find an ideal place to combine their interest and skills together in one job. 

Summary

As we saw earlier, career management has become more complex because of this two-way relationship between our aspirations and opportunities. Aspirations are fuelled because of increasing opportunities, and more aspirations generate more opportunities.

The environment today is also conducive to fulfill our aspirations. Mandar only has to just find how to fulfill his aspirations by thinking differently about his career and skills. He cannot use the skillset of his father. If he has to learn to use the new environment for his own benefit, he has to think and act differently. Only changing aspirations won't help; he need to acquire the new skills to fulfill those aspirations. 

For instance, one of the most important challenge that individuals face early in life is in finding meaning in life. 'Finding meaning in something' is not a left brain sequential process. It is in the realm of your right brain. And therefore, it is not in your control. Right brain outcomes like satisfaction, meaningfulness, happiness cannot be achieved directly by Will. They are typically the by-products of some other actions, of the way you live life. This is a new skill that one has to learn early in life. 

Can an entrepreneur develop managerial talent?

Narayan has started three companies in three different segments in last 20 years. First it was coke-based fuel company which did not work out because of the technical glitches of the innovation. Next he ventured in starting an automobile ancillary company, supplying to Maruti, which he ran successfully for 12 years. Then he went on to innovate another product, an automated chair for physically handicapped. The product could not be marketed successfully because it could not be aligned with the existing business model. He asked me a very pertinent question "Haven't i developed a managerial talent'.

As you would have noticed from the above example, Narayan seems to have developed an entrepreneurial talent. Entrepreneurial talent is about finding a 'new need' that is unmet by the market, bringing together the resources required to 'convert that need into a product', and then finding a business model to 'manufacture and market the product'. As Eric Beinhocker, author of the Origin of Wealth, says wealth is created by finding solutions to problems. Entrepreneurs do this marvelously. Even when they make mistakes, like Narayan has done, they know how to 'learn' from the mistake in time and develop talent to 'find new solutions to existing or new problems' all the time.

Managerial talent

Managerial talent building is more complex because 'manager's job is not of one single type; it has many variations. For instance, first level of management which we discussed earlier is easier to understand. The manager of a 'functional department' like marketing, sales, production or administration is the first level of hierarchy in an organisation. At this level, the managerial jobs look similar.

However, as you view the hierarchy beyond that level in a typical organisation, you will find considerable variations in a managerial job between companies. In order to understand the variation of a 'managerial' job in a company, let me give you a 'classical' definition of different managerial functions (according to VSM model of management)

System 1	The entire collection of interacting Operational units.
System 2	The system responsible for stability/resolving conflict between Operational units. ( Inside view)
System 3	The systems responsible for optimisation/generating synergy between Operational units. ( Inside)
System 4	Future plans and strategies. Adaptation to a changing environment. ( Outside view)
System 5	Policy. ( setting the ground rules)

To simplify the above, System 1 is called operating system, while system 2,3,4 and 5 functions together are grouped under a Metasystem. Although System 1 functions are easy to understand, it also has many variations, as we  found in the project manager's job of a software company. That increases the complexity of developing managerial talent of even the first level job of system 1. Because of this variation, someone who can do a job of System 1 in a company may not be able to do the same job of System 1 in another company. For instance, a project manager of BI project cannot do a project manager's job of Java development project in a software company, because of a completely different skillset, unless additional support is provided to him.

In contrast to operating system, Metasystem functions are distributed unevenly in a managerial hierarchy in a company. Every company distributes it differently. In some company, system 2 and 3 are conflated in one managerial job. In some, system 1 and 2 are mixed. Variations in managerial job at a metasystem level are huge. Many professionals are not even aware of these variations, because they are invisible to the eye. Only when they move from one company to another (with the same designation), they find the difference because they fare poorly in a new job. Very few professionals realise that their poor performance is due to mismatch between system functions. They simply assume that they fared poorly in a new job because of 'bad boss' or 'wrong culture' !

Some of the functions are more confusing. For instance, the 'rule setting' function of System 5 like Quality or Process are sometimes 'devolved' to such a low hierarchy in a company, that senior management does not even 'realise' that they are the 'owners' of these system 5 functions.

Entrepreneurial talent

As you would understand from the above explanation, entrepreneur is perhaps doing all the five system functions together. In an automobile ancillary company, Narayan may have had a different 'functional' manager, but he seem to be doing all the five system functions. This diffuses the focus, because of which Narayan may not have done enough work in a System. For instance, because he was supplying only to one supplier (Maruti), his experience with working on System 4 would be limited. Because he was the owner, his ability to perform System 1 and 2 functions paradoxically would not have got developed. In short, his managerial skill is likely to have remained at a very low level. Due to the above situational dynamics, an entrepreneur will always find it difficult to develop managerial talent.

In contrast to his managerial skills, Narayan's entrepreneurial talent seem to have developed to a significant extent. His skill of reading a business model must have developed to a significant extent. His technical skill of understanding need and converting into a product also seem to be exemplary. He also must have developed a wonderful 'network' of resources who he can use for 'innovating' a product. In short, his entrepreneurial talent is well honed.

If you are an entrepreneur, you have to understand your strength to develop your entrepreneurial talent.  Narayan's strength seem to be 'technical skill of innovation'. What is your strength?