Rethinking the strategy of business

i’ll give a small brief about myself my

name is

i have you know worked in

business development and strategy team

of

you know whatever the you know people

have mentioned

um so primarily i would like to focus on

a few things over here

my topic is basically rethinking

business strategy

uh a host time of covet and over the

past 18 months i’ve been

working with the boston consulting group

i’ve reached i’ve recently joined cars

24

but during the last 18 months there has

been seven months where i’ve been

working

in the lockdown with different clients

and i’ve seen

business from a very close um you know

close view

where i can actually say that you know

there have been things on ground

uh which have been really bad and also

things which have been really uh

you know inspiring just to to to see

i think we’ve all been through tough

times but you know these are

unprecedented times

we haven’t seen a downturn like this

since the spanish flu or the world war

ii given the catastrophic nature of

events

the world has gone through and still

coming to terms with

it completely dwarfs what we have seen

in the 2008 financial crisis which is

the earliest crisis which we have seen

till now

now i won’t bore you with you know

unnecessary details about you know how

this pandemic

has changed everything you know because

we have

had enough of that and frankly speaking

um you know probably a lot of people

would know much more than what i have

i would want to focus on you know a very

small

bit of information over here so i will

focus on small businesses

and how because of their you know

their limited clientele limited

availability of capital they have

survived and what

they should be doing in going into the

future

and what are the learnings from this

pandemic

and why did i choose this 80 percent of

the working class population of india

actually works in small and medium scale

in in

industries the case in point i present

is of india

but the principles are more or less you

know applicable for all job geographies

according to a recent report that

reported

in in november by the economic times

almost 140 million people have lost

jobs in india itself over the last 10

months

some of them have stumbled back to their

feet

but somehow a lot of them are still in

dole drums what are the few learnings

okay so the first point which i want to

focus on

is basically cut the fat now

why did why do i say cut the fat is that

basically you know it does not

necessarily mean to let go of the

workforce

in fact i would love everyone to do this

thought experiment

right think about when you are

going out and buying groceries right you

take your car

and you go ahead and buy those groceries

you come back

you do not go to the garage every time

to get your car

checked and then you move on to the

endeavor you generally trust your car

you trust it

to basically take you where it went now

what would happen if you developed some

kind of an issue in the car you would

probably take it to the garage then

think of it in terms of business right

most of the bus

which the world has seen be the

southeastern southeast asian crisis of

the late 90s the 2008 financial crisis

the or the great depression of the 1930s

they were

both they were all caused because of

ignoring the cracks in the system which

were developing since long now just the

case in point which i was

referring to your car probably has gone

through a lot of damage

of some kind or the other but since it

it was running fine

you didn’t notice that once the sheen

like the

polished layer on top goes off then only

people realize

that this is what was happening right so

there was certain cracks

this is what businesses have realized

over this time

when the boom goes away right when the

market is not

up when the cash dries up this is what

what what you realize

small businesses by nature you know have

limited credit uh availability

they have a limited clientele they do

they have not got a very big big

digital presence they don’t have enough

capital to you know put in a lot of

fixed costs they have limited product

lines

but many a times even managing these

limited

product lines and everything becomes a

huge task

and inefficiencies creep in into the

system

now if a product line has a large

overhead cost

but is severely and is of course it’s

severely

underpriced but a lot of sales comes

from that

but in the end a lot of what happens is

that it ends up losing out money

so just to give you an example probably

a tailor in

in some part of india was selling

certain suits

made of a certain material and his

clientele or

the clientele which he used to serve was

a very legacy they were

they were people who you really used to

rely on him now suddenly what happens

is because of certain trade changes etc

the price

of a particular material goes up now

he’s thinking that my all of my revenue

comes from this particular clientele

but i cannot exactly you know

go ahead and you know probably

like you know remove this line this is

this is important for me

but what happens in this is you they

tend to lose money a lot

and what happens i went in in the time

of bust when the clientele dries out

the credit lines the whole inventory

cycle goes

goes for a talks now when

credit dries up what works well in in

case of business is that sound

financials make

life really easier recovering revenue

reducing inventory days

and efficient supplier contracts are

essential for a healthy ebit

earnings before interest and taxes now

another factor which i would like to

focus on is basically

return on in in invested capital

now where do i come from from this so in

today’s growth of you know

large scale in investments pouring into

businesses which have high growth

generally roi is something which gets

lost

and for small businesses who don’t have

a lot of

investor money coming in roi becomes

even more important

why do i say so so in the if you look at

the formula for roi the denominator

actually has

invested capital capital which basically

makes money for you

such as land machinery etc now a lot of

these machinery

are thought of as fixed cost now in my

terms

or you know where i will come from is

nothing is a fixed cost right

either it’s variable in the short term

which people say it’s a very variable

cost

or it’s variable in in the long term

which people

tend to call it fixed cost

very difficult science in terms of you

know how you allocate

in in indirect costs and this indirect

cost allocation generally provides a

trouble

so shedding down inefficient machines or

leases that have turned redundant

or unproductive is an effective way of

reducing the stress

and you know improving on your

productive assets

i would give you a very small example

where i was working on a

on a steel case and i was working with

one of the leading steel suppliers of

india

and during the time of lockdown a lot of

things came out and they said that you

know we want to optimize inventory

and the case in point here was that

almost 30 to 40 percent

of what inventory they were they were

not using was almost more than 10 years

old

now when the company was making profit

when everything was going really well

they didn’t care about this but even at

that level like

people who are generating millions and

millions of dollars of profits

they also came under the hammer because

of covet and they plan to shed off

inventory

and take the hard calls because a lot of

time what happens is

there is a lot of consolidation which

need needs to be done

after this so what do i say is shed the

meat take both

decisions and go ahead and do do do your

thing

right the second thing which i would

want to focus on

is execution over research

right now recently we have seen

uh you know execution learning by

execution

is basically the kind of learning which

everyone

would should do now the biggest question

which

i read somewhere that you know i i ask

everyone that if someone asks you to

invest in a stock

ask him opposite question that are you

invested in in this talk

a lot of pundits who give you that

fundamental

that you know this is right this is

wrong generally

would not have skin in the game right so

having skin in the game is really

important and that’s what

the execution brings you and when you

are consolidating remodeling stuff very

quickly

execution becomes key you execute you

learn you

unlearn then you execute again this is

not there’s not a lot of time of

planning

right i would use the code of one of my

favorite authors nassim nicholas talley

to quote him

he says unlike a well-defined precise

game like russian roulette

where the risks are visible to anyone

capable of multiplying and dividing by

six

one does not observe the same kind of

simplicity in the barrel of reality

so what he wants to say is basically

saying that

at in reality plans etc are due

to good look on paper but the real

learning comes from executing stuff

in the real world execution is performed

by workers on the ground

your workforce the team which is there

on the ground

working for you learning from doing is

the best kind of learning

and for people who are working on ground

motivation exactly plays a key role

of delivering true value to the customer

the customer interacts with your

workforce not the people sitting in the

corporate office

hence you know executive research and

modeling

in an excel sheet are only worth it if

they are executable right

so now what the small businesses should

keep into mind when i talk about

execution

so driving closed loop accountability

letting go of micromanaging execution so

micromanaging execution becomes really

tiresome

because a lot of people get involved in

a lot of small things

which kind of delays the whole process

and when you are

remodeling and reconsidering how what

path your business business should take

speed is of the essence the other thing

which

you know we should also do is empower

the leaders right so

this is a part of my execution over

research so people who are executing

they’re not really the decision makers

most of the times they are people

who have been told to do a certain job

and they are doing that but what happens

when things are moving fast they will

need to take that call okay so if a guy

is working in retail he would need to

say that okay i

am getting this amount of um probably

grains

over the counter and should i should i

go ahead and purchase it my target is

this only

so those few decisions if you empower

the employees

they will basically go ahead and you

would and what the good thing which

would come out from this is

you would get good leaders for for

tomorrow i would like to quote the

example of

you know the recently con concluded uh

india versus australia

test series in which in if you remember

in the third test match harsha burglary

pointed out when

ravi chandra nashville was giving a you

know talk before the

session started to to the bowlers that

you know people who have really not been

in in in the limelight when the

talismanic leaders of the team are not

present

generally you see that a lot of

different leaders crop up

right so it can be because of absence it

can be because of you know

there’s a need to do that so a lot of

times what will happen is that you know

you will see

that if you will empower the people who

are working with you

they will execute and not only research

and not only you know just

do do their job the third thing which i

want to

point out for you know for small

businesses or

for for that matter any small business

across the world

it’s partnerships over over profit with

which i call pop

so partnerships over profit so in this

interdependent global environment

right where we are seeing disruption

across supply chains especially in in

the time of covet

at breakneck speed right where

partnerships really play a big role

now there’s a very famous in it investor

in

in the us who has invested in uber and

he’s an indian

entrepreneur by goes by the name of

naval ravi khan

he’s an indian indian investor who has

made good money

and you know he has done really well for

himself in in the us he’s a brilliant

guy

he says one of the very important things

when you are building a business

he says that building long-term equity

is the best way

to understand compounding nature of the

business

so compounding will increase your

profits in

in the long run if you do the small

things right long-term partnerships and

ethics

go a long way in surviving tough times

for example i’ll

give you a very small example there was

a north carolina design company

who used to do designs of different

restaurant chairs and all of those

things right

they suddenly realized that you know

restaurants have closed there are no new

restaurants opening up and their

businesses start started drying out

people started pulling out money and you

know cancelling contracts

they moved ahead and designed

ventilators but because they were not in

that

healthcare in industry they didn’t have

any other person to approach to for

manufacturing them and

basically they had a deadlock they

approached one of the business partners

which they’ve been working with

and working with and he was associated

with one of the

health official ministries in in the

united states

what happened later was that you know

they kind of went ahead they got the

contract

and even got emergency procurement and

production licenses

to basically send out their vend

ventilators now

this is a clear example of how they have

built a long-term partnership a

long-term equity

and that is what caused them to

basically re-pivot

very quickly and you know change their

business course

very quickly and design something which

was entirely different from their

current portfolio

right now lastly there’s one more point

which i want to focus on then this is

definitely not

you know any anytime lesser than what

i’ve been speaking the

top three points right so it it says

that re-pivot

test and repeat we have all

seen right how quickly we can transition

to make something possible this pandemic

has showed us right

adopt new ways of working and do not shy

away from technology

be robots so even for very small

businesses if if you think of

you know very small tradesmen in india

like

using technology and using you know

not being close to use technology and

not being close

to try out new things is the need of the

hour right

we have experienced a medic medical

marvel

of sorts right having seen a record

number of vaccines

not only just in number but also in

types being developed

and of course for different strains of

virus right and

it’s just a record like it’s almost

one-fifth of the time

in which we have seen that we have seen

people turn up to vote

for key elections i’ll i’ll take the

case in point of south korea and

united states we have companies shifted

their whole workforce

to home and you know you can just look

at you know how the changes have

happened

people have juggled home home course

along with company calls

if you ask an executive who was you know

probably a couple of years

back that if he would be able to do

everything from home he would have

laughed at you

but not now they have done it with

utmost dexterity

and poise and after a tumultuous year so

this this one is

is really my my favorite right who would

have thought

that you know people who that the

disease which is caused by

you know everything right so if we were

we were we were shying away from

ordering food online everyone was

cooking at home and food delivery

companies were struggling like anything

but look at the uh you know the initial

public offerings the doordash has done

our initial public offering and it’s one

of the best

the second we would see probably another

you know

another one coming in in case of zamato

in june if you know if

if the reports are correct so you see

that companies who are

supposed to struggle because of the

pandemic they have really

done well so essentially they have

re-pivoted

they have tested their model and they

have repeated again so they have not

closed down to change their path from

one go

and they have quickly turned around and

changed it to other all businesses small

or large

should noise shy away from speeding up

the decision making

empowering employees and reducing

regulatory

barriers and steps to achieve results

one of the few points which i’ve learned

in my short career till now

that if a process is taking five

different steps if you reduce the number

of steps you reduce the number of time

you if you reduce the number of

regulatory barriers somewhere

you reduce the number of time you end up

saving a lot of capital you end up

saving a lot of margin

and you end up more profitable and not

just because of you know not just

because of squeezing out something it’s

just by design

right i will take very two small

examples from

india itself so mr anger who’s who is

you know

reigning from himachal who basically

shifted his factory’s focus to produce

hand sanitizers

from personal hygiene equipment so

basically he was

designing equipment or you know not just

designing was he was manufacturing

uh bottles for personal hygiene he

quickly re-pivoted he said personal

hygiene and equipments are important but

they are not as important as hands

and sanitizers and he basically came

ahead and

you know re-pivoted his business and

started doing well although they

it came with some some challenges

another example is that aryata

who is a an entrepreneur and she added a

uv additive

she the company basically makes

bags to carry cement now suddenly during

the lockdown nobody wants cement right

nobody is

investing in infrastructure products

when the world has come to a standstill

now where will these banks be used there

is no business for

for her company but what happened there

was that she

re-pivoted her whole whole business

juice added a uv additive in this bag

because

now she planned to use it for different

uh food grains and for food drains they

would be lying out in the sun

and probably get damaged so a uv

additive was added

and suddenly the business did well

another example is from

someone who’s from a south bombay

restaurant who was running a small

restaurant but found out that a lot of

workforce is not coming and they are not

really

able to deliver food on time she

basically called the people from from

the slum areas they were anyways you

know the most vulnerable they were

living in cramped spaces

and a lot of these people helped her and

you know they did

food this again started the business and

did food food delivery

so all of these points i think these are

not just you know anecdotes from my side

i think these are first class examples

and you know these are first-hand

research

and any of these you would find and if

you search more you’ll probably find a

you know

dozens of more examples who have done

really well and if you’ll probably go

ahead and speak to kirana stone owners

in your backyard or in in your locality

you’ll be able to find out a lot of

different heroes

and so this is this is this has really

proven out to be that people have really

gone out from there from

from there what what they were trying to

achieve

they quickly have changed courses and we

have seen how resilient a human race

as a human race is towards you know

these type of calamities

right now what i would like to do is i

will just like to share one more quote

which i would i feel that you know it’s

just summarizes this whole

situation really well so this is by

michael jordan

when you know he was uh he was

just shooting for this uh documentary

which has come which is the last dance

and he’s pretty emotional during that

time because it’s one of the most

difficult times he has gone through and

also one of the most tiresome so he said

that i’ve missed more than 9000 shots in

my career

i’ve almost lost 300 games 26 times i’ve

been trusted

to take the game winning shot and i have

missed i

failed over and over again in my life

and

that is why i have succeeded and with

this thought

i would like to thank everyone and thank

you