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