The importance of being innovative in business

Rahul Bajaj, Sanjiv Goenka and Ronnie Screwvala talk about why reinventing is no longer optional in business

Published: Jan 28, 2016 06:35:46 AM IST
Updated: Jan 27, 2016 12:47:50 PM IST
The importance of being innovative in business
Image: Vikas Khot

There is no genius in our company,” Katsuaki Watanabe had once said about Toyota in a Harvard Business Review interview. “We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution.” Truer words have, perhaps, not been spoken on how a company grows into a veritable powerhouse. Not through a breakthrough moment, not overnight, not merely by establishing the right person at the right place, but by tiny, persistent steps towards improvement.

The second part of the Forbes India Leadership Series looks at ‘Entrepreneurship and Innovation’ and includes interviews of industry veterans who have had very different journeys but who have all embraced innovation in their businesses. Rahul Bajaj inherited his family business Bajaj Auto, while Sanjiv Goenka shrugged off the family mantle to forge his own path with the RP-Sanjiv Goenka Group. Ronnie Screwvala, a first-generation entrepreneur, started out as a cable operator, founded UTV Software Communications with a capital of Rs 37,500 and retired as a media baron.

‘Those Who can Adapt Best Survive’

Rahul Bajaj
Chairman, Bajaj Auto

Q. What do you recall of your early days as a young entrepreneur?

When I started in 1965, Bajaj Auto was a very small company with a turnover of about Rs 7 crore. After completing my Economics (Hons) in 1958, I received on-the-job training in two of our group companies for four years and then went to Harvard Business School to do my MBA.

I started as second-in-command in the company, in charge of commercial operations, and took over as CEO in 1968. Systems and practices in 1965 in a small engineering company were not necessarily in tune with what I was taught in my MBA course. Without suddenly changing the existing systems and upsetting people, I tried to improve the efficiency of all commercial operations to the extent possible.

My wife and I decided to stay in the factory colony in Akurdi, which was about 19 km from Pune city. This was quite a contrast for a person who had lived his life in Mumbai and studied in the US. In those days, Akurdi was just a village without any proper schools, leave alone colleges and hospitals. However, staying in the colony did set quite an example to all employees. Later on, my children also went to the same school in Akurdi where the children of my employees, including workers, studied. Our top management stayed in Pune and their children went to Pune schools.

Another unique situation was to work at cost, quality and volume even in a scenario where demand for Bajaj vehicles far outstripped supply and many sins could have easily been swept under the carpet. Building corporate agility without market pressures on you was a nice but difficult task. In the ’70s and ’80s, Bajaj scooters had an eight- to 10-year delivery period, resulting in market premium for Bajaj vehicles. This naturally encouraged workmen to ask for more wages and vendors for higher prices, saying all that you have to do is increase your vehicle prices which would not be a problem in these market conditions. The supply was restricted due to the government policy which was socialistic and limited every company to a licensed manufacturing capacity. The only country in the world to do so.

Q. Tell us about the need to toe the ‘innovation’ line at all times in order to build an institution. What role does innovation play in building a successful organisation?

In business, one has to stand on one’s own legs. If you cannot develop products or services, you don’t earn the right to participate in that business.

In those old days, when the political environment forced technology owners to barter their intellectual properties (IPs) for market entry compelled by country regulations, things could change overnight (like it happened when Mrs Indira Gandhi cut off all foreign technical collaborations in 1971). Cultivating a culture of development was a challenge. Conscious efforts at this enabled Bajaj to continue producing scooters and three-wheelers, even after the Piaggio collaboration was foreclosed by government policy.

Our own developed products like the Rear Engine Autorickshaw (RE has now become the brand name) and M80 Step Through helped breed the culture of own development.

In today’s open world, no innovation ability means endgame for businesses. We have seen many big names vanish already.

Q. You had to deal with a labour strike only once. What advice would you give aspiring business leaders regarding managing the human asset of a business?
I have had to face labour situations a few times, but a serious labour strike only once. That was in the ’70s when we demanded productivity linkage in return for a good jump in pay. It was probably an industry first, and even the first time in India. But after a couple of months, there was realisation among the workmen that one has to first create more and then take home more.

It was also my policy to be fair, but firm. This combination works well and when deployed consistently, makes for easier management of human relationships.

These days, the paradigm has changed even further. Competition has taught one and all the relevance of continuous improvement. Workforce has become an important stakeholder, responsibly participating in corporate goals.

Q. How should entrepreneurs approach challenges created by external factors beyond their control?
The best way to withstand external pressures is to become internally strong. There are going to be so many factors outside one’s control impacting your business.

Specialisation, sticking to one’s knitting, focus, seeking exposure to competitive market-play, brand-building and standing by brand values on the front end and continuous improvement at the backend are vital.

One must remember it is not the strongest that survives, but the one that can adapt best.

Q. What are some of the most significant values that a leader must possess?
Respect and emulation can only be earned, never commanded. One has to lead by example. Tougher the time, more the onus on the leader.

Integrity and courage to say ‘no’ to unreasonable requests are important attributes of a leader.

Right-manning for desired result and encouraging dissent and meritocracy transparently are leadership hallmarks.

Q. What are the entrepreneurial qualities you are looking for in an emerging leader?
One would need to spend time with the person to be able to judge her/him. I would look for qualities mentioned in my answer to the above question. He should also have the ability to identify business drivers and visualise future scenarios.

Q. A quote by you has stuck with me: “Listen effectively, think like an entrepreneur, go for multi-tasking and combine hard work with smartness.” Please expand on this thought. In your opinion, what lessons in entrepreneurship can a B-school never teach you?
What you quote may have been mentioned by me in different articles/speeches.

When I speak to students in schools and colleges, I emphasise that they must choose to work in the field for which they have passion. In today’s competitive world, if you are in a field that you are not really passionate about, the other person who is passionate about what he is doing will overtake you even if he is only as bright as you are.

For an entrepreneur, my advice is traditional. Leadership means that there is no substitute for excellence, no tolerance of mediocrity and no compromise with integrity. The higher one is on the ladder, the more integrity becomes the single-most important attribute. Another attribute is courage to face unpleasant situations and to say ‘no’ when unreasonable and wrong requests are made to you. I have referred to this earlier also.

The importance of being innovative in business

‘Passion and Patience are Key Traits in a Good Businessman’

Sanjiv Goenka
Chairman, RP-Sanjiv Goenka Group

Q. How important are ethics for sustained growth? What are the other factors you would attribute to both your own and your group’s success?

The family has survived for two centuries in business and unless you have a sustained acumen for values and ethics, you can’t survive that long... we believe in being fair, honest and transparent. Success is yet to come, but I think there has been hard work, there has been passion which is shared by all the people who work for us, and there is a very strong desire to excel.

Q. What are the important traits in a good entrepreneur or a leader? What are the greatest challenges you have faced and lessons you have learnt while setting up the RP-Sanjiv Goenka Group?
The traits I consider important in a good entrepreneur: One is passion; second is the ability to listen; and third is the ability to be firm in decision-making. There have been many challenges and I think there are many lessons to be learnt—one of the biggest lessons is that of patience, all new ventures will take decades of nurturing.

Q. Have there been any significant challenges that you faced in the initial period? What are the key learnings from those phases?
Firstly, I would like to say that RPG Enterprises is jointly owned by my brother [Harsh] and me, and I always have the option of using RPG Enterprises. It was a voluntary decision to try creating an independent identity.

The challenge was to inculcate and instill a sense of youth in all those who work with us, to induct younger people in the top leadership team; there was resistance from the old guard, there was resistance to a different work culture, there was resistance to greater accountability, there was resistance to greater operational excellence. But that is behind us now.

Q. What are the key factors that a leader needs to consider when expanding an enterprise and how does one prepare for failures?

Failure and success are both integral parts of life and business. You will have some decisions that are right and some that are wrong. I think the more successful businessmen are those whose ratio of right to wrong is higher.

Q. You’re a leader who gives his CEOs ample space to run the show and you are keen on the details. How do you manage to strike this balance when you are deeply involved and yet not micro-managing?

I think it is about focusing on the right issues, it is about identifying the right issues that confront each company at its edge, and then following up on those.

Q. What differentiates an entrepreneur by inheritance from first-generation entrepreneurs?
The only way you can differentiate entrepreneurs is by those who are driven and those who are not. I don’t think it has to do with inheritance or otherwise. It is good always if it is somebody who is driven. But I would like to distinguish them by saying a driven entrepreneur and a not-so driven entrepreneur.

Q. What are the major legacy issues that an entrepreneur who inherits a business is likely to face in today’s environment?

It is not only in business, but I think these legacy issues exist in every profession. So if you have a father or a grandfather who has been very successful,
they start comparing you to him, start expecting you to be his clone, and I think the biggest challenge is to actually be your own self and create your own identity, at the same time retaining the good value system and the good practices of the past.

Q. What are your thoughts on the importance of innovation and diversification through spotting opportunities? How important a role has inorganic growth played in your success as a leader?
Growth has to be sustainable and growth has to be both organic and inorganic—we have used both tools to grow. Five years ago, our assets were Rs 8,000 crore; today they are Rs 32,000 crore. And that has happened as a result of both organic and inorganic means. Frankly, for us, the mantra is now to strive to become a leader by way of excellence in operations.

For operational excellence, you have to earn the right to lead. It’s not just by skill; if you are not competitive, if you are not innovative in terms of operational parameters, then even though your scale may be the largest, you sort of lose out or have to give up. So if you have to sustain, you have to be extremely efficient and competitive.

Q. What would your advice be to a young startup entrepreneur today on the five key factors that lead to success and innovative entrepreneurship?
The first is passion. The second is self belief. The third is a competitive itch. The fourth is... maybe a good team of professionals/perfectionists. And the fifth is evolving a very cost-effective institution mechanism.

Q. What are some of the biggest lessons that you have learnt?

To me, the biggest lesson is that if you are unjust to somebody, if you try and sort of deprive someone of something, you may gain in the short term, but in the long term, your deeds are surely going to come back to haunt you.

The importance of being innovative in business

‘Innovation is not a One-Eureka Moment’

Ronnie Screwvala
Founder and CEO, UTV Group

Q. What does entrepreneurial innovation mean to you?

Innovation is a continuous process. People mistake innovation for this one-ride idea or this one-eureka moment, but it’s mostly not. It must be intrinsic to the culture within the company. There are two kinds of innovation: One, when you are being innovative in the actual world sense where you are looking at a market where the need is not being served or creating a new product or a new intellectual property; the second one is when you are innovating in a product or service line by finding a differentiator and moving ahead of what the others are doing.

Q. What are the qualities that are imperative in a good leader?
To me, high on the list is staying the course. While everyone actually looks at branding apps and more on the exit mode, I believe that every time you have a setback, you have to figure out how you are going to stay the course. Leadership is also about resilience. Anyone can run a company when the whole sector is growing and the stock markets are booming. But, it is the tough times that test the mettle of a good leader. The third is curiosity because it means the culture of your company encourages being open-minded and humble. It also means you are a good listener and you want to know what your consumer is looking for.

Q. What makes a business leader successful, both as a leader and as the owner of a business?
I don’t see how anyone can be successful in business without being a successful leader because if you are running a business you have to lead from the front and be a good leader across the board. The core team that you build is the most critical element, and only a great leader can empower and inspire his team members to do great stuff.

Q. You are often called the ‘cat with 20 lives’, considering how often you have bounced back. How do you take failure and how does it contribute to your success?
Failure fascinates and intrigues me. I believe that in business and in life, failure can be a bigger motivator than success. It’s a given that people are going to fail, not just once, but multiple times; and I think if you can ruin the concept of fear of failure completely, then you are definitely onto something constructive. People think of failure as a dead-end, and that’s the problem. I look at failure as a comma, not a full-stop. The endeavour must be to recalibrate failure as a setback, realign the goals, pivot and charge forward.

Q. You meet many budding entrepreneurs. Can you gauge one who will go the distance? What are the qualities that you spot first?
I don’t believe in any kind of ‘X-factor’. I am a first-generation entrepreneur. I came from a lower-middle class family where everyone had 9-to-5 jobs. All I had was clarity of thought and confidence. While not everyone is cut out to become an entrepreneur, it is not something you have to be born with, but you should really want it. When I do meet someone, I look at their risk-taking ability, their clarity of thought, the conviction in themselves more than their idea and resilience. Chances are that they are going to go through a lot of ups and downs, but these qualities will keep them going.

Q. How crucial is it for an aspiring entrepreneur to secure an investor early on, especially in the case of startups?
Entrepreneurship is a challenge and the perception that only people with huge initial capital can become entrepreneurs is a myth. If we look at the entrepreneurs who are prospering today, they bootstrapped themselves. You have your idea and you should start executing it; only after you reach a particular level, should you go for an investor. If you get an investor early on, you get spoilt. The entire work culture changes and half the time, the investor runs the business that you are supposed to run. The hunger is much more when you are doing it on your own. A good idea will always find an investor; therefore, there is no point in compromising with the idea.

Q. What would your advice be for entrepreneurs who want to take the plunge into unknown territory?
The question of domain knowledge is important, but it is not critical. There are so many new sectors opening up today, where there aren’t many benchmarks and the ground rules are being made as the sector develops. You have to assess your own risks, and try it out. If you are not a risk-taker, you are either not going to grow or you will call it a day at the earliest opportunity. You have to commit to stay with it come what may. That conviction will see you through a lot of ups and downs.

Gunjan Jain is an author, with her first book She Walks She Leads due for release in April 2016

(This story appears in the 05 February, 2016 issue of Forbes India. To visit our Archives, click here.)

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