You can be the next Narayana Murthy

First of all, he or she must have an idea whose value to the market can be expressed in a simple sense. Not a complex sentence, not a compound sentence. In other words, it has to be something like reduce cost or reduce cycle time or improve productivity or improve customer comfort or improve customer base etc. That is the first requirement.

Second, the market must be ready for the idea, which means, you have to do some test marketing. Or at least hold some dialogue with the relevant community. I know several ideas which were wonderful but the market was not ready and they did not succeed.

The third is—you need to put together a team of people that have complementary strengths. You need people who understand technology, marketing, sales, finance, human resources etc. Generally what happens is that technology people come together, or marketing people come together, or finance people only. Such projects generally don’t succeed.

For somebody who is starting today, which sectors would you recommend that they look at? Which are the hot sectors in your opinion?

See, in a country like India, there is opportunity in every area. For example, how to consume less water? How to consume less petrol? How to keep your vegetables and fruits fresh for a longer period? How to deliver healthcare at a lower cost? So you look around, there are zillions of areas where a difference can be made.

However, what is needed is – you have to pick up such ideas, which are aimed at people with reasonable disposable income, in the beginning. If the idea is aimed at people who have no money, it is no value, however good your idea is. So it is very important in India that the ideas are focused on the market segment which has reasonably good disposable income. It could be nanotechnology, it could be biotechnology… for example, there is a lot that we could do to improve our agricultural productivity. There is a lot that we could do to improve our healthcare systems.

You said, “reasonable disposable income…”

Yes. The important thing is you should come out with such products and services that people with a reasonable disposable income in India should be able to use it. It cannot be the disposable income in the US. That cannot be the benchmark. It has to be Indian.

It is well documented that you had a very small capital base to start with. You went on to build one of the biggest brands in global IT. For somebody starting today, can they do something similar and what is the key to building of that big brand?

First of all, the market is difficult for a general expertise company – a startup company which focuses on some kind of a generalized expertise like project management, software development, etc. On the other hand, if a startup was to focus on a niche area like embedded systems for automobiles, or let us say, systems for improving the quality of water, or designing software for handling risks in derivatives… any of these. In other words, it has to be a focused niche area. There they will be able to perform better than an Infosys. Because they have something tangible that we did not have, they can establish credibility with customers more easily than we could. In addition, they can provide other services. The name of the game is to create a niche market, in a specialized area.

Second, my belief is that brands are created by doing unusual things. . For example, when Pradeep created Dataquest, there was no such magazine in India. And he became the leader. Everybody noticed him, everybody wrote about him. The way you build brands is to do something unusual and get written by other people, get noticed by other people easily – because you are doing unusual stuff. Then you sustain them with some advertising.

Can you start on a small base today or do you need a large capital base?

No, as long as you are in the service business, as long as you have a wonderful idea, it is possible to go to the customer and because of the idea get an advance from the customer. That is exactly what we did. We got advances from our first customer and that sustained us. We also made sure that there was a milestone every month. Once you define milestones every month, and you raise invoices when you complete these milestones, there is a steady inflow of cash. So these two principles are very important. One – have an idea which is so good that the customer is willing to pay advances. Second - create milestones every month so that there is a steady cash flow. This is for services. However, if it is a product idea, then obviously you need venture capital.

You mentioned ‘common value system’ for the team that starts off… you had a great team of entrepreneurs starting off Infosys. Any tips on how critical is that there be partnership instead of an individual? One man show versus a team of partners, what is the big difference?

Nothing can be done by a single individual. In fact, if a leader has to succeed there will have to be followers. I don’t think anybody can succeed individually. You need a team that has complementary strengths. I believe that in today’s context, an entrepreneurial team, rather than an entrepreneur will succeed better. That is where you can bring complementary strengths. That is where you can bring people with expertise in human resources, sales and marketing, finance, technology, etc. I believe in a team, rather than an individual.

At what point should an entrepreneur hand over operational management to professionals? How do you prepare for a management transition?

Right from day one, an entrepreneur should conduct himself in a manner that professionals would appreciate, professionals would feel happier about. Doing that requires not bringing in non-merit based family members into the picture, making sure that all decisions are taken objectively based on data and making sure that there is no asymmetry of roles between the founders and the non-founders. Now when should you bring professionals – you should bring in professionals from day one. Because, as long as you can conduct yourself in a manner that raises the confidence, the hope, the enthusiasm and the energy levels of professionals, then why not? The only difference would be somebody may not be able to take the risk saying that ‘Look, I don’t want to take the risk, I want a decent salary, because that is what I am comfortable with’. So you have to pay that professional a lot more than what you get as an entrepreneur. The only difference between a professional and an entrepreneur is that an entrepreneur is willing to take risk and accepts deferred gratifications whereas a professional does not want to take the risk, and wants to be rewarded immediately.

If you were to start afresh today as an entrepreneur; what would you do differently?

First of all, I would use the same people – perhaps with a few more people that have worked with me in Infosys, the same co-founders, plus a few more in the senior management. I would do the same thing. Differently, I don’t know, because we are an enlightened democracy. Here, every issue is discussed and debated quite a lot. The good thing about a democracy is that you avoid major disasters. It may not be as efficient as you would like, but you avoid disaster. So, I am not very sure I would do many things differently.

Can there be another Narayana Murthy? How would you inspire a person to emulate you?

Oh I am sure there will be thousands more. What I believe is required for an entrepreneur is first – he has to have a vision, wherein the entire team finds value. One which is seen as a rainbow by everybody else, and they must be sure that they can catch a part of that rainbow. That is extremely important. Second, because the initial journey requires lot of sacrifice, the leader has to lead by example. The leader creates trust in other people, saying that ‘look if this guy is willing to sacrifice all of this, I too will do that’. Third, the leader must be impartial. Because the team is small, the team is making tremendous sacrifices; the leader cannot create cliques or groups. He has to be seen as impartial and fair. Fourth, the leader has to be confident. Because at the end of the day when there are so many problems, to continue on that marathon they need somebody who will infuse confidence every morning. They should feel an inch taller than they are in your presence. The leader should also be optimistic. There will be many inputs that keep coming in saying, ‘no no, there is this problem, that problem’ etc. To fight all those and still persist, you need optimism.

Source : Dare - A Leading magazine for Entrepreneurs.