Social Capitalist - A Set Of New Ideas

I came across Fast Company Annual Social Capitalist awards in this issue of Januray 2005. It lists out 25 companies - from a larger list of nominees - which aims to make a significant social impact through its business models.

The list is US-centric, but it is an interesting categorization. Such businesses do exist in Asia, Dr. Younis' Grameen Foundation in Bangladesh and BRAC, also in Bangladesh, or Amul in India will fall in this category. However, in Asia, such are not called businesses [Amul is], and labelled as charity/foundation/trusts whatever, which means they can not seek profits, and general shareholders can not take part in these businesses.

This model, in the context of the modern world, needs to be revisited, both by entrepreneurs and the governments. Our societies are now becoming the frontiers of global business, and there is huge unutilised potential in the sectors like Education, Health and other services. Legislating to keep most of these sectors in a non-profit mode will keep such provisions restricted, supply of resources - capital and skills - constrained, and allow corruption and malpractises.

Think of higher education in India. The market realities made Government policies look foolish and hopelessly outdated. IT education long bypassed government policy in India, and grew regardless. The issues with this kind of growth is that it becomes unregulated, and often breeds corruption and inefficiency. Today's unequipped and outmoded Engineering colleges, run by bogus trusts and old-era entrepreneurs, illustrate the point.

Time now for legislators to look at the possibility of creating appropriate regulatory mechanisms and allow smart, new age entrepreneurs to enter these businesses of public service provision. I see a great future of micro-enterprises springing up in various areas. Time to institute a Social Capitalist award for India.

Design at Start-Up

I still remember my first day at business.

Four of us, colleagues at a market leading training company, left our jobs and secured some money from a property developer to start a training company.

What was the winning idea? Back in 1997, Internet was still a new thing in India [yes, time moves fast, VSNL started offering internet access accounts only in 1995]. We were convinced of its potential, and was trying to tell our employers that we must train people on internet. But, it was a large company and we were small people - sales executives and technical executives - not the type who are expected to talk about strategy. So, no one really bothered about what we said.

And, then this chance meeting with this property guy, suave and dazzling, took place accidentally, and he blew our minds away with his receptiveness to our ideas [though he did not use computers himself, we were to find out later]. He was the first one to take us seriously. We were bowled over, completely, and felt top of the world.

So, there we go - resigned from our jobs one by one, and virtually went into hiding. Yes, hiding! Four people resigning from the same department in a span of few weeks was news inside the company, and everyone wanted to know what we plan to do. We were afraid that our employers will learn about our idea and do it themselves [illusory self-importance that catches up with every first-time entrepreneur]. And, therefore we sheltered ourselves into a furniture-less apartment owned by our financier, and cut ourselves off from the rest of the world, and started contemplating our business idea.

And, now, let me come back to the first day. We wondered where to start from, how do we get great training material and give the students a real different feel, and - ended up deciding the corporate colour. Hah! yes, corporate colour, which was to be Black and Blue - we thought that was cool and technology-centric, away from the 'vanilla' training that we were offering in our earlier company.

After that, we started working on the logo. Soon realised that we did not have a company name yet, and hence, logo was best left for a later date.

Next, we got on phone and called a stationery vendor and ordered the office stationery. He came with a brilliant catalogue and we picked up some really cool stuff - black and blue. Well, this came at a price, around Rupees three thousand!

Day-end, we met the investor and discussed what we did during the day. He was horrified to know that we blew away an awful lot of money on stationery on the first day for a company whose business, name or logo has not been decided.

We were heart-broken. We were back on the ground. We felt bound again, this time by investor expectations. We felt foolish, because we did not care for money. And, we thought to ourselves - we must build the coolest company around to tell him that this was all necessary for being 'world class'.

Of course, we were wrong. If you were looking for a morale of the story, there is none. This is only a blog, not any fable. We never could do internet training the way we wanted, and later, after making some considerable losses, adopted the same 'vanilla training' mode that we wanted to run away from.

I would not spend my first day in a new business again throwing money at buying stationery, not any more! Well, give me a break - I was a kid then :-) But I know next time I get involved in a business, I shall spend all my while to make it the coolest company in the world, in terms of design and presence to start with.

At the end, I must mention this great company that I came across, people who enable these dreams to be successful. I found their output real cool, and I guess you will find that out yourself too. Do check the company out at www.artofstart.com. Design and style are very important for a start-up, that gives it the personality it sorely needs. I believe too many people get this wrong - with the usual existentialist get-to-the-ground first mentality. I dont deny it is important to get on to the more serious aspects of business without any delay. But, like making a business plan, getting the design and personality right is equally crucial.

In the end, one advise - if you are starting off, spend your first day thinking of what how you want your company to look. It will make your customers feel comfortable, and make you feel business-like. When I get a go again in creating my own company, I would still spend the first day thinking about corporate colours. Well, the stationery vendor may have to wait a little while longer.

BPO - Business of Tomorrow?

I share a flat with Neil, a friend of many years, who is convinced that BPO is the future of Indian business.

Okay! I did not have to come to London and share a flat with him to know that - Nasscom and everyone else in India told that to me in many ways, many times. However, I had to live with Neil in a flat to know the extent of his faith in this idea, an idea which I disagree with!!

Never mind the trade bodies - I have learnt that through my experience in dotcom years. I almost blindly followed everything that happened in Comdex and elsewhere, spent money on attending seminars and diligently bought every report that came out. Well, I dont blame them for the fact that I am not a millionaire yet, but I know you can not be in a trade body and say that this industry has such and such constraints. That is simply not their job to tell us so.

But, what about Neil? He behaves exactly as I did in 2000. He believes it is the future - he collects all the data that comes out anywhere. All correct data, obviously, no dearth of that in such a heady time. He sees the common sense logic of cost reduction, why won't someone ship out their accounting department when it will reduce the costs by 50% or more? Well, I am sceptical - I have still not figured out why bookshops exist to this day.

BPO is the future of Indian business. Yes, it looks like that way. Indians were always good back-office operators [did anyone say clerk?], we have been trained well to do that. We have been taught English to perform the clerical, menial jobs of the empire; here we are at it again.

BPO is the future of Indian business - Neil believes that and he is investing all his energy and enterprise into that. What would he have spent time on, if this did not occur to him? No, not brooding like me - he is a man of action. Probably, in developing clothing brand, probably in agri-business, food processing, software products, consulting, many other things that could be done by such an intelligent and enterprising person.

But he would not do that. BPO has been proclaimed by people in the know to be the future. I recall we used to read in magazines in the 90s that Indian software industry, which was then doing well by body-shopping and data-processing, will grow up the value chain soon. There will new 'Products', new indian multinationals. We were starry-eyed! We spent hours thinking of new ideas [well, dotcoms!], we wanted to break new ground, we wanted to create brands and cult-followings, just like the americans did. Instead, we chose to go down the value chain.

Well, it is a solitary mumbo-jumbo, that's what blogs are meant to be. But, I believe we are frittering away an opportunity. BPO is not the future - I will tell you why I think so.

Neil's straight-forward faith in the prospect of BPO stands on the fact that it will reduce costs. The bevvy of small, new entrepreurs are coming into it, as they believe they can offer services even cheaper, compared to more established players with higher overheads. But, there is a big gap in this thinking. We set benchmarks against what the cost would be for the organisations doing the work themselves. But, Charles Handy and others saw it coming two decades back - the non-critical functions of the organisations getting outsourced. Internet made it offshorable, adding to savings. For many organisations today, it is really a movement from 'outsourced work' to 'offshore work' - a scenario where cost savings are not as dramatic, and credibility and service issues are more important than we think. The organisations, in the least, have to be able to believe that they can manage the off-shore operation at least as easily as their outsourced operation. Therefore, while IBM, Accenture, EDS will continue to expand their businesses, and offer cheaper services by offshoring it internally, the new Indian entrepreneur setting up a BPO unit has to struggle to prove his worth to already sceptical customers. It is no longer just about costs, as we would like it to be - it is about competence and costs. I have seen a friend of mine concluding a very smooth deal with a Danish advertising agency to outsource their low resolution graphics and page layouting operations to Bangladesh, largely because he was an advertising man himself, running a large agency, handling big clients and having a big-name affiliation. I am forced to believe that with our faith in costs, we forgot that we dont get BAs to do our accounts just because they will charge a fraction of our CAs.

Second, coming from what I just said, very little is being done in building these competencies and people infrastructure. In the gold rush of the BPO, the small town investor has gone hunting and set up data-processing outfits. He would put that money and run an IT school in the 90s. I am no apologist for IT Training, and I do think that there is an over-supply of IT schools. But, what about English Skills, Behavioural Skills, Practical Skils like Accounting, Customer Service, Health Care? Training requirements change over time - in a normal transition, the IT schools would have incorporated all these to remain afloat. McKinsey came out with its Global Institute Report in 2005 predicting that only 14% of developing country graduates of equal education and experience [with the developed country counter-part] can replace the developed country kid in their job. They cited language proficiency, practical skill levels and labour mobility as prime causes. But, alas, both the Nasscom and the government is telling the Indian entrepreneurs to join the glod rush of BPO. At the cost of sounding obsessed, I would fear that this BPO rush will leave our society skill-poor, which will probably damage development prospects of BPO as well as many other future-focused industries.

And, lastly, from close quarters, I can see one big trend we are missing out on. I am quite intrigued by the fact how important design aspects of a product or service is becoming. I could see it is becoming increasingly important. I am not just seeing it from the eyes of my british colleagues, who have always been obsessed with design - but also hearing about it in American journals and behold - from Chinese manufacturers. In our mad rush to the backoffice, Indian start-ups are increasingly doing poorly here. In my experience, an average Indian business house is grossly oblivious of the design aspects of its products or services. I guess I understand this - This is the cost is everything mentality! But I am rather convinced that it is a regressive business strategy.

So, as I keep trying to tell Neil, BPO is a great business, but that is a business of the present. It is good money, but not the future. I hope the policy-makers in India will also soon start telling him the same.