By 2003, Sunil Bharti Mittal’s company, Bharti AirTel, had become a major player in the Indian telecom industry, having won licenses in 15 of the 23 ‘circles’ or regions where mobile phone operating licenses had been granted. These circles represented some 92% of the current Indian cellular population. Bharti’s overall market share in India was north of 20%. But Mittal had a problem.
The fast-growing company had been doubling its sales year-on-year, but continuing its rapid growth would mean moving more aggressively into rural markets. There, doing business was going to be much less efficient than in urban areas.
Rural users in India were using far fewer minutes, by half, compared to western users. And competitive pressure and rural users’ very limited spending power had driven per-minute pricing to as low as two UK pence per minute, one-third that in Europe and the United States.
The company’s strategy would have to change from growth at any cost to a search for profitability, by becoming the lowest cost provider. The focus henceforth would be on per-minute profit margins. But how?
Why invest if you can borrow?
In early 2004, co-managing director and CFO Akhil Gupta developed a plan. He had been growing increasingly frustrated that every new spurt of growth called for new investment in the Bharti network—new investment in network equipment and IT hardware and software, new towers and base stations, and more.
Gupta and his team decided to ask his network equipment suppliers, including Ericsson and others, and his main IT provider, IBM, to become outsourced partners, taking over the complete responsibility for keeping pace with Bharti’s growth—building, maintaining and servicing the network and the IT systems that supported it.
No longer would his team have to spend time poring over bids for new equipment that would soon prove insufficient. No longer would Bharti place orders for network equipment, computers, and such. The more than 1,000 Bharti staff currently managing its network and IT would be taken over by the vendors.
In late 2004, breaking the conventional rule that outsourcing meant western companies’ outsourcing to eastern resources, Bharti made front-page headlines in the Wall Street Journal for ‘reverse outsourcing’—that is, by reaching agreements with IBM and three network equipment vendors, Ericsson, Nokia, and Siemens, to carry out Gupta’s plan.
Under the network equipment deals, Bharti would pay for capacity only once it had been used by customers. IBM committed to certain IT service levels and would get a percentage of revenue.
In essence, Bharti would ‘borrow’ the assets it needed, paying for them only as they were used by consumers, rather than ‘investing’ in them.
Visionaries break the conventional rules
Building upon 20 years of field-based research into what makes entrepreneurs ‘entrepreneurial’, and how they differ from other successful businesspeople, I’ve learned that many successful entrepreneurs exhibit one or more of six counter-conventional mindsets:
- ‘Yes, we can!’: When asked by a prospective customer whether they can do something promising that’s entirely new and unfamiliar and falls outside their current competencies, entrepreneurs say ‘Yes, we can!’. Then they figure out how.
- Think narrow, not broad: Entrepreneurs know that learning happens after success is established in a tiny market, with their businesses growing from there.
- Beg, borrow, but don’t steal: Entrepreneurs will look to ‘borrow’ resources to start something new instead of investing in them.
- ‘Problem-first’, not product-first logic: Entrepreneurs know that if they solve genuine customer problems their businesses will thrive.
- Ask for the cash, ride the float: By getting customers to pay in advance, and by paying their suppliers afterwards, entrepreneurs put that spare cash into growing their businesses.
- Instead of asking permission, beg forgiveness later: When the legal or regulatory landscape is ambiguous or uncertain, entrepreneurs simply plow ahead.
These six break-the-rules mindsets connect what entrepreneurs observe and encounter with the actions they take. These mindsets help them challenge assumptions, overcome obstacles, mitigate risk and, sometimes, change the world.
But, alas, the six mindsets run counter to the conventional wisdom that’s typically found in large and well-established companies. They fly in the face of what’s taught in most business schools about strategy, core competencies, target marketing, financing and more.
Why become entrepreneurial?
These days, it seems, every HR leader has been charged with helping their company’s people become more entrepreneurial, even though most large companies don’t like the risk and uncertainty that comes with the entrepreneurial territory.
So why should you encourage your people to start breaking the rules? Three reasons:
- As the saying goes, ‘Innovate or die.’ Innovation is the lifeblood of your company’s future.
- To innovate means getting the right people on your bus. This means people who share the company’s values, and who have the capacity and willingness to learn and, when appropriate, break the conventional rules. ‘Hire for attitude, not for skill or experience’ is a much-overlooked principle in hiring great teams.
- Many large companies fail to undertake small, quirky, controversial projects – truly innovative experiments that wouldn’t be accepted by the organization at large but that have the potential to grow. Who would have thought that the team that broke rules to create Nespresso inside the world’s instant coffee leader, Nestlé, were creating a business that today is among the company’s hottest growth engines?
The six break-the-rules mindsets provide a proven path toward meeting these strategic imperatives.
The results that Bharti delivered by borrowing the assets they needed were remarkable. In the single month of February 2006, Bharti added 1.07 million subscribers, thanks in part to the more than 17,000 base stations in more than 3,300 towns that its new strategy delivered.
As a result of its relentless growth in subscribers, in 2008 Bharti became India’s largest mobile operator.
Fast forwarding to 2021, Bharti’s revenues reached $13.5 billion, its market cap reached nearly $40 billion, and it ranked number 92 on Forbes Magazine’s list of the world’s most innovative companies. ‘Borrowing’ key assets had taken Mittal and his fast-growing company a very long way.
Can an entrepreneurial mindset be learned? The good news is this. These six mindsets can be learned, adopted, and mastered, not only by today’s most visionary HR leaders, but by those they bring along on their journeys as well. Ignore them at your peril.
The International Festival of HR is back! Discover amazing speakers from the world of HR and business at UNLEASH America on 26-27 April 2023.
John’s book, ‘Break the Rules! The 6 Counter–Conventional Mindsets of Entrepreneurs That Can Help Anyone Change the World’ is out now.
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