Strengths of a "Traditional" Businessman
Off late I have been running around a lot and have been meeting a lot people.
"Networking" a lot.
Entrepreneurship has been a great teacher.
I have evolved a lot over last many months, I can understand business better, I can understand what are processes and systems.
Earlier Everything was"Globe" to me.
Being a CEO of firm with 15 people under you, working at various levels and functions, its so difficult to control each of them, ensure most of their work is productive, advice them timely, monitor them constantly, pamper them occasionally, Pep them up on a routine.
To run any enterprise, you need very robust PROCESSES.
Lets Define my understanding of processes: Processes: No Rocket science or anything to do with codes but are pure logical statements, set of rules or an algorithm which can take care of any thing that is routine.
Robust Process: Every rule has an exception, but there are instances where the frequency of exceptions is high but variations among exceptions are low.
These exceptions can thus be again programmed, or be bound under a set of rules.
A Robust Processes addresses these exceptions and thus appears as extending flexibility to the executioner.
Suddenly Why am I talking for these processes? On Monday, I happened to meet one Traditional Businessman, put to Indian Context, who runs a jute mill another traditional business with a typical 8~10% Y-o-Y growth rate, matured industry, perfect competition.
This person is just 35 years old, considers himself to be the most savvy of his fellow businessmen as he uses email to expedite his communications.
Yes, He has a blackberry Apart from the golden Spoon, there is much more a traditional businessman inherits from his predecessors.
He Inherits Processes which have been tweaked, tested and adapted over thousands of years and practiced to perfection.
He runs a Jute Mill with over 500 looms, he is an HNI - so obviously he is a busy man.
I reached to meet him at 5 pm, as advised by him over the phone.
I sat in his cabin on the other side of the table, on the corner chair totally unnoticed for over 2 hours.
In fact, I was really enjoying sitting there and observing how this person conducts business.
He sits in a small closed chamber in his head office, hardly gets up and moves around, but he still is in total control of his mill, go downs, inventory, sales, and even in tune with Labour Sentiments.
How does he manage that? I observed that only He in the entire organisation uses a green pen/ or a green ink.
He goes through the Day books, the daily bills, everything nearing the end of the end.
More than, bothering about the numbers, he carefully pauses to notice the body language of the person who is presenting him the numbers.
He personally marks small ticks in his green ink beside each and every figure and places a small signature on each pages.
This suggests that those numbers have been checked and need not be revised again.
The signature ensures that no one can change that page, paper or numbers.
He encircles each and every total with his green ink and again puts a signature beside it.
On each of the bill which needs to be paid, he repeats the entire process all over again, but as added measure of security, he notes down one random number from the bill onto his personal pocket diary.
No one knows what component of the bill he noted down, this again doesn't allow anyone to tamper with the bills.
Occasionally he points out to certain numbers on the bills and presents some comments on it " Yeh bill abhi clear kyun hua? pichle hafte ho jana chahiye tha " and occasional " Ye Lyka waalon ka bill hai, inko bolo kuch discount to de ".
This sends a message across that he is in total control of the numbers.
My Dad is an entrepreneur, a business man for last 30 years.
He didn't inherit any business from his father.
He still suffers from Labout issues, Stealth, Fraudulent bill payments, arbitrage trade by staff for their own interests.
in his 30 years, he designed and master many of the processes - how to use ancillaries to your advantage, how to get the best quality product within minimum time, how to standardize quality, how to standardize measurements, etc.
But again, the saying is Rome wasn't built in one day.
You can build a house in one day but not a home.
If you have money, man power, what stops you from setting up a highway in 5 days.
Because of these processes which cannot be built overnight.
Consultants bill @ $200/hr just to create these processes for you.
But still These processes cannot be bought.
Coming back, it took 30 years for my father to set product and quality control in place but these 30 years were not good enough to master some of those processes which were developed by the Vaisyas - the merchant class since history.
He came to know of my venture, my idea, my background that I am an MBA from an IIM with an engineering degree too.
After lot of careful thinking, he said " Youngsters like you lack patience ".
You want to try to many things too early.
He symbolised patience.
I can recall him explaining the map of his plant to his employee for 20 years who has seen the plant in and out - still not getting the picture right.
He explained to him over 4 times, then finally the employee went out and got a map from a file and then he explained him again over the map.
Not once he raised his voice, or his eyebrow, neither his voice has any dejection or irritation.
He says " In this kind of industry, if you go too fast you will surely falter ".
He suffers from a problem: there are 2 class of labours - One which is paid Rs.
250 a day and One which is paid Rs.
150 a day.
If The higher wage labour ( H ) is absent, the Lower Wage Labour ( E ) will strike a deal with H.
He will put attendance for H, and mark an Absent for L.
L gets paid Rs.
250, of which he pays Rs.
75 to H without doing any work and himself takes home Rs.
175 which is higher than his daily wage.
He said if you put swipe cards attendance mechanism in place, there is always a risk One person swiping cards for 6 others.
So, you have to man the Swiping Card place.
Moreover, in a mill, 5000 employees report to work at a shift.
Even with 20 Swiping machines, there will be que and the labour will protest to come 15 minutes early just to mark their In time.
Thumb Impression based machines were tried on Pilot they failed as they are too slow.
Thus the entry time of 5000 labours was running into an hour.
Moreover, such a sudden change always run the risk of being taken adversely by the labors.
He being an HNI, I was obviously pitching him to fund my venture ( small seed money ).
I was explaining to him fundae of Valuations, Equity, Debentures etc.
At the age of 31, this guy has acquired an Electric Transmission Company, which was sick, turned it around in 6 years and was now negotiating with PE to buy stake in the firm.
Remember he said - He was most savvy among the comparable lot.
I really have started to admire these businessmen for their processes which we call as acumen as well as their person or human skills.
Only thing which have restricted them over the ages to scale much beyond has been the vision, the need / zeal to scale up and education.
Now, in this context I remember one very wise saying by Ajit Balakrishnan, as the core problem of Indian Approach to Business and Scaling.
He says, Indians are really good in scaling in numbers and replication of processes but fail miserably in adapting automation.
This means, if I am running a Call centre of 50 people and I do well, suddenly over few years you will find me having 5 setups of 100 people each.
I have scaled from 50 people to 500 people and thus increased the number of customers serviced.
This is where out knack is, human resource being available at arms length we scale by adding numbers.
We don't think much about strengthening processes even more, automating more routine work, finding consistency among requests and making those 50 people service a load of 500 people.
This is scaling by automation.
This has been the precise debate of Independence Era where British nationals used to take raw material back to England and bring finished product back to India and still sell cheap.
Because they scaled by automation, India was scaling by adding more Jute mills.
"Networking" a lot.
Entrepreneurship has been a great teacher.
I have evolved a lot over last many months, I can understand business better, I can understand what are processes and systems.
Earlier Everything was"Globe" to me.
Being a CEO of firm with 15 people under you, working at various levels and functions, its so difficult to control each of them, ensure most of their work is productive, advice them timely, monitor them constantly, pamper them occasionally, Pep them up on a routine.
To run any enterprise, you need very robust PROCESSES.
Lets Define my understanding of processes: Processes: No Rocket science or anything to do with codes but are pure logical statements, set of rules or an algorithm which can take care of any thing that is routine.
Robust Process: Every rule has an exception, but there are instances where the frequency of exceptions is high but variations among exceptions are low.
These exceptions can thus be again programmed, or be bound under a set of rules.
A Robust Processes addresses these exceptions and thus appears as extending flexibility to the executioner.
Suddenly Why am I talking for these processes? On Monday, I happened to meet one Traditional Businessman, put to Indian Context, who runs a jute mill another traditional business with a typical 8~10% Y-o-Y growth rate, matured industry, perfect competition.
This person is just 35 years old, considers himself to be the most savvy of his fellow businessmen as he uses email to expedite his communications.
Yes, He has a blackberry Apart from the golden Spoon, there is much more a traditional businessman inherits from his predecessors.
He Inherits Processes which have been tweaked, tested and adapted over thousands of years and practiced to perfection.
He runs a Jute Mill with over 500 looms, he is an HNI - so obviously he is a busy man.
I reached to meet him at 5 pm, as advised by him over the phone.
I sat in his cabin on the other side of the table, on the corner chair totally unnoticed for over 2 hours.
In fact, I was really enjoying sitting there and observing how this person conducts business.
He sits in a small closed chamber in his head office, hardly gets up and moves around, but he still is in total control of his mill, go downs, inventory, sales, and even in tune with Labour Sentiments.
How does he manage that? I observed that only He in the entire organisation uses a green pen/ or a green ink.
He goes through the Day books, the daily bills, everything nearing the end of the end.
More than, bothering about the numbers, he carefully pauses to notice the body language of the person who is presenting him the numbers.
He personally marks small ticks in his green ink beside each and every figure and places a small signature on each pages.
This suggests that those numbers have been checked and need not be revised again.
The signature ensures that no one can change that page, paper or numbers.
He encircles each and every total with his green ink and again puts a signature beside it.
On each of the bill which needs to be paid, he repeats the entire process all over again, but as added measure of security, he notes down one random number from the bill onto his personal pocket diary.
No one knows what component of the bill he noted down, this again doesn't allow anyone to tamper with the bills.
Occasionally he points out to certain numbers on the bills and presents some comments on it " Yeh bill abhi clear kyun hua? pichle hafte ho jana chahiye tha " and occasional " Ye Lyka waalon ka bill hai, inko bolo kuch discount to de ".
This sends a message across that he is in total control of the numbers.
My Dad is an entrepreneur, a business man for last 30 years.
He didn't inherit any business from his father.
He still suffers from Labout issues, Stealth, Fraudulent bill payments, arbitrage trade by staff for their own interests.
in his 30 years, he designed and master many of the processes - how to use ancillaries to your advantage, how to get the best quality product within minimum time, how to standardize quality, how to standardize measurements, etc.
But again, the saying is Rome wasn't built in one day.
You can build a house in one day but not a home.
If you have money, man power, what stops you from setting up a highway in 5 days.
Because of these processes which cannot be built overnight.
Consultants bill @ $200/hr just to create these processes for you.
But still These processes cannot be bought.
Coming back, it took 30 years for my father to set product and quality control in place but these 30 years were not good enough to master some of those processes which were developed by the Vaisyas - the merchant class since history.
He came to know of my venture, my idea, my background that I am an MBA from an IIM with an engineering degree too.
After lot of careful thinking, he said " Youngsters like you lack patience ".
You want to try to many things too early.
He symbolised patience.
I can recall him explaining the map of his plant to his employee for 20 years who has seen the plant in and out - still not getting the picture right.
He explained to him over 4 times, then finally the employee went out and got a map from a file and then he explained him again over the map.
Not once he raised his voice, or his eyebrow, neither his voice has any dejection or irritation.
He says " In this kind of industry, if you go too fast you will surely falter ".
He suffers from a problem: there are 2 class of labours - One which is paid Rs.
250 a day and One which is paid Rs.
150 a day.
If The higher wage labour ( H ) is absent, the Lower Wage Labour ( E ) will strike a deal with H.
He will put attendance for H, and mark an Absent for L.
L gets paid Rs.
250, of which he pays Rs.
75 to H without doing any work and himself takes home Rs.
175 which is higher than his daily wage.
He said if you put swipe cards attendance mechanism in place, there is always a risk One person swiping cards for 6 others.
So, you have to man the Swiping Card place.
Moreover, in a mill, 5000 employees report to work at a shift.
Even with 20 Swiping machines, there will be que and the labour will protest to come 15 minutes early just to mark their In time.
Thumb Impression based machines were tried on Pilot they failed as they are too slow.
Thus the entry time of 5000 labours was running into an hour.
Moreover, such a sudden change always run the risk of being taken adversely by the labors.
He being an HNI, I was obviously pitching him to fund my venture ( small seed money ).
I was explaining to him fundae of Valuations, Equity, Debentures etc.
At the age of 31, this guy has acquired an Electric Transmission Company, which was sick, turned it around in 6 years and was now negotiating with PE to buy stake in the firm.
Remember he said - He was most savvy among the comparable lot.
I really have started to admire these businessmen for their processes which we call as acumen as well as their person or human skills.
Only thing which have restricted them over the ages to scale much beyond has been the vision, the need / zeal to scale up and education.
Now, in this context I remember one very wise saying by Ajit Balakrishnan, as the core problem of Indian Approach to Business and Scaling.
He says, Indians are really good in scaling in numbers and replication of processes but fail miserably in adapting automation.
This means, if I am running a Call centre of 50 people and I do well, suddenly over few years you will find me having 5 setups of 100 people each.
I have scaled from 50 people to 500 people and thus increased the number of customers serviced.
This is where out knack is, human resource being available at arms length we scale by adding numbers.
We don't think much about strengthening processes even more, automating more routine work, finding consistency among requests and making those 50 people service a load of 500 people.
This is scaling by automation.
This has been the precise debate of Independence Era where British nationals used to take raw material back to England and bring finished product back to India and still sell cheap.
Because they scaled by automation, India was scaling by adding more Jute mills.