Skip to main content

Risk Culture - By Sanjay Anandaram

The board meeting at the startup was underway and the CEO proudly highlighted what he considered to be the most successful initiative of the company. The initiative had been embraced by customers and partners whole-heartedly and the signs of continued growth were very visible. The head of business development, present in the meeting and responsible for that initiative was understandably delighted at the acknowledgement by the board. He subsequently made an unusually peppy presentation on his department to the pleasant surprise of all. Later on, the CEO explained about business development and its head: “He’s full of ideas all the time. We tried several of his ideas earlier and they all bombed. When he came up with this latest one, I told him that this would be the last one we’d try. I also asked him to think through the idea and take full responsibility for its implementation. The results are visible. In addition, the business development head was so thrilled with the success that he took extra care to make a detailed presentation on his department, something that was sloppy, at best, earlier.”

The above highlights two important things: one, the role of the CEO in encouraging and nurturing ideas, in spite of past failures and two, the delegating of execution of the idea to its originator. All too often, the company culture is hierarchical resulting in a top down style of management. Where the CEO generally decides what to do and the rest of the organization simply executes. This implicitly assumes that the CEO has the monopoly on thinking. Of course, there are socio-cultural issues at work as well, typically visible in a class and hierarchy conscious society. In addition, the person who generates the idea and the person executing it are two different people. This quite naturally leads to problems – of egos, of understanding, of expertise and so on. On the other hand, if the person responsible for the idea is made part of its execution, the practical aspects of idea implementation come to the fore. It is one thing to suggest an idea, quite another to execute it. Participation of people from different areas of the company in problem solving is a great way to build a strong culture of team work as well.

A startup is founded on risk-taking and its management. So how come in many startups as they evolve, there’s this hesitation to experiment, to try out new initiatives? After all, no one really knows what specifically is going to work. If they knew it, all startups would be successful. There’s this endless cycle of trying and experimenting, seeing the results, modifying activities and then dropping some initiatives, re-launching some and starting off others afresh. One of the advantages of the startup is its ability to move fast. It makes mistakes faster, learns faster, launches faster, makes newer mistakes, learns,…..It is therefore critical that this culture of risk taking is encouraged and calibrated by the CEO. Else, it will be impossible to harness the intellectual capital of the people. There are market and customer insights that only those in daily touch with customers and partners have. It would be fool hardy not to listen to this group for their ideas and thoughts. Being afraid of trying new things is a sure recipe for failure for all companies, especially for a startup.

Creating and sustaining this culture of ideation, risk taking and managing it are therefore crucial for a startup. The entire company needs to be motivated to participate. Obviously, the effort needs to be calibrated in such a manner that, both, the cost of failure and the cost of trial need to be low not just for the startup but also for the customer or partner if they’re involved in the initiative. Quick and inexpensive course corrections need to be made based on results.

After all, jumping off a cliff without a parachute isn’t risk-taking, it is foolish.

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.

Popular posts from this blog

How I Raised Funding - Priyanka Agarwal, Wishberry

You have to be confident and shameless while crowdfunding. Priyanka Agarwal, Wishberry shares on how to succeed in crowd funding with Venture Intelligence in this  interview. Priyanka also candidly shares how the team built Wishberry, raised funding from top angel investors like Rajan Anandan, on pivoting, and difficulties in raising capital for entrepreneurs operating in niche spaces not chased by VCs. Q: What does Wishberry do?Priyanka Agarwal: In its latest avatar, Wishberry has pivoted into crowd financing of low budget films (INR 1-5 Cr). We are essentially trying to create an internet platform for investment opportunities for HNIs in films including Marathi, Tamil, Kannada, or films targeting the global diaspora.

L-R: Co-founders Anshulika Dubey & Priyanka Agarwal, Wishberry Given that you are building a marketplace, how did Wishberry solve the Chicken and Egg problem? Beyond the “all or nothing” model what did Wishberry do to pull in more artistes and investors? First, you…

Interview with One97's Vijay Shekhar Sharma

Venture Intelligence featured an interview with Vijay Shekhar Sharma, Founder & Managing Director of One97 Communications as part of the July issue of the US-IVCA / Venture IntelligenceIndia VC report. One97 is one of the pioneering start-ups in the Indian Mobile VAS space and recently raised its first round of funding led by SAIF Partners.

Some extracts from the interview:

VI: How were you funding the company until now?
VSS: We were the first company to put a revenue sharing model in place with operators. That gave us recurring revenue and made the company cash positive.

VI: What were your challenges in fund raising?
VSS: Two challenges: first, deciding on the network the fund could provide and second, the kind of size commitment they can make for future investments. A third factor was the comfort with the VC: what kind of team it was, the chemistry between team members, the kind of person who will come onto our board. The VC on the board becomes your everyday business partner.

V…

How doing Outsized Partnerships led Karadi down the Wrong Path

Business Line has a fascinating account of the travails faced by Chennai-based children's entertainment and education brand, Karadi Tales, in its search for strategic / financial partners. Viswanath has been fire-fighting to keep afloat Karadi Tales (now a unit of Karadi Path), the company he and his wife Shobha founded in 1996. A distribution agreement with Times Music had landed them in court. And the merger with ACK Media (publishers of Amar Chitra Katha) and subsequent acquisition by Kishore Biyani’s Future Ventures didn’t pan out as expected.  ...The partnership (with Times Music) turned sour when there was a change in leadership at Times Music...When Viswanath cited the exit clause and asked for the agreement to be nullified, his partner refused to oblige and instead took him to court, which issued a stay order. Viswanath and his team, despite founding Karadi Tales, could no longer use the brand. “It took us two years to get out of the case,” says Viswanath, who also had to fa…