First published in Financial Express. Reproduced with the author's permission.
Some time ago, I met with a young entrepreneurial team that had started an e-commerce company. They seemed very excited and gung-ho with the prospects of their company. But there didn’t seem to be any differentiation in their product offering vis-à-vis the many others who too, according to me, were dispensing similar, if not, identical e-commerce services. I therefore asked about their differentiation. I was told that they had not just an online service but also a physical, telephone enabled and mobile versions of their service.
The conversation reminded me of my days as a computer salesman in the mid 1980s. In those early days, vendors and customers were both equally knowledgeable or ignorant (depending on how you look at it!) and the IT revolution was yet to take off. Personal computer sales would take place based on features – kind of monitor, size of the monitor, kind of keyboard, number of keys on the keyboard, how much memory was offered as standard and so on. And price. Clearly, price per feature was therefore, quite understandably, the norm!
It was much later in the early 1990s that I realized that features don’t make a product. Features can be copied easily, products less so. Being responsible for business of personal computers in an overseas territory presented me with the opportunity to look at how international class products were offered. The entire ergonomics, design, look and feel mattered. The quality and kind of packaging, the design that permitted ease of unpacking and installation, the user-friendly documentation, the pre-bundled software (different ones for the home and for the office), the prominently displayed toll-free customer support numbers, the simple processes for returning the product if a customer were unhappy, the easy to understand product identification codes, the pricing information, the newsletters that talked of impending new product releases etc. I realized the role and importance of product management and marketing. The needs of various customer segments have to be factored into the design and development. The right pricing has to be arrived at after considering and even anticipating the competition. How would the product be sold, delivered, installed and supported? Remember, there was no on-line those days and computers had to be bought from stores or the company distributor delivered them to your office. Providing for as pleasant a customer experience as possible from the purchase to unpacking (“the joy of unpacking a brand new computer in front of the family should be understood” is what I learnt) to installation and use.
A subsequent learning was that a product doesn’t make a business. To be a business, one had to have a slew of products, a road map. There needed to be sales people, customer support, designers and developers. Finance, operations and logistics; Marketing and advertising; Hiring and training; Process and policy. Inventory and risk management. Forecasting and channel management. Building a business that was growing year-on-year and was profitable was not quite the same thing as putting features together on a brochure or in producing a product.
Today I know that a feature doesn’t make a product. A product doesn’t make a business; And most importantly, a business doesn’t make a company. A company is a means of organizing a business. It has a board of directors who are answerable to shareholders. The CEO is answerable to the board while the management team is answerable to the CEO. The scale of ambition and operations require detailed, sophisticated and prudent financial and risk management, planning, monitoring and measurement systems. Hiring, training, retaining, growing talent is a priority. This requires a structure that enables the creation and execution of strategy via processes, policies and procedures. Decision making is therefore different. Multiple sources of financing need to be understood with regard to their long term ramifications to the organization. Determining new avenues of growth for the company as a whole while managing a portfolio of several businesses, each with several products, can be rather far more complex an activity than many of us are ready to admit and or are keen to handle.
It is therefore important as entrepreneurs to understand and appreciate the orders of complexities involved as one traverses the trajectory from creating features to building a company. It is through this appreciation that one can then decide on the changes required to be brought within oneself and around if the journey towards a company is to be made. Again, this is not a right or wrong, good or bad matter or for any of us to be judgmental about. It is quite simply an issue for the entrepreneur to determine for himself. After all, it is the entrepreneur’s journey at the end of the day.
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 email@example.com. The views expressed here are his own.