Building Against All Odds: Part 2
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As the impact of COVID-19 intensifies and spreads globally, business leaders, investors, and employees are all fearing what seems like inevitable economic doom. Across board rooms and town halls, the same questions are being asked – Will we lose our jobs? Will we get (or make) investments? Will consumer demand normalize? How bad will the situation get?
Keeping with our spirit of optimism, Blume Ventures presents the ‘Building Against all Odds’ series – a series of interactive webinars for Blume portfolio founders (or ‘Blumiers’) to learn from industry experts and seasoned founders who have built rocket ships through tough times.
In Session 2 of the series, we spoke with Aditya Ghosh, who built and ran IndiGo Airlines for over 10 years, and led OYO India & South Asia more recently. And is now a member of the global board of OYO and advises various other organisations in different capacities.
Aditya spoke about the different facets of organization building – Leadership, Product, Customer Success, Cost Management, and more – and how each of these facets can be thought of and potentially re-tuned during wartimes. In addition, he shared his views on the impact of COVID-19 on the different sectors within the Indian economy, and what the recovery phase could look like.
Organisation building: Vision of your org, and what drives it.
Founders need to focus on the one big objective they are chasing. These objectives are usually not being the most profitable company, or having the largest market share. Their objective should be the key customer problem they are solving and the gap in the market they are filling – i.e. being able to hone in on the “needs” of the consumer as opposed to their “wants”. Internal elements of the organization like employee culture, training, and corporate strategy are all woven into this vision.
Companies that can focus on their core competencies and the big objective they are chasing, can recover from war times faster.
Levers of a company: Competitive vs Structural Advantages.
Most companies try to achieve immediate advantages over their competition, to win more of the market share or get higher profits. These could include adding marketing channels, making small tweaks to reduce prices, etc. These advantages are all competitive advantages, that is, competencies that all competitors are active chasing, and can achieve (or copy) quickly. Chasing only competitive advantages puts companies into a rat race, where small changes can change the dynamics of “who is winning” in the market.
On the other hand, advantages that cannot be copied easily (or at all) are structural advantages. Such advantages or competencies put the company far ahead of the competition and make it very hard for competitors to catch up.
Aditya encourages all founders and managers to balance the time and resources spent on both levers, and understand that both are equally important to help organizations succeed. But what is more important is not to lose focus from the structural advantages of the company in the midst of fighting the daily fires.
Culture Setting: Who sets an organization’s culture, and how?
Aditya uses the example of IndiGo culture and says that he realized early on that culture needs to be set top down. Employees in an organization look up to management, especially the leader, when it comes to company culture.
Aditya narrates interesting stories from his time at IndiGo, explaining that to set up a culture for squeaky clean airplanes, he had to ensure that all workstations and conference rooms in the offices were clean first. To ensure that customer facing employees were always courteous and customer-first, he had to ensure that he was always polite and respectful himself.
Culture is built over time through repetitive behaviour, with employees imbibing what they see around themselves – just as people do in their personal lives. Aditya speaks about how over time, employees used to be excited to see if IndiGo flights were on time and had the fastest turnaround times, despite having no personal or monetary incentives to achieve this, because they understood the role that they individually played in achieving the larger goal.
Building a culture like this from day one also creates positive peer pressure for new entrants into the company, even if they have come from other workplaces that may operate differently.
(Blitz)Scaling: How and when to scale?
While most founders obsess about scaling, Aditya fears that not many actually question why, when, and how they need to scale. He encourages founders and managers to question why they want to scale in the first place. Does scaling help you reduce costs? Does it improve your product? Is it creating an operational efficiency you cannot otherwise get? Decisions made around scaling one’s company must stem from answers to these larger questions.
Impact of COVID-19: Who will get hit and when will they recover?
With cities across the globe going into lockdown, countries closing down borders, and people avoiding travel, the mobility and hospitality industries were the first to get hit. Over the last two months, several other industries have gotten hit because of lockdowns, supply chain disruptions, and lower demand. Aditya notes that industries like travel, hospitality, luxury shopping, and brick and mortar retail, that were first to get hit, will also be the first to recover. He points out that while people will want to conserve cash, they will not stop travelling and shopping. Other sectors are likely to see a lingering effect of supply chain issues, and the companies providing the most affordable solutions will recover faster. The key to recovering in the time of a slowdown, will be focusing on one’s core competency, and reducing costs – even if this means re-working one’s cost structures. He believes that in almost every industry / sector, the affordable end of the market will lead the recovery first.
Macroeconomic effects of COVID-19: How will this change our larger context?
This is one of the first times in our lives that we are seeing a multidimensional crisis hit almost every country in the world. The larger context we operate in – regulation, national economy, geo-political landscape – are all likely to react to this unprecedented situation.
Businesses going digital ahead of time
Lockdowns and remote work have forced several businesses to go digital (or further increase their digital footprint). Aditya uses the example of Education, which has gone completely online since schools and colleges were amongst the first to shut down. Other examples include increased reliance on tools for remote work, move towards online delivery of grocery, and online workout sessions.
- Move towards national self reliance
The global nature of this pandemic has forced countries to place their citizens before all others, thus reducing cross border aid and supply of medical services. Border closures have also deeply affected supply chains – both in B2B and B2C sectors. Aditya expects this shock to fasten the move towards self reliance and domestic redundancy, and spur an increase in domestic businesses. Given India’s large domestic consumption, this could be great news for domestic businesses in the long run.
- Increased role of government in business
Globally, both businesses and vulnerable citizens are looking to the government for relief. In India this has taken the form of tax breaks, moratoriums, and stimulus packages. If government aid continues, it is likely to increase the role the government plays in private businesses going forward.
Conclusion
From people management, to cost optimization, to scaling and growth – a company’s entire trajectory, both during war times and peace times, begins from the founders and managers. While Aditya agrees that this is an incredible responsibility, he sees it as the best way to tide over a crisis and build a rocketship.
The key learning from Aditya’s session is to be clear on the vision and objective one is chasing; and to ensure that all internal facets of the company are aligned with that vision. This allows all employees collectively to cater to the customer in the best way, without losing sight of the company’s growth and future.