“Growth hacking is more of a mindset than a toolkit.”
– Aaron Ginn, Silicon Valley Technologist.
The term ‘Growth Hacking’ is primarily a marketing concept that is leveraged by start-ups that operate with flexible business models and focus on massive growth with small budgets. But the trend is steadily catching up with the corporates as well. After all, what is more enticing than the prospect of rapid growth in a short time frame and at a low cost? But what does it take to ingrain the growth mindset in companies?
Let us delve into a panel discussion by the experts Amit Chaudhary, Co-Founder, Lenskart, Bhaskar Appacudal, Managing Director – APAC CoE, Vista Consulting, Pari Natarajan, CEO, Zinnov, and Rajesh Nambiar, Chairman & President, Ciena India Pvt. Ltd., moderated by Megha Vishwanath, Assistant Editor, CNBC-TV18, and get insights on inculcating the growth instinct in organizations.
Megha: What does growth mean to you or your business? What was that one misstep that you took, in the journey of trying to hack growth?
Rajesh: Growth, for us, is profitable and sustainable growth; clearly focused on the shareholders and investors and adding value to them.
A misstep or an initiative that did not go well in my career was when I was responsible for Global Application Services in IBM and we divided the business into two broad areas; core (legacy) and digital. We expected our Digital segment to grow exponentially, and our core segment to decline or struggle to grow. After this distinct division of our business, we started focusing more on our Digital portfolio; but few months and quarters down the line we understood that this was a very wrong way to classify a business. We understood that the buyer looks at buying a solution and does not look at the divisions of our business – core or digital; this called for an integrated approach of core and digital, which is why, we realized, treating core and digital as different segments was a very wrong way to classify. The right way was to leverage the core (legacy) to drive growth in digital.
Pari: For us, growth meant – growth in the ecosystem where our customers are able to drive innovation, value, and global roles from India. The misstep when we got on to this journey was that we tried to push it from an India-out mindset, and not looking at it with a country-out mindset. When we made our pitches, we had our customers say that the idea was great for India, but what was in it for the company. We had to change our overall approach and we started thinking about what does driving innovation and value from India, mean to the organization – in terms of revenue, customer experience, and bottom line. We are also taking our forums like Confluence to global locations where the decision-makers operate from. Now we have started to measure the number of roles from India.
Bhaskar: I have been with Vista for 15 years. Vista has got 45 Bn assets under management. It does about 40 acquisitions every year, including platform and tuck-in acquisitions. Currently, we have 62 platform companies in our portfolio. When we do our acquisitions, we don’t do early-stage funding; we take companies that have been very sticky in their customer base, mission-critical in their lines of business, and are very profitable. When a private equity firm like ours makes an acquisition, we look to make a pivot. We look at multiplying revenue and a bit of growth. This requires a significant change in the mindset, which calls for a complete churn of leadership. In this situation, the team is unsettled and goes through the stages of forming, storming, etc. This is a challenge that we face from a private equity perspective.
Megha: Lenskart had multiple verticals – JewelsKart, BagsKart, Watch-Cart, and Lenskart; and Lenskart was the only Kart to survive. So, what was your mistake when you were trying to adopt a growth hacking approach?
Amit: I would like to draw a simple analogy. Force is equal to mass * acceleration. So, when we were not achieving growth, instead of focusing on accelerating, we were focused on increasing our mass, which is why we kept adding multiple product categories to our portfolio. By doing this we lost all the acceleration, because, we were not focusing on one category and building it.
This was one big mistake because the company reached a situation where there was no cash flow and it became difficult to run the business. That taught us a lesson that if you can focus on one segment, scale it, build the mass, and accelerate – the force could be much greater
Megha: How did you recover from this expensive misstep of diversifying rapidly, and hiring multiple teams to manage the multiple verticals?
Amit: What we did at that point was, started understanding customers. When we grew from 100,000 consumers to a Million consumers, we realized that it was important to understand the needs of the consumers irrespective of the channel they chose to shop through – online or offline. We understood the pain points of a customer and analyzed the multiple entities in this value chain – an optometrist, a manufacturer, a distributor, a retailer, and a consumer who is not getting the required service because of the disconnect from the rest of the entities. We understood this major pain point and started owning the integration, and we then looked at expansion.
Megha: While churning the leadership being the initiative undertaken in the interest of the business, how did you handle the people-related challenges that it brought? How did you balance the business and the people side of things when there were significant changes brought about in the organization?
Bhaskar: When you compare a private equity firm and a services firm, what is done in ten years in a services firm will be done in three years in a PE firm. One common thing observed among the leaders of PE firms and the leaders of portfolio companies is that they are ‘Red’ personalities – They are ‘Be Brief. Be Gone.’, very analytical, logical. They understand the need to drive value extensively. We have made more than 350 transactions to date and we have never lost money on a single transaction. We are also partnering with Zinnov to drive some of the best practices in the space.
Most of the leaders self-select themselves out when they realize they don’t fit into a certain fast-paced environment, which makes it easier for us.
Megha: What is the right approach to go about blitzscaling especially when it comes to B2B and Enterprise companies?
Pari: In India, we have reached a level where we have the capacity to drive global transformation. Take for example the top three CEO priorities of a company – one of them can be driven from India. To be able to run that you need the following:
• High-quality Talent
• High-quality start-ups and partners
• High-quality Leadership
• Understanding of customers
We have got a product-market fit for the ecosystem; the next step is to accelerate. The ecosystem now has all of these ingredients, and now we have to have the right ambition to accelerate and go about it.
Megha: How do you get there – getting high-quality talent, start-ups & partners, leadership, and understanding the customers, within small budgets?
Amit: The ‘small budget’ is the answer to growth hacking. When you have a lot of money, you try to buy the problems out instead of thinking of innovative solutions to the problem – this has been a common problem across organizations. When we talk about blitzscaling, let us take the examples of Uber and Airbnb. They didn’t have a lot of funding at the start but were able to scale rapidly because of their innovation. Innovation in devising solutions is, therefore, the key, as opposed to investing money in buying problems out.
Megha: What is it that India has that the rest of the world doesn’t have, especially when it comes to blitzscaling?
Baskar: The India advantage has moved well beyond the cost arbitrage and it is now execution arbitrage and innovation arbitrage. The R&D center is a cost center, but it impacts the revenue by allowing the addition of product features that can enable upselling and cross-selling; the sooner the company gets a product to market, the better is the impact on revenue. This can be done by economies of scale, enhancing productivity, quality, etc. India has an excellent framework to provide this execution arbitrage.
Talking about innovation arbitrage, when companies assign work to India, they look at horizon-1 initiatives – the preserve and protect, things that are keeping their lights on. For example, companies get maintenance engineering done out of India because it is a low-cost center. We have to pivot this conversation and say how do we drive innovation arbitrage from India. We conduct ideation summits, hackathons, etc. and urge companies to focus on Horizon-2 initiatives – initiatives that will give portfolio companies a competitive advantage. Analytics is one area that has a lot of scope with innovation arbitrage being driven from India, in the space.
Megha: How do you instill the growth hacking instinct in your team and weave it into your work culture?
Pari: The key is to have leadership with an intrapreneurial mindset. An intrapreneur is an entrepreneur within a large organization. Leadership with an intrapreneurial mindset with the willingness to take risks and solve problems for the company will be able to drive the growth hacking culture across the organization.
Rajesh: Leaders make a big difference. The top leaders make a disproportionate difference in having the organization focused on what they do. Leaders must paint the reality, give hope, communicate the vision and the path to get there.
Amit: I would like to differ. When you assign tasks, track performances, and do a lot of reviews, the scope for innovation, and intrapreneurship is little. In our organization, we communicate our vision, and vest our workforce with autonomy, give them the freedom to adopt various managerial styles to manage micro teams in their own styles, even set their own targets, and get there. This enables them to think differently.
Megha: This is what happens when you are managing millennials. They don’t want to be told how to get to a goal. Communicate the goal and they will get there. Baskar, what are your views on this?
Baskar: I have not directly worked with millennials, but my teams have. It warrants a significant change in the way you approach a workplace culture. The definition of leadership is changing every day. It is far more challenging to be a leader today than it was two decades ago. The leadership is constantly under scrutiny, with whatever they say or do, and it is recorded for posterity across platforms like Twitter, Facebook, etc. The challenges are, hence, immense.
Amit: Formerly, the attitude was such that you think of a person’s capability to take your place when you move up the ladder, but today the attitude is to analyze whether a person reporting to me is capable of starting a company like mine. This is an ideal shift. It gives a sense of pride that somebody in your organization is able to learn the techniques used, and get inspired by the way you work, and start their own venture. This is how you generate entrepreneurs within the organization.
Megha: What is that one value/quality that you have held on to as an entrepreneur throughout your journey?
Pari: The ability to listen to the customers, understand their problems deeply, and incorporate their feedback into our business is very important to me, given the fact that we are in the business of supporting and advising customers. Therefore, spending more time listening than talking, has now become a part of our organizational culture.
Bhaskar: ‘Fail Fast. Learn Fast’ is a quality that we have very consciously adopted. Make a mistake, realize, pick yourself up, and get the team rallying behind the new idea – this is something that we follow.
Amit: There are a few things that were told to us by the Zappos CEO, that we stick to. They are:
• Never sell a product at a loss
• Don’t put rules to customer service – The worst thing that can happen in customer service is to give the customer one pair of spectacles.
Rajesh: Focusing on your core competencies is important. Going back and analyzing what you are good at and sticking to your knitting is essential. One of the responsibilities of the leadership is to sense and respond – the way in which we sense that the trends might change, but the ways in which we respond should be the same, and in line with the organizational DNA.
One thing that is clear from the above discussion is that, growth hacking is not a strategy, but a mindset, and that the leadership plays a critical role in driving this mindset across the organization. The intrapreneurs that a company generates might be inspired by the company’s techniques and the way it works and employ them within or outside the organization. However, one thing is certain that the growth hacking mindset will help create more entrepreneurs in the Indian ecosystem.