BACK TO Business ResilienceZINNOV PODCAST | Business Resilience
In this episode, BVR Mohan Reddy, Founder Chairman of CYIENT, sits down with Pari Natarajan, CEO, Zinnov to discuss the nuances of his incredible entrepreneurial journey, how he built the billion-dollar CYIENT to provide Engineering Services to the world, from India, and how leaders like him can help further the start-up ecosystem by paying it forward for future entrepreneurs. They also delve into how employee, investor, and customer relationships are crucial to running a successful company and how today’s entrepreneurs must carve our their niche categories with care and foresight.
Delicately balancing employees and customers is the key to bringing about a harmonious business environment. How CYIENT was able to build a global company with this balance has been a phenomenal, impactful journey. Catch these two leaders in conversation about building Engineering Services for the world, from India.
Pari: Hello everyone. Welcome to an all-new episode of the Zinnov podcast. I’m Pari Natarajan, CEO of Zinnov and I’ll be your host today.
It is my pleasure to introduce B. V. R. Mohan Ready, who’s a Founder Chairman and Board Member of Cyient as our guest for the episode.
Mohan built Cyient in 1991 in Hyderabad, to provide affordable engineering services to global markets from India. In today’s conversation, we will explore the evolution of engineering services over time, how Mohan built Cyient, and how leaders can pay it forward for other entrepreneurs.
Mohan’s entrepreneurial journey of transforming his dreams into building a billion dollar entity that is Cyient is not only inspiring but heartening to read about in his latest book, Engineered in India.
Welcome, Mohan. It’s great to have you with us today.
Mohan: Thank you Pari. Thank you very much for inviting me to your show.
Pari: So let’s dive in. Mohan, you are a very successful leader, a corporate executive, leading a fast growing company. It’s easy to understand when people start on entrepreneurial journey early in their career there’s nothing to lose, everything to gain. But you are one of the few people who started a company in the middle of a career when your son was 15 years old, how did you make that decision to be an entrepreneur?
Mohan: Thank you Pari for that question. Entrepreneurship has been in my mind for several decades before that. Fresh out of the college itself. I’m talking about early 70s. Money was not in plenty. There was nothing called Venture Capital at that point of time. And also if technology was not at its best, so therefore, the opportunities for entrepreneurs were more in brick and mortar companies.
It meant two things thereafter. One is that it definitely required fairly large amount of money. The second one is to run the brick and mortar companies of that era by yourself, you needed to have lot more experience. So therefore, I had to wait for a while before I did both of them. That’s A, waited for the right type of technologies that came by; B, I had reasonably good amount of money to risk into an entrepreneurship. And the third one is that, I also gained a fairly large amount of experience. It’s a combination of those three which made me feel confident that I should become an entrepreneur. Though in some ways it might sound a little late. I was turning 40 at that point of time. But then the big asset that came along with it was my experience.
Actually, there are some studies which I read in the past which talk about the experienced entrepreneurs a lot more successful compared to the people who are fresh from the college.
I’m not saying they should not be, but experience is necessity even in today’s world. And as a result of that, I thought it was the right time. No denying at all. It also brought baggage along with it.
Pari: But 90% of the startups are Me Too startups. They’re looking at what other people are doing and building something similar. It could be something which is built in the US or Europe, or even in India. They’re replicated. But in your scenario, there was no category called Engineering Services. What inspired you to almost build a category from scratch? And what went in to choose a path which is less travel compared to… it’d have been easier for you to start something which other people have done and proven?
Mohan: I keep saying this, Pari an entrepreneurial journey is one which would make it distinctively different from anybody else’s journey.
If you are like anybody else, your competitive advantage is lost very, very quickly. At that point of time, if you look at it, even in a broad category, of IT services they were fairly larger number of players that were there.
We thought there was an opportunity therefore in Engineering Services and there were not many companies ahead. And I certainly felt that there was an opportunity because we looked at the ability for India to offer high quality, low cost Engineering as a Service. A combination of that made a unique proposition for us.
So therefore I keep talking to a number of startups and keep telling them that I don’t invest in a company if I’ve heard the story already once. So the story that they have had to be uniquely different. There’s no denying at all when you get into a unique distinctively different stories, you have the challenge in terms of market development as opposed to fighting for a market share.
So there is both ways of the coin. There’s an opportunity and a challenge. Now, if you look at the challenge part of it, you have to spend more marketing dollars in making sure that awareness levels are created. But you will have the advantage in terms of being a player who’s ahead of many others. So you have to balance between both of them to make sure you have a winning proposition.
But I always keep telling the startups that I work with that please look at unique propositions. You have to be distinctively different. You have to continuously innovate to make sure that you’re distinctively different from all times. Not necessarily just at one point in time.
Pari: And that’s really right now even your investment, your advice for startups is that. Another aspect I’m always fascinated about when I read the book and also observing you.. even at an early stage of a career you always work with large companies and always there is this perception that large companies don’t work with startups, and startups have to work with smaller companies, and you go to build capability. But your customers are really the top companies in the world, even at early part of your career. Even if I talk to customers today who worked with you early part of a career, they have such fascinating stories to tell.
What built that relationship with customers and how did you go after these large companies early on?
Mohan: Certainly it is not a one day battle. It goes on and on. You breed that culture. Actually, there are people from competition who made fun of me that I cooked the best chicken, and that is how people came to my home.
That is absolute life. I would take it with a big smile. The fact of life is they love to come to my home and actually in about 60 to 70% of our customer dinners were all hosted in my home. We never took them out and that was very special. You entertain this customer because of the affection that you show to them.
They think, you know, you are a part of the family, you’re extended part of the family. And that doesn’t just only reason why they come. But you’re also creating value on one side. You’re a trusted partner. You build a relationship with them. The amount of work that we do in terms of measuring the customer satisfaction is something which is very unique. Three times over, we’ll measure our customer satisfaction. One is called a Transactional MFA, that as soon as an engineer submits this piece of work to his counterpart engineer in the customer organization, he gets rated, he or she gets rated.
The second one is called Periodic. Every three months manager to manager, there’s an exchange of form which the customer fills and gives it back to the manager. And at third one is that we bring in a third-party, which is feedback consulting and we’ve been doing it for last 14 years. They go and make interviews with our customers and we keep saying that, you know, if you just do this interviews, that’s not end of it.
The customer has to get a feeling that based on my feedback, my relationship with this particular company or a supplier has improved. So it is a very, very involved process. You have to be nothing short of paranoid about it. That’s only when you see the customer’s satisfaction grow.
I think the first large customer I got was, I should certainly acknowledge that I was lucky, it was not a plan, there was no market research. We were not doing large amount of emailing or using social media those days for customers to find us. It was a strange coincidence that this large company, Pratt & Whitney came to Hyderabad to find an outsourcing partner. A common friend suggested that I meet them for dinner.
I made the right conversation. In a lighter vein, I had the ability to spot out the decision maker fairly quickly, impressed him and we brought him to our facility the next morning and demonstrated our capabilities. Actually, it also surprised me as to why a large company like Pratt & Whitney decided us as a small player, which was… we were not really a startup because we already in business for about 8-9years, we already had about 2000 to 3000 people who were working for us, but then we still asked the Senior Vice President of Engineering of Pratt & Whitney as to why he chooses as a partner. And he used this word trust.
He said, Mohan, I had a conversation the previous evening in terms of what your capabilities are, or where you are in terms of your business. How much emphasis you had in process and how you monitored your processes and control them thereafter. You could demonstrate the next morning.
He said, there was absolutely nothing which came as a surprise. Whatever you told me that night, the next morning when we came to your facility we saw it. So that was a turning point, according to him to build the trust. So therefore, the big lesson that I have for my good startup friends is that please promise, but underpromise and overdelivered. Never overpromise and underdeliver.
So here is an instance where whatever we said, which is basically the promise that we made, we demonstrated that which means that we were delivering that, the same theme that we continued in our journey itself. And of course, keeping in mind, next to God is customer and I believe in him, and so therefore we respected the customer. We made sure that we were paranoid about the customer all along. We continued to be… I think that’s the culture that I created in the company. We continuously work towards the goal of saying Customer Delight, the big message is that finding customers is very difficult. If you find one, don’t leave the customer. And the only way you can do is continuously delight them, by making sure you create value. What’s the customer looking from you?
They are looking for value creation. Does it get value for the dollars he spends with you, so that if you continuously do it, I think customers will stick to us. And that is how we are today. We have customers who are 25 plus years old. I think the key to it is making sure you delight the customer all the time by making sure the customer trusts you.
An interesting thing that I actually started realizing… when customers start worrying about the health of your company too, because they have made such large investments with you. They’re equally concerned about your health. I have seen some of my customers with a very hard day of bargaining that went on in terms of pricing, et cetera. At the end of it, you would still ask you this question, Mohan, are you happy or unhappy with it?
And there was an instance where I told people that I’m unhappy. And they said, let’s talk about it again tomorrow where you want us to re-look at the numbers. So the result is if you really create value for your customer and the customer is making investment in you and you are creating value for them, then they will look for a partnership and not any longer for this relationship called supplier and a customer.
There was an instance that we were doing at a customer location in the US. We took the appropriate permissions at the right level and then we even announced the event and then I got a call from the CFO for the company and he said, Mohan, this is not an acceptable thing that you’re doing.
And I said, ‘What?’ He said, ‘No, we never thought we were your customers, we were your partners.’ So he said, ‘Let’s call it a partnership meet. And he said both of us will pay for it.’ So that’s the type of relationship you have to build over a period of time with the customers.
Pari: You went IPO fairly early and at that time, like you said, there was no other way to raise money. Talk through that journey… one is building trust with customers, but how do you build trust with investors? Are they even looking at only at financial results? Are there are other aspects which are important in building the relationship with investors who invest with you for a long period of time?
Mohan: I still believe in my own instincts would say… the investors also look much beyond just the gains in their share prices. They like to see a sustainable company. They like to see that there is de-risked company associated with it. They also like to see a company which is value-driven because the moment they suspect that their values are in questionable terrain, we have seen investors disappearing in other companies. And so therefore what the investor is looking at in an organization is just not what is the appreciation of shares or the return for the investment.
But they’re also looking for long term sustainability of an organization and organization’s ability to deliver results over a period of time. An organization which has a culture of values.
Pari: So we talked about investor, we talked about customers. and the third, probably the most important part of building a services organization is the employees. And you have thousands of employees working for you. And especially now they have choices from other services companies, technology, product, global companies are here. How do you continue to inspire talent to do the best job when they’re working for Cyient?
Mohan: To start with itself, if you start building a culture, which I think, a fairly larger amount of literature talks about owner’s mindset, make sure that the employees are actually the people who create the wealth.
But you need to share the wealth with them in several forms. It goes in terms of their salaries, it goes in terms of their perquisites. And it also goes in terms of the rest of the facilities that come back to them. At this point of time, the amount of money we spend on training them, so, which means that irrespective of the type of challenges we have with attrition, we continue to spend money which is effectively saying that we trust you, we want you to develop yourself as technologists or as leaders in both those areas. We just not reward them with the salaries, but create a work environment which is extremely challenging.
If you look at one of the projects that we did… was absolutely 21st century aircraft engine, the leading edge of it. Some of the modules were done by our company, our engineers. That opportunity they would not have got anywhere else. So the people who are in a position to see those opportunities saying that my work environment is going to be far superior certainly are the people who think that, you know, here is the place we should build my career for future.
Pari: Yeah, it looks like taking care of associates has to be built into the culture, so it becomes a habit for every person. And, any thoughts around the next generation of entrepreneurs, how they should plan their journey?
Mohan: So if you see any business, especially in the era that all of us live will go through enormous amount of changes. Technology shifts will happen faster. And it’ll become even better as we move forward.
So what will happen is the services plays there, but companies which are in a position to adopt to newer technologies, companies which can innovate much faster are the companies which will still have a play in services.
If you want to build a services company, place an enormous amount of emphasis in technology. You need to have those skills with technology, and then you have to have an organization which is absolutely glued to innovation.
You need to be the company which constantly has breakthrough innovation as opposed to waiting for the customer. That’s when the customers will look at you to come and do services with you.
The next generation people are going to be much more fortunate. Because the opportunities are a lot more compared to my generation. And I’ll leave you on this parting note that I keep saying I’m past, what I see in front of my eyes is my future. And, people like you with the smiling faces and shining eyes, Pari makes me believe that the future of this world is in safe hands.
Pari: Thank you, Mohan, for this enlightening conversation. I thoroughly enjoyed it. Thank you for taking the time and being part of this podcast.
Mohan: Thank you, Pari. Thanks for giving me this opportunity.
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