Build to last

In the second part of a series, the author notes down some lessons for start-ups

Philosopher Thomas Kuhn argued that scientific breakthroughs ha­ppen when a researcher observes the world well enough to identify and explain an anomaly. The discovery of an anomaly, a surprise, gives scientists the opportunity to revisit a theory to better understand it. This often leads to a modification or improvement of the theory by understanding and explaining the anomaly.

In the first part of this series (March 11), I explained our initial hypothesis that eight attributes of Mindset-Behavior-Action assemble into a grid pattern; the first three are essential, while the other five are very valuable. Our method of validation and confirmation has been ex­pla­ined in the trilogy of books under the Sha­pers of Business Institutions series. Like we instill certain things from childhood, start-ups must co­nsider doing the right things from the beginning.

• The first essential is ‘People relations.’ This refers to the shapers’ obsession to engage with people, constantly nurturing their ski­lls/expertise. Shapers tend to accord this higher priority than business planning. For example, as des­cri­bed in one book, Anil Naik’s seven step leadership process.
• ‘Short-term and long-term’ refers to a counter-intuitive mindset — to spend clock time to ro­bustly solve short-term problems, without reducing the emotional time to think through long-term issues. (A mother, who raises her child, exemplifies this ability.) Kiran Mazumdar-Shaw maintained a laser-sharp focus on solid state fermentation, while thinking through the benefits of an alternative technology for a biopharma entry by the firm.
• ‘Critical thinking’ refers to the ability to generate new options in decision-making: the obvious ones strike most managers anyway. For example, TCS’s creation of software tools to automate software development to exploit the explosive Y2K opportunity.

In this second article, I explore lessons from our book titled, How Kiran Mazumdar-Shaw fermented Biocon, co-authored with Dr Sushmita Srivastava.

Biocon is interesting because it has been founded and nurtured by a woman entrepreneur in the biotech field that tends to be dominated by males—at least when she entered the fermentation industry in 1978. 
 

Imagine a Gujarati-origin, Kannada-speaking, Australian-trained female brew master, who sought a job back in India. Her Australian classmate recommended her name as a possible Indian entrepreneur-partner for an upcoming Irish fermentation company called Biocon. She meets the company with a raw dream, but understandable skepticism. That is why Kiran calls herself an accidental entrepreneur—perhaps all entrepreneurs are accidental.

My co-author and I had to be careful to avoid the trap of colonial-era historians, whose preoccupation is with the ‘character’ of the subject — and the character becomes dominant in the narrative. We reminded each other to focus on the institution rather than the subject. The MBA grid as explained previously greatly helped to view the institution objectively.

How did a clutch of Biocon companies get conceived, all sharing a common parentage, but operating as a federation of independent companies? How did the Indian progeny of the Irish Biocon end up buying the parent in Ireland?How did this disruptor company become profitable early enough to parent other companies? How did this company, founded on the robust, koji solid-state fermentation technology, pivot to the delicate biopharma technology in an India which could not boast of high skills in biological sciences and manufacturing control systems?

These days, Biocon group counts among the global top 25 biosciences company. It debuted in an IPO as late as 2004 at a valuation of one billion dollars, yet fifteen years later, how did the clutch of companies aggregate a market capitalisation of 6x? The company is about to enter the US market with its biosimilar insulin in partnership with Mylan Inc, but in the process, it will sell a diabetes treatment that will cost the consumer about ten percent of what the current treatment costs. Exporting CK Prahalad’s bottom-of-the-pyramid idea to America.

In the chapter titled "The Biocon Way", the authors have tried to capture the essence of the institution-building technique. It converges all the ideas from the interviews. Once written down prosaically, the Biocon Way may sound obvious, but a reading of the book provides deep management insights into the grammar that underlies the prose. The authors have summarized the compass of Biocon leadership as containing six traits:

• Confident humility

• Critical thinking

• Focus on challenges, not tasks

• Experimental mindset

• Employee engagement through freedom to operate

• Conservative financing

Biocon is an institution-in-the-making. The shaper’s influence imparts to the group a great chance of successfully overcoming future vicissitudes. 

The writer is a distinguished professor of IIT Kharagpur. He was a director of Tata Sons and a vice-chairman of Hindustan Unilever

(Three co-authored books in a series called ‘Shapers of Business Institutions’ — on TCS, Biocon and L&T — have just been published by Rupa)