Robin Banerjee, Managing Director of Caprihans India and author of 'Who Blunders and How: The Dumb Side of the Corporate World', in an exclusive interaction with Human Capital, shares intriguing insights on the pivotal mistakes and missteps that could bring down a successful business or cripple a growing company.
We must begin on a congratulatory note with well-merited kudos to you on your second bestseller, 'Who Blunders and How'. What do you think made your book so successful?
This book is all about business ‘mistakes.’ Business books are usually on ‘success’ stories— enhanced sales, good profitability, great acquisition, and positive stories go on. But how can there be success without failure? It is through missteps that we learn. Unfortunately, there are almost no books on business-fiascos. This book articulates over 300 live examples as to how other businesses, entrepreneurs, and managers have floundered. Reading the stories would help readers appreciate the undercurrents of business reality. Readers like the book as it is looking at the world of business from a different angle, involving steps to avoid catastrophes, and enabling one to walk into the realms of success.
In your book, you write about how sacrificing quality at profit’s altar leads to disastrous consequences. Could you elucidate this with an example?
Entrepreneurship is all about making profits. Many business managers miss the trick and concentrate on generating returns by cutting costs. Reducing cost is a great idea, but it cannot be done by compromising on quality. Providing good and consistent quality does not come free. Some costs need to be incurred. But, historically, many businesses have blue-pencilled costs in the arena of quality, which is pure hara-kiri.
When you visit your favorite restaurant, do you not expect the same taste and quality the last time you visited? When you use your morning toothpaste, do you not desire the same tingling feeling you enjoyed the day before? There are examples galore. What if the producer of goods or services now tries to save costs by compromising on the quality? How would you feel? Quality is more than making a good product. Remember, ‘quality’ is the bond with customers— any wavering will negate the positive relationship, and profits will take a massive dip.
What are the most common reasons leaders lose their edge and fail? Also, how can the pitfalls be avoided?
Strangely enough, many leaders who have had the vision to create an enterprise, ran around to obtain funding for their dream business, put in their best effort to garner resources and convinced customers to purchase what they make, sometimes falter when it comes to taking some basic steps as time goes by. Many business managers function in a bizarre way!
The most common snag business people fall into is the trap of over-confidence. They start believing too much in their own abilities. They convince themselves that they know everything—from production to sales, from HR to IT, and from finance to marketing. This is an impossibility. Only in mythology, Goddess Durga had ten hands, but in reality, we just have two hands with only one brain.
Many successful entrepreneurs make two mistakes. First, they fail to seek support from professionals in the areas that are not within their core competency. Second, greed sometimes overtakes their zeal, causing them to make blunders by focusing on the short term over long-term goals. If these two pitfalls can be avoided, success can come faster than later.
Mergers and Acquisitions (M&As) fail for a variety of reasons, cultural shock being one of them. Could you cite an instance where culture became the cause for a failed M&A? Also, how can the cultural challenges be surmounted?
M&A is a mug’s game. Globally, although over $2 trillion worth of transactions chase the mirage of becoming big and fat quickly, over 70 percent of the deals fail to fulfil the dream. Cultural integration has been observed as the number two driver for a deal failure, with the number one game spoiler being the lack of ‘give-and-take’ policy between the acquirer and acquired companies.
I had a bitter personal experience with how a lack of cultural understanding stood between a multi-billion-dollar deal. The Indian corporation was very close to finalizing a European deal. In its overzealousness, the Indian entrepreneur called for a conference call on the eve of Christmas day to finalize the price. The European team refused to join the call—in fact, they stated that they would be free for the call only after the New Year. The Indian industrialist felt short-changed, and mutual trust cracked. The deal never saw the daylight thereafter!
Cultural challenges can be surmounted only by keeping in mind that the culture of two nations, companies, or religion will differ. None of us are similar. Accepting that all of us are different and being patient in understanding the other side’s views will go a long way in making M&As efficacious.
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