Focus or pivot: A growth dilemma
Ganesh Natarajan November 21, 2018 Last Updated at 23:23 IST
Conventional wisdom would suggest that any organisation that starts in a competitive demand environment needs to have done its homework and chosen a product or service strategy that will stand the test of time. Even more important, the founder and the team need to stay focused on the vision and avoid any distractions that can make the company and its growth stray from the defined path. The story of Indian entrepreneurs in the past has often been a combination of building large corporations in an area where domestic
demand was either growing or protected and using related and, in some cases, unrelated diversifications to created large conglomerates. The super success story of entrepreneurs in the eighties and nineties like Narayana Murthy also led one to believe that in an area where competitive advantage was defensible due to factors like global wage asymmetry and better process adherence like IT services, the path to success was fairly easy if one focused on serving all customer needs through astute marketing and excellent delivery.
However in the last 20 years and more, the number of entrepreneurial failures — to build a world beater product business or scale a services business after many years of following a tried and tested model, has raised fundamental questions in the minds of entrepreneurs as well as angel investors, venture capitalists and even business school academics. Does success come to those who remain unwavering in their pursuit of the original strategy or is the willingness and speed of pivoting to a new strategy the key to success in a fast changing world?
There is no better place to find answers to this question than in the history of the FANG (Facebook, Amazon, Netflix and Google) quartet and the supremo of all success stories in this lot, Amazon. When the legendary founder Jeff Bezos chose in the nineties to build an online book store, even he would not have imagined that a quarter century later, Amazon would offer the widest range of product categories, maintain a third party marketplace for external retailers, offer software and cloud storage services, its own range of hardware products, online video streaming and Amazon Prime, a membership programme that is taking the world by a storm and helping Amazon to compete with most of its peers, Apple, eBay, Google etc. and become one of the highest valued companies in the world.
While Amazon received its initial impetus in the internet boom years at the turn of the century, the company’s fortunes also turned when the internet bust occurred with the value of its equity deals with other category leaders declining and a few analysts even predicting the demise of the company. In 2001, the formalization of a strategy process, the first significant layoffs and a thorough clean-up of their products enabled the company to become more nimble and grow. With the launch of Prime, Amazon could well have decided to ride the wave of renewed growth and mainstream adoption of online buying to stay focused on the marketplace business. But this is what differentiates a
Bezos, Ma or Musk from the ordinary entrepreneur. Ma did it with Alipay and Ant, Musk with SpaceX and Bezos has diversified in quick succession into Amazon Web Services, Unbox, Kindle, Fire, Fire Phone and Echo. Some of these have fallen by the wayside but the profitable growth of Amazon and AWS and some of the products have ensured that Amazon has stayed ahead.
The lesson for many wannabe Bezoses and Mas in India in India is simple: Keep an open mind to chase large new opportunities and even if the first hurdle has been crossed, to build a profitable and growing business, ensure that the organization stays nimble and is willing and capable of diversifying or even transforming its business model to capitalise on new opportunities in the marketplace. Entrepreneurship in India is evolving and the glory days lie ahead!