Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group
The Smart Manager
Nov-Dec 09, Vol. 8, Issue 6

Entrepreneurship remains the outcome of a highly energised process of human ingenuity with its indomitable spirit to create. In this exclusive article for The Smart Manager, Mr. Kumar Mangalam Birla relates entrepreneurship to the current times and looks at it in the contemporary context.

The notion of entrepreneurship has always been rich and complex, and it has always had a tinge of romanticism about it. It defies box-tight definitions. It is about turning aspirations into reality. It is about dreaming big. It is about the courage of conviction. It is about what Charles Handy calls creating "new alchemists from ordinary people."

First, I will talk about the images the mind conjures up about entrepreneurs, and how the idea of entrepreneurship has evolved over time. Next, I will dwell briefly on the forces spawning the growth of entrepreneurship. And finally, I will talk about some of the things large organisations can do to make themselves more entrepreneurial.

For all too long, India's entrepreneurs were shackled by the 'license and control' raj.

Thankfully, that period of entrepreneurial drought ended in 1991, when India kick-started economic reforms. Since then, the rebirth of the entrepreneur has been one of the defining features of India's economic scene. Today in India, the stature and standing of the entrepreneur has grown immensely.

No longer does the IAS tag, alone, command the same 'wow' factor among prospective in-laws. No longer is social acceptability bestowed only on the so-called 'well-settled' lawyer, doctor, or engineer, or the bright young manager intoxicated by the pay and perks of leading companies.

Time was when a brash young person setting out on his or her own was considered not 'quite with it'. One can well imagine the behind-the scenes talk in hushed tones...perhaps the parent's were too lax...maybe the boy strayed into the wrong company. Ironically, in many cases, the young man just stumbled into entrepreneurship, as he was not fit for anything else!

Gone are those days. Today, the entrepreneur is a hero in his or her own right — just as much as the cricket player or the film star.

Entrepreneurs: from greed to conscience
Through time, and the world over, entrepreneurs have always had exciting, often colourful images spun around them. For most of us, the very idea of throwing it all up and setting out on one's own is enough to touch a raw nerve. Consider some of the images over time and space. The rich merchants and royalty of Europe who bankrolled voyages over the oceans: one led, quite by accident, to the discovery of the US; others led to the development of the spice trade; in some of those voyages lay the origins of the East India Company or the establishment of the first colonial outposts.

Moving forward in time, there was the Gold Rush, as new settlers staked it all to pan for gold. At the turn of the 1900s, we witnessed the opening of new frontiers — among them the discovery of oil, the development of the combustion engine and the laying of railroads. All these led to the age of the 'robber barons' — a reference to the large financiers and the monopolies they commanded. Back then, entrepreneurs, though certainly powerful, were not exactly the role models they are today. They did regain a lot of their respectability though after their wealth was channeled into laying the foundations that led to the creation of social wealth. What comes to mind are examples like the Rockefeller Foundation, Ford Foundation and the Carnegie Endowment.

In the decades that followed, with the US depression in the 1930s, and in the post-war world, the image of entrepreneurs has become much more benign. Among other acts, the early entrepreneurs broke rules, busted unions and were quite ruthless about throwing competitors overboard. The entrepreneurs since then — Edison, and, moving on, to the founders of enterprises such as HP, Intel, Microsoft, and Google — are a quantum improvement in terms of social conscience and governance practices.

The intellectual and knowledge content of entrepreneurship is also much higher today. Sheer financial power or influence power will get only so far. Today, it is ideas and innovations that rule. We can truly call our times the age of the innovative and idea-oriented entrepreneur, as also the entrepreneur with a heart and a conscience.

Also, the concept of entrepreneurship is now almost universal — barring a few holdouts such as Cuba and North Korea. In China, a thousand flowers have started to bloom in the aftermath of Mao's regime. Japan, in an economic rut for over a decade now, is looking to foment and ferment entrepreneurial activity to pull it out of its long slump. The oriental societies — where the nail that stuck out invariably got hammered down — are changing to make space for the eccentrics of the business world.

Redefining entrepreneurship for our age
Now, let's relate entrepreneurship to our times and look at it in the contemporary context.

Of course, the basics haven't changed: entrepreneurship remains the outcome of a highly energised process of human ingenuity with its indomitable spirit to create. The process is fraught with risks and uncertainties. Extreme bursts of entrepreneurial activity are often accompanied by widespread destruction. The status quo collapses; vested interests run for cover; and entire industries are brought to the brink. On the flip side, customers gain, market size increases, and society is almost always better off. The vivid phrase "creative destruction", coined by the economist Joseph Schumpeter, says it all.

Consider some of the great breakthroughs of entrepreneurship, and the changes they ushered in: the air plane and what it did to passenger ships; the humble word processor and the consequent demise of the typewriter; mobile telephony and the speed with which it broke the monopolies of the land line operators; how the credit card gained market from travelers checks; how Amazon transformed book retailing, making every book available to every person in the world; and who today can make it through the day without doing a Google search? Can even the best library in the world provide us with such a handy and superb reference service? These best-of-breed marvels of entrepreneurship resulted from a certain process.

However, with the changing world, the currents and processes which created entrepreneurs have also evolved. Let's look at some of the ways in which entrepreneurship has changed over the years.

Earlier, entrepreneurship was largely about mobilising resources that were available close at hand. Today, entrepreneurship is about leveraging opportunities within a much larger ecosystem. The idea or the intellectual property need not be your own; one can tap into the vast pool of patents and gain access to what others have discovered by paying for it or by collaborating.

Earlier, the person willing to finance the entrepreneur was the family or the local moneylender. Later, it was the neighbourhood bank. Then it was a state or government financing agency. Today, the person with the knowledge, the idea and the drive can tap into a global pool of finance. Of course, in today's world where euphemism is often rife, the moneylender is no longer referred to by that 'derogatory' term. Rather, it's more likely the moneylender comes in the garb of an 'angel investor'. The pound of flesh extracted by both would, however, be equally chunky!

A second shift — a few decades ago, entrepreneurship was talked about largely in the context of small business start-ups. Take for instance the mythical inventor putting together his invention in the garage — what would later become Hewlett Packard. Today, the concept of entrepreneurship is not limited to small-scale ventures. Rather, it is more an attitude and a mindset; something vital even for the largest of organisations! Indeed, rigid organisations, wanting in entrepreneurial spirit, put their very survival at risk.

A third change — earlier entrepreneurs worked predominantly at the extremities of the value chain — in manufacturing or in retailing. Now there is much more entrepreneurial activity at different points along the value chain such as R&D, product design, customisation, distribution, service, and the financing of customers.

Fourth — entrepreneurship was once an idea confined largely to business. Today, entrepreneurs are doing their thing in areas other than business — in government, NGOs and education, to name a few. In this context, the Mid-Day Meal Scheme and the National Rural Employment Guarantee Scheme rank with the best of entrepreneurial ideas. They are truly game-changers. Both are bold, and both attack the problem of poverty in a very direct way. In terms of targeting a market need, they are spot on. And their multiplier impact spills far and wide.

These schemes also represent a break from conventional economic theories that are biased towards discouraging government expenditure that does not result in creating hard assets. Take another example, that of Grameen Bank in Bangladesh, which pioneered the concept of micro-finance. All these entrepreneurial ideas are unique in the sense that they help nurture human capital itself, which is the most beneficial form of asset creation.

Fifth — and I repeat this point because it matters a lot today — entrepreneurship had once necessitated the breaking of rules, beating the system or taking short cuts. In India, post-liberalisation, the 'dubious' compulsions of entrepreneurial activity — getting licenses, permits, keeping competitors away — are much less relevant. Entrepreneurs can now afford to stick to their value system.

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