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Factors driving entrepreneurial activity
Let me recount some of the factors that I believe facilitated the entrepreneurial vigour of recent decades.

First, the death of distance made it much easier to pursue the entrepreneurial dream. The world shrunk. Communication became instant and cheap, and information was available to everyone at the click of a keyboard button. Contrast this with the way our Group established a foothold in South East Asia.

A few trusted persons went and virtually settled in Thailand to look around for opportunities in the region. Compared to now, they had little prior information. Travel was expensive and nowhere as convenient as today. The telex was the fastest mode of communicating. They had to start from ground zero to study the local environment and market and build the contacts. Our people there were virtually emissaries, business ambassadors, like early settlers in a new land.

Second, opportunities for new businesses today correlate highly with the rate of change. The more the churn, the greater is the scope for an entrepreneur to capitalise on it. The acceleration of change is driven by new technologies, shorter product life cycles, greater customer awareness, changing customer needs — all of which can be converted into markets and profits by a person sharp enough to sense the currents and willing to take the risks.

A third driver of entrepreneurial activity is demographics. Younger people have altogether different aspirations. And they have no hesitation about pursuing unconventional career paths and lifestyles. This opens up whole new possibilities. The motorcycle industry exemplifies the excitement the youth are seeking. The drive for purposive leisure has led to entirely new businesses; for instance, adventure travel and fitness centers. The new Internet has become the backbone of companies such as Amazon and e-Bay. Online job search sites have invaded what was once the domain of the conventional employment agency.

Take Just Dial. How often do we now refer to the bulky multi-volume telephone directory? Take another old staple business — the travel agency. There are so many online air ticketing and hotel booking sites that one has to look hard to justify the value added by a travel agency. Even the most basic of social needs — the need to build relationships — has been converted into ventures such as those exemplified by Facebook.

All these businesses barely existed as recently as five years ago.

I think promoting entrepreneurial ambition calls for a supportive eco-system. Entrepreneurship thrives when the rewards for entrepreneurial activity are high. Moderate taxation, particularly of capital gains, certainly helps. In addition, there has to be a sophisticated financial infrastructure, including availability of venture capital and ready access to the equity capital markets.

A robust R&D infrastructure is also an immense help. In the US, for instance, a large number of entrepreneurial nodes have developed around universities such as Stanford, MIT, and the Research Triangle in North Carolina. India has made a start in this area. IIT Bombay, for instance, is disbursing seed finance — provided by businessmen such as Kanwal Rekhi, Vinod Khosla and Shailesh Mehta, among others — to students with bright ideas.

How large organisations can stoke the spirit of entrepreneurship
Let me briefly dwell on the contradictions inherent in the way entrepreneurs function and thrive and the way large organisations function. Entrepreneurship is all about creativity, agility, speed of response, passion, flexibility, the willingness to take risks, and, above all, a sense of deep personal involvement and ownership.

Organisations, on the other hand, are constrained in many ways — by structure, hierarchy, collective decision-making, well-defined and institutionalised systems and processes. These are the contradictions one has to resolve. I believe one can and must work out the right balance, one that blends the free form of entrepreneurship with the positive attributes of the organisational form. We have done quite a bit of thinking along these lines and I would like to put forward a few thoughts about how organisations can be infused with the entrepreneurial mindset.

A good starting point is the recruitment process. Most corporate recruiting is skewed towards hiring very normal people, those who can fit in. They have their well-defined educational backgrounds. Most hires are from rather comfortable, middle to upper class backgrounds. Their career paths to date would have been largely predictable. They may have studied hard and played hard, they may be bright.

But what's mostly missing are the factors of hardship and adversity. They have not experienced the margins of existence. They have not faced any fear or uncertainty. The result is a certain predictability and an unwillingness to rock the boat, stick out, or do wild things. These are not mavericks. So, our recruitment process needs to also include those who are 'oddballs', if I may use that word.

Our talent search should identify those who have braved adversities; those who show guts, passion and perseverance, and who would like to think of themselves as internal entrepreneurs — people with a spirit of wonder and a sense of adventure. Entrepreneurs do not come in well-defined packages. How many companies in India — or for that matter anywhere — hire a college dropout as Bill Gates was? Google and Microsoft hire people who are truly unusual and would probably not make the cut in more staid organisations.

Importantly, the organisation has to be designed so that it promotes a culture of risk-taking, counts failure as acceptable, and breaks the habits and attitudes that lead to complacency, hubris, and denial — a structure that overcomes the inertial aversion to risk that blocks true entrepreneurship. This, among other things, might call for designs that build flexibility into normal processes and hierarchies, to ensure that corporate entrepreneurs are not hog-tied and stymied by bureaucracy. It also calls for instituting appropriate reward and recognition systems. What has worked in many situations is the formation of small entrepreneurial pools — the so-called 'skunk-works' or the spinning off of smaller units of projects into separate modules that function with a high degree of freedom.

The falling apple
I believe we in the Aditya Birla Group, have prospered because of the spirit of entrepreneurship that our employees have consistently demonstrated. And it is the ideas they generate that are at the nerve center of our entrepreneurship. New ideas are fleeting. We normally don't pay even a passing thought to them. In the course of a normal day, we don't consciously work to catch an idea, or spend time to generate it. Our daily schedule is much too structured to allow that luxury. Seizing the idea — that's what it's all about.

If an apple fell on our head, we would think about it only as long as the pain persisted. It's amazing to think about the extent to which the same falling apple stirred the thought process of Isaac Newton! In effect, nurturing entrepreneurship is largely about getting the ideas factory to work at full blast.

Let me elaborate a bit on this, with reference to our Group.

As part of our quality and TQM processes, we receive amazingly innovative suggestions from our shop-floor workers. It is gratifying to see that some of these suggestions result in crores of savings annually, on a recurring basis, without requiring major investments. I believe the worker who has gone beyond the call of duty to find solutions to practical problems in her area of work, is in every way an entrepreneur.

Let me give you a concrete instance. Our Group operates a carbon black factory just outside Bangkok, at a place called Angthong. Carbon black is the major raw material for tires. This facility is one of the largest in the world and a pioneer in carbon black technology. Not surprisingly, it is an important supplier to the largest tire companies in the world.

Three years ago, Angthong had torrential rains that almost drowned the entire industrial area. All the factories in the vicinity, without exception, had shut down. The management and workmen of our unit were however, determined to dispatch shipments on time to a customer who was in the midst of critical testing for new-technology tires. A truly committed team of workmen and managers took charge. They used wood from the crates that are used to supply carbon black, creating from them canoes that they dexterously steered through the water to meet their supply commitments. What better example of entrepreneurship through innovation? Needless to say that they had, in showing such an initiative, won a customer for life.

Likewise, through leveraging bold ideas, our cement business has converted waste into an opportunity. Our plant at Reddipalayam, Tamil Nadu, has among the highest use of non-fossil fuels in South Asia, having substituted up to 10.98 per cent of the heat required in FY 2008 through the use of agro wastes, tire chips and chemicals wastes. This is a program that is being extended across our business.

We were the first cement company to set up a municipal solid waste plant in Jaipur to process municipal waste and use it as a substitute for conventional fuels at our cement plant at Khor in Madhya Pradesh.

Given our ambitious growth plans of becoming a Fortune-150 company by 2014, the importance of the spirit of entrepreneurship began assuming higher proportions. So we launched a number of contests that would excite aspiring entrepreneurs from within the Group. For instance, the IdVenture competition provides a platform to aspiring entrepreneurs, individuals, and teams among management employees of the Group to present 'new business ideas' that are capable of being converted into 'start-up ventures' within a time frame. Basically, we are asking them to dream the business venture they always wanted to create, assuming that there are venture capitalists ready to invest.

One of the notable entrepreneurial ideas that emerged was again from our cement division, where they proposed to re-invent the future of concrete by using fly ash and slag which have scientifically proven ability to complement concrete durability. The project has gone on stream.

Let me give you another instance. There are a number of occasions when each one of us believes that there are a few 'not so smart' things done in our organisations. In our minds, these are not in the best interests of the unit / business / group / function or any of its stakeholders. Some of the things done could be out of tune with the ground reality, some not futuristic, and some downright silly.

Every organisation, without exception does have such 'not so smart' things going on. However, smart organisations recognise the 'not so smart' things they do and figure out better ways to do them efficiently or eliminate the process for the benefit of the stakeholders. They also encourage a free flowing culture of ideas — which is essential for incubating entrepreneurial thinking.

Conclusion
Let me conclude with the thought that going forward, it will be increasingly critical that large organisations increase their entrepreneurial quotient. Among other things, it means being quick-footed as well as quick-witted. These are basic survival instincts. Recent business history is replete with evidence that the survival instincts of large organisations are often out of sync with a world which is changing the way it is.

We, in business, have to periodically remind ourselves that being large does not, by itself, ensure longevity. The evolutionary process has been rather unkind to large species. We now know for sure that agility and thinking smart count for much more. Time and time again, we have seen that the Davids of the business world have run-rings around the Goliaths. The current environment is made for entrepreneurs. They are the ones ideally suited to create economic and social value. And they can do this even as they engage in what is, for them, a personal passion, a hobby. The start-ups-and the up-starts who create them-are making a huge contribution to the vitality of India's economy, and they deserve their place in the sun.

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