Lessons from an Entrepreneur: 4KTA
Date: Monday , July 01, 2013
This month’s article features wisdom from a successful entrepreneur from the services industry. Raju Reddy, Founder & CEO of Sierra Atlantic, grew his company to be a best-in-class global services company over a period of 17 years. Under his leadership, Sierra Atlantic grew from a startup to over 2400 employees with operations in several countries and was consistently ranked amongst the best managed companies including the top 75 most admired companies in Silicon Valley, Top 25 great places to work in India and Top 10 best employers in South China. Sierra Atlantic was acquired by Hitachi Consulting in December 2010 and it is the largest ever acquisition by Hitachi Consulting to date. He is an advisor, seed investor and Board Member to many startups and continues to actively help entrepreneurs. With special gratitude to him, here are four key take away (4KTA) points from his amazing and exciting entrepreneurial journey based on my discussions with him recently.
Creating an admirable company culture is a key element in building a world-class company and it often reflects the core values of its founders and leaders at the top. This helps in attracting and retaining employees, customers, and shareholders. You need to do it because it is good for business. However, the core values of your culture need not be there from day one. We implemented it after we reached about fifty employees. Once you have defined your company’s culture and core value system, everyone must adhere to it religiously. In case of Sierra Atlantic, the five core values comprised of trust, results, empowerment, learning and family. The first core value is about creating a trust relationship with all stakeholders including employees, investors, vendors and partners. All stakeholders reward you for being pro-active. The second core value is about end results. The efforts are good but ultimately, the results are what matter. Everyone including the CEO is accountable for delivering results on well defined targets. The third value is about creating an environment for employees to feel empowered and make decisions themselves. The fourth value is about the notion of building an adaptive learning engine, so an ongoing learning cycle persists at all levels that can adapt to ever changing market needs. As a CEO, you can be the biggest asset or liability. For example, when Sierra Atlantic purchased a company in China, it was for serving the customers close to where they were locating geographically and we had to adapt to a changing market need. The final core value was creating a family environment and getting involved with the local community. Finally, create a reward system for all employees using core values as guidelines. The reward system validates that leaders walk the talk and are absolutely committed to the core values. All actions such as hiring, firing, promoting, and interacting with your customers must take the core values into account. The byproduct of these core set of values is that employees come up with numerous ideas for improvement. For instance, at our India Operation, one of the employees created a program called “Bring Your Parents to Work”. In India, the extended family culture and close ties are significant. The parents are involved in their children’s decision making about the companies that they like to work for. This program created a stronger bond for employees and their families with the company in a high attrition environment and hence, achieve high retention rate.
2.Scaling the Business
This includes focusing on two areas. The first one is recruiting and developing the talent pool by using new college graduates. Some of the best people at leadership level at Sierra Atlantic now were hired right out of school. With about six months’ training, these new recruits start coming up with new improvement ideas across the company. They develop a stronger bond with the company, are committed and can become leaders of tomorrow. The second core element in scaling the business is by doing acquisitions to fill holes in various verticals and expanding the geographical reach. Sometimes as a first time CEO, there is a mental block to doing acquisitions. You are worried that it may disrupt the awesome culture that you have helped create. However, both customers and employees view acquisitions in positive light. It further helps create the perception of company investing in growth and committed to it. After all, growth is the oxygen for any company. One another point is to ensure that the company is being built and managed as a high quality public company at all times and the right exit will happen as a result.
3.Dancing with the Elephants
In your market space, identify market leaders such as Oracle, SAP, Google, Cisco and others, then build something that could be strategic to them so they help you market it within their eco-system of partners and customers. For instance, Sierra Atlantic built migration and integration tools for enterprise to seamlessly move from a non-Oracle to an Oracle environment and hence, it turned out to be a win-win for both Oracle and Sierra Atlantic. The eco-system partners end up licensing these tools validating the high and unique value of the services being provided by your company. This also results in large company sales team being more open and favorable in inviting you to participate in sales cycle from early on. Such relationships are hard to develop and there are significant benefits if you get it right. As the smaller partner however, you can also get easily trampled upon if you don’t play it right, hence the notion of “dancing with the elephants”.
4.Lonely at the Top
As a CEO, it’s extremely important to have few unbiased advisors and mentors to help you sort through myriad of choices and key decisions. For instance, I was fortunate to have Kanwal Rekhi, a successful entrepreneur and investor as our independent Board Member since inception of the company. Similarly, within your company, you must have a trusted executive team, who can challenge your assumptions and help you implement your decisions flawlessly. Bob Hersh, our CFO at Sierra Atlantic was one such outstanding executive for me among others. At least in services industry, CEOs of other companies are very open to sharing ideas and giving advice, so make sure to take advantage of it fully by networking with them. It’s amazing not only what you can learn but also validate your ideas and assumptions about the market trends and directions.
In summary, the four key take away points are about creating an outstanding company culture, scaling the business, leveraging the market leader’s eco-system, and dealing with the reality of lonely at the top.