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March - 2008 - issue > Management
Establishing and Growing Product Startups in India
Neelakantan Natarajan
Friday, February 29, 2008
The early history of the Indian software industry saw the emergence and remarkable success of service-based software companies. They have established extremely successful and enduring business models. Equally importantly, they provided (and continue to provide) the breeding ground for the next generation of successful technologists and leaders.

Overlapping with their rapid growth period was the entry and growth of the multi-nationals. Along with the multi national companies came a mindset towards product building and research. Since 2000, we have seen numerous product startups establishing their subsidiaries in India and carry out their operations here with remarkable success. Rich with innovational and disruptive ideas, these product startups sought to utilize the skills of Indian software engineers to rapidly churn out the products and get to the market at significantly lower costs.

Today, the spectrum of software companies encompasses product startups founded and headed out of India and supply their wares to global markets. The strengthening rupee rates, rising operational costs, and an acute shortage of skilled personnel that is compounded by a growing rate of attrition are challenges that confront the Indian leadership today.

While these problems are generic in nature, and can be applied to companies across the entire spectrum, what makes the matter particularly unpalatable for startup product companies is the fact that the ‘product-DNA’ personnel are hard to find. Personnel with the ‘product-DNA’ are folks who have the ‘do-whatever-it-takes’ attitude in shipping out the products. Their job is not to implement specifications, but to challenge them (if they exist), and more proactively build the best possible product in the shortest possible time with the best possible quality while innovating with the best possible technologies. There really are no rules to the game of product building when one is in the startup mode. Ultimately, it is not about the number of hours of work one puts in – it is all about efficacy. How can leadership in startup product companies stimulate and
sustain efficacy at such high levels?

I conducted several of my interviews for Winphoria Networks in September 2000 in the balconies of the business center that we were occupying temporarily. We were in our very early stages – it now seems extraordinary that several bright young folks actually signed up for what at that time was considered very risky! They did very well with their stock options subsequently. The reason for this memory recall is to highlight the fact that the first step to a successful startup operation is building the team with the right people with the right attitude. This cannot be over emphasized. It is better not to be tempted to fill the vacant positions as quickly as possible.

The structure of the organization must be based on the precept that innovation must not cost the earth. Building a strong leadership team with a mix-and-match hiring policy of youth and experience is key to the success of an organization. What must be a uniform trait, of course, is the presence of the ‘product-DNA’ in all the people. Around the team must be built a very strong infrastructure. Redundant networks with high availability and good work tools are mandatory to create a high-productivity environment.

It is crucial to ensure, as the startup begins to gain momentum, that there is an organized process of tracking progress, results, and feedback from the customers and within. An information-based organization with measurable parameters lays the foundation to a transparent and data-driven decision-making. Two simple rules for data collection – firstly, each vertical must collect and display data on just one sheet, and secondly the data must easily roll up into an overall measurable progress for the organization. Too much of data will be distracting and will lead to indecisive meetings.

As data is dissected, there must be ample collaboration and orchestration amongst the leadership. All of us as leaders are susceptible to slip into the respective silos that we represent. It is imperative for the leadership team to remain tightly integrated as the first team. Every time the head of a vertical justifies the lower results of his or her team, it is critical for the leader of the team to remind everyone that the first team is the leadership team and that all others need to rally around the lower performing vertical to raise the bar of efficacy and results. The impact of this constant reinforcement percolates down to the rest of the organization. It is an inspiring sight to watch the tester, developer, and the customer-care personnel huddle together collaborating on solving a customer-reported problem.

Around the system of team building, product-construction and a closed-loop feedback system must be a transparent system of communication. All personnel in the organization must be constantly exposed to the progress and lack thereof. Questions must be encouraged and there must be tangible follow-ups to the unanswered ones. Along with information dissemination, the organization must invest some time and effort to allow the personnel to experience the product themselves as it gets constructed. Employees therefore, are empowered to corroborate the information provided by the management with their own experiences. As the organization rapidly matures under such an ambience, it must invest in training the personnel and help them re-engineer themselves. A startup will constantly demand that the personnel adapt themselves to changing conditions. People need to be dynamic and flexible while constantly being exposed to new technologies. Soft skills and technical training budgets must be built in at the very onset.

Before concluding, a word on personnel attrition. The biggest expense for product startup companies is attrition. It is easy to fallaciously compute attrition as the percentage of people leaving the organization. The real attrition computation must include the percentage of people who are disengaged from their work. This is the number a product startup company needs to measure for its internal performance.

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