For starters, any business has to make money, it has to be profitable. Customers too, will truly be happy only if you’re making money.
This is what BVR Mohan Reddy said while addressing aspiring entrepreneurs and startup founders at T-Hub on the lessons they can learn from a successful company like Cyient.
Cyient is a 27-year-old global engineering, manufacturing, data analytics, networks and operations provider. It was founded in 1991 by BVR Mohan Reddy. Starting with a modest investment of Rs 20 lakh, Cyient today has grown to revenues of Rs 983.4 crore and a net profit of Rs 108.8 crore for the quarter ended December 2017. It expects to close the fiscal at $610 million. It is today the market leader when it comes to engineering services in the aerospace and railways verticals.
Values come first
According to Reddy, values are the most important thing to uphold while building a business. “You lose your money, you’ll get it back, lose your health, you may get it back but if you lose your values, you will never get them back. Your value is the sum of your values. And at Cyient, it has always been a part of our DNA,” he says.
If you’re not transparent, you will lose the trust of customers and investors. Hence, integrity is very important, he says, adding that an entrepreneur should never compromise on his values since it’s the foundation of any business.
Identify, solve and differentiate continuously
To start a business, entrepreneurs should identify a real problem. “Don’t imagine a problem, or don’t think people have a problem. Experience the problem and come back and find a solution to the problem,” Reddy says.
The key to build a sustainable business that is successful is that you need to differentiate yourself. At the same time, identify that this differentiation is not going to last forever - it is momentary. “So you have to work at a pace where you constantly ensure you are ahead of the curve. Keep moving up constantly,” he adds.
And the idea with which a business is started, may not always work. Taking the example of Cyient, Reddy says that when he founded Cyient in 1991, he saw a potential for engineering as a service, he faced challenges because people were reluctant to outsource engineering services because of the fear of IP loss. But that didn’t stop him. He parked the idea there and looked at alternatives such as geospatial mapping. Over the years, Cyient has constantly reinvented itself.
The lesson here, according to him, is that entrepreneurs are nimble-footed and don’t hang on to one idea saying it’s the only thing I know. If the idea isn’t working, park the idea till the right opportunity comes along and look for other alternatives.
Drive operational excellence
In order to scale, it is extremely important to drive operational excellence. Reddy says that a company should have the ability to deliver solutions without any flaws, because in any business, there is nothing called second chance. A customer has enough options today.
“Remember, you should get into operations excellence mode before you scale. At Cyient, we followed a model where customer is at the centre and around that are people, processes and tools, technology and training. You have to lay a lot of emphasis on processes and it is equally important to deploy the right technology and tools,” he adds.
You need to excel in terms of ability to deliver on time, quality and cost because customer won’t give you a chance thereafter, Reddy says.
Customer centricity
“There have been very few instances where we lost a customer because he was unhappy with us. We have in fact walked away from customers at times. And how did we get to that position? It’s because I’m paranoid about our customers,” Reddy says.
A customer makes your business and eventually pays your salary. Therefore, customer is king and Reddy says that unless you are so paranoid, you will never build a business that is consistently successful and scalable. Never lose a customer and ensure at all times that he is delighted.
Cyient has built a robust feedback loop where it is able to measure customer satisfaction at all times. It also listens carefully to what the customer wants. Another important factor for it has been quality. Reddy says that he has ingrained quality into the DNA of every individual at the company.
Employee engagement
Companies should focus on recruiting the right people with skills and values. And as much as customer satisfaction is important, employee satisfaction should also be treated with equal importance. Companies should have retention strategies centred around compensation, career development, rewards and recognition.
“To me, employees make the difference. Wealth has to be shared with wealth creators. At Cyient, 5% of our company shares is distributed to our employees as ESOPs (employee stock option plans). Ensure they are taken care of,” Reddy says.
Look for money when you don’t need it
An important lesson Reddy says he learnt while building Cyient is that when you are desperate for money, no one will give it to you.
“If you go to investors and say I need money because I’m very sure my business will bounce back, there is an upside to it. But, if you just say I need money, no one will give it to you. The timing of when you raise money is very important,” he adds.
Globalisation
“People try to spread themselves too much too quickly. Please be careful of that. Stay put for a while and first establish yourself,” says Reddy.
But to be a truly global company, one has to have a global footprint and a local presence. Being physically present in that country helps customer satisfaction, helps in moving up the value chain and in retaining ownership.
Reddy takes the example of its US office where 80 of its employees are local residents, either holding a citizenship or a green card. This way, the company doesn’t face challenges, such as the ones IT majors have been facing with regard to visa regulations post Trump’s election as the US president.
The final message from Reddy to entrepreneurs is that governance of the company needs to be the best. It’s extremely important to have a strong board. Having a good board brings in a lot of wisdom to the company.