ENTREPRENEURSHIP MANAGEMENT

Kumar Mangalam Birla

ADITYA BIRLA

GROUP

Project BY-

Faisal Siddiqui – Roll 53

Harsh Sachdev – Roll 48

ENTREPRENEURSHIPMEANING

The word entrepreneur originates from the French word, “entreprendre”, which means "to undertake." In a business context, it means to start a business. In definition, an entrepreneur is a person who undertakes and operates a new business venture and assumes some accountability for the risks. Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often difficult and tricky, as many new ventures fail. Entrepreneur is often synonymous with founder.

The personality of an entrepreneur expresses an intense desire to achieve. He or she is willing to accommodate the desire goal by dedicating him/herself to hard work. They represent leadership and acceptance of responsibility whether it is morally, legally, or mentally directed. They initiate the skills of organization and focus their level of success with optimism, while allowing for a realistic mindset. In common understanding it is taken as describing a dynamic personality.

CHARACTERISTICS OF AN IDEAL ENTEPRENEUR

• ENTHUSIASTIC VISION

• DRIVING FORCE OF ENTERPRISE

• MOTIVATED

• CLEAR OBJECTIVES

• GOOD HUMAN RELATIONS

• TECHNICAL KNOWLEDGE

• INNOVATIVE

• RESPONSIBLE

• FLEXIBLE

• OPTIMISTIC

SOME FAMOUS ENTREPRENEURS BILL GATES KUMAR MANGALAM BIRLA HENRY FORD LAKSHMI NIWAS MITTAL

J.R.D. TATA ADI GODREJ DIRUBHAI AMBANI VIJAY MALLAYA NANDAN NILEKANI ARUN NAYYAR MOHAN SINGH OBEROI WARREN BUFFET EKTA KAPOOR ANITA RODDICK J.P.MORGAN RANA KAPOOR MICHAEL DELL AZIM PREMJI PIERRE OMIDYAR CHRIS GARDNER

MONISHA ADVANI ESTEE LAUDER

RUPERT MURDOCH STEVE WOZNIAK OPRAH WINFREY STEVEN SPIELBERG

GORDON MOORE RAHUL BAJAJ A.P.GIANNINI

ETC…..

Now, we take a look into the lives of two great entrepreneurs the first being Adi Godrej

Adi Godrej

Adi Godrej is one of the icons of Indian Industry. Adi Godrej is the present chairman of Godrej Group of companies. Adi Godrej was born in a business family. His father’s name was Burjorji Godrej and his mother’s name was Jai Godrej. More than a century age, the Godrej’s were into manufacturing locks and vegetable-based soaps. The Godrej products were among the first indigenously manufactured products to displace entrenched foreign brands.

Adi Godrej left India at the age of 17 to enroll at the Massachusetts Institute of Technology. He received his Bachelor and Master degrees in Management from the Sloan School in 1963. Though he planned to study mechanical engineering but he later on switched to management. After his return to India, Adi Godrej joined the family business. He modernized and systematized management structures and implemented process improvements. Adi Godrej took the Godrej Group to great height during controlled economy era.

After the liberalization process, Adi Godrej restructured company’s policies to meet the challenges of globalisation. In the early 2000s, the Group completed a 10-year restructuring process through which each business became a stand-alone company with a CEO/COO from outside the Godrej family.

Under Adi Godrej’s leadership, the group is also involved in philanthropic activities. Godrej is major supporter of the World Wildlife Fund in India, it has developed a green business campus in the Vikhroli township of Mumbai, which includes a 150-acre mangrove forest and a school for the children of company employees.

ADI GODREJ’S WORKING STYLE & VIEWS ABOUT ENTREPRENEURSHIP ARE AS FOLLOWS:-

INNOVATION

Well, you have got to keep innovating. You’ve got to transform yourself. If you keepdoing things exactly the way you were doing earlier, then you won’t succeed. So we have alsogot out of business where we felt that there are other people who might do something well. Wehave sold businesses, we have put some of our old businesses into a joint venture with aninternational company that would be very good in that field. We have sold businesses and wehave acquired business. So we like to feel that we change with the time but we need to do moreof it because times are changing much faster than they used to. So I think to us, strategy is veryimportant and having a clear strategic approach to each of our businesses is very important.

Sometimes your old thinking overcomes good new ideas. I like to feel that I would like to encourage innovative ideas, new ideas and I think that’s how you grow. If you don’t pay attention to new ideas and if you keep paying attention only to the old way of doing things, if you approach thing with not invented here kind of syndrome, I don’t think you will progress. In fact there are many, many companies which were very strong, some 20, 30and 40 years ago which have disappeared from the scene So unless you change, unless you innovate and it’s very important to listen to the young who have a tremendous talent to do that. And I think you need to create a culture of innovation. You need to create culture of change and you need to encourage that and I hope that we do it better and better all the time.

LEADERSHIP

The earlier concepts of leadership, when I first joined the businessmore than 40 years ago, the concept of leadership was a military concept. And all, all leadershipconcepts originally came from military command. And, so, the thinking was you order somebodyand they follow it. Now it has completely changed. For example, a lot of research on, on HumanResource Development, organization structures has now thrown up clearly that the commandstyle of leadership cannot work in the modern world. It must be buttoned up kind of thinking andan empowering kind of leadership. And I think the other major change I think in leadershipthinking has been - In the old days, you used to think of the present and project it into the future.

Now you need to think of the future and take backwards what you need to do to reach there. And so I think that concept of leadership has changed. But the biggest thing aboutleadership that I personally decry is that in the political circle now, you have a lot of politicalleaders but you don’t have statesmen. And even in the economic sector you need to havestatesmen like thinking about leadership

there must be some directional leadership. You might want to discuss it, get everybody together to decide what the future should be and how we are going to get there, but then there should be some leadership in getting there.

DECISION MAKING

Adi Godrej has earned his reputation as a man who respects punctuality, who is impeccably organised with a table that is never cluttered like his mind and who is clear in thought, prompt in decision making "someone who is constantly open to feedback" as says his Secretary of 33 years.

MAKEOVER

As an entrepreneur he has been responsible for restructuring and modernizing his entire group and moving away from family hegemony that inflicts so many family-owned businesses in India. For instance, he has chosen CEOs from outside his family to head his various group companies.

He undertook a complete overhaul of his businesses and instilled new processes at a time when most" companies were resistant to change and saw any disruptive change as a threat to their business.

BUSINESS EXPANSION

The spirit of entrepreneurship, the vision of a dynamic tomorrow, and the capacity to build and realize dreams! This is the essence of the Godrej group. No wonder then, Godrej has become the symbol of a vibrant multi-business enterprise touching the lives of millions and at the same time an icon of enduring ideals in a changing world.

Godrej & Boyce

From locks to aerospace, furniture, appliances to custom-built critical equipment, storage solutions, and several more, Godrej & Boyce has a diverse range of products and services.

Godrej Industries

India's leading manufacturer of oleochemicals making more than a hundred chemicals for use in over two dozen industries. Its products also include edible oils, vanaspati and bakery fats.

Godrej Properties

One of India’s leading real estate development companies focusing on residential, commercial and township development.

Godrej Consumer Products

A major player in the Indian FMCG market with leadership in personal care, hair care, household care and fabric care segments.

Godrej Saralee

Godrej Sara Lee is a joint venture between Godrej Group, India and Sara Lee Corporation, USA - world’s largest insecticide manufacturer. It is also into home care and personal care products.

Godrej Hershey

A joint venture between the Hershey Company, USA and the Godrej group, it is one of India's leading businesses operating in Food and Beverages segment.

& also other companies such as Godrej Agrovet, Godrej Efacec Automation & Robotics, Geometric, Godrej Infotech etc…

STAFF MANAGEMENT

Godrej Industries Ltd. (GIL) bought a 26% stake in "Personalitree Academy Ltd." Personalitree provided interactive soft skills training programmes online to corporates. Personalitree's training modules have since been a part of Godrej's training and development initiatives.  

Parivartan was launched in GSL to train new as well as existing employees on various aspects of the business and to motivate them. New initiatives like Young Entrepreneurs Board (YEB), Red and Blue Teams, Mentoring and Reverse Mentoring were introduced in the Godrej Group, (Godrej) to encourage the involvement of youth in strategic decision-making.  

Thus, Godrej developed a comprehensive and innovative training programme for management trainees and named it Godrej Accelerated Learning Leadership and Orientation Programme (GALLOP).   The objective of GALLOP was to develop a newcomer into a professional by giving him or her exposure to various departments and inculcate in him or her, a sense of belonging.

A special HR programme on honing the interpersonal and negotiation skills of officer- level employees was launched in GIL. Further, an English language training programme

was held for floor workers of Godrej and Boyce Manufacturing Company Ltd (GBML), so that they could follow all instructions issued in that language independently 

FUTURE OUTLOOK

Adi Godrej   The interior of the office reflects the man. The ambience is staid and white, sans any garishness, the decor simple yet modern symbolising the makeover of the group post-liberalisation. Godrej swears by change, technology and growth in the global economy. He says, “The challenge of the future is to use our brand image and success, while simultaneously creating a modern, efficient, young and consumer-centric organisation which can create a momentum of growth in the future.” But his motto - ‘sales is vanity, profit is sanity and cash is reality’ - remains unchanged.

Godrej believes that every organisation needs to benchmark itself with global players. The company already receives 10 per cent of its revenue from operations outside India and aims to increase it to around 25 per cent over a 10-year period.

“India has changed dramatically. Indian thinking has changed.The young have a very refreshing approach to things…for example, the thing I am most pleasedwith is with the whole socialist mind set has gone away from the young. India is entrepreneurial,India is dynamic and the young are especially taking the flame forward.”

Kumar Mangalam Birla

Chairman of the Aditya Birla Group; Vhosen as Ernst & Young Entrepreneur of the Year - India in 2005 

Kumar Mangalam Birla is the Chairman of the Aditya Birla Group. The group is India's third largest business house. Major companies of Aditya Birla Group in India are Grasim, Hindalco, UltraTech Cement, Aditya Birla Nuvo and Idea Cellular. Aditya Birla Group's joint ventures include Birla Sun Life (Financial Services) and Birla NGK (Insulators). The group also has its presence in various countries such as Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, China and Australia.

Born on June 14, 1967, Kumar Mangalam Birla spent the early of his life in Calcutta and Mumbai. He is a Chartered Accountant and did his MBA (Masters in Business Administration) from the London Business School, London. Kumar Mangalam Birla took over as Chairman in 1995, at the age of 28, after sudden demise of his father, noted industrialist Aditya Birla, after whom the group is named. 

When Kumar Mangalam Birla assumed the mantle at the Aditya Birla Group, Doubts were raised about his ability to handle a giant business house with interests spanning viscose, textiles and garments on the one hand and cement, aluminium and fertilisers on the other. But Kumar Mangalam proved his skeptics wrong. He brought in radical changes, changed business strategies, professionalised the entire group and replaced internal systems. Kumar Mangalam reduced his group's dependence on the cyclic commodities sectors by entering consumer products. 

Under Kumar Mangalam Birla's leadership, the Aditya Birla Group, apart from consolidating its position in existing businesses, also ventured into sunrise sectors like cellular telephony, asset management, software and BPO. 

Kumar Mangalam Birla also holds several key positions on various regulatory and professional boards, including chairmanship of the advisory committee constituted by the ministry of company affairs for 2006 and 2007, membership of the prime minister of India's advisory council on trade and industry, chairmanship of the board of trade reconstituted by the union minister of commerce and industry, and membership of the Central Board of Directors of the Reserve Bank of India.

Kumar Mangalam Birla has won several honors. Major among them include The Business Leader of the Year (2003) by The Economic Times, Business Man of the Year - 2003 by Business India, and The Ernst & Young Entrepreneur of the Year - India in 2005.

“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”. – MR Kumar Managalam Birla.

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.

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

LEADERSHIP

"Leaders are truly transformational when they increase awareness of what is right, good, important, and beautiful; when they help to elevate followers' needs for achievement and self-actualisation; when they foster in followers high moral maturity; and when they move followers to go beyond their self-interests for the good of their group, organisation, or society." –KM BIRLA

Kumar Mangalam Birla took over as Chairman in 1995, at the age of 28, after sudden demise of his father, noted industrialist Aditya Birla, after whom the group is named. When Kumar Mangalam Birla assumed the mantle at the Aditya Birla Group, Doubts were raised about his ability to handle a giant business house with interests spanning viscose, textiles and garments on the one hand and cement, aluminium and fertilisers on the other. But Kumar Mangalam proved his skeptics wrong. He brought in radical changes, changed business strategies, professionalised the entire group and replaced internal systems. Kumar Mangalam reduced his group's dependence on the cyclic commodities sectors by entering consumer products. Under Kumar Mangalam Birla's leadership, the Aditya Birla Group, apart from consolidating its position in existing businesses, also ventured into sunrise sectors like cellular telephony, asset management, software and BPO. Kumar Mangalam Birla also holds several key positions on various regulatory and professional boards, including chairmanship of the advisory committee

constituted by the ministry of company affairs for 2006 and 2007, membership of the prime minister of India's advisory council on trade and industry, chairmanship of the board of trade reconstituted by the union minister of commerce and industry, and membership of the Central Board of Directors of the Reserve Bank of India.Kumar Mangalam Birla has won several honor.

He has scaled up the turnover of Aditya Birla Group to $9.7 billion or Rs. 43,000 crore fromRs. 8,000 crore ($1.7 billion) in 1995. Today, the group is world’s top viscose staple fibreproducer, world’s fourth largest producer of insulators, fourth largest producer of carbonblack, eleventh largest cement producer, fourth largest aluminium producer in Asia andthe largest single location custom copper smelter.Last year he succeeded in gaining full control over Idea Cellular, the fifth largest mobileoperator of India, buying out the stake of joint venture partner and India’s largestindustrial conglomerate Tata Group after a prolonged tussle. The group has presence inbusiness process outsourcing (BPO), Life Insurance and Asset Management, brandedgarments and fertilizers also.The group companies of Aditya Birla Group include Grasim Industries Ltd, HindalcoIndustries Ltd, UltraTech Cement Ltd, Aditya Birla Nuvo Ltd and Idea Cellular Ltd. Thegroup’s Joint ventures include Birla Sun Life (Financial Services).

VISION

Very early in his career, long before the word 'globalisation' came into our everyday lexicon, he had foreseen the winds of change and staked the future of his business on a competitive, free-market driven economic order. At a time when India's economy was glued with bureaucracy and taped with controls, his was a rather lone voice. But it was a voice that not only spoke, but also acted decisively and with conviction.

For him, though, globalisation meant more than just geographic reach. He believed that a business could be global even whilst being based in India. Therefore, back in home territory, he drove single-mindedly to put together the building blocks to make his Indian businesses a global force. It is this vision which, I believe, will prove to be one of his enduring legacies to Indian business. “It is a vision which prompts the Indian entrepreneur to take a longer stride; it is a vision which makes the Indian entrepreneur dare and may be even dream; it is a vision that makes all of us proud to be a part of the new India in the making.” — Mr. Kumar Mangalam Birla

TRANSFORMATION/MAKEOVER  

Kumar was only 28 and by common consent, too young to fill the shoes of India's greatest businessman. Moreover, Aditya was a charismatic figure and many of his senior managers were emotionally committed to his memory. "I remember that for the first few months there would be times when somebody would mention my father during a meeting and we would have senior executives bursting into tears and leaving the room," says Kumar.

Many of these executives had known Kumar as a child and he felt awkward telling them what to do or holding them accountable for their performance. Plus, there was his own sense that India was changing more rapidly than most people realised. In 1991, Manmohan Singh had begun the liberalisation process and many of the old cozy certainties that traditional families like the Birlas had grown up with were vanishing.

"I knew that we needed a transformation," Kumar recalls. "Not a cosmetic transformation but a fundamental change in the way in which we did things. My only question was: when? I was never sure whether I needed to wait before making the changes that I thought were necessary. The timing needed to be worked out carefully."

Eventually, of course, he found the right time. In the Birla Group, there was a womb-to-tomb policy. People rarely retired. And it was assumed that their children were guaranteed jobs with the group.

Kumar changed all that. "I felt that if people never retired, then there was no place for younger people to rise. So it was important to institute a retirement policy," he says. In real terms, this involved retiring 350 employees over the age of 60. As for the guaranteed jobs for family members, his view was "what used to happen was that if one son was very bright, he went to work for a multinational. The other son, if he wasn't good enough for anywhere else, was sent off to work for us. So I instituted a policy that vetted all applications from family members of existing employees. None of this made me very popular but I thought it needed to be done and now, I think people are much more accepting of the policy."

People used to say that when Aditya babu phoned somebody, then that person would stand up while answering the phone. He was great at bilateral motivation and contact. My style is more group-oriented. I like motivating groups of people. I find that in business, it is more important to empower a whole group than to depend on a single individual. So in that sense, my approach is less bound by the baggage of tradition." 

ORGANIZATIONAL STRUCTURE

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.

MANAGEMENT STYLE

The young 28 yr old KM Birla had gradually developed his own personal management style. Commonalities include performance orientation, a strict eye for detail, close attention to budgets. Differences include more informal interaction with managers from top to bottom; a greater gap between personal and office life; and a strong emphasis on financial performance. For example he has replaced the old Parta system, which focused only on production with the Cash Value Added method, which emphasizes profitability, asset productivity and growth.   Birla is a firm believer in meritocracy. In his father's time, there were several marwaris in top management. Today there are plenty of non-marwaris. He places a lot of emphasis on HR and hired Santrupt Mishra from Hindustan Lever to spearhead the groups’ HR initiatives. A 360 degree feedback program that allows managers to question even Birla’s own leadership style and does away with the 'babu culture' prevalent in the group. But while on one hand Birla nurtures employees, on the other he is very careful about performance measures.   Birla is equally adamant about strict adherence to policies and procedures that have been discussed and approved. For example he introduced a retirement policy, similar to the one Ratan Tata introduced over at the Tata Group. While a cresendo of unhappiness was heard at Bombay

House, peaceful silence reigned at Industry House. At Lever House, no doubt Vindi Banga is closely watching these events. Birla’s retirement policy saw 325 senior executives, between the ages of 62 and 65, step down after years of service. Though the policy was drafted in 2001, he took a year to implement. He then hired 190 young executives to infuse fresh and out of the box thinking in the group. "I think its been one of the most important decisions I've had to make," says Birla.

BUSINESS EXPANSION

Company Products / servicesGrasim viscose staple fibre, rayon grade pulp, cement,

chemicals, textiles::

UltraTech Cement Ltd ordinary portland cement, portland blast furnace slag cement, portland pozzolana cement and grey portland cement

Hindalco aluminium, copperAditya Birla Nuvo garments, viscose filament yarn, carbon black,

textiles, insulators::

Idea Cellular Ltd. cellular telecommunications

::

Birla Sun Life Insurance Co.Ltd life insurance

::

Birla Sun Life Asset Management Company Ltd.

mutual funds

::

Birla Sun Life Distribution Company Ltd. mutual fund distribution

::

Aditya Birla Capital Advisors Private Limited (ABCAP)

private equity advisory and investment management, for Indian and offshore investors

::

Aditya Birla Money Limited leading player in broking space

::

Aditya Birla Minacs IT Services Ltd. application development, maintenance and enhancement solutions

::

Aditya Birla Minacs Worldwide Limited customer relations management (CRM), integrated marketing services, knowledge process outsourcing

::

Birla Global Finance Company Limited asset-based finance, corporate finance and investment banking, capital market and treasury

::

Birla Insurance Advisory & Broking Services Ltd

non-life insurance advisory and broking services

::

Madura Garments Life Style Retail Co. Ltd apparel retail

::

Peter England Fashions and Retail Ltd apparel retail

::

Madura Garments Exports Limited apparel exports

Aditya Birla Retail Limited multi-format storesTanfac Industries Ltd. fluorine chemicalsEssel Mining & Industries Ltd iron and manganese ore mining, noble ferro

alloys

FUTURE OUTLOOK

It may be in businesses as mundane as cement, telecom, viscose yarn and metals but Aditya Birla Group is looking at a future business portfolio that includes alternative energy, water management, and new-age, eco-friendly materials that can be used instead of plastics 

Aditya Birla Retail, the country's second-biggest supermarket operator, is considering an initial public offer and will time it as soon as

the company starts spinning profits. "We will definitely be open to an initial public offer, but it will be closer to the time of profitability ... around 2012 or maybe even before that when we sight profitability," Aditya Birla Retail Ltd (ABRL) chief executive officer, Thomas Varghese, said

According to Mr.Kumar Birla “The plan for each industry is outlined on the basis of the unique competitive landscape of each sector. However our intent is to be the No 1 or No 2 player in each of the sectors in which we have a presence” 

Kumar Mangalam Birla’s Viewa on Future India :

A decade is but a small speck on the sands of civilization’s time. But in the life of a nation born only sixty two years ago, a decade can be quite transformational. Each of the last two decades has been transformational for India, and the next one will also see dramatic changes.

envision India’s higher international leadership along several dimensions. First, India will be, along with China and Brazil, among the worlds’ major drivers of economic growth. It is feasible that a 7-8% p.a. GDP growth over the coming decade will significantly narrow the differential in income and living standards between India and some of the emerging Asian countries.

The growth impetus provided by the domestic economy can easily propel us into the world league. We can become one of the manufacturing hubs for the world, in areas like automotive, metals, textiles and engineering. In IT services we can enhance our already established global status.

I do believe that India is set for rapid growth and progress over the next decade. Even so, I believe that we have to scale up the boldness of our dreams. The time has come to shift from small, incremental moves to taking big leaps even if it means taking on greater risks.

As the world economy slowly takes to the upswing, we must be ahead of the curve in terms of growth and value creation, so that we are able to supplement the domestic growth momentum with the global push, when it come. High economic growth is a prerequisite to achieve inclusive growth. The next decade is for India to grab.