Startups People

Companies can't have long-term life without digital roadmap: Ram Charan

9 Nov, 2016

Every company that has a vision needs to be digitised because there is no long-term life without a digital roadmap, says renowned coach, speaker and author Ram Charan. And, for being relevant in the digital age, more investments are needed in technologies than focus on cheaper costs. In an exclusive conversation with Techcircle, Charan says while it is imperative for businesses to digitise, the reality is that companies are constrained in their efforts to create a digital infrastructure because they still operate with legacy IT systems. When it comes to startups, Charan says there will be more of them and India will prosper when startups and legacy businesses are linked together. Edited excerpts:

How are Indian businesses adapting to digitisation? Can you provide any examples? 

There are a few things every business has to realise and that is every company of any substance has to be digitised. No digitisation, no long-term life. Second, any decision that can be digitised has to be digitised. All said and done, it's a factor of three things: one, consumer end-to-end experience; second is finding the right ecosystem or business partners; and third is designing the right platform and executing it. This is the context in which you evaluate the appropriateness of the companies. In most countries, this is at a very early stage. We have to see which companies are trying to do that. Most companies are doing piecemeal without having the overall sketch. A number of companies are simply substituting the old process with a digital process without having the overall sketch. And many companies are really constrained because their IT systems are legacy systems and the new system requires one to go on the cloud and therefore they are constrained. So these are the factors people have to think through.

In the American scene, you see the movement. One you see in the auto industry. You see in Germany with BMW, clear movement. There are some parts suppliers that are doing that. There have been some in retailing like the Walmart coming up and they made a big change to buy a company called and made the chief executive of that company, the chief executive of the whole of Walmart effort. So you have to bring the right people going forward. Now when it comes to startups, they can be divided into two arbitrary categories. One is the startup has an idea and they really want to build their business long-term. Uber was at one point a startup, Airbnb was a startup, WhatsApp was a startup. Some sold, some are building a long-term business. So you look at each startup and say what is their vision, what is their motivation, what is their intent. But for existing companies, they must decide those three factors and search for people who will design that platform. Often it may be useful to have a startup company as a partner. Most startup companies will want an equity share. They need a scaling up and the existing companies need the platform. Find a mix of the two.

India has become a major startup destination with a lot of tech play. What differentiation do these companies bring to Indian businesses?

The key point here is that we have a ton of talent. Bengaluru, IITs, even people from Chandigarh….tons of talent. And many of them want to start their own business for good reasons. So the prosperity of India is going to come in how the startup and legacy businesses link together. In America, in the Silicon Valley, there are intermediate firms where the startups people go and if they made sense to these intermediate firms, they are able to connect with the big guys within minutes. We got to build that mechanism.

Do you see any difference in the way Indian startups are run versus their American counterparts?

Well, people need to see who are the people in Silicon Valley. They're Indians. So there's no nationality issue. This thing flows across borders. Some of the best capitalists and intermediaries and venture capitalists and leaders of the startups are Indians.

Would you consider coaching startup founders?

I have now. I do them. Oh yeah! Because I think I'm able to help them.

What difference do you see among startup founders now compared to a decade ago?

I think there is going to be more and more startups. The technology is available, people have experience in Google, Amazon, Facebook, Microsoft and IBM and many others and there is an honest to goodness urge to start their own business. Why not? So I see more coming.

How do you see the outcome of the US Presidential election affecting Indian business?

There's a good news that the Washington policy to link India in many ways, one of them, Washington has decided to have India produce defence products. That's a very big relationship. So that will continue.