Monday, March 15, 2010

The 1000 days principles in Entrepreneurship

People often seek advice from others on Entrepreneurship. While a lot of those who do advise on such matters are obviously experienced people (having been there and done that), there is a general lack of broad guiding principles for an aspiring young entrepreneur who wishes to have a long term view of things. Keeping this in mind, I list below my learnings on the topic. The advice here will suit most businesses generally.
Before I begin, I must warn that what follows is not for the faint-at-heart. Enterprise creation is an adventure that's all-consuming. It cannot be done part-time, and it surely won't be successful that way.

The 1000-days principles in Entrepreneurship

The process of enterprise creation is a long one. But a structure does seem to work well, if followed rigorously. I feel that the following steps will stand a young first generation entrepreneur in good stead, as she tries to build her enterprise from scratch. The least it will do is minimise waste and senseless effort. Here goes!



The phases mentioned below are from the entrepreneur's perspective. The organisation will evolve on its own also, in parallel. As you cruise through this, it will be a good idea to remember the poetic punch that "A man who follows his heart does not expect the world to follow his point!"

A. The first 1000 days - Customers and Cash phase
For the first one thousand days of the enterprise being built, the only focus should be getting customers, and generating cash to meet the survival needs of the system. There can be no other pressing objectives. Since the issue of survival of the enterprise to the next level is the only one that matters here, hence these two objectives should override all other considerations. During this phase, if you are unmarried, good for you. If you are married, try getting your spouse onboard as well. During the first 3 years (1000 days), an entrepreneur should
  • Live with the simple driving dictum - Get customers, get customers, get customers
  • Focus on day-to-day revenues and cash generation activities
  • Personally interact with as many customers as he/she can to really understand their needs, offer on-the-spot solutions to problems, and build the first level of brand-confidence
  • Realise that 24x7 availability for customers (at least through phone) is a boon not a bane
  • Avoid thinking too much about profits - they usually won't happen now
  • Not think about other softer and grander issues - they'll follow later if you'll survive
  • Remind himself constantly that "if I don't survive through these 1000 days, it's all over. I'll be dead."
  • Get up early, reach office much before anyone else will, and not leave for home in the late evening until all followups for the day and next day's preparation is made
  • Make do with not more than 6 hours of sleep every day/night
  • Realise that work-life balance is possible provided he treats work as life!
  • Do not at all think about fancy software, fancy hardware, costly manpower, big a/c offices. The time is not ripe yet (even if you have enough money somehow)
  • Give up almost all "luxuries" of life that cost too much - take a train if flight is too costly
  • Realise that all that he/she does is creating a brand automatically - so branding, marketing and PR is actually happening without consciously being done under those 'verticals' and 'divisions'
B. The second 1000 days - Quality, and Systems and Processes phase
Congratulations! You have survived the first phase. Barely 10% entrepreneurs make it to the second phase, so obviously there's something special about you. I know what that is - total dedication you've shown to the cause of enterprise creation. So it is obvious that your customers have noticed it as well. Now you must realise that what you did on your own single-handedly through these first 1000 days needs to be institutionalised somehow, at least at a basic level. That's precisely where you need a quality culture to be created, and systems and processes to be built. This is what Raymond Kroc of McDonalds understood early in the evolution of the company, and hence went to extraordinary lengths to create the "Hamburger University" to train his people! Thus, in the second phase (the second 1000 days), an entrepreneur should
  • Constantly repeat what made him/her a success in the first phase
  • Start building a quality culture through his now-growing enterprise
  • Articulate a formal quality policy that's simple to understand yet powerfully worded
  • Tell everyone in the team what is simply not acceptable in terms of customer happiness and product quality - this is THE PHASE when your long-term culture will be created - mess with it now, and you have no culture left to bank upon and defend later
  • Realise that as the scale and scope of your business grows now, you need formalised systems and processes that capture the essence of what you as an individual did wonderfully well in your first phase, and which others in your team now need to do
  • Start communicating a lot, and aggressively (not impolitely) with his/her team members about the need for repetitive good experiences for customers (and that's possible only through processes and systems)
  • Realise that he needs to sit down on a PC personally to start documenting the various processes and systems that were used to reach this place
  • Create what we call the "Operations Manuals"
  • Realise seriously that this is the time when the very long term foundation of the entire business is being laid - it's not a joke, and do not treat it like a joke
  • Keep a parallel eye out for talented people, who will now start getting attracted to your enterprise (through market's word-of-mouth), and think of how you will recruit and retain them
  • Do not at all think about fancy software, fancy hardware, costly manpower, big a/c offices. The time is not ripe yet (even if you have enough money). Go for basic essential stuff only.
  • Avoid listening too much to costly "consultants" and fancy "management gurus" who can generally only talk big things, but can hardly deliver real value for money to struggling and upcoming entrepreneurs (like you are, at this stage) {remember what Dr Peter Drucker said - "I suspect the media calls me a guru because they find charlatan too much space to print!"}
  • Resist the temptation to expand aggressively - lots of people will praise you and show you the golden path to prosperity through rapid expansion! But listen ONLY to your heart - does it sound intuitive and ok to expand? Can you handle it, resourcewise? If no, then it's no!
C. The third 1000 days - HR and Team-building phase

Wonderful! You survived the second phase also. You have guts, and glory surely awaits you. For the six precious years of your life that you just invested in enterprise creation, now comes the time to build the next step for a bigger game ahead. In the third and very crucial phase of your enterprise creation adventure, you need to now religiously focus on building a core team of professionals, who are vertical specialists, and gel them together for a long play. Dhirubhai Ambani gave precisely this advice to both his sons, and also the liberty to create teams that they thought were best for their respective domains. In this third phase, you have to focus primarily on

  • Building a team that will stay with you for a long time ahead (at least 10 years)
  • Find vertical specialists who will create the "departments" or "divisions" or "verticals" that will define the key parts of your enterprise for all times to come (at least for next 10 to 15 years)
  • Get these key team members involved in the documentation and systems-design process - and be ready to face resistance, it's not easy!
  • Start focussing on HR processes that will sustain on their own without your personal intervention always
  • Make sure you interact with each new joinee at least once before he/she is approved by the "HR dept" and reserve your veto on their joining (or not joining) - nobody knows the enterprise's DNA better than you do
  • Start focussing on your personal wealth. This is the first time you will be doing so
  • Get a very good wealth-manager (advisor). A regular CA alone won't do. You need someone who is monetarily and asset-wise rich - only he/she can advice you on wealth matters (if that person happens to be a CA, good!)
  • Continue motivating the team for the things that made you reach the third phase
  • Keep interacting closely with all key business partners. No one should say you have grown big enough to not interact with them!
  • Do not indulge in vulgar displays of your wealth. It will adversely affect your image and make enemies out of friends. So if you can make do with a smaller car, no need to think of the Mercedes yet!
  • Be on the watchout for frauds - people who are trusted by you, but are actually not worthy of that. You will have your fair share of experiences; learn quickly!

D. The fourth 1000 days - Expansion, Branding and Finance phase

Now the game turns serious. You have an organisation that's beginning to stand on its own, you have revenues and profits (hopefully!), you have team-members whom you can trust, you have a decade of experience (how time flies!) and you have seen ups and downs to even out your animal spirits to a reasonable level (again, hopefully!). Having successfully done it at the national level, Sunil Bharti Mittal is now passing through this phase in terms of global expansion for the company. So what should you personally focus the most on, now? Three things basically.

  • Start thinking of expansion, if your business model allows for it
  • Expansion can take place in any manner - more offices, more locations, bigger teams, newer business venture(s), etc.
  • Since the organisation is likely to have a lot of positive energy at this stage, you are most likely to get good results from expansion
  • The biggest caution - keep a watchful eye against systems dilution. That can kill your brand in the long run otherwise
  • Secondly, focus on concerted efforts regarding "Branding and PR"
  • Become media savvy - start appearing for media interactions, press-meets, national PR and TV coverage
  • Get a really good PR agency to work for you, and if possible, develop a long-term relation with them
  • Get your branding language consistent and right. It's going to reap rich rewards for you soon!
  • Thirdly, focus on big-ticket Finance. It may be the time to go for private equity (PE) or a public issue (IPO)
  • At the same time, it may not be! All depends on your personal ambition regarding growth
  • These three areas are all strategic - and must be handled personally by the entrepreneur as much as possible
  • If done right, the fifth phase can be a totally different experience altogether for the organisation and the brand!
  • By the way, this is also the time when some serious investments will need to be made into creating the I.T. backbone for the organisation. Again, the magnitude of investments depend on what you expect from I.T. for your organisation
If you navigate these four stages properly and successfully, you can then focus on your personal life and wealth, and enjoy it to the maximum. After all, you are the elite member of probably less than 1% of those who started this journey several years ago.

Company-specific exceptions to the above description will always exist - WalMart invested aggressively in creating an aggressive I.T. backbone much before it expanded globally.

These are the most crucial four stages for any enterprise. Most of the embroynic action happens here. Of course, the years ahead are also full of action, adventure, suspense and drama! But the start-up phases get over with these four I have described. 

Finally, let me say this - if you are not the adventurer-type, please don't go in for all this. Your hair will turn white in a decade, your personal life will be messed up and all happiness and cheer will be lost - you truly need to have the unending passion and insanity in your DNA to be able to do all this, and live life to the fullest while doing this. It is not easy at all - so the next time you see a successful entrepreneur, salute her!

Wishing all young, budding entrepreneurs success in life! 

A comprehensive list of Questions and Answers on various topics is available here for your perusal - Click! 
~

39 comments:

Satyawan Malhan said...

Respected sir,
The four stages mentioned in the blog are very important for an entrepreneur. The first 1000 days are very important,retention of customer & cash flow in the business.Always be cost effective by saving & cutting in luxuries life in early days.
Thank you sir for giving us great learning & for such a intellectual blog.
Pr.Satyawan Malhan
FALL-09

nikhil said...

ultimate sir jee.....
its being a nice experience 2 read this dis all , i wud try my level best not to miss any of them/......

Soya said...

Dear Sir,

Very, very insightful blog. I really wanted to know more about the 1000 days principles which you mentioned in your last lecture & this blog simply covers the topic in totality.

Regards,
Shoaib Qureshi

munish said...

Respected Sir,
What a post!
I was struck dumb by the sheer explicitness of your experiential wealth poured directly to cater to the minds of budding entrepreneurs. Incredible indeed.
While I was reading this blog, I could see a young man envisioning a dream of an organization, then gathering and establishing foundation stones, piling up brick after brick and culminating a wonderful organization. Was this way Sir that PT Education got its present status? I am totally amazed.
Even one thing that surprised me was how simply you revealed such vital tricks of the trade while the existing competition scenario presses entrepreneurs to abstain from that.

Lastly, I confess that I never wanted to be an entrepreneur so early in my life. But as you have simply put down the 1000 days formula for success, God knows when I may get into that.

Thank you so much Sir.

Regards
Munish Sharma
Fall 09

mayurpatelcr said...

Entrepreneurs take years to collect insights and facts just mentioned above in the blog.

Awesome topic suits for almost all people in the world who like to be entrepreneurs.

Thank you.

MDP
OC OKC US MBA
http://santakadu.blogspot.com/2010/03/retiring-at-30.html

Pinakin Barot said...

It's worth learning. I always wanted such a insightful blog to be written by you. Since it is very tough for us to directly talk with you on such issues (entrepreneurship) therefore your opinion always help us. I learn a lot from your blog-posts. However, this one is of great help.
Thank you Sir

Pinakin Barot

Manish Vaswani said...

Respected Sir,

Quite insightful post.
In beginning it makes one feel as to accomplish all the steps in the very first powerplay. Creating an enterprise, making oprs. manual, processes and all together.
The post provides learning as of dividing them as as per the need of the hour.


Regards,
Manish Vaswani

nivesh said...

Respected Sir,

This post gives wonderful and most valuable insights about creating an enterprise from scratch to sky.
It was great to have these valuable insights from the person who is role model of many including me.
Have learned lots of amazing things from you in Proton and this was probably most valuable. every point u shared is worth lakhs coz each came out from years of experience u have..
thank you so much.

your's truely,
Nivesh Goyal

Sandeep Manudhane said...

Thanks everyone for reading and commenting! Actually, I can sense that those who have tasted Entrepreneurship themselves will very quickly identify with this post. The pain, the joy and the demands - they can feel every bit of it inside their blood and bones. What an adventure!

Neetu Jain said...

Dear Sir,
Its wonderful to read such a precious blog. You have changed the way we look on becoming entrepreneur. Its not all about risk taking and preparing a business plan for an enterprise to set up, but the whole endeavour should be planned and superbly executed. You have rightly said that one should be ready to sacrifice 10 complete years of one’s life to see one’s business to prosper and flourish. A new venture is just like a new born baby which needs to be taken care of and for which we should devote ourselves to make it healthy and viable.
Thanks a lot for sharing your great insights . I hope I could implement all learned when I step into my venture.
Regards,
Neetu Jain
Fall 09

Neetu Jain said...
This comment has been removed by a blog administrator.
CHOTU said...

Nice Ones.

Manas said...

Nice!

Shiv Premani said...

interesting read Sir ...
I got this link while surfing ....
http://www.paulgraham.com/really.html
on similar topic ...

Nidhi Agarwal said...

Respected Sir,
On November 26, you posted one of your writings, 'The Secret Sauce of Entrepreneurship.'That post left a permanent imprint on mind. And I had been keeping my hopes on reading more on 'Entrepreneurship' and 'The Power of Simplicity.' After four months, it's so good to read the post which, I would say, is the Bible of Entrepreneurship.
I convey my gratitude to you for sharing your wisdom.
Academic and experiential learning at PROTON is one thing and learning from your blog posts is another thing that dominates everything else.
Is it not possible for you to release a book which could have excerpts from your wisdom, like we have Speaking Tree from TOI? What you speak and what you write must reach people across the world. I feel that tonnes of gold lie stuffed inside a little place. People need your wisdom.

Regards,
Nidhi Agarwal

Nidhi Agarwal said...

Respected Sir,
On November 26, you posted one of your writings, 'The Secret Sauce of Entrepreneurship.'That post left a permanent imprint on mind. And I had been keeping my hopes on reading more on 'Entrepreneurship' and 'The Power of Simplicity.' After four months, it's so good to read the post which, I would say, is the Bible of Entrepreneurship.
I convey my gratitude to you for sharing your wisdom.
Academic and experiential learning at PROTON is one thing and learning from your blog posts is another thing that dominates everything else.
Is it not possible for you to release a book which could have excerpts from your wisdom, like we have Speaking Tree from TOI? What you speak and what you write must reach people across the world. I feel that tonnes of gold lie stuffed inside a little place. People need your wisdom.

Regards,
Nidhi Agarwal

Nidhi Agarwal said...
This comment has been removed by a blog administrator.
Sunil Bhaker said...

All things are real..You are the best Managment Guru...

I am going to start my own business...So it will help me lot Sir..

With Best Regards,

Sunil Bhaker

vivblend said...

Great post Sir. I too realize that the biggest mistake I did was to put up heavy investment even before the start. It would have been a lot better if we would have started humbly,, 'like the garage'.. Anyways life has it's own way of teaching, it hits you hard and makes you learn. I think if i would have got this training on entrepreneurship earlier the scene would have been different. Let's see.. Picture abhi baki hai mere dost..

Sandeep Manudhane said...

Once again, thanks everyone for reading and commenting! This has been one of the most liked posts, and I am glad I could share so many useful things with you.

Ritesh Sharma said...

This is an extraordinary picture of Entrepreneurship . I am from service class family and I am working with successful entrepreneur , I wish to start my own enterprise after getting tough command on business.

The 4000 days plan for making an enterprise is just a tablet for patient .

But the first 1000 days are really tough one to sustain the pressure of society .

Sir I feel many of young people have talent to establish enterprise but they even don't want to take risk and it is misfortune of our country.

raja said...

Dear Mr. Manudhane,

Greetings!!

I am a regular visitor of your blog and I find it quite insightful. I am also a young entrepreneur. I need your help in concept of Personal branding, you have used the concept beautifully. So do you think its important to go for Personal Branding and what is the right time to do that.

I too belong to education industry.

Thanks

Prashant

Utkarsh said...

respected sir ,

so beautifully said.." a man who follows his heart , does not expect the world to follow his point"

you have given such a beautiful picture of the "Art of Entrepreneurship"

since you are such a successful entrepreneur , you have shared all the practical experiences and knowledge with us.

i myself aspire to become a successful entrepreneur , and this post of yours has helped me a lot to understand the time and dedication needed to reach my goal.

i even got to know the risks involved in this field , and that this field is not ment for weak hearted people.

the way you have explained the four stages of being a successful entrepreneur is superb.

as a very successful entrepreneur you are such a wonderful motivation to me.

thank you for sharing such a wonderful part of your knowledge and experience with us.

yours sincerely
utkarsh bhargava

SHREYA KHANDELWAL said...


RESPECTED SIR

YOUR ELOQUENT WRITE UP ABOUT ENTREPRENEURSHIP LET US SEE CONSTELLATIONS WHERE OTHERS CAN ONLY SEE STARS.

If these 4000 days principle was said by some job keeping corporate slave it would be like easier said than done.
But said by you,a very successful entrepreneur cum management guru,who is overblessed with drive and ambition, has lived through all this and come up brighter than the sun, it dons on every struggling,striving entrepreneur that its not late to embark on a journey to follow your heart and dreams.
I personally felt the enlightenment that can keep me going on the tough paths ahead and can meet all the obstacles head on that comes my way.
Your such a crisp and emphatic write up has been an ocean of learning and has unclogged many bottlenecks.
With reverence and gratitude I want to thank you for shooting up an eye popping visionary, ballooning our confidence and renewing our hope and vigour.

You have set up a surefire and make all of us hungry again for pushing it off the edge.

We have comprehended all the four principles and in the best possible way will implement and execute them in our business life.

yours sincerely
SHREYA KHANDELWAL

Yogesh Nirwan said...

ENTREPRENEURSHIP it is word that has
changes the world.
every one can not become an entrepreneur. it is in one's heart that makes him an entrepreneur.
we can see a wide range of product and services in our daily life and this all are the result of the ENTREPRENEURSHIP.
all the comforts and pleasure that we have in our life or in the world is all becos of the entrepreneurs. they are like "bhrama deva" who has make this world.

vaishali soni said...

good evening sir,

all the categories,like Customers and Cash phase,Quality, and Systems and Processes phase,HR and Team-building phase,Expansion, Branding and Finance phase are very useful for management field.
we an use this condition in the ENTREPRENEURSHIP.



thanks
VAISHALI SONI
PT INDORE

barbarik lifestyle said...

respected sir,
I have a question on the path midway towards. we have two thoughts one is positive for our goal and another is negative for our goal sometime that negative goal so positive that one can't restrict it.so how to choose one of them. sometime people become unethical to achieve goal in this process what you think how to tackle that situation?

Palash Rajani said...

Sir while going through the blog I got a bit reckless(maybe the fault of the generation I am born in) as wealth building didn't seem to appear till the 3rd 1000 days phase.
Sir your principles are 100% correct but I seriously doubt them being followed by an entrepreneur(of my generation specifically). This generation entrepreneurs care only about one thing and that is funding. Even the various t.v series's about entrepreneurship focus only on funding (eg: TVF pitchers,Silicon Valley etc.). NO one really cares about customer satisfaction, team building, product quality or the process strengthening part, this precisely is the reason why around 99% of the startups(having immense potential and a lot to offer to the society) die.

With the help of this blog I am taking away with me the secret to create a successful enterprise. And I thank you sir for sharing this secret.

Thank you


Shivank Pandey said...

It was a simple sutra for new entrepreneurs.
For me it was pretty insightful in understanding the mindset of young businessmen and greatly helped in getting a rough idea about how the journey of startups(sucessful) begins and evolves.Also here and there it keeps reminding what could possibly go wrong for new entrepreneurs.

Thank you
Shivank Pandey

Hitesh said...

I learned a lot from this post. I don't see myself as an entrepreneur. Some friends say that it is a very good idea to become an entrepreneur. I believe their minds will change like an actor's clothes, if they come across this article.

Navchetan Singh said...

Dear Sir,
I found this post captivating and I kept longing for more.Being an entrepreneur is a tough nut to crack for sure and it is not for everybody.I must say that I have never read anything on entrepreneurship so far that brings to light the various phases you described in such a scientific and precise manner.I also noticed the way you treated an entrepreneur as a 'she' or 'her' and it is brilliant because it encourages women to pursue their dreams and scale unimaginable heights.
I thank you for writing this wonderful piece of article.

Mokshit Jain said...

A blog brimming with experience
Everything written in this blog is so filled with true life experiences. The advent of this demanding journey aptly requires more and more customers as they lie at the bottom of any business. Then comes customer experience and the quality provided to them. Customers associate themselves with a specific brand due to the quality provided to them by that brand, besides many other factors. Then comes the phase where team-building and process-building takes the center stage and an enterprise is given the ability to exist even without its founder (although, I am not suggesting that a start-up becomes independent from its founder at this stage). After a great team is made and the quality of service maintained through processes, comes the expansion part which is vital to give a taste of the novel and exceptional goods or services provided by a star-up to a larger world.

And finally, as I see here a successful entrepreneur, I salute you Sir!

Abhishek Artwani said...

Indeed an insightful article. I particularly loved the second phase and it brought few points about quality and processes which i have never seen anyone else emphasizing upon.
Also, i never thought 4th phase would also be there. Now at least i know better what a CEO does apart from reading reports and setting missions/goals.

Manish Kumar said...

Dear Sir,
It’s too good to read this Article on Starting a company and becoming an Entrepreneur. I can easily correlate the Entire Article with your Session on Startup, Entrepreneurship, Realities of Indian Economy.
As you said in your lecture that "Entrepreneurship is all about finding the gaps and problems in existing system and process and offering effective and profitable solution to plug the same"

So the journey begins by finding the key problems that is present in an already existing model. but with your ideas, Brain storming, ability to think out of the Box, courage and helping and advising nature of your near and dear ones ,a person can think of starting a business.
Sir,
By your explanation you have cleared how we can find the solution then we search for Precise Solution and then try to convert it in to a Profitable Solution for your Organization.
The concept of expansion in the 4th phase reminds me of the redefining the Mature Business by the process you have taught as “Creative Destruction" by Schumpeter.

By the explanation you have given it is clearly reflecting the different phases which you have personally experienced in your life.
Thanks for sharing this article.

Warm regards
Manish Kumar

DIVYA said...

This is something very new which I have read today. All articles are different about entrepreneurship however this was unique. Writing was different, sequentially defined parameters.

This article makes me think certain things very differently. Which I never thought of doing earlier. Surely, I can understand why there is boom for startups.

Best Regards,
Divya

Naveen Ramchandani said...

Dear Sir,
With reference to your blog above, i must say that i was carrying a different persona of Entrepreneurship in my cerebrum but after reading your structured post defining different phases, the overall picture of Entrepreneurship has become very limpid to me. Starting from Customer & Cash phase to Expansion, branding and finance phase. I have gradually started feeling animal spirited.
I appreciate your efforts for writing such an insightful blog on Entrepreneurship
Sincerely
Naveen Ramchandani
Lead Controls Engineer
The Netherlands

Mohit Mahajan said...

Thank you sir, for such an insightful and lucid article. The article beautifully presents a long-term and holistic approach to be an successful entrepreneur.
The key take-away from this article have been that it takes a lot of patience, ups and downs, clarity of mind, systematic plans,continuous changes, charting of well defined goals and eventually keeping all the systems in place to be successful.
In fact, I believe that entrepreneurship is a journey and every moment of it is meant to be enjoyed.

Sanjay Mandalja said...

Hello Sir,

Great blog with a wonderful virtual journey to the path of entrepreneurial success.
The core or the key here I observe is sustainability with a phased approach over a decade divided into level of human and intellectual efforts. I myself have not stepped into an entrepreneur's shoe but when I do, I am sure this will by my guiding manual.

According to blog, quote "slow and study wins the race" fits more for entrepreneurial world during early stages, say early 6 years, contrary to the trending quote "fast and efficient wins the race"

However with the rapidly changing business environment, growing technology, startups emerging every single day and taking into consideration creative destruction theory by J. Schumpeter, 6 years is good enough time to identify gaps and have the business idea die eventually.

What do you suggest to sustain the business from short term gap identification or faster growth to not let gap identification suffer the existing business idea.?

Let me know your thoughts.

Thanks,
Sanjay Mandalia

Unknown said...

Hi sir,

in the economy like INDIA where even less then 10% of people works in organized sectors, and as per annual population growth chart our expected population will be crossing 150cr very soon, with major population as youth, entrepreneurship is very essential not only for development as an individual but also for the development of society by becoming a job provider rather than a job seeker.
your 1000 days rule for entrepreneurship will really be helpful for youngsters with great innovative ideas in there minds which can turn out to be business revolutions.