SCALING UP YOUR BUSINESSRamki

SCALINGUPYOURBUSINESS

Whatistheprofitmarginofthisbbusiness?

Itcharges0(Zero,Zilch)for27%ofcustomersg ( , ) Itchargesafractionofmarketpricefor26%ofcustomers

Itchargesmarketratefor47%ofcustomers

What is the profitWhatistheprofitmarginofthisgCompany?

Its profit margin is:Itsprofitmarginis:

45%!45%!It makes $13M on aItmakes$13Monaturnoverof$29M!!

Forbes:aperformanceth f i lworthyofanycommercial

venture!

Magic of scaling up!Magicofscalingup!

Welcome to the magic world of Welcometothemagicworldofscalingup!

AnnualgrowthofthisCompanyYOY:10% in volume much more in sales!10%involumemuchmoreinsales!

Thevisionofavisionaryinvision Aravind eyehospital!

NotaRupeeoftheturnoverisdonation!

The best example of scaling upThebestexampleofscalingup

A58yearolddoctorfoundeda11bedeyeclinicin1976 Hismission:Togivesightforall By2010Aravind eyecaresystemwasleadingtheworld:

Theworldslargestandmostproductiveblindness preventionsystem Treated32millionpatientsandperformed4millionsurgeries! PerformseyeoperationononeoutofthreepeopleinT.Nadu ;5%of

alleyecareproceduresinIndia! Its quality is in some cases better than the British medical system and It squalityisinsomecasesbetterthantheBritishmedicalsystemand

Aravinds costis1%ofBritainscost!(C.K.Prahlad inBottomofthePyramid)

Aravind isoneofthegreatestsuccessstoriesinallofmedicine(Dr.D id F Ch th Mi h l J d f t t i USA)DavidF.Chang theMichaelJordonofcataractsurgeryinUSA)

Manyaretreatedfreeoratverylowprice paywhatyoucanafford!

How does Aravind do it?HowdoesAravind doit? Missionandmaniacalfocus AgreatMentorSirJohnWilsonhimselfablindman andDR.V Fightingspirit/Grit/Perseverance/HARDWORK/Empathy Greatsacrificesoftime,effortandmoney tookdecades Not incremental innovation break through solutions Notincrementalinnovation breakthroughsolutions Consistency,reliability,clearstandards,lowcosts,dataanalysis SCALElikeMcDonalds The mantras The more you do the better you get; get less do moreThemantras Themoreyoudo,thebetteryouget ; getlessdomore Streamlinedworkflow,wellcraftedprocesses Reducingmainsurgeonstime;waittime=0 Networkscampsponsoring;localhelpp p g; p Monitoring Aravind Parameterprogram qualityaudits TRANSPARENCY TRUST

Dream visionDreamvision

Dr.V journalentryin1970swhenhewasstillj ypayingoffthemortgageforthefirsthospital,wherehewrites:

of his intention to set up 100 hospitals across the ofhisintentiontosetup100hospitalsacrossthecountry

Ofthepossibilityoftrainingvillagewomentoassistsurgeons

Oftheurgentneedforgoodadministrators Ofplansforbuyinglandp y g Ofthenatureandpotentialsofyoungstaffmembers AndofatargetofdoingaMILLIONsurgeriesayear!

Vision and realms of possibilityVisionandrealmsofpossibility

Fred Munson on Dr.VFredMunsononDr.V

ThroughoutthetimethatIhaveknownDr.V,hisvisionfor what was possible wasforwhatwaspossiblewasbeyondwhatwasanythingy y greasonable.

Can do attitudeCandoattitude

We need to do what we need to doWeneedtodowhatweneedtodo Whenyoubegindoingtheworkyouaremeant to do unexpected resources will findmeanttodo,unexpectedresourceswillfindyou

A i d i h i f Aravind operateswithaveryuniquesetofselfimposedconstraints;Thatautomaticallyli i di l i CEO f IDEOeliminatesordinarysolutions CEOofIDEO

Manufacturing revolutionManufacturingrevolution

WHOsaidUsingIOLsindevelopingcountrieswasnotmerelyunsustainablebutirresponsible.

WhenAravind wantedtomanufactureIOLsinAurolabthey were told they were crazytheyweretoldtheywerecrazy

Aravind wantedtodoitsotheycanofferIOLtothepoorat$10 importprice$80to$150B 2009 A i d d i 2 illi IOL By2009,Aravind wasproducing2millionIOLsperannumandowned10%ofglobalmarketforIOL,exportingitto120countries!

Dr.DavidJ.Apple Aurolab lensesclearlymeetandoftenexceedthestandardofmanylensesmanufacturedinUSandEurope.p

Appropriate size for scaling upAppropriatesizeforscalingup

Dr Aravind of Aravind eye hospital says:Dr.Aravind ofAravind eyehospitalsays: Doapilotandifthatworks,thenbuildit.Forusscale has always come late Building in phases isscalehasalwayscomelate.Buildinginphasesismorepractical.Yourtimeandenergyneedtobeinvestedininspiringpeople,patientsandstaff.Startwiththemicrocosmofwhatyouaredreamingof.Seeingitinmotionwillgiveyouthe

d d C ienergyyouandyourteamneed.Commitmentonthegroundgoesalongway,evenifitsamodestefforteffort.

Essence of scaling up summed upEssenceofscalingupsummedup

Dr.Venkataswamy summarises thesuccessofyAravind beautifullytoJustinHuggler ofTheIndependent,UK

We did good quality work Wedidgoodqualitywork Sotherichpeoplecameandpaid Andwecouldtreatthepoorpeoplewiththemoneysaved

Thepoorpeoplebroughtmorepoorpeople The rich people brought more rich peopleTherichpeoplebroughtmorerichpeople Sonowhereweare!

Simple,elegantandthatsallyouneed!

Money Money

SwamiVivekananda:whenIaskmoneywillpoury pfromtheheavens!

Dr V:Youmustdothework.Themoneywillfollowfollow

Ifamanhasgoodcornorwood,orboards,orpigs, to sell, or can make better chairs or knives,pigs,tosell,orcanmakebetterchairsorknives,cruciblesorchurchorgans,thananybodyelse,youwillfindabroadhardbeatenroadtohishouse though it be in the woods house,thoughitbeinthewoods.

RalphWaldoEmerson. ThisiswhatStevejobsdidtoo!j

Narayana HrUdhayalayaNarayana HrUdhayalaya

Doing an Aravind in heart surgeriesDoinganAravind inheartsurgeries 15%ofallheartsurgeriesinIndia

li l h k h i l MortalityratelessthanNewYorkhospitals 5outof6donefree BloodgasanalysiscostsRs8.50againstNormalRs350

AppliesWalMart tohealthcare

Before 1980Before1980

IdidmyCAarticlesinChennaiin1970s Atthattimeifyouwantedgoodvegfoodyoumainlywent

toWoodlands driveinorthemainhotelinMylapore Good medical attention meant Isabels, CMCVellore, LadyGoodmedicalattentionmeantIsabels,CMC Vellore,Lady

willingdonetc(mostlymissionary) Woodlandshadagoodnameandcouldhavescaledup They did not and it was left to a cleaner boy/ grocery owner Theydidnotanditwaslefttoacleanerboy/groceryowner

withgreatvisiontodothatwhoopenedarestaurantin81 Andayoungdoctorforesawwhathealthcarewouldmean

in future and started a private hospital in 83infutureandstartedaprivatehospitalin 83 Restastheysayishistory~

1981 dawn of a restaurant chain1981dawnofarestaurantchain

ThefirstSaravanaBhavanbornwithonee st Sa a a a a a bo t o erestaurant Letscometo2013

Now70plusrestaurantsand16moreopening Saidtobetheworldslargestvegetarianrestaurantchain

Over7500employees TO$200M PerWikipedia 11countriesandgrowing,growing

1983 dawn of a corporate hospital1983dawnofacorporatehospital

First Apollo hospital is bornFirstApollohospitalisborn Letscometo2013

Now 52 hospitalsNow52hospitals Over8500beds One of the largest in healthcare in India OneofthelargestinhealthcareinIndia GlobalreputationTO 12 13 R 3768 TO1213:Rs3768crores

PAT1213:Rs304crores

Scaling up success saravana bhavanScalingupsuccess saravanabhavan

T i d hTripodapproachdProduct

CustomerEmployee

ProductProduct

Goodquality InitialtimeofmanyhourswithchefbypromoterRajagopal

perfectingtaste Bestingredients

Initiallymadelossformanymonths Customerfeedbackandattendingtothat

Consistency/stadardisation sameprincipleofMcDonalds Dosa weighs60gms maybemorebutneverless

Highhygiene Bananaleavesontheplate(alsoeasytowash)p ( y ) Employeesbathebeforework

Haircutonceamonth;nailtrimmingonceaweek Brand buildingBrandbuilding

Product and service extensionsProductandserviceextensions

New food itemsNewfooditems Fastfoodclosesafterrestaurantsleftoversofrestaurants can be usedrestaurantscanbeused

Ownicecream Both sit in and stand up customers (R K Salai) Bothsitinandstandupcustomers(R.K.Salai) Murukku makingusingladiesVill f d it Villagefooditems

Outdoorcateringforaslowas25people

CustomerCustomer

Uniforms for employeesUniformsforemployees QuickserviceC i Courteousservice

Nodrinkingbyemployees Nolatemoviesforemployees Customer complaints listened to and attendedCustomercomplaintslistenedtoandattended Regularexpansionatgoodlocations

employeeemployee

Jobsecurity nobreakinservicey Higherpay payaccordingtoneeds Accommodation Singaporetripforselectemployees Abusivecustomerreportedtomanagerwhowilldi tl d l ith hi k t t ldiscreetlydealwithhimevenaskcustomertoleave

Closeinteractionwithworkers(Rajagopal saysheistheunion leader)unionleader)

Clearpromotionpolicy Employeebenefitsgalore seelistp y g

Employee benefitsEmployeebenefits Annualfaretogotonativevillage 2childreneducationuptopostgraduation sameschoolastheone

ownerschildrengoto Newclothesduringfunctions/festivals;alsoforspouse Life and medical Insurance policyLifeandmedicalInsurancepolicy EmployeeESIpaidbycompany Attendantandfoodiffamilymembergetssick Hospitalisationbenefitsinprivatehospitalp p p ParentsgetRs200pm InvestmentofRs10kperdaughterformarriage(Maniammal

marriagescheme) onedaughteronlyperGovt policyi h f id IncentiveschemeforTV,Fridgeetc

Vehicle aspercategory Phoneathomeforkeyemployees

Proposed house buying scheme Proposedhousebuyingscheme

SAS best company to work for in USASAS bestcompanytoworkforinUSA

CEO says:CEOsays:

Contented cows giveContentedcowsgivemore milkmoremilk

justtakecareofyouremployees everythingl ill b t k f!elsewillbetakencareof!

Interviewwithapartnerofmr.lrajagopal

1)Annachi Rajagopal,isadetailsperson,andhencesetab h k i F d T t Q lit H i d S i Thi tbenchmarkinFoodTaste,Quality,HygieneandService.Thissetthemarketafire,andestablishedhisbrand.

2)Heisagreatvisionary. Hescaledhisbusinessslowly,ashe) g y y,hadtoparallelly developateam,whosemembersinternalisedhisobsessionfortaste,quality,hygiene,andservice.

3) Hiscoreteamofabout2000people(Managers,Chefs,andS i S i St ff) h d l d hi litiSeniorServiceStaff)havedevelopedownershipqualities,and runtheorganisation now.

4)Annachi takescareofhisemployees,ashefirmlybelieves) p y , ythatwhentheyaretakencareof,theyinturntakecareofthebusiness.

Interview with a partner..contd.Interviewwithapartner..contd.

5)Annachi hasmadegreat contributionstothe) gSocietyatlarge,bycreatingthousandsofjobs,groomingseveralrestaurateurs,anddevelopinghis native land which is a very arid districthisnativelandwhichisaveryarid district.

6)WhileAnnachi hashadthevisionindevelopingp gahumongousbusiness,healsorecognises thechallengesgoingforward,forthenextgeneration,he already has plans in placehealreadyhasplansinplace.7)Ihavenot metanotherperson,whohassomuchclarityofthought.

A manufacturing co who is our clientAmanufacturingcowhoisourclient

Grew500%inlast5years! 10%netprofit! Hugeappetiteforgrowth 25% of revenue is from new productslast 3 years 25%ofrevenueisfromnewproductslast3years Widearrayofproducts;widerangeofcustomers Productsmadetoorder Notmorethan10%saleswithonecustomer;notmore

than30%withoneindustry Exportsandlocalsalesp Specialpurposemachinessuppliedbycustomer! Greatquality,designandR&D manyawards Owns up mistakes Ownsupmistakes

A manufacturing company contd.Amanufacturingcompanycontd.

Perfectmanufacturingatcentralfactoryandshifttosatellitefactorytnearcustomer

Takepowerintensivemanufacturingtostateswithsurpluspower Sweatassetsfully

h k l ff f Morethanmarketsalariestostaff;freecanteen;nounion CEOwearssameuniformasworkers;moulds people MarketingthruJVs Preventivemaintenance spareschangedafterstatedno.ofhours

evenifgood Setanexample personalexpensesseparatedfrombusiness

G d h h l P i ! GoodgovernanceeventhoughonlyPrivatecompany!

Modern day scaling upModerndayscalingup

YouTubeYouTube Firstvideouploaded2005 BoughtbyGooglein2006for$1.6B Todaywortharound$20B! RevenueCY:$3.6B! Unique US viewers per month (excl mobile) 133 millionUniqueUSviewerspermonth(excl.mobile)133million AverageUSusageminutespermonth(excl.mobile)31.7B Monthlyvideosviewedglobally:130B!

h i b h h i h MoresearchesinYouTubethanonanysearchengineotherthanGoogle!

100hoursvideouploadedeveryminute!

How did YouTube do it?HowdidYouTubedoit?

Byteamingupwithotherswhohavetheirowny g ployalfollowing

InOct11theyhelpedfinance100neworiginalchannels from celebrities online video creatorschannelsfromcelebrities,onlinevideocreatorsandHollywoodstudios

Spent $100MSpent$100M Nowcalledthemostefficientspendinhistory!

Example: Machinima caterstogamingcrowdandhas14.5msubscribers

its videos have been watched 2 Billion times a month!itsvideoshavebeenwatched2Billiontimesamonth!

Howdoestheworldslargestrestaurantcompanybyit l ?unitsscaleup?

YUMwith39000KFCs,PizzaHutsandTacoBellsistheworldsl tlargest;

Operatesin130countries Openedonenewrestaurantevery14hoursforlast16years!

i h ld b b ildi Itistheworldsbestteambuildingco. HasworldfamousleadershipprogramcalledTakingpeoplewith

youM t i t t l t I t t iti ! Mostimportantelement: Instantrecognition!

ProgramslikeWalktheTalkaward,Rubberchicken,PlasticHog! CEONovak:Imonearthtoencourageothers,liftlives,helpcreate

leaders inspire people recognize others leaders,inspirepeople,recognizeothers.

Few examples around the worldFewexamplesaroundtheworld

McDonalds quality, service, cleanliness andMcDonalds quality,service,cleanlinessandvalueformoney(RayKroc founder)

Cirque Du Soleil a $1B circus company!CirqueDuSoleil a$1Bcircuscompany!(Innovationandgreatestshowsonearth)

Southwest (Pick up assets in downturn, beSouthwest(Pickupassetsindownturn,bedifferent,actdifferent)

Netflix (cannibalises its own good businessNetflix(cannibalises itsowngoodbusinesskilleditsownDVDbusinesstostreamvideo)

Apple (Customers as roving fans)Apple(Customersasrovingfans)

Should you scale up?Shouldyouscaleup?

Daniel Isenberg HBR 2 minute checklistDanielIsenberg HBR 2minutechecklist Iveurgetomakesomethingtoimpactmarket Icansellthingstopeoplewhodontwantitg p p Ihaveagreatteam IvePolicies,proceduresandprocessesinplace, p p p IknowexpertsIcanturnto IknowMoneyisoutthereforagoodventure Iraisethebarallthetime;Imnoteasilysatisfied Iam/canhave thebestsalespeople

Should you scale up? Contd.Shouldyouscaleup?Contd.

Thinkingsmallisacrime Salesprocessstartswhencustomersaysno IfIstandstill,Iwillperish;Iscaleuporfadeaway Iknowhowtofindgreatpeopletoworkforme Closingasalegivesmethebiggestrush Itsimportanttoknowofabigproblemthecustomerhasand Lookforasolutiontothat

Itsnottechnologybutteam,organisation,marketingand Ambitiontosellthatareimportant

Ithinkandactlikeamarketleader Ivefireinthebelly

Ifyouansweredyestomostofabovescaleup!

Will I have obstacles?WillIhaveobstacles?

Ofcourse,yes, y Evenyourpartnermaynotwanttogrow AsGermanphilosopherArthurSchopenhauersaid Truthpassesthru3stages

First it will be ridiculedFirstitwillberidiculed Seconditwillbeviolentlyopposed Thirditwillbeacceptedasselfevident!

If you are scared of taking risks: Ifyouarescaredoftakingrisks: Youmiss100percentoftheshotsyoudonttake.

CanadasgreatesthockeylegendWayneGretzky

Whenmr.rajagopal scaleduphisb hgrocerybusinessinthepast

Toimprovehisgrocerybusinesshebuilta2storiedbuilding Itscostescalatedtoomuch Hehadtopledgeeverythingheandhisfriendhad Rentwasjustenoughtopayloaninstallment DailybusinessinstoreplummetedfromRs 5000toRs 500 Hedelayedpaymentstowholesalersandhadloanseverywhere Hecouldnotevengetriceforhishome Hiswifewept,whyisthissorrystateofaffairsinthishouse? Hesoldthebuildingultimately

Justtoshowallscalingupdoesnthaveafairytaleending! Dontbitemorethanyoucanchew!

How to scale up?Howtoscaleup?

Haveclearvision DoaSCOT(strengths,concerns,opportunitiesandthreats) DoaPEST(political,economical,socialandtechnological) Systematize have policies procedures processes Systematize havepolicies,procedures,processes GetaCEOifyouarenotCEOmaterial

GooglebroughtEricSchmidt;RedzoneroboticsbroughtChrisDunkerleyDunkerley

Hiretofillgapsinyourskillset Bringinpeoplewhoarebetterbutwhomeetyourculture Delegate Adequatecapital thinkVC,partners

How to scale up? Contd.Howtoscaleup?Contd.

ProductVservice Expandproduct/servicevGeography BrickandmortarVOnline Outsource

Ubiquiti networksisa$300MTurnovercompanywithover25% margin which outsources everything including SALES!25%margin,whichoutsourceseverythingincludingSALES! CEOsays:Myaimistobuildsomethinggreatasefficientlyaspossible

I f l k t l t f l Informalworkstyleto formal Properfinanceandaccounts Infrastructure including IT InfrastructureincludingIT

RememberRemember

Customersarenotsameasusers Ryanairwenttosmallmunicipalairportshungryforbusiness(cafes,taxis,stores)andtheairportsevenpaid them to start a service!paidthemtostartaservice!

Firstusersnotsameasscalingusers Mostgamesarefirstprovidedfreetoprofessional

h d d h f lgamerswhosuggestmodsandthenfinalgamegoesonline

FirstproductnotsameasscalingproductFirst product not same as scaling product BAANofferedafreeERPtoSHELLandafterincorporatingalltheirsuggestionstookittomarket

makemoremoneyasaminorityh h ld l lshareholder saletoscale

Paraspharmamakersofmoov,kracketc Familybusiness

Soldmajoritystake(63%)toActiscapitalaPEinvestor2008forRs600crores

Businessscaledup NewCEORaghunandan Streamlined distributionStreamlineddistribution Internationalexpansion SAP Umbrella branding etc Umbrellabrandingetc

ReckitBenckiserboughtco.in2010forRs3260cr PromoterPatelmadeanotherRs900cr

Mantra for scaling upMantraforscalingup

1 Correct old mistakes1.Correctoldmistakes 2.Scaleup3 k i k 3.Makenewmistakes Gobackto1!

Scaling up in todays hitech worldScalingupintoday shi techworld

Thenewwayofscalinguporevenstartingup:y g p g p Movie: Kathalil Sothappuvathu eppadi wasasmallYouTubevideodonewithnorealbudgetanditwenti l Th th h d it k d t kviral.Thentheguywhomadeitwasaskedtomakeafullmovieandrestishistory.

Songs: A 40 second clip in a HBO Movie catapulted "ISongs:A40secondclipinaHBOMoviecatapulted Iloveit'totopofthechartsfromnowhere

NewProduct:JustputyourideaonkickstarterPebble:$TheEpaperwatchgot$10Movernightforitsidea

makers(Theyjustwanted$100,000!)Imaginebeingamulti millionaire in a few hours!multimillionaireinafewhours!

Sir donald cohen apax founderSirdonaldcohen apaxfounder

Y b i illYourbusinesswillgrowtothesizeofgyour vision!yourvision!

From the biggest in this game..Fromthebiggestinthisgame..

SOURCESSOURCES

InspiringPersonality Mr.P.Rajagopal HotelSaravanaBhavan~GetI i d !!!!!!! D k R hInspired!!!!!!!DeepakRaghuraman

IsetmyheartonvictoryAutobiographyofMr.Rajagopal ownerSaravana Bhavan

Saravana Bhavan Wikipedia the free encyclopedia SaravanaBhavan Wikipedia,thefreeencyclopedia SaravanaBhavanAnnachiRajagopal Cleanerboytoownerof

mostsuccessfulchainofrestaurantChennaiStartup GreatMindsDiscuss IdeasDiscussIdeas

Howtotakeyourbusinesstothenextlevel ,Howtotakeyourbusinesstothenextlevel BusinessNews News MSNIndia

TakingYourHostingCompanytoNextLevelLearnfromMistakes,g g p y ,CorrectThem Rinse&Repeat!

PrivateequityfundActisCapitalhashelpedIndiancompaniesscaleuptothenextlevel

Sources contd.Sourcescontd.

FindOutifYou'reaScaleUpEntrepreneurwithThisp pTwoMinuteTest DanielIsenberg HarvardBusinessReviewI f il b i tti ht ith f il Isyourfamilybusinessgettingcaughtupwithfamilyissues

Million Dollar Tip #4 Scale Up Your Work PersonalMillionDollarTip#4ScaleUpYourWorkPersonalExcellence

ScalingUpWhenYoureStillSmallChiefExecutive.netChiefExecutiveMagazine

ScalingUpYourBusinessToAHigherLevel WhatCould Be Stopping You The Learning 2 Live BlogCouldBeStoppingYouTheLearning2LiveBlog

Sources contd.Sourcescontd.

AnEntrepreneursDilemma WhentoscaleupyourbusinessBPlanExpertsBlog BusinessPlanExperts,BusinessPlanConsultants,BusinessPlanWriters

ThebiggestchallengesforentrepreneursonstartupsBusinessToday

ScalingUpIntuitSmallBusinessIndia 3 Mistakes Made in Scaling up New Ventures Charles3MistakesMadeinScalingupNewVentures Charles

BadenFullerandIanMacMillan HarvardBusinessReview ScalingUpYourBusinessStartupKashmir! Eleven Lessons for Scaling Up Fast Company Business + ElevenLessonsforScalingUpFastCompanyBusiness+

Innovation WhyitssohardforsomebusinessestogrowinCanada

The Globe and MailTheGlobeandMail

Sources contd.Sourcescontd.

Infinite Vision by Pavithra K Mehta andInfiniteVision byPavithra K.Mehta andSuchitra Shenoy (StoryofAravind eyehospital)hospital)

HowYouTubechangeseverything FortuneAug 12 13Aug12,13

GreatJob FortuneAug12,13