Tuesday, October 10, 2006

The 10X hypothesis on Entrepreneurship

If we look back the Entrepreneurs in India and their background, one pattern comes out very clearly. They were mainly from ‘family-oriented’ businesses and I can quote numerous examples like TATAs, Birlas, Ambanis, Godrej and Mittals. Individuals starting from the scratch and becoming successful was less heard in India, till the economy got opened up in 1991.Even after a decade after that Entrepreneurship is not very popular among Indians. Regular salary from a MNC, 2BHK apartment in any of the metro and Honda City cars are the necessary requirements for people and Entrepreneurship not even comes last in that list. For a long time a question was going on in my mind ‘What stops anyone in India becoming an Entrepreneur?’ Of course the first and big reason was the adverse economic conditions that were prevailing in the ‘pre-reform’ times in India. But there is ‘cultural’ reason behind that as well. Then the next question comes up to anybody’s mind is what does a country’s culture got to do with Entrepreneurship?

Recently I was reading the book ‘Marketing Maayajaalam’ in which the author presented some interesting facts. Based on lots of research experts found that there are three ‘Institutions’ which play major role in anybody’s life: Family, Educational institutions, Religious places (like temples, mosques, churches). In the western world the divorce rates are very high (as much as 50%). Most of the children are brought up by single parent/step father or mother, because of which children are not emotional towards family. Going to any university and getting a degree is not given much importance. As a matter of fact Bill Gates and Steve Jobs are university drop-outs. Also following any particular religion also cannot be forced on any individual because of the so called ‘free’ culture. In conclusion a westerner doesn’t derive his security from his family, university or religion and starts embracing ‘capitalism’. Since Entrepreneurship has got to do a lot with capitalism and he finds his security in following the business he goes on to make the business successful. In contrast for any Indian, these three Institutions play a major role in his life and naturally we get ‘emotional’ towards them. Most of our lift time is spent in taking care of family and leading a ‘comfortable’ life instead of venturing into something new.

But if we look into the big picture, Entrepreneurship is the only way out for countries like India to solve the problem of poverty by generating employment. In fact the first generation IT companies like TCS, HCL and Infosys have successfully demonstrated what changes Entrepreneurship can bring into our country. These companies have proven the ‘wealth generation’ formula in India.

Having said that, Entrepreneurship is never been easy in India. People need to fight against the gravity to make is successful. If 3X energy level required making a company successful in any western country, in India we need 10X energy. The extra 7X is spent towards fight against mindset, government, family and society. This is what I call as ‘10X’ hypothesis. I can give two examples to prove my 10X theory:
  • When Mr.Ramadorai (CEO of TCS) joined Tata & Sons in 1970s (There was no TCS by then) they imported a computer system by paying 120% government import duty. Please note the number 120% is not a spelling mistake. When they received it, nobody had any idea of operating that computer. In fact Mr.Ramadorai traveled to Canada to learn how to operate the computer.
  • When Murthy started Infosys he had to travel ‘seven’ times to Delhi to get customs clearance for his imported computers. Apart from that he dealt with government officials to move it to Mumbai.


At the same time if you think of any western country these things would have not even existed. They would have struggled with the ‘business’ but not with the ‘system’ whereas in India we need to fight with both of them. In conclusion, I strongly believe Greg Chappell’s theory: ‘Emotions leads to actions, reasons lead to conclusions’. As long as any individual is emotional towards anything the action will automatically happen irrespective of adverse conditions. The energy required may be in the order of 10X but it is indeed the need for our country.

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