If one were to describe Harsh Mariwala's story in numbers it would be - from 40 lakh in 1971 to 4,000 crore in 2012. His ambition now is to create thousands of Harsh Mariwalas through a new programme that he is launching under his favourite buzz phrase personal, social responsibility. Talking about the new programme the acronym of which is ASCENT, Harsh Mariwala, CMD of Marico explained that accelerating and scaling enterprises sums up what it aims to do.
"It is very important that all entrepreneurs look at what they can give from their personal wealth from their personal time. There are many options available. If you do not feel like giving your own time, you can give a donation to a hospital or some education institution. But I was clear that whatever I had to do from my personal angle had to be driven through my own passion. It had to be driven through my own personal involvement and time," Mariwala said.
He added, "My whole objective of doing this was to bring in awareness among all the entrepreneurs, teach them through thought leadership initiatives, form trust groups within themselves so they can learn from each other."
According to him, entrepreneurs play a very important role in driving the growth of the economy.
While the programme began with a group of 100 entrepreneurs and enterprises, a confident Mariwala foresees adding 10,000 entrepreneurs over a period of time.
Explaining their role, Mariwala said, "Instead of individual mentoring, we will form trust groups of entrepreneurs who learn from each other. So our job is now going to be selecting good quality entrepreneurs who are very ambitious, who are keen to learn from others and who are keen to give something back to other. I have seen that in a diverse group of ten entrepreneurs which will form a part of a trust group, which does not compete with each other. So we will ensure that in that group there is no competition wherein a high degree of trust is established and we play the role of a facilitator."
Here is the edited transcript of the interview on CNBC-TV18.
Q: Is your aim to to create thousands of Harsh Mariwalas?
A: Absolutely. It is required because entrepreneurs add a lot of wealth to the society and to all the stakeholders whether it is the owners, employees, associates and to the society. So entrepreneurs play a very important role in driving the growth of the economy. If I am able to do that, I will give my personal input into making this happen.
Q: Tell us about how ASCENT will work. What do you hope to achieve with it and what is the process through which an entrepreneur can be part of this ambition of yours?
A: Ascent stands for: A is for accelerating, SC is for scaling and ENT is enterprises. Therefore, accelerating and scaling enterprises, in a way, sums up what ASCENT aims to do. As you mentioned earlier, it is a part of my personal social responsibility. I also drive the corporate social responsibility in Marico through Innovation Foundation.
But it is very important that all entrepreneurs look at what they can give from their personal wealth from their personal time. There are many options available. If you do not feel like giving your own time, you can give a donation to a hospital or some education institution. But I was clear that whatever I had to do from my personal angle had to be driven through my own passion. It had to be driven through my own personal involvement and time.
I started identifying this area about four-five years back and began identifying what are my passions. One of the passions was entrepreneurs. The other passion is innovation, which I am driving through the corporate social responsibility and the third is preventive health. And out of this, I chose entrepreneurship because I thought that's one area where I can add substantial value.
I have seen that from my own personal experiences when we were a small company, I had do a lot of things on my own, and then as we grew bigger, I had to get things done. Once you are large, you are influencing things, you are not even getting things done, you are influencing others. So there is lot of reinvention which occurs at different stages in an entrepreneur's life.
Unless the entrepreneur is willing to reinvent himself, he will just get caught into managing day-to-day activities because if he is expanding, he will need to take good quality talent and delegate, he will have to trust people. Once he still further expands and becomes a larger public company in the new world, he will have to work with the board of directors and the skills required to manage a small to a medium to a large organization are very different.
My whole objective of doing this was to bring in awareness among all the entrepreneurs, teach them through thought leadership initiatives, form trust groups within themselves so they can learn from each other. This is something which I have experimented for the last one year.
Q: When you say experimented as in you have already reached out to mentor entrepreneurs?
A: It was not mentoring. Let me start by saying that I started an award scheme for women entrepreneurs in Mumbai and I realized that just to get the entries from those women entrepreneurs it was a difficult thing. So I said this is not the right way to go forward and then I started speaking at The Indus Entrepreneurs (TiE) and started working with individual entrepreneurs to mentor them.
I realized while mentoring that each case is a different case and you can only impact a few numbers because beyond a point if each entrepreneur requires individual mentoring and it requires a flexible approach depending on his set of issues.
My ability to impact large numbers would be limited. So I had to rework my model and basically arrive at how I impact large numbers. Starting August 15, with a group of 100 entrepreneurs and enterprises the dream is much bigger, we want to tap 10,000 entrepreneurs over a period of time.
Q: What are you going to be doing, are you going to be handholding, funding, everything?
A: Instead of individual mentoring we said that can we form trust groups of entrepreneurs who learn from each other. So our job is now going to be selecting good quality entrepreneurs who are very ambitious, who are keen to learn from others and who are keen to give something back to other.
I have seen that in a diverse group of ten entrepreneurs which will form a part of a trust group, a trust group which does not compete with each other. So we will ensure that in that group there is no competition wherein a high degree of trust is established in the group and we play the role of a facilitator.
Q: What will you facilitate? Will you go the full range from financing to handholding, to advisory, to being on their boards?
A: I will try and cover what you are saying. I think what we will do is initially for a period of four months for each trust group we will have facilitator from our side. The role of the facilitator is to ensure that the group dynamics work in a right manner and normally in a group of ten entrepreneurs.
There are lots of day to day issues which the entrepreneurs face for e.g. somebody may have a strike, somebody may have a problem with promoters, somebody else may have attraction and retention of talent, how to prepare a business plan. So what they will do is through a structural process, they will talk about their problems and others will add value to the problems.
Q: Is it like a therapy group?
A: Not a therapy group but basically a learning group, a trust group which learns and levels each other, you bring good relationship, you learn a lot, you get newer insights and many a times entrepreneurs realize that all other are also facing similar problems, its just not me who is having problem.
Q: So it's a sharing of knowledge, experience etc.
A: Sharing of knowledge, sometimes its just to share because many a times you may share that at your home with wife or a friend but until another entrepreneur gets deeper picture or better understanding of what you are facing. So it really works and I am very confident that this kind of trust groups will work. Over a period of time we will train two members from the trust group as moderators or as facilitators to train the trust groups.
Q: I am not hearing anything about funding in this; this is not a new fashioned venture capital fund of any sort?
A: No, it is not.
Q: Does that mean you are not going to fund?
A: We are just going to provide knowledge through various mechanisms, one is through internal discussion with the trust group, we have identified something like 15 different topics. Somebody from Marico or from outside will speak to these groups about various topics, how to prepare for this business, how to attract talent, how to organize funding.
So there will be a lot of learning through these lectures in trust groups. Over a period of time, we will have a convention, sharing of best practices, best scale ups, they will share with others, we will call thought leaders.
Q: Why have you left funding out of the picture?
A: Because we plan to invite venture capitalists to be a part of this group.
Q: Why not put your personal wealth?
A: At this stage, I don’t want to mix that because my whole objective is not a business objective, it is more to give something back.
Q: Since you have been able to identify in your interaction with these trust groups promising entrepreneurs, would you not want to extend that support to financial support as well?
A: First of all, the skill requires managing a venture capital in a very different way than what we are trying to do. At this stage, I want to mainly concentrate on giving back. At some stage over a period of two-three years, if I find that there are enough opportunities for me to fund this, I could consider it later.
But at this stage, my thinking is to create an ecosystem of all those who are connected with entrepreneurs. You will have consultants, coaches, mentors, venture capitalists. If there are a lot of entertainers who have ideas, we will expose all these stakeholders to them so they also would learn from each other.
We will have many lectures, we will get thought leaders, we will have awards for best scale ups and then have a panel of leading industrialists critiquing somebody's plan for example. In this way, they will get lot of inputs from industry thought leaders and experts in terms of how to scale up the business.
Q: What kind of entrepreneurs should consider themselves appropriate for this programme? Are you looking at the absolute start-up stage or at a slightly more mature start-up stage, who should be applying to be part of this programme?
A: Good question. When you are at a start-up scale, you are still exploring, you are not sure of the business model, there are a lot of adjustments which needs to be done in your business model. So considering the fact that we want to impact large number of entrepreneurs enterprises, we said that we will not have start-ups so minimum turnover in manufacturing of Rs 2.5 crore or in services of Rs 50 lakh and a profitable business, which has been in existence at least for two-three years.
Q: Profitable business?
A: Profitable or at least breakeven business, the challenges required in actually turning around the business for or being profitable is very different than a business player. The business model is, by and large, proven but it needs to be scaled up.
I think most of our efforts will be in how to scale up rather than how to arrive at a business model. Sometimes you may have those issues of arriving at the right business model but only after their business has reached a certain critical mass in terms of turnover and at least a breakeven situation in the bottomline.
Q: You have given me a broad idea of what these trust groups will do. Can you identify for me, what you thought were some of the key challenges that you faced as an entrepreneur who was trying to scale up?
A: I will go back to my days when I started working, and at that time, we were a small family-managed company. The key challenge, to sum up in those days, was how to attract good talent, how to retain talent, how do you manage the family interfaces with the talent because there is always a resistance. There are so many family members involved. In our segment, which is the FMCG industry, talent plays a very important role, in terms of brand building distribution whatever.
So how do you overcome those gaps? An entrepreneur will not take 'no' for an answer. If I am not able to attract talent, what I used to do in those days was to work with some experts and bridge those skill gaps by working with consultants. Then over a period of time, create an impact in terms of the image of the organization. Image building is important; it will have some problem, all of a sudden, some labourers will raise more demands but I think it is very important that if you want to attract good talent, you have to have good image at least in the job market.
If you are located in Masjid Bunder, how do you get an employee to come to the office. I used to call potential employees and prepare them, excite them about the job and then call them to office. So these small things play a very important role and then as you grow, you start recruiting talent from different backgrounds and different type of companies.
In my case, at one point when Marico began operation in 1990, it became a melting pot of cultures. How do you ensure that you create a strong culture? How do you delegate? How do you create the right systems, processes? How do you improve cost structures? How do you prepare business plan? I have gone through these things - this happened during the first 8-10 years of Marico, and when you go public, how do you live upto the challenge of going public, from quarterly reporting to managing, external stakeholders like potential investors.
Q: Can you recall instances where you wish there was an ASCENT in your time?
A: As I said, if you have a burning desire to succeed, you try and find your ways to resolve them. So I would try much harder how to overcome, say how to go towards a board managed company or in the bad market how do you turn public? Or in our case, initially when we went public, we were being associated with commodity companies or valuations were very single digit valuations.
All those FMCG companies are at a multiple of 25-30 and we are at multiple of 10. So what do you need to do to improve your multiple? If you are constantly searching, and if you have the desire to work on that, this would have been a far better option but one tried much harder and one was able to get all the answers.
Q: You have considerably professionalized your business over a time but you are still Chairman and Managing Director. What would you advise entrepreneurs to come and become a part of your ASCENT programme in terms of how hands-on they need to stay and how hands-off they need to stay?
A: I think a lot will depend on what stage you are in.
Q: At this stage of Marico, which I would imagine is probably at its peak, you are still fully involved in executive functions both as Managing Director and Chairman. What is your advice to entrepreneurs in terms of how much they need to hold on in terms of control?
A: From doing things to getting things done to influencing things. So I am at this age influencing internally. I am not day-to-day managing the company, nothing comes to me for pricing decision or advertising decision. Even if I am out for 20 day in a month, I do not think I will get a single phone call from my office.
It's very much independently managed, not to say that I am not involved. I am fully involved. I know what exactly is happening but not to control things. My role is to add value to what we are doing and to be aware of what is happening outside, bring the outside in the organization, get the best practices, look at all the external stakeholders whether it's the government or whether it is the shareholders or the imagine building for the organization. I think it's more to do with influencing rather than getting things done.
Q: How would you look at Mahindra Rise?
A: Mahindra Rise is more in the corporate so there will be some rub-off image. Like our Marico Innovation Foundation, there is some rub-off image to Marico’s image. In this case separately, there is some benefit and I always believe that if you go with an open mind, you want to do something good for somebody else; somewhere you will get some benefit.
Q: I am not trying to understand if there is a benefit. What I am trying to understand is what is prompting organizations like yours and promoters like you or Mr. Mahindra to turn to this space because the processes maybe different but what the two of you are trying to achieve, you through either ASCENT or the Innovation Foundation or Mahindra through Rise are in some sense similar or parallel?
A: A lot depends on what is the internal belief; and the belief is to actually what I can add back? Why is innovation crucial for India if India has to be a super power? or why scaling up enterprises is very crucial again to India? So I think a lot of it is getting that satisfaction of doing something rather than getting a mileage for it.
Q: How will you measure the success of ASCENT because there are no commercial terms to measure success. What is it that you set out in terms of one year or two years goals that will help you understand whether you have succeeded with what you have set out to do?
A: I was just looking at the numbers and I am happy to inform that we have just crossed the 100 number, which was our target.
Q: So do you have 100 entrepreneurs signed up?
A: More than 100; by the time we launch it on August 15, we will have 101-102, ten groups. If I add the total turnover of these 100 entrepreneurs, it's adding to 2,800 crore. It's adding to 12,500 crore employee base. The range is Rs 50 lakh-Rs 300 crore turnover and we have divided the trust groups depending on the size.
So there are six trust groups, which are up to Rs 25 crore turnover, two between Rs 25 to Rs 50 crore turnover and two which are above Rs 50 crore. Again the challenges, the issues faced by small and medium size are very different, so more than 50 crore turnover will be in one trust group or totally into two trust groups. Ten percent are women out of this which is good.
Q: Is this a good time to launch something like this; do you believe that the animal spirits exist in this economy at this point in time?
A: In my opinion, there is no good time or bad time. Any entrepreneur, even in bad times, has opportunities through innovation, through doing things differently. There will always be examples of somebody doing very well.
Separately, if you are not doing well if there is under pressure then these kind of things also will help in managing the challenge of the so-called bad times in terms of improving the cost structures, be more focused. So there is always a challenge in the business whether it's a good time or a bad time.
Q: In the many man-hours that you have spent over the last few months in selecting these 100, did you witness that the spirit of entrepreneurship has taken a bit of a beating in India over the last couple of years as we have seen governance deteriorate?
A: Not in the groups which I have interacted with but if you ask me based on interaction I had with my other industry colleagues, it all depends on what sector you are in. If you are in a sector where the government's permission is required whether it is steel or infrastructure or power or coal, they are the ones who are most impacted by this.
Q: Anybody else who needs to setup a manufacturing facility and need land might face similar trouble and if you are a startup entrepreneur or even in the early stages of your business then these kinds of delays, cost overruns could be crippling. So Marico might be able to tide through such a slowdown but a smaller company might not. So can I use you as a gauge of entrepreneurship spirit in the country based on your interactions in the last few months to understand what damage the last four or five years of poor governance and policy paralysis has done to animal spirits in the country?
A: I would say the damage is more at the sectors which I mentioned earlier. Direct damage - indirect damage is in terms of its impact on the GDP growth rate and the growth rate impacting the overall business climate in the country. To others, it's more of an effect of lower GDP growth rate, and to those industries which I talked earlier, has direct effect of the government policy.
Q: But the entrepreneurs you have interacted with do not seem to have lost hope or spirit?
A: I do not think it is that sad. We are looking at a lot of opportunities. In spite of whatever we say, we are still growing at 5.5% as compared to many other countries. So I do not see a mood of despondency. I think the problem is more at those sectors where the government intervention is high.