CKS' Sood: It's actually serious business

What's common to a Bangalore-based design hot-shop, an exhibition of unique media devices used in India, and the desire of every company, Indian and global, tech and non-tech, to use technology in such a way to create products and services that can be used by people who aren't conversant with technology (think handheld computers targeted at rural areas, village ATMs and the like)? The answer is Doors or Doors of Perception (the name, and the headline of this piece, together make up almost half of William Blake's famous quote, borrowed first by Aldous Huxely for a book he wrote while on LSD, and later by Jim Morrison of The Doors) 8, a conference that will be held in Delhi in the third week of March (the exhibition is an add-on).

Big deal? Actually, Doors is. A participant at an earlier conference described the event as "the nearest thing the design world has to a World Economic Forum" and Wired magazine called it a place where "top conceptual thinkers ruminate on sticky new media subjects ... key steps in the transition from products to services".

The Bangalore-based design firm is Center for Knowledge Studies (CKS), a technology design firm that obsesses more about usability and interface than the actual technology itself. CEO Aditya Dev Sood (see In Your Face, In Your Space, BT, June 20, 2004, where Sood talks about the use of ethnograhic research in designing technology products) first encountered Doors... four years ago when he attended a conference in Amsterdam-the seven previous editions of the conference happened there and explored themes drawn from technology that had implications for almost everything; the theme of Doors 7, for instance, was Flow, which dealt with the design challenges of pervasive computing-and has since been trying to organise a Doors conference in India (he has organised two abbreviated versions Doors East, in Ahmedabad and Bangalore in 2001 and 2002).

Sood was driven by the same motive that drives several transnational technology firms. Today, a large number of products are being created for emerging markets. Designers and companies need to understand how consumers in these markets use and react to these products. And the learnings may not merely necessitate a new design; they could entail a whole new way of doing business, a new business model. Sood himself is thrilled by the fact that some 150 design students from schools across India will attend Doors 8 (its theme is Infra, for infrastructure). "Hopefully, they'll learn something they can take into their professions," he says. Some research on how people use information they glean at such conferences may not be out of place.

-Kushan Mitra

A New Path Upgrade
Semi-conductor pioneer Vinod Dham is back with a better version of his, er, VC fund.

Dham's Law: India=(VC)2

You can count on a chip industry veteran to keep striving for an upgrade. Two years ago, the man who built the Pentium chip, Vinod Dham, set up a fund called NewPath Ventures. He would, he then said, invest in promising start-ups with an India angle, especially those seeking to operate in the rarefied reaches of the semi-conductor market.

Now, 30 months on, after attracting $100 million (Rs 440 crore) in investment, and funding three companies-Insilica, Telsima and Nevis Networks-Dham has realised there is more to the India story.

Not that the three are doing badly. Insilica, backed by Flextronics (an electronics manufacturing services major that will make the chips) will begin shipping its system-on-a-chip (soc in trade lingo) sometime next year; Nevis' security solutions are close to hitting the market; and Telsima, a broadband solutions company, looks set to parlay the booming domestic telecom market into a commercial advantage. "There are massive opportunities in India beyond investing in seed-stage companies," says Dham. "There are several companies in later stages of development that are as promising."

The result of this realisation is a second fund that will focus on companies in a broader spectrum of the technology space. In November last, Dham actually chaperoned a delegation of investors, including venture capital firms such as New Enterprise Associates and CMEA on visits to companies in Bangalore, Hyderabad and Pune to understand investing opportunities in India, in these companies, or, in some cases, in the industries in which they operated. One company they visited was Sasken Communication Technologies, a Bangalore-based firm on whose board Dham sits. Another was Hyderabad-based pharma major

Dr. Reddy's Laboratories. That's understandable: both the telecommunications software, and the pharmaceutical research and manufacturing spaces are booming. The investments, Dham expects, will be announced anytime now.

-Rahul Sachitanand

WISHLIST
Three Things FIIs Want RIL To Do

Foreign institutional investors (FIIs) would like everyone to think that they place great store by that elusive thing called corporate governance, although as one Mumbai-based investment banker says, "As long as the company puts forth good results, not many FIIs may be concerned about governance." Still, this writer spoke to a sampling of the species on Reliance and here's a wishlist.

» Everything the company does should be above board from the legal and compliance point of view. Although the matter is before the courts, there is enough to suggest that RIL subsidiary Reliance Infocomm flouted existing regulations in the passing-off-international-calls-as-local-ones scam.

» Investors should not learn about the company from the media; the management should be more transparent. From details on the companies that control the family's holding in RIL to those on investments in Reliance Infocomm, investors have learnt of everything through reports in the media.

» Independent directors should be truly independent. Rather than go along with promoters, independent directors should focus on, well, governance.

-Roshni Jayakar

CORPORATE
3G Troubles
An expert on family business expounds the 'shirt-sleeves to shirt-sleeves in three generations' theory.

With business families in focus (we won't go into the details), it's only natural that experts on family business make a beeline for India. One such, Marshall B. Paisner, a first-generation entrepreneur and author of Sustaining The Family Business: An Insider's Guide To Managing Across Generations, was in Bangalore recently to help the Rs 2,500-crore GMR Group (yes, it is family owned) address some challenges (he also claims to be working with a few other Indian groups he'd rather not name). Paisner, whose research showed that there is only a 16.33 per cent chance of a family business surviving reaching the third generation (the first generation rolls up its sleeves, he explains, and works hard; the second sports full sleeves and lives it up; and the third loses it all and returns to bared arms) spoke to Business Today's Venkatesha Babu on managing the family business. Excerpts:

Why are family businesses prone to extinction?

I have been watching with interest the developments regarding family businesses in India. Family conflicts have been the most important cause for the split and ruin of family businesses. Succession is not an event but a process, which involves continuous preparation. When individuals, families, companies and organisations fail to do an effective job, it leads to all kinds of problems. In the US, for instance, 90 per cent of entrepreneurs would like to be succeeded by family but this happens in less than 30 per cent of the cases. And less than 2 per cent of family businesses last a 100 years.

So, what's the big deal about family businesses?

The passion, commitment, drive, vision and energy, which an entrepreneur brings, cannot be substituted by a group of professionals. However, let us not confuse ownership with management. A company can be completely family owned but run by professionals.

Any other advantages?

Actually, there are several. Unlike most other businesses, family-owned ones do not function with an eye on the next quarter. Family-owned firms can afford to take the long-term view. Also, they are good at swimming against the tide or the prevalent wisdom. They can retain capital without diluting it for the long-term good of the organisation.

Conflicts apart, what if the next generation wants to sell out?

The two main tenets in a family business are: one, family value is more important than market value, and two, a legacy of opportunity is far more valuable than a legacy of wealth. My research shows that the after-tax return on investment of dollars from the sale of a business is always lower than the return on the business had it been retained.

Are you saying families should never sell out?

No. If a new technology, for instance, threatens the long-term viability of a business, it makes sense to sell out and, well, start a new family business.

Helping Make Breakthroughs
Top auto ancillaries get a new guru of strategy.

Shiba-san: He's spread the TQM gospel across the globe

Since February 2, a short and cheerful Japanese has been camping at Surinder Kapur's (of Sona-Koyo Steering) farmhouse on the outskirts of Delhi. But the man, a former professor of total quality management (TQM) at MIT and regarded as the father of "breakthrough management", is on no holiday. Instead, Shoji Shiba is here on a mission: "to help frontrunner auto ancillaries in India run faster", says the Deming Prize winner. An Indophile, Shiba-san has helped spread TQM in several other countries like the us, Hungary, France and China, and now in India he's going to help a select group of companies make the TQM leap from everyday quality management to breakthrough strategy. Says Shiba, 72: "India needs a new plan for manufacturing."

Over the last six months or so, Shiba has already explained the concept of breakthrough to the top management of his "learning community". He is currently touring India to explain the methodology and tools one needs to make breakthroughs. There are three parts to breakthrough management, says Shiba. One is creating new businesses or new customers. The second is about nurturing and protecting breakthrough projects within the organisation (he calls such organisations "ambidextrous"), and the third is the abilility to "see the invisible and the unknown". Using a five-step discovery process, Shiba is training Indian auto ancillary CEOs to anticipate global industry changes and leapfrog to a higher level of competitiveness. Don't think that's possible? Just ask Toyota, one of the many companies he's advised.

-R. Sridharan

Reliance's Rollbacks
Does undoing follies absolve it of guilt?

The chinks in the armour of India's once most powerful corporate are getting bigger. The latest skeleton to tumble out of the group's closet and embarrass the elder Ambani scion, Mukesh, is the revelation that three companies-Fairever Traders, Prerna Auto and Softnet Consultants-to which Reliance Infocomm had allotted 10 million shares at Re 1 apiece, were allegedly linked to former telecom minister Pramod Mahajan. When the controversy broke, Reliance issued a statement that sought to clarify its position. It admitted that it had given some equity to the three nominee companies of Ashish Deora (who was linked to Mahajan) as a "nominal compensation" for helping the company in obtaining "in-building permissions and associated Right-of-way permissions". However, since "Deora was not able to fulfil his commitments... the shares were returned to the trust," the statement concluded, naming neither the three companies nor the dates of the share transactions. Mahajan, however, has admitted that his son-in-law Anand Rao works with India Online, a company co-promoted by Deora. In November, Reliance had done another volte-face when Mukesh Ambani had to give back the 12 per cent sweat equity (now worth some Rs 5,000 crore) when it transpired that he had been issued the shares at a face value of Re 1 against Rs 250, which parent Reliance Industries was made to pay (Reliance Infocomm subsequently denied this). But the moot question is, does undoing its follies absolve Reliance of its guilt? It may be too much to expect an answer from the regulators.

-Sahad P.V.

SCI-FI
Biotech Wars

Biotech industry in India may be nascent and all of Rs 3,000-crore worth (in revenues), but that hasn't stopped a multitude of agencies from fighting fierce battles over biotech seminars. On February 9, a Confederation of Indian Industry (CII)-organised two-day exhibition-cum-conference on biotech took off in Delhi. Even as the meet got into its second day, Bio Asia, a three-day-event, kicked off in Hyderabad, with once again the Secretary, Department of Biotechnology, M.K. Bhan, inaugurating it. While both the events were in progress, a third show on chemical, pharma and biotechnology was put on by the Chemtech Foundation in Mumbai. Needless to say, industry executives were overwhelmed. "There is a flurry of interest from all the states, since no one wants to be left behind," says Kiran Mazumdar-Shaw, CMD of Biocon. Adds Varaprasad Reddy, Managing Director, Shantha Biotechnics: "We need to ask what is the end objective of such seminars. If it is to stimulate growth in the industry, then we need a concerted effort.'' The US, for example, has just one annual event, bio. Warns Krishna M. Ella, CMD of Bharat Biotech: "We could end up creating a lot of hype for many of the students, as yet unemployed, attending these meets." Not to mention investors.

-E. Kumar Sharma