Lessons from the Flipkart story are less about business strategy and more about character traits

The recent $16 billion acquisition of Flipkart by Walmart is a watershed, not just for the Indian technology sector but also for Indian business as a whole. It’s the largest deal Walmart has done till date. It’s the largest ecommerce acquisition in the world. Early investors such as Accel and Tiger Global made 400 times their investment. This is significant even by Silicon Valley’s atmospheric standards.

Though Flipkart’s numbers are impressive, even more impressive are the lessons learnt. The first lesson is insight. When Flipkart started in 2007, e-commerce was very small and most of it was travel related ticketing. Flipkart’s bet on e-commerce growth had multiple legs: improving connectivity, increased consumption by India’s youth, and better logistics infrastructure. In hindsight these bets look obvious, but it was not the case then. Flipkart’s astuteness made it bet on electronics and fashion, today the two top categories after travel.

The second lesson is trust. Flipkart’s heady growth would not have happened if managers were not empowered to make decisions. It was a two-way trust. For the company, it was faith in its army of techies and marketers that they could deliver in the high stakes game. For managers, it was the confidence that wrong decisions – inevitable in any business – would not be held against them personally. Political commentator Francis Fukuyama’s pioneering study on culture shows that prosperous countries tend to be those where business relations between people can be conducted informally and flexibly, on the basis of trust.

Related to this is the third lesson of ambition. Flipkart had crossed $3 billion in revenues on its 10th anniversary. It’s clipping a growth rate of 30%. Companies like Flipkart consciously plan for a tenfold growth in business. This  exercise is both invigorating and humbling. Companies have to learn new skills every day. And unlearn a few along the way! All six aspects of Galbraith’s Star Model – strategy, structure, people, decision making, reward systems and symbols – have to evolve in synch for the new incarnation. Most businesses falter here.

A byproduct of such ambition is the fourth lesson of tenacity. Almost every great business i have seen has had an  existential dilemma sometime or the other. As recently as early 2017, Flipkart faced markdowns in valuation from some of its blue chip shareholders such as Morgan Stanley, Vanguard and Fidelity Investments. That was the fifth consecutive quarter of valuation markdowns. Many questioned Flipkart’s staggering losses of $1.2 billion that year. The company was seeing top level exits.

Sachin and Binny Bansal moved from running day-to-day operations of the company. Kalyan Krishnamurthy was brought in to stabilise operations. After a series of transition hiccups, in the face of Amazon’s aggressive onslaught, he did not make a tentative or conservative detour. His aggressive strategy was a classic play-to-win gameplan: boost spending on promotions and dominate India’s festival-season shopping. It worked! The fifth lesson is alchemy. In mythology, alchemy is the art of turning ordinary metal into gold. In people, it manifests as charisma. Or, as was often said of Steve Jobs, he had a “reality distortion field”. He would win over the sceptics and confound the critics.It’s the same for Sachin, Binny & Co. They raised $6.9 billion in equity in 16 financing rounds, one of which was a $1.4 billion round just a few months after Flipkart’s low period in early 2017. This dynamism gave the underdogs the magnetic appeal to attract the best talent and the capital to be the last-man-standing in an otherwise capitulating sector.

These traits need not apply to businesses only. And Flipkart is just a metaphor for an entrepreneurial mindset. Athletes, doctors, social workers, policy makers – all will appreciate these human qualities. Perhaps the best ode to these doers comes from Theodore Roosevelt: “The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause.”

Source : the times of India