Risk and reward Featured

8:00pm EDT September 25, 2009

Sudip Nandy knows a thing or two when it comes to growth.

At his previous position at a billion-dollar company, he oversaw more than 18,000 employees and led nine global acquisitions and joint venture operations in two years.

Nandy, who is now CEO of Aricent Inc., a global technology and services company that focuses exclusively on communications, says the key to driving growth is to have a good blend of what you know and ambiguity tolerance — the things you don’t know because you haven’t seen them in the past and others haven’t either.

“In a growth market, it’s always new things that drive growth, and new things mean it’s uncharted territory. So one of the critical things to have is that tolerance in a growth market and having a good understanding of what we know and also knowing what we don’t know,” says Nandy, who is pushing his 8,000 employees at Aricent to work closely with customers, take risks and to move forward in trying new things to take the company to the next level.

Work with customers

It’s so easy to make your customer into nothing more than a data field in your spreadsheet, but to drive growth, see them as people. The mantra that Aricent uses is “co-develop, co-design and co-innovate” so that they’re actually working with the customer to find solutions.

“Most companies have a map … so you know the route to take,” Nandy says. “We say we don’t have a map — we have a compass. We know which is north and south, but we don’t know the route. We’ll work the route together with the customer — that’s co-creation. … If you have a map, you won’t change the game. If you have a compass, you probably can make a new road and change the game.”

If you want to lead with a compass, then you can’t come off as a know-it-all to your customer.

“The compass thing happens in the area when you don’t know and the customer doesn’t know,” he says. “Both of you have an idea, but you have to start working in those areas of, ‘What next? What next year? What for the segment?’ It’s a way of self-discovery with the customer.”

The only way you can figure out which way the compass is pointing is to get in front of your customer and the competition.

“Typically you have to go to your customers and you have to go to your customers’ customer yourself, and then decide, with in-depth interviews and observations of what they’re doing,” he says. “You collect and come back and think them through, and you analyze, and through the analysis, you get your own insights and the implication of what’s true in your market or what’s true in your subsegment and so on.”

For example, by observing customers’ customers, Aricent noticed that people in their 30s and 40s, when asked to push a doorbell, would use their forefinger; however, people in their teens and 20s, who text message more prevalently, tended to use their thumbs.

“Those observations are what make you design things in a different way,” Nandy says. “That comes through observation, and you have to do that kind of thing, and it makes it very important.”

When you meet with people though, it’s important to get in front of the right audience.

“It’s not an issue of what you discuss, but it’s equally important who you start the conversation with,” Nandy says. “When you’re doing a discussion on what new features to add on, which would make your product gain market share, it’s probably with a product management team … but if it’s what new products to launch, what new services to offer, what new end users to address, it is probably a C-level — a CEO or chief marketing officer that you’re addressing.”

By talking to the right people at your customers and competitors, you’ll start to get a picture of what’s needed and the things that can help move your business forward.

“We get insights, insights lead to ideas, ideas lead to very interesting conversations with our customers, [and] customers come up with good ideas,” he says.

But with so many ideas coming in as a result of the conversations and research, how do you know which ones may be viable? Nandy says that you have to go back to your customers and explain what you’re seeing and present possible problems, solutions and ideas to them.

“Say, ‘Have you thought of doing this for your customers, or have you thought about launching this kind of product or service?’” he says. “They sit up, they clear their desk, and they call their team. They say, ‘Here’s some interesting discussion,’ so you stimulate that. If you get that reaction, you know you’re on the right track.”

Take risks

When it comes to the HIV crisis in South Africa, you wouldn’t think that there’s much to be done aside from educating people about safe sex practices. However, Aricent teamed up with other organizations, and after doing their own analysis, they found that the larger problem was the social stigma that went with simply getting tested for the disease.

They also realized that about 85 percent of the population had wireless phones, so they worked with these other organizations to create a system where a citizen could send a text message to receive information on getting a testing kit. Citizens could then have the kit sent to them, do the test, send it back in and be notified by text again when the results came back. The program launched a year ago, and within the first three months, the number of people being tested for AIDS quadrupled.

“It’s not a money-making proposition, but you know there’s a problem available, people are trying to solve it, and if you have an approach to discuss, sometimes people will say, ‘OK, let’s try it out,’ and it becomes a case about how technology … can really solve a problem,” Nandy says.

This testing system is just one example of how you have to try out ideas when you see problems. Sometimes ideas will be successful, as it was for this case, but sometimes they’ll fail. Either way, you have to be willing to implement new ideas if you want your business to grow.

“There are some times you fail, but that’s the other important thing,” Nandy says. “For a growth industry, you have to be not scared to fail. You have to embrace uncertainty, and you have to be someone who is aggressive in seeking new experiences, and you realize that even if you fail, you have to believe that you have broadened your repertoire, you have enhanced your knowledge base, enhanced your experience base. That’s the approach you have to take.”

The problem is that so many people are opposed to risk, especially in a down economy, as the leader, you have to show them that it’s OK.

“Reward people who have taken good risks and do not penalize people who have taken a risk,” he says. “It takes some building because people are generally risk-averse.”

But Nandy also cautions that you need to balance risk taking.

“It should not be experiment and risk run amok,” he says. “So it’s a nice balance between making people comfortable with taking risks and, at the same time, have a finance team that isn’t really a team of accountants but a team of strategic finance, who understand that it’s a percentage game.”

For example, they should u

nderstand that you may fund 10 projects, and maybe you succeed in three or four, but the success of those three or four will more than pay for the other six or seven that failed. Doing this gives people room to try new things, but it also helps move your company forward because you’re not relying on one home run but instead a series of singles and doubles.

“I think I would be adverse to take one bet of a particular side of $10 million,” Nandy says. “I would rather take 10 bets of $1 million each. Each company needs to choose where its comfort zone lies.”

Move forward

Once you decide which ideas to move forward with, then you have to act quickly.

“Move on that and make those bets quickly and cut through the process,” Nandy says. “Then, what happens is, you succeed or fail very quickly, right? Then you can build on that quickly. Otherwise, as the whole thing lingers, your success is delayed, and so is your failure, which is sucking in more money from your kitty to do that kind of thing.”

First, create ways to measure your progress so you know if you’re succeeding or failing.

“It is not that you discuss with your customer only at the end, at one point in time,” he says. “You have multiple checkpoints. We intend to go back. There are checkpoints for different things. You define, maybe depending on how long the project is, 10 proof points or five proof points — whatever you define.”

The key to creating proof points is that they should be done before you start working on the project and be there to help show you if you’re on track or not.

“Ask the people who are doing it themselves to say, ‘At what point of time do you think you have failed?’ because you have to ask those questions before the start of the project because once you start the project, you slowly grow and you’re not objective anymore,” he says. “You’re part of the problem, so defining at what point to pull the plug on a project is something that you do before with the team so people are a little more sane and less married to the idea so they can make objective calls at that point in time.”

Some of the proof points may be technology-related, while others may be financial, and some may be related to your customers.

“Whatever assumptions or insights you had before you started the project, are they still valid or has something else come in the meantime to change the market or has something happened where people’s ideas have changed or have some technology come about that makes the whole thing obsolete and changes the whole idea?” Nandy says. “So it’s important to define those proof points and have a set of people who are external who help you assess it.”

It’s also important, as you move forward, to knock down the barriers to success that may exist, which include approving budgets and resources as well as simplifying processes. For example, if getting an approval for a customer takes seven days, find a way to cut it back to three. If it takes 72 days to hire someone and get him or her on board, cut it back to 62. By looking to simplify processes for your people, it increases their creativity and moves everyone forward in growth mode.

“Bureaucracy busting should be a constant exercise because it’s a human thing,” Nandy says. “We build it up trying to allocate work in the right way, so constantly looking at that is a critical component for having a company that’s growing and growing in innovative ways and doing things for customers that customers just love.”

How to reach: Aricent Inc., (650) 391-1088 or www.aricent.com