Think “unreasonable”

There are plenty of ways to measure the success of a business. Revenue is one. Profitability is another. Market share is always important.

In today’s competitive environment, if you can command 20% of your market, you’re doing well. If you’ve got 30%, or even 50%, you’re almost certainly a focused, successful, fast-growing company.

Right? Well, maybe not.

I am in New Delhi in India for a conference organised by hardware giant Dell as part of their annual small business awards program. Four businesses – including QSR International from Australia – are represented, having won recognition for the way they’ve used technology to grow.

The two-day conference has been built around the idea of managing growth, and particularly the step from an SME to a large company.

We’ve heard from a string of very interesting presenters, including marketing expert Jessie Paul on the art of frugal marketing and entrepreneur Neeraj Roy, who runs India’s largest online entertainment content company (it’s called Hungama) and believes mobile has now overtaken online as the single most important medium for most consumers.

But for me the most striking quote of the day came from Rajan Anandan, the managing director of Microsoft India, who is also an angel investor in his spare time.

When talking about the challenge of driving growth, he said there was one thing he was always wary of when talking to entrepreneurs.

“I get very worried when companies tell me they have more than 10% of the market.”

It wasn’t that these companies weren’t successful, he explained, but that these companies were in danger of reaching their growth limit.

If you are a $10 million company with 40% of your market, how on earth can you expect to become a $100 million company, or a $1 billion company?

What Anandan argues is that companies with more than 10% market share must try to redefine their market.

If you dominate a niche (say, for example, the transport sector) you need to think hard about how you can adapt your product or service to other markets.

Anandan says entrepreneurs need to be “unreasonable” about their definition of the market – or in other words, think big.

It’s an interesting way of looking at the question of growth and one that might be confronting for entrepreneurs who have been consistently advised to focus on a niche.

But the idea lends weight to the theory discussed by another entrepreneur who addressed the conference, Satya Narayanan, who founded a highly successful education business called Career Launcher.

Narayana said entrepreneurs need to step out of their business to reinvent it every three to five years – part of this might involve the redefining of the market you’re targeting.

Narayanan also had a great phrase that might sum up what it takes to survive in the hyper-competitive world of Indian business – “entrepreneurial humility”.

“I know there is a 22 year-old who is waiting to take me apart,” he said.

Nothing like a bit of pressure to keep you motivated, is there?

James Thomson’s trip to India was sponsored by Dell