Succumbing to the Temptation of Grabbing Every Opportunity by shridharlolla


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									       Succumbing to the Temptation of Grabbing Every Opportunity
                                When an Opportunity is not an Opportunity

                                                  Dr. Shridhar Lolla
                                                 CVMark Consulting

Early Draft , Needs Editing
Mar 2011,
Bangalore, INDIA

(This caselet belongs to ‘respecting the business’ series of CVMark. It is based on real
life experience at InfoSoftCom- a software development firm; and several other new
companies )

Key words: focused execution, entrepreneur, startups, entrepreneurship, investment, funding, business
rules, business fundamentals, built to last, capacity building, entrepreneurial behavior, first generation
entrepreneur, neu-entrepreneurs, value system, culture, focusing behavior

Definition: Prime Rule (n)= Non negotiable rules

Prime Rule #010: Do not do what is not required, do what is required.

This is a sequel to following caselets:

0. The Saga of Startups
1. When sales Staff quit, Clients switch over
2. Sales is the prime responsibility of entrepreneurs
3. Not Succumbing to Pricing Pressure
4. Entrepreneur Agrees to do Sales
5.Temptation of taking large orders
6.Pitching Business Idea within 3 minutes
7. Startup Carnival
8. Taking Funds NOW or LATER


Opportunities to earn money is always tempting and organizations have specialist to seek
for opportunities. However, for any business, the market is always big enough, provided
it offers the right value to the customers. In order to create and deliver right value, it
requires organization to continuously engage in activities that offer better value. And
remaining focused on ones organizational goal is the prime tactics of new businesses.

While an organization is engaged in its activities, often big opportunities occur in areas
that are peripheral to that of the organization. And there is often a tendency to jump at
such opportunities.

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Since such opportunities are too lucrative to avoid attention, entrepreneurs succumb to
the temptation of exploiting them and fall into the trap of shifting focus away from their
main agenda.

This happens too often and with too many organizations. The caselet here, reminds
entrepreneurs of the danger of loosing focus.

Very often I receive calls from my clients saying that they have been approached by a big
client to fix up a deal for a hefty commission. They argue that there is not much to be
done, i.e. the order will not come into the organization but could be passed onto
somebody and obtain commission without pain. Or that some company wants to enter
into India and they want help in connecting them with the right people, organization and
logistics etc. Most of my clients are in hard core value creation business of technology,
service, solution or manufacturing. This chunk explains why it is not good to get diverted
by opportunistic calls.

For every business, the market is big enough, which means that the constraint of the
business is most often within organization. As a company goes on conducting business, it
identifies itself with specific market needs and attempts to create and deliver the right
value proposition, that enhances its long term success.

Now that the market is always big enough, time to time the company receives leads that
are neither directly related to its key proposition nor to its key markets. Some times, these
leads are very lucrative and often look like one time big opportunities. It is important that
the organization understands the repercussion of engaging or indulging into such
opportunistic moments.

For a young company, its growth is directly dependent on its learning curve. The learning
must happen in its chosen skills and capabilities such that it can deliver more value to its
chosen customer segments.

When an outside opportunity comes that uses none of its prime skills but say e.g. a hefty
commission on passing on a large order to somebody or negotiating a large deal for
somebody, in most cased it does not fit into normal business logic.

For a startup, the time and effort it takes to deal with such large opportunities is huge.
Say for example, there is an opportunity of outsourcing a software development deal
that’s more than 5 times your capacity. You have declined to bid for the orders, since you
know you can not deliver; but you realize that there is an opportunity to earn quick buck
by mediating the deal for another company. However, the proposal preparation and
negotiation cycle itself takes 3-6 months. Getting into such a process, prevents you from
focusing on the prime value creation in your organization for substantial time. You might
get a commission after 6 months, but since you have been engaged in the process of

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bidding, you loose focus and the growth momentum that is so necessary for your initial

The same thing happens when a small organization tries to take a large order. The issue
is that the large orders normally blinds the organization from focusing on those activities
that are core to it. A large order saps energy from all the resources and interrupts the
business cycle of the organization. Often such large orders come with risks that a new
organization is not capable of dealing with. There are umpteen case studies on how
startup companies collapsed just because they took a large order that choked the complete

Also look at the following example.

An organization actually succeeded in mediating a large order and it got a good
commission without much effort.

This organization has been growing at 30% year on year and had set another 30% growth
target last year. It was at Rs 15 Crore. The year had just started and it got into this
lucrative opportunity to earn quick bucks from a mediating deal that is not same as a
development work that it carries out. The deal was big enough and the commission was
almost 10% of its revenue. The company decided to take a chance. The mediation
however took almost the year for proposals after proposals, back to back negotiations and
for sealing the deal. It got Rs. 2 Crore commission on this trans Atlantic deal. It sales and
marketing team put tremendous effort and used the hidden knowledge of its development
staff. The company however ended last year at Rs.14 Crore a well short of its yearly
target. What happened?

The company is a young company and it has been building its capability year on year that
gave it a growth of 30%. But when this side deal came, focus and alignment of its team
got disturbed and it looked for quick money than spending time in building capability to
earn money. It did get Rs 2 Crore from the deal, but its capability remained where it was
last year. So, there was nothing new that its own customer or client based got from it
than what it did last year. What is expected if a young company looses the opportunity of
1 year of learning.

What happened this year?

The order books looked awful; that the company did not do any new thing last year and
did not build any new capability; it had nothing new to offer to the market this year.
Further, no one time opportunity was visible that could have given it an outside chance to
earn quick bucks. The companies order book stood at Rs 2 Crore at the beginning of the
year and they ended at Rs 6 Crore. What happened thereafter, was any bodies guess.

So you know where you go if you defocus yourself from doing your work and try to earn
quick bucks.

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The point to remember is that an opportunity is not an opportunity if you are not prepared
for and you do not have a value proposition to offer. And an organization can be prepared
for every opportunity. The preparation that you need to do is first in your area of focus.
Any ‘request’ that you get outside your area of focus, may not be actually an opportunity,
rather it could be a distraction from your focused area. It is true that the market is huge
for any idea, but all opportunities in the market are not right opportunities for you.
Chasing a wide range of opportunities, irrespective of size, scope, clients etc, only thins
down your capacity to run and grow business effectively.

This simple point of behavior could make a decisive impact on the performance of a
startup (and for that matter later stage companies) and create a huge ‘operational
differentiation’ that seldom any competitor cares for. This aspect is based on the simple
but prime rule: ‘do not do what is not required’; by first principle of execution, by doing
what is not required now, you are only wasting your ‘time’, that is the key constraint in
the business.

Though this rule seems innocently no brainer, it is the hardest to follow since it is so
simple. It is ‘simple’ but not ‘easy’. Let me repeat, ‘it is simple but not easy’.

It is simple to understand and every body understands it in the same way, ‘do not do what
is not required’. However, we are used to do things through out our life, keep ourselves
busy always, look working always. We therefore, have difficulty in giving some time and
space for ourselves. Doing simple things calls for a change in behavior and habits ‘of an
order of magnitude’ (switching our mind from the belief that only complex things give
big dividends and that ‘not doing’ is a waste of time).

Hence we have prime rule #010 (for focused execution):

          Do not do what is not required, do what is required.

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Bangalore, INDIA


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