BackKishore Biyani’s new secret sauce: Holacracy
Kishore Biyani has identified nine intrapreneurs who would run parts of Future Consumer's business as if they owned it
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Kishore Biyani’s new new thing is to create more Kishore Biyanis, and he recently announced he has succeeded in creating nine more—all part of his company Future Consumer Enterprise Ltd’s (FCEL) objective of growing revenue tenfold to ₹ 20,000 crore by 2021.
After an internal competition, FCEL identified nine employees (average age: 26) who would run parts of the company’s business as if they owned it.
Biyani, who has a bit of a management bug, calls this Holacracy, after the organizational structure popularized by Zappos where roles are flexible, authority is distributed, structures change, and the rules, which are clearly laid out, are the same for everyone.
It may be that, or, according to Abraham Koshy, marketing professor at the Indian Institute of Management, Ahmedabad, it could just be a modification of the age-old SBU, or the strategic business unit structure, where each unit is independently run by a business head responsibile for its profit and loss (P&L) statement.
Whatever be the term, FCEL has nine new intrapreneurs: Saikat Sarkar, bakery; Bhavesh Shah for beverages,which come under the brand Tasty Treat; Ganesh Dare for CleanMate; Nikunj Biyani for the frozen foods category under the Veg Affaire brand; Keshav Biyani for the wet wipes brand Kara; Abhas Kumar for edible oils brand Karmiq; Chiranjiv Kumar for prayer materials brand Pratha; Harsh Nanavaty for juice brand Sunkist; and Shyam S. for the tea and coffee brand Fresh and Pure.
Biyani’s plan is to provide the entrepreneurs mentorship and also have the larger organization handle the supply chain, logistics and retail network for manufacturing and distribution of these brands.
But the strategic decisions will be made by the entrepreneurs. They will set their targets. They will decide the markets they want to operate in. And they will decide on the product and marketing strategies.
What Biyani has created is intrapreneurs who have to work within the firm’s framework. The business gives them freedom and targets, and they have to create a proper feedback mechanism to report on their progress and requirement for resources, said Nitin Sanghavi, professor of retail marketing and strategy at Manchester Business School.
According to Biyani, supply chain accounts for 13% of total costs and by adopting his integrated approach, the company will bring it down to 5%—one of the lowest in the consumer packaged goods industry.
The savings will give Biyani the leeway to drop prices.
“It’s interesting how Biyani is looking at creating brands and using all the different pieces of infrastructure that he has created to market these brands. The Indian market has huge growth potential, and even if he captures 10% of it, he will succeed in becoming a ₹ 20,000 crore company," said Abheek Singhi, partner, Boston Consulting Group.
Still, creating so many entrepreneurs will put greater responsibility on the top management to integrate the different units at a strategic level, said Koshy.
Biyani’s aim is to grow revenue to ₹ 20,000 crore by launching more brands, either directly or through partnerships, and have entrepreneurs, such as the first nine he has identified, manage them.
In September 2014, Biyani opened a 110-acre India Food Park in Tumkur near Bengaluru. He has also acquired 160 acres of land in Nagpur for a manufacturing plant. Biyani is looking at partnering with manufacturers to open units at these parks and develop products.
The retail tycoon is in talks with Cargill Inc. for a partnership, said Biyani.
The company has also tied-up with LT Foods Ltd, which markets the rice brand Daawat, and Mibelle AG, a Swiss personal care products company, to introduce more brands in the Indian market. “We will have 27 brands in 64 categories in the next five years with a turnover of ₹ 20,000 crore," Biyani said at conference in Mumbai.
In 2015 fiscal, the firm had a net loss of ₹ 108.77 crore on total income of ₹ 1,347.41 crore.
The nine entrepreneurs were chosen from 450 applications that were received for a campaign run within the organization called Ban Jao Biyani in the month of January.
The selection process shortlisted 50 applicants, who were then put through a five-day boot camp with the top management where they were trained on management aspects and asked to present a business plan for the brand they had bid for.
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