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The People & Process Playbook for Scale | Hari TN @ BigBasket.com
154 Plays5 years ago
“You can't build a large company and build for scale without laying the foundations” - Hari T.N
If you are seeking guidance on problem solving or building an organization for scale Hari is the person you should go to. As a part of the management team at various startups, he’s helped shape four successful exits in different industries!
Hari started his career at Tata Steel as a part of their management trainee program and worked in myriad engineering and project management roles for 11 years before he pivoted towards working in human capital & resources.
Since then Hari has held leadership roles in HR across organisations including IBM Daksh, Virtusa, Amba Research, Taxi For Sure sms now heading HR at BigBasket.com.
And no, that’s not all, Hari is a published author, a mentor and advisor for several startups as well as investment firms and educational institutions.
In our conversation with Hari we learn about scaling startups and solving problems from a people and process perspective. Here are our key takeaways:
- Are external consultants crucial for change management?
- Hiring philosophy of BigBasket.com.
- Navigating the challenges of a blue collar workforce.
- Adopting innovation for a consistent customer experience.
- How can early stage founders approach organisational culture.
- How to make incentive plans work.
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Transcript
Introduction to The Founder Thesis Podcast
00:00:05
Speaker
You are listening to an HD Smartcast original.
00:00:24
Speaker
Hi, I'm Akshay. Hi, this is Aurob. And you are listening to the Founder Thesis Podcast. We meet some of the most celebrated sort of founders in the country. And we want to learn how to build a unicorn.
The Ambition of Founders: Lessons from Ola and BigBasket
00:00:38
Speaker
The founder ambition is important for scaling. Founders don't have the ambition, it won't scale. So for example, if you take taxi aggregation, you have a big gorilla in the form of Uber. But Ola has a founder who is ambitious. So it is a founder ambition that helped Ola successfully take on Uber.
00:00:54
Speaker
Founder ambition has helped BigBasket take on the likes of Amazon. Founder ambition has helped Swiggy, for example, get to what it is. So I think founder ambition we've talked of extensively. We've talked of foundations. You can't build a large company and build for scale without laying a strong foundation. So foundation is extremely critical as well.
Scaling Operations with T.N. Hari
00:01:14
Speaker
If a startup founder needed to find a mentor to learn about managing HR in a fast-growing company, the first person who would pop up in his mind is none other than T.N. Hari, the head of HR and big basket.
00:01:28
Speaker
Hurry has been steering the HR function that startups for 18 years now and has authored multiple books on startups that are not only best sellers but are also full of wisdom about navigating explosive growth. At BigBasket, Hurry has built up enviable systems, processes and teams which have made the online grocery store one of the very few companies that actually grew in the pandemic. Its efficient and customer friendly employees are simply the envy of all startups.
00:01:57
Speaker
In this episode of founder thesis, T.L. Hari shares the secret of how to scale startups from a people and processes perspective and dives into his journey of self-discovery.
Management Training at Tata Steel
00:02:08
Speaker
Here's Hari talking about his one-year-long Tata Steel management program.
00:02:16
Speaker
So, how was your management training program like at Tarasil? I imagine you must have undergone some amount of time as a management trainee without being assigned to a specific role. It was a one-year training program very very comprehensive which also included a three-week trek in the Himalayas along with Bachchan Rigbal who was the first Indian woman to climb Mount Everest.
00:02:38
Speaker
The comprehensive where we had an exposure to the entire operations of the company right from the INO mines to the collieries to the marketing divisions to manufacturing different plants, steel melting shops. The complete works including all the subsidiaries.
00:02:55
Speaker
So after that, you know, we had an option. All of us were picked from IAM calculator. There were four of us, campus placement, and all of us were picked for some of the commercial functions like marketing or international trade. But I was very particular that I wanted to join the engineering division. In fact, those days, you know, international trade meant a lot of foreign travel and those days foreign travel was not as common as it is today. And it was a bit of a craze, but I think I was crazy about some of these wrong things in life.
00:03:23
Speaker
So I focused on working in the engineering division, and that's how I started my career there.
00:03:28
Speaker
So how long was your stint at Tata Steel? I was there for 14 years in all, 11 years largely in mechanical engineering and for three years I was there in the human capital side.
Restructuring at Tata Steel: A Human Capital Project
00:03:39
Speaker
So how did that switch happen? So all my switches in my career have been, you know, an accident. So at that point of time, it was, you know, a 1991 post that I'm sure you recall that, you know, India as a country and the government went bankrupt and we opened up the economy and
00:03:55
Speaker
to follow some of the IMF prescriptions lowered customs duties and prior to that India was a country that had erected barriers for international trade and also followed the Soviet Union model of centralized planning as a result of which there was no competition from external sources nor was an internal company.
00:04:14
Speaker
competition because in the steel industry, the Ministry of Steel decided who would produce what quantity of steel. So industry had become, I would say, very, very bloated and did not have that competitive energy and spirit. But post-1921, suddenly when customs duties were lowered, these companies were under an existential threat because many CIS countries were dumping steel at prices that were below our costs. So imagine prices that were below our costs. So we had to restructure in a very big way and we got McKinsey to help us with some of the
00:04:44
Speaker
thought process. We reorganized into you know business units. We right-sized the company in a big way. We changed the culture completely from a lifelong employment to a basis of employment based on performance. Also said no you know no guarantee of employment. No earlier if you work for 20 years your children were guaranteed employment too not just yourself. So we had to make a change in that as well. So that was largely a human capital driven project and I was part of the core team that worked with Mackenzie on this.
00:05:11
Speaker
So, and it's not very uncommon in large companies for people management trainees to be rotated around multiple
Consulting's Role in Change Management
00:05:17
Speaker
functions. That project lasted for those three years after you made the switch or? That project did not last for three years, but it might have lasted overall for about two years. One year it was, I would just entered the function and two years later, two years I did this project.
00:05:33
Speaker
And what is the value of a consulting company for change management? And, you know, I'm speaking as the founder of a small company where I think, okay, if something needs to be done, then this is how it should be done. And this is, you know, so just help me understand the perspective that why a large company would bring in a consultant to do change management.
00:05:56
Speaker
Yeah, that's an interesting question because at that point of time, I was relatively young, not very young, but much younger than what I am today, obviously. So I never understood what role these consulting companies played. I realized that there were a bunch of youngsters, so there was an engagement manager who would
00:06:14
Speaker
He may be 32 years old and there will be a bunch of fresh college graduates, typical MBAs from IM who would be 23 years old. So one of five youngsters whom the company pay, I would say maybe a few crores for about $250,000. I remember the bill. You must have felt that you know more than there was.
00:06:32
Speaker
I had absolutely no doubt that we knew more than them. So I think the role of a consulting company is that when you pay so much to somebody, then the top management begins to pay attention to what is being done. So I think internally there are smart people, but I think very few companies are smart enough
00:06:49
Speaker
to be able to bring these smart people within a company together around a common goal. They need somebody external to come and suggest ideas and sometimes peak management you know rely on the advice of these companies to drive change. I think companies who are smart who have the guts to figure out what is good and how the courage to drive the change don't need consumption.
00:07:08
Speaker
I think only weak companies are consultative. I'm not saying you should not engage consultants at all. Consultants can help you with some specialized topic. For example, introduction of a new technology. But a steel company can't get a steel consultant. A steel company can get an IT technology consultant to help them with that. So that's perfect. But help getting a company to figure out what should be the strategy for you. How do you write size and how you think about restructuring the company, I think you don't need consults.
Career Path: From Daksh to Leadership Roles
00:07:36
Speaker
So after that three years, 10, 10 people operations, why did you decide to switch the organization? After 14 years or rather 12 years, I began thinking, this is the company for me in the long run. And I felt I was not a perfect fit in that company. And I have no complaints about against the company. I think Tallahassee was a great company, very, very ethical, largely very ethical company driven by a good set of principles, high on integrity, great company. But I just felt that
00:08:04
Speaker
were other elements which were important for a person to make a career there and I didn't fit in there. I was a bit of a rule breaker also at Tata Steel in the sense that I wanted to get things done. I didn't want to consult 10 people before figuring out whether I needed to do something or not. So how did that change happen? Because I mean from manufacturing to like a service organization that kind of switch is not the easiest to make and I mean a lot of companies may even hesitate to hire a guy from manufacturing
00:08:35
Speaker
How did you manage that? In your career, you can never ignore chance and people sometimes underplay the importance of chance. When you look back at success in life, you always say that I did this, I did that.
00:08:49
Speaker
and you never say that something came to me on a platter, I was just lucky that something came my way. So Daksh just happened to come my way and my CV was out there and I think Daksh was growing rapidly. There are some phases when an industry grows rapidly and when an industry grows rapidly, they go out of the industry to hire people because the industry does not exist, BPO industry did not exist. So therefore,
00:09:14
Speaker
at banking, they look at FMCG and they look at talent from anywhere. They just found me and they had found I had worked in some that human capital project was relevant for them. It's all that I had studied at IIT, I am and I met Anjiv Agarwal who was the founder come CEO and I still have a great relationship with him. I'm an advisor to Fundamentum today which has been set up by Sanjeev Agarwal and then the Lekhani. So it's been a lifelong relationship after that.
HR Leadership at Virtuosa and Amba Research
00:09:38
Speaker
So how old were you when you made that career? 37.
00:09:40
Speaker
And I imagine Daksh would have been like a company with an average age of 25 or so. Yes. For me moving to Daksh was like moving from an oil tanker to a fighter jet. But then as I told you, I was a bit of a rule breaker at Taurasthi. For me, I felt like a fish in water completely. I was able to adapt very quickly, although in the first couple of months, it took me a couple of months. But after that, I think I quickly adapted.
00:10:05
Speaker
And what role did you play there? I joined the company in the corporate function in HR as the head of performance management compensation and benefits. I used to report to the CHRO. That was where I started my career. And within a year and a half, I was promoted as a CHRO at Daksh. So what was the state of performance management at that stage? And is it more evolved now? And what is your thesis on performance management?
00:10:32
Speaker
Performance management, to my mind, does not depend on the HR function or the HR head at all. Performance orientation in any company is driven by the CEO of the company or by two or three key executives in the company. What kind of orientation they have towards performance? What are the kinds of demands they place on people who work with them, whether set high standards for themselves and for the others who work with them?
00:10:58
Speaker
Whether they set high standards for the team, whether they hold people accountable to those standards. So I think those determine whether a company eventually is very performance oriented or not. I think it depends on a few key leaders in the company as to how they view performance, whether they are themselves very strongly oriented towards performance. Those basic beliefs are there. Then I think the rest is all about creating the right structure and mechanisms.
00:11:23
Speaker
So Daksh was acquired by IBM after about two years. Part of the deal was that the management team would continue with IBM for two years because IBM didn't know the BPO business and they wanted this team to continue and help transition to a team that they might put in place. After two years, I moved on. I found this company called Virtuosa, which was a US-Boston-headquartered IT product and services company. And I joined there as the global head of HR.
00:11:50
Speaker
And this was a truly multi-ethnic, multicultural, multi-geographical team. And the leadership team comprised of all kinds of people. What exactly were they into? Like what products or what industries did they serve? So IT services and IT products. IT services like any other
00:12:08
Speaker
services from Infosys and, let's say, Wipro, but it was a little different from Infosys and Wipro. It was more like Accenture and IBM on a much smaller scale. In a sense, they have helped transform IT in a company rather than just provide services. So it is about re-architecting the whole thing. So what is played on that platform, on that playing field? It has also helped companies like Vignette, Pegup, they acted as their offshore product development centers. So Vignette and
00:12:36
Speaker
where companies had built products and they didn't have teams in India. So what user provided them offshore product development platform. And of course we went public. We listed on NASDAQ in August 2007. So you spent about three years there. Why did you decide to move on?
00:12:53
Speaker
So after we listed the company on NASDAQ it became about running a public company and running a public company is a quarter on quarter basis where you know every quarter you're looking at you know what was the guidance you had provided the previous quarter are you going to meet that guidance or not and it was a lot of more compliance again it was about all of compliance and rather than you know
00:13:14
Speaker
growth and innovation and uh disruption so that i just felt it's time to move on and there are other opportunities to disrupt other opportunities to you know take a private company public or build companies so back to my sweet spot so uh you uh what next then afterwards you sir
00:13:33
Speaker
After Wachuza, I joined a relatively small company called Amba Research, which was in the knowledge process outsourcing space, which did investment research for investment banks and money managers in the US and Europe, again an outsourcing company. Exactly like what Motilal Oswal would do, initiating coverage. So we would initiate coverage for JP Morgan or Morgan Stanley or the companies that they covered and we did research reports for them.
00:13:59
Speaker
And why did you choose this company to go to next? So the common theme in my career has been, you know, people have asked me if I have planned my career. The answer has been I've never planned my career at all. But then when I think back, you know, I found that there are three underlying themes around my career, which is my moves have been based on three, four things. One, of course, I've been extremely curious as an individual. Learning has been more important than me, than roles, power or salaries.
00:14:26
Speaker
those that have never mattered for me, will I be able to learn by doing this? Will I have an interesting set of colleagues to move? I could learn. Another thing I always looked at was interesting people. So second common theme has been, do I like the people that I work for? Do I respect them? Are they people of integrity? Do they stand up to the right values? Are they smart?
00:14:44
Speaker
So that's the second theme in my career. So I think by joining Amba was again, this I'm sure there must have been other good companies as well. It's just that I happened to encounter this company and Sanjeev Agarwal in some ways, who was my mentor all along was also the board of Amba research. So he said that I joined this company and my joining big basket also is entirely because of Sanjeev Agarwal. Sanjeev was on the board of big basket as
TaxiForSure's Rapid Growth and Merger with Ola
00:15:07
Speaker
well. So next you joined taxi for sure. So
00:15:11
Speaker
What was that? How did you end up joining Taxi for Sure and what was that since like? Well, Taxi for Sure also, it came as a recommendation from Sanjeev. Sanjeev told me that Taxi for Sure was a good company and I met Raghu. Raghu was the founder CEO and I had Taxi for Sure. I was 48 years old. Raghu was 34 years old.
00:15:30
Speaker
So I've always enjoyed working with young people but this is the first time I would be reporting to such a young person. So I was looking forward to this meeting with Raghu and when I met him, I liked the way the conversation went. He explained to me the business, he explained to me the entire taxi aggregation model, the industry.
00:15:48
Speaker
showed the app and then told me, you know what, I don't think I'm competent to interview you. I've heard a lot about you. I think we'll love to have you on board. So I think the way he handled this and I realized that he's a good guy, high integrity, and looked like the opportunity was also interesting and the market size was big. And I figured the taxi aggregation is, you know, one of the next big things. So what were your takeaways from that experience, taxi pressure experience?
00:16:17
Speaker
Taxi for sure, experience I think the key takeaway was that irrespective of what you do sometimes you can get hit by a black swan event and even the best can come down, be brought down. So taxi for sure and Ola were doing pretty well and both were in the market to raise their $200 million round.
00:16:37
Speaker
is that round first with the soft bank $210 million and taxi for sure also was in that mode at that point of time. But just as Raghu was in the US talking to investors sometime in December 2014,
00:16:53
Speaker
And Uber driver raped a female passenger in Delhi and all broke loose at that point of time. So all the regulators who already thought that taxi aggregation was illegal began to clamp down on this business. And instead of focusing on the poor law and order situation in Delhi and the safety of women in general, I think the focus was on the taxi aggregators rather than solving the real problem. And this sometimes happens everywhere. And in India, you can see that happening as well sometimes.
00:17:21
Speaker
So, and then the investors then went into wait and watch more because nobody knew whether, you know, this industry would be allowed to continue in the first place. And therefore, everybody said, let's wait and watch. We'll take a decision six months down the road and have cash to run the business for six months. So at that point of time, you know, we took the decision, both investors at Ola and taxi for sure came together and figured out that a merger is, you know, good.
00:17:49
Speaker
Fortunately, we were able to get $200 million for the deal. And that's interesting because we didn't have cash to pay a salary three months down the road. And the reason why Ula paid $200 million was because otherwise, Uber would have acquired a taxi for sure and got a big foothold in India. So we were in some ways unlucky, but in some ways very lucky.
00:18:13
Speaker
So I was there for just 13 months. In 13 months we were occupied by Ola. So in 13 months we grew from 4 cities to 45 cities. So that was explosive growth. And every day I would be in the office by 8 o'clock in the morning and rarely left office before midnight or before sometimes 1 am, 2 am.
00:18:33
Speaker
So it was about extremely rapid growth. So 13 months of real team building, hiring people, putting processes in place and scaling rapidly.
Strategic Choices at BigBasket
00:18:45
Speaker
What did you learn in terms of navigating that explosive growth? Did you form some pieces to help other people who might be seeing that kind of explosive growth? That's a topic in itself for Akshay. I've written a book called Uni to Unicon.
00:19:02
Speaker
how to scale your startup sustainably. So it's a 250 pages book. Letting that into a very short answer would be difficult because growth and scale have multiple dimensions. You need to get all dimensions right. In fact, we talked of a framework in that book about some of the common things that you should get right. So for example, you said you need to be in the midst of a mega trend
00:19:29
Speaker
be able to scale. You need to be participating in a large market. You can't participate in a small market and expect to become a unicorn. You have to participate in a large market. Take some strategic decisions right. So if you get your key strategic decisions right, then you can tolerate a lot of other missteps that you might end up making. So getting a few strategic choices correct is important. What are those strategic choices?
00:19:51
Speaker
So for example, at Big Basket, one strategic choice we got absolutely correct was inventory-led model. So unlike the asset-like hyper-local models which depended on physical stores to pick and deliver to customers, we chose to build our own inventory. And that has proven to be the only reason why we are successful. Very few others have been able to get that model right. So it was a strategic choice that we made. Despite SoftBank and Tiger Global telling us it won't work, we stuck to the strategic choice.
00:20:17
Speaker
So, for example, Make My Trip made the strategic choice of moving from airline tickets to hotel bookings because airline tickets was a very low margin business. There were all very few number of airlines and you could go to an airline site and book your tickets and therefore it was not no big deal. But hotels was very difficult because it was a completely disaggregated market and you needed to bring that aggregation and Make My Trip
00:20:43
Speaker
went into the next orbit after they went into hotels. So it was a strategic choice they made. You need to get those choices correct. Strategic execution is important after that. Being able to execute thoughtfully, being able to figure out what not to do, being able to figure out how to stay focused, how not to get sucked into activity traps, not doing things that are considered just cool and fashionable. Then other things we talked of a foundation and founder ambition. So founder ambition is important for scaling founders don't have the ambition, it won't scale. So for example,
00:21:11
Speaker
If you take taxi aggregation, you have a big gola in the form of Uber. But Ola has a founder who is ambitious. So it is a founder ambition that helped Ola successfully take on Uber. Founder ambition has helped big basket take on the likes of Amazon. Founder ambition has helped Swiggy, for example, get to what it is. So I think founder ambition we've talked of extensively. We've talked of foundations. You can't build a large company and build for scale without laying a strong foundation. So foundation is extremely critical as well.
00:21:41
Speaker
How much of it is due to luck? So a good chunk of it sometimes you know luck plays a part in this actually you know I would say my own belief on this based on what I have seen in life is that you know if you're good you can be successful very unlikely you would be a big failure if you're good. Come to taste runaway success I'm hoping you know what runaway success means. Runaway success is extreme success I think
00:22:05
Speaker
Extremely successful, super success, I think you need follow ups of luck. To become successful, I think talent is good enough. To become super successful, I think you need to have the element of timing right, element of marketing right, which is all luck based. For example, 3D. I think they were at the right time, right place. Another big company called Deliver, which Bigg Boss did and ended up acquiring. They were the first hyper-local company in India. They did what exactly Swiggy is doing.
00:22:31
Speaker
ahead of their time and investors didn't believe in the food delivery story. So I think it's super successful. You need to have that element of luck. You can't deny that. So after a taxi for sure got acquired, then what did you decide to do next? So for me, again, Big Basket was the next place. Big Basket was the company I liked. Again, the bunch of people I met, I liked. It was also on the board. So I had no doubt that it would be a great company to work for. So that's how I came on board at Big Basket.
00:23:01
Speaker
So, what has your journey been so far at BigBasket? How have you seen the company evolve?
00:23:07
Speaker
what have been the key challenges that you have faced in the journey and what have you learned from those challenges? So Big Basket life for me has been different at Big Basket than in the other startups. So in the previous startups, I actually was very inward looking focused within the company and focused on ensuring that the company grew without the wheels coming off, helping solve problems within the company and helping find a meaningful exit.
00:23:35
Speaker
But at the last several years, five years, I have looked outwards as well. I have become a very active part of the startup ecosystem in India. I am a mentor at multiple accelerators like Techstars, Silicon Road, Numa. I'm an advisor to an early stage VC fund called ARCOM. I'm an advisor to a late stage VC fund called Fundamental Partnership. I'm associated with multiple educational institutes in different capacities.
00:24:03
Speaker
So I think I have been able to fulfill a lot of my dreams the last five years and I think we got a few strategic choices correct. I told you that so big has been a very grounded company and one beautiful lesson I learned is that if you get a few things right a lot of us tend to get hidden and those things you must get them so right that they can disguise the other weaknesses and a few things that got right was the business model and more importantly the attitude which is that in
00:24:30
Speaker
build a sustainable business.
Balancing Growth and Profitability: BigBasket's Approach
00:24:32
Speaker
We will never be carried away by fashions and fads. We will never do anything which does not just simply create growth at the expense of profitability because very soon the same people who are putting pressure on you for growth will come back to you and ask for profitability.
00:24:47
Speaker
So people, if you have seen these cycles of profitability and growth in the past, you will realize that you need to always balance the two. It never does anything for the sake of doing. You never apply for awards and rewards and you don't care about awards and rewards. We don't get into activity traps. We don't do anything that sounds good. Good principles, I think have given us unbelievable strength and helped build an amazing team. As a result, I have a lot of free time now in my hand. So I think
00:25:13
Speaker
Last five years, Bigbasket has been generous. They've allowed to do multiple things beyond the company and I end up enjoying my life. What was the headcount when you joined and what is it today? Today is about 28,000. It would have been about 4-5,000 when I joined. How did you navigate this from a 5x growth of headcount?
00:25:36
Speaker
That's not very difficult if you get a few things right. So we got the structure right, which is that we created business units and corporate functions. So every region for us is a business unit and all in corporate are replicated in the regions or in the business. Except
00:25:52
Speaker
for technology, IT, info, and product. Otherwise, supply chain, HR, training, last-mile operations, warehousing, those functions are there and corporate those functions are there in the regions as well. Those who run these functions in the regions have a firm line reporting to the business unit head and a dotted line reporting
00:26:07
Speaker
to your respective function heads in corporate and therefore there's an HR head in every region and HR heads we hired very competent people training head we hired very competent people so they helped scale so you don't have really too much so once you hire competent people we also hired a VP HR we got a VP learning and development
00:26:26
Speaker
All the HR heads in the region report to the VP HR. All the training heads report to the VP Learning and Development. And these people are in charge. They help in the regions higher. The corporate function help provide the structure and play some degree of thought leadership, help solve problems. But the execution engines are the businesses. We build the execution engines. Once you build a combination of execution engines in the business and thought leadership in corporate, then it's not very difficult to scale and groom.
00:26:55
Speaker
What is the big basket hiring philosophy?
BigBasket's Hiring Principles and Culture
00:27:00
Speaker
What do you look for when you hire people?
00:27:03
Speaker
So typically, companies look at three broad levels of skills, irrespective of what they may say. First is ability to execute, ability to think clearly, and you can call it whatever you want. Think clearly can be strategic thinking, can be anything, right? Ability to think clearly and communication. Ability to execute, everyone needs. So that's a core capability. Whether we hire people in businesses or in corporate functions, the ability to execute is important.
00:27:27
Speaker
We realize that we are a low margin business and therefore we need to take a slightly different look at people's strategy. And therefore, you know, the moment you add clear thinking on top of execution, the price point goes up, right? So we say clear thinking, we want people in corporate to all think clearly, but in the businesses aren't think clearly, no worries, as long as you can execute for you will lay out these and average people, they're backed up by
00:27:51
Speaker
good processes can deliver outstanding experience again and again. Clarity of thought only in corporate functions. And with education skills adds another layer of cost, price points to talent. We said we don't care for education skills irrespective of whether in corporate or in the regions. We need only execution and clear thinking.
00:28:07
Speaker
And for example, supply chain head at Big Basket is a guy who grew up in a village in Andhra Pradesh, studied in a coastal town, did odd jobs, and enjoyed Big Basket. And at the age of 35, he was the national supply chain head. In fact, during the current crisis, he's the guy who's helped us reconfigure a lot of things. So our entire approach is humble people. So for example, we have a head of analytics, CTO. They are all people who create education backgrounds. But one prerequisite is that when we hire people from these backgrounds,
00:28:37
Speaker
they should have that humility to work with those with less privileged education. And humility is a very important trait when we hire people. What is the process you follow to really judge whether someone has the ability to execute, the ability to think clearly? What is your selection process like?
00:28:59
Speaker
So it is a combination of multiple interviews and reference checks. And, you know, interviews may not tell you a lot, but if you do your interview well, they tell you sufficiently. So poor interviews have zero correlation with ability to do a job. Good interviews have a reasonably good correlation. So poor interviews will be asking somebody, tell me, you know, can you execute well?
00:29:24
Speaker
That's a more way of figuring out whether somebody can execute. But if you ask the person, tell me a little more, a few examples of where you had to take something end-to-end, take initiative and get some things done under difficult circumstances. Can you talk of some of those examples? There have been conversations with some of those. So multiple interviews followed by reference checks. I think reference checks are important, especially at leadership levels because they tell you a lot about a person.
00:29:51
Speaker
So what are some of the challenges of managing a blue collar workforce and how does big basket navigate them? Challenges of managing blue collar is once you understand them, it's not very difficult, which is that the blue collar category is looking for two or three things. In India, they come from the less privileged sides of society.
00:30:11
Speaker
And they are looking for respect. I think because in India for various reasons, you know, if you are working, if you're a blue collar worker, you typically don't respect them. You know, they take them for granted. Respect is something, unfortunately, you know, is not given irrespective of what you do in a country like India, which has been cast ridden for 20 centuries.
00:30:35
Speaker
So, I think if you learn how to treat them with respect, they tend to be a little more loyal and they understand a few things. It should be transparent, try to explain to them what's happening. Be very honest in some things like salary payment. Many companies don't even pay salaries on time because when they are going rapidly things break and they think you can pay a little late, no problem.
00:30:58
Speaker
Pay salaries on time, ensure that questions on, you know, reductions, incentives are answered properly, time and effort is to compute them correctly and pay correctly. That's a side of respect for them. You know, you can't delay a white collar worker's salary, so how can you delay the accuracy and, you know, and timeliness of blue collars? People also need to be paid fairly. I think a fair wage is important.
00:31:24
Speaker
And these are the two or three things that do matter. And I think getting your basics right, reward and recognition is important. I think from time to time, they need to be rewarded for the good work that they're doing. You need to set up role models. You need to realize that their role models are as important as the white collar role models. They are called out in the six-monthly big annual reward and recognition functions there.
00:31:50
Speaker
the days made given pride of place, their contributions are acknowledged by the CEO. So all these things are important in managing and I think ultimately it's about honesty, very simple, plain old habit, plain old value of being honest and transparent and simple, you know, respect for people, irrespective of who you are, respect people, respect for people. I think these are small things. One thing which I have observed as a customer of big basket is
00:32:19
Speaker
my experience with the person who comes to deliver the product. I mean, you know, I see a certain amount of care which you don't necessarily see from people who are delivering something. Lot of people will say, but that is not the case with, you know, when I'm ordering groceries through big buses. So how did that kind of
00:32:42
Speaker
care gets developed with people that they actually care about the customer. Right, so I don't know if you've read this book by Saffi Bagkul titled Loon Shorts and that talks of two types of innovations. The P-type innovation and the S-type innovation. The P-type innovation is a typical one like an iPhone or a Polaroid camera or a jet engine. Whereas an S-type of innovation is about
00:33:06
Speaker
being able to bring process technology or training operations everything together in such a seamless way in such a collaborative way.
00:33:19
Speaker
You are able to deliver consistent customer experience millions of times day after day, year after year. And for somebody who is seeing it from the outside, it won't even look like innovation. You might think, these guys must just be lucky getting the right kind of people who are just smiling and delivering stuff and who know how to handle every single interaction with the customer. It's not that way.
00:33:42
Speaker
So it's about being able to get the training, get process, get audit mechanisms, processes in place, do the right kind of training, reinforce training continuously on a regular basis, and do this in such a way that it delivers an outstanding experience consistently day after day. And that's the kind of innovation which is the S type of innovation. I think BigBasket has acquired mastery over the S type of innovation. A company like Amazon is also reasonably good at the S type of innovation.
00:34:12
Speaker
See is that they genuinely care. How do you make people care through training? I mean does that happen that can you train a person to care? Is it also like if an employee feels that my boss cares for me then he passes on that feeling of care to the customer. It's a combination of everything right from recruitment which is that in the recruitment itself we try and filter people you know who don't demonstrate empathy.
00:34:38
Speaker
So, for example, we try and figure out how a delivery boy would behave towards women and towards senior citizens. So, we try and figure that out by provoking them asking a few questions and seeing how they respond. So, we do a filter at that level. We pick people who are soft-spoken, who don't easily take Umbrage, who deal with customers with some degree of patience. So, we take soft-spoken and patient
00:35:03
Speaker
and they go through a fairly comprehensive training which is reinforced periodically and there is a feedback mechanism from the customers to identify those who tend to be a little rude and that feedback is passed on again to the individuals concerned and they are put through refresher programs. So it's a complete virtuous cycle right from recruiting to you know taking feedback from customers training and then back to the feedback loop.
00:35:28
Speaker
What about getting the feeling that my boss cares and therefore that gets very important? So therefore I told you to treat people with respect. So that's the value. So if you can treat the blue collar staff with respect, they feel happy and happy people tend to also be treat others that they meet more politely.
00:35:44
Speaker
And that would be something which only I guess a founder would be able to drive in an organization.
How Does Culture Guide Organizations?
00:35:49
Speaker
I would say largely in a small startup, founder equals culture. Yeah, in a small startup. I think the more the leadership team equals the culture. So for somebody who's like at an early stage founder, there is a lot of conventional wisdom that culture is more important than strategy and so on. But how should a founder think about culture or because, you know, they are struggling with
00:36:12
Speaker
day to day problems and maybe their struggle is more about how do I pay salaries next month. So, what should be their thought process about culture?
00:36:21
Speaker
Adam Smith in his book, The Wealth of Nations, had written that a free market is the invisible hand that keeps the economy going. A free market, there are no defined players who say how much of what is to be produced, how much of chicken is to be sent to Bangalore, how much of rice is to be sent to Mumbai on the 23rd of August, for example.
00:36:47
Speaker
So the market forces determine how different actions in the economy take place. The pricing is the signal that is being sent out between the suppliers and the buyers. So simply culture is the invisible hand that runs organizations. It's important to understand this invisible element of culture. Culture is something that
00:37:08
Speaker
What you do every day. Culture is not about just saying we are customer centric. It is about whether you are customer centric. It's not about leaders saying that we respect people. It is about whether people are respecting people. People don't care about what you say. They care about what you do.
00:37:24
Speaker
So culture is about doing what you believe are the right things and there are no set of things which say that this is right and that is wrong. Because different companies can have different cultures and all cultures can possibly be working while there are toxic cultures which are to be ruled out by everybody.
00:37:43
Speaker
Among other acceptable cultures, there are a range of them and all of them can be good. So, for example, big basket culture is very different from the culture reduction. But both turned out to be unicorns, both turned out to be amazing companies. But people understood for a slightly different set of values in either in both these companies. And that depends on
00:38:01
Speaker
background of the founders, their upbringing, the business context, multiple things. So I would say founders in any company at early stage have to understand what are their values, what do they want to live by, what do they want to build the startups to stand for, and live good every day. If they believe, you know what, that paying people their salaries on time is important, the small thing that you mentioned, pay them on time, be committed to paying them on time. If you believe that respecting people is important, demonstrate respect every day because other people are looking at you and they're seeing what you're doing
00:38:31
Speaker
they are observing and imitating and meditation will become genuine. So it's important to just do the right things. So I think culture is not such a great effort that you need to, you know, read a lot. It's just that you live the values that you stand for every day. That's it. So you're saying your culture is getting built irrespective of whether you're thinking about it or not just by virtue of the choices you make. Yes. Okay. Okay. So,
00:39:02
Speaker
This is something which is more of a personal challenge which I'm facing in my own organization which I thought that I could bounce it off you. So I run a recruitment firm and what we did about a year or so back is we always had like team leaders but we decided to make team leaders as T&L heads and make them
00:39:28
Speaker
responsible for their own P&L and therefore their incentive was linked to the revenue that they generated and the cost which they entered in terms of headcount. But what I see now is that the teamwork between these P&L heads, the flexibility with which employees used to switch between teams earlier has kind of stopped. Team leaders hesitate to share their best resources with each other.
00:39:56
Speaker
which is a bit counterintuitive to me. I would have thought that if you make people owners of their P&L and empower them and that would lead to a more productive organization.
00:40:12
Speaker
Do you have any advice for me? Yeah, absolutely. I would say that to be very candid here, a lot of people leaders think that by putting in place incentive programs or by putting in place incentive plans
00:40:32
Speaker
their job is done because the incentive plans are going to drive people to take the right actions because the plans are aligned to whatever objectives the company wants to accomplish. Therefore, the incentive plans are going to solve our problem. That's not true. But if you need to make incentive plans work, I think, you know what, if you say, you know, all people come on time to the office at nine o'clock because it's important and with this part of your KRA and your incentive 5% weightage, you're going to give it and your incentive will depend on that.
00:41:00
Speaker
That is indicating what they are supposed to do. If you want to put people into a classroom for training and people are not turning up, and if you put it as a part of the KRI with 10% weightage, then it's indicating what they are supposed to be doing. So the role of management is to provide feedback to their team members, help them perform better, coach them in terms of new skills that are required, help them figure out how to run their organizations, how to give feedback, how to get the best out of their people, constantly do all of that.
00:41:30
Speaker
And if you can use an incentive plan, maybe you will be able to cement some of that.
00:41:37
Speaker
Incentive plans work really best when teams don't necessarily have a lot of handshakes. So for example, sales incentive plans work really well because a salesperson doesn't depend a lot on other salespersons. But where what you do determines the outcomes, what you do or don't do determines outcomes largely, then incentive plans work. But where what you do
00:42:01
Speaker
No does not entirely determine the outcomes by somebody else what they do also controls the outcomes that you deliver. Then collaboration becomes important so there you need to use incentive plans with a lot of smartness so for example when you create an incentive plan you should also not ignore the fact that sharing resources between your teams is important.
00:42:22
Speaker
So you need to figure out a way of recognizing people who share their best resources with other teams versus the people who are hoarding resources and call the behaviors out. If you don't have a mechanism of calling these behaviors out occasionally once in a while and rewarding those who are sharing their best,
00:42:37
Speaker
then go deeper into these wrong behaviors. So I think management or leadership can never ever believe that incentive plans I can put in place and the rest they will take it is not true. You need to, for example, teach people how to run a P&L. You can't just see you're responsible for P&L and not be trained on what is P&L, how to run a P&L, how to control costs. So I think incentive plans are just the icing on the cake of overall leadership. They are not
00:43:07
Speaker
What leadership is all about? What are the pens that you do on eta services?
Advice for Newcomers: Staying Curious and Focused
00:43:14
Speaker
Like you would have some spend on people who provide you automation like Darwin Box, you would have some spend on recruitment related tools or some spend on training related vendors. So like what are the big pens which would somehow indicate that okay, this could be an area which
00:43:33
Speaker
is big enough for a large company to emerge out of. Only Darwin box. That's the only big spend. No other big spend. Okay. Everything else you do in-house? A lot of things we do spend, but it's all very, very disaggregated and is no single large spend. So what is your view on recruitment in-house, like building a team and doing entirely in-house versus through vendors?
00:44:01
Speaker
And when should a company outsource? When should a company do it in-house?
00:44:09
Speaker
It's a combination. So, outsourcing has never been a black and white choice. So, for example, outsourcing from the US to India, I think has been a no-brainer to a large extent because of the cost arbitrage. But within a country, within India, for example, should a company outsource its services to another company within the country?
00:44:32
Speaker
where cost and labor arbitrage does not exist is not a bank-wide choice. I think it can work both ways. In-house will also work. There is not going to be a very significant cost difference. There are advantages both ways. I think sometimes by outsourcing it, outsource companies understand the space better than what you can understand in-house because
00:44:57
Speaker
Outsource companies tend to be specialists. So you can be a specialist in recruitment, you can be a specialist in some type of service. And it's impossible to build all that specialization in-house. So I think we need a combination both in learning and development as well as recruiting. Even in learning and development, I think it's important to outsource some programs and not try and develop every single program in-house because it's a waste of time.
00:45:19
Speaker
And you don't have the capability as well. But some of them must develop in-house because you can't outsource. The outsource guys will never understand your business imperative, your situation. So I think it must be a combination. Any last advice that you would like to leave for someone who's just finishing his education and going to start out his career? Only advice I can provide is be curious. Ask a lot of questions.
00:45:45
Speaker
Do the right things for the right reasons. Don't chase vanity metrics. And if you do the right things in the long run, you'll be a happier individual.
00:45:58
Speaker
So, ladies and gents, that was a masterclass by T.N. Hari, the HR head at Big Basket, whose unique outlook towards life and problem-solving abilities have made the functioning of the online shopping store look seamless in all aspects. If you're in the mood for spending some quick bucks, or if you need everyday groceries without having to step out, head to the Big Basket app now.
00:46:28
Speaker
If you like the Founder Thesis Podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit the podium.in that is t-h-e-p-o-d-i-u-m.in for a complete list of all our shows. This was an HD Smartcast Original.
00:47:01
Speaker
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