Over the past few months, RPG Enterprises chairman Harsh Goenka, has been having an assignation every other Friday for a few hours. That’s when he meets his think tank of former consultants and investment bankers. Their task— to come up with two-three new business ideas in a year that will generate revenue of Rs 1,000 crore in the next three years.
“RPG has not had a new business in the last decade. Opportunities have gone past us and we have not been able to capitalise on them,”said Sachin Nandgaonkar, management board member and president, specialty sector. The former BCG senior partner and director was recruited by RPG in January 2015 and made leader of the think tank.
“We will look at game changers and disruptive ideas leveraging the power of digital.”Nandgaonkar has been roped in for a twopronged effort— come up with the new ventures and migrate the existing six to the digital era. A digital officer and a team have been set for each of the six segments— infrastructure, automotive tyres, information technology, pharmaceuticals, plantations and energy.
The conglomerate has a total market cap of Rs 18,147 crore with over 15 companies in these six areas. One-fifth of Nandgaonkar’s performance score card depends on the successful move to digital and another 20% on the new launches. The launches have to be from two baskets— a new venture from one of the existing business segments and another from unrelated areas.
“From a list of 45 ideas in March, we are down to a handful now and these include foraying into art, health and wellness, music amongst others,”said Nandgaonkar. The team has a corpus of around Rs 100 crore to start with.
Making the move to digital is imperative for old business houses, said Sanchit Vir Gogia, CEO and chief analyst at IT analyst firm Greyhound Research. “Return on investments from traditional methods have become questionable,”he said.
“Digital techniques in business will give better insight to customers and make it more nimble.” Although it’s tough for traditional businesses to incubate startups, clear direction from the top provides clarity, he said.
The think tank, which includes former senior leaders of BCG and AT Kearney, meets every week to evaluate the viability of their ideas.
“Within a year we have to get to a point where there are a few new businesses and game changers,” said Nandgaonkar. Given the stringent deadline, the strategy involves reaching out to the student community. Nandgaonkar’s team also plans to visit incubation centres at the IITs and look at projects in specific areas that RPG is interested in.
The group would then offer to incubate such startups. “This helps both students and business houses,”said Poyni Bhatt, chief administrative officer of SINE, the incubation cell at IIT-Bombay. “Students get immediate client, funding, an exposure to the corporate structure and the company gets talent and a startup idea without having to create teams for it.
“Buying startups rather than incubating them inhouse could be a better bet, according to Sharad Sharma, angel investor and former head of Yahoo India R&D. “When the IT boom happened, every business house started their own IT software services centre but only a few survived.”Once new businesses are decided, the group will bring in industry specialists.
Source: Economic Times