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Only 25% entrepreneurs have a defined second line of management: ASCENT

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Entrepreneurship is not everyone’s cup of tea. It requires just the right mixture of persistence, courage, a great idea and of course a great team. India has seen an upsurge in the entrepreneurial spirit of late and there have been a lot of startups making their mark both on national and international platforms. However, a lot of them still rely on “Jugad” techniques to scale up faster, avoiding the tried and tested methods of setting up teams and making strategies due to the extra cost and effort entailed. A recent ASCENT-EY report has brought some of the attributes of this phenomenon to the fore.

According to the report, only 25% entrepreneurs have a defined second line of management. The report was presented at the first experiential learning conclave, themed ‘Growth. Disruption. Entrepreneur’, hosted by ASCENT. While first line of management is one which deals with the day to day work taking place within the organization, second line of management is the one above the first line and offer various advantages to the organization — including a broader outlook.

Speaking at the occasion, Harsh Mariwala, Chairman, Marico Ltd. and Founder, ASCENT, said:

We are proud to partner with EY and hope that entrepreneurs across India, as well as globally can gain valuable insights from the report. For me, the biggest and most interesting take away is the fact that investment in different processes which support customer centricity, leadership planning and operational efficiency, has a multiplier effect on the business and provides disproportionately higher returns to the entrepreneur.

In case you are unaware of it, ASCENT is a non-profit, unique, powerful peer-to-peer platform that aims to bring entrepreneurs, service providers, investors and banks, industry role models and domain experts all together in a single place.

EY on the other hand, refers to Ernst & Young Global Limited, which is a well known brand and provides its clients with advice over matters like tax, transaction and other financial scenarios.

According to the findings of the report, as many as 75% of the companies do not have a second line of management. This is certainly a not very appreciable state of affairs. However, it is sometimes made a necessity because startups have neither the resources not the time to train too many people. Indeed, in many cases, it is “do what you can” after fulfilling your primary set of duties.

However, according to the ASCENT report, it may be worthwhile to train a second line of managers. Here are some of the other fundings of the report:

  • Companies that offer customer-centric solutions (75% respondents) have twice the average revenue size of companies that do not have such solutions. 
  • Companies that have set up a strong second line of management (25% respondents) have 3.5 times higher average revenue size compared to companies who do not have a second line of management. 
  • Companies who have a total rewards mechanism (10% respondents) have 15% higher employee productivity when compared to companies who do not have total rewards. 
  • Companies who segregate core and non-core activities (75% respondents) have approximately four times higher average revenue size vis-à-vis companies that do not segregate. 
  • Mid-sized companies who have investors on board register 1.7 times higher growth compared to companies who do not have investors. 
  • 50% of the companies with a strong corporate governance structure (10% respondents) have managed to attract external investors, as opposed to approximately 10% companies who do not have a corporate governance structure in place. 
  • Companies who used technology to drive growth have registered three times higher average revenue size compared to companies that do not use technology.

Commenting on the event and on the findings of the report, Pinakiranjan Mishra, Partner and National Leader – Retail and Consumer Products, EY said,

Entrepreneurs need to understand that achieving growth is not enough; it also needs to be scalable for long term sustainability and success. Amongst the seven drivers of the growth maturity model, they seem to be doing quite well in understanding customers and managing operations. Entrepreneurs will also need to focus on the other five drivers in order to be successful.

The 2016 iteration of the ASCENT saw participation from well-known names among the corridors of business — including Uday Kotak (Kotak Mahindra Bank), Ronnie Screwvala (Founder, Unilazer Ventures Ltd. and Swades Foundation), Vijay Shekhar Sharma (Founder, PayTM), Sandeep Singhal (Co-founder, Nexus Venture Partners), Sasha Mirchandani (Chief Executive Officer, Kae Capital) among others.

 

 

A bibliophile and a business enthusiast.

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