Knowing & Understanding Business-Industry History

Working in the very nascent & just-born (5-years old I would like to estimate) Indian Retail Industry, I am increasingly running into the "Indian Retail Doomsday Predictors" everyday - within and outside of my own Workplace.

Typical Conclusions are:
- 3 Years on, What a Mess it is & How it is Not Going to Work.
- They should have done This and That and Even That.
- How the Likes of IT, FMCG & Telecom are doing so well (!)
- There is no Positioning & Strategy.
- And so on...
These conclusions could turn out to be right in the long run alright (yes, things are bad in Indian Retail at this moment), but it is frustrating to see how easily one can be so disillusioned & dismissive about a Sector one was so bullish just about a Year back.

The sense of Doom is accentuated just because 3 Things happened in the Last Year - No increments, No variable pay and Sad job market (which doesn't allow you to quit easily and move on). [As far as Retail Industry growth is concerned, it is still progressing as smoothly (read: slowly) as it was envisaged last year.]

• People loved it when despite being on "Zero" Revenue, Retail companies gave them "Awesome" Pay hikes, to join the Retail Bandwagon. And they loved it when the company gave them their 1st year Variable pay-offs in full - despite still being on Negligible revenue. This Sector rocked and held promise...
• But now that the Retail Environment has toughened and the Company cuts back (big-time) to manage Survival better, the Sector is headed for Doomsday...
• Comparisons are being made with the likes of IT, Telecom & FMCG (and whichever industry which gives out pay-hikes & variable pay) Sectors and I can probably even see regrets on people's faces, questioning the Choices they made and the Opportunities they may have missed elsewhere.

I have this thing to say: Know & Understand Business History.

1. Every "Brand New" Business/Industry goes through the "Up-Down-Up" Cycle:

• Irrational Exuberance about Business/Industry Potential,
• Overboard Vision,
• Too much Investment,
• 100 Models of Working,
• Glitches & Errors & Outright Mistakes,
• Learning & Rationalization,
• Moderated Vision,
• Re-organization & Improvization,
• Re-ignition & Renaissance.

Take any Industry (and the business leaders of their time) - Automobiles, IT, FMCG, Telecom, Oil, Manufacturing - and they will have gone through this cycle. Even Retail - in US, Europe & Asia-Pacific) - has gone through such a Cycle. Things don't Change quickly enough - for the worse or for the better. It takes Years of Effort - to fail at it or to make it work.

2. No "Two" Industries are the Same, nor are they Completely Different:

• Breakeven in one Industry may happen in 3 years and in some other still it may take 7 years. We cannot compare Apples & Oranges.
• A company in Industry A may take 3 Years to become a 'Leader', whereas a company in Industry B may take 7 years to become a 'Leader'. The important part is that both of them are 'Leaders' eventually. So, in the interim 4 year period, one simply has to be Patient.

3. There are No Absolutes:

• Good to Great & Build to Last Companies have failed (Circuit City in Retail, Motorola in Manufacturing) and Written-off Companies (Amazon.com in E-Business, Cisco in Telecom Hardware) have to come to rule the Businesses they operated in. And, within a decade of them having being written about either which ways.
• When any Company is in a Business with "Serious Intent", the time frames have to be measured in Tens of Years and not in Single Years. To specifically quote Retail Examples, it is worthy to note that the Walmarts & Tescos of the world became 'World Leaders' after nearly 20-25 Years of "Competitive Existence". They didn't start at # 1 and they did not make Zero mistakes along the way.

I hope this is not coming across like a sermon, but I have read a lot of Business Magazine "Archives" (Fortune, BusinessWeek, BusinessWorld, Forbes) in the last few months and I have seen how so many of today's favorite companies (as well as the industries they were in) had had it so tough during their 'initial' lifetimes. It was encouraging & insightful to evaluate them through the complete Cycles and understand that "Uncertainty" always prevails in a Business Environment - Be it a Brand New Industry or the Old.

"Brand New Industry" types can probably take heart from these Old Business/Industry History Lessons and stem a little of the Impatience that prevails in the Indian Retail context today. Walmart, and for that matter, Mr. Biyani's Future Group, wasn't built in a Day.