Review by Syama K.S and Anand Venugopal of Failure to Launch Mitu Jayashankar, N.S.

Ramnath and Ashish K Mishra, Failure to Launch, Forbes India Vol: 3 Issue II, June 3 2011. The article, appeared in Forbes India Magazine of June 2011, enlightens the readers about the chaotic start up environments in the country. It points out to the fact that even an experienced hand can go wrong during the start ups. This article is about the entrepreneur Captian G.R. Gopinaths logistics start up, Deccan 360, which has been grounded due to the obvious reasons towards failure.

The authors started off with the quote from Old Man and the Sea by Ernest Hemingway. The Old man and the sea is a story of a life threatening ordeal to an experienced fisherman named Santiago while fishing in the Gulf Stream. The relevance of the Old Man and the sea to the situation cannot be overlooked as there is a similarity between Santiago of Old Man and the Sea and Capt: Gopinath, and the Marlin and the Deccan 360, the start up. The authors expressed their views on the matter on a pessimistic. But as the comparison to the story by Hemingway, it has to be noted that there is still a ray of hope as the Old fisherman returned to the shore, if not with the prize at least with remains of the huge Marlin. The first part of the article clearly depicts the authors pessimism with the statements expressed such as; His biggest customers are fuming and many of his franchisees feel betrayed. His key executives with their salaries delayed for two months are demotivated. Later on, the authors cited an example through the words of one of the customers of Deccan 360. It is not difficult to understand the view of the authors on the venture as they say Gopinaths ambitions far exceeded his execution capability.

The article also contains authors perception of Capt: Gopinaths personality. It is said that There is no doubt that the Captain was aggressive. and the comparison to the CEO of the venture H.L. Rikhye clearly shows that Capt: Gopinath always with high energy and with what it seems to be over confidence. The comparison also puts him as non-pragmatic and has non-idealistic approach to the tasks at hand or rather existential absurdist. Capt: Gopinath is considered as a gutsy entrepreneur who did set out on a difficult task. By the quote his heart was in aviation, the authors, we feel, project his success as the pioneer of Indias low cost airline. However it also implies his non versatility towards diversification to other industries as well. It is also mentioned that he is trying it expand the venture into the charter segment.

The authors were careful enough not miss out the reasons for the arrest of the venture by citing the previous attempts by different players to start off similar venture. The dream of the Captain was to build a logistics company that would revolutionise the industry. The plan was to connect 17 airports and 24 cities by air using three JET engine airplanes and seven Turboprop airplanes. The initial market study showed that the venture would be profitable and the company would have 20% of the market in five years. Instead of taking step by step, the entrepreneur had gone to build the scale with sourced funds from private equity firms like Reliance Industrial Investments. The company had managed to source talents from the best companies in the sector such as DHL, Blue Dart, UPS and FedEx. But all they forgot was the Customers. The business model to achieve the scale was to use the entrepreneurial instincts of the people and is said to be advocated by, a close confidante to Captain: Gopinath, Mohan Kumar. The model was that the company would be handling the core area of the network while the pick-up and delivery franchised out. The article points out that this worked in the initial days of setup as the capital required was low but retaliated as the day passed by. From a logistics management perspective, more than 32 tonnes of cargo capacity should be serviced every night. It is pointed out that the air freight is normally four times the ground freight and as a result many clients who promised to give business to the venture had been slow to switch to air cargo. This inadequate air tonnage caused the venture to be eventually grounded. We seem to understand that the authors were trying to point out that the pioneer of low cost air travel did not turn out to be a pioneer in low cost air cargo. The inefficient management of franchisees and inadequate support rendered to them, which includes incentives, caused a slip in the brand image of the company. The example cited to hold this point was the words from a customer Often there were delays in our orders or there would be mix-ups and the packets would be sent to wrong locations as mentioned in the article. The franchisees too felt the void of assistance by the company in getting the business and operational systems. As mentioned, everything looked good on paper when the predictions were $73.5 million and it looked like turbulence when numbers popped out was nothing but in red.

As we mentioned above, the authors shows a ray of hope by citing Kumars statement of availability of two credit lines and the current CEO Rikhyes operational plan. Amongst all the bad news, the only good news is that demand many be picking up. This year the company is expected to touch revenues of Rs. 200 crores.- This statement shows a protagonist nature of the article and propagates the idea that all is not lost yet. There is also a mention of his supporters partly blaming the investors who opt out before the end. They claim that Capt: Gopinath is a visionary, who dreams up big ideas. The supporters firmly believe that

Deccan 360 is a revolutionary idea which, given some time, can become a viable business. Only time would be able to say whether this words are right or wrong.

The case explained in the article is of outmost importance to business students as well as corporate and budding entrepreneurs. We feel that there are a lot of lessons hidden between the lines of the write up. Let it be from the logistics, marketing, talent sourcing, etc to strategic and tactical aspects of the business these lessons must not be ignored. The article provides a valuable lesson to an ardent learner of theory in practice. In a matter of months since the adoption of the business model suggest by Mohan Kumar, the company had more than 45 franchised service center employing 600 people. This meant that none of the customers had direct interaction with the company and all they had through the franchisees. This system works well on papers but in reality the ambiguity that arises are too complex to calculate the future requirements, as well as the feedback, from the customers. In addition to the above mentioned strategy, it is evident from the article that the company did not give needed priority to the rural and remote areas. The corporate policy did not incentivize the delivery of packages to these areas. Since they (the franchisees) got the same amount irrespective of the distance they travel to deliver a package, the more remote a location, the less willing they were to do so. Ignoring the rural and remote locations proved to be a fatal flaw in the system. Deccan 360 kept changing the flight schedule. And worse, at times they suspended the network. This statement in the article lights up the mishandled logistics management in the firm. As mentioned above, if the vision of the organization was Express Logistics, it is ridiculous for the company not to keep the promises to its customers as it tarnishes the trust placed by its customers. During the initial parts of the article it is mentioned that within 15 months into operations, two CEOs and the sales head left the company. As the time passed by it became more visible that the talent brought in by Capt: Gopinath from the peers proved to be a fiasco, as they did not survive the rigours of the chaotic start-up environment. The authors mention of Kumars statement of Blind Men and the Elephant and the issue raised by him as the failure to see the big picture is necessary enough to understand the holes in the areas of talent sourcing. What we understand from these statements is that there was a lack of synergy between the human resources and the organization.

The operations were suspended by the CEO H.L. Rykhe citing the company was not able to live up to the delivery targets or to respond to customers. Here, we are reminded of the words by Sir Nick Scheele, the Former President and the Chief Operating Officer of Ford Motor Company. He says, When a company is losing money and is in a general state of confusion, it is time to get back to basics. It is a clear message from the article that what Rykhe is doing is exactly what Sir Nick Scheele had said. The way forward and through the mess is Shrink to Survive and then gradually build it up. The article points out the

statement by Rykhe to take the hard step and to swallow the pride to get corrected out of the debris of the failed launch. As they say in Harvard get lean to get better, it seems they say in Deccan 360 too.

As an optimistic conclusion, the authors quoted from the same old Man and the Sea. In the novel, the old man finally returns to the shore, but with a skeleton of a huge fish, half eaten by sharks. Still, generations of readers have been inspired by the scale of his ambition and the nobility of his effort. And what beat you, he thought. Nothing, he said aloud. I went out too far. The last statement from the authors seems to have a comparison with Capt: G.R. Gopinath. They believe (we too) that the Captain will return to shore with a skeleton of an ambition, to revolutionise the logistics industry. Generations of budding entrepreneurs will be inspired by the scale of what he has achieved and dreamt. What went wrong with Deccan 360? Nothing, they scaled too fast and too wide.

The authors intention is well understood by going through the article. However as we mentioned above, the article is a treasure of lessons hidden between the lines to be learnt to put theory into practice in a better and mature way. Through an eyes of a layman this article is orderly and sufficiently to understand the current scenario of the express logistics industry and Deccan 360. It is, undoubtedly, served its purpose of being in a business magazine. But, we feel, more could have been done so that it would be to sufficient enough for being a lesson theory in action for the students of business administration. Overall, the authors present the case of Deccan 360 as an invigorating reading material for those who know Captain G.R. Gopinath. The article is well constructed with the proper flow of events unfolding to the present scenario of the company Deccan 360. More over the comparison with other failed air cargo startups provides trivial information on how the air cargo industry works. The article helps to understand not only what is happening with Deccan 360 but also, other peer group in the sector. There are certain points regarding the initial capital and the investment by the Reliance Industry which remain concerning. It is said in the article that the people close to Mukesh Ambani believe that the way things stand, he is in no mood to invest any more money in this venture. and also, it is mentioned that Capt: Gopinath raised Rs 110 crores from Reliance. According to the documents filed by Deccan 360 with the Registrar of Companies (ROC), the Article of Association show that the Reliance Industrial Investments invested in Deccan 360. The funding was in tune of Rs 500 crores starting with Rs 110 crores with a commitment to invest more at different valuations. The statement from the people close to Mr. Mukesh Ambani and the statement CEO of Deccan 360 H.L. Rikhye about the Reliance funding prove to be contradictory. The accuracy remains vague here. The article proves to be of high relevance for those in the areas of Mutual Funds, Venture Capital Investments, as well as students of business and budding managers. Apart from the above mentioned

ambiguity, the knowledge provided by the article cannot be compromised in areas of corporate strategic management. The inclusion of the lines from The Old Man and The Sea brings a real effervescence to the introduction. It is an appreciable factor that the authors found such striking similarity between the fisherman Santiago and Capt: Gopinath.

This article thought provoking tale of crust and trough, of triumph and disaster of a successful entrepreneurial career is perfectly depicted with sharp and invigorating manner.