You Don’t Want to Get a Rough Ride Like OLA

And you certainly don’t want the kart to be flipped like Flipkart’s !

So, try to think differently.

I have found one thing common about emerging sectors – the focus of new businesses is on valuations.

They seldom realize that most often there are legislative gaps in newly liberalized policies, an inadequate regulatory framework adding to the grey areas and the government / regulator’s huge discretion to toss your valuations / business plans out of the window.

Start Ups like OLA engage the top law firms and also have in house legal teams – so they are not living in the world of the ‘uninformed’ but its more like living in the world of ‘mis-informed’ ( usually attributed to consumers of media )

Here are some tips that would certainly help you play safe & steady–

Knowledge

• Start the business with knowledge of Regulatory compliance and you will also find grey areas
• Do not operate in uncertainty just because someone is funding or valuations are going up – usually your valuations are based on potential customers / competitor’s market and does not factor in potential regulatory risks
• Unfortunately for disruptive technology businesses there is no example to learn from. Other Start Ups that are not disruptive could do a comprehensive study of successful businesses ( as opposed to successful products ). For Eg. The Ambassador & Fiat cars were very good but could not survive the competition from other brands
• Knowledge alone will not get the desired result but it’s a necessary first step

Strategy

• Create strategies by thinking deeply on the knowledge you have found
• Marry strategies to regulations - Align strategies to be on the right side of law / policy
• Mark that a strategy is not a plan – plans are steps towards profitability – they do not consider risk factors & deterrents
• Consider compliance / training to be an investment like you do for branding – not a cost
• Plan a solid multi-faceted strategy that is legally compliant and anticipates how to react to obstacles – don’t wait for challenges or depend on delaying the right things to do just because the law enforcement is slow

Execution

• Now that you have a solid strategy you can operate your business without fear and doubt and dash into executing it
• You will find that execution will be simpler and faster avoiding too many gaps that you may have had to fill otherwise
• Look around for failures of executing first without knowledge & strategy – e-commerce sector has plenty of examples of rolling back plans / services due to this very reason
• Finally, a strategy is only useful if you put it into execution based on in depth study of your business / regulatory environment

Where did OLA go wrong?

It seems OLA did not get clarity on some starting questions, like–

What is the sector policy applicable to them?

Is SaaS recognized as a Technology sector? Or Is e-commerce defined?

What are the obvious contradictions / grey areas? and

How many regulators with overlapping jurisdictions could regulate OLA’s business?

So, when OLA launched its service -

Firstly, OLA tried to resist essential compliance with environmental norms of Transport department (CNG requirement) on the ground that they are not a taxi service

and

Secondly, OLA was not prepared with a competition strategy ignoring the market regulator (Competition Commission of India ) with robust powers to investigate and levy penalties that could be as high as 10% of turnover. As a result, they did not have enough time to respond with a planned strategy when the CCI issued notice to them on ‘predatory pricing’. Therefore, they faced an order of investigation against them. Although, in later orders CCI has closed cases against OLA / UBER, contradicting itself, the rules of competition in the market of “Radio Taxi services “ have still not been laid down by CCI.

Implications - Government begins to ‘seize’ Ola’s and Uber’s ‘surging’ growth

SaaS ( Software as a service ) - that has brought e-commerce into the market is not a defined sector.

Therefore, all app based aggregators ( OLA / Flipkart ) are not recognized as technology companies. They are taken as competitors of the traditional services available in the market even though they are way different in terms of pricing, efficiency, convenience etc.

All SaaS / e-commerce companies need to change their approach from execution 1st - then knowledge & strategy to knowledge 1st and follow the above mind-map to operate without FEAR, UNCERTAINTY & DOUBT and not be a slave to policy grey areas which compels them to change business plans by knee jerk reactions.

So shift your paradigm and you will not have to depend on government or the courts to win !

Hope you found this post useful. I would love to hear your views & experiences - especially if contradictory.