Myths about entrepreneurs:

People usually think that it requires a great idea, product or a brilliant strategy to become an entrepreneur. However the truth is that when you start, you know little and gradually things become clear. That is true for HP, 3 M, Sony and P&G. When Mr. Dawood started, they had a searching mind, motivation to do something different and commitment to go an extra mile.

Parameter to consider:

• Mission and Vision of the business. Failure of this will result in ultimate failure of the business.
• Narrow or broad range of product
• Niche market
• National or international boundaries
• Proper leadership
• Domain and Core competence
• Trial and Error
• Economies of scale. Currently Descon takes on bulky projects. It contracts in millions of tons and does not take small assignments.

Birth of Descon:

In 1997, Mr. Dawood along with 3 engineers decided to launch a company that gives a range of engineering services. In those times, there were small not very well known  companies and petty contractors. Descon decided to have a broad range of services, catering to civil, mechanical and electrical. Some critical decisions were:

• 1. Narrow Versus Long term Vision

The projects started were small but scope and vision was broad. Mr. Dawood said that we could have been comfortable even if we had stuck to one area but this was not our vision. Hence electrical, mechanical and civil were started alongside. EPC was started later.

• 2. Global Versus local operations

Also another major decision was to launch a global venture alongside domestic. The motivations were personal growth and exposure, take Pakistan brand outside and build its image, diversify etc. Mr. Dawood stressed on international operations. He said it is even more important in today’s era.

Problems with Pakistan’s Entrepreneurial climate

• People pursue short term policies
• There is a rent seeking attitude. The businessmen will try to seek government subsidy and protection rather than accept challenges and compete.
• Also most businessmen are fixated on commodity based sectors: Textile, Cement, Sugar and Ghee. They also remain local. However, going global and trading value added  product is the need of the country.
• Pakistanis are not good team players but good in developing processes.
•  Most Pakistanis are not born entrepreneurs
• Risk taking is discouraged in Pakistani business environment.

Deson Approach, experience and suggestions.

• Long-term strategy was formulated by DESCON.
• Follow a sequence and not launch all at once. At Descon the transition into broad based services has been swift.
• They were clear they will be contractors and not consultants.
• Started with a small job, wiring in a warehouse but it eventually got them more contracts. It is important to realize that no work is too small. It is important to build good will and reputation for long term success.
• They outbid 30% lower to remove catalyst in a gas processing plant. It was a 16 days job. However, it made them earn newer contracts. Initial loss should be considered as an entrance fee.
• They started EPC (Engineering, Procurement, Commissioning, and Construction) with instalment of Chemical plant for Unilever at RYK. It cost Descon a lot of money. Hence they closed EPC temporarily. Lesson: the time to begin EPC was not right
• Cash flow is more important than profits.
• In real life, the business plan and feasibility study are sometimes are not considered while taking important investment decisions. For example, in 1985 DESCON bought over a factory in Saudi Arabia without analysing the cash flows, feasibility and business plan.
• Descon decided to move up the value chain and not stick with the commodity products.  Also, low valued added products are shredded away with introductions of new high value added products.

Present situation of Descon:

• Descon is at a high level of value-addition. Entered into technology transfer agreement with Mitsubishi in 2006. Today, Descon is Mitsubishi’s 5th largest technology player.
• EPC is currently a viable business segment.
• Descon’s achievements are:
• From  Initial Strength of 4 engineers it has moved to present 4000 engineers
• Operates in 7 countries
• Has 140,000 employeesFuture of Descon:

• The company intends to go further up the value chain.
• Expand globally.
• Focus on niche markets
• Market segmentation and product differentiation are two key areas to concentrate.
• Leave behind a company that sustains itself successfully in the future.
• Build an institution that can leave behind a legacy like Western institutions. P&G is a 90-year-old company.
• Have a long way to go. Competitors still have a lot more achievements than descon.

Organic growth Versus Acquisitions:

• A company must start with organic growth. It builds company’s character. Descon’s growth has been mostly organic.
• Once established, acquisitions become feasible. The company saves times especially if technology to be acquired will take a long time to develop.

Importance of global operations:

• More competitive edge
• Helps in local competition
• Become wiser when rub shoulders with world class organizations
• Helps move up the value chain

How to face international standards?

• Gain competitive advantage by core competencies
• Clarity comes with time

Lessons from overseas growth

• Cash flow is an important factor.
• Market segmentation, differentiation and niche marketing are important concepts.

Qualities of an entrepreneur:

• Vision/ dream for the company
• Passion
• Commitment to your dreams
• Courage to take the plunge
• Choices
• Wrong decision is worse. Be careful about it.
• Persistence is extremely important
• Hard work

Traits of an entrepreneur:

•  Is Visionary
•  Has Clear goals
• Captures niche
•  Is Innovative

Purpose to become an entrepreneur:

The idea is that of Abraham Maslow’s Hierarchy. Mr. Dawood told of four levels of why an individual seeks entrepreneurship:

• Level I: Person wants to make money
• Level II: Person wants to make money and improve the human capital of his family.
• Level III: Person wants money, improve the human capital of his family and benefit society.
• Level IV: Person wants money, improve the human capital of his family, benefit society and leave behind an institution that outlasts the entrepreneur and goes on from generation to generation.

Concluding remarks:

• Do you want to be time teller or clock builder?
• There are no right or wrong answers in life, just live up to your decisions.
• Entrepreneurship is a lifetime adventure for greatness of family, society and nature.
• Being an entrepreneur is an extremely risky yet fun for those who are committed in it.
• It requires the person to take full responsibility for decisions. Failures can be immense.
• Patience is important.
• Hard work pays in the long run.

Questions and Answers:

• How important is succession planning for an organisation?

Mr. Dawood said that it is an extremely important aspect. It is vital for the long term sustainability of the business.

• What challenges did you face and how did you cope up with them?

Mr. Dawood said it is a natural thing for an entrepreneur to fail at times and face difficulties but he must be able to successfully cope up with them.

• How does recession affect emerging entrepreneurs and Pakistan’s business?

No doubt It is a difficult time but you can diversify your products and enter new  markets.

• How can we build Pakistan brand when our image has deteriorated?

This is true. However, once you start working and your quality of work will make the difference. Pakistanis face more challenges than others. Yet it is not impossible to break the stereotype.

THANK YOU MR RAZZAK DAWOOD FOR ENLIGHTENING US WITH YOUR VALUABLE THOUGHTS