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Page 2 of 2Develop a roadmap to nurture IP
So what comes through from the Satyam example is that one form of crossing the line is corporate fraud, underlying which may be misplaced value. Explaining how this works, Bhaskar opines that Satyam was doing well as long as it was solely engaged in the IT business. It was only after the promoters sought to diversify into real estate that the misappropriation occurred.
In this context, Bhaskar questions: "Perhaps Ramalinga Raju did not believe in Satyam?" He relates this to Indian entrepreneurs in general, as he expresses the opinion that by and large, they still don't sufficiently value intangible intellectual capital, which unlike instantly acquired (and tangible) real estate is difficult to maintain for a long period of time. Unlike buildings that last 50 to 100 years with minimum maintenance, IP (intellectual property) has to be carefully nurtured to stay ahead of the race, over generations.
In truth, with business, there are no ‘get rich quick' avenues nor are there any short-cuts, and as Natarajan highlights, "Start-ups should not misconstrue risk-taking with short-cuts."
Narayanan adds to this, "If you are really convinced that what you are doing is valuable, then do not worry about growing quick. It might take some time to climb the hill, but do realise a grave mistake will cause you to slide down fast. So, be at it patiently. At the end of the day, if you are convinced that you have a value proposition and you work on it constantly, then you will reach your goal."
Along the way, Narayanan suggests that any business, start-up or otherwise, should take extra precautions to safeguard its investors. And there is perhaps nothing more that investors like than transparency. As Natarajan explains, this entails sharing the bad news along with the good news so that investors do not for a moment suspect that something is being hidden.
return on investment.
Is Satyam doomed?
Undoubtedly, the magnitude and audacity of the fraud was huge.
Additionally, Chandras believes the new management and board of directors must also move quickly and aggressively to restore customer and investor confidence, and thus bring normalcy to the situation. Satyam is a leader in IT, has solid talent and subject area expertise (in, SAP, for instance), and an equally solid market presence. What is required is a public relations offensive that is immediate and direct, along with the sustained contact of senior Satyam managers and executives with customers. This should be supported by a well-defined and selective publicity campaign.
The impact of the Satyam fiasco
Sethi adds to this, saying that the Satyam disaster has caused enormous collateral damage across the Indian market. It has raised apprehensions about how the world would view both the IT services sector and the Indian corporate sector's standards of governance.
While it still remains to be seen whether foreign investors tar other IT and tech related ventures with the Satyam brush, the examples of Tata Consulting, Infosys, and Wipro, that have had better success at achieving transparency and investor trust are in India's favour. Additionally, as Chandras points out, "The seemingly small action, of these IT majors and Satyam's competitors dealing with the situation wisely and without any blatant exhibition of opportunism, has also gone a long way towards lending credence to the maturity of Indian IT vendors."
Primary determinants of investor faith in start-ups
At the end of the day, Chandras concludes that ‘greedy corporate chieftains' are always around, but the primary determinants of investor faith in start-ups will continue to be economic: the safety of capital invested and the potential