8 Lessons Entrepreneurs Should Learn

HMT Watches, the iconic brand that most Indians grew up wearing, will be shutting shop soon. The government has decided to wind up the company, which has been incurring losses since 2000 and been unable to generate adequate resources to pay salaries to its employees. The company launched in 1961 and set up its first watch manufacturing unit in Bangalore in collaboration with Japanese watch manufacturer Citizen Watch Company and had its first batch of watches released by Pandit Jawaharlal Nehru.

The brand evokes some serious nostalgia in all of us who grew up in the previous millennium. And while many of us, including myself have grown to associate the brand as a visual reminder of the past - as an accessory personifying our grandparents, the truth is that the watch giant failed to keep pace with the sprinting Indian marketplace, and had its meaty share slowly usurped by competitive and innovative young brands. Here are 11 lessons that entrepreneurs should learn from this news:

Photo: HMT

1. Innovation Is Important

HMT was never big on innovation. It copied designs of foreign products available in markets like Hong Kong and the Far East, which HMT officials would pick and bring back to India to imitate. In fact, even till 1982, HMT had just four basic designs, giving customers very little to choose from. Even two years after Titan, its biggest competitor to-be was launched, HMT still did not launch any new products. Lack of innovation is said to have gone against the company that at one point enjoyed a 34 per cent market share of the watch market in India.

Lesson: The days of monopoly will be over sooner than you can imagine, so don't live in a bubble. Always, always, keep on innovating.

Photo: Shutterstock

2. Not Enhancing Technology Is Lethal

HMT started out with building mechanical watches and failed to see the changing current in the tide as the competitors began to aggressively push Quartz Analog watches.

Lesson: Technology is reckless. It kills products every day. You've got to keep enhancing technology to keep the show running.

Photo: Shutterstock

3. Bad Work Habits Can Crumble The Company

Lack of discipline and commitment are also to blame for the sad demise of HMT. Even after possessing sufficient managerial talent and providing the employees with lots of training facilities, there was a lack of skilled employees that HMT faced. Apart from this, there was a serious dearth of team spirit and the drive to innovate. ?HMT also suffered from serious under-utilization of human and machines resources. Internal red tape, another common occurrence of PSUs, also resulted in HMT reacting slower to its competitors' moves, in the process running huge losses as it lost out in the fiercely competitive space, now dominated by classy global and local private brands.

Lesson: It is imperative to keep the employees motivated not just towards personal goals, but also organizational goals. Motivational strategies such as reward and punish (carrot and stick approach) should be adopted. And as a business, keep absolutely no space for red tape.

Photo: Shutterstock

4. Good Design Rules

HMT paid little or no attention to aesthetics and packaging. It also failed to create a suitable retail outlet-all cardinal sins for a product firm.

Lesson: Looks matter. Whether it is a website or a customer product, some attention needs to be paid to design and aesthetics, as the customer today is highly discerning.

Photo: Shutterstock

5. Cost Control-Keeping Tab On 'Mehengai'

No adequate cost control system was set up by HMT. The wage bill and manufacturing costs had been swelling over the years. ?As a result, the company's net loss rose to Rs 242.47 crore in 2012-13. At the end of March 2012, it also took a government loan, including budgetary support for salary and statutory dues, amounting to Rs 694.52 crore.

Lesson: Proper cost auditing needs to be done regularly, as cost overflow can make even the tightest firms bleed.

Photo: Shutterstock

6. Missing Opportunities Is Like Missing The Only Bus

HMT failed to diversify. It could have diversified into different watch categories like analog-digital, multi-function, digital, stop-watch, alarm clocks, etc. It could have tapped the export market too. It could also have created a range of women's watches. ?HMT also failed to tap in on the festival bonanza - one that Titan has captured wonderfully.

Lesson: As a business, you must learn to cash in on possible opportunities and get there before the competition does.

Photo: HMT

7. Failure To Identify The Pulse Of The Market Can Permanently Rest Your Pulse

Even though they commissioned regular marketing audits and had detailed access to changing customer demographics, HMT failed to tap in to the pulse of the youth market. Their advertising was jaded compared to that of its competitors. HMT's average age of first time buyers was 23, and it did little to decrease the average age of its buyers, and move into the youth category, which is a highly lucrative target for most retailers.

Lesson: It is more important than ever to stay relevant to your audience, each day, each minute. And in a business, you should understand the value of youth targeting, as it is one market you cannot afford to ignore.

Photo: HMT

8. Premium Products Mean Premium Products

HMT Quartz was created to be a prime product and targeted to the modern Indian young man. ?But Quartz's high price meant it was to be afforded by only the middle age affluent consumer. The fate of the product? It ended up being abandoned by both demographics. Even after reducing the price to Rs 800 and creating an ad campaign highlighting its youthfulness, it failed to attract the target audience because it had no visible differentiating factor, and the product failed to match up to its communication.

Lesson: Claim what you can back. And when you plan to launch a premium product, be sure as hell ready to give the customer a premium experience.

Photo: HMT