Learn to Leap: Green Business Building Edition

How to accelerate innovation in new green business building

India-based industrial biotechnology company Praj Industries has spent decades making innovation and growth fundamental to its business while also being mindful of how its actions affect the planet, people, and local communities. Consequently, the organization has been able to scale up in numerous locations worldwide. In an interview with McKinsey’s Pablo Hernandez, Praj Industries founder and executive chairman Dr. Pramod Chaudhari discusses what he’s learned along the way, how to build custom solutions, and how the next generation of start-ups can approach sustainability.

Key insight #1: Maintain a balanced view of people, profit, and the planet. Emphasis on one area should not come at the expense of another.

Pablo Hernandez: Sustainable growth is clearly a priority for you at Praj Industries. How do you balance that vision while also trying to run a profitable business?

Dr. Pramod Chaudhari: Entrepreneurs can adopt green practices in their business to help create new opportunities. For example, if they come from a manufacturing background, they could build models that show how green manufacturing approaches, such as using renewable power, can minimize their carbon footprint. By embedding these ideas in the company from the beginning, entrepreneurs can strike a good balance among people, planet, and profit.

Unfortunately, right now the people element is suffering across many companies, especially as digital technology evolves. Automation, for instance, is having a big impact on employment as its use increases. At the same time, technology is also responsible for a lot of new professions and businesses emerging worldwide. The question is, how can we get people interested in learning how to embrace these new opportunities and strike the right balance?

Key insight #2: Make passion, purpose, and innovation through failure foundational to your business.

Pablo Hernandez: What are your most significant insights from running such a large company? Is there anything you would recommend to other start-up leaders?

Dr. Pramod Chaudhari: You must base your business on purpose and passion, and we can all learn how to do this better. After that, finding the right people and motivating them to get on board is important. When you have the right mix of passion and purpose and the right people, you can get them to do extraordinary things because they will work hard. Of course, leaders must also empower their teams and give them freedom to explore lots of opportunities for innovation—this is often forgotten.

Praj Industries is no longer a small garage company, but we make sure that we have a strong R&D focus, which helps us discover, introduce, and commercialize new technologies. By finding the right mix of innovation, people, purpose, and passion, we can grow even faster than normal businesses. Ultimately, innovation should minimize cost, create easier access to customer intelligence, and deliver best-in-class technology.

Pablo Hernandez: In many of your writings, you emphasize the relevance of finding the right people. What characteristics do you look for in the people you work with? What attributes do you value most?

Dr. Pramod Chaudhari: Conventional attributes such as being hardworking and sincere and having dignity are the most important, especially for people who want to build a career in our organization. They must also not be afraid to fail. Failures are encouraged, as long as we learn from them, because if people can explore more ideas and approaches, then we can innovate quickly.

We also value people with intrapreneurship qualities who have the mindset of an entrepreneur, meaning they embrace risk and are results-oriented and cost-conscious. A person with unique viewpoints and imagination can also help us find solutions that are effective and efficient. But it’s affordability and innovation that play important roles in accelerating the commercialization of technology.

Key insight #3: Develop a deep understanding of local environments, talent, and culture so you can build custom solutions.

Pablo Hernandez: Your company has a footprint in more than 100 countries across five continents. How did you manage this? How would you advise other entrepreneurs who want to scale their businesses?

Dr. Pramod Chaudhari: In our business, biotechnology is influenced by the local environmental conditions. We come from a tropical climate, and that’s the setting in which we gained experience, built on it, and found success. It wasn’t until later that it became important to offer bespoke solutions.

Finding custom solutions requires developing an understanding of the subject and the physical area in which you’re working. When our intrapreneurs go outside India, they look for local knowledge. They need to know about the available logistics, the culture, and the economy of an area so they can adapt to those conditions. Therefore, we created a process to understand the local economy and costs of materials to adapt our products accordingly. We need to know how much this would cost in Africa, in India, in Southeast Asia. Taking the time to do this work shows customers that we are flexible, and it helps us arrive at a solution that is more suitable to a specific location.

Pablo Hernandez: Finding the right people to fuel growth in certain markets is challenging. What is your approach?

Dr. Pramod Chaudhari: You cannot do everything centrally. You need to have the right blend of decentralization and centralization, which is why we sometimes rely on the skills of people in certain markets to help develop our products. For example, in Brazil, the locals’ expertise in manufacturing fabricators was similar to or better than what we could offer in India. Our business approach has always been to think “glocal”—that is, think global and act local.

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Key insight #4: Cultivate an optimistic mindset. This will help you come back from failure and find new solutions quickly.

Pablo Hernandez: During the many years of running and scaling up your business, you faced challenges and even some failures. What did you learn from these experiences?

Dr. Pramod Chaudhari: Optimism is of paramount importance for entrepreneurs. I consider myself lucky in that regard because I am a robust optimist. When you’re optimistic, it’s easier to be innovative and find creative solutions. Of course, the focus should always be on the customer and how quickly and effectively we can satisfy their needs.

At one point, most of my company’s business depended on countries in Southeast Asia. Then, in the late 1990s, those countries went through a currency crisis. We had a strategy mismatch with existing products in new markets and new products in existing markets, so our company suffered. But we learned lessons from that situation, and I changed how we do business. Running a company is an endurance game and a team sport.

Pablo Hernandez: How do you manage to push ahead in these challenging and complex moments?

Dr. Pramod Chaudhari: We focused on innovation, which helped us explore manufacturing in a different way, and we also began exploring new markets. Our focus shifted from Southeast Asia to South America, and then we ended up in Colombia. We saw that the country was importing oil and exporting sugar, so we said, “Why don’t you use this extra sugar to make fuel?” By working with local authorities and developer trade organizations, we helped them create their own ethanol-blended fuel. From 2003 to 2007, several products in that market reached almost 100 percent market share, which was huge.

Because of our success in Colombia, we knew we could go to new markets and find the right technology solution to solve their specific problems. So from there we started working in developed countries such as Germany, the United Kingdom, and the United States.

This is just a small example, but with optimism, resilience, and an open mind for solutions, you can transform every failure into a lesson and seize the opportunity to grow successfully.

Key insight #5: Learn how to anticipate problems so you can solve them swiftly; multiple solutions for the same challenge may exist.

Pablo Hernandez: With the growth of your company, you’ve been able to do a lot of new-business building, R&D, and product development. How do you balance creating new things while focusing on the performance of the current business?

Dr. Pramod Chaudhari: You need to train your team to “change the wheel while the car is running.” You also need to get a feel for what the upcoming problems or challenges are so that you can be proactive about finding solutions. These practices can help you face challenges more confidently and comfortably. We have a strong conviction that our future growth drivers stem from R&D; hence, maintaining a healthy innovation pipeline is critical to business growth. In the hustle and bustle of running a business, we have always kept a steady eye on our R&D performance.

Pablo Hernandez: Today, being “green” is a priority globally, with many initiatives running in parallel. If you were to start a new business, where would you start?

Dr. Pramod Chaudhari: Genetically modified crops don’t exist in most markets, except in the United States, though they are starting to take off in Europe. I think there should be a greater global effort to create affordable, scalable, and higher-quality genetically modified products that have a more robust life cycle. This way, we can use the same area of land but have more value-add products per each square meter of land. These improved crops may need less water, may not require pesticides, and could produce more and better yields.

In this and other areas, biology plays a very important role. We cannot stop the growth of our population, but we can find ways and means to support [people] while not allowing the planet to suffer. Bio-based solutions can address both of these needs.

Whenever I get the chance, I like to create awareness about climate action and solutions because each challenge brings the potential opportunity to find multiple solutions for the same problem. If everyone looks at things this way, then you can help yourself and others prosper.

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