Business is next to love

Role of business

NK Chaudhary

15 December 2014

The following is an edited version of a talk given by NK Chaudhary, Founder of Jaipur Rugs.

I would like to take you through the journey of my life. I started my career selling shoes from a little shop that my father had started. There was very little room to grow. When I was offered a full-time job in a national bank I declined the offer because I wanted to do something of my own where I could enjoy what I do.

36 years ago I started with two looms in my own house in a small town, Churu in Rajasthan, as a contract manufacturer – producing rugs for large exporters. I borrowed $200 from my father to buy looms and an old bicycle to travel to the homes of weavers. The beginnings were humble yet filled with challenges.

One of the first challenges I faced was from my own family. In those days rug weavers belonged to the “untouchable” class and were not given the same social standing as others. Given the strong class system in India, interaction was not only discouraged but was looked down upon. I faced a lot of resistance from my own family members but I could not understand how they could see the weavers as anything other than fellow human beings. I fell so much in love with weaving that I used to take my lunch and eat with weavers and their families, sitting beside the looms on which they made their carpets.

I used to spend entire days working with them and learning the basics of my craft. I discovered that some of the most beautiful rugs in the world were made by people who do not have the most basic rights. The only encouragement I had was from my wife, who not only supported me but also sometimes provided the weavers with tea and food.

Within two years, I established ten looms in and around my village in Rajasthan and thereafter I spent another eight years expanding my operations, but still working as a contractor for other exporters. Then I moved to Jaipur to start my own export business with my brother.

Kavita Chaudrey, Designer at Jaipur Rugs.

In 1990 I moved to Gujarat where I stayed for eight years. In this period, I had the opportunity to train and develop a network of about 15,000 tribal men and women in the art of rug weaving. Initially, I faced challenges working with the tribes, who were not welcoming of outsiders. But I knew that love, empathy and respect could make the relationship much easier. In a matter of just three to four years they started to respect me as their guide. My interest in village life and being close to nature made it easy for me to connect with the tribal people and grow the business.

During that time, I was blessed with three daughters, then with two sons. In my society at that time (and even now), girls were given much less priority than boys. However, a British friend of mine suggested that girls are often more efficient and receptive than boys. So my wife and I treated all our children equally and sent the girls to study in America, even though our family tradition strongly disapproved of sending a girl abroad alone.

One thing I learned was to appreciate the wisdom that people at the grassroots generally have. Women manage home, food, children and budget – and still have time to weave carpets. They are probably some of the best managers in the world.

In 1999 I separated from my brother and started Jaipur Rugs. I also established a company in the USA to move closer to the customer. Initially I had little knowledge of business and finance as I spent my time mostly with weavers in villages. As a result, I had to face a lot of problems and it was one of the most challenging moments in my life. I had to learn things which I had not learned during the previous 20 years.

I had already by this stage established a good reputation for quality and quantity in carpet weaving. But once I started again, I had huge problems and failures for the first three years. Then I started to reflect on what went wrong and I realised that my past success had created a “false feeling of goodness” within me. I realised that “good is the enemy of best” and I had developed a mental disease called “euphoria”. I was highly successful at working with the people at the grassroots, but now I had to learn new skills and change my leadership style to run a global business.

I observed that it was me who was restricting the growth of the organisation, as I was everywhere in each decision. So I had to remove myself from many decisions and rely on the natural talent, wisdom and capability of other individuals to see things as they are and not just as I want them to be. Up to now I had relied on the entrepreneurial skills and leadership qualities of the uneducated weavers and, as a result, they had gained deep understanding of the business. But to support rapid growth I had to hire fresh and experienced ‘professionals’ – and then learn how to deal with them.

I learned that knowledge is power but too much knowledge, and knowledge gained without practice, develops ego. Practitioners sometimes get the skills without having the knowledge. To break the ego of the professionals, I started a learning initiative which we named ‘Higher School of Unlearning’. We made the professionals work alongside our older, uneducated managers in different departments to develop deep understanding of the business process. We worked on the philosophy of ‘finding yourself through losing yourself.’

I attribute the success of Jaipur Rugs to the following factors:

First, our vertical integration and the way we nurture the capabilities of people at the grassroots. There are about 60 processes involved in making a carpet – from buying the raw wool to final product delivery. Our competitive advantage comes from the high quality of our products that is a result of our investment in developing the skills of uneducated people throughout our supply chain. Hundreds of our weavers have risen to become either managers in our business, or entrepreneurs in their own right.

Secondly, I attribute our success to the benefits we pass on to the weavers. While hand-knotted carpets fetch high prices, the weavers themselves typically receive only a fraction of this, because of middlemen involved in selling the carpets. I realised this early on and started going directly to the weavers, eliminating the middlemen. We could therefore pass on more benefits to the weavers – sometimes increasing their income by as much as 100%.

Doing this wasn’t easy because I was taking away someone’s business and I was regularly threatened by other contractors. One day, a politically powerful contractor came to my office with a gun and asked me to leave Gujarat but I knew that he was acting out of frustration at his own failure.

In 2004 we set up Jaipur Rugs Foundation which works to improve the lives of weavers and their families by providing them with training and access to health and education benefits.

I believe that innovation will be a key for Jaipur Rugs to grow further. One of our new initiatives is to include our weavers in the product development and design process. This allows us to unleash the creativity of the talented artisans we work with.

Another initiative we’re implementing is called ‘Founder’s Mentality’ – an idea that comes from research by Bain & Company. It explains that out of one million founder-driven companies, only two have surpassed $100 million in revenue. The rest of the companies remain small or die because they are unable to define and communicate the founder’s vision and style of working. Over time, these organisations lose touch with their customers and grassroots people within the company.

When the second generation joins the business, new capabilities are added which gives the potential for achieving huge scale. However, the second generation is disconnected from the frontline. Thus, the growth is not profitable and sustainable.

The third layer is the professionals, who are distant from both the grassroots and the customers. This leads to a huge gap. Founder’s Mentality helps explain and bridge these gaps. The Bain research says that those on the frontline and at the grassroots are the doers – they are the kings, the heroes of the business. Those in the corporate office, sitting at the top, are thinkers. The thinkers’ job is to make the doers’ life simpler. Doers pay salaries to thinkers.

The Founder’s core values, leadership style and way of working should be documented and made into non-negotiable principles for the organisation. This will help the next generation of leaders and professionals to scale up the business, by maintaining simplicity and focus, and without diluting the core values of the enterprise.

Typically, authority and decision-making power are concentrated at the top of the organisational pyramid. When we turn the traditional hierarchy upside down, the weavers are empowered with greater freedom of action. The thinkers’ job is to make the strategy pull up, not push down.

So for us, at Jaipur Rugs, it is time to invert the pyramid. My future vision for the company is to allow the artisans to enjoy a greater share in the wealth they produce. Also, I want Jaipur Rugs to be a platform of connecting the end-consumer with the artisan so that they can emotionally connect with one another. I consider myself privileged to have worked with some of the most talented artisans in this country.

I would like to end by sharing a small experience I had when I was in college. I had a very strict professor of business administration and one day he came to my classroom and called out my roll number and asked me to stand. I got scared: I was a disciplined student but I started to worry what wrong I might have done. Then he took out a test copy and showed it to the whole class saying “look at the answer this boy has written.” The question was: what is the definition of business? My reply was: “Business is next to love. It is the creator and preserver of civilisation.”

Thank you.