Linkwell Telesystems "Leadership through Innovation"

- A case study on Innovative and Entrepreneurial practices by an Indian SME Author: Manoj Joshi
BE(Mech), PGDFM, MBA, MIMA DSch (Innovation/Strategy)

Assistant Professor (Sahara Arts & Management Academy) B-1/51/Sector B, Aliganj, Scheme, Lucknow, Uttar Pradesh, India, 226024 E-mail: mj_32@gawab.com Residence Phone: +91-522-2370934 Handy: +91-933-52-35676
Nilesh Joshi
Student 04th Year BTech(Electrical & Electronics) Email: nilesh.nick@gmail.com

Submitted 30/07/2005 Revision A 15 Aug 2006

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Electronic copy of this paper is available at: http://ssrn.com/abstract=921278

Abstract Linkwell telesystems private limited was established in the year 1993, with a bold step by the first generation entrepreneur promoted by Mr. A. K. Prasad. It was he who took the advantage of liberalized economy and the telecom policy of 1994. The need was to have telecom products that would revolutionise the burning need of Indian consumers. As a result it ventured into manufacturing and marketing of products of PCO (payphone) products in India, with a vision of excelling the best Technology feature based products. While Me. Prasad set the tone from a single PCO it rose and expanded to multirange of PCO (payphone) products under the brand name of VISIONTEK. The product advantage pioneered by LINKWELL steered the company to spread its base to every nook and corner of India with a customer base of 100,000 plus.

Linkwell Telesystems, a professionally managed company, entered the high potential field of telecommunications a decade ago that has admired the power of innovation.

The introduced STD and ISD Payphones in the market under the brand name Visiontek and are leaders in the Indian Market.

Keywords:

Innovative Practices, Intrinsic Motivation, Entrepreneurial Competency, Opportunity recognition & Orientation, Innovation

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Electronic copy of this paper is available at: http://ssrn.com/abstract=921278

Linkwell Telesystems
"Leadership through Innovation"

The Company evolution

Linkwell telesystems private limited was established in the year 1993, with a bold step by the first generation entrepreneur promoted by Mr. A. K. Prasad. It was he who took the advantage of liberalized economy and the telecom policy of 1994. The need was to have telecom products that would revolutionise the burning need of Indian consumers. As a result it ventured into manufacturing and marketing of products of PCO (payphone) products in India, with a vision of excelling the best Technology feature based products. While Me. Prasad set the tone from a single PCO it rose and expanded to multirange of PCO (payphone) products under the brand name of VISIONTEK. The product advantage pioneered by LINKWELL steered the company to spread its base to every nook and corner of India with a customer base of 100,000 plus.

Linkwell Telesystems, a professionally managed company, entered the high potential field of telecommunications a decade ago. The introduced STD and ISD Payphones in the market under the brand name Visiontek and are leaders in the Indian Market.

The diverse range of products can be chosen from PCO (Pay phone), SOHO (small office home office), Niche application based telecom terminal products and telecommunication software projects. The product innovation in this category has been upgraded from single line numeric based telephone metering product to Alpha numeric, two lines, two lines PC based PCO monitor and that lead to the launch of Indias first line powered pay phone (coin operated payphone). Besides this, LINKWELL has been marketing the GENEI model fax machines with OEM suppliers from South Korea. It is also currently working on POS terminals, Credit Payment terminals, and banking terminals for its telecom related products.

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Electronic copy of this paper is available at: http://ssrn.com/abstract=921278

LINKWELL has products both from the GSM and CDMA technology. VISIONTEK has taken the lead of launching GSM based PCO billing machine in India and these meet the global standards.

Linkwell since its inception has created a market of its own and has retained as number one position as a manufacturer of PCO (Payphone) products in India. The total sale of 50 Crores in 2001-02 is a highlight of the organization. It has also positioned its image in the global market by establishing market bases in Far East, SAARC and is now entering in African countries. The footsteps have lead to an increase in 20% in sales.

The expansion of domestic market in India has leveraged Linkwells interest too further its business. The Private basic operators have become a major target. The company also participated in the project VPT (Village Public Telephone) with TATA Teleservices in Andhra Pradesh. It has also endeavored in providing customized requirement solutions to the Payphone market and also to the basic operators.

The major strength of Linkwell has its branches in major cities including all the metros with dealer networks of 585 making it a show of strength to the reach the maximum number of customers. The strength extends to the human resources department too. The emphasis and cajoling can be experienced in this direction by the presence of deep rooted entrepreneurial spirits in various departments like Business Development, Marketing and Sales, Services and R&D. The investment ranges nearly 10 percent of its revenue in the research and development which provides substantial growth in the direction of competitive edge.

The Entrepreneur

Linkwell Telesystems was established by Mr. A. Krishna Prasad, an Electronic Engineer, and a first generation entrepreneur. The experience he had gained over several years in the field of electronics in reputed companies set the tone for his venture. Persistent innovative thinking combined with a rich combination of persuasive efforts

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positioned Linkwell in-house R&D. This was and has been recognised by Department of Scientific and Industrial Research (DSIR), Government of India. Linkwell has set into a direction as the moving force behind innovative products with advanced product features. The company has won the prestigious ELCINA Award in 1997 for its Research and Development, and FAPCCI Award in 1998. Mr. Prasad and his team is constantly engaged in manufacturing products according to DoT and TEC specifications and have Dot approval. In the Industry Sector Linkwell Telesystems has demonstrated to bee the pioneer in STD/ISD Payphones and expanded fast into the manufacture and marketing of other Telecom equipment. The Motto stands as 'Leadership through Innovation' Linkwell Telesystems is poised to leap into the next century with an ever expanding range of products and market. The company believes the key to future growth is 'innovation' to conquer new markets. Mr. A. Krishna Prasad has recently been elected as the President of Electronics Industries Association of Andhra Pradesh (ELIAP) a fillip to his presence. The Hyderabad-based Linkwell Telesystems, popularly known for its Visiontek range of products is present in three core markets segmentsbusiness communications, personal communications, and PCO segment. The year 2002 ended with revenues of Rs 29.2 crore. Bulk of its revenues, worth Rs 26.5 crore, came from the PCO segment. The PCO monitors alone accounted for Rs 17.79 crore. In fact, Linkwell Telesystems has created its leadership in AP circle and has emerged as the top PCO vendor in the country.

The SWOT Environment The companys strength lies in as a Strong PCO technology company. It needs to strengthen its efforts in the Partnership direction. The opportunities for the company are in many directions. It proposes to diversify laterally in Call Centers, Internet and messaging solutions. The only threat it envisages is from the strong software companies which could integrate or expand their business in this growing market.

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There are two reasons for its success. It is a strong technology company and is smart on optimization of resources, along with production and distribution arms. Its mantra has been innovation and quality control. It also has other range of products like EPABX and telephone handsets. However, these products are more for the local market and needs. This diversification strength has critically pushed the companys existence in creating its own new markets. One cannot deny the fact that the potential for the PCO business in the country is very large. Not all can have phones because of the topography and large terrain that the Indian geography offers. But to migrate to the next level of growth, one needs to diversify and innovate. And that is what the people intend to do year after year. The expertise on R&D has been leveraged for that it has procured the necessary software for its products. This effort would be purely to facilitate indigenous and unique support to the Indian market. A further step to set-up a software division has been currently initiated. To go under the name of Visiontek Solutions, this would be a 100 percent export oriented Unit (EoU). Hence, newer markets the company expects to see as a 50 percent growth in its revenues in the current year. The Corporate Office of 7,000 square feet; Factory of 13,000sq.feet and R&D unit of 5,000 square feet area are located at prime locations in Hyderabad teaming with business activity. One can find gleaming and inquisitive eyes ready to support you, each time you enter their premises. Service as profession is lead with perfection, honesty, dedication and the strongest being with pleasure. This makes ample evidence of the companys public relationship, having 250 dealers spread over the country to market and provide prompt service after sales to its popular Visiontek range of products. The Company is all set to introduce technology for wireless public call offices (PCOs) to help telecom companies expand their networks in rural India. The Company is also geared on launching technology for mobile telephony-based PCOs, the first time in India. This would be yet another first which is a demonstration of pioneering and enterprising effort by the young & dynamic team.

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The company has even endeavoured to export its products to Bangladesh, Bhutan, Nepal, Sri Lanka, Saudi Arabia, Yemen, Oman, Algeria, Kenya, Uganda, Tanzania, Zimbabwe, Zambia, Mozambique etc. Organisational Structure

The Corporate

MD

Dir P&A

Dir. Mktg

Dir. Buss Dev.

Dir. Manu.

Head R&D

Dir. MIS

Marketing & Business Development

MD

Dir Marketing

Dir Business. Development

Mgr. Mktg.

Comm. & Ser

Branch Sales-8

Projects

Business Operations.

Exports

Service

Head (Research &Development)

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Head R&D

Asst Mgr. -3

PCB Designer

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Manufacturing set up

Director Manufacturing

Production 3 lines

QA

Mechanical

Vendor Development

Stores & Dispatch

PCO

Pay phones

PBX/ tel. prod.

QA

IGI

Product Profile

Payphones: These are coin based phones available in wall mounting and desktop versions. Being Vandal proof these are a product of superior technology. STD Billing Machine: These Machines are computerized STD Billing Machines with built in data base for STD / ISD Stations. These are widely used by all communication centres for billing of STD / ISD calls. The built-in Printer mechanism can print the bill details instantly in both number and Alpha Numeric Characters.

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Coin operated payment: This equipment is used for making local calls using coins. The machine will allow the user to make calls only after deposit of the coin (pre-paid) and can be programmed for 3/5 minutes. The equipment can be used as a Table Top or Wall Mounted. These machines are line powered and need no external battery. Local Call meter: This is used for displaying and counting the local calls. The machines can be programmed for 3/5 minutes and is line powered. The call can be extended after 3/5 minutes and can store and display calls up to 1000. Call conference unit: This unit can be used for Conferencing the STD calls with local line. This can be used all communication centres for extending STD facilities. This has very good voice quality and field adjustment detection of engage tone. The unit when connected to STD/PCO can generate the complete details of calls. Some features being as follows:

STD/ISD PCO Charge Indicator (Numeric) STD/ISD PCO Charge Indicator (Alpha Numeric)

Telecom Terminal Equipment

EPABX's FAX Voice Mail - Small & Big Digital Pair Gain systems

Telecom Appliances

Telephone instruments Value added services

PABX System The Visiontek PABX system are the most reliable business communication systems ranging from 104 to 624 with many advanced features like DISA, DOSA, Auto Redical

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etc. The Unique Selling Point (USP) has been the detailed billing of STD / ISD in the local currency along with the station name pulse rate. GSM PCO Visiontek

These provide telephone in rural & remote areas. They have an inbuilt GSM fixed terminal- ready to start billing calls for payphone. Its like you have the SIM card which can be inserted to start your phone shop. Is it not a great idea?

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The Product Future

Product Lines
POS Terminals Wireless Products Business Comm. Products

Telecom Software

Basic POS EMV POS PIN PADS

* Remote Data Terminals GSMA/CDMA

Digital PBX-60 Ports

* Remote Payment Term. GSM/CDMA

Laser/Fax Printer

* Wireless solutions for Utility industry * Wireless Extenders

Prepaid solutions for Pay phone service providers Telecom access s/w for utility industry Payphone solutions for fixed and mobile operators Billing solutions for operators

-Repeaters -Boosters

Expansion Plans

The company intends to focus on its core competency of customization, marketing and streamlined logistics which has been its cutting edge. Surely, propelled by this thought the company proposes to a fast growing corporation with excellent infrastructure strengths. Merely a phone call to VISIONTEK makes the presence of its products across the country. And this is supported by the six main offices present in the country, seven logistic centers and 585 traders across the nation. The export is also plausible by these synergized efforts and the benefit is made available to 16 countries where the exports are made. The nerve center remains the Hyderabad corporate office which is considered the power driver.

The Advantage Factor

The company has a strong understanding of terminal business across the country and in International development. Being a first generation entrepreneurial company it has willed to develop a wide network through business associates. The expertise and

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experience of professional manpower in terminal business segment is worth experiencing. There has been a consistent growth of 16% per annum with dedicated Marketing department and a recognized R&D. Certainly it has been exposed to the International payphone and telecommunications terminal equipment market which now stands as its key strength.

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Marketing Channels, Strategy and Service Policy

Being a pioneer in the Pay phone, digital and GSM based Pay phones in the Indian market; under the brand name of VISIONTEK it has made bold and innovative attempts to strengthen its position in this business line. With the liberalization of Indian economy and subsequently the Indian telecom industry the demand for pay phones was well felt. This was gradually capitalized by the innovative idea which was conceived on 15/06/1993 when the company was formed.

VISIONTEK strengthened its belief that in order to ensure the product succeeds in the stiff competitive market, the product has to be need based. The company has been able to vitalise its strategy in the following directions. 1. Product 2. Positioning 3. Pricing 4. Promotion 5. Packaging

The entire ranges of its products are sold in all the major towns, cities and taluk headquarters in India. The representation is by authorized dealers at the district head quarter level and who is served by an able distributor. The company has a firm belief in Goodwill and brand imaging which is established through its superior quality products. To add to this the products are available at a reasonable price.

Maximisation of sales through persuasive efforts in all directions is what the company aggressively endeavours. There has been an attempt to show their presence in 80% districts with 50% market share. It is termed to be a strong marketing organization. LINKWELL strongly believes that broad based marketing with an extensive & intensive dealer setup and a strong eye on the competition.

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The Service Policy has roots in setting high standards in after sales service. The precedence has been set by good and fair practices. The features that they integrated into their service quality are as follows: 1. Regular campaigns at dealers premises 2. Strategic locations become the house of service engineers for regular service calls in short notices 3. Marketing professionals are directed to visit the dealers and then implementing schemes conducive to the market needs. 4. On Line Service round the clock 5. Lower response time for deputation of engineers 6. 2% of free spares for warranty maintenance 7. Timely dispatch of spares to dealers 8. Regular service camp / customer meet 9. In-house training to dealer personnel.

The MD is supported by 240 personnel comprising of 57 engineers, 24 Managers, 40 supervisors and 119 workmen. There is a possibility of increasing the strength by 45 persons more.

Matrix of Innovative Practices

The tone of all the practices is being set by the strong R&D, Marketing strategy and the matrix of innovation in all directions. The Indian domestic market being sensitive in many segments calls for volume dependency. Logistical issues impacts the growth as importing of silicon based products is time consuming. Hence, the company has desired to be among the leaders in investing in R&D. Selecting the strategically customized solution line, expanding the market reach, building the customer confidence is what is desired, says the MD.

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Our focus is on embedded products in telecom and broadband. Its a very dynamic field from concept to product launch, from customer specification to product implementation. The technology is always in continuous development. To sustain we have to look for tomorrows technology in todays application, advocates strongly the dynamic MD of Visiontek.

There is a stronger need to develop continuously and keep on investing in R&D for feature products and in order to increase the product depth, becomes the running philosophy of the organization. If a thrust for stronger policy on hardware is made both at the central and state level it would enable to sustain the exports and aid in creating newer markets. Growth Chart Turnover NET In Lacs 250 325 1079 1508 2134 2943 4063 4150 5581
Year 6000 5000 4000 3000 2000 1000 0
19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03

Year 1995 1996 1997 1998 1999 2000 2001 2002 2003

Grow th (turnover - net)

Perform ances in Lacs

Profit after Tax as on 31/03/2002 was 3,12,19,863 and as on 31/03/03 it was 1,86,36,571 Rupees.

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The Fresh Picture Mrs. Rani, Director appears to be very confident senior executive, full of jubilance and powered with energy has all the attempts to practice innovative ideas in the organization. She vehemently claims the key factors of success on the following principles. 1. Positioning product right time and at the right place based purely on market requirements. 2. Defining key logistical decisions to reach the end customer ASAP. Do you know or ever heard of a distribution network with no investments from the respective distributor? Let us go a little further, no investment in product and yet you become a millionaire! true to all these sequences the company has redefined logistics and channel partnership networks to reach to the customers very easy. And this has turned out to be a key success in a enterprise starved environment. The company though has adopted a high risk factor in investing in products but the model it has displayed has proved its utility beyond the understanding of business pundits, who by pragmatic existence have been very traditional in conducting the business. The distributor appointed has to make investments in the marketing support activities only. LINKWELL identifies key strategic points for logistic distribution which become as ware houses on intermediately shifts. Distribution orientation becomes the key concentration. The store points are managed by the company and become as virtual stock centers. For each volume of sales made the channel partners are given commissions which are based on slabs. Hence the investment by any new dealer is only in its marketing networks rather than buying and stocking. This concept has enabled the company to build very strong relationship with individuals who would like to associate their set up with the enterprising skills that they possess and LINWELL products. Entrepreneurs who have started from

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scratch have positioned their organization with profits rolling in very quickly in a product line which has already created a niche market of its own. As a result 585 dealers have presently gained the relationship which has grown like bondage of family relationship. The company boasts of having converted 250 people as millionaires and all of these were small time entrepreneurs. There is always an emphasis on long term relationship. Together we grow becomes the emblem and their anthem. My dealers should earn more says Mrs. Rani, charmingly. And this is the reason we work for them, they are bound to work for us! She goes further by claiming that the dealers become the actual eyes and ears for any new product development. Since the competition is quiet local the fear from foreign market does not arise. LIKWELL takes the lead because of its channel partnership strategy. The company constantly provides assistance and training to dealers in the area of product knowledge and service orientation. To enable this for dealers regular camps are conducted. For field service engineers, those issues that are not being addressed by the dealers are taken care of. The company has 8 branches. They are Noida, Ahmedabad, Mumbai, Bangalore, Chennai, Vizag, Calcutta and S Each office has 4-5 marketing, 4-5 servicing and about 4 executives to run the show. The focus of Business development is on Projects, which emanate from the department of telecom, telegraphs and government. Basis operators form telecom and mobile area form the next business segment. Service support is a team dedicated to each of the above segment. In order to make work a pleasure, internal transfers are plausible form projects to individual business channel partnering. A very strong MIS acts as a placard for the organizational success. The concept of value addition is traditionally in-built. For every work, it seems any one is responsible. That makes a better sense by claiming that each employee is further delegated to look for seeking more responsibilities in absentia of his/her

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co-partner. However for a particular client servicing dedicated service responsibility is pre delegated. Experiment on job rotation in this sector has proved to be boon and as a result some junior positions have experienced the opportunity for being elevated to higher positions. The back up is always secured. Women have also played a good role in building the business. Some are really excellent, claims Mrs. Rani without any prejudices. Well the percentage of females to males stand as 20:80. She goes further to this and pushes with a strong voice that 96-97 was a bad year as a result of bad supply chain management and out standings. This was the root cause and as a response the systems were decentralized. For all project management activities one window contact and clearance was adhered. That meant to have all the outside, outsourced activities as a one point contact to that of the referred project with a pre designated executive. One worse patch was the recall of 500 machines they had sold. Lessons were learnt in this context. Hence the services were made round the clock. They understood how suppliers could cheat when monitoring was totally left on trust. R&D in this case acted as fire fighting. Executive summaries of good books have now become one of the good practices for sharing rich thoughts. Transparency is what is adhered. Awards are becoming common. Increase in salaries has gone near 5000 Rs per month for people who have been performers. Customization has been their success story. The main emphasis is on investment on people and relationship management, coupled with the finesse over logistic operations.

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Teaching Objectives: 1. To understand how the Innovative enterprise was seeded? 2. To understand the importance of Opportunity recognition and its orientation to be a successful entrepreneur 3. How does a Start-up happen despite the unfamiliarity of the entrepreneur in the field he endeavours? 4. The importance of recognising quality in a small enterprise 5. The effect of combining radical and incremental innovation in the growth of the firm

Identification of intended course(s): Innovation (Innovative practices), Entrepreneurship, Start-ups, Strategy

Suggested Student Assignment:

1. Study the case carefully and explain the process by which the existing Director of Linkwell was able to establish his enterprise. 2. Radical innovation exists in SMEs! comment 3. Study a similar enterprise that is engaged in manufacturing and construct its practicing model.

Discussion questions: 1. How does Opportunity recognition facilitate towards the formation of an enterprise? 2. How far it is true that uncertainties propel towards innovative practices?

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3. How to expand aggressively into newer areas?

4. Can this formula of success be replicated?

Suggested time plan: Initial class room discussions- 90 to 180 minutes General survey by researching students one week Conclusive discussions on innovative practices with emphasis on incremental innovation- 90 minutes

References: (NA since it is an original case study comprising transcripts from interviews with owner/manager/founder/customers/concerned entities within/outside enterprise.)

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