Interview with Manu Jain, head, Xiaomi India, on how he managed the crisis after the Ericsson IP lawsuit that led to a temporary ban on Xiaomi’s sales in India.
An IIT Delhi, IIM Calcutta, and ESCP Europe
alumnus, Jain co-founded e-commerce portal
Jabong.com and co-created DINK Couple,
an urban-lifestyle cartoon series. He has also
worked at McKinsey and Company.
Xiaomi’s Beijing-based bosses trusted Jain with running the show singlehandedly in the world’s third-largest smartphone market, when the little-known company came here in July 2014. He has since grown the team, built the brand, and delivered spectacular results: In December Xiaomi India’s sales crossed a million devices, contributing handsomely to the $45 billion (Rs 2.8 lakh crore) valuation that makes Xiaomi the world’s most-valued startup—taking the sting off potentially damning speculation that the company’s Chinese servers were leaking sensitive user data. Jain was also central to the launch of an India-specific, sub-Rs 10,000 4G device, in association with Airtel. In 2015, he will look to expand the product line beyond phones, beef up aftersales service and R&D, and build a local data centre to allay cyber-security fears. More critically, the bosses will lean on him to overcome tricky hurdles that threaten to derail the company’s dream run—chiefly the patent-infringement lawsuit by chipmaker Ericsson that forced temporary suspension of Xiaomi’s sales in India.
“The Delhi High Court’s ex-parte injunction [prohibiting Xiaomi from importing and selling its devices in India, following allegations of patent breach lodged by Ericsson] came on December 8. It was a Monday. We had just come to our office in Bangalore, and Tuesday being our sale day, things were a lot crazy. A lawyer friend of mine came to know of the order from some of his colleagues at the court, and he immediately called to tell me about it.
At first, I was frankly taken aback; I never thought something like this could happen to us, neither had I faced a similar situation in my career before. After that initial feeling blew over, all I wanted to do was to find out more about the case rather than send out an emotional reaction. I wanted to know exactly what had gone wrong, and what its implications were for our operations.
It took us till Friday to get a copy of the court order. Till then we were a bit blindsided, although various people, including the media, were filling us in on the details.
After going through the order, we set our own response in motion in consultation with our legal team. I had, of course, spoken with the headquarters in Beijing and with Hugo [Barra, Xiaomi’s international business head], in order to understand if there was any history in the company of dealing with such a case. To my knowledge, there’s no precedent. But at no point was there any kind of anxiety or unnecessary pressure on us from the founders or the senior management. We were only worried that till we were able to seek legal recourse, the ban would disappoint the huge number of Xiaomi fans in India. We wanted to address their concerns in whatever way we could, without doing anything that might lead to contempt of court.
One of the first things I did was to gather my team and tell them that we are very confident about restarting sales soon. With our call centre agents, things were a bit trickier since worried customers had started calling them with all sorts of questions: “Will Xiaomi continue in India? What will happen to service now?” and the like.
We tackled information flow to the call centre in three phases: Till we got the court order, we instructed all our agents to be honest with customers and tell them that we didn’t have all the answers just yet, but were doing everything possible to get more clarity. Then, towards the end of the week, we published a Facebook post informing all our fans about the temporary suspension of sales and told the call centre to communicate likewise with customers. We told our agents to let customers know that the December 16 sale for Redmi Note [Xiaomi’s latest model in India] wouldn’t happen. Finally, when on the 16th afternoon we were allowed to resume sales [for our Qualcomm chipset-based products] after an appeal hearing, we conveyed the development to the call centre pronto.
The episode had two big lessons for me: First, during a crisis, it is critical that the leader keep everybody aligned through crystal-clear communication. It is particularly important to empower the front-facing people—the call centre, the social media crew, and the service centres—because those are the guys the customers come to when they are apprehensive.
Second, all the channels should then send out consistent messages to the customers. These two lessons were underpinned by my belief that when the chips are down, a leader must resist the urge to react impulsively. You must first collect all the information needed to form an educated response, and take everyone on board.
Another key lesson was the organisation’s belief in doing the right thing. All through, I was consistently told, “We believe we are on the right path, and we should transparently tell our own story to the court.” We got only three days to present our case before the court the first time. We were able to demonstrate that we already have some of the licences, and the interim relief has been a great confidence builder. Now that we have had more time we are confident of putting together a stronger argument. We have also said from day one that we are open to out-of-court discussions.
Meanwhile, we are working towards putting together a risk-mitigation plan so that such issues don’t take us by surprise in the future. Hugo and I have also been thinking about helping the government and regulators better understand us and our business model.
The support that we have received from our fans has redoubled our resolve to be a long-term player in India, and proved that we have made the right choices. Within hours of a Facebook post announcing that we were resuming sales, we got 2,500 likes, 500 cheery comments, and 400 shares. Our registration numbers didn’t get hit either. In four days after the pro-tem order, we got about 2,200 registrations for the next sale.
Our time and energy are now fully dedicated to our 2015 plans. Any consumer tech company today faces the spectre of commoditisation, and the only way to survive is through rapid innovation and high-quality service. In line with that, we will bring many more products—notably the Mi Band, and my personal favourite the Mi TV—to India much faster after their launch in China; scale up our exclusive service centres; develop R&D; help build the mobile services startup ecosystem; and establish our own e-commerce platform. Avoiding litigation will be a concern, but we have much bigger things to worry about.”
Photo courtesy: Reuben Singh; first published in Fortune India January 2015 issue