The entire nation today is in a state of shock, of one kind or another, over the performance of Aam Aadmi Party (AAP) in the Delhi elections. Having become used to misgovernance and the prior failure of newbies in making an impact in the political arena, AAP’s success has come as a welcome reinstatement of confidence in the institution of democracy.
What did AAP do that others did not? What are the lessons that entrepreneurs can take away from AAP’s success?
1. Great businesses are created by playing into market shifts
Arvind Kejriwal recognized the shift in the political landscape and leveraged it fully. Be it the already underway regionalization of politics, or the sense of public frustration with governance levels and identity based politics, the ‘Anna pilot’ provided enough evidence to the founders of the party. It is worth noting that short term spikes are not market shifts — this is a multidecadel trend, and disruptors will continue to ride it. Like true disruptions, incumbents are poorly positioned to compete — be it due to the constraints of dynastic compulsions, or of strong historic polarization that some incumbents have inspired.
2. Startups need sharp focus and positioning
Even amongst supporters, it was common criticism of AAP that they were mere activists, and while they could protest, they could not be trusted with providing solutions. AAP refused to broaden its positioning. They continued to stick to their key appeal — to rid politics of corruption. With all the energy and focus committed towards communicating this one message, AAP was able to underspend their competition by an order of magnitude and still make an impact. Sharp positioning requires making tradeoffs. One such tradeoff that AAP made was to not accept donations from corporates — something it believes is at the root of public-private corruption.
3. Run a well-designed proof of concept
It is clear to any observer that AAP has bigger ambitions than Delhi. However, the choice of Delhi as a PoC (proof of concept) was insightful. Apart from having prior awareness in Delhi due to the IAC (India Against Corruption) movement, the size of the pilot market was important. AAP could run this test with a meagre Rs 20 crore and a compact candidate base. The balanced urban-rural mix provided the right setup to test the relatively evolved message that the party was trying to communicate. And most of all, any impact in Delhi would be highly noticeable.
4. The founder is the best salesperson
Arvind led from the front and proved to be an excellent salesperson. Not just to voters, but also to volunteers and investors (read ‘donors’). What was surprising was that while most people interpret AAP to be a left-leaning party, high networth individuals embedded in the capitalist system turned out to be the biggest donors. It is still baffling how Arvind sold the notion of taking money away from HNIs to themselves!
5. Conviction of the founding team
This is a key ingredient of startup success, as is their ability to think big. If something is worth doing, it is worth doing big. And AAP lived that mantra. They did not play defense by contesting a few seats here and there. In fact, that could have increased their chances of failure. They went all out to make an impact in the shortest period of time, and did not give competition the time to react. In recent times, this has to rank as the best illustration of conviction and thinking big.
What AAP has illustrated so far is the product-market fit, and ability of the team to execute at a certain scale. Like any startup which achieves this level of success, they are now entitled to broader buy-in, larger resources and bigger dreams. However, challenges remain. Post-purchase dissonance is clearly one of them — can AAP deliver what it promised? Scale is another one — is this a flash in a pan? And not the least, evolving the organization — can AAP grow from activism to providing governance?
Watch out — this might well be the trillion dollar impact startup all of us have been looking for!