The Case of BYJU's Fall: Poor Project Management?

3 days ago
3 min read

Awareness of project management is still lacking in Indian context. A case in point for this is BYJU's ed-tech start-up. It was founded in 2008 and experienced rapid growth, reaching a valuation in the billions of dollars. It was known for an innovative approach to education, providing personalised learning experiences and utilising technology to achieve its educational goals. A very ambitious and noble initiative started by the CEO, Raveendran.

However, somewhere in 2021, BYJU's saw losses and numerous challenges, which led to the growth rate valued at $22 billion declining to $250 million by 2025. The cause of it? On the surface, it may look like poor business decisions - like overpaid acquisitions, relying on the growth during the COVID-19 boom and maximising marketing investments. However, it can all be traced back to one crucial skill that was overlooked: poor project management.

What Took Place

Between 2020 and 2022, BYJU's spent over $2.5 billion acquiring companies such as WhiteHat Jr, Aakash, and Great Learning. BYJU's did not have the financial support to acquire these companies and ended up with a debt-to-equity ratio of over 20:1. That is to say, the company was overpaying and at risk of economic or market changes.

The acquisitions led to many complex integrations across different companies. This put the company at operational risk and cultural risk. With mergers, uncertainties arise, and there is a need to manage these acquisitions as projects with defined objectives, risks, owners, regulatory budgets and execution timelines.

Additionally, the company faced significant regulatory backlash due to various aggressive legal and financial violations. The sales team used predatory marketing tactics, acquired companies were mismanaged on a legal and financial front, leading to poor governance, and ultimately, the TLB lenders sued the company to recover the money owed to them.

Let's see what a leader with the right project leadership could have done in this scenario:

Risk management: BYJU's strategised in some ways to overcome the foreseeable risks - gathered a significant amount of capital from investors, invested in its operations and risk management system. However, these strategies were implemented more as an afterthought. A pre-acquisition feasibility assessment for each deal, focusing on operational readiness - do we have the bandwidth, the leadership capacity and the systems in place to absorb the companies right now? BYJU's was simultaneously integrating multiple acquisitions while expanding into 21 international markets. A risk register would have immediately flagged the critical resource constraints this strategy would bring.
Defined Integration Scope: For each acquired entity, there needed to be a clearly defined integration scope - What does a 12-month integration look like? What is the accountability structure? Who is the owner of the entity? When integration has no clear owner or no clear success criteria, it is bound to fall apart.
Independent PMO: There were enough regulatory violations going on. The resignation of the Deloitte auditor and three board members in 2023 was a gateway to poor governance and stakeholder management. A PMO does not prevent bad decisions, but it creates documentation that forces decision-makers to confront the problem before the crisis becomes irreversible.

India is home to extraordinary ambition and vision, with many startups poised to become stable giants in the industry. However, if poor governance and the capability to foresee risks in a volatile market are not present in the leaders, this ambition is then but a liability waiting to collapse in on itself.

Feel the urge to build your project leadership capabilities?

Head to www.appliedpm.org

Sources FYI: