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On how Reliance was built

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Mukesh Ambani on how Reliance was built

If Dhirubhai Ambani was a larger-than-life patriarch and Anil was the public face of Reliance, Mukesh Ambani was an enigma. Those who knew him well credited him with leading Reliance’s turbo-charged growth over the last two decades.

But very little is publicly known of his beliefs, vision and motivation. In his most expansive interview ever to MoneyLIFE, a personal finance magazine, Reliance Industries chairman Mukesh Ambani tells
MoneyLIFE editors Sucheta Dalal and Debashis Basu, what drives him and his business decisions

A lot of details about your life are already known. But we don’t know things from your end. Your life has changed dramatically in just about three decades; will you take us through that process?

From my point of view, very little has changed (Laughs). In terms of attitude to life, little has changed. There are important lessons I have learnt during my upbringing. It is important to share these, though these are tough to practise as a parent (smiles).

We were like a joint family and I was the first child of the family of that generation. There were advantages in being the first child those days. My father navigated through life from Aden in Yemen to Bhuleshwar (a congested commercial precinct in Mumbai), to Usha Kiran (Mumbai’s earliest skyscraper) at Altamount Road to Sea Wind (an exclusive tower which is the Ambani residence).

My first memories are of the early ’60s at Altamount Road which was then an emerging area. We were a close-knit family and the four of us — Dipti, Nina, Anil and I — were left to do what we wanted. There were boundaries, of course, but within those, we were not micro-managed. Things have changed so much now. When my kids, Isha and Akash, were in the third standard, we behaved as though it was our exam.

Our own childhood was totally different. I guess when you are left on your own, you find your true potential. I remember my father never came to our school even once. Nevertheless, he was hugely interested in our all-round development for which he did some amazing things.

Give us an example.

Imagine this. In the mid-60s, he put out a newspaper ad for a teacher, but specified that his responsibility would be non-academic; he would have to impart general knowledge. He interviewed several persons and selected Mahendrabhai Vyas who taught at the New Era School. Mahendrabhai used to come every evening and stay with us till 6.30-7 pm.

His brief was our all-round development. We played hockey, football and different kinds of games, watched matches at Cooperage, travelled in buses and trains and explored different parts of Bombay. We went camping and stayed in a village for 10-15 days every year.

Great lessons from Dhirubhai Ambani

On Dhirubhai H Ambani again, unabashedly so, and for a very good reason.

I guess it must have struck many readers by now that I idolised Dhirubhai. They are right. I do. Every column I write on Dhirubhaism invites an outpouring of mail, some even requesting me to mail them the previous column on Dhirubhaism.

And I am glad that I have an opportunity to share what I’ve learned from Dhirubhai with you.

He was a one-in-a-million human being, and I was blessed to have had him as my boss. He taught me many things that have transformed an ordinary executive that I was, to be the founder chairman of an agency that grew from nothing to one of India’s largest.

I would have never achieved that without him. It would be a shame if I then let his extraordinary teachings gather dust. And judging by the response I receive, it looks like there are some really eager learners out there. So here goes.

Dhirubhaism: Leave the professional alone!

Much as people would like to believe, most owners (even managers and clients), though eager to hire the best professionals in the field, do so and then use them as extensions of their own personality. Every time I come across this, which is much too often, I am reminded of how Dhirubhai’s management techniques used to be (and still remain) so refreshingly different.

For instance, way back in the late 1970s when we decided to open an agency of our own, he asked me to name it. I carried a short list of three names, two Westernised and one Indian. It was a very different world back then. Everything Anglicised was considered “upmarket.”

There were hardly any agencies with Indian names barring my own ex-agency Shilpi and a few others like Ulka and Sistas. He looked at the list and asked me what my choice was. I said “Mudra”: it was the only name that suited my personality. And the spirit of the agency that I was to head.

I was very Indian and an Anglicised name on my visiting card would seem pretentious and contrived. No further questions were asked. No suggestions offered, just a plain and simple “Go ahead and do it.” That was just the beginning.

He continued to give me total freedom — no supervision, no policing — in all my decisions thereafter. In fact, the only direction that he gave me, just once, was this: “Produce your best.”

His utter trust in me was what pushed me to never, ever let him down. I guess the simplest strategies are often the hardest to adopt. That was the secret of the Dhirubhai legend. It was not out of a book. It was a skillful blend of head and heart.

Dhirubhaism: Change your orbit, constantly!

To understand this statement, let me explain Dhirubhai’s “orbit theory.”

He would often explain that we are all born into an orbit. It is up to us to progress to the next. We could choose to live and die in the orbit that we are born in. But that would be a criminal waste of potential. When we push ourselves into the next orbit, we benefit not only ourselves but everyone connected with us.

Take India’s push for development. There was once a time our country’s growth rate was just 4 per cent, sarcastically referred to as the “Hindu growth rate.” Look at us today, galloping along at a healthy 7-8 per cent.

This is no miracle. It is the product of a handful of determined orbit changers like Dhirubhai, all of whose efforts have benefited a larger sphere in their respective fields.

In a small way, I too have experienced the thrill of changing orbits with Mudra. In the 1980s, we leapt from the orbit of a small Ahmedabad ad agency to become the country’s third largest ad agency — in just under a decade.

However, when you change orbits, you will create friction. The good news is that your enemies from your previous orbit will never be able to reach you in your new one. By the time resentment builds up in your new orbit, you should move to the next level. And so on.

Changing orbits is the key to our progress as a nation.

Dhirubhai gave management a whole new ‘ism’

February 03, 2006 06:06 IST
Dhirubhai Ambani was no ordinary leader. He was a man who gave management a whole new “ism”.

There is a new “ism” that I’ve been meaning to add to the vast world of words for quite a while now. Because, without exaggeration, it’s a word for which no synonym can do full justice: “Dhirubhaism”.

Inspired by the truly phenomenal Dhirubhai H Ambani, it denotes a characteristic, tendency or syndrome as demonstrated by its inspirer. Dhirubhai, on his part, had he been around, would have laughed heartily and declared, “Small men like me don’t inspire big words!”

There you have it – now that is a classic Dhirubhaism, the tendency to disregard one’s own invaluable contribution to society as significant.

I’m sure everyone who knew Dhirubhai well will have his or her own little anecdote that illustrates his unique personality. He was a person whose heart and head both worked at peak efficiency levels, all the time. And that resulted in a truly unique and remarkable work philosophy, which is what I would like to define as Dhirubhaism.

Let me explain this new “ism” with a few examples from my own experiences of working with him.

Dhirubhaism No 1: Roll up your sleeves and help. You and your team share the same DNA. Reliance, during Vimal’s heady days had organized a fashion show at the Convention Hall, at Ashoka Hotel in New Delhi.

As usual, every seat in the hall was taken, and there were an equal number of impatient guests outside, waiting to be seated. I was of course completely besieged, trying to handle the ensuing confusion, chaos and protests, when to my amazement and relief, I saw Dhirubhai at the door trying to pacify the guests.

Dhirubhai at that time was already a name to reckon with and a VIP himself, but that did not stop him from rolling up his sleeves and diving in to rescue a situation that had gone out of control. Most bosses in his place would have driven up in their swank cars at the last moment and given the manager a piece of their minds. Not Dhirubhai.

When things went wrong, he was the first person to sense that the circumstances would have been beyond his team’s control, rather than it being a slip on their part, as he trusted their capabilities implicitly. His first instinct was always to join his men in putting out the fire and not crucifying them for it. Sounds too good a boss to be true, doesn’t he? But then, that was Dhirubhai.

Dhirubhaism No 2: Be a safety net for your team. There used to be a time when our agency Mudra was the target of some extremely vicious propaganda by our peers, when on an almost daily basis my business ethics were put on trial. I, on my part, putting on a brave front, never raised this subject during any of my meetings with Dhirubhai.

But one day, during a particularly nasty spell, he gently asked me if I needed any help in combating it. That did it. That was all the help that I needed. Overwhelmed by his concern and compassion, I told him I could cope, but the knowledge that he knew and cared for what I was going through, and that he was there for me if I ever needed him, worked wonders for my confidence.

I went back a much taller man fully armed to face whatever came my way. By letting us know that he was always aware of the trials we underwent and that he was by our side through it all, he gave us the courage we never knew we had.

Dhirubhaism No 3: The silent benefactor. This was another of his remarkable traits. When he helped someone, he never ever breathed a word about it to anyone else. There have been none among us who haven’t known his kindness, yet he never went around broadcasting it.

He never used charity as a platform to gain publicity. Sometimes, he would even go to the extent of not letting the recipient know who the donor was. Such was the extent of his generosity. “Expect the unexpected” just might have been coined for him.

Dhirubhaism No 4: Dream big but dream with your eyes open. His phenomenal achievement showed India that limitations were only in the mind. And that nothing was truly unattainable for those who dreamed big.

Whenever I tried to point out to him that a task seemed too big to be accomplished, he would reply: ” No is no answer!” Not only did he dream big, he taught all of us to do so too. His one-line brief to me when we began Mudra was: “Make Vimal’s advertising the benchmark for fashion advertising in the country.”

At that time, we were just a tiny, fledgling agency, tucked away in Ahmedabad, struggling to put a team in place. When we presented the seemingly insurmountable to him, his favourite response was always: “It’s difficult but not impossible!” And he was right. We did go on to achieve the impossible.

Both in its size and scope Vimal’s fashion shows were unprecedented in the country. Grand showroom openings, stunning experiments in print and poster work all combined to give the brand a truly benchmark image. But way back in 1980, no one would have believed it could have ever been possible. Except Dhirubhai.

But though he dreamed big, he was able to clearly distinguish between perception and reality and his favourite phrase “dream with your eyes open” underlined this.

He never let preset norms govern his vision, yet he worked night and day familiarizing himself with every little nitty-gritty that constituted his dreams constantly sifting the wheat from the chaff. This is how, as he put it, even though he dreamed, none of his dreams turned into nightmares. And this is what gave him the courage to move from one orbit to the next despite tremendous odds.

Dhirubhai was indeed a man of many parts, as is evident. I am sure there are many people who display some of the traits mentioned above, in their working styles as well, but Dhirubhai was one of those rare people who demonstrated all of them, all the time.

And that’s what made him such a phenomenal team builder and achiever. Yes, we all need “Dhirubhaisms” in our lives to remind us that if it was possible for one person to be all this and more, we too can. And like him, go on to achieve the impossible too.

Mukesh Ambani on how Reliance was built
If Dhirubhai Ambani was a larger-than-life patriarch and Anil was the public face of Reliance, Mukesh Ambani was an enigma. Those who knew him well credited him with leading Reliance’s turbo-charged growth over the last two decades.

But very little is publicly known of his beliefs, vision and motivation. In his most expansive interview ever to MoneyLIFE, a personal finance magazine, Reliance Industries chairman Mukesh Ambani tells MoneyLIFE editors Sucheta Dalal and Debashis Basu what drives him and his business decisions.

Here is the second part of the interview:

You were first among the new crop of licencees for Partially-Oriented Yarn.

Yes, but whoever already had a licence, had a business advantage. So, what competencies did we build? One was to get a licence in a licence-permit raj. Getting a licence is nothing; you have to build a sustainable business. Raising the money is another competence.

In the ’80s, when I came in, the ground rules were made clear to me. ‘Build this business from scratch, without taking anyone from Reliance.’ That forced you to be very disciplined. I looked around and figured out in three months that this industry runs on heroes.

Experts came in with their notebooks on which they had written down all the process conditions, temperatures, pressures and carried these readings back with them.

Are you talking of the consultants?

Even the managers. It was all a feudal style of management. If we had accepted that style, we would not have grown. It was simply not a scalable model. Of course, the easiest thing would have been to follow it. But we had a disruptive style of management. So we said, ‘we don’t want people carrying their wisdom in notebooks as if it is some kind of secretive operation.’

We tried to create an open environment. In today’s language, we created SOPs and SOCs (standard operating procedures, standard operating conditions) so that everybody was on the same page. We wanted an organisation where everybody contributes but the business is not dependent on a few individuals.

When our competitors were buying licences for half a million and one million dollars, we agreed to pay DuPont $5 million, because we wanted to work with the best in the world. We had limited capital but our approach was different. We got a few experts from DuPont and put some 25-year-olds with them to learn how to manage operations and sustain chemical processes.

The vision of the top person, in deciding that this was the right path, was totally different from what existed in India. It was a big thing.

Reliance went through turbulent times in the mid-80s when there was this long battle with the government and the media. Then Dhirubhai suffered a stroke. From the outside, it seemed that Reliance would be sorely tested because the perception was that so much was built by “managing the system.”

This is where investing in talent works. We had different sets of competencies in Reliance. If it meant getting licences to import something quickly to reduce the cycle time or to get steel from Steel Authority — there were people with relevant competencies handling those things to ensure that the project is completed in time.

There was another set of competencies for the operational part — how do you run things efficiently. That strength of Reliance was underestimated.

What went on in your mind during the crisis?

We lost Rasikbhai on 30th August, 1985. That was a huge blow. Then my father suffered a stroke in February– two major events in five months. From three of us running the business, for some time, I suddenly became alone. But my father recovered reasonably by June-July.

There was no sense of panic. The whole picture was in my head. That was the strength of the open system. If I had kept everything close to my chest, it would have been difficult. We had excellent people across the company. The polyester business was institutionalised and there was a plan in place. We just kept our heads down and executed it.

When the economy opened up in 1992, there was a lot of apprehension about whether Indian companies would survive. What was your gameplan?

We were clear that we had to be internationally competitive and were passionate about building competencies that were the best in the world even when the tariffs were very high. It was an obsession with me to beat the Taiwanese and the Koreans who dominated the polyester business in the ’70s.

That was possible only when all aspects of the business were better than them. One critical factor is scale. We understood that, unless we had scale, we won’t be world-beaters. Remember, with enormous effort and all the limitations of the licence-permit-raj (between 1981 and 1991), we had built a polyester capacity of 75,000 tonnes. But we had also built a different mindset by looking outside India.

So, when the deregulation came, we were ready. By the middle of ’95, we were producing 1 million tonnes. A spring was released. Tariffs also fell sharply from 150% to 30% and later to 10%. We wanted to be internationally competitive even when the tariffs were 300%, but being based in India became a competitive advantage when the tariff level fell to 30%.

By that time, we had developed superb project execution capability. We had more than 300 top quality people to execute the projects. From the ’80s till today, we have not struggled to start up any plant. The biggest companies in the world do not have this kind of record.

How did Reliance develop this mindset? There was hardly anything, except some public sector companies as a reference in India.

My reference points were US companies. We were hugely influenced by large US chemical companies, especially DuPont. It was a very open company and we could take advantage of their learnings. The US is also a very open society. I could to go the US Association of Chemical Engineers and get the standards, data, etc.

It was not the Internet age, but it was easy. It sometimes cost us money to buy what we needed but the investment was worth it to put the right thought process in place.

Critically, some of the leadership came from public sector managers. For instance, KK Malhotra, who was with us for 15 years from 1985, made a fantastic contribution. He was my guru. He ensured that we imbibe all the best practices.

You see, all the right things are written in books and research papers. The trick is to ensure that there is no gap between what is written in the books and your vision; from what is happening on the shopfloor and what is going on in the marketplace. That is execution. That is what makes the difference.

So, in short, we had a huge US bias and great public sector talent. It was not a large group, just 5-6 outstanding people. I always believe that so-called ordinary people can achieve extraordinary results as long they are given a sensible framework. We have been able to do it in industry after industry.

Till 2000, Reliance always said it wanted to capture the entire value of the oil and petrochemicals chain, but after 2000, you have gone in different directions. What caused the change in thinking?

We had three thoughts. One was the fundamental belief that we will invest in businesses of the future and we will invest in talent. We clearly saw that from oil to fabric was a value chain of opportunity and it will remain so for many future decades.

We executed that well and created enough disruptions in the polyester, plastics, refinery and the upstream business of oil and gas. We had very good cash flows. In late ’90s, we had two options. One was to make the current business more global, bigger and better. The other option was to use our cash flows to do something else.

We were sitting right in this room and my father said ‘now it is your call, what you would like to do.’ I said, ‘we must use the competencies and cash flows to make a difference to millions of Indians’. He said, ‘that’s exactly what I had mind. Let’s do it.’ The strategy was: while we strengthen our current business, we will use our cash flows to invest in the businesses of the future. That’s how Infocomm was born.

There is a sense that, in the early 1990s, you missed the bus on the biggest opportunity of the future — the IT business.

We saw the IT business coming. I lived in Silicon Valley. I knew it was a big opportunity. I mentioned it in a speech in 1995 — the clear arbitrage opportunity for software development. But for us, it was a question of focus and trade-off.

I was very focussed on building various competencies in Reliance and we were not ready to do two things at the same time. It was a big risk for us to get into IT, especially because it was hugely effort-intensive. In my language, I said we have too much soap on our body and we need to take a bath in the chemicals business.

We had signed a JV with Microsoft, but decided to pass up that opportunity. To my mind, I was right. We still needed to build that focus.

So, in the late ’90s, you zeroed in on telecom, life sciences and retailing. . .

Actually, my father was very keen on the agri-business. He said, that is the real big business in India. We looked at three or four businesses. We got into life sciences as a defence mechanism in the late ’90s. In 1996-97, we were big in plastics already when Dow announced that they would make plastics from E Coli.

It looked like our business would be ruined because we would buy naphtha and these guys would make plastics from salt and water. We quickly put four or five guys together to understand what Dow Chemicals was doing. That is when we started the industrial biotech business.

Then, we stumbled on human and plant biotech. We were fortunate to have some good people and decided that Reliance can build this business over 5-10 years without any great revenue pressures. In the mainstream business, there was telecom or what I call infocomm.

We got into telecom in the ’90s by bidding for cellular licences. But I felt that the real value is in the convergence of information and communication; pure communication will not deliver a sustainable value; that is why we called ourselves infocomm. It was learning a whole new domain. We brought in experts from the outside but we essentially did it with proven Reliance people.

THE MAN WHO WOULD BE PRINCE: ‘Dhirubhai will go one day. But Reliance’s employees and shareholders will keep it afloat. Reliance is now a concept in which the Ambanis have become irrelevant,’ said Dhirajlal Hirachand Ambani, arguably India’s greatest entrepreneur ever, years before his death on July 6, 2002.
His words have proved prophetic, as the Reliance juggernaut keeps rolling on towards excellence.

Dhirubhai rose from humble beginnings to found India’s largest industrial empire and, in the process, became one of the world’s richest men. He transformed the way big business operates and thinks in India.

His death marked the end of a golden era in Indian entrepreneurship, but his values continue to guide the Reliance group, now run by his two sons, Mukesh and Anil.

HE CHANGED THE INDIAN STOCK MARKETS: Dhirubhai was praised for his key role in shaping India’s stock market culture by attracting hordes of retail investors to a market dominated by state-run financial institutions.
The history of the Indian market, there are two distinct eras — ‘Before Dhirubhai’ and ‘After Dhirubhai’. In the first, people invested in gold or land; the stock exchange was an arena reserved for the rich.

But that changed forever when Reliance went public in 1977. Dhirubhai created a new class of Indians — middle-class investors. Buying into the Ambani legend was one of the wisest decisions they ever made.

THE AMBANI MAGIC: Reliance Industries was listed in 1977 in one of the largest public stock offerings of its time and its annual shareholders’ meetings were so well attended they had to be held in a football stadium.

And Dhirubhai held his shareholders spellbound, paying high dividends and bonuses at a time when equities were seen as a low-return, risky investment.

This made Dhirubhai Ambani a hero to shareholders. Original investors in the 1977 initial public offering have earned a compounded annual rate of return of 43 per cent.

THE MASTER STRATEGIST: Dhirubhai’s is not just the usual rags-to-riches story. He will be remembered as the one who rewrote Indian corporate history and built a truly global corporate group.
He was not a conformist, but those who chose to back Dhirbubhai’s style of doing business came up trumps. For, the ‘Dhirubhai school of management’ firmly believed that the only thing which mattered at the end were results and the benefits which accrued directly to the shareholders. And that is what he passed on to his two sons — Mukesh (right), the current chairman of the group, and Anil, the vice chairman.

His biggest success was his ability to carry people with him. From brilliant technocrats to financial whiz kids and high flier managers to small time dealers and messenger boys.

Assisted by his sons, Dhirubhai, unlike some of the other corporates of India, never had to face any internal revolt.

EVER THE FAMILY MAN: The Reliance patriarch, although busy all through the day building India’s largest private conglomerate and interacting with the crème de la crème of the world’s political, entrepreneurial and social superstars, always had time for his family.
He loved to play with his grandchildren, passing on qualities to them that would mould their future.

On June 16, 1998, Dhirubhai Ambani became first Indian ever to be awarded the Wharton School Dean’s Medal.
A galaxy of politicians and entrepreneurs attended the ceremony. Seen in the picture are former defence minister of India Mulayam Singh yadav (from the left), former Indian prime minister H D Deve Gowda, Dhirubhai’s wife Kokilaben, Dhirubhai himself, and Thomas Gerrity, Dean of the Wharton School, University of Pennsylvania, United States.

Dhirubhai was conferred the Economic Times Award for Corporate Excellence for Lifetime Achievement in August 2001.
Seen in the picture are Bollywood superstar Amitabh Bachchan (extreme left), Finance Minister Yashwant Sinha (third from left), Dhirubhai himself, and Dr Verghese Kurien, Chairman of the Gujarat Cooperative Milk Marketing Federation.

He was conferred the lifetime achievement award by India HRD Congress in February 2002. He was thrice rated ‘India’s Most Admired CEO’ in the Business Barons-Taylor Nelson Sofres-Mode survey in June 2001, 2000 and 1999.

Dhirubhai was picked by Asiaweek magazine as one of the 50 most powerful people in Asia.
‘If power is measured in face time with the leader of the free world, then Ambani has it in spades,’ said the magazine.

When he visited India, former US President Bill Clinton spent 45 minutes with the ‘Polyester Prince’. That was the measure of the power of the man.

Dhirubhai and his sons, Mukesh (left) and Anil (right), strike a happy pose with the charismatic Bill Clinton

THE PAST AND THE FUTURE: The question about the future of Reliance group in the post-Dhirubhai Ambani era haunted millions of small investors, after the legend passed away.
But Dhirubhai had moulded his sons well. Mukesh and Anil learnt the lesson from their father in the art of market management, coupled with the enhancement of shareholders’ value that had helped the patriarch build an investor cult — and in the process build a formidable business empire.

The Mukesh-Anil duo is carrying on Dhirubhai’s legacy, even as the Reliance group continues to attain new heights.

ONE YEAR AGO…: It will be one year on July 6, 2003 since the Reliance patriarch passed away. But his group continues to reach dizzy heights under the stewardship of his sons.
On July 6, President A P J Abdul Kalam will deliver the first Dhirubhai Amabni Memorial Lecture, instituted in the memory of the late chairman of Reliance Group of Industries, in Mumbai.

A host of distinguished businessmen, speakers and politicians will greet the function.

The legend lives on…

Written by Bhushan Kulkarni

January 18, 2007 at 11:37 am

Posted in Uncategorized

Tagged with , ,

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