In Business There Are No Foes, Only Friends
You have brought new leaders from the outside. Does the culture at your organisation accept outsiders?
Don’t think of this as management jargon. When we started out, we were an entrepreneur-led, entrepreneur-promoted company. We did a great job. In some companies, this phase lasts forever. Nothing wrong. But in my view, if you do that, you remain small. You can’t manage a large company using this model. So we moved to the next stage — entrepreneur-led and professional-supported. Over the last four years, we’ve moved to professional-managed and entrepreneur-supported. And that’s where we want to keep it.
There is one more stage — professional-led and professional-supported. Vodafone is in this mould. To a certain extent, so is MTN. No single shareholder is dominant. Ownership was created among managers unlike Vodafone. I personally believe, the finest way to drive value for all stakeholders is from the position we are currently in.
Parts of our organisation were moving to the professional-led and professional-supported model. I had to pull it back because I figured they were becoming too bureaucratic. Things didn’t move; too many approvals were needed; too many emails. That is something we want to avoid.
In which case, how do you retain professionals?
We have retained them. People who come in from the outside love what they see here. We ask them to tell us what’s good, what’s bad and what’s ugly about us. They tell it like it is. In turn we tell them, here’s the canvas, go fix it.
You have a point there. The real issue is always with the war veterans. How do you handle that?
Four years ago at a conclave, I let go. I told the veterans you’ve done a fantastic job of building the company. But unfortunately, some of you haven’t kept pace. And I don’t want you to come in the way. You’ve got the titles, you’ve got the money, but no major responsibilities. So, I said, walk out now, with your medals and feathers intact. Else, you will start dying. People were shocked. That evening people came to me and said they had never heard me talk as sharply. And I had to explain to them where I am taking the company from here. I think most of them are now gone.
You said you are a professional-managed entrepreneur-supported company. But implicit to that is your being around, somewhere in the background. Do you think it possible that someday Airtel could become a professional-managed professional-led company?
“Me” implies some shareholder. You must remember that Singtel owns 30 percent in this company. Airtel should never become a professional-managed professional-led company. This company’s foundations are different. If you strap a different edifice to this foundation, it will not work.
You also said things didn’t go well when some parts of the company went the professional-managed professional-led way. What specifically were the issues?
Speed was compromised.
What was holding the organisation down when you wanted it to move?
Bureaucracy and a lack of urgency.
Why was it missing?
You must feel like the deer in a forest, which is always afraid of being attacked. Else you’re dead.
How do you institutionalise that?
Entrepreneurs do it intuitively. For professionals, it is part process and part intuition. When we wanted to outsource our network, it was considered blasphemy. Akhil [Gupta] and I spoke about it many times. I know how many obstacles he had to face to take it through. Everybody was dismissive of the idea. Sometimes, seniors will not only say this isn’t good, they will work hard to ensure it isn’t good. I had to protect him. That’s where the professional-managed entrepreneur-supported model comes into play. I said let’s go.
When we took our plan to the board, they almost killed it. One of them told us, ‘we speak English. But you guys speak a kind of English we don’t understand.’ We had another board meeting at the end of which they were still uncomfortable. Finally, I told them it’s my neck on the line. If it fails, I fail. They agreed — not because I was the owner or the largest shareholder and could vote them out, but because they could see a certain passion. And I had a track record to back myself up. If I were a professional CEO and even if I had the guts to take on the board, I don’t think I would have got the approval. The board would have batted on the safe side.
When it was time to present the MTN plan, did you have to go through something like this?
You must understand I have been at this for the last 30 years or so and this is the only thing I do. Once I understand my limitations, the only way I can learn anything is to work with people like them. I am sharp, incisive and understand the industry. But they manage the industry better. They can’t take decisions that are risky. I can say, guys, it’s my neck, go for it. The combination is a powerful one.
What next? There will be a time when you want to do something else.
I tell you, we entrepreneurs are like junkies looking for the next big fix. There is no question about that. The question is, where will it come from. Business-wise, we will create some successes. But during my life time I don’t think we will be able to claim there will be anything as successful as Airtel. What are the opportunities we have?
We understand telecom — that’s in our blood now. So, one opportunity is to take telecom to other markets. We are making a very serious attempt to do that. Our balance sheet is strong.The other thing we are capable of doing is India. We understand this country very well. But we don’t want to be in manufacturing. Although we did that earlier with Beetel, we are services-oriented now. We are into financial services with AXA, retail with Wal-Mart, and agri food services with Del Monte. We chose these verticals very carefully. They are India-led, pioneering, connect directly with our consumers, require brand building, need massive investments and are heavily regulated. We are comfortable with all of these.
The common thread that binds all of these for us is that our partners are experts. We don’t have the time or luxury to learn how these businesses operate. I don’t feel any shame in saying we want to fly on the wings of these people. When we were young and small, we did it with British Telecom, Telecom Italia.
What have you learnt in the non-telecom businesses, like financial services for instance, where you are playing catch-up?
The only place where we are slightly late is financial services. In some sense, we are in the middle there. AXA is a trillion dollar asset management company and one of the most respected worldwide. They are bringing in best practices and knowhow and we are not uncomfortable with the pace at which it is moving. We need to be on a sure footing in these businesses. But I can assure you it will be a billion dollar business. It will not be a $10-billion business like telecom, but it will be a billion dollar business in the not so different future.
As for retail, we are in the first flush. It’s the first lot of people who have come into business. Here again, we’ve had a slow, calibrated, moderate start. We will get to a billion dollars here as well in two-three years time. From there, let’s see how it goes.
But they would want to control operations…
Control has no meaning, influence has meaning. I have influence in areas where I can add value — look and feel, brand building, customer segmentation. But in terms of domain knowledge, how the insurance piece works, this must come from AXA.
Wal-Mart would have a point of view as well on how to grow the India opportunity.
I went to Amritsar and they showed me some stores. I thought there was too much breakfast cereal stacked there. I told them it’s the wrong thing in the wrong place. These are things you learn when you’re in a country. It isn’t a fight. They laugh over it, we laugh over it.
Equally, to their credit, they were moving slowly. We wanted them to be faster and open more stores. They refused and said we first need to understand what works here. It got us frustrated. But in hindsight, they were right. We would have lost a lot of money if we had gone at that pace.
In all joint ventures, you have a difference of opinion. At the end of the day, only one thing is sacrosanct — what is good for business counts. Not what is good for shareholders! From our point of view, if anything is good for business, but not good for Mittal as a shareholder, we will fight in favour of business. Similarly, if Wal-Mart says it is not good for Wal-Mart, we don’t care. But if they say it’s not good for India or the joint venture, we care.
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