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July 19, 2002 | 1530 IST
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Dhirubhai's genius, and relevance

R Ravimohan

In a career spanning four decades, Dhirubhai Ambani achieved the most that has ever been achieved by any industrialist in India.

Dhirubhai Ambani. Photo: ReutersHe built India's largest enterprise in the private sector. That enterprise generates, at the last count, well over Rs 70 billion cash surplus a year. He had created a sustainable organisation.

He had institutionalised the key factors that have contributed to his success. These can be summarised as a penchant for global benchmarking, intense cost consciousness, determined pursuit of goals, flawless implementation, and the will to dominate.

He challenged the existing paradigm. He was seen to bend rules.

And he certainly set a scorching pace for growth. He redefined project financing. He took the art of negotiations to new heights. His decisions on investment and divestment were far-sighted and always proved right.

Therefore, to me Dhirubhai was a management institution, which taught me many valuable lessons. Indian business could too benefit from his teachings.

In 1985, he had shared his optimism for the petrochemical field with a few of us. He said that this industry converts oil and gas that come out of the ground. This cannot be stopped, until converted into materials, including polyester-based clothing, which his company was already making at that time.

His mantra was to keep the cost low, so as to garner volumes. He said that he would sell polyester below the cost of moongfalli (peanuts). Soon his words turned prophetic, as the global polyester prices fell dramatically to well below the price of peanuts!

Since he knew it would happen, he set up the plant and financed it with an eye on the cost element. He was simply obsessed with keeping costs to the bare minimum. Towards this end, he depended on technology, superior project management, and his ability to raise money at competitive rates. He employed whatever tactics were needed to achieve these goals.

From the very beginning, all his projects were benchmarked to the best in the world. The minimum economic size of projects and the appropriateness of the technology were key elements that determined the basic viability of his ventures.

He came across the vexatious government regulations that threatened to prevent him from achieving his economic objective. He then understood that government policies were the key to achieving his business goals.

Anil and Mukesh, with father Dhirubhai AmbaniHe simply redefined the boundaries of business domain, by including the government relationship as part and parcel of his business paradigm. To him, ends were sacrosanct. He had to find a way to reach the ambitious goals that he set for himself.

His vision guided him, both to make and, as importantly, withdraw from business choices. His calls on almost all his new ventures have been lauded by the industrial community. However, not enough attention has been paid to his strategic withdrawals.

The neat, painless exit from the textile manufacturing has not been well appreciated. After charting the course of backward integration into petrochemicals, Reliance achieved a position of domination pretty quickly. This business grew and overtook the textile business contribution, setting the stage for the exit.

Behind this move was Dhirubhai's right call on the need to exit the troubled textile industry, without getting hurt. To me that move was no less spectacular than the decision to set up the mind-blowing Jamnagar complex.

While his tenacity in pursuing goals was legendary, he also showed remarkable astuteness in climbing down on the L&T issue. He avoided a potentially expensive battle for the control of L&T, which most people thought was uncharacteristic of Dhirubhai.

However, the effect of such a battle on his company would most probably have been debilitating. To him Reliance was the ultimate possession, and it had to be protected from all dangers, including his own will and whim. I thought again this subtle nuance was missed by most in the market, which seemed more taken in by his 'defeat.'

I have rarely come across anybody who so closely empathised with the company he worked for. To me one of the success factors in Dhirubhai's career is this uncompromising dedication with which he served Reliance.

He displayed an amazingly rare ability to influence people. Be they his own sons, the folks that worked for him, his customers, his traders, financiers or indeed the man on the street: Mukesh and Anil Ambani never tired of quoting their father, incessantly, all these years. I feel it stemmed from his genuine desire to include people in his schemes.

When he talked about selling polyester below the price of peanuts, or when he brewed his schemes for raising money from millions of investors, he always spoke of people, as a ruler would of his subjects.

Dhirubhai Ambani"Logon ka kalyan" (welfare of the people) and "unko khush rakho" (keep them happy) were phrases I have heard him say many times in meetings that I have attended over a long period of time. He was never satisfied with plans or projects that would touch a small number of people.

I learnt quickly that in order to sell any idea to him, we had to include a multitude of people or numbers. At one point he said, one out of 10 people in the world that bought anything in their life, lived in India. It costs almost as much to do business with 2,000 people, as with 20,000.

For instance, raising Rs 100 crore (Rs 1 billion) or Rs 500 crore (Rs 5 billion) probably will entail almost the same cost. Putting these two philosophies together, he would say raise Rs 500 crore (Rs 5 billion), and do something useful with that money for the people.

His genius lay in always figuring out a win-win solution, producing a spectacular buy-in from the people he dealt with.

I bring this facet of his success to focus because there are few industrial houses whose workforce has consistently displayed such high levels of purposefulness, productivity, flexibility and dedication, as one has seen in the Reliance group.

The best testament to this argument is the fact that this group would have lost the lowest number of days due to labour unrest in the country, despite becoming the largest private sector company, while logging one of the best labour productivity measures.

The other fascinating aspect of his developmental efforts is the complete alignment of his organisation with his vision and inculcation of his behaviour.

I am not only talking about his sons, the able Mukesh and Anil, here. Almost everyone whom you meet in the Reliance group is a confident and aggressive will-do master.

It would be a great case study to chronicle his lifetime achievements, especially for the policymakers. In spite of every possible restriction one could think of, Dhirubhai set up the country's largest company in a very short period of time.

Even the laudable achievements of the Reliance group during the controlled regime have been dwarfed by the growth during the liberalised nineties.

It shows the degree of suppression that those economic polices had imposed on the progress of the nation. I do hope the current environment is stewarded more astutely to encourage industrial progress and entrepreneurship, to make a thousand more Dhirubhais bloom in this country.

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