Who will inherit Dhirubhai's mantle?
DHIRUBHAI Ambani, the entrepreneur who emerged as the tallest industrial leader in India in the last two decades, transformed the industrial landscape just as Jamshed Tata and G. D. Birla did in their times. Starting his career in Aden earning just $6 a month, he raised the Reliance Group from the scratch to a $13-billion empire and a Fortune-500 company.
Dhirubhai leaves behind a strong legacy of thinking big and doing the impossible. He was not just a visionary beyond par but also an achiever. He was the architect of the equity culture in India. His competitors feared and respected him alike. International media credits him for the competence he developed for `getting round the regulators'. Sure he did find a way to cut the bureaucratic labyrinth, but only to bypass restrictive licensing practices of those times.
Since liberalisation began about a decade ago, manufacturing has been facing a rough weather. While China has become a powerhouse of the manufacturing sector, Indian businessmen failed to take advantage of their entrepreneurial spirits to create wealth. India, therefore, needs courageous people who can follow Dhirubhai's example to create internationally competitive industries. What sorts of businesses these could be and what would be the characteristics of people who are thought of worthy successors to Dhirubhai?
Dhirubhai Ambani leaves behind a strong legacy of thinking big and doing the impossible.
The future of Indian businesses largely depends on how far Indian businessmen would be able to compete in the international arena. While in the licence-permit-quota raj, family-owned businesses and conglomerates flourished, in the next decade, regulatory regimes would be further relaxed. Businesses would have to develop the competencies of dealing with the critical success factors in an atmosphere of de-regulation and lower import barriers, globalisation, rapid technological change and fast-changing customers' preferences. Entrepreneurs would have to work overtime to align their practices, philosophies of conducting day-to-day affairs in tune with the international requirements and norms.
A look at the BusinessWeek's latest list of `Global 1000' indicates dominance of US companies (19 out of the first 25) and barring GE, all are dedicated to single lines of businesses. This is because Wall Street promotes focussed businesses. In the same list of `The Top 200 Emerging-Market Companies', most companies including ONGC at 25, are single line businesses. Same is true of the list of `Most Admired Companies' published by Fortune.
The recent corporate scandals in the US (and pay-offs by Xerox in India) further suggest that the markets and regulators would demand stricter standards of corporate governance. Companies would be evaluated by their qualities of management and products and services, innovativeness, financial soundness, use of corporate assets and long-term investment value and finally, corporate social responsibility. A global scale is also a sine qua non for creating a successful business.
Localisation of products or services to satisfy different tastes of customers in different markets will be one of the key assets to win the battle in the marketplace. In such circumstances, any ambitious Indian businessman will have to find a niche and confine himself to just one or two lines of businesses to create a globally competitive outfit. South Korea's Chaebols, which have been shedding businesses, are no longer successful in the global market. Multi-business groups, such as ABB, Tyco, Fiat, Daewoo have all been in the news for the wrong reasons. They are having problems of one type or another.
Only GE remains at the top, as it has a philosophy of picking up and retaining businesses, which are either No 1 or 2 in their industry.
Depending on the ground realities, the changing landscape of business and opportunities in the domestic and international markets, a visionary like Dhirubhai will choose the right kind of business to enter, where he will develop a competitive advantage. Emulating personal qualities of Dhirubhai will also require developing a vision and a roadmap for creating a high-profile industry. He should be able to make a sound judgement of the approaching revolution and develop all the right strategies for growth.
Any examples to follow? Worth emulating are Finnish Nokia and South Korea's Samsung Electronics, which have become world-class in the last decade, capturing markets around the world. Not all that long ago, Nokia manufactured diapers and rubber boots. But Jorma Ollila, the CEO, turned around the company and found a niche in electronics, manufacturing mobile handsets, with a global market share of around 40 per cent now.
Similarly, Samsung Electronics, which manufactured 12 inches Black & White TV sets under Sanyo label in the 1970s, is aggressively riding the technology wave and specialising in electronics business, which today constitutes 25 per cent of the turnover and 65 per cent of the profits of the Samsung group. Its objective is to become like Sony in the international market.
We are living in the age of Toyotas, Hondas, Microsofts and Canons, all focussed in their single lines of businesses and doing well, even in the downturn.
The real tribute to Dhirubhai would be paid, if India produces many entrepreneurs like him, who energise the manufacturing industry in India by setting personal examples and creating world-class businesses, worthy of Fortune 500 listing. Anybody listening?