Manjari Raman debates the leadership conundrum with John Kotter, Jim Collins and Michael Useem, and juxtaposes their theories with the Reliance experience, only to find Reliance's MD Anil Ambani has some views of his own. Anil Ambani, the global manager, networks at Wharton, schmoozes at Davos, and spins witty stories on the perils of globalisation. In 1992, for example, when Reliance was planning to issue global depository receipts (GDR) "" the first ever by any Indian company "" he recalls making a passionate pitch at the ministry of finance in New Delhi. After Ambani finished, a perplexed finance ministry official asked: "I know Reliance is ambitious, but why do you want to buy the German Democratic Republic?" Anil Ambani, the parochial entrepreneur, who strides the corridors of power in North Block and knows how to win friends and influence policy, can be as trite as a politician. "National interests are prime and above all other interests. Reliance will not exist if India does not prosper and bloom," he says stuffily. I'm confused. Is the vice-chairman and managing director of India's largest business house, the $20.9 billion Reliance group, a leader who can build Reliance into a global force? Or, is he just a globe-trotting entrepreneur who is content with making Reliance bigger and better in the India market? Over the past four months, as I have addressed the question of what stops India from throwing up a global company, the issue of leadership is beginning to loom large. It's increasingly clear that there comes an inflexion point in the life of a company when the leader sets a mandate for globalisation and literally pushes the business down the path. What is not clear, however, is what goes into making such a global leader. Are there traits that are common to leaders who lead their companies into globalisation? What distinguishes global leadership from good leadership? Finally, are global leaders born or made? To find answers, I turned to three of the leading voices on leadership in management today. John Kotter, a retired distinguished professor of leadership at Harvard Business School whom BusinessWeek readers voted as the "No.1 leadership guru". Jim Collins, the best-selling author of Good to Great and Built to Last. And a leading voice on leadership, Michael Useem, professor of leadership and director of the Centre of Leadership and Change Management, at the Wharton School. Interestingly, while all three are devoted to working on leadership, they had to mull hard on their experience to extract the traits specific to global leadership. And what is worth noting is that the ideas they finally came up with had a strong bond running through them. Consider what sets a global leader apart: Global leaders really, truly want to go global "At some point what differentiates people who create global corporations from those that don't," says Kotter, "is that they want to." When George Weismann, a senior executive at Philip Morris was asked to develop the company's international market, he did an inspired job. Marlboro became the best-selling cigarette in the world, three years before it became number one in the United States. Says Collins: "When I think of George Weismann, or Colman Mockler, former CEO of Gillette, or Citicorp chairman Walter Wriston, they had a global vision and it wasn't purely strategic. It was almost a sense of destiny "" in the world and not just the domestic economy." It made me wonder: perhaps, external factors like a closed economy, the high cost of capital, low GDP, or a protected market do stunt the growth of global leaders. After all, Ambani repeatedly blames local limitations like the lack of capital account convertibility on binding Indian business. Says Ambani: "Strategic planning and corporate planning used to be done in Udyog Bhawan and Shastri Bhawan." Kotter doesn't quite buy the argument that external factors nip global aspirations in the bud. "These factors may not encourage leaders to think beyond the boundaries or to be more ambitious. But 'encourage' does not mean 'force'. People can overcome these factors but they must deeply want to globalise or else they invent something that the world wants "" which by the way, doesn't require zillions of dollars." Global leaders build organisations capable of going global According to Kotter, one of the most important traits in a global leader is the ability to get out of their people an idea that has global relevance "" and the capacity to create an organisation that produces products that the world wants. Sometimes, a leader's globalisation instincts kick in when the options for domestic growth dry out (Coke and Pepsi). In others, the product (McDonald's) or service (American Express) has such global appeal that it literally pulls a company across the world. In contrast: Reliance has built an organisation that seems to excel in serving the Indian customer "" more and more. What started in 1966 as a textiles manufacturer is now a colossus with interests in the exploration and production of oil and gas, refining and marketing of petrochemicals, financial services, power, telecom, infocom, biotech and even insurance. Ambani instantly rises to the bait. "We are very, very focused on building vertically-integrated value chains. You can name these various businesses but when we look at what constitutes 99 per cent of Reliance's revenues, then it is just two areas: the energy chain and the information and communication space. Everything else is an also-ran." As Ambani speaks, it's obvious that Reliance Infocomm is almost pulling the group into globalisation "" early this year, in January 2004 FLAG Telecom became a Reliance Group company for $207 million in cash. At the other end, the Group is being pushed into the globalisation of its energy chain due to its integrated "wall-head to wall socket" strategy. For the first time in the world, a utility provider is trying to control the entire value chain from exploring and producing (E&P) oil and gas, to delivering it at the consumer's home. Downstream, Reliance Energy is eager to sell products in Asia and the company recently bid for a retailing opportunity in Sri Lanka. Upstream the company is scouting the globe or opportunities in oil and gas E&P: it has already acquired a block in Yemen, a bid is out in Iraq, and five other global locations are under survey. Admits Ambani: "We're being driven and forced to go where the natural resources are." Global leaders ooze confidence in their ability to go global Pointing out that it took Toyota years to gather the courage to move out of Japan, Useem says: "Most of the global leaders I've met have impressed me by the level of personal self-confidence they exhibit moving into markets that they are unfamiliar with." It's hard to imagine Anil Ambani lacking in self-confidence "" or to think that Dhirubhai Ambani was risk averse. But what if the very factors that made Reliance so effective in the domestic market "" the network of political, business and social relationships; the capability to influence policy; the skills to work the system from within; the ability to leverage power and clout "" are constraints that make the company diffident about playing an equally aggressive role in the global arena? As examples in Mexico and Brazil show, instead of seeking growth globally, leaders tend to build a diversified conglomerate within the secure confines of the country "" especially in large markets like India. Says Kotter: "One reason people stay within their locality is that they think they know it well. They think they have good relationships with the appropriate authorities. They don't have the self-confidence that they can develop the understanding and relationships elsewhere." Global leaders have a high tolerance for risk and uncertainty Useem knows fear "" and risk "" from up close. A skilled mountain climber, he teaches leadership at Wharton by taking his class on hair-raising treks in the Himalayas or in Patagonia, Chile. So I believe him when he says: "Global leaders have a high tolerance "" even a hunger "" for ambiguity and uncertainty." Today, Reliance claims "global leadership" in several businesses. It's the world's second-largest producer of polyester fibre, the third-largest producer of paraxylene, the seventh-largest of polypropylene. It's refinery is the third-largest in the world. Yet, all this is within the comfort zone of building global scale within India, for India. Until just a few years ago, nearly 100 per cent of Reliance revenues came from domestic operations; today exports have just about risen to 20 per cent of total revenues. Sensing my scepticism, Ambani says: "We export the entire gamut of petroleum products from selling detergent raw materials to Proctor & Gamble and Unilever, to selling plastic bottles to Coke and Pepsi. If I am serving global customers in global markets with global quality and global logistics, isn't that a form of globalisation?" Perhaps, but as long as it's an exports-led strategy, it's low hanging fruit. Sometimes, the low-risk strategy can be a result of the values the leader embodies. Ambani admits that every decision in Reliance is based on maximising returns to the shareholder. Sometimes, that's the kind of speed-breaker that slows down globalisation. Collins relates an incident when a board member challenged then-Citicorp Chairman Walter Wriston on the expense of having the Citicorp brand in other parts of the world. Wriston's blistering response was: "It 's not a matter of returns on investment. We may have a negative return on investment by having a branch in Dubai but we have an overall net positive return because we are going to be truly global." Marvels Collins: "Imagine, there was an actual debate defending the negative return on investment, in order for Citicorp to have a global position." Global leaders exhibit a global sense rather than a global mind-set Clearly, few people are born global leaders; most evolve into it. But, surely all global leaders have a global mindset ? "Absolutely not," snorts Kotter. "You don't need a global mind-set at all to be a global leader." He cites the example of Akio Morita and Masaru Ibuka, the two electronics engineers who came out of World War II in Japan with the idea of building the small pocket transistor. Neither had ever travelled outside Japan "" but Sony was to become one of the world's best-known global brands. Similarly, Ray Kroc, the 52-year-old founder of McDonald's was quite happy selling burgers within the state of California "" and made no pretensions of being a global citizen. Says Kotter: "These leaders would not have anything as close to the global vision or global sophistication of their successors 20 years later. They were much more parochial and had narrow mind-sets than their successors. I do suspect, however, that they were more ambitious than their typical neighbour in the country was at the time." Kotter's suggestion: imagine what leaders must have been like 20 to 50 years ago, just before their company embarked on globalisation. He bets that more than a global mindset these people had a global sense. Says Kotter: "A global sense doesn't mean understanding 200 different countries and 900 different cultures. It means knowing something about which products and services cross national and cultural boundaries "" and which don't." The bottom-line, says Kotter, is that a global leader is someone who is excited and not intimidated by globalisation. That should be a snap for Reliance, I reckon. After all, the late founder of the group Dhirubhai Ambani, is the epitome of entrepreneurship in the country, building a mega domestic empire from scratch. Are his sons up to the task of taking that empire global? Ambani struggles with emotion. "My father was the son of a school teacher but he had a great passion and commitment to being world class in whatever he did," he says. "There is a common DNA between him and Mukesh and me. The same passion and vigour is there. Reliance is now on a critical path." Suddenly I wonder if Reliance is finally waking up to its destiny as a global player. Perhaps, the Ambanis' rallying cry of Dikhaana hai is about to become Duniya ko dikhaana hai.
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Does Reliance have leadership issues?
GOOD TO GLOBAL
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First Published: Apr 27 2004 | 12:00 AM IST
