Before he could build his world size plants, Dhirubhai Ambani had to get hundreds of licenses. And for that, he had to change the bureaucracys mindset and force it to review the licensing system. Some industrialists, Rahul Bajaj the scooter manufacturer for example, shared Ambanis world vision, but lacked the latters knack or clout of making bureaucrats listen. According to Ambani, convincing the government means adopting a flexible approach. The most important external environment is the government of India. You have to sell your ideas to the government. Selling the idea is the most important thing, and for that Ill meet anybody.
Through his promotion of the equity cult and his world vision in manufacturing, Ambani impacted the economy and polity as no businessman has done, not even Jamsetji Tata (1839-1904), the man who brought steel and electricity to India. Convinced that Indian manufacturing could and should be world class, Reliances plants can be compared to the best internationally both in terms of volume of production and quality of output. My commitment is to produce at the cheapest price and the best quality, he insists. Think big, think fast, think ahead.
Before Dhirubhai, the size of most Indian plants were pigmy partly because of their promoters blinkered horizon. The size of Reliances facilities represented a major departure from the normal Indian business practice of the time. Instead of creating a safe capacity based on reasonable projection of demand, Ambani applied for world scale capacity that could meet cost and quality standards on a global basis.
According to one Reliance executive, The fundamental difference between Reliances approach and that of other companies is seeing things hidden to other companies. The user industry was held back by non availability of supplies. Other companies would typically do a market survey that would show the current usage at, say, 2000 MT. They would project that usage into the future and arrive at a demand of say, 5000 MT.
They would then set up a 2000 or 3000 MT facility, depending on their projections of their market share. Dhirubhai threw away that incrementalist mindset. Reliance creates capacity ahead of actual demand and on the basis of latent demand.
Thats why India today has one of the finest refineries in the world.
(Managing editor of The Smart Manager, Dr Gita Piramal is author of Business Maharajas and Managing Radical Change)