It was December 2002. Reliance Communications, then part of the undivided Reliance Industries had just launched. There was considerable buzz around the launch and the prevailing view amongst many analysts was that most existing telecom players would come under severe pressure, now that Reliance had arrived.
There was some credence to this prevailing view. Reliance had laid, at that time, some 60,000 route km of a pan-India fibre optic cable network. The technology was state-of-the-art. The company was promising high speed data on mobile and fibre to home, bundled services ranging from high speed internet to video on demand and of course, phone calls.
Like Reliance Industries’ Jio in 2016, RCom had a strong balance sheet – that of then parent Reliance Industries – backing it. Remember this was the undivided Ambani empire. Their ability to take losses was high and the threat to grab substantial share from existing players as well as dominate the market quickly appeared very real.
But that did not quite happen.
For two reasons. First, existing players, including, notably, Sunil Mittal of Bharti Telecom (Airtel) stood their ground, indicating their willingness to fight a bare knuckles battle if it came to that. Second, Reliance itself imploded as a feud between the brothers over ownership and control became public in November 2004. Incidentally, this story was broken by my then channel CNBC-TV18.
So what would you do if your own company or business faces a Jio moment ?
Particularly when a mighty company with vast resources and regulatory clout enters the space. Do you allow fear to take over your rational thinking and beat a slow retreat or do you regroup and fight back ? What do professional companies do when faced with entrepreneurial energy and might ? Here are my takeaways.
Fight Or Jump ? Back in 2002, I visited the top executive of one of the major telecom players. I bluntly asked him what would happen to companies like his when Reliance’s CDMA services would launch. The executive, who had moved from a non-telecom background into his current position, was silent for some time.
Then he lost it.
“So what if they are launching ?” he asked, his voice rising. “Of course, they are Reliance and they are big and powerful. So what do you think we should do ? Should we line up and jump out of the window ?” he almost shouted.
More calmly, he explained that they had been in the market since the mid 1990s. “Please give us some credit for building a business, understanding the consumer and working the tough telecom landscape.” To sum up; of course fighting Reliance would be tough but fight they would.
And fight they did. So did Sunil Mittal and others. And the results of the first round – if it can be called that – are there to see.
To me, this reaction was instructive in many ways; of the opportunities and challenges in the Indian market, what it took to survive and more importantly, the hard fact that the Indian consumer was no one’s private property, however strong the lineage, the balance sheet or marketing spend.
Fear: The appearance of a large, menacing player or potential competitor can send waves of fear through the ranks of most organisations. The fear is often times genuine. The competitor might arrive with better technology or service, slick branding and marketing push, better paid and thus aggressive employees and, finally, oodles of money.
The fear can get compounded if your own organization is going through a motivational low, compounded by general complacency. This could be due to slipping market share, product weakness or perhaps internal leadership and people challenges.
Without getting into a how-to guide, the first task for the leadership, whether at a CEO level or the team level is clearly to repel the fear. Am sure the top executive who lost his cool that day with me had just done that with his own senior management team and perhaps on several occasions in recent days.
What’s The Choice ? Like the executive asked me sarcastically, should we jump out of the window ? Good managers accept that retreat is not an option and attack is the only choice. Think about it, as a manager, what else can you do ? And what indeed are you paid for doing ? Surely you don’t have an option of quitting your job and going home.
Responsibility: As the CEO of an organization or a manager of a customer facing team, you are paid to do a certain job. More than your salary, it is your responsibility. Remember, you are not just paid to do your job in good times but also to buck up and fight in bad times.
How you handle this responsibility is what will define you as a manager. It will also build your curriculum vitae. After all, your next employer will be more impressed if you had demonstrated mettle in a battle, whichever the industry.
Ask yourself. Who would you hire for a sales head position (for example) in a telecom business ? Someone who previously worked with Jio or the company and team that fought them bravely ? Not that there is anything wrong in working for the market leader or potential leader but today we are talking about the rest.
Are Professionally Run Companies At A Disadvantage ? I used to believe that tough, young entrepreneurs would give any professionally-managed company a run for its money. As did incumbent Sunil Mittal against Reliance. But I believe this was more the case in the early days of liberalization when markets were opening up and new businesses were grabbed by smart entrepreneurs.
I now believe that the odds are more even as India’s economy has evolved. Entrepreneurs like Mittal are capable of big, bruising battles but so are companies like Vodafone whose CEO’s have usually hailed from staid, consumer product companies. Note that I am not talking about tech startups here.
To digress a bit, I thought Flipkart, Snapdeal and the like had massive entrepreneurial drive and capability. They do, but evidently not enough managerial width to take on an Amazon which operates more like a composed, long-term thinking Unilever, at least in a market like India. Which makes things difficult in a winner takes all internet stack economy.
Fact is someone who has spent 25 years in consumer products will scope out and build a consumer facing market much better than a hot-headed entrepreneur who in any case is riding on casino-grade venture capital.
Of course, you can hire such people.
But I increasingly get the feeling (and I might be wrong) that the best consumer product talent did not flock to e-commerce companies and their like or were not wooed because the entrepreneurs thought they could do it themselves. Perhaps it’s too late now.
Now, Jio is a hybrid of strong entrepreneurial drive in the form of Mukesh Ambani and his top team who have been around for many decades combined with strong professionals who run different profit centres. Make no mistake, Reliance goes all out to hire the best.
The problem is that many professionals find Reliance’s way of life, particularly centralised decision making, difficult to adapt to and often leave quickly. Jio itself has lost several CEOs even before launch. Read this 2015 piece by Indrajit Gupta on Reliance’s struggles with the Jio project.
Bottomline: You are not necessarily at a disadvantage if you work for a company that is the steady sort. If you have talented leadership and a team that is capable of being motivated and coming together, you can push back competition from the highest profile entrepreneurs. Just wait for the media coverage to subside.
Confidence: Finally, it boils down to confidence in yourself and India’s market opportunity – or for that matter any market.
The fear of a Reliance is understandable, as I said in the beginning. But break it down a little more. Reliance has a monopoly position in petrochemicals but that came in a different age and the initial spur came from licensing.
For every industry that Reliance has done well, there are others it has not. If you take all the Ambani (Mukesh and Anil) companies, there are many businesses including telecom and retail which are facing tough times or harsh markets. And there are several ventures which have not taken off or the plug has been pulled, wisely in retrospect.
Reliance Fresh (retail) is doing better now but that comes after tremendous teething problems, management churn and market place struggles. Equally, it’s not that other retail players have perished. Most, including Kishore Biyani’s Future Retail have survived some very tough years, facing competition from physical retail and hyper funded online retail firms.
Fear Into Action: Good business leaders sometimes wait for fear impulses. Because there is nothing like fear and paranoia (as Intel’s founder Andy Grove so well articulated), if channelized well, that could convert into a solid market response. And fear could help rally and goad an otherwise complacent organization or teams into action.
And some times, the revitalized force is stronger and more determined than that of the attacker.
Am sure the Jio moment will do that to many.