Where did Anil Ambani go wrong?

Yesterday was corporate India's biggest “Never say, never again” moment.

Anil Ambani – whose surname is so powerful in India that when Ambani sneezes, the who’s who in India catches cold - was asked by the top court of the land to clear his dues or risk going to jail. In a country, where the rich and powerful rarely follow the rule book especially when things go wrong, the Supreme court’s decision is both ground-breaking (for the masses) and earth-shattering (for the classes).

How could a superstar industrialist reach the impossible fate of staring at a jail term?

The background

The infamous Ambani brothers' spat led to the breakup of the Reliance group. While the elder brother retained the cash-cow and the flagship petroleum behemoth Reliance Industries Limited (RIL), the younger one took the new age-businesses – telecom, finance, energy and potloads of cash to compensate for the absence of a cash-cow.

The distribution seemed to play well to their individual strengths – Anil was a finance MBA from Wharton and the businesses he inherited, especially finance, appeared best suited to his subject matter expertise. After all, who can forget his genius in raising over two billion dollars from overseas markets with a 100-year Yankee bond issue in January 1997 – that episode cemented his "financial whiz-kid" status. On the other hand, Mukesh had led the backward vertical integration of Reliance Industries, even quitting his Stanford MBA program in the process. He knew the nuts and bolts of RIL and with his depth of knowledge, was deemed ideal to run it.

Action after split 

Anil Ambani was sitting on a goldmine of opportunities in new sectors like energy, media and finance. With his excellent vision, he ventured into entertainment and defence.

Mukesh meanwhile had no-compete clauses that prevented him from entering new-age segments. He focused on RIL and grew it.

A decade after the split, Mukesh is Asia’s second richest man while Anil faces a possible jail term. So what explains the situation Anil faces today?

The similarities and the differences

The two brothers differed in several areas. Mukesh was a typical back-room, media-shy, conservative perseverant businessman. Mukesh was known for his resilience and his excellence in execution through tight project management. On the contrary, Anil was an extremely gregarious, media friendly and impetuous personality.  

Despite these differences, they had several similarities. Both were smart, well-networked, ambitious, well-educated, had the equal benefit of hands-on “Dhirubhai-coaching”, and were go-getters. Crucially, both were visionaries. But there is more to business success than that.

How do businesses succeed?

Having a grand vision is a vital ingredient for success in any field – and Anil Ambani did well in that department. He even went a step further – the charming personality that he was, he often marketed his vision so well that his mere presence sent his stocks to new highs. However, vision and short term returns is just the beginning. Sustaining that success long term necessitates designing strategies to convert that vision to reality and executing on those strategies. Where the rubber meets the road, execution in the only thing that matters.

How did the two brothers fare there?

Like we already saw, Mukesh was the guru of execution – he had the ability to translate a grand vision into reality through meticulous planning and tight project management. That’s what helped him lead the mammoth backward vertical integration that propelled Reliance to the world’s largest petrochemical organization.

And Anil? While he was terrific at envisioning, he lacked the execution discipline to bring the idea to fruition. Throwing the best possible seeds of vision is one part of the equation – providing a fertile ground for the seeds to germinate is equally important and Anil failed there big time.

Focus

Another area Anil struggled with was focus. Throwing his net wide - from energy and telecom to even entertainment. Add political interests and social circle to his time commitments and he had too many things that competed for his attention – he was spread simply too thin.

And Mukesh? With RIL under control, he ensured that he maintained a laser focus on his telecom venture Jio.

A light ball can throw its feeble light in all directions – but it cannot light a fire unless its energy is focused on a point.

Anil’s light ball approach contrasted sharply with Mukesh’s laser focus.

Self-awareness – the top leadership trait

Do business tycoons need to be good at every imaginable leadership skill – do they need to be perfect? Not really, and here comes THE leadership skill that separates the men from the boys. A true leader is one who has the self-awareness of areas she is lacking in and the humility to ask for help in those areas. Such self-aware leaders take the effort to bring in other leaders with skills that complement their own. Anil Ambani – who clearly lacked execution skills– neither recognized his frailties nor brought in any market leader to cover for them. As a result, several promising seeds – that might otherwise have germinated in the presence of fertile conditions - wilted and a few like the telecom business died a silent death.

Meanwhile, Mukesh planted exactly a similar seed in the SAME environment – telecom. The difference was that Mukesh chose the right seeds (data is important not voice alone), provided the seed excellent germinating conditions – pot loads of capital funded by RIL cash, long germination cycle (years of undisturbed investment) and protection from weeds (distraction of quarterly financial returns and market naysayers). The upshot? Mukesh’s seeds succeeded so much that they ironically killed Anil’s telecom plant.

Did Mukesh not have any blind spots? He did. Mukesh was a typical back-room boy and he recognized that he lacked the presence and the public image that tycoons needed. A decade of efforts after, he is much more in the news – importantly for the right reasons. Secondly, while Mukesh excelled in execution, he wasn’t known to be a top fund raiser like Anil. Mukesh compensated for that by ploughing cash from RIL into his telecom business. Lastly, when tons of cash was being funneled from RIL into Reliance Jio for years, RIL lost a bit of its valuation and Mukesh lost support of a few valuable investors – he kept his resilience during the process. There is NO question that if JIo had to keep upto the market pressures of quarterly returns, it would have shut shop way back – Mukesh’s provided the leadership support there.

Epilogue

As Anil Ambani reflects on the past and plans for the future, he would do well to recall another Indian tycoon Ratan Tata’s famous lines –

“I  don't believe in taking right decisions. I  take decisions and then make them right.”

Ambani took several decisions – he missed the effort involved in making them right. 

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Raja Jamalamadaka is a TEDx and corporate speaker, entrepreneur, mentor to startup founders, winner of "Marshall Goldsmith award for coaching excellence" for being top 100 coach to senior industry executives, a board director and a member of CXO search panels. He was adjudged a LinkedIn Top Voice 2018 for being one of the platform's most insightful and engaging writers. His primary area of research is neurosciences - functioning of the brain and its links to leadership attributes like productivity, confidence, positivity, decision making and organization culture. If you liked this article, you might like some of his earlier articles here:

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