Listen to Others and Be Quick on Your Feet
Imparting ownership of an organisation and empowering its employees is essential if the company has to grow
Let me illustrate using the example of the most successful entrepreneur of all in India, Dhirubhai Ambani. There are two qualities that made him very different from others in my view. In some ways they are two sides of the same coin. The first one was that he always listened to everyone all the time, he constantly wanted to learn something new and he knew the best way to do that is to listen to people. He had the humility to assume that lots of people knew more than him. If you are humble, keep your ear on the ground and listening, you’ll be nimble and get the better of the ever-changing environment.
Second thing you have to realise is that you can’t do everything alone. You have to impart ownership across the whole organisation, wide and deep. I tell my own people here at Blackstone, “Yes for process’ sake there is one CEO, but you should all think you are assistant CEOs.” That according to me is the right organisation culturally. It’s not in terms of titles. You may still have several titles for process sake but it’s in the terms of the way people should feel.
Thousand of books have been written by thousands of authors on management and leadership and you can keep going on about this forever. But what is at the root of everything? It’s these two things: Humility and ability to empower people. Ultimate core competence is to learn and to learn fast. And again you are not learning as an individual, your whole organisation has to learn.
That’s one of the things we do as private equity. We look at companies and promoters. He’s brilliant obviously and that’s why he’s been successful. That’s why Blackstone is investing in the company. He has done many things right but he hasn’t done all things right. And one of the things most promoters don’t do right is that their organisation is too dependent on them.
First thing we tell them is that, ‘We want to meet with your next ten people and involve them in decision making. We have a review with them. In all organisations all the possible problems and solutions are well known across different levels of the organization. Except what happens in the bureaucratic functioning of an organisation is that the wrong problems and solutions get filtered through to the top. You have to cut through that through proper culture.
In private equity one of our jobs is to spot the potential of an organisation and help them realise that potential faster. What you find is that entrepreneurs sometimes do not know the opportunity costs of doing things the right way mostly because they are very successful. But they don’t know how much more successful they can be if they do the right thing. This many times is the biggest impediment to realising your full potential.
Egos result in organisations underperforming. You start failing when only few people make all decisions, you are not humble and you stop listening to others. Look at what we did to Gokaldas. After all, the six proper family members left, I started to have monthly reviews with top ten people. When I have my review I ask only one question: How much more ownership are you guys feeling? It was zero when we started out, then a month later it was 20 percent, then 40 percent. The number keeps increasing every time. They are showing amazing results. EBITDA has increased by 60 percent at a time when the global garment industry collapsed. The team have transformed the company completely, building upon the solid foundation that the promoters had laid.
Then you have to bring in processes, systems and proper methods. There’s no magic about business. Business is about common sense. Every company has access to the same labour markets, same finance markets, consumer markets etc. Why do some succeed and some don’t? It’s because of personal qualities of leaders of these organisations.
Blackstone has looked at 2,000 companies and selected only 15 to invest in. The first thing you look at is the promoter/ management quality. You look at competence and integrity. There’s a company we are looking at right now. They’ve told us, “We want you because we want to take this company to the next level but we can’t do that on our own.” They said, ‘We have family issues but we will give you all the authority and you can make the changes’. That is such a great opportunity. We can be the transformation agent there and improve the chances of this company to realise its full potential.
(As told to Cuckoo Paul)
