Making money is the easy part, believing you can make money is tough
I believe that all that people want is fair treatment, open communication and care and that is our driving principle in managing people
Q. What are the founding principles of the Modi Group and what distinguished it from other conglomerates?
If you ask me to describe our company in one line, I will say that we are survivors. It has not only survived all adversities, it has also found its niche, grown through the years and become profitable. Now, our main motto is to win and to ensure that we put in place a measure called 30-30, which means that we will achieve minimum 30 per cent growth year-on-year with a minimum gross margin of 30 per cent. The items with lower margins will be replaced by high margin products. We have just started this and on an average we are achieving 30 per cent margin and an overall growth of 20-25 per cent. This is the goal that we have set up for our companies. From survivors, we have set out to be winners.
Q. Is the DNA of the people who work with you different compared to any other multinational?
In our case and in start-ups, survival instinct is a necessity because if you don’t have that you will give in too early even before you start on your growth trajectory. So irrespective of what the problem is, be it a government regulation, issues with labour unions or market competition, you need to navigate through all of that and emerge a winner. Either you swim or you drown. Secondly, in organisations like ours we believe in a divine power. We act on the faith that if we continue to do our best, results will be in our favour.
We all work like a family; loyalty and trust score high. Everyone is an integral part of the enterprise and the owner wants you to consider the company as your own. If you don’t feel for the company, you may not be able to work in an organisation like ours for a long term.
Q. In such a scenario, how do you choose your leaders and plan succession? Will it always be someone from the family so that they consider the business as their own?
We have put all the shares in a trust to ensure seamless succession and to make sure that the business is not divided after me. There is a clause that says that after I retire, the beneficiaries have to choose a single person as a CEO. We have formulated a process where the Group President/CEO will be chosen by a vote going forward and the election will happen every three years. If the members of the trust are unable to choose a person by unanimous vote, the company will be sold and the money divided among all shareholders. To ensure that this process is not used for malicious purposes, we have also added a provision that once the share price is determined, the rest of the family can buy back the shares of the person who is not willing to arrive at a consensus. There is a further provision to buy the shares in the name of the company itself. These measures have been kept in place to ensure that the company doesn’t run into dispute after me and is not divided among multiple partners. If there is a difference of opinion, everyone will have to find ways to settle. The voting system to choose a CEO every three years is to ensure that we hire the most competent person for the top job with consensus. There is a fair chance for anyone outside the family or in the family to be chosen for the role provided they win by an unanimous vote.
Q. What are the people-centric initiatives of the Modi Group that you take pride in?
I believe that all that people want is fair treatment, open communication and care and that is our driving principle in managing people. While managing performance, if you evaluate someone below par you need to give him a reason for the same. If you don’t tell, the employee will be dissatisfied.
You need to also review an employee in a long-term horizon: There is a possibility that someone may not have performed in a particular year, but if they have a long-term good record, they have an equal chance to succeed. Second case in point is the employee welfare schemes. While they are similar to other organisations, we also make exceptions on a case-to-case basis if an employee has a special need. For us, our employees are family and we see if the company can help them attain their prime goals in life. For example: One of our employee’s son wanted to participate in Formula 1 racing. We were in a dilemma on whether to support him or not because there was a high risk with no promise of return. However, we realised that he was really passionate about it and decided to support him. Whether he won or lost was not counted, but we had invested in a relation for a lifetime. The testimony of this formula is that we have many generations working with us.
Q. What do you look for in a business leader?
When you run a business, you need to deliver three things – profit, good people and changing the business around the market requirement. If you have the ability to achieve that even in a small business, you are entitled to a bigger challenge. All I see is whether you have the ability to make money or find the right kind of people and whether the business adopts a niche to make profits in the current environment. If you are capable, you can get whichever role you want to.
Q. What is the secret behind creating a business that can stand the test of times?
My father used to tell me that making money was the easy part; believing that you can make money is the most difficult thing in the world. Most people don’t believe so they give up too early or they never try. Having that belief is the key to success, but having that belief is very difficult.
Secondly, you need to adapt your management style as per the occasion. For example: If you have to revive a sick enterprise, you need to believe in yourself, make quick decisions and get people who trust you and follow what you say because reviving an enterprise is a war-like situation where you are trying to find your way out. At that time if your lieutenant keeps questioning, you might lose the war. When you are stable, you can reason him out (counter argument experiment is possible) but not at the time of crisis. You need to trust the gut of the captain and go with him. A leader is someone who can rise up to the occasion, find a solution and inspire faith in his abilities.
Q. Your message to budding entrepreneurs in India
Read, hear as many stories as you can and implement the learning to create your own success story. In 1985, I went for the Harvard Business School executive programme where you learn by case studies. Now that’s nothing but a story. Students need to figure out what to learn from each good or bad case. And this, we learnt every day from our father: What happened, what action was taken and what was the result. Students are so engrossed in the explanation and they forget to enjoy the story. If you don’t enjoy the story, you will never remember it and probably will never implement it in your life. I believe that story telling is a very important way of teaching.
In our company, there is a monthly management committee meeting where different functionaries heading various businesses write down what they want to tell. Then they tell their story. I learnt this from my father and am trying to implement it in my business. To discover a story of an enterprise is not easy and requires a lot of information to be gathered and put in a systematic manner. That is what Harvard calls a case study method. Even we as company keep looking for new stories, we listen to people’s stories and hire the ones who have created success stories and help them create new stories in our organisation.
To sum it up, learn from as many stories as you can, because stories teach you things that no other course does. Secondly, believe that you can make money and create an organisation that can make money for you. If you don’t create a successor, you will never rise. Believe in yourself, believe immensely, don’t have any doubt. If you do all of these, nobody can stop you.