Saturday, September 13, 2008

Riding his way to the top

Indian entrepreneurial journeys are often characterised by some common features. A young man moves from the place of his birth in Pakistan to a city in India. He ,with his immediate kin, starts small. They show promise enough to land a bigger opportunity. Through hard work, integrity and unitary spirit which symbolises their ventures , they enter the big league of large industry. And, with strong business performance, outstanding values and excellent stakeholder relationships, they get bigger and bigger. Often, they reach the very top. Yet, the young man who started it all stands tall and detached. He has donned the role of Karta. Wealth has not affected him much. Except, he wants to ensure that his ventures build enduring values and qualities to sustain their performance and fulfill the expectations of his stakeholders. His zeal is to preserve the legacy. to create competent kartas to don the leadership of his several ventures. To handle the future growth responsibly.

He hasn't let his past successes get to his head. The wealth he has created has not affected him. This is the story of many Indians. Yet , one of them is special . Brij Mohan Lal Munjal, the patriarch of the Hero group stands tall among India's most outstanding businessmen. The many facets of his management style and leadership have given Indian Family-owned businesses a dignity and respect in the eyes of its stakeholders. He always knew the art of balancing interests. He led in a way which inspired and melded his family, enthused his employees , created confidence in partners and rewarded his shareholders.

Let us see some of the views of BM Munjal which exemplify the extraordinary persona of this Karta.

The man keeps it simple, "I look at myself as an advisor, as a support system. I won't call myself the brain behind the group. The group functions well through marvellous planning and execution. The team is a hundred per cent professional."

He rarely, if ever, uses the first person singular while talking and is clearly much more comfortable saying 'we' than 'I'. Speaking about himself does not come easy to Brij Mohanlall Munjal. Articulate about events in the office, he becomes tongue-tied about events in his personal life, about the events which shaped his career and his management philosophy.

The little he has said about his life says a lot. An interview with business Historian Gita Piramal gives us a perspective of BM.

"Togetherness is a value we learnt from our seniors and parents in our childhood," he continues.

"Your ethical values show when a problem comes. Leaders stick by their values. These values are respect for elders, religious leaning and living within your own means. In school, there were children in our class who would bring silver coins and we were lucky to have one or two paise, but because of our values, we never minded that we had less, or that we should get friendly with those with more money."

School was the local paathshaala. There was also a brief stint at a gurukul headed by a Rishikesh-trained instructor. "I stayed there only for two years," recounts BM reluctantly, clearly unused to talking about his childhood.

"That influence doesn't go anywhere, it stays. Even today I can recite so much without referring to any books. I got admission without my parents' consent, I don't think my mother would have permitted me if I had asked."

"One morning, I heard that admission was open and I went there to get admitted. They shaved my head, gave me different clothes and told me to get bhiksha from my mother. When my mother got to know, she cried. It was a new age."

"She had ambitions of sending her son to a modern school and then high school. She was 101% religious: we were woken up by four in the morning and taken to the ashram where she used to go. But she had already given one son to the gurukul and didn't want to give one more. That is how mothers are."

He did make it to college but had to drop out "because there was pressure to start earning".

The traditionalist

"The values from childhood have stood me in good stead," BM stresses. His upbringing has strongly influenced his decision-making. At the same time, "I wouldn't say there was any one individual who influenced me. It was the entire setup, my parents. It was a combination of almost every individual who we came across. Respect has to come naturally."

What about contentment and growth, can they come together? "Contentment doesn't mean you should be satisfied with whatever little you have but it means that you achieve more for yourself but don't go for what others have. You have to labour hard, there are no two ways about that. Never shirk work."

What about respect for elders? All of us want our children to grow into managers who can take independent decisions, take responsibility, who can be innovative and creative, but don't we then put a leash on them?

"No, no, please don't bind respect with discipline," Munjal explains.

"Respect doesn't mean you don't allow children to grow. Respect is more than something to do with age. Respect and discipline are two different things. I have an elder brother and younger brother. I always bow down to my elder brother even in public without any shame. Whenever Om Prakash comes, he always bows to me before he takes a seat. It comes from inside, deep inside. I don't know what you will call it."

The impeccably right Karta in BM Munjal

From the time the four Munjal brothers set up shop in Amritsar, they have stuck together. In 2000, 21 family members were working in different businesses of the group, up from four in the 1940s. If the family stands united today, it is largely due to impeccable equity planning and BM's charisma and personal standards of fair play.

The original partnership understanding between the four brothers continues. Promoters' holdings in the various group companies are structured so that each of the four families controls 25 per cent.

According to BM, "We have always tried to give every incoming family member a meaningful role to play in the group's growth."

He and his brothers meticulously work on stability. Over the years, as new companies are launched, they ensure that all four branches hold equal stakes in them. Since the family stakes are identical, all get equal returns on their investments in the form of dividends or bonus shares.

Moreover splits are thwarted by an intricate network of family-owned investment companies. And none of the four families can transfer shares to a third party.

To further nip tensions in the bud, elders keep young minds busily focused on work rather than on each other. New companies or divisions are continuously being floated.

In the mid-1990s, the need for growth led to the group's bid for Scooters India [Get Quote], a tie up with Austria's Steyr Puch to make mini-motorcycles, and a flirtation with Germany's BMW to make expensive 650cc motorcycles as well as cars. Within the existing businesses, several new models of cycles were introduced both to meet the needs of the newly emerging leisure cycle market and to keep family members occupied.

The 1990s also saw the opening of a cold rolling mill in Ludhiana which ensured the quality of the group's basic raw material, steel, as well as a reliable supply at reasonable prices.

The mill's output goes to all Hero group companies and other buyers as well. The responsibility for managing prime companies or divisions depends on the member's competence rather than the branch to which he belongs.

Humility in learning

 Always hungry for knowledge, BM feels that, "One of the most important lessons I learnt is the need to be well prepared and I learnt it in Germany. It was 1959, my first overseas trip, an Air India flight. I missed the flight I was booked on and had to catch the next one. A German was waiting for me at the airport. We were going to buy equipment from his competitor." "A meeting was already scheduled with them, but he wanted to take me away from them to his company. He drove to the airport, back to the city, again to the airport and back again, 400 km each way. On the way to the hotel he recited shlokas from the Bhagwad Gita, and because I came from Punjab, recited verses from the Guru Granth Sahib." "He had done a thorough study of Indian culture and could talk about it. In the hotel, he ordered food to my taste and liking. That impressed me thoroughly. If you prepare early and well, you can be so successful. These are the kinds of lessons I learnt." "Germany would become my second home. We started looking for equipment but didn't have too much money. The same person, he knew a lot of places but he had to convince his boss that he would get a good order in the end, and we traveled extensively. We picked core technology but built everything else in India. I learnt how you should deal with people, how you should behave if you want to be in the big league. One has to project oneself properly." An Iranian importer taught Munjal his next big lesson: keeping one's word. "We export bicycle components. We started exporting in 1964-1965 when an Iranian came to us with some other buyers. In Ludhiana, there were many manufacturers of bicycle components, many bigger than us, but we got an opportunity and that gave us very good lessons in quality requirements, timely shipment, money management, foreign exchange management." The balanced CEO The third all-important lesson was controlling his own selfishness. "If you want a company to function smoothly, you have to go beyond yourself and your needs. In any organisation, and particularly a large one, there are issues everyday, some kind of proposition and some kind of opposition, but everything gets sorted out by the evening." "We always find a way out, there is nothing that can't be sorted out. For an alliance to work, one has to give, one has to sacrifice, one has to be far less selfish. Your needs will be fulfilled, nothing will stand in the way, but you have to take care of everyone else as much as is due to them. There also has to be a certain amount of discipline." But what about non-family managers? Promoters may be willing to sacrifice the short term for the long term but professional managers need to look after their self-interest, move up in their careers, show quick results, so their time frames are different, their needs are different, how do you balance all that? "They have their aspirations, but they see us," points out Munjal. "Even we have aspirations and they see that our vision is long term. They are not paid less or taken less care of than anywhere else in the country. I don't compare with IT or new economy. But here they have all the privileges that any good company will offer. Therefore knowing that their aspirations are also met, they are not unhappy." The Munjal attitude towards vendors and dealers is similar. "Pricing is transparent, and if full details are given to the company, the information will not be exploited or misused," is typical Munjal-speak. The family is always friendly when a dealer comes and don't deny him anything. If he needs a car, they'll get one for him. They make him feel at home. And they listen to him. For vendors, payment is always on time. Since vendors are either Munjals or brought in by a Munjal, personal loyalty is expected, but loyalty is not enough. All terms are settled on logic, not sentiment. It's this fine sense of balance which has kept the Munjals and Honda together. "The media has been speculating so much about what could happen after 2004; that if Honda goes its own way, what will happen to Munjals. We are equal partners but technology is from their side so many decisions have to be made by them. But true financial management, human management, marketing management, and even production management to a certain degree, the total selection of equipment is our own." 

The problem solver

"In terms of culture exchange, I think the Japanese managers might be carrying something from us back to Japan," muses BM.

"We keep them informed about every detail, they have started working in our ways in some processes. We work well as partners. Our functioning is very straight forward.

An impeccably ethical, home grown business leader,  BM Munjal provided a distinctly Indian leadership to his group. The business philosophy he gave his group is his contribution to the Nation and the legacy of BM Munjal needs to be seen in the context of the inclusive growth that eludes our nation. The balance between stakeholders which he devised and maintained has its lessons for our future leaders to school in.  India needs many Munjals and the towering Karta's life will inspire many Young Indians.

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