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Feature Article: Unraveling the DNA of Bharti Airtel

Anil Nayar

Anil Nayar

Editors Note: In the early nineties, India went through a liberalization of its economy. The era of government controls and large Public sector investments gave way to an encouragement of private equity and foreign investment. Bharthi Airtel is a spectacular success of this era. The reader will notice how Sunil Mittal has been able to maintain a strong red orientation to the environment, and an orange collaborative interface with vendors and partners while anchoring the internal team in values of patriotism, family belonging and spirituality.  He has been able to build a culture that could bridge the chasm that exists in many Indian business families across  the purple-‘trust the family, and the community’; the blue- ‘anchor to a larger purpose; serve the country and society’ on the one hand and  the red- ‘fight hard and be ruthless’ ; orange-‘build the right networks and foster these coalitions’ on the other hand. Building a committed professional leadership team is another hurdle many family business houses fail to cross.  Airtel was also able to leverage its leadership in the telecom sector and encourage the development of a new business ecology around their thrust areas. This narration does not delve into the green aspects of Airtel’s efforts in detail. But in keeping with the tradition of many families, the philanthropic activities of the business houses are seldom talked about in public.

Anil Nayar

As the vanguard of the telecom industry, Bharti Airtel Limited has played a huge role in enabling the ‘mobile miracle’ in our lives. In just over a decade, brand Airtel has reached its zenith in terms of the high quality value and service it provides to its customers as it continues to lead the Indian market.

A lot has been written about the making of the Bharti Airtel behemoth in order to understand what has worked in this success story. To a large extent, there are measurable components such as strategy, goals, financial engineering, people development policies and the like that have contributed. However, having been a participant in nurturing this brand through 11 crucial years since its inception, I believe that Bharti Airtel’s success goes a few layers deeper than this—into its DNA. I have attempted to unravel the DNA of Bharti Airtel—a difficult task, as there is a possibility that biases may creep in. I would therefore, on that count, like to seek your indulgence!

I believe that the persona of an individual or organization develops a characteristic or quality by which it is known to the outside world. Sometimes this is so subtle that it’s not easily discernable. While very little may have been spoken about these underlying yet sterling qualities, I truly believe that they play a powerful role in shaping a successful organization. So, in the case of Airtel, what are some of these softer, intangible qualities that define its persona? In the first part of this article, I have explored these through Bharti Airtel’s story. In the second half, I have explained how leadership could well be a state of being, of consciousness, that leads an organization to a different orbit altogether.

The Bharti Airtel Story

A Sense of Service to the Community and an Insatiable Desire to Succeed

Hailing from a family with political leanings, ‘Bharti’ or Indian nationalism played an influencing factor in the life of Sunil Bharti Mittal. It was therefore inevitable that one of the key Gandhian principles, of ‘service to community’, became the cornerstone of Sunil’s life purpose. His dream was to build a business that would work in harmony with society and the environment around us. Complementing this noble belief was an insurmountable desire to make something big.

On the sunny sands of Goa, one morning in 1992, Sunil happened to go through a tender advertisement inviting bids for mobile telephony. Almost as if he knew in a flash the potential it held, he chose to dive in headlong. He asked his brothers to handle their family business of manufacturing phones, while he focused on constructing the GSM based mobile business.

Despite being on a weak footing with limited funds and unknown standing, Sunil left no stone unturned in putting together the techno-financial bid for the first four mobile licenses. A consortium of international players was put together to increase the strength of the bid. Sunil, with his irresistible charisma and obvious insatiable desire to succeed, was able to convince a global player, Vivendi of France, to join in. After a due diligence, Vivendi realized that Sunil’s organization was a small timer and decided to withdraw support. Sunil, undeterred, called the company in Paris. “Look” he said, “when you agreed to go with me, you sensed something. You saw something in me. Remember that something. Go with your instincts. Forget what your team has told you.”  Vivendi stuck with him despite the odds and the consortium qualified to bid for the tender.

Self-Belief and Tenacity

As is the case with most ventures starting out, there were innumerable obstacles that came Bharti Airtel’s way.  In spite of winning the bid in all four metros, the government only allocated them the Mumbai license. Soon, however, the entire process was challenged in courts by bidders who had lost out. A protracted battle lasting over two years ensued and tested both the patience and resources of the company. The courts finally allotted Bharti the license for Delhi at the end of 1994.  The ability to ‘hang in there’ and not give in to the onslaught, clearly held the organization in good stead. The same qualities also proved to be invaluable throughout the challenges of expansion and the low price onslaught of CDMA mobile operators in 2002-2003, when many outside forces attempted to destabilize the organization.

Passion and Contagious Energy

Sunil has always received unfailing support from vendors, partners and employees. What was unusual and probably unprecedented was that everyone seemed to be lending an encouraging hand in the making of the organization. One of Bharti Airtel’s principal partners, Ericsson, had great faith in Sunil’s entrepreneurial ability.  Kurt Helstom, CEO of Ericsson, agreed to install their equipment on terms that were very liberal. How many times has one heard a partner say, “You pay me when you can.”? Clearly they were banking on something more intangible. Sunil, armed with an audacious dream, was able to charge others around him with the same level of energy and passion. In time, this magnetic force attracted many others who contributed greatly to the success of Bharti Airtel and also served as catalysts in further attracting the best talent.

Seeing Opportunity in Adversity

From 1997-1999, things were tough to say the least as the market grew at a painstakingly slow pace—in fact there was zero growth! The biggest hurdle came in the form of the approach adopted by DOT (Department of Telecommunications)—the regulator, policy maker and operator. The high fixed license fees, interconnection issues and a biased policy framework were the roadblocks. This period of adversity presented itself as an opportunity for the organization to equip itself suitably and build a strong foundation. The key focus areas were (a) building an effective leadership team (b) developing a culture of openness to enable purposeful dialogue (c) adopting best-in-class technologies (d) introducing management control & review processes and (e) developing teams that would challenge the status-quo and re-engineer systems based on the principles of continuous improvement. The Delhi circle operations made significant investment in building a positive mental attitude, business process improvement and building a TQM culture during this period, to lay a solid foundation of excellence. At all times, there was heavy emphasis on people development on both the technical and behavioral aspects. Each employee was expected to continually align to the vision, mission and values of the company.

Visionary with a Daring to Drive Change

Because DOT was the dominant Government telephony service provider, the regulator, as well as the policy maker, changes were very slow to come by and the conditions were not favorable to opening up of the sector. During this phase, Sunil played a key role in the formation of the Cellular Operators Association of India (COAI) to influence the political and policy formulation machinery. Its intense lobbying resulted in the formation of the Telecom Regulatory Act in 1997 and subsequently to the advent of the New Telecom Policy 1999. This policy resulted in the creation of BSNL in 2000 as the Government’s service provider arm, distinct from the policy making wing of the DOT. The policy envisaged a shift from the high fixed license fee to a license fee structure based on revenue share while simultaneously dismantling the duopoly structure and permitting third and fourth operators in markets.

Changes in the policy and regulatory environment were the most important shift in the telecom business environment and this engaged the attention of foreign telecom operators who saw in India the next growth market after China. Singtel, which was flushed with funds at that time, chose to buy out the equity holding of British Telecom in Airtel and in addition also increase their holdings at a huge premium. This brought significant funds into the company.

Airtel, with this war chest in hand, responded with audacity and speed by acquiring circle operators in Karnataka, Andhra Pradesh, Chennai and Kolkata, and followed this up with a Greenfield national roll out in other circles that was completed in record time. Within a short span of two years, Airtel had moved to becoming a national operator by 2002—an achievement which brought the company into international limelight. The company adopted ‘speed’ over ‘perfection’ as its mantra, and increased its national market share from 10% to about 25% during this period. This would not have been possible had the company’s management team not built a strong foundation by  developing governance systems based on empowering management control systems, standardizing on technology platforms, effective processes and innovative offerings, when the industry as a whole had been marking time.

Sunil was always ahead of his time, not just in seeing the potential of this sector but also in the way he articulated a direction for his organization much before it became an imperative. He was clear that, in the beginning, it was “OK to do things right the second time” and being the first to market was of paramount importance. As the organization became bigger, he shifted the focus of the leadership team to quality and the need to do things right the first time. Whilst the sector started to grow rapidly and everyone was focused on revenue and growth, he kept bringing the organization’s focus onto the customers and their service experience. Whilst the building blocks on customer focus and process focus (with IBM’s entry as an IT services partner in a historical deal in 2004) were settling down, he was already drawing the attention of the organization to people focused agendas to be managed at the expanded scale.

This ensured that Airtel invariably stayed ahead of the curve and speed. Daring and proactive change were transmitted as a DNA right across the organization.

Staying Focused in the Face of Intense Competition

The new policy and regulatory framework also brought about a more intense competitive environment, the entry of new mobile operators and also the government operator BSNL. What resulted was a price war, the likes of which had seldom been seen in any market.  The prices, within a short time, dropped by over 50 %, but this also resulted in a huge growth in the market, both in terms of usage and volume, thereby improving cost efficiencies significantly. Airtel responded by ensuring a competitive price but put more focus on ensuring a higher level of customer service and offering some very innovative value added services.  This enabled it to hold on to its market share, for the moment, but the leadership team felt that what was needed was a more sustainable strategy which would require a quantum jump in IT enabled services, high quality network planning and maintenance. The answer emerged after cross-functional dialogues across the company and culminated after an intense debate in the Management Council, who decided that there was a need to partner with leading technology service oriented companies, by way of outsourcing of services. This was a huge risk, because this had never been done anywhere in the world. What clinched the debate was the structuring of the deal on the principle of ‘win-win’. Our existing network partners Ericsson and subsequently Nokia, saw the potential of a long term relationship in the area of managed services and an assured market for their products in an emerging market. The IBM team also saw this as an opportunity to increase their India exposure on service delivery and a way of entry into the high growth telecom market.

At that time in 2004, outsourcing key operations was a relatively unknown phenomenon in the telecom world. Most CEOs of international mobile companies felt that Airtel had “lost it”. To them, a telecom company outsourcing its network and IT was like giving away one’s heart and lungs. But time would prove them wrong as Airtel continued to double its network usage for the next few years. This innovative business model soon came to be accepted as the new way to do business in a highly competitive world. This was possible because the entire strategy was built on the spirit of a high degree of trust and respect for the partners’ capabilities. This trust also provided a platform where these world class companies agreed on traffic and revenue sharing agreements over a long term instead of the usual fixed capex and consulting fee models prevailing till then. Clearly, Sunil’s ability to identify core issues and inspire total trust with the partners enabled him to take tough decisions. This was possible due to his commitment to the process of deep listening and dialogue with all stakeholders.

A Spirit of Innovation and Continuous Learning

As a team of energetic and empowered employees, there was always a buoyant energy to move out of comfort zones to reach newer heights. Sunil, with his childlike curiosity, never shied away from learning new things himself, including the fundamentals of the GSM technology! There was also no undue pressure on the leadership team to deliver the bottom line in the short-term and quarterly results. In fact they were encouraged to focus on learning and innovation that would enhance customer service. Teams at all levels thereby felt encouraged and empowered to make decisions, which would be favorable first to customers, employees, partners and only then the investors.

In a market dotted with several competing players, the alacrity with which Bharti Airtel responded to needs of the market helped it to gain that cutting edge. Over a period of time, both speed and perfection came to define the ethos of the organization. This was significant in leading change while raising the bar on best practices.

In a nutshell, the growth was driven by a very cohesive leadership team with great humility, open to learning, listening to its customers and with a sense of a larger purpose of “Making mobile communications a way of life and be the customers’ first choice”. On many occasions, when teams met with failure in spite of their best efforts, Sunil would accept it by saying, “Let us learn from our mistakes and ensure that we do not repeat the same. Whatever happens is for the best and therefore let us re-examine our paradigm”. He would often acknowledge the presence of a higher force. “I have faith in a power which has always guided me through thick and thin. This is the power which infuses me with a positive spirit and provides encouragement—day after day.”

Bharti Airtel is a leading global telecommunications company with operations in 19 countries across Asia and Africa. The company offers mobile voice & data services, fixed line, high speed broadband, IPTV, DTH, turnkey telecom solutions for enterprises and national and international long distance services to carriers. Bharti Airtel has been ranked among the six best performing technology companies in the world by Business Week. Bharti Airtel had 194.8 million customers across its global operations at the end of September 2010. It ranks amongst the top 5 mobile telephone operators globally. In an Indian market with 636 mm mobile and 36 mm fixed line customers as of June 2010, Bharti leads with a mobile market share of 21.5% and the fixed line market share of over 8%. This is an amazing set of statistics given the fact that Bharti’s telecommunications’ services came into being only in 1995.

Leadership, a State of Being Rather than Doing

I am reminded of Brian Bacon’s (Oxford Leadership Academy) proposition on what makes organizations and institutions tick. He compares an organization’s characteristics to that of an iceberg.

While on the surface the winds of goals, strategies, policies, structures and systems guide the successful running of an organization, below the surface lie the intangibles or the currents of spirit, emotion and passion. It is these underlying currents that really steer the organization. Very often and sometimes quite unknowingly, a focus on these ‘below the surface’ unquantifiable but palpable imperatives get diluted while running an organization. Brian Bacon explains that the greater the degree of alignment between the winds and the currents, the higher is the probability of its success as an organization.

When I look back, I realize that Bharti Airtel did strive to focus on both the ‘winds’ and the ‘currents’ simultaneously and that possibly has been the reason for its success and fast paced growth. As leaders, we need to be cognizant of the softer values of the human potential as the critical building blocks of an organization. To nurture an organization to achieve its pinnacles of growth, it is vital to fan these ‘currents’ to help the ‘winds’ get momentum.

In the last few years since I left Airtel to pursue my learning journey of helping organizations and leadership teams realize their potential, I have often been asked as to whether there are some things that successful organizations need to be careful not to do. While it is extremely difficult to provide a generic answer, it is certainly possible for us to learn from mistakes that other organizations may have committed. These have been appropriately reflected in Jim Collins’s recent book titled How The Mighty Fall: And Why Some Companies Never Give In. As an example, he cautions us on the danger of unknowingly slipping from humility to arrogance. “The great irony is that it leads to the undisciplined pursuit of more, and it’s very hard to preserve your values and your basic model if you grow too fast.” (Collins, 2009) One therefore needs to always be mindful of this slip and keep a dogged focus on the essential building blocks. In a world that is witnessing rapid and unprecedented changes, businesses are being compelled to redefine the way they work. With the invasion of telecom and information technology in our lives, social and business institutions are intricately woven into an interdependent web. Consequently, businesses can no longer choose to work in isolation and will have to move from a shareholder model to a more inclusive stakeholder one.  Sisodia et al (2007) iterate in their book, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose
, that businesses are realizing that society is turning out to be the most important stakeholder. Organizations that will be sustainable in the long run will be those that have a multi focus on the society, partners, investors, customers, employees and environment (SPICEE).  They go on to amplify that the four pillars for successful and sustainable organizations are:

  1. Organizations need to work towards a HIGHER PURPOSE
  2. Organizations must work to the benefit of all stakeholders (SPICEE)
  3. Organizations must have CONSCIOUS LEADERSHIP
  4. Organizations must develop a CONSCIOUS CULTURE

Sunil Bharti Mittal ensured that he addressed all these dimensions and operated from a state of being that emanated from something deep within. Can other organizations replicate the same? I don’t know the answer because it will depend on the level of ‘inner connectedness’ with which the CEO operates in his personal and professional life.

Notes

References

Collins, J. (2009).How the Mighty Fall: And Why some Companies Never Give In. New York: Harper Business.

Sisodia R. S., Wolfe D. B., and Sheth J. N. (2007). Firms of Endearment: How World Class Companies Profit from Passion and Purpose. Philadelphia: Wharton School Publishing.

Bacon B. (n.d.) Personal Communication.

About the Author

Anil Nayar is the founder and managing director of Prerna Centre of Learning (www.prernacentre.com) . An engineer from REC Rourkela and an MBA from IIM Bangalore, he has had over 35 years of experience in steel, IT and telecom sectors. Before founding the Prerna Centre of Learning, Anil worked with Bharti Airtel for 11 years as CEO, President and Corporate Director. Under his leadership, Airtel established itself as the leading mobile operator in India and was continuously awarded for being the best ‘Cellular Service Provider in the Country’. During his tenure at Bharti Airtel, Anil spent a considerable part of his time in identifying, developing and mentoring leadership talent across the organization. Anil is currently working closely with the Planning Commission, Government of India, in helping Government departments to prepare their strategies and assess their performance. He is also an advisor in organization building strategies for a large Infrastructure company and a leading Print Media brand.

He can be reached on anil.nayar@prernacentre.com

1 Comment

  1. Vinit Taneja on January 12, 2011 at 10:31 pm

    I often hear criticism about Airtel on fronts of customer service and people management. Whilst the individual stories may well be true, it is important for everyone inside and outside the organization to remember that Airtel is only 15 years old. I wonder how many of us have an active memory of dealing with a 15 year old teenager on hormones. If we remember this, we will realize that Airtel has done wonderfully well to be amongst the top 10 companies in India in such a short period. She is prepared to make mistakes, stumble and learn and its customers, partners and employees need to engage deeply and compassionately with the organization, helping it to evolve. I have tremendous personal conviction that Airtel will make all course corrections necessary to be truly admired by all its stakeholders. If there is one area I would like to see Airtel take the lead, it is in its crusade on making the environment cleaner and more respectful of human needs. Telcos are big diesel guzzlers especially to keep their towers active during power cuts and this is a major cause of pollution. I hope to see the most admired brand in India take a lead on this arena in the coming years.