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  1. 1. Bharti Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership: India Knowledge@Wharton( Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and LeadershipBharti Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership Published :July 10, 2008 in India Knowledge@Wharton This is a single/personal use copy of India Knowledge@Wharton. For multiple copies, custom reprints, e-prints, posters or plaques, please contact PARS International: P. (212) 221-9595 x407.When Sunil Bharti Mittal started in business more than 30 years ago in Ludhiana in NorthernIndia, he borrowed $1,500 to make bicycle crankshafts. Today, he heads the $5 billion BhartiGroup, whose flagship company, Bharti Airtel, is Indias largest mobile phone operator. Forbesmagazine, which estimates Mittals net worth at some $11 billion, ranks him among Asiasself-made billionaires. Mittal spoke with India Knowledge@Wharton at the U.S.-India BusinessCouncils 33 rd annual meeting in Washington, D.C., about the leadership and entrepreneuriallessons he has learned during his career. Among them: When faced with a choice betweenperfection and speed, choose speed; perfection will follow.An edited transcript of the conversation appears below:Knowledge@Wharton: You started in business in 1976 at age 18, with $1,500 that youborrowed from your father. I believe your first business was making bicycle crankshafts. Couldyou tell us about your earliest entrepreneurial experiences and what you learned from them?Mittal: I was raised in Ludhiana, a very industrious town, where almost everybody is anentrepreneur of some kind. It is the bedrock of small-scale industry, the principal industries beingcycles or cycle parts, hosiery, or yarn to make knitwear, and light engineering items. Coming outof college with a small amount of capital, one could only do what was allowed in the ecosystemthere. I decided to manufacture bicycle parts, in particular crankshafts. It was a hot forging unitthat I put up, and thats where I cut my teeth on business.Knowledge@Wharton: You moved to Bombay in 1980. At that time, your business plans werea little more ambitious. Could you tell us a little bit more about your business ventures at thattime?Mittal: I realized that one could probably make some modest success out of what I started to doin bicycle parts, but there was a limitation. At the end of the day, the manufacturers of bicycles   All materials copyright of the Wharton School of the University of Pennsylvania.                    Page 1 of 6 
  2. 2. Bharti Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership: India Knowledge@Wharton( how much -- at what price you could supply to them. And just making shafts wouldnthave made you a player of any size or scale.So, it was very clear that I had to get out of Ludhiana into a much bigger place, Delhi or Mumbai-- Bombay at that time. And I spent about two, three years in Bombay importing a variety ofproducts -- steel, brass, zinc, zip fasteners, plastics -- and eventually bought Indias first portablegenerator. And that was the first turning point in my career.Knowledge@Wharton: Was that the venture with Suzuki?Mittal: Yes, that venture was with Suzuki. Thats how I got in touch with the Japanese, spenttwo to three years with them, learning their techniques and practices. I internationalized myconcepts, learned the art of diplomacy in international trade. I would say that was the periodwhich gave me opportunities, on the one hand, to make some significantly higher amounts ofmoney than I could have done in cycle trade. More importantly, it gave me independence andexperience in marketing, brands, international trade. That held me in good stead later on.Knowledge@Wharton: What were the main lessons you learned at that point in your career?Mittal: I think, two or three things. I realized very early on that you need to tie up with somelarge entities -- much, much larger than yourself. From there on, we set up a string ofpartnerships, and they were all with very large companies, multi-billion dollar corporations:Suzuki, AT&T, Siemens, Lucky Gold Star (now LG). Suzuki Motor Company was there, ofcourse. We also partnered with British Telecom and Telecom Italia.So, that is the course I followed: Tie up with large companies. Its easy to say, but largecompanies intuitively dont ally with small companies or entrepreneurs. So, one had to persuadethese large companies, assure them that they needed to be in the Indian market. We also had toconvince them that we had a high governance structure despite being a small company, and givethem the comfort to join hands with us to exploit and come into the Indian market together.Knowledge@Wharton: How did you enter the phone business?Mittal: That, I would say, was happenstance. In fact, you could call it an accident, because thegovernment banned the import of generators. One fine day, there was no business. All thebusiness that I had developed was gone. My beat was Japan, Korea, Taiwan. I went back intothose areas looking for a new product. And one of the theories that Id built around myentrepreneurship was to do things that have not been done before. Because if you are competingwith the big boys in areas where they are strong, theres no chance for you to succeed. My questto look for the next big breakthrough product -- which also didnt need too much capital -- wasmet in Taiwan at a trade fair when I saw push-button telephones. I brought Indias first telephoneset replacing the rotary phone.That became a huge success, and my romance with telecom started thereafter. So, it went ontocordless phones, answering machines, fax machines, and then Indias first mobile phone.Knowledge@Wharton: India in those days was such a highly regulated market, and anespecially challenging environment for somebody who wanted to be innovative. How did younavigate your way around those currents?Mittal: Tough, but as an entrepreneur you get trained on everything. You understand importpolicy, you know how customs work, you know excise laws. You practically learn to do   All materials copyright of the Wharton School of the University of Pennsylvania.                    Page 2 of 6 
  3. 3. Bharti Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership: India Knowledge@Wharton( yourself. You hit roadblocks, you have difficulties. I had to open my own LLC, takemy own consignment, taking the material on trucks myself to the market.An entrepreneur gets a huge amount of experience. Then, you also know how to deal and moveinto the system. And the good news is that my excellence in the entrepreneurial area truly startedhappening alongside the breaking down of these barriers. The more the barriers dropped, the morewe surged. So, 1992, in that sense, was the turning point, when the Narasimha Rao governmentalong with now Prime Minister Manmohan Singh -- then finance minister -- decided to open up,[and] about 10 to 20 of us young entrepreneurs really moved in. Each one of us has created afantastic business out of that.Knowledge@Wharton: In concrete terms, how did the business environment change so that itallowed this entrepreneurial surge to happen?Mittal: Take the case of telephone manufacturing. The government completely regulated whatyou could import, what you could not import, how much you could manufacture. I got my firstindustry license to make cordless telephones; it had a limit of Rs. 2 crores of sales. I mean, itsridiculous when you go back -- half a million dollars today. You could not manufacture morethan two crores of sales. Now, if you see that number, what does it mean? Sub-scale operations,[a] small, tiny factory, and you dont manufacture telecom products like that. Its not a small-scalefactory that you can put up. Suddenly, one day, the government said, "No licenses required."From controlling what you could do [snaps fingers] it was gone in one day. That, to my mind, wasthe first time the entrepreneurial energies were released into a more constructive arena ofmarketing, branding, doing the right things.Knowledge@Wharton: In just about 10 years, you have built Bharti into Indias largest mobilephone operator. How did that come about? What are some of the main lessons you learned fromyour experience that could be helpful to other entrepreneurs?Mittal: I think, very clearly, we could have never claimed that we had more capital or bettertechnologies, because everybody was buying the same technologies; GSM is a set standard. Wecouldnt claim that we had massive brand or distinguishing strength in the market. The only thingthat we needed on our side was speed, and we used that to great effect.We were in the market ahead of competition. We brought new products on the market ahead ofcompetition. We rolled out our networks. We begged, borrowed, stole, put things out. And whilethey were never near perfect, they were first. And that gave us, to my mind, a lot of advantage.Our theory was: If youre caught between speed and perfection, always choose speed, andperfection will follow. You never wait for perfect positioning, because in business you dont havethe time; especially if youre small, you cant do it.And the large companies took their own time. They were months behind us, and that made uspick up a market niche for ourselves, which in turn made us big.Knowledge@Wharton: How did you position yourself against your competitors? Was yourstrategy based entirely on speed, or did you also have other tactics?Mittal: No. I think one thing was that we were very, very passionate about our business. Thiswas the only business we were doing. Other competitors had other businesses and this was one ofthe new businesses they were starting. Speed, new products into the market, close to the   All materials copyright of the Wharton School of the University of Pennsylvania.                    Page 3 of 6 
  4. 4. Bharti Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership: India Knowledge@Wharton(, knowing what the customer wants -- I think we lived that whole space ourselves, dayin and day out. And that made all the difference.Knowledge@Wharton: How do you see Bhartis future in the mobile industry? I know you triedrecently to merge with MTN in South Africa, but that merger didnt work out. What were yourstrategic goals for that merger, and what else might you be considering for the future?Mittal: We believe that while India is not done in so far as rolling out networks, the process isdone. Well keep on adding two and half or three million customers a month until we get to apoint where India has seven or eight million customers, management teams are in place, brand isvery strong, distribution is in place, the company has no debt.So, India is done. Now, what does the senior management team do? You have to create newopportunities of growth. And they lie in other emerging markets -- therefore Africa, the MiddleEast. And we have today a business model which is the best business model in the world -- thelowest costs with the highest quality.And I think that model is ready to go out. So, we would like -- whenever we get an opportunitylike MTN -- to seriously attempt to put some assets together.Knowledge@Wharton: Would you look for partners in other parts of the world?Mittal: Well, we keep on getting shown opportunities around the globe, and we remain open.Knowledge@Wharton: Lets turn now to the retail industry, where you have a partnership withWal-Mart. Help me understand how you evaluated the retail opportunity and what your thoughtprocess was in making the decisions you did.Mittal: We wanted to do something more in India. As we grow telecom outside of India, I thinkthere are opportunities in India. And one of them, we felt, was in the area of retail. Indias retailneeds to get organized, and it will one day. It may take its own time, and everything in India doestake time, but we will organize the retail to a point where $400 billion will come throughorganized retail stores.We had opportunities to tie up with Carrefour, Tesco and Wal-Mart. And in fact, we were almostin the signing stages with Tesco when the Wal-Mart meetings started to happen and we liked thestore model, we liked the same low-cost delivery mechanism, the values of Sam Walton. So, Iwould say that we are very, very pleased to venture into this area.It has its own issues. Like telecom, this has resistances built in. There are barriers, there areissues. And we enjoy properly dealing with these issues.Knowledge@Wharton: Speed was the hallmark of you experience in the mobile industry, but ofcourse the retail market is very, very different. How do you deal with those challenges?Mittal: Its frustrating. I must confess that its going much slower than what we originallythought. Speed is still what we like, but this is now a large company. We have a tie up with alarge company. They believe that you need to tie up a lot of loose ends before you launch yourself.The first three stores that have opened up with the assistance of Wal-Mart demonstrate thatplanning does make a difference. So, we are spending a lot of time planning; its not wasted time.The supply chain is being built. The first distribution center has come up. The three stores are   All materials copyright of the Wharton School of the University of Pennsylvania.                    Page 4 of 6 
  5. 5. Bharti Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership: India Knowledge@Wharton( in-fill rates of 95%. And theyre having sales per square foot of 30% to 40% higher thanthe other top two or three operators in the country.So, the start is good. It is surely slow. But, I think youll start seeing some action fairly soon.Knowledge@Wharton: Are any political changes needed to make that happen?Mittal: FDI must be allowed. We would rather have Wal-Mart right in there with equity ratherthan providing franchise support from the outside. So, we would like FDI to open up.Knowledge@Wharton: You have been quoted as saying that India needs a "footballrevolution." How exactly would that come about?Mittal: Its a shame, and it in some sense saddens my heart that a country like India does nothave any representation in world soccer. Its a sport which is watched by the largest amount ofpeople in the world -- were talking about hundreds of millions of people, topping over a billionpeople who watch soccer.Knowledge@Wharton: Did you play soccer growing up?Mittal: No, we played everything else that kids in middle-class families do. I wont say footballwas my main sport, but it is for one of my sons. Both my sons play. My nephews play. And myson plays fairly competitive football. I enjoy watching it with them.Its also, to my mind, a sport which can create a revolution of sorts in a country like India, verysoon. One ball, one open field, a few kids, and it starts off. There are no expensive kits orequipment required to support this game.And I also believe that India had a football base earlier on. In 1950, they were in the World Cup.They could not play because they didnt have shoes. They refused to wear shoes and they couldntplay. That was the last time India reached that point.I see no harm in giving it one serious shot -- of carrying an Indian team into a 20-year team. Ipersonally believe we can do it. Ten years is good time for us to plan.Knowledge@Wharton: Cricket has received quite a shot in the arm with the formation of theIndian Professional League. Is that in the cards for football?Mittal: Yes, India is a cricketing nation. Its a cricket-mad nation. I think we need an alternativesport. We need something else to offset cricket. Will football have its own premier league? Itwill, certainly. In fact, the IPL (Indian Premier League) is a copy of the English Premier League.And thats the fundamental basis of football.And yes, we will see something along those lines. Itll take a long time for people to switch fromcricket to football, but younger people are watching a lot of international soccer. There is goingto be the European Cup in Austria a few days from now. And you can see already some feverbuilding up in India. The timing is right.Knowledge@Wharton: In all the years that you have been an entrepreneur, what is the singlebiggest leadership challenge that you have faced? How did you deal with it and what did youlearn from it?Mittal: Its hard to put down, in a single event, what would be the hardest decision. But, I would   All materials copyright of the Wharton School of the University of Pennsylvania.                    Page 5 of 6 
  6. 6. Bharti Groups Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership: India Knowledge@Wharton( bidding for a mobile license -- against all odds -- in 1992, when I was a rank outsider. I thinkthe total sales were about $5 million in all, and going and bidding for a mobile license was tough.But, we persevered, we went into it against the might of the biggest of the biggest in the countryand in the world. And we ended up getting a license. More importantly, not only a license -- werolled out Indias first network and have now become Indias largest.So, that starting point of having, in a sense, defied the logic of, "This is only for the big boys. Youneed deep pockets. Dont even look at this." That defiance of the conventional wisdom, to mymind, was very important -- and being determined to challenge that thought that you cant do it asa young entrepreneur.This is a single/personal use copy of India Knowledge@Wharton. For multiple copies, customreprints, e-prints, posters or plaques, please contact PARS International: P.(212) 221-9595 x407.   All materials copyright of the Wharton School of the University of Pennsylvania.                    Page 6 of 6