What does Mukesh Ambani's leadership transition message mean?

Succession planning in promoter-led businesses is always a tricky issue. The larger the entity is, the greater the nature of challenge involved.

When Mukesh Ambani, Chairman, Reliance Industries opened up on leadership transition, it did have everyone's attention. Ambani's empire is complex and has always had businesses relevant to the times one lives in. His father, Dhirubhai Ambani, was among the earliest private sector participants in oil exploration and refining to be followed soon by retailing. His son, Mukesh, at Reliance Family Day, held virtually on Tuesday, spoke on the need to have leadership transition in his group.

To him, the process should be accelerated, with seniors, including him, yielding to the younger generation. “Achieving big dreams and impossible-looking goals is all about getting the right people and the right leadership. Reliance is now in the process of effecting a momentous leadership transition…From seniors belonging to my generation to the next generation of young leaders. I would like this process to be accelerated,” he said during the event.

“All seniors — myself included — should now yield to the highly competent, extremely committed and incredibly promising young leadership talent at Reliance. We should guide them, enable them, encourage them and empower them…and sit back and applaud as they perform better than us. Let me summarise it this way. At Reliance we must build an organisational culture that outlasts its leaders. We must continuously sow seeds of goo culture and good nurture , so that we can create a garden that is perpetually beautiful and perpetually bountiful,” stated Ambani.

He added, “I have no doubt that Akash, Isha and Anant as the next-gen leaders will lead Reliance to even greater heights. I can see and feel their passion, commitment, and devotion to the cause of Reliance every day. I see in them the same spark and potential that my father had for making a difference to millions of lives and contributing to India’s growth. Let us all wish them good luck in their mission to make Reliance ever more successful with even more transformative initiatives and achieving even greater accolades for our Reliance.”

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So, what exactly was Ambani trying to convey? According to Sanjiv Bhasin, Director, IIFL Securities, at some point, someone will have to step into his shoes. "He will of course be at the helm but will take a slight backseat and the children will take it from there," is how Bhasin sees it.

Ambani is 64 and in that sense, the time is appropriate for succession planning. Kavil Ramachandran, Professor at ISB, Hyderabad and a family business specialist, says once a business leader is in the 55-60 age band, it is natural to prepare for a transition. "What Ambani is doing is expected and very much in line with a long-term succession plan," he explains. Over time, the Reliance group has moved into several new territories and that has changed its complexion. "Reliance is not what it was 5-10 years ago and its foray into businesses for the new digital age indicates a clear shift in focus. Keeping that in mind, what Ambani plans to do is necessary."
   
The step is also what any good organisation ought to do. Bhasin describes succession planning as being the best global practice with many multinational companies taking it quite seriously. "It is an acceptance of the fact that the old guard will take a back seat especially when most of the businesses are a part of the new age such as renewable energy, retail and telecom," he says.

With Ambani's messaging devoid of ambiguity, the next steps in the process are to be tracked closely.

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