Reliance Industries’ Manoj Modi On Jio, E-commerce And Leadership
As Vani Kola acknowledges in her account, an interview with Reliance Industries Ltd.’s Manoj Modi is a rare opportunity. He’s promoter Mukesh Ambani’s right hand man and has helped lead several new projects, from refining to retail to telecom, yet carries no designated senior executive or board position and maintains a low profile. But this month he appeared at the Kalaari Summit to talk about India’s startup ecosystem.
These are excerpts from his fireside chat with Kalaari founder Vani Kola, a well known venture capitalist.
Reliance Jio’s Impact
Manoj Modi: Jio was not Reliance’s first startup. All our businesses have been startups as we have never acquired anything. We have a practice of creating startups and successful world- scale, global businesses. Earlier, there was this impression among some of our telecom peers that we don’t understand consumer-related startups.
But we were quite sure that businesses are businesses and as long as we are solving some of the needs of the society in the most efficient manner, we will have a successful business.
That is the philosophy that we have always followed.
Coming to Jio, definitely, Jio has done better than what we had anticipated with more than 320 million subscribers in such a short time. In terms of data consumption also, we had thought that, maybe, 50–60 million subscribers might use 10–12GB per month while the rest will use around 4GB or so. But looking at the Jio phone with just a 2.4-inch screen, we have seen data consumption of above 9GB a month! Just this 2.4-inch screen and consuming so much data - this is a confirmation of the theory that we have followed for the past four decades, that India is a supply-constrained market and not a demand-constrained market.
So, as long as we can efficiently provide goods and services at affordable prices, this market will consume. With Jio, we have proven this hypothesis.
Reliance’s Entry Into E-Commerce
Manoj Modi: Well, if you see Mukesh bhai’s speech during the annual general meeting, he spoke of ‘new commerce’ and not e-commerce. At Reliance, we build all our businesses with the need of society in mind. We try to understand what can be done that will affect the masses, make substantial improvements in their lives, and provide benefits. New commerce is the same.
With Reliance Market, which is our physical B2B (business-to-business) business, we have around 1.5 million small merchants buying from us. But when we look at their last five years of financial health, these small merchants’ revenues and incomes have not grown during this period because of the cost of inflation even though their cost of operation is just 3–4 percent. An organised retailer, in contrast, has a cost of operation of 10–12 percent and e-commerce has even higher costs when you take factors such as the promotions, supply chain management, last-man delivery, etc. In spite of their low cost of operation, the small merchants are not able to compete. Why is this so?
They don’t know how to reach new customers, and younger customers are buying more online. Effectively, their basket of supply has reduced. They are not making enough money to stay in business.
So, at Reliance, we give small merchants the technology where they can reach out to new customers. We facilitate such merchants to do business more efficiently through customer promotions, loyalties and improve the entire inventory efficiency. We provide them with efficient technology bouquet using retail PoS (point of sale) as well as back-end services, which will allow them to survive the competition from large players who can offer huge discounts.
Negotiation, Strategy And Leadership
Manoj Modi: I don’t really negotiate — generally, my work is internal 95 percent of the time. I, instead, deal with our internal people, coaching them, mentoring them, and guiding them on how something can be done.
Our principle at Reliance is very simple: Unless everyone makes money while working with us, you cannot have a sustainable business.
We have no commercial or financial disputes with any customer, supplier or distributor. Our philosophy is that all the stakeholders need to make money. If consumers don’t feel that they are getting value from our products or services, they will not buy. If the intermediaries, retailers or distributors don’t receive adequate remuneration, we will not have a long-lasting business. So, I think, all this negotiation is a myth and not much of reality. Businesses always need to have a win-win proposition.
And as for strategy, I don’t understand strategy. I am a very simple person. In fact, internally, people know that I don’t even have a vision. I put blinkers on when I am executing because I know that if I am constantly changing, I won’t be able to execute. My great strength is in execution because I don’t look at the obstacles. I just know how to pass these obstacles and find the way out.
Most of the time people get stuck in their own decisions — they are not wedded to the outcome but to the decisions they made. At Reliance, we don’t care who made the decisions. If a wrong decision was made, we only look at correcting it quickly.Manoj Modi in conversation with Vani Kola, Kalaari Capital