Business Today 14th January 2018 - Page 114

The Best Management Lesson I Learnt outcomes. I began to discover how the real world and business operate when I took the plunge from being an economist to an investor with a well-established Wall Street private equity firm. Even then, my expe- rience of the world was still only vicarious. It was at IDFC that I learned what it takes to build not just a business unit but an institution. Being a leader can be a lonely job, especially if your task is to bring about transformational change. Articulating business strategy was easy. Building a culture was much harder. Culture is vital to institu- tion building. It requires relentless communication to ensure that purpose, vision and values of the firm are internalised and cascaded from top to the frontline. Building a cohesive leadership team with ownership of a shared vision was an exciting journey. Between 2004/05 and 2013/14, IDFC’s balance sheet grew from `8,434 crore to `75,163 crore on a strong capi- tal base and profits grew from `304 crore to `1,803 crore even as we navigated past the turbulence follow- starting operations. Every single member of the team took personal ownership to achieve the impossible. It was truly a test of collective grit under pressure. R elief was, however, short-lived. Cleaning up the legacy balance sheet has had its challenges given the wide range of stakeholders involved in bad debt resolution. IDFC Bank has led the market in transparently disclosing, resolving, hiving off and aggressively provisioning against the stressed asset portfolio way beyond what was required by the regu- lator. Thanks to a very comfortable capital cushion we had built up earlier, our balance sheet remains strong. What has been harder is guiding the transformation of what was a specialised wholesale-focussed finan- cial services company with a large and lumpy balance sheet into a universal bank aiming to serve the mass retail market. It required forging a new culture, build- ing trust and collaboration between diverse groups of people brought together for the first time and rallying them around a recrafted mis- sion and vision. Since our inception a Getting people to connect to mere 24 months ago, we have a shared sense of purpose hired nearly 4,700 people and is vital for keeping them launched a diversified suite of wholesale and retail banking energised and focussed products. The bank now serves through the long and over two million people, grow- inevitably uncertain journey ing at the rate of 120,000 new of institution building customers a month. It has rap- idly developed a diversified retail asset portfolio of `18,000 crore, growing at a run rate of over ing the global financial crisis in 2008. By late 2013, `2,000 crore a quarter. We have a new corporate book however, we were seeing clear signs of the impending of over `20,000 crore. The Bank's CASA and retail problems in the Indian infrastructure sector. It was in deposit base has crossed `7,000 crore and is growing anticipation of the crisis that the decision to pursue a at an annualised rate of 140 per cent. These are signifi- universal banking licence was taken. cant achievements for a start-up bank, but in order to People are generally not comfortable with change. grow out of legacy challenges, we aim to sustain this It was not easy to convince the team and stakehold- pace of execution. ers to pursue this radical change even before the true So what does it take to build an institution? My extent of the challenges in our balance sheet had most important lesson is that getting people to con- become fully evident. But the team rallied behind nect to a shared sense of purpose is vital for keeping the idea and IDFC ended up getting one of the only them energised and focussed through the long and two banking licences that were awarded in 2014. It inevitably uncertain journey of institution building. was a matter of great pride for me to see how my col- Clarity of vision, self-belief, resilience, and relent- leagues committed themselves to the difficult task of less communication, with both internal and external launching IDFC Bank in a short span of 18 months. stakeholders, are also useful. In the end, though it’s all This involved adding new members to the core team about people: it is about creating an environment that and hiring a large number of new people; addressing motivates people to consistently give their best. If you enormously complex legal, regulatory and compli- are able to do that, you will find yourself leading a fine ance hurdles; putting together a state-of-the-art tech- institution – if you are unable to do that, you may still nology platform; raising additional capital; and list- find yourself at the helm of a decent business but not ing the newly formed bank within the first month of an institution that will outlast you. 114 I BUSINESS TODAY I January 14 I 2018