How Reliance Won

Note: This is Part 6 in a series of articles and cases on Asian Conglomerates. Read Part 5 here. You may read more about the Asian Conglomerate Series here, or view all the published cases here.

In the previous instalment of the Asian Conglomerate series, we said that we were nearly done with sowing seeds and asking questions. This is the final case in the series before we start examining answers together: as I’ve mentioned previously, there are core patterns that exist across all the Asian tycoons, and we’re going to look at that very soon.

Before we get into it, I want to give you a small note about how to read this week’s case, because we finally have enough cases on tycoons to do the compare-and-contrast exercise that accelerates one’s business pattern matching.

How To Read The Cases

Commoncog cases are produced for and meant to be read according to a particular theory of expertise, called Cognitive Flexibility Theory. The basic idea is simple: experts in business and in investing read histories for instantiations of concepts. They are forced to do this because concepts in business are highly variable and context dependent: each time you see a concept in the real world, it is going to be somewhat unique. In order to compensate for all of this uniqueness, experts in business and investing do not reason from business concepts alone. Instead, they do a lot of their reasoning by combining fragments of prior cases they’ve seen.

This means that they never stop collecting new cases over the arc of their entire lives, in order to continually improve their pattern matching.

We can copy this style of thinking for ourselves. When you are learning a new business concept, you should aim for 10-20 real world cases to anchor your understanding of ‘this is what things can look like’. Some of these cases will look very different from each other, and diverge significantly from what you expect. Some of them will look conventional, or at least similar. It’s important to collect enough cases so you don’t get thrown by the live instantiations in your own business life, especially when you’re encountering them for the first time.

The research also tells us how to read these cases. CFT tells us that experts in business and in investing read in a certain way. As they’re consuming a new case, they are comparing against the catalogue of other, similar, cases in their heads. They ask two questions while doing such comparisons:

• What are some surprising similarities with this case and previous cases I’ve seen?
• What are some surprising dissimilarities with this case and previous cases I’ve seen?

(Or, more accurately: they’re watching for cues of surprising similarities and surprising dissimilarities, and doing rapid case comparisons as they read).

CFT research tells us that novices tend to ask only the first question, which makes sense: humans are pretty good at noticing similarities in a random bag of stuff. Unlike novices, however, experts pay close attention to surprising dissimilarities, and file that away for future use in pattern matching.

So far, the Asian Conglomerate series has covered the lives of two tycoons, from two different countries:

1. The life of Stanley Ho (case one, two), gambling king, who lived in Hong Kong and Macau.
2. The life of B.C. Lee, founder of Samsung, who built his empire in South Korea.

Two cases aren’t enough to learn interesting things. By the end of this series we will almost certainly have hit 10 cases about the rise of various tycoons, which is the bare minimum you need to be effective at pattern matching in the wild.

With the publication of this week’s case, though, we have three cases in total, which means you can start doing slightly more interesting case-wise comparisons. This week we are studying the founding of Reliance Industries in India, and the patriarch of what becomes the richest family in Asia. We are looking at:

3. The Rise of Dhirubhai Ambani. Dhirubhai started a polyester trading business in India, and then expanded up the supply chain into polyester manufacturing, and then petrochemicals, and then petroleum, and natural gas, and retail, and technology, and then every goddamn business, it seems, in sight of the family’s 27 story home in Mumbai.

I highly recommend reading this case, and then doubling back to read the Stanley Ho cases, and then reading the B.C. Lee case. Read about all three in one sitting, if possible. You may skim the previous cases if you’ve already read them.

Ask yourself:

• What are some surprising similarities?
• What are some surprising dissimilarities?
• And, perhaps to make this slightly more interesting, ask: if I wanted to become a tycoon myself, today, what do the answers to these questions tell me I would have to do?

We have purposefully picked three very different countries for the first three tycoons for a reason: if there are any patterns present, they must be present for ... interesting reasons.