As early as 1985, ICICI started changing its business strategy, anticipatingchanges in the economy, such as de-regulation, disintermediation process andthe emergence of financial markets. Pertinently, all this at a time whenICICI was sitting pretty: it had an assured flow of funds from thegovernment, interest rates were mandated and corporates had no other lendinginstitution other than ICICI for term funding.

As a result, from a financial company with a single product (term loans forproject financing) in 1985, ICICI today has grown into a group of 13companies, each with a wide range of product portfolio. In this period, itsasset size has grown from Rs 2,200 crore to Rs 80,000 crore, profit aftertax rose to Rs 1200 crore from Rs 36 crore while its market cap soared to Rs26,300 crore from Rs 172 crore.

According to N Vaghul, the chairman of ICICI, the Group continues to stretchits boundaries of business even today. While the concept of universalbanking is still being debated, ICICI has gone ahead and converted itselfinto a virtual universal bank.

This kind of success the Group owes to out-of-the box thinking in certainkey areas:

Anticipating developments in the economy: ICICI not only foresaw thede-regulation of the economy, but also anticipated the emergence offinancial markets. It sensed the need for new funding initiatives such asventure capital, set up market related services such as credit rating.

Quick response to unexpected developments and business opportunities:The company shifted to retail borrowings, when the government fundingstopped in 1995. According to Vaghul, speed of the response is crucial forcompetitive advantage, as there is large-scale volatility in the markets.

Development of new products to suit customer needs: ICICI introducedleading and medium-term financial products to cater to the clients who wereapprehensive about the convertibility clause. It also introducedsecuritisation of wide range of asset classes such as credit cardreceivables, lease rentals etc.

Structural changes to suit shift in business strategies: The companychanged classifications to client specific business groups, instead of theold legal groupings. It also has formed special task groups across the groupfor cross-selling of products.

Pioneering global practices in India: Benchmarking against globalstandards is important for survival today, said Vaghul. ICICI was the firstto move way from a single prime rate and provide yield curve base pricing.

Leveraging technology to innovate: ICICI has used IT to leapfrog intothe future with Internet banking, Internet broking, financial supermarkets,data warehousing, advanced work flow management tools etc.

Adopting best practices: Complete separation of the board andexecutive functions and full authority to the executive management in ICICIhas made a tremendous difference in its competitiveness and decision-makingprocess, said Vaghul.

Investing in HRD: According to Vaghul, just market relatedcompensation is not enough to retain talent. It is necessary to create anenvironment to nurture the entrepreneurial needs of the employees.

Work environment, culture and values: The company has realised thatmangers in the age-group of 25 to 35 years are the driving force of the neweconomy. It caters to employee empowerment by letting the younger managersrecruit their own team, thereby increasing responsibility and commitment.