Carlo Slim was born in Mexico in 1940 by an immigrant parents from Lebanon. Since the tender age, Slim started receiving business lessons from his father on how to increase personal financial resources. His father started his business training with little capital, and taught him to increase the money from his own initiatives. The business training was developed in Slim’s spirit because of his aptitude for numbers. At the age of 12, Slim started buying shares and opened his first saving accounts at Banco Nacional de México. However, the efforts of his father ended because his father died when Slim was only 13 years old. To improve his educational skills, Carlo Slim proceeded his education by attending National Autonomous University of Mexico (UNAM) School of Engineering. While studying in the university, he was taught Algebra and Linear Programming, and at the age of 25 he had already laid foundation for Group Carso when he incorporated Inmobiliaria Carso in January 1966.
Thus, the spirit of transformational leadership to direct organizations began to manifest in the Slim abilities when in 1982, he diversified his business activities when Mexico was in debt crisis, and government decision to nationalized banking sectors. His visionary skills made him to invest actively in various sectors during this period. As one of the major qualities of the transformation leader is to possess visionary qualities, which is ability to predict business outcomes. The economy problems that Mexico was experiencing at this time inspired Slim to increase his acquisitions by purchasing Bimex, Hulera el Centenario, Reynolds Aluminio, and Hoteles Calinda. Slim did not stop there, by 1985, his company Group Carso acquired Fábricas de Papel Loreto y Peña Pobre, Artes Gráficas Unidas, and had majority stake in Sanborns and its affiliates.
After Mexican economy recovers, this is the time Slim’s fortune continues to grow substantially. His business acquisition initiatives make him to acquire number of US based brands such as Hershey’s chocolate, Firestone tires, and Denny’s coffee shops. Moreover, Slim also bought and merged Serguros Inbursa insurance companies into the giant firm.
Slim abilities to predict business outcome does not only manifest in Mexico but also US. This is made known when Slim was having interview with Business week and Slim was asked a question: “You’re known as “the Warren Buffett of Latin America” for your ability to pick good stocks and companies”. Slim’s answer to Business week is as follow: “Maybe, but I don’t think I’m really like him. I think that I am more of an operator of companies than he is. I buy companies for strategic reasons and operate them. Take Telmex. I’ve always thought we got a very good deal on Telmex, even though people thought we overpaid at the time…..We knew the company had real potential.”
His way of directing his business organization as transformational leaders reveals the practicability of his leadership styles that make him to be one of the successful businessman in the world. For example, Crupo Carso does not have corporate staff, and in his business empire, each company has a structure that makes them more efficient. These are leadership initiatives that are the cornerstone of the Slim’s characteristics, styles and personality that influences his business transformation.
Slim’s leadership Styles, Change Management and Organizational Transformation
Slim’s leadership styles are influenced by the personal principles and beliefs that has influenced his business decision and these are the principles that he has been using in the business transformation and management of his employees. These business principles are what Slim summaries in 10 points that he urges his colleagues and entire work force to follow. He advises his workforce on how organization structure should be, and from his philosophy on the structure of an organization, he points out that organization should have minimal hierarchies with non-complex structure that can enhance flexibility and growth. Apart from this, Slim also integrates principle that can enhance organizational success, these includes focusing on modernization, quality, simplification that can increase productivity at all times.
Apart from this, Slim has some philosophy that that he is instilling on his followers as an example transformational leader. As transformational leaders are those who have the ability to free themselves from greed, fear, jealous and hatred that can jeopardize their abilities to carry an organization to a level of success. It should be noted that these are the qualities that Slim posses, and the qualities manifested from the letter he wrote to the university students in Mexico city in 1994 advising them on the important attributes of life, which the students must follow. The letter vividly reveals the Slim’s life experiences and philosophy that is guiding him. The letter reveals how a good leader should stimulate good example to his followers and how they will be able to influence the followers in an organization. For instant, Slim states in his letter “I write to you this letter in order to share some of my life experiences, hoping it will contribute to your education, your way of thinking and living, your emotional well-being, your sense of responsibility to yourselves and to others, your maturity, and above all, to your happiness, which should be the result of your daily existence”.
It should be noted that Carlo Slim possesses the qualities of transformational leadership, and this is revealed from his letter to the students. The transformational leaders are the people with skills to stimulate others, and have ability to motivate followers to emulate his attributes in order to create safe environment. This also includes the ability to free himself from greed, fear, jealous, and hatred.
Slim advised to students on how to achieve success in life and this entails love, friendship, and integrity. The students must also have internal values that are important than professional, social and economic success that can help students in living successful life. For example, Slim states that “Emotional strength and stability are in the interior life, and in avoiding emotions that erode the soul such as envy, jealousy, arrogance, lust, selfishness, vengeance, greed and laziness, which are a poison that is ingested little by little.” Thus, with relation to Slim’s business philosophy and internal belief that a company should not be limited in size and should have clear objective of increasing in size and create wealth at all time. With patient and optimism, there are greater rewards in the business investment.
The astute of his business philosophy and his leadership styles lead him to acquire businesses he believes to be undervalued, and with his business skills, he transforms the businesses by overhauling their management. For example, Slim invests in undervalue businesses such as real estate, a construction equipment company, then mining interests. In addition, Slim grow his portfolio into a printer, a tobacco company and retail stores.
By 2007, the group of companies of Carlo Slim has worth more than $150 billion. The Slim’s personal wealth estimated by Fortune Magazine has reached $59 billions that makes the Fortune Magazine and other sources to conclude that Carlo Slim is now the richest man in the world. These are the transformation styles and techniques used to transform TELMEX as discussed in next section.
Transformational Leadership Styles and Techniques that Carlos Slim use in Building and Transforming TELMEX
Slim acquired Telefonos de Mexico (Telmex) in 1990 when the company was privatized in 1990. Thus, in partnership with Southwestern Bell and France Telecom, Slim gets hold of 10.4% Telmex stocks, and since 1980s, Slim has been initiating certain techniques of acquiring companies and transform the companies.
Slims’ techniques to transform Telmex is by embracing culture of modernization, quality, improvement of customer service, which are the techniques Slim used to transform Telmex. For example, five years after the acquisition of Telmex, Slim trained all his employees on modern technology and in the area of information technology so as to equip his employees to adopt modern techniques in Information Communication Technology. Part of the styles and techniques Carlo used are to change the obsolete equipment’s and other electromechanical analogy equipment’s the Telmex was using in 1991 to modernized them to digital technology that enhances the improvement of Temex service. Presently, the company has modernized technology installed throughout the country.
More technique Slim’s use in transforming Telmex is by using his unique idea of introducing cell phone service, and by selling cell phone with prepaid system rather than offer monthly bill to customers. It should be noted that with prepaid system, the Telmex customers grow substantially by 66%. By 2000, Slim uses Telmex to beat all his competitors including foreign based companies in wireless telecommunication service providers. In addition, with intention to reach every part of the country, Slim provides subsidies by reducing the telephone charges and profits margin in all part of Mexico so that Telmex will have the largest network in Mexico. This is also part of techniques that Slim is using to beat his competitors in Mexico.
The attributes of transformational leadership that indicates that a leader must be able to free himself from greed influences Slim’s decision in running Temex organization. Slim beliefs that public telephone is important for easy communication, and facilitation in the improvement of business activities. Thus, Slim increases the public telephone booth from 69,025 in 1990 to 715,000 in 2007.
Carlo Slim has techniques of beating his competitors by assuring that everybody in Mexico should have access to telephone service. His technique is by extending the telephone service to rural areas because the telephone networks of other telephone service providers in Mexico are only based in the towns and cities. Thus, Telmex is the only telecommunication service provider that extends its service to rural areas in Mexico. Apart from telephone service, Telmex also launches internet access that improves internet connectivity in every part of Mexico. The modern techniques that Slim embraces in the telephone service make Telmex to have 100% share of the market. However, since Telemex has gone public, the company has invested $30 billions between 1999 and 2007 only in Mexico and approximately $45.8 billions in telecommunication sectors that make Telmex investment to reach 65% in Mexico.
Meanwhile, by the end of 2007, Telmex has 17.8 millions lines reaching approximately 22, 890 communities in Mexico. In addition, the revenue of Telmex increases yearly, for example, the revenue increases by 0.6% from 2006 to 2007 that made Telmex to realise revenue of approximately US$9.5 billions in 2007. The solid revenues base allows the company to expand, beat its competitors and assume the position of leadership in the telecommunication sector in Mexico. Presently, Telmex is the largest wireless Telecommunication company in Latin America.
Thus, with spirit of expansionism, Telmex has also gone international and is now operating in Argentina, Brazil, Chile, Colombia, Peru, Uruguay, Eucuador, and United States of America. Since 2008, Telmex international has been listed in the New York stock exchange and other stock exchanges in Madrid and Mexico. With spirit of transformation leadership, Slim transforms Telmex that was formerly operating with obsolete technology to the modern telecommunication service provider.
To summarize, Carlos Slim is exceptional transformational leader who has an ability to transformation a dead organization into super giant. This has been revealed on the methods he has used to transform Telmex that was struggling for finances before 1990 to a company that has been operated in different countries and be able to be listed in the New York stock exchanges. While transformation leaders are very scarce in the society, evidence has shown that Slim has visions to manage an organization. It should be noted that in the modern day business, survival of an organization depends on the model of the management, which Slim has been able build over the years. Slim has been able to stimulate tangibles and intangibles values that all his employees are emulating over the years. This is reflected in the way Slim develops his human resources to the level of professionalism, where each employee has autonomy to make decision. It should be noted that Slim styles of instilling values and abilities have yielded sustainable advantages to his companies. For example, Slim instilled the culture of endurance to his employees during the Telmex’s transformational process, and this has yielded positive results as Telmex has monopolized the Telecommunication system in Mexico.