The Chairman

N Chandrashekaran rose from rank and file (Intern) to become Chairman of Tata Sons. He replaced Cyrus Mistry.

In an interview to Quint (appeared on 22 January 2018) , I felt, in some replies, the question remained unanswered:

"What’s the goal for Tata Motors in the commercial vehicle segment, and how quickly do you hope to achieve that market share?

As far as the commercial vehicles segment of Tata Motors is concerned, I am extremely happy with where we are. The progress that we have made this year has been excellent. I come from running a company where we were industry leading in terms of revenues, margins, and profits. I don’t sacrifice one for the other. We are sensible about building our business and let’s wait."

My comment: The answer for goal for Tata Motors in the commercial vehicle segment could not be found.

What can we expect in 2018 on retail?

The way to look at our agenda is by themes. The themes are going to be simplification, synergy, and scale, and will play out in every segment. Simplification will mean sometimes holding cross-holding and sometimes consolidating entities, sometimes getting out of some entities. So, it could be any one of those things. But the major verticals are 6-7. We will play these themes across these verticals. So, I can’t sit here and tell you what exactly I will do in retail. Because there are multiple companies and strategies have to be formed for these companies which make sense for these companies, shareholders. So, it is a lot of detail work.

 My comment: The answer for retail could not be found.

Further, on working relationship, Mr. Chairman replies “There’s no friction at all. There was no interference at all.”

I wonder whether Mr. Chandrasekaran will be in a position to say No to Mr. Ratan Tata if there is disagreement.

I wish to share herein a interview:

“12-14. Do you think leaders in military contexts exhibit the same qualities as organizational leaders? Why or Why not?

This is a interesting question to answer, in my opinion I believe that each all leaders are unique. In the military realm of leadership, I believe that these types of leaders do exhibit some qualities that can be found in the corporate world. Effective command presence over groups of individuals as well as the ability to inspire and motivate groups of people to accomplish a goal is imperative for all leaders. I do however believe that some military leaders do not have all the characteristics of the corporate style leadership. I say this because some leaders within the military are promoted through acts of valor or distinguished merit. Some of these leaders are promoted without the proper guidance and are simply placed into the position of leadership due to higher-ranking officers becoming killed or no longer able to participate in combat, forcing some people into leadership roles. I feel that military leaders gain much experience as a leader more in the aspect of “OTJ” or “On The Job” style, gaining leadership qualities through trial and error.”

References:

https://www.bloombergquint.com/davos-world-economic-forum-2018/2018/01/22/chandrasekaran-feels-empowered-as-he-charts-out-future-course-for-tata-group

A Interview: https://ryanpregent.wordpress.com/2015/04/02/ch-12-leadership-mettle-forged-in-battle/

http://www.thehindu.com/business/N.-Chandrasekaran-from-TCS-intern-to-Tata-Sons-Chairman/article17029346.ece

Learning : Toyota Production System

The article “Decoding the DNA of the Toyota Production System” by Steven Spear and Kent Bowen (HBR September-October 1999) will provide a learning experience for Indian Industries.

Indian Government had launched Make in India initiative (September 2013) which intends to transform India into a “Global Design and Manufacturing Hub”.

In this context the article will provide an insight as to how India can learn from Toyota Production System. Here, I am in awe of “On-Demand production capability at the Aisin Mattress Factory” (keep in mind; I am talking about 1999 in 2018).

I hope Indian factories manage to deliver product like Aisin Mattress Factory.

I will reproduce section of the article where the authors describe about Aisin capability:

“Aisin Seiki produces 850 varieties of mattresses, distinguished by size, firmness, covering fabric, quilting pattern, and edge trim. Customers can order any one of these in a retail store and have it delivered to their homes in three days, yet Aisin maintains an inventory at the plant equal to just 1.5 days of demand. To be able to do so, Aisin has made thousands of changes in individual work activities, in the connections linking customers and suppliers of intermediate goods and services, and to the overall production lines. This table captures how dramatic the results of those changes have been.” (For table please read the article).

A very informative article for a factory manager / owner whose factory is located at India, to progress and leapfrog from traditional manufacturing processes.

References:

http://www.makeinindia.com/about

Contradictory Change

Billionaire Mr. Anil Agarwal (Vedanta Group) made a startling statement (January 18, 2018):

"At the same time, businessman also needs to live simply. They have to have a simple house, simple car. I've seen in USA, all the industrialists are very, very simple. I've met Warren Buffett. He wears a shirt and pant, drives his own car." 

"Big cars and big houses give a wrong signal. Businessmen have to lead a simple life to set an example. You have to spend less on weddings." 

We will roll back to an article appeared in Lunch with Business Standard (first Published: Tue, February 15, 2005) subsequently republished in www.rediff.com:

"I have to do things differently. I have to project myself. I have to have a Bentley, the best of chauffeurs and butlers. All these add to the confidence," Agarwal says.

Mr. Anil Agarwal stays at Mayfair in Central London (once his mansion was valued at 20 million pound sterling).

Glimpse of a simple life:

We have to remember that Mayfair is considered as one of the most expensive village in London (www.ft.com). Further, Mr. Anil Agarwal has covered a long distance. Initially he was a scrap dealer (school dropout).

Similarly, it seems Mr. Anil Agarwal has covered the distance from having Bentley, Mayfair house (London) to being a person who advises to lead a simple life.

Indeed contradiction but still it is a change.

References:

https://economictimes.indiatimes.com/news/company/corporate-trends/industrialists-should-lead-a-simple-life-to-set-an-example-anil-agarwal/articleshow/62548638.cms

http://www.dnaindia.com/business/report-a-long-journey-from-bihar-s-badlands-to-london-s-mayfair-1093750

http://www.rediff.com/money/2005/feb/16inter.htm

http://www.business-standard.com/article/opinion/-don-t-be-too-smart-looking-foolish-is-ok-105021501055_1.html

https://epaperlive.timesofindia.com/ETE/BOM?AspxAutoDetectCookieSupport=1#display_area

https://www.ft.com/content/936ee878-a12c-11e6-891e-abe238dee8e2

Note: Date of posting is 17 January 2018 but article reference is 18 January 2018. This is due to the date appearing in Laptop which was one day slow due to cell issues.

Essence of Entrepreneur

Essence of growth as an entrepreneur was very well explained by Ridham Desai in a panel discussion conducted by CNBC TV18. 

The topic for discussion was:  How to be as rich as Rakesh Jhunjhunwala?

“Latha: Today we understand from the papers of course, that Mr Rakesh Jhunjhunwala's total net worth is Rs 10,000 crore. At CNBC-TV18, we cannot invest in shares, so we depend on mutual funds. Since you are a neutral party, Ridham, can we these guys make me as rich as Mr Rakesh Jhunjhunwala?

Desai: You can try. There is a very famous quote by Warren Buffett. He said, "I became rich because I was lucky and my luck began the day I was not born in Bangladesh, but United States of America." But, we are plagued by three things, as Nassim Taleb would say, three intoxicants or three habits which really hurt us. The first two are very obvious, so that is drugs which can be intoxicating and you can get hurt and most of us should not be there. The second is carbohydrates. We are all plagued by carbohydrates, that is why you suffer from all these illnesses.

But the third one is what really hurts you and that is why you cannot become Rakesh Jhunjhunwala which is your monthly salary. If you are willing to give it up, then I think they can make you Rakesh.”

(2:27 onward to go directly to the above subject)

References:

http://www.moneycontrol.com/news/business/mutual-funds/how-to-be-as-rich-as-rakesh-jhunjhunwala-heres-ridhams-answer-1059251.html

Learning : Right Supply Chain

What Is the Right Supply Chain for Your Product? By Marshal Fisher (HBR March –April 1997)

Learning:

“….a supply chain performs two distinct types of functions: a physical function and a market mediation function. A supply chain’s physical function is readily apparent and includes converting raw materials into parts, components, and eventually finished goods, and transporting all of them from one point in the supply chain to the next. Less visible but equally important is market mediation, whose purpose is ensuring that the variety of products reaching the marketplace matches what consumers want to buy.”

“Physical costs are the costs of production, transportation, and inventory storage. Market mediation costs arise when supply exceeds demand and a product has to be marked down and sold at a loss or when supply falls short of demand, resulting in lost sales opportunities and dissatisfied customers.”

“.. suppliers should be chosen for their speed and flexibility, not for their low cost”.

Matching Supply Chains with the products:

	Functional Products	Innovative Products
Efficient Supply Chain	Match	Mismatch
Responsive Supply Chain	Mismatch	Match

In case of Functional products companies can outsource but in case of Innovative products it is better to carryout in house manufacturing. This helps in maintaining tight leash of the demand for Innovative products. Example given by the author is presented below:

“Compaq, for example, decided to continue producing certain high-variety, short-life-cycle circuits in-house rather than outsource them to a low-cost Asian country, because local production gave the company increased flexibility and shorter lead times. World Company, a leading Japanese apparel manufacturer, produces its basic styles in low-cost Chinese plants but keeps production of high-fashion styles in Japan, where the advantage of being able to respond quickly to emerging fashion trends more than offsets the disadvantage of high labor costs.”

Classic case of Dealer issue which hampers the link with the manufacturer and customer is excellently explained by the author in the following way:

“The dealer told me that he had 2 versions of the car model on his lot and that if neither matched my ideal specifications, he might be able to get my choice from another dealer in the Philadelphia area. When I got home, I checked the phone book and found ten dealers in the area. Assuming each of them also had 2 versions of the car in stock, I was choosing from a selection of at most 20 versions of a car that could be made in 20 million. In other words, the auto distribution channel is a kind of hourglass with the dealer at the neck. At the top of the glass, plants, which introduce innovations in color and technology every year, can provide an almost infinite variety of options. At the bottom, a multitude of customers with diverse tastes could benefit from that variety but are unable to because of dealers’ practices at the neck of the glass.”