‘We need to keep the momentum going at Tata Motors’

Murali Gopalan | Updated on: Feb 14, 2019

As he completes three years as MD on Friday, Guenter Butschek has reasons to be pleased with the turnaround exercise

Guenter Butschek completes three years as CEO and Managing Director of Tata Motors on Friday. It has been a tenure marked by transformation across the ecosystem, which has seen the company emerge a lot stronger from what it was when he took charge.

“If you go to Tata Motors today and compare it to what I inherited three years ago, it is a different entity. People from all layers know what the organisation is all about, they are aware of their contribution to targets in the overall scheme of things, and they have taken a proactive approach in the journey,” says Butschek.

More importantly, employees have started to own the transformation journey and embrace the cultural change. As he adds, it is an inclusive/comprehensive approach that “started with ourselves” before the effort spread to other areas like quality improvement, service improvement, cost optimisations, etc.

Beyond product, continues Butschek, there has been “tremendous progress” in after-sales service, customer satisfaction and so on. The transformation journey kicked off in 2016 and encountered a lot of disruptions along the way in the form of demonetisation, the transition from Bharat Stage III emission norms to BS IV and the Goods and Services Tax.

Cultural shift

This meant that the company also needed to keep pace and, therefore, shift gears from the originally intended transformation exercise to a turnaround effort. “People generally think that this (turnaround) is pretty much a financial exercise but for us it was about changing the Tata Motors culture,” says Butschek.

It was also about soaking this idea into the DNA of the company and to ensure that the entire organisation was on its toes to drive change. The Tata Motors chief still remembers the time in September 2016 when he made it clear to the employees that they could not blame volatility alone as the reason for the company not being able to perform to its potential.

“This is because volatility is largely out of our control and is a reality as well. We needed to be blamed for not being able to cope with volatility because the enemy was within us,” says Butschek. The solution, therefore, was to manage volatility more effectively by being extremely agile and flexible in the overall response.

Hence, if there was a structural change in the market, it was important to have enough intelligence “brought into the plate to foresee these developments” in order to have alternative scenarios ready.

This could include new goalposts like moving from BS IV to BS VI in April 2020 and still being able to understand the potential impact in terms of customer sentiment, product pipeline, etc. “Your planning needs to be longterm and you need to have enough agility to steer the big boat like a speedboat in order to manage volatility,” stresses Butschek.

EV drive

All the hard work paid off during the electric vehicle drive when the company had to supply cars to the Government entity, Energy Efficiency Services Limited. The timeline was short but a special team was formed that pulled out all the stops to make this task a reality. What was clearly evident in this exercise was a “strong sense of purpose and ownership”.

It is this trait that has clearly pleased Butschek and he reminds you that while mass movement is the recipe of any kind of transformation, ownership is the “key ingredient”. If this is not present, the efforts are not going to pay off.

From Butschek’s point of view, the turnaround exercise at Tata Motors will always be a work in progress even while it has gone through a nomenclature change from Turnaround 1.0 to 2.0 “We need to keep the momentum going and this will be the new mentality and DNA of Tata Motors,” he says.

Turnaround 3.0?

And even while there could possibly be a Turnaround 3.0 drive going forward, the bottomline is that the new culture is now fully embedded in the ecosystem and is the way forward. What is even more interesting is that this exercise has now gone beyond the company’s borders to its suppliers who will now be part of the journey as they move to the next level in competencies.

By the end of the day, it is important to have solid engineering competencies in place to be able to pull off effective local solutions for the market. In short, this means getting the next set of technologies into a “much more comprehensive cost envelope”.

As Butschek reiterates, mere “copy paste” does not work for India and will not help transiting to the next level. “We need to make mobility sustainable and affordable, which means Tata Motors needs to be in the forefront here in terms of being competitively priced with solutions,” he says.

It is also in this context that Butschek is pleased with the effort that has gone into the recently launched Harrier SUV. It is keeping in line with the promise made two years ago that the future of Tata Motors’ passenger vehicles would be based on two architectures: Alpha and Omega.

This was important from the viewpoint of launching more vehicles in shorter time, which would be enabled by commonality, modularity and economies of scale. The Omega architecture is the one on which Harrier is based and it is the first product of the new strategy.

Butschek says Harrier has even more significance since it is going to lead the passenger vehicles journey at Tata Motors from the past to the present “and into the future”, which effectively reflects a change from a value to premium position.

Brand revival

This new positioning is important since it sends out a strong statement that the company has come through a turnaround and a revival of its brands in order to claim a new position in the market. “The point that comes with Harrier is that all of a sudden, it will have a huge knockdown effect on other vehicles as well,” explains Butschek.

In the process, people will be compelled to buy something premium that meets global requirements. More importantly, it marks the successful result of the turnaround exercise where, beyond market share, the change is now more visible on the product front in terms of design, styling, features and safety.

“We are now ready to take things to the next level with the new chapter. It is already drafted and the middle of the year will see the first product from the Alpha architecture,” says Butschek. The important thing is that it is on schedule and, eventually, there will be a family of products rolling out in quick time.

“Harrier is the first part of the transformation at Tata Motors and the opening of a new chapter to say that we are stronger than ever. This product demonstrates our strength as well as our confidence about the future,” reiterates Butschek.

Will there be another shot at collaboration on the lines of what was announced with Volkswagen at the 2017 Geneva Motor Show? Eventually, things did not go according to plan even while big things were conceived initially. The Tata Motors chief’s response is that it is important to be “alert and open” to more opportunities for reasons of technology and scale.

Published on February 14, 2019
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