Can Guenter Butschek Do An Alan Mu­lally? The Mu­lally Turn­around…

The Economic Times - - Deep Dive - Li­jee Philip, Ke­tan Thakkar & Satish John

Tata Mo­tors is in a sim­i­lar po­si­tion as Ford Mo­tors a decade ago — down and vir­tu­ally out. Then came the CEO’s magic touch

When ET met Guenter Butschek in early Fe­bru­ary, the sec­ond meet­ing in less than 10 d ays, he was cruis­ing to­wards his first-year an­niver­sary at Tata Mo­tors. He seemed ebul­lient.

Lit­tle did his de­meanour be­tray the calami­tous 96% drop in prof­its the com­pany an­nounced the fol­low­ing week for the quar­ter ended De­cem­ber 2016. While Butschek ex­uded con­fi­dence, in­vestors pan­icked when the Tata Mo­tors stock plunged 14%, in two days, re­act­ing to the earn­ings melt­down. A few days later, ET met Butschek again. This time, Tata Mo­tors was hold­ing a joint press con­fer­ence with Mi­crosoft In­dia to an­nounce a strate­gic col­lab­o­ra­tion for tech­nol­ogy for con­nected and per­son­alised driv­ing ex­pe­ri­ences.

This con­stant flow of an­nounce­ments is un­likely to stop soon. In the com­ing days, Butschek will head to the Geneva In­ter­na­tional Mo­tor Show. One of the high­lights will be the TaMo Fu­turo, a con­cept model that may cre­ate rip­ples, not just back home but in the en­tire au­to­mo­bile world. Through the Fu­turo, Tata Mo­tors — which hardly had any new road ma­chines to show till last year — will un­veil a new avatar. While the razzmatazz in Geneva is still un­der wraps, what is not is the ma­jor over­haul un­der­way at Tata Mo­tors.

In a two-hour-long in­ter­ac­tion, Butschek, a for­mer chief op­er­at­ing of­fi­cer at Air­bus Group SA, slipped into the par­lance as­so­ci­ated with the avi­a­tion in­dus­try to ex­plain the on­go­ing trans­for­ma­tion at Tata Mo­tors. Tata Mo­tors’ turn­around will re­volve around the “six an­gles of at­tack. We can­not be a steam­boat when the mar­ket has speed­boats,” he said. such as China and Europe; needed to have ex­pe­ri­ence in cor­po­rate trans­for­ma­tion ini­tia­tives and a deep de­sire to take on chal­lenges. “Butschek ticked most of the boxes,” the per­son re­vealed. To put it an­other way, Butschek has t o a c h i e v e wh a t A l a n Mu­lally did at Ford Mo­tors be­tween 2006 and 2014 (when he re­tired) — a mir­a­cle.

While sim­i­lar­i­ties be­tween the chal­lenges for the two CEOs are many ( see graphic), there’s one ma­jor dif­fer­ence. Mu­lally had no ex­pe­ri­ence in the au­to­mo­bile in­dus­try be­fore he joined Ford – he joined Boe­ing as a young en­gi­neer in 1969 and went on to be­come CEO of Boe­ing Commercial Air­planes (the busi­ness jets divi­sion) by 2001. Butschek, on the other hand, is an au­to­mo­bile in­dus­try vet­eran. Be­fore Air­bus, he worked at Daim­ler AG for 25 years in in­ter­na­tional au­to­mo­tive man­age­ment. An­gle of at­tack is a phrase used in the aero­nau­ti­cal in­dus­try to de­scribe the acute an­gle be­tween the chord of an air­craft wing and the di­rec­tion of the wind, which helps lift planes. At Tat a Mo­tors, Butschek’s first an­gle of at­tack is to ad­dress top line growth — not just bring in more prod­ucts but bring them faster to mar­ket.

The sec­ond an­gle is to bring about ag­ile cost man­age­ment, which es­sen­tially will en­ti­tle struc­tural im­prove­ments and a mod­u­lar bill of ma­te­rial that can shave costs by us­ing com­mon com­po­nents across the two mod­u­lar platforms.

The third an­gle is to bring in cus­tomer cen­tric­ity, some­thing that Tata Mo­tors woe­fully lacks.

The fourth is to make sure that the pro­cesses and prod­ucts are done right the very first time.

The fifth ini­tia­tive is set­ting up of a core team that will look at dis­con­ti­nu­ity, dis­rup­tion in the mar­ket place, new mo­bil­ity so­lu­tions and new busi­ness mod­els.

And the last an­gle of at­tack is or­gan­i­sa­tional ef­fec­tive­ness, which would mean adding speed, sim­plic­ity and agility to the or­gan­i­sa­tion.

Since Butschek took over as chief ex­ec­u­tive on Fe­bru­ary 15, 2016, he has been meet­ing col­leagues and deal­ers, vis­it­ing fac­to­ries and ad­dress­ing town halls across In­dia. “I in­vest a lot in com­mu­ni­ca­tion. I en­joy be­ing with peo­ple,” he tells ET. His in­box is flooded with emails as even em­ploy­ees from dis­tant Jamshed­pur re­spond to an­nounce­ments and give sug­ges­tions. and op­er­a­tions spe­cial­ist, Mu­lally joined Ford af­ter 37 years at Boe­ing

in the red, stock price had hit rock bot­tom and debt was at junk sta­tus when Mu­lally took over in 2006

mar­quee brands such as Jaguar, Land Rover, Volvo and shed the stake held by Ford in Mazda. He went on to made Ford world-class again who tracks both com­pa­nies very closely. For in­stance, Tata Mo­tors has 1,200 sup­pli­ers, which Butschek reck­ons is “un­prece­dented” in the in­dus­try. “The most im­por­tant part is to have a pyra­mid struc­ture. To­day, we will fo­cus on the ca­pa­bil­ity of the sup­plier. This is our jour­ney.”

The struc­ture cur­rently is f lat. To change that, the com­pany has to strate­gi­cally choose its sup­pli­ers keep­ing the fu­ture prod­uct port­fo­lio in mind. Tata Mo­tors will thus com­pletely change the way it does its prod­uct plan­ning. It will in­volve en­gag­ing with sup­pli­ers from an early stage in the prod­uct cy­cle. It also in­volves com­mit­ting that cer­tain mod­ules, sys­tems, com­po­nents will be pur­chased from sup­pli­ers in­stead of mak­ing it in­house.

Tata Mo­tors will do an in­te­grated sup­plier ca­pa­bil­ity au­dit which will probe and au­dit the tech­nol­ogy ca­pa­bil­i­ties that will lead it all the way to the sub-sup­pli­ers to its ven­dors. The com­pany has al­ready au­dited 100 sup­pli­ers.

“If they don’t meet the hur­dle rate, they are cer­tainly out of the game,” Butschek said. “We are go­ing to de­velop jointly (with our first tier sup­pli­ers), strin­gently fol­low­ing de­tailed mile­stones to bring a prod­uct to life. It is go­ing to be a com­pletely dif­fer­ent story. Many sup­pli­ers of Tata Mo­tors will find them­selves as sub-sup­pli­ers of our tier one sup­pli­ers.” Tata Mo­tors cur­rently has six prod­uct platforms in the pas­sen­ger ve­hi­cle seg­ment but in three years, this will come down to two. to bring in up to 300 sup­pli­ers in the older ex­ist­ing platforms. An­other man­u­fac­tur­ing process that the Ger­man is un­der­tak­ing is to bring agility and f lex­i­bil­ity to the man­u­fac­tur­ing line. This en­tails de­vel­op­ing more top heads in one man­u­fac­tur­ing line on one mod­u­lar plat­form. Thus, a hatch­back, a sedan and an SUV can be made on the same man­u­fac­tur­ing line. “It is not the case to­day. Tata Mo­tors works with ded­i­cated lines for sin­gle prod­ucts. We are chron­i­cally un­der­utilised to­day when there is de­mand only for one prod­uct,” Butschek rues.

The or­gan­i­sa­tional ef­fec­tive­ness struc­ture will go live on April 1. It will in­volve some pain. Butschek weighs his words care­fully. “One of the suc­cess fac­tors (and les­sons learnt from past) is the need to pro­vide trans­parency in what one needs to ac­com­plish. We have been ex­tremely open. There is go­ing to be a de­lay­er­ing ex­er­cise.”

Tata Mo­tors will only have five man­age­ment lev­els be­low the ex­ec­u­tive com­mit­tee (as against 14 now). “A sig­nif­i­cant flat or­gan­i­sa­tional struc­ture that is lean, ag­ile and ac­count­able,” Butschek added.

“At the end of our ex­er­cise, Tata Mo­tors will not just look dif­fer­ent as far as struc­ture of the man­age­ment team is con­cerned. It is also go­ing to look dif­fer­ent as far as the con­tent and the siz­ing of the or­gan­i­sa­tion is con­cerned.” Will it mean some jobs will be re­dun­dant? “We have never made an an­nounce­ment on the num­ber of jobs be­cause this is some­thing we found in­ap­pro­pri­ate. This is a very dy­namic process. But (it will be) a struc­tured ap­proach..” Butschek re­vealed. “We are go­ing to an­nounce the ‘to be” or­gan­i­sa­tion on April 1 — the struc­ture, team, the new lay­ers and right­siz­ing of the or­gan­i­sa­tion.”

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.