Saturday, October 20, 2012

Titan Industries: The 3M of India?

In an earlier post, I chronicled the story of 3M, often regarded to be the company that has most successfully sustained a strong innovation culture over an extended period of time. Though several Indian companies have developed a reputation for innovation in recent years, we would be hard pressed to identify a company like 3M that has innovation in its DNA. But, if there is one company that could challenge this notion, it is Titan Industries Ltd., India’s largest watchmaker, jewellery giant, and retail pioneer.



A Creative Start

Titan started off on a creative note in the mid-1980s. The dominant watchmaker at that time, HMT, sold watches that operated either on the basis of the traditional hand-winding mechanism, or “automatic” watches that depended on the vibration and movement of the wrist to keep the watch going. Instead, Titan introduced battery-powered quartz watches that were more accurate as well as sleek. HMT had allowed the distribution channels to control the availability and price of its watches; instead, Titan created a modern retail experience for its consumers, and in the process became perhaps the first Indian company to apply a sophisticated understanding of consumer behavior to retail store layout. Titan’s first CEO, Xerxes Desai, an aesthete himself, set up a full-fledged design studio in the company that has today become the best corporate design facility in the country. Titan also made a mark for itself through its signature brand and marketing campaigns with several memorable commercials. Thus, Titan embraced innovation in technology, design, branding/marketing, and distribution right from its early years. Besides, it developed strong internal competencies in manufacturing and quality that were required for the watch business.

The Challenge of the Jewellery Business

Buoyed by its success in the watch business, and seeking frontiers for growth, Titan used its strengths in design, marketing, distribution, and manufacturing to venture into jewellery, a business believed to be too traditional and “unorganized” to be amenable to the methods of organized industry. Titan’s early years in the jewellery industry were exciting from a design standpoint, but did not translate into significant financial results. In fact, the jewellery business continued to lose money till 2003. Initially, the company was too far ahead of the market and consumers found its designs too “western” for its taste; once the company realized this and moved towards more traditional designs, it came up against the challenges of competing with small jewellery makers all over the country who have strong customer relationships as well as a reputation for sharp business practices!

Ironically, it is the jewellery business that has been the engine for Innovation 2.0 at Titan. Strategically, the company realized that it needed to identify areas in the jewellery production, sale and distribution process in which it could take advantage of its size, brand, and processes. At the same time, they would need to involve their employees and other stakeholders in transforming the business.

Innovation 2.0 from Tanishq

The challenges faced in the jewellery business made Tanishq, the jewellery business of Titan, embrace innovation. Arguably the most visible innovation in the jewellery business was the introduction of Karat meters at Tanishq stores which enabled customers to measure the purity of the gold in the jewellery they are buying. This one innovation helped Titan to emphasize the trust and quality associated with the Tata and Titan brands, and at the same time question the quality of gold being sold by its unorganized competitors.

But the jewellery business has gone well beyond the karat meters by embracing an employee-driven innovation programme.

Since 2004, the business has run an innovation campaign every year based on a different theme. The first campaign, “What is New?” in 2004, had a simple objective: the identification and implementation of 5 new ideas by every supervisor on the shopfloor. The 2006 campaign revolved around an “HOD Fund” – to accelerate the pace of innovation, every Head of Department was authorized to spend upto Rs. 1 lakh on each idea coming out of his department without seeking approvals from senior management. The 2008 campaign identified a catchy theme that became the basis for some of the most successful innovations at Tanishq: “Simplify and Automate.” But, from the point of view of developing sustainable innovation capabilities at Titan (and making it India’s 3M equivalent), the most important initiative/campaign was the creation of the “Innovation School of Management” (ISM).

By 2008, Titan’s jewellery business found that though innovation had been a mantra for more than five years, only 15% employees were actively engaged in innovation. The business faced a challenging question: How important is participation? “Very important” was their conclusion on the basis that if 15% employees could achieve so much (see examples below), wouldn’t the benefits of more participation be much greater? This was the seed for the creation of the ISM which has the objective of training all stakeholders to be innovators by 2014-15.

ISM consists of a 6-month course, and focuses on shopfloor employees. It’s a very formal process, which starts with the issue of an academic-style prospectus. ISM begins with a 3-day training workshop to learn the tools and techniques of creative problem-solving. Participants then form teams and choose a challenge to work on from 10 challenges already identified by the company. In the next few months, they get 4 hours a week to work on the project, and 2 hours a week of mentoring. More than 200 employees have been trained under the ISM umbrella so far.

The 2010 campaign embraced the concept of open innovation. Sticky problems faced by the business were posted on a Tata group internal website. This open innovation platform proved to be quite effective as 7 such problems were “cracked” by other Tata group companies.

The 2011 campaign extended beyond the company’s organizational boundaries to include the network of “karigars” (craftsmen) who make jewellery for the company. This campaign was two-pronged: on the one hand it sought to get the karigars involved in the innovation process; on the other, it tried to make them think and behave differently by holding a challenge contest to see who could make the lightest weight jewellery to a given design [Conventionally, in India, heavier jewellery is considered more valuable because the price of jewellery is a direct function of the weight of gold in the jewellery].

In the last few years, Titan has been one of the best performers on the Indian stockmarket. A major driver of this has been the rapid increase in sales and profits of the jewellery business. The company estimates that 30% of the jewellery division’s profits have come from innovation in manufacturing and integrated supply chain.

Where did these gains come from? Here are some examples:

  • In the conventional stone-setting process, one person could set 100 stones per day. This constrained scaling up the operations. Thanks to a new, patented, mould-setting process developed by employees, today an employee can set 1,500 stones per day. The new process does not require specialized skills and can hence be performed by any employee.

  • Earlier, the company could create 150 prototypes for new products per month. Now thanks to a newly developed “virtual stone-setting process,” the business can create more than 1,000 prototypes per month.

  • A complex piece of jewellery can have dozens of stones. In the conventional jewellery-making process, the diamonds needed for a particular piece of jewellery are manually selected and placed in a bag before the piece of jewellery is put together. Earlier, Titan’s jewellery business employed 40 people to do diamond bagging, and could pack 800 bags per day. Today, Titan has created the world’s first automated process for diamond bagging using a robot that took 4 years to design and build. This robot can pack 2,500 bags per day.

  • Earlier, the cycle time to make plain gold jewellery was 30 days. This cost the company money in terms of the cost of carrying a large gold inventory as also the risk of large quantities of gold lying with craftsmen who were not company employees. In a series of process improvements developed in conjunction with the craftsmen, the cycle time has been reduced to 3 days.

  • A decade ago, gold loss in the jewellery manufacturing process was as high as 5% and the company had to use elaborate processes to recover gold powder from the manufacturing process. Today, thanks to various process innovations, Titan is a world leader with only 0.15% gold lost in the manufacturing process. The company estimates that thanks to these innovations it averted the loss of 55Kg of gold in 2011-12.

Innovation in Technology…


Most of the innovation described above were in the areas of manufacturing and supply chain management. But, Titan has made serious efforts to innovate in technology as well. A decade ago, Titan’s watch division took on the challenge of making the world’s slimmest, water-resistant watch. The result was The Edge, developed through the efforts of Titan’s technology innovation team and its manufacturing group. More recently, Titan developed a new HTSE (“High Tech Self Energized”) watch – a watch that can be powered by solar energy. The technology for such watches is closely held, and the company lacked experience in critical areas like development of Application Specific Integrated Circuits (ASICs) required for such products. Again, the company kept the faith and persisted in spite of several failures and has now broken into the ranks of companies that possess the capability to create such watches.



…..And in Marketing

All the innovations listed above are outside what is often considered Titan’s distinctive competence, i.e., marketing. Over the years, Titan has built multiple brands and sub-brands (Titan, Sonata, Raga, Fastrack, EyePlus, GoldPlus, to name a few), often with creative advertising campaigns. Fastrack is one of India’s biggest youth brands, and naturally uses social media and the internet extensively in reaching out to its marketplace. GoldPlus is a new gold jewellery mass market brand built to reach out to Tier 2 and Tier 3 towns across India, and has a social marketing angle to it as well. Titan’s marketing innovations deserve a separate blogpost!

The Underlying Philosophy


While Titan’s focus on innovation has undoubtedly been driven by a quest for better business results, its foundation lies in a belief in human potential and achievement. As Bhaskar Bhat, Titan’s Managing Director says, “We should innovate to create value for all our stakeholders and meaning for ourselves.” Take the ISM for instance – it is predicated on an assumption that operators on the shopfloor can, if given the right skills, time, and space, come up with good ideas to improve the efficiency of operations. In fact, the Titan management strongly believes that everyone has two jobs – doing your own job effectively, and finding new and better ways to do your job. In this, Titan reminds me of two other legendary companies – 3M, for its belief in individual initiative, and Toyota, for its belief in continuous improvement.

The company’s belief in individual potential and development is more than skin deep. Over a decade ago, when the company was contemplating major changes in its strategy and operations, Titan sponsored an education programme for its union leaders at IIMB – this is the only instance I am aware of an Indian company investing in executive education for its union leaders. The initiative to involve karigars in the innovation process described above took several years of effort, and involved taking care of several basic needs of the karigars first (better working conditions, welfare schemes, etc.); yet the company kept its faith and persisted in working with them till an environment of trust and mutual belief was built up.

A belief in individual potential, and confidence in the ability of groups of people to do extraordinary things. These can’t be faked. That’s why building an innovation culture is as much about leadership as it is about structures and processes.

[Disclosure: I worked with Titan in designing an innovation programme for its managers at IIMB last year. But I do not have any ongoing pecuniary relationship with the company. Examples in this post are taken from talks given by Mr. L.R. Natarajan, head of Titan’s New Business Division, and earlier architect of the manufacturing innovations programme at Tanishq.]

6 comments:

  1. Comprehensive article! Very nice. Thanks Rishi.

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  2. Very good article and well researched posts on the whole, keep up the good work.

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  3. Interesting info Rishi.

    Best Regards
    Jayesh
    ideaken - when you need to collaborate to innovate.

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  4. Good Article and a consolidation of information on Titan

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  5. Good to read this well researched article on innovation at Titan.
    Is the innovation at Titan's Watch business not inspired by, or similar to, the innovations that happened at SWATCH ?

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