Monday, May 19, 2014

TVS Motor & Thermax: Just a Step Away from being Outstanding Innovative Companies

I give several talks each year at corporate and industry association meets. One year, I found that I had given close to fifty such talks. But, one of my enduring regrets is that a good majority of my invitations come from (non-Indian) multinational companies. I don’t see myself as more patriotic than anyone else, nor am I xenophobic, but I find that I am just that little bit more motivated and excited when I speak to an “Indian” company. I guess this is closely related to the fact that building Indian innovation capabilities has been the overarching theme of much of my work.

I was therefore happy to be invited to speak at two prominent Indian companies in the last month.

TVS Motor Company Ltd.

The first talk was at TVS Motor Company Ltd. This is a company with more than 35 years’ experience in product development. I can still recall the excitement in Chennai when the TVS 50 moped was launched (actually by Sundaram Clayton, the parent company of TVS Motor) around 1980.

When the motorcycle industry was opened up in the mid-1980s, the company formed a joint venture with Suzuki to launch Ind-Suzuki 100cc motorbikes. Unfortunately though, in spite of being the first mover, the company was quickly overtaken by another Indo-Japanese joint venture, Hero Honda. The success of Hero Honda was due to an almost unbeatable combination of Honda’s superior 4-stroke engine technology and Hero’s vendor management and supply chain capabilities.

TVS and Suzuki split around 2001, but TVS had reasonably good internal design and engineering capabilities. In fact, in an article I wrote in Economic & Political Weekly at that time (EPW, October 13 2001), I predicted that TVS would be able to hold its own thanks to this ability. Interestingly, prior to 2000, Bajaj’s innovation capabilities were seen as quite weak, and its dependence on Kawasaki (whose technology was unsuited to the fuel economy needs of Indian customers) was seen as an enduring disadvantage.

Of course, that assessment proved to be only partially correct. TVS was successful with its internally developed bike the Victor, but under the leadership of Rajiv Bajaj, Bajaj launched its own bike (without Kawasaki’s help) the Pulsar which turned out to be a blockbuster. Bajaj and TVS got embroiled in a patent dispute that prevented TVS from launching the Flame, its answer to the Pulsar.

Notwithstanding these issues, TVS has persevered. It’s a dominant player in the niche moped market, and has developed a very competitive and nicely-designed Autoricksha (The King), which is reported to be doing very well in the export market. It’s trying hard to recover ground in what is now a much more crowded and competitive motorcycle market with powerful competitors like Hero, Honda, Bajaj, Yamaha, Suzuki and Mahindra through a series of new product launches.

Attending the IP Day at TVS I was struck by the enthusiasm of their young engineering team, and the diversity they have been able to create over time (good representation of different regions and women in product development and IP). There is a firm determination to achieve breakthroughs in technology and product development that could put TVS on a different trajectory. I wish them luck!


My second visit was to Thermax. Set up in 1966, the company is close to celebrating its golden jubilee. Starting with a focus on boilers, today it has broadened its footprint to span a whole range of energy technologies, including renewables. The current chairperson, Meher Pudumjee, is strongly committed to a mission of converting waste into wealth. Over time, Thermax has grown into a large engineering company with a topline of $1 billion.

My first exposure to Thermax was as a student at IIM Ahmedabad. We discussed a case study on Wanson (India) as Thermax was called before 1980. I can’t recall the details of the case except that it was all about boilers! I had a chance to meet Anu Aga, one of the prominent conscience keepers of corporate India, at an executive programme led by Professor Indira Parikh around 1995. I remember being impressed by her management philosophy and straight talk! I read a book called “Confessions of a Chief Executive” by Rohinton Aga (Anu’s husband and the person who shaped Thermax into what it is today) somewhere in the mid-1990s. It was an insightful account of the challenges involved in building a technology business in a regulated economy.

Today, Thermax is doing impressive work both in its conventional strength of boilers, and in new technologies like solar energy. Under the leadership of BARC veteran RR Sonde (see picture below), Thermax has worked closely with institutions like IIT Kanpur, ARCI and Fraunhofer institutions to develop high performance solar parabolic concentrators at very reasonable costs. I was impressed by their willingness to get down to the basics and find innovative ways of jointly optimizing cost and performance.

Thermax has a very positive organizational culture that is reflected in the long stays people spend at the company. Employees are comfortable calling even the Chairperson and President by their first names. Thermax has all the foundation conditions to promote an innovation culture, and I won’t be surprised if the company is the source of some major breakthroughs in the years ahead.

Some Concluding Comments

Both TVS Motor and Thermax are good engineering companies. They have talented people, all the basic processes for R&D and product/process engineering are in place, and the leadership is committed to making long-term investments in innovation. But they appear to have a couple of the typical handicaps of engineering companies too – both are somewhat internally-focused, and pursue a “do-it-yourself” philosophy. Prima facie, both of them would benefit from being more aggressive in telling the world about their distinctive products and services, and collaborating more actively with other companies (open innovation). A caveat - this impression is based on spending just half a day at each company and looking at what they say about themselves on the internet. I don’t mean this as criticism, but to reflect a desire that Indian companies that possess the capabilities for successful innovation should be able to realize their full potential.

(The views expressed here are the personal views of the author.)

1 comment:

  1. A very impressive post. Congrats Rishi. Ajay Jain