Archives for posts with tag: Nissan

Provoked by Justice Sotomoyer’s observation of dealing with her atypical “imposter syndrome”, in a recent Business Standard Op-Ed piece, Shyamal Majumdar writes, “The ‘imposter syndrome’ – Even high achievers often dismiss their success as some fluke or luck, and not the result of their own competence.”

This got me thinking. Internet based research revealed that, “The impostor syndrome, sometimes called impostor phenomenon or fraud syndrome, is a psychological phenomenon in which people are unable to internalize their accomplishments. Despite external evidence of their competence, those with the syndrome remain convinced that they are frauds and do not deserve the success they have achieved. Proof of success is dismissed as luck, timing, or as a result of deceiving others into thinking they are more intelligent and competent than they believe themselves to be.”

Imposter

Analyzing this wiki definition, I feel that at least partial description of “imposter syndrome” in the West is simply being realistic. After all, in my case I am sure what I am today is also a function of the bosses, colleagues and subordinates in the teams that I have worked in, as well as suppliers, customers and well-wishers in the extended environment. Thus, it is difficult to find a purely self-made individual. Hence, I believe that my success can be attributed to luck, fortune and timing.

I remember my days in Toyota, when our domestic market share in Japan in the segments we operated was increasing from 40 to 44 %, while Nissan’s was in decline. Sitting in the smoking corner during lunch, one of my colleagues made the observation that“managers and executives at Nissan are just like us, from the same classrooms of the same universities”.  In many cases, the choice between the two companies was made purely on geographical reasons, while choosing their office locations in Japan. Yet, one company is rising and the other is declining. Certainly, decisions taken by our seniors were instrumental in the current success and failure, rise or decline, but the fruits that WE were enjoying (or not, as in Nissan’s case) were more a matter of providence”.

Back then, my Toyota colleagues and I shared the perception that we were part of destiny.

lucky

I remember another instance of a junior, call him Taro for now, who joined us from one of the leading private universities in Japan, Keio. Being assigned to an operations group that was very busy with re-structuring, his seniors could not mentor him sufficiently. They just did not have enough time. His development as an executive dragged, until he was transferred to an administrative job. There, under appropriate mentorship he became like a fish taking to water. He was admired for his attention to detail, his confidence grew and he started commanding respect. Different circumstances, different results, same person. Taro would not internalize failure changing to success purely to his competence.

I dedicate my own competency development to being a function of luck, timing and hard work. What about you?

The Schumpeter column in the recent Economist, “Mammon’s new monarchs” describes the emerging world consumer as king. It seems that Western companies are interested in knowing how to appeal to emerging world consumerism and compete with home-grown domestic rivals. Consultants from Boston Consulting Group (BCG) advise companies to jump in early. I agree that going in early can be useful, but according to my observations, this is not essential nor a panacea.

honda-city

Consider the automobiles industry – Honda started early in India, in 1998. Toyota started shortly afterwards in 2000. Their early start has certainly helped. Honda’s City and Toyota’s Innova enjoy stable market leadership in their respective segments. Though many thought Renault-Nissan to be a late entrant to India (over a decade later than Honda), given that automobile ownership is still at the lower tail of the S-curve, it still has potential to emerge a winner. Renault is already doing well with its Duster shining in the market this year.  The same applies with Volkswagen, which really kicked off with the Polo in 2010. So, coming in later, even a decade later can be okay. On the other hand, in the absence of quality offerings, coming in early is not a cure-all as Fiat has failed to learn in repeat attempts at conquering the market.

Similarly, in the appliances arena, Hitachi that started early in the upper end high quality air conditioner segment, continues to enjoy aspiration status. Panasonic that is just starting its big bang could yet do well. LG may have made early inroads, but eventually quality shall become the priority of the consumer. Already, at the “non-frugal” end LG finds it difficult to attract the well-to-do. Experience with air conditioners also demonstrates that starting early is fine, but quality is perhaps more important.

LG

My own feeling is that when deciding market entry into emerging Asian economies, companies shall do well to concentrate on two things. Firstly, they need to get the price point right and match local tastes, while matching the quality expectations. This is where Hyundai succeeded with Santro. The second point is to focus on a core competency. So, for example, Daimler Benz did well to first start with its Mercedes E-class, a core competency yet economically right for India. It’s A-class is only now being contemplated, over a decade later (the price point is no doubt more suitable, but not what Daimler is more commonly associated with).

Many people try to bring out a single point solution, such as “start early”. This pithy advice can result in disasters as the Fiat experience in India demonstrates. Instead, international business strategy needs to concentrate on what sells (the buyer’s desires), and what can be sold (the seller’s competency), which are perhaps more important to conquer the Asian consumer.

I read recently in the Economic Times that Unilever finds innovations that have marked its growth in India, are now more relevant than ever, in recession hit parts of the world such as Europe.

As the Unilever CEO, Paul Polman, has rightly mentioned, “Learnings” from India such as lower price points for products in smaller packages or sachets, is gaining acceptance in the European market, poverty has returned as the local economies continue to reel under recession.”

It is transferability of such learnings that makes knowledge of international business practices so valuable. I remember my time in Toyota where we applied our learnings from implementation of kaizen principles for just-in-time (JIT) logistics across countries. Thus, Oman could benefit from learnings from Poland, and in turn teach a lesson (or two) to Australia and South Africa.

According to the newspaper, Paulman, also highlighted the success of the affordable water purifying product, Pureit.The product entirely developed in India, is now being sold by Unilever in at least 15 other countries, where according to him, it has become a popular brand. “

This reminded me of the concept of “reverse innovation” that was popularized by GE. Why is it called reverse? Previously, innovation occurred in developed markets, and products were sold across the globe. However, those markets are now saturated, or even in decline as Unilever is discovering. Undiscovered markets lie in populous emerging markets like, China, India and Indonesia. Thus, there is profit to be made by innovating for these markets. And, what sells here can also be sold in the fast-becoming-poor markets of the developed world. Learning frugal engineering has become so important that Carlos Ghosn of Nissan Renault invested USD 1 billion for starting a greenfield factory in India.

I suspect, eventually, as this becomes the mainstream model, the “reverse” will then be dropped from the nomenclature.

Recently, Yamaha announced that it would make the cheapest ever bike in India for $500. This, along with other similar observations in the Indian market on the relentless pursuit for lower prices in the realm of B2B marketing, has convinced me that frugal manufacturing has now become a mainstay for the Indian market for years to come.

I was involved in such a process at Toyota as early as 1997, way before the term frugal manufacturing itself was coined by Carlos Ghosn of Nissan-Renault in 2006 on the Indian context. He was impressed by Indian engineers’ ability to innovate cost-effectively and quickly under severe resource constraints. More recently, other European companies such as Alten Group and Faurecia also announced the establishment of R&D centers in India – perhaps a confirmation of the sign of the times?

An important aspect of frugal manufacturing for India is to create good enough products that offer high value for money. Thus, it is not only about low cost but about meeting the Indian customers’ seemingly paradoxical expectations of “cheap and best”. Thus, Tata Nano could not succeed simply because of its low price. I have ridden in the car and it seems perfectly fine. However, for some reason it has failed to satisfy the desired perception level of high value for money.

Frugal engineering can be seen as a continuation of Value Analysis/ Value Engineering that became popular even at Toyota of the eighties and nineties. One important question that needs to be asked is, “Do customers value all the current features”? Even before Carlos Ghosn coined the term, I remember being involved at Toyota in such value analysis when bringing in the old Indonesian Kijang into the Indian market in 2000 christened as the Qualis. The car became the market leader in its segment because of the perceived value for money, despite its outdated design by both, international as well as domestic standards. We were well aware of the design considerations, but were also aware that the Indian consumer is also highly pragmatic, recognizing value for money.

In their HBR blog “Frugal Innovation: Lessons from Carlos Ghosn, CEO, Renault-Nissan” the authors Navi  Radjou et al rightly point out Ghosn’s effective policies of tapping partners in emerging markets and sending top management to emerging markets. In a kind of reinforcing coincidence, a recent McKinsey report titled “How MNCs Can Win in India” also emphasized the importance of top management visit to India and the need scale up via deals and partnerships. The authors of the McKinsey report Vimal Choudhary et al recommend a formula: Commit to products that have 30% less functionality and that cost 50–70% less without compromising quality.

Despite the battle at the upper end between German giants Audi, BMW, Mercedes the proverbial wisdom has it that the fortune is at the bottom of the pyramid. There is no doubt that people at the bottom of the pyramid want value for money. Hence, Frugal engineering is the new mantra in international business for making money in emerging markets.

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