“Experiment, anticipate future, innovate, collaborate to survive in a VUCA world”
Ravi Kant, Vice Chairman, Tata Motors feels that it is pertinent to look at the past and study how different companies have managed economic crises
Managing bottomlines and delivering on business goals amid tough economic conditions is a new reality that companies face today. Navigating in this VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world poses a lot of challenges for companies and industry honchos. According to Ravi Kant, Vice Chairman, Tata Motors, it is pertinent to look at the past and study how different companies managed such crises.
As per industry data, there were 500 S&P companies in the US 40 years ago. The number now stands at just 74. It is expected that only one-third of these companies will survive in the next 25 years. Clearly, changes have triggered the entry, exit and renewal points of companies. In fact, till the 90s, IBM, which was the leading hardware business, switched gears to keep up with changing times and started offering software and services. Likewise, Ravi Kant pointed out, Tata Motors, which was only into locomotives, started manufacturing premium cars and trucks of different sizes. He said, “Tata Motors was very vertically integrated. Now, we crowd source things. Initially, we were doing everything in-house, now we believe in the collaborative way of working. Also, we only had domestic presence earlier, but now we have grown internationally – organically and inorganically.”
Tata Motors has gone through all kinds of business cycles, wherein the truck category shrunk by 15 per cent. Ravi Kant remarked, “One must have low break-even point. So, when you go down, you make less money. And when you go up, you make more. The company aims to reduce the break-even points from 60 per cent to 30 per cent.”
Tata Motor’s acquisition of the Jaguar and Land Rover businesses from Ford Motor Company in 2008 generated a lot of buzz internationally. One of the key strategies of such an acquisition was spreading Tata’s footprint globally. As of 2013, 78 per cent of Tata Motors’ revenues come from its international business, while the domestic business contributes 22 per cent. Ravi Kant informed, “80 per cent of our bottomline comes from Jaguar Land Rover. Five years ago, people thought that it would sink the company, but today, it is Jaguar that is helping Tata Motors survive.”
According to the Tata Motors’ Vice Chairman in order to survive and grow in tough conditions, companies should be able to experiment, which they need to do by anticipating the future, innovating and collaborating.”
Ravi Kant was speaking at ISA’s Global CEO Conference - Navigating VUCA, organised by the Indian Society of Advertisers (ISA) in partnership with exchange4media. The Conference was held in Mumbai on October 30, 2013.
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