Through the last half a century and more, the Anand Group has grown to become one of India’s most diversified automotive suppliers. A group that manages 21 global partnerships, including 15 joint ventures and six technical collaborations, challenges are manifold. Sunil Kaul, Group President – Technology, Innovation & Automation, Anand Group explains how the organisation has gone about creating an environment of breakthrough innovation, even while customising technologies from its partners for the Indian automotive industry.
A veteran of 27 years with the Anand Group, Sunil Kaul wears several hats within the organisation. As the Group President – Technology, Innovation and Automation, Kaul is responsible to direct and steer the technology and innovation focus of the group as a whole. He is Managing Director, Behr India Limited and is also a member of the Anand Policy Committee and the Anand Management Committee.
He joined Anand in 1985 at Purolator India, and subsequently moved to Behr India in 1996. Between 1999 and 2004, Kaul spent five years on deputation to Behr GmbH, Germany. He rejoined Behr India upon his return and was subsequently appointed MD in January 2009. He is the Chairman of the Boards of Haldex India and Victor Gaskets India and is a member on the Board of Takata India. Kaul holds a degree in Mechanical Engineering and a Certificate in Management Education Networking from the Stuttgart Institute of Management & Technology.
For a group that believes in customising technologies from partners for the Indian industry, how do you approach innovation from a product perspective?
There are two aspects to innovation. Primarily, innovation is not invention. Any significant improvement that is made, we call it a breakthrough and that could be in any field. In operations, for instance, reducing inventory by 30 % is a big breakthrough. Within the group, any improvement beyond 30 % is innovation.
For the last two and half years, we’ve been working on a specific programme on innovation for all group companies – focussed on motivating people to take hard challenges, and also giving them a tool with which they can think beyond. It’s a programme that begins with structured brainstorming, after which we move to benchmarking. Having looked at benchmarking, and provided you still don’t have an answer, we look at other industries as well – say for example the jewellery industry.
Breakthrough innovation comes from different fields, not from your own field – that’s what we believe in. It’s possible to benchmark and manage 5-10 % improvement from your own field, but to get to 30 % improvement, you need to look at other fields as well.
How did you arrive at that 30 % figure?
As a group, we are so engrossed with Kaizen that everyone looks at a 5-6 % improvement every time. And with the world moving so fast, we’d be nowhere chasing 5-6 % improvements. That’s where we thought of bringing in a change of mindset. Following Kaizen is very important for sustenance, but to lead we need to go beyond. Hence, we put a thumb figure of 30 % and said if we achieve this, we’d be close to breakthrough innovation.
Lot of our companies improved productivity by 30 %. They improved the yield of the basic material by 30 %, hence reducing cost of raw material to the extent of 30 %. Many within the group improved their energy consumption by 30 %. So, for the last two and half years, we’ve been working on changing the culture of the whole organisation. To me, benefits were important, but not crucial. It was more important to change the mindset of my team.
I didn’t want to start with product innovation. We are essentially manufacturing companies, and we do get technologies from our joint ventures. But we do have a strong engineering focus as well. For the last 6-8 months, we have looked at product innovation in a structured way. But product innovation is a lengthy process, and might take up to five years for real innovation to happen.
More importantly, innovation is now part of the group culture. Every company has an innovation head leading 7-8 teams working on innovative projects. His job is to teach methodology, and facilitate teams to use the tools to achieve their targets. We aren’t worried about results, but want to ensure we improve our methodology. We have created strong engineering teams in companies like Gabriel, Behr and Mahle, for instance. For us, it’s a matter of driving innovation now.
What’s the average spend on R&D within the group?
In some of our companies, we spend 2.5 to 3 % of our revenues on R&D. We have never been restrictive on funds for R&D, at least for the last two years. I believe budgets need to be reviewed frequently, say every three months, and see the direction that the project is taking. If required, it should be modified, else restricted.
Talk to us about the Tata Nano experience, especially from the view of technology customisation.
We had many products in the Nano. To give a customer a quality product at low cost is always a big challenge, and to become a supplier for this project, we had to innovate. In the automotive segment, we normally get a blueprint or a drawing specification from OEMs. Our contact with the end consumer is minimal as against the OEM. But the knowledge of my product is more with me than the OEM. In this case, we went out of the way to contact the end-customer, and wherever we deemed necessary, we tweaked specifications.
Normally specifications come in from European and American companies, and they don’t gel well with Indian conditions. That’s where adaptation or customisation comes in. Now, a lot of global customers come to us asking for customised solutions.
A term that came to be accepted globally with the Nano is ‘frugal engineering’. Has that become a mantra for engineering universally?
Frugality is in our genes. If you look at the American or European way of developing a product, you can’t match the cost challenge in any manner. Today, the design to market time in India, at times, is lower than what you have in Europe. And you can only do that with frugal engineering. Project managements of Indian players are weak, and that’s our biggest drawback. If we are able to improve on that, we have the potential of becoming the best in the world.
When I go to the shopfloor, my productivity requirements are very different from that of Europe or North America. I don’t pay the kind of wages they pay to shopfloor operators, but that doesn’t affect my productivity. My equivalent focus is on reducing capex, where my interest rates are very high. They invest a lot on technology, but to me technology has to come at a low price. Else, it won’t survive.
We have another challenge in the organisation – we’ll double the top line revenues in five years, but we’ll not add people. Each of our plants is working towards that. We have brought in more robots, but robots are standard products. However, application of robots is our choice, and that’s where frugal engineering comes in. We’ve been focussing on human efficiency as well as equipment & machine efficiency, and automation is being used for material movement. So, the focus for us is not just on products, but also on processes and methods.
With the capabilities being developed in-house, do you think you’re ready for reverse innovation?
It’s still a bit early for that. Most technologies still come out of the western world. Technology gets modified or improved because of environmental norms today. While Europe is in Euro V, we’ve still not got to BS IV across the country. If you go to Euro V or Euro VI, you have no choice but to innovate. But by innovating within BS IV, my probability of taking my technologies global is minimal. The Indian auto industry is still lagging behind many developed markets, and that offers restriction as far as reverse innovation is concerned. One of our companies in India is a role model for low cost countries worldwide, with companies in Brazil, South Africa and China benchmarking our work.
How do you face up to competition from multinational suppliers – some of whom are your partners – who are investing big in India?
These players with deep pockets see India as a future market. Developing technology requires a minimum 5-8 years, and that is the advantage that I have vis-à-vis global competitors. All our companies are at least 14-15 years old and we have invested in engineering from the very beginning. Our knowledge of the local market and the technologies we have developed for the Indian industry holds us in good stead over competition. But it certainly isn’t a cakewalk, and price does play a big role. Some might use cost as bait, but that’s a short-term game plan.
As far as technology is concerned, talk about the areas wherein the group has developed core competences.
We don’t have a central competence pool, and I don’t believe that’s the right way of looking at developing capabilities. Each company in the group has its own core competence, specific knowledge to develop the right products, be it in the areas of electronics, mechanical or mechatronics.
Mechatronics is widely regarded as a need for the future. Would you agree?
There is a thought towards mechatronics as the future, and to that measure, there is a need. We look at mechatronics in areas where the product demands that technology. For instance, we’re trying to bring mechatronics into our shock absorbers. If it helps bringing in more comfort to the customers and make the vehicle drive better, we’ll look at it.
There is increasing competition in the market, and you have challenges of technology, people and cost. What would you need to do to stay ahead of the curve?
In our group, we firmly believe that 90 % of the business is people. We approach innovation to bring about a cultural mindset change in people. And that, we believe, is the key to success. We’d be people-driven rather than technology-driven, because people can bring in technology, but technology can’t bring in people.
Text: Deepangshu Dev Sarmah
Photo: Bharat Bhushan Upadhyay