Dr Pawan Goenka, who retired on April 2 as Managing Director of Mahindra & Mahindra after 27 memorable years, believes the company has made some right choices in rebooting itself for the future. In a freewheeling conversation, he reminiscences about his tenure, the people who made a deep impact along the way and shares some management mantras.
Dr Pawan Goenka has become so synonymous with Mahindra & Mahindra that it is difficult to believe that he is no longer at the helm as Managing Director. It has been a memorable 27 years at the company for this affable human being who is fondly known as the Father of the Scorpio. This was the product that changed the course of M&M and it was Dr Goenka who played a big role in its creation and the subsequent growth of the core SUV business.
“I am one of the most fortunate professionals where everything has fallen on my lap. The 14 years at General Motors (in the US) and the 27 years at Mahindra have been the most wonderful ever . . . I would not trade any of these tenures for anything else,” he says during the course of an interview.
According to him, the opportunities at GM and to be able to work on something which is in use even today — a software program called FLARE (Friction and Lubrication Analysis Of Reciprocating Engines) which Dr Goenka had developed — is a matter of great satisfaction.
By all counts, it was a “very decent career” at GM where, as the youngest manager in R&D, he was one of the highest paid in his age group with rapid promotions. “Life was just fantastic and when I came here, to transition from knowing a lot about something very small to knowing something about a lot, was interesting,” reminiscences Dr Goenka.
At M&M, everyone thought that here was this “hotshot engineer” from GM though the reality was that “I knew very little about cars”. As he puts it, he knew a lot about the special field he was in more than anyone else but had no knowledge about cars.
“I learnt about automotive engineering after joining M&M since I was a specialist prior to that,” readily admits Dr Goenka. The whole learning process and getting a chance to develop modern R&D by recruiting people, putting infrastructure in place and defining processes “was an amazing high”.
True-blue engineer with R&D in his veins
It is in this context that he wonders if there are as many fortunate auto engineers worldwide who got such a “clean canvas” to play with. He could pretty much do anything since “we were starting from zero”. There was no past baggage, legacy and the new recruit got the carte blanche from his boss and now Group chairman, Anand Mahindra, to develop R&D “the way I wanted”.
Dr Goenka, known as 'Father of Scorpio', with Mahindra Group chairman Anand Mahindra at the launch of the new Scorpio on September 25, 2014.
All this happened in the time period of 1993-97 when India had just ushered in its historic reforms exercise and M&M was likewise in the midst of a big transition. “I was truly excited about building an R&D base and making products to compete with MNCs,” says Dr Goenka.
The first 4-5 years were spent in putting basics in place — hiring people, setting up departments, getting equipment while the five years were devoted to product development and it was here that Scorpio was key. “Those 10-11 years were the time where very few R&D professionals would have got that kind of an opportunity,” he adds.
When he came on board, there were 50 people in R&D which has since grown to 3,500, one of the largest cerebral bases in India.
Yet, it was not as if everything was hunky-dory from the start. When Dr Goenka visited the R&D at the Nashik facility for the first day in October 1993, there was really little to write home about. “I was looking for R&D and learnt that this was it. . . there was no rest of it,” he laughs at the memory.
Three to four years down the line, when Anand Mahindra asked him what his initial impressions were and then got the real picture, he asked Dr Goenka to build an R&D that “people like me would love to work in”. This was when the company decided to invest significantly in not just people but the R&D infrastructure. It was the time when the “whole seed” of the now sprawling Chennai-based Mahindra Research Valley was sown that day.
“Anand Mahindra was clear that if we had to succeed, we needed a strong R&D, strong product portfolio and something that we could do on our own instead of asking people for licences and so on,” continues Dr Goenka. All this was happening even while M&M was pulling out all the stops for the Scorpio project. It was the biggest bet that it had ever taken because if the plan had not succeeded, the company would have been in big trouble.
At that point in time, any expert would not have even given a 10 percent chance of success “given what we had”. It was not a big bet just in terms of the investment but also in terms of the risk. “We were taking a huge bet on a low probability of success. We had no people, process, infrastructure. . . nobody had done product development including me because I was a specialist,” says Dr Goenka.
To put it all together from nothing and create a product that would compete with the best was something big. While everyone knew what the implications of failure could be, not many would have realised at that point in time how the success story that followed would actually transform the company.
“We did not hire any heroes but made them heroes. Today, a lot of our senior R&D people who came in then were just out of college. The opportunity to build this institution called R&D for a company with such aspirational goals was a once-in-a-lifetime opportunity for very few people,” he fondly recalls.
Of course, the Scorpio turned out to be a huge hit and continues to be around nearly two decades after it was launched. There were more surprises waiting for Dr Goenka. “For an R&D person who knew nothing about sales, marketing, finance or HR to be suddenly told that I would be running the biggest business of the group was quite a surprise,” he says.
This was six months after the Scorpio was launched, sometime in end-2002. As he elaborates, two “very good things” happened — the first was a two-year overlap with Alan Durante, who was then Executive Director and President of the Auto Sector and Dr Goenka was Chief Operating Officer under his mentorship. “He was a wonderful teacher, a very tough person and wanted me to succeed,” he recalls.
The next good thing to happen was when Anand Mahindra sent Dr Goenka for a nine-week advanced management program to Harvard during the early part of the mentorship. “Both Alan and he told me that during this time, I would be totally cut off from M&M and I just needed to learn, learn and learn,” he says.
Partners and global alliances
An interesting aside to the story was that when M&M had first hired Dr Goenka way back in the early 1990s, it was planning to bring the Grand Cherokee to India as part of an alliance with Chrysler. “My first project was to work on this and within six months I concluded that India was not ready for the vehicle,” he says.
This pretty much meant that there was really nothing to look forward to with Chrysler and this was when M&M decided to team up with Ford. “I constantly say that the Mahindra auto business learnt a lot from its JVs. Ford, Renault and Navistar gave the foundation for being a true global automotive company,” says Dr Goenka.
As he elaborates, “Ford taught us manufacturing and when the JV happened, we did not even have a proper paint shop.” This was established only then in Nashik. Ford also took the M&M engineers to Detroit to teach them quality systems and processes and handhold them in quality manufacturing.
The Renault joint venture taught the company how to do purchase — “they are very good at this as well as processes” — since it did not have such strong processes then and picked up many things from its French ally which are used even today.
“Navistar was about engineering trucks and this was why we went in for the JV,” continues Dr Goenka. The truck concerned was originally designed at the American company’s R&D centre in Indiana. “Learning became the core of our JVs,” he says.
Yet, how does he counter those critics who insist that M&M just went on a mindless expansion spree with too many joint ventures over the years? From Dr Goenka’s view, there is more to it than just a black-and- white scenario. “I think the Ford JV was a must because without that we would have not learnt enough to develop Scorpio,” he says.
What is also not too well known is that Ford actually provided its Indian partner with engineers who came from Detroit as part of the IDAM (Integrated Design And Manufacturing) team free of cost even though the company had no stake in it. IDAM was the foundation for the Scorpio project and the time when both M&M and Ford were in a partnership.
The Ford CEO at that point in time (Jacques Nasser) is believed to have told his team that he wanted “these guys to succeed” and therefore decided to provide M&M whatever help it needed. They were not part of the Scorpio project but from the CEO’s point
of view, the reasoning was that “if these guys can develop a brand new product at Rs 550 crore, I want to learn how”.
To that extent, the separation that followed was amicable which also puts in perspective why the two came together decades later to forge another alliance, which may have well taken off had it not been for Covid-19 and the global upheavals that followed.
Whilst on the subject of joint ventures, how relevant was the one with Renault? “We had to learn more and some of these leanings cannot come from hiring consultants,” says Dr Goenka. Even though M&M was in a better place than it was in 1998, it still had to improve and this is where Renault was an important part of the journey. “Learning can only come from those who have done it before and are willing to share the knowledge,” he adds.
Unfortunately, the Logan did not as well as expected but the JV paved the way for Renault to come to India along with its global ally, Nissan. “Had the Logan succeeded, who knows what could have happened? In the auto industry, one blockbuster changes everything and you can make three mistakes and still ride on that single blockbuster,” says Dr Goenka.
If the Logan had worked, M&M may have well got into sedans and hatchbacks. Yet, this was also the time when SUVs were on the rise and it just made sense for the company to push the envelope in this space.
SsangYong: Korean caper that never took off
The topic shifts to SsangYong Motor which M&M had acquired way back in 2011. Things looked very promising initially and the partners were closely involved in a host of new initiatives till the script began to go awry.
“I have no doubt that SsangYong was a right decision even after seeing what has happened. The XUV300 is a successful product that came under a licence from SsangYong. The Alturas is another example and more would have followed had we continued,” says Dr Goenka.
In his view, there was a lot of technology development done together . . . it was not a one-way street and there was a lot Mahindra could do as well as SsangYong. “Unfortunately, too many things did not work right at the same time. If I had to do it all over again, I would still do it,” he reiterates.
Doubtless, the financial performance was not up to expectations over the last two years but “lots of things were taken care of” during this time. “I take pride in
the fact that Mahindra was able to make SsangYong strong enough to hire back people who were laid off before we came in,” adds Dr Goenka.
Yet, he admits that the fact that SsangYong did not succeed will count as the biggest regret in his career at M&M. “It was very unfortunate and would have meant a lot to India since a company here rescued a Korean company. Till the time we decided to exit SsangYong, Mahindra was highly respected for what we did. As a result, Indian management was highly respected too,” says Dr Goenka.
More importantly, this was a two-way learning process where the partners complemented each other in skills. There were many joint projects — M&M’s engines and transmissions are being supplied to SsangYong even today. Likewise, a lot of components are shipped out from here for the Korean automaker’s electric vehicles (EVs).
Betting big on e-mobility
Electric mobility is clearly a passion with Dr Goenka and there are no two ways about the fact that the company was among the first to identify EVs as the future. However, this first-mover advantage did not really help and it would have actually been better had there been more players in this segment for the numbers to grow.
Quite rightly, M&M was cautious about investments and the fact that EVs were not taking off “made us somewhat conservative”. Yet, it did quite a bit in terms of products, technologies and infrastructure and today would probably be right on top in terms of electric powertrain R&D resources. “We have about 300 engineers in Bengaluru and the largest infrastructure for making batteries, motors, transmissions, power electronics at Chakan,” says Dr Goenka.How does he look at things today where M&M is now back to where it started at the time of the Scorpio and wanted to focus on SUVs? Does going solo really help at a time when all automakers are in consolidation mode? “That is a conclusion one could draw looking at things looking from the outside but it is not right. We are not slowing down on exports . . . where we have slowed down is SsangYong, which is the only major thing cut out,” he says.
Ford, in any case, was in the future and to that extent “there is no reduction or dilution in our aspiration to be a global company”. The better way to put it is perhaps “course correction” where M&M is taking a call while saying that “we were doing too many things” and it is critical to spot those areas where it could slow down for now. “That does not mean that we cannot come back to these three years down the line. Perception may seem that we are lowering our aspiration but that is not the case . . . where we were doing 10 things, we can do seven right and put three aside,” says Dr Goenka.
Effectively, the company is taking some hard calls on what is non-core where success is difficult. The aspiration is for the core to become stronger rather than “try things that we are not very good at”. As business becomes complex, every company “will have to take that call where you cannot be little bits in everything because those who are focusing on that one thing will eat you alive. You have to be the master at whatever you do”.
Interestingly, it was the pandemic which helped the company take these tough calls. And it was just not M&M but other manufacturers which were doing “multiple things” and are now rethinking their business portfolio.
“That is the unintended positive from Covid-19. Sure, it is an extreme situation but if you look at previous upheavals and slowdowns, each one was an opportunity to cut out the flab and focus on the core. Those who followed this rule prospered,” says Dr Goenka.
What are his own plans going forward? "I certainly do not want to work full time and worry about deadlines but will look for things that I like to do,” he says. Ideally, Dr Goenka would like to see his time divided into three one-thirds where the first one-third will be in the form of professional work and remuneration. Another one-third will also be professional but not for compensation while the last one-third is about taking it easy.
For now, he is excited about being part of the Government committee on building Indian manufacturing. It involves 24 verticals and has been a huge learning for someone whose life has been marinated in the auto industry. The people he has been interacting with are passionate, aspirational and upbeat about the country’s potential. “If I can contribute to increasing the manufacturing footprint in India, that will give me tremendous satisfaction,” concludes Dr Goenka.
This feature was first published in Autocar Professional's April 1, 2021 issue.
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