As Tata Motors' commercial vehicle division prepares for life as an independent entity, it embarks on a multifaceted strategy encompassing talent development, technological innovation, and market adaptation to secure its position in a rapidly evolving industry.
22 Oct 2024 | 8171 Views | By Shahkar Abidi, Ketan Thakkar
In the steamy heat of July, a group of top executives from Tata Motors' commercial vehicle division embarked on an immersive journey through the industrial heartlands of China, with the financial powerhouse of Shanghai serving as their gateway. This region, long established as a nerve centre for China’s automotive industry, ...
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In the steamy heat of July, a group of top executives from Tata Motors' commercial vehicle division embarked on an immersive journey through the industrial heartlands of China, with the financial powerhouse of Shanghai serving as their gateway. This region, long established as a nerve centre for China’s automotive industry, revealed itself in new, unexpected ways to the Indian delegation, whose mission was not just to observe but to glean insights that could redefine their own strategic trajectory.
What they found was a landscape where innovation and state support had rapidly propelled the adoption of liquefied natural gas (LNG) in commercial vehicles, a feat made all the more remarkable by the geopolitical tension between China and Australia—a key supplier of the fuel. Despite the diplomatic frost, China’s ability to secure and utilize this resource spoke of a pragmatic agility that left the Tata Motors team greatly impressed. Equally striking was China’s ambitious foray into hydrogen fuel, particularly in advancing fuel cell technology, a sector still in its nascent stages globally but gaining swift traction here.
“I was surprised by the huge penetration of LNG,” remarked Girish Wagh, Executive Director at Tata Motors, underscoring the scale of China’s achievements. This visit had strategic undertones for the company, which is busy splitting its CV and PV businesses into two separate entities – something that is aimed at allowing the two businesses to follow their own independent growth paths.
The visit to China is merely a glimpse into the broader strategy that Tata Motors' commercial vehicle division is pursuing as it gets ready for the multiple alternate fuels for the future. As the company prepares to stand on its own, it's also casting a wide net to identify and cultivate top talent that will steer this new organisational structure towards success. Already the commercial vehicle business has been carved into eight different business units, which are responsible for their own profit and loss account. To this end, Tata Motors has engaged a global consultancy to spearhead an exhaustive leadership mapping and development initiative.
The hiring effort is complemented by strategic partnerships with institutions such as IIM Ahmedabad, aimed at refining leadership capabilities across the board. The company introduced its executives to the dynamic world of startups, organizing programs that mimic the format of Shark Tank. The program was conducted for its L2 executives, a group of about 30 to 40 individuals drawn from commercial and product lines.
The aim was to instill entrepreneurial skills within a large corporate framework. Over nine months, these leaders participated in sessions ranging from startup immersions to pitching business ideas in a Shark Tank-style setting, where the company executives presented their pitches to a panel of startup CEOs.
“They visited startups, developed business ideas, and pitched them to the Shark Tank panel,” said Wagh.
Wagh also spoke about an extensive leadership assessment program conducted by a management consultancy for various leadership ranks from L1 to select L3. These assessments included rigorous 360-degree feedback, psychometric evaluations, group discussions, and industry benchmarking, all aimed at creating personalized leadership development plans. “By comparing our leaders with industry standards, we help them understand the kind of development plan they need,” Wagh noted.
Simultaneously, Tata Motors is also embracing Industry 4.0 technologies by collaborating with a government-backed entity, a critical step for maintaining a competitive edge in the rapidly evolving automotive landscape. Tata Motors is also driving a digital transformation within its ranks by training executives in digital technologies, artificial intelligence (AI), and machine learning (ML).
The company launched a year-long certification program designed to cultivate digital leaders in partnership with the Centre for Industry 4.0 (C4i4 Lab), a government-backed entity. This initiative includes live projects to ensure that participants can apply their learning directly to real-world challenges. Additionally, Tata Motors is collaborating with tech-savvy startups for journey mapping and UI/UX design, equipping their teams with cutting-edge industry insights.
Tata Motors has also put in place skill development efforts designed to address emerging needs in areas such as sustainability, AI and machine learning (AIML), and ACES (Autonomous, Connected, Electric, and Software). The training initiatives focus not only on engineers but also on operatives, ensuring comprehensive skill enhancement across the workforce. The skill development framework is built on two key pillars: "Future Capability" and "Current Capability."
The "Future Capability" pillar concentrates on equipping the organization with expertise in cutting-edge fields such as digital technologies, AIML, generative AI, sustainability practices, and ACES-related programs. These areas are critical for staying competitive and innovative in the fast-changing automotive landscape. On the other hand, the "Current Capability" pillar emphasizes strengthening existing functional and behavioral competencies, which are essential for immediate operational effectiveness.
Additionally, Wagh explained that his company has established Experiential Leadership Development Programs aimed at nurturing both current and future leaders. These programs are curated with a focus on practical, hands-on learning and are developed in partnership with top global experts. "These programs are designed by partnering with the best in the world."
He added that by aligning these skill development initiatives with these two pillars, the company leadership ensures that its workforce remain well-prepared to meet the current demands of the automotive sector while also building the necessary capabilities to drive future innovation and leadership in the industry.
Billion Dollar Business
Such efforts to groom the right talent are crucial at a time when Tata Motors' commercial vehicle division is positioning itself to meet ambitious financial targets. The company envisions each of its eight distinct business segments to surpass $1 billion in revenue and profitability.
These divisions range from those for heavy commercial vehicles; intermediate, light, and medium commercial vehicles; commercial passenger vehicles; international business; TML Smart City Mobility Solutions; and digital and non-vehicular. They will operate as independent profit centres, each with dedicated teams and a sharp focus on value creation.
When asked if each of these businesses could have at least a billion dollar revenue potential, Wagh remarked: "So, each of these businesses has already looked at what the revenue potential could be. It would be surprising to have one that is not to that scale."
He further explained the rationale behind focusing on these eight segments, noting that each serves different customer needs and demands distinct business models. Some segments also have a geographical aspect, aligning with international expansion plans.
For example, within the non-vehicular segment, sub-businesses like spare parts, automotive fluids, and aggregates require tailored approaches. This strategy aims to reduce cyclicality, and transition from product-based offerings to services and solutions. Each segment is being rigorously analysed for growth potential, with clear financial targets guiding their business plans, Wagh added.
As Tata Motors navigates this intricate landscape, one thing is clear: the road ahead is fraught with challenges, and Wagh and his team will be keenly watched by the automotive industry.