Through sheer business acumen and an avant-garde approach, Rajiv Bajaj, MD, Bajaj Auto, has charted his own course to conquer the global marketplace.
by Mitalee Kurdekar & Bibhor Srivastava
Numbers, they say, seldom lie. And if that saying holds true, Bajaj Auto is on a pretty firm footing. The Pune-headquartered business is the world’s largest maker of three-wheelers and has claim to the third spot when it comes to motorcycles. Industry insiders know this to be no mean feat, given the cut-throat competition that currently marks the automotive space. However, most exemplary is the way is which Bajaj Auto has remodelled itself over the years in order to stay relevant to the customer and, in the process, retain or better its rankings. And a large portion of the credit for that goes to the man many believe – and rightfully so – to be a revolutionist.
Since first launching the Pulsar just 17 years ago, Bajaj Auto has become the third largest motorcycle maker in the world.
Rajiv Bajaj, MD, Bajaj Auto, may have inherited a gem from his father and his grandfather before him, yet what the scion has done with the company is a case study in itself. The starting point – by Bajaj’s own admission – was a conversation between his father – Rahul Bajaj – and him, around 20 years ago.
“A few years after joining the company, I asked him: ‘What is it that you want me to do here?’, and my father narrated what my grandfather had once told him: ‘Do what you do the best and be the best at what you do.’ While that sounded like a reasonable ask, what did it mean to be the best at what you do; what is the measure of that? My father replied: ‘If you are a global company i.e. your product is accepted all over the world and is successful, only then can you be termed world-class, hence the best or one of the best,” recounts Bajaj as if it were a recent conversation, probably indicating that the words guide him to this day.
In fact, that dialogue perhaps triggered the long and arduous journey for the home-grown automotive maker to become the global giant that it is today.
If one were to travel back in time to that period, one would recall that everything that Bajaj Auto made was sold only in India. And this posed a unique conundrum for Bajaj, given that it is a well-known fact that as you expand the number of markets that you seek to address, you can be successful only if you narrow your product portfolio at the same time.
“It is very difficult to take all products, to all segments, in all markets; nobody can do that. We were clearly a company that was selling in lots of different segments, but attending to one market. However, we were now talking about going to many markets, so it seemed like we would have to drop one or the other. In other words, it was time to specialise,” says Bajaj.
The Lone Rider
The Chakan plant has the capacity to produce 1.2 million vehicles per annum.
There were many who told him otherwise. But Bajaj trusted his gut rather than oft-quoted business school teachings to de-risk by having a large product base. Being the only one in the family that didn’t go to B-school, Bajaj is rather glad to have skipped the opportunity, stating that such places are often responsible for teaching incorrect concepts like de-risking.
“In the world of business, the notion of specialisation doesn’t seem to fit very well. People think they can do everything. In my view, this is no good, either for the front-end in terms of the brand, because it diffuses the brand; nor for the back-end, because to create a strong back-end in terms of design, development, manufacturing and supply chain, that can cater to such heterogeneous scheduling requirements is in itself a sub-optimal concept to start with,” argues Bajaj.
Within the world of two-wheelers, both by share volume and definitely by value, motorcycles were the most attractive slice of the two-wheeler pie. The company considered this and made a conscious decision to go after that segment. As a result, it was the end of the road for Bajaj scooters. While a majority of people would have perceived losing what the entire nation knew to be the face of ‘Hamara Bajaj’ a gamble, Rajiv Bajaj vehemently disagreed.
“Strategy is nothing but specialisation, and there cannot be any specialisation without sacrifice. While both motorcycles and scooters were lucrative businesses, one cannot climb two mountains at the same time. If you want to excel at something significant, you put every man, every rupee, every minute into that trust, and if you divide that attention, then I don’t think it can be called de-risking at all. So, we said to ourselves that we will narrow our focus, and specialise in motorcycles to the exclusion of all other products. And that in itself is the biggest learning and it has been the biggest strength of our strategy,” declares Bajaj.
The strategy, of course, has paid off, and how. Bajaj’s brainchild – the Pulsar – was their first foray into the motorcycle market, almost 17 years ago. That makes them a novice when compared to their competitors, who happen to be 50 or even 100 years old. Also, while they did not export anything back then, over 40% of the motorcycles they produce today are exported to 72 countries, ranging from developed markets like the USA, Europe, Japan, Australia etc. to many countries in Latin America, Africa, the Middle East, South Asia and South East Asia. In essence, in those 17 years, Bajaj Auto has traversed the journey from not being a motorcycle player to becoming the world’s third largest motorcycle player, and that’s nothing short of impressive.
“This outcome is a result of our desire to be global, followed by our strategy to specialise. My marketing guru Jack Trout once said: You can’t sell, you can only supply a reason to buy. And we did that by building our brand. A brand is like a three-legged stool; the first leg is the product, the second is the story, while the third leg of this stool is the experience. They come together to make a brand. Similarly, when you want to evolve your product, you must think in terms of price, design and performance. Finally, one must understand that the most critical aspect of strategy is timing,” Bajaj explains in a nutshell.
Unlike its competitors, Bajaj Auto appears to be the only motorcycle company successfully operating in all types of markets.
Of course, he knows a thing or two about timing. He has been successful at drawing a clear, singular connection between the opportunity in the marketplace and the brand with which they seek to fulfil that opportunity, and striking while the iron is hot. When there is an opportunity for volumes in two-wheelers, the company is well positioned to compete using the Pulsar, Avenger, etc. And when it comes to tapping an opportunity for premium motorcycles, that brand will be KTM. In fact, since first acquiring a stake of almost 15% – which has now increased to about 48% – in Austrian brand KTM AG, Bajaj Auto has powered it enough to take it within inches of Harley Davidson, which it may soon topple as the largest premium motorcycle brand.
Not just that, in 2017, the company inked a non-equity MoU for a partnership with UK-based Triumph Motorcycles to manufacture mid-capacity motorcycles in the 250-500cc range. With this, Bajaj Auto would cover a very important, missing piece of the product puzzle. In fact, such a production feat may well give them a serious edge over competition.
“Yes, I think that was a very obvious missing part. Once we put that into place, then between Bajaj, KTM, Husqvarna and Triumph, we would have covered at least 90% of all addressable consumer-run segments. There can always be some niches that you don’t cover, and that’s okay. Therefore, we don’t worry about the remaining 10%. But yes, in terms of substantial presence, I think that is achieved. With these brands, we are able to address all markets in the world,” states Bajaj.
Having said that, he also believes that a two-sided approach is instrumental to such plans. On the front-end, one can seek to be more global by specialising in a product, have a play in various segments, create different brands and cater to different places, but that is just marketing. On the other hand, the back-end reflects what one has achieved in terms of competitive versatility.
“For example, Africa as a continent is a big market for us, today, with every third motorcycle sold there being a Bajaj motorcycle. Shipping out a motorcycle for as little as $400 to Africa and also shipping out a motorcycle for as much as $4,000 to Europe depends on how we build that modularity into our back-end i.e. into our design, into development, into engineering, into purchasing, into production, etc. As a motorcycle maker, our strategy is to be an inch wide and a mile deep. You don’t want to give up any segment,” Bajaj points out.
Yet, not many other players are able to apply this strategy with much success. “Whether it’s an American, European, Chinese or Indian maker, they are in one market or the other. They are not present across markets. To the best of my knowledge, Bajaj Auto is the only motorcycle company that you will find operating in all types of markets,” he states with pride.
Making it Count
And the way Bajaj Auto is able to do that is through its strong manufacturing base. They run three manufacturing units at Chakan (Pune), Waluj (Aurangabad) and Pantnagar (Uttarakhand). The Chakan plant produces premium motorcycles in the Bajaj portfolio, including the Pulsar, Avenger and KTM series. It has the capacity to produce 1.2 million vehicles per annum. In addition, it doubles as a manufacturing laboratory to develop innovative technologies for production processes and production management techniques.
The factory at Waluj manufactures the entry commuter and deluxe commuter range of motorcycles. It also houses the facilities that produce the three-wheeler range and the quadricycle. Further, the Waluj plant serves as the export hub for Bajaj Auto, with around 60% of the monthly production meant for exports. Finally, Pantnagar is the location for their youngest plant. This unit produces the same range of motorcycles as the Waluj plant, while catering to the demand from the Northern and Eastern parts of India.
Typically, each plant has two manufacturing streams, engine manufacturing and vehicle parts manufacturing, which come together at the vehicle assembly stage. The engine stream comprises of parts production, machining, assembly and testing. The vehicle stream comprises of parts production, painting, vehicle assembly and testing. Overall, 95% of the raw materials and components needed are locally sourced in India. All vendors, who make components to their drawings, are located within a radius of 10 kms from each plant. Other vendors, who produce components to industry standards, such as tyres, batteries, bearings, fasteners, etc., tend to have warehousing facilities within Bajaj Auto’s three supplier clusters – Chakan cluster, Waluj cluster and Pantnagar cluster.
“We are firm believers of the fact that no demand can be accurately forecast in the current VUCA world. Over the last few years, we have been striving to develop a supply chain that is highly flexible and very agile, that can respond very quickly to fluctuating demands and varying model mixes. Therefore, we share only the firm, monthly plan for the next month’s production. Having said that, we review our medium-term growth plans and share them sufficiently in advance with our supply chain for necessary capacity augmentation,” says Pradeep Shrivastava, ED, Bajaj Auto.
In fact, he does not rely too heavily on management principles, believing that there is no science there since results are not repeatable. A proponent of yoga and homeopathy, Bajaj admits to drawing inspiration for his management style from the two ancient gems, stating that there is a definite science involved in their practice. And given Bajaj Auto’s rise to the top, these mantras sure seem to have worked for his company.
It’s not all about the numbers
The company acquired about 48% stake in Austrian brand KTM AG, and has since powered it to the top of rankings.
Despite all the fuss about the numbers game, Rajiv Bajaj doesn’t care about results. “In the words of Rumi: We chose our joys and sorrows much before we experience them. You have to find joy in your technique, which helps make your strategy competitive. To me, success is being at ease. If sales are at a certain level and, at the same time, if my people are at ease – not complacent, but not stressed either – wherein they’re enjoying what they’re doing, then I will say we’re successful,” confesses Bajaj.
That all sounds good, but of course, as the man at the helm, Bajaj would want a larger share of the proverbial pie? To that, he says quite simply, “I wouldn’t say that. Instead, I would say that we always want to build a better motorcycle.”
It’s hard to dispute that claim. The company has stood the test of time by trying to deliver better products through the ages. Speaking of which, it’s now time for the electric vehicle. And Bajaj is ready to join the bandwagon, having already announced plans to launch an electric model by 2020. “Shared electric mobility is a very exciting new space that is coming up, not only because it helps us to grow, but because it is very relevant to society. Creating products that are suitable for this space is a very exciting challenge, and a very meaningful process. If we can supply a reason, society will buy such products,” supplies Bajaj, albeit also observing that this is not yet a viable option for OEMs to make any money off. While it remains to be seen how both OEMs and the Government tackle the challenge, Bajaj has a better approach to solution-finding.
“I believe in the power of observation over thinking. Thinking is a very egoistic process, especially when you feel that you will come up with a solution in that way. I prefer to observe, because there is no need to reinvent the wheel when somebody else has done it. They probably made a mistake and all you do is learn from other people’s mistakes. The starting point is a weakness that you try to overcome, which is turn makes you a success,” Bajaj says coolly.
As far as lessons go, if there is one take-away from a meeting with Rajiv Bajaj, it is this: Observation and instinct often triumph teachings from the best B-schools. And that is a lesson worth learning!