Innovation and Agility : Dr. V. Sumantran

Interview Questions

Full Interview with Dr. V. Sumantran

Dr. V. Sumantran:

There is innovation throughout the company. We are continuously innovating with product development within the core company and also in terms of frugal and cost-effective measures through our joint  ventures. In the field of advanced electronics in mobility and transportation we have entered a JV with Continental. To cater to green technology needs we have set up a 100 percent entity called AlbonAir in Germany, which is oriented towards clean exhaust. As India moves to a hub-and-spoke transportation system, we looked at the light vehicles segment and moved into a joint venture with Nissan. We are also simultaneously looking at the huge spend in infrastructure in a JV with John Deere. There are a fair amount of new projects and ideas that are being harnessed in each of these domains. We looked at our investment landscape and as a transportation-oriented group we had our core investments in trucks and buses through Ashok Leyland. We expanded into the defense mobility area a few years ago. That gave us an opportunity to build some stability and diversification.
Also, to drive innovation within the knowledge economy of the future, we singled out the investment in Defiance. We believe that the combination of creating IT and engineering solutions, and leveraging technology for business excellence has become a platform.

Dr. V. Sumantran:

In India, if you give a challenge to engineers, it is remarkable how they come up with innovative solutions. The orientation towards innovation from the top has more to do with direction setting, defining horizons, and defining stretch. That then creates an environment where innovation is unleashed within the company. Whenever we have set an aggressive challenge to a team of young engineers, the boys and girls have come up with phenomenal outputs; I have seldom been disappointed. More often than not, the top management of a company becomes a hurdle to innovation and the best way they can foster it is by setting the direction and developing internal culture.

Dr. V. Sumantran:

First of all, I must say that it is very heartening to see India come out of these last 18 months or so in the manner that it has. It is strong and robust across various industry sectors. There is confidence among customers as well as the industrial sector. Freight movement has started to pick up and mobility has increased. Also, the government's stimulus for urban mobility and development through its investments in buses has also had a big impact.
All said and done we are finding a broadbased forward movement of the economy. It must also be said that the company has really tightened a lot of its internal processes.Every time anybody goes through a downturn, the important questions are: How much did you learn and how much did you improve? The company has also benefited from a lot of changes that have been made over the past 18 months.

Dr. V. Sumantran:

Companies like Ashok Leyland have spent a lot of money in tuning up their IT systems. If you just take the area of customer intelligence and the whole domain of understanding customer needs, I think they have been hugely benefited by the changes that they have made and this definitely includes harnessing the power of IT.

Dr. V. Sumantran:

Inertia. As a whole, the country has witnessed a high inertia in the entiresystem. The slowdown has been a roller coaster ride. From a very aggressive yearon- year growth till 18 months ago, the economy suddenly slammed the brakes and we saw a 40 percent drop in commercial vehicle demand. Now, with the recovery, the demand is back to full throttle. It must be noted that Ashok Leyland cannot perform as a single entity but an enterprise that relies on its tier-1 supply chain which in its turn depends on a tier 2 supply. This entire chain has some lag. The downturn was severe enough and some of the weaker smaller elements of the supply chain actually got taken out of business.

So, even as we look to our tier 1, they were looking down the chain for signs of a ramp up. When you have a large economy expanding and then suddenly halt that rate, then to get on the gas again takes a bit of time. So I think it's nothing more than the inertia in the system.

I believe that things are getting back in shape. I'd still rather have the situation in India than the situation in many other parts of the world where the recovery is rather sluggish.

Dr. V. Sumantran:

We will continue to be globally attractive as a manufacturing base only if we continue to demonstrate cost efficiencies. I say that because quality is no longer considered as a special attribute. Quality is considered a hygiene factor; you need to have the requisite quality systems in place to even begin to compete at the global level. Beyond that, for at least the next decade, we are primarily going to compete on cost efficiencies as we progressively pick up our technological spread. For this we will need to have manufacturing efficiency which is truly as good as anywhere in the world. We do have some disadvantages. If you look at India compared to China, no matter how fast we seem to be growing, the difference in scale is still enormous. While we hope to celebrate 2 million cars in India this year, China will cross the 10 million mark. India will work, for some time to come, on a smaller scale with more flexible production systems, smaller lots of production, and reconfigurable, agile investments. This then puts a tremendous amount of emphasis on manufacturing architecture and this is where I feel the CIO can play a huge role.

Dr. V. Sumantran:

Everything else being same, Indian auto manufacturers would have a disadvantage in coming up with smaller production lots and a smaller scale of production compared to China. However, if we tap into what is a huge advantage in India - our familiarity with IT and the cost effective IT resources - then we can get a leg up on China by configuring systems that are intrinsically more efficient and use that as the USP which propels our competitiveness globally. In the future, there are also going to be other demands. Apart from quality and productive systems, the question that remains is going to be: How green are we in our manufacturing? Again, IT can play a huge role. Our group company, Defiance has solutions in this area which allows us to aggregate information right from the PLC (programmable logic controller) levels in the manufacturing shop floors all the way to the dashboards to drive systems related to production and business strategy. We also have a green technology platform that will help people monitor, audit and certify the extent to which an organization has been able to reduce their CO2 footprint. In all of this, IT plays a pervasive role. And this is one of the reasons why we have had the conviction in our investment in Defiance. By investing in these areas, we put our money where our mouth is. And we believe that IT will be key enabler in India's rise as a manufacturing hub.

Dr. V. Sumantran:

No doubt we can. In fact in both my previous roles and in my current tenure I have spent a fair amount of time looking for opportunities to enter China. We looked at opportunities for investment, acquisitions and joint ventures. However, in the auto industry it is very difficult. While in India we have Hyundai coming and setting up a 100 percent entity for manufacturing, the same path is not available for manufacturers especially in the automotive space in China. To enter China you need a 50:50 partnership where one 50 percent chunk has to be held by a Chinese partner. Many companies have been trying very hard to make investments in China. This is somewhat easier in the tier 1 and tier 2 supply community but at the apex vehicle manufacturer level whether it's a company like GM, Ford, or Honda they need JV partners. The only time an auto manufacturer can own a 100 percent entity is if it's completely export-oriented. The situation has been difficult. But like everything else I think it will go through changes. In the long term, it is inevitable that in many domains India and China will be competitors for market and access to resources. But it is also true that in other domains the two countries can and will learn to be partners and investors in each other. We are going through a period where hopefully openness will increase and we will do more business with each other.

Dr. V. Sumantran:

This is an age where we seem to propagate the n=1 theory, which implies that you can no longer target consumers as a group, but need to be able to cater to individual choices and preferences. In the commercial vehiclesector, the heavy commercial vehicles segment already operates that way. We are forced to sub-divide customer groups. For instance, we have separate solutions oriented to people who transport cement and steel. We are forced to configure and adapt products to narrower segments because we want that differentiation to contribute to the customer's business success. Now, if you trace this entire chain it starts with understanding what the customers want - and really going beyond superficial needs. You then need to link it to production systems which are flexible and configurable enough to manage many varied products at fairly short lead times. This in turn should link to the product data structure that allows configuration and managing very large product variety out of a fairly high common platform. So in every element of the chain you see a huge role for IT either in the form of CRM in understanding what the customer wants, or an MES system to back the manufacturing, or an IPMS to link the supply chain with a just-in-time approach and then the link to PLMs and configurators that integrate design systems to manage the creative parts.

Dr. V. Sumantran:

We need to change the language we use within the IT community especially to communicate what we mean by benefits. Benefits to some extent are not very clearly visible. That's something we need to articulate better.Second, there are huge sums of money deployed to tune large IT system deployments but we have been unable to track and trace their benefits.

We have to find ways to trace and attribute value to improvements so that IT's visibility is enhanced.The next most important thing is to celebrate case studies. The biggest example, the entire learning about justin- time inventory, came about through the celebration of the Toyota production systems. So many people in the world are inspired by such examples and that is because it was a highly-celebrated case study. IT drove home the value of kaizen among other things. We, too, will need to identify specific case studies, celebrate them and use language that is simple enough to get broader group of people to appreciate IT's value.

Dr. V. Sumantran:

I know many CIOs in the industry. They are very smart people and clearly know what they are doing, which is why I would hesitate to offer them any advice. But I do hope that in the coming years IT gets better integrated with business strategy. The perception that IT is a cost center is an old philosophy and we are seeing many areas where IT will be inevitably integrated. I hope that more companies embrace the fact that IT needs to be part of core business strategy. With this the role of the CIO will become much more important and lend more contribution to the success of the company