The Original Market Czars : Adi Godrej : Adi B. Godrej

Interview Questions

Full Interview with Adi B. Godrej

Adi B. Godrej:

IT is used extensively in the group. We were among the first in India to introduce enterprise resource planning (ERP) systems about 12 years ago. Ever since, we have concentrated on extending our reach from our vendors to our distributors and retailers. Connect-ing everyone using our IT infrastructure helps us keep tight control over our work-ing capital and manage our business better. It helps us tremendously in ensuring that our logistical systems and supply-chain work efficiently. This keeps our costs down, a benefit our customers eventually see.

 

We have found that IT is an investment that pays excellent returns. This is why, in some of our companies, our IT investment is not concentrated in our factories.

 

We have established strong connectivity with our distributors (project Sampark) and suppliers (project Sahyog) by deploying a supply-chain management (SCM) system. Now we intend to reach out to our retailers. This is going to be quite a challenge since we deal with about three-and-a-half million retailers. No country in the world, other than China, has as many retailers and there are no ready solutions we can turn to. We are working on various IT solutions employing different technologies, such as mobile messaging, to make it happen.

 

Adi B. Godrej:

Very clearly, from early on, we figured that the advance of IT could be leveraged in businesses that require interaction with large numbers of customers and vendors. IT allowed for rigorous statistical analysis and enabled our marketing and sales man-agers to monitor the nuances of changing scenarios, almost in real-time. We saw IT adding more and more value.

 

Because of Sampark we know exactly what's going on in the pipeline. We use this knowledge for replenishment-based re-supplying, instead of waiting for orders and then fulfilling them. This avoids a number of problems including running out of stock. Without IT, it is impossible to have a replenishment system that ensures a con-stant logistical flow. Developments in IT have helped us quite considerably and we continue to invest in them.

 

Adi B. Godrej:

We have no plans for an e-Choupal type of model. We leave it to ITC to do that. But, the Godrej Group does have a lot of rural businesses where we deploy plenty of IT. We have a fairly large agro-business called Godrej Agrovet, which uses IT. For example, we were among the first to use linear programming to perform least-cost formulations for the fields. Even our FMCG businesses have made fairly considerable rural inroads, but not on the lines of e-Choupal.

Adi B. Godrej:

Well, I think, our people and our leader-ship have seen the fruits of IT. I feel they will continue to view it favorably. We have some very good IT management people who are business-oriented. Our business and IT teams are not segregated. They work together to find solutions. Our people have to come up with great ideas and win-win solutions. That's one of the reasons why we prefer not to outsource. In fact, we haven't outsourced our actual IT processes. It's not as beneficial as an international company outsourcing to India.

Adi B. Godrej:

IT helps tremendously, because it cuts costs. When you cut costs you turn more competitive, and are able to pass on those savings to your consumers. They, in turn, are able to afford more of your goods, spreading your base. As your percentage costs come down further, you're able to build a virtuous cycle.

 

When I say sales is vanity, I mean sales for the sake of sales is not something that should be a goal. Increased sales to make increased profit is what the goal should be. And, IT enables that.

 

Adi B. Godrej:

I believe our insistence on quality is distinct from our ideas about IT. There is no direct link between IT and TQM (Total Quality Management) or TPM (Technical Performance Measurement) except to the extent that in many of our quality solutions and processes we use statistical models, where IT plays an important role. However, I would not say that IT has major role to play in TQM and TPM. I feel that companies need to be proficient separately both in their IT usage and quality management deployment. We look upon IT as a tool and not as an end, just as quality is a tool, not an end.

Adi B. Godrej:

Like quality, innovation is an important tool for business performance. Innovation is present in both products and processes. I don't think IT can add too much to product innovation. R&D and imaginative employees contribute a lot more to this. However, increasingly, IT has a role to play in process. I think innovation in processes is as important as product innovation. Both need to go hand-in-hand. It doesn't help if you have innovative processes but lack good products for the processes to support. Similarly, if you have great products but poor processes, your products won't do you much good except for lying in your showroom or store window.

Adi B. Godrej:

All our IT deployment is business-result led. Unless there are strong business results to be obtained, we don't make investments. Many of our businesses operate on nega-tive working capital. There is no way we could have done this without extensive IT implementation.

 

Efficient deployment of our resources, both financial and human, is extremely dependent on IT. I think that the onset of low-cost IT solutions has brought about tremendous business efficiencies and proficiencies.

We are strong believers in the value of IT but unless we are satisfied, we don't allow new investments.

 

Adi B. Godrej:

If you were to evaluate a CIO only by IT developments, in isolation of business bene-fits, you will have this divide. Therefore, it pays for the business person to closely listen to the CIO's ideas and vice versa. CIO's should not live in ivory towers. They need to constantly monitor ground level performance.

 

I'd also like to point to our organization's variable remuneration scheme. A team's remuneration is based on the performance of the entire business. While we also evalu-ate an individual's performance, it's not a major part of his or her variable remunera-tion. That comes from the performance of the company and business as a whole. This creates strong teamwork especially in the deployment of IT.

 

Here, the business managers and IT thinkers work almost as one. The business managers end up wearing the IT shoes and IT thinkers end up wearing the business clothes.

 

Adi B. Godrej:

Twelve years ago, we decided to invest about Rs 12 crore to 15 crore in an ERP system, of which only about Rs 2 crore to 3 crore was spent in hardware, and maybe another Rs 4 crore or so on software. The rest was spent on what I call brainware. Getting good consultants to advise us on how to deploy these investments is the most difficult part.

 

When you are investing in hardware it is easy to see where your money is going. When you are deploying something as ephemeral as brainware, it is far more difficult. Companies that don't do that find their investment almost totally wasted. I think that was a difficult decision.

 

Adi B. Godrej:

A costly decision is when you waste money. If you get good returns from an investment, it isn't costly. Moreover, once the first decision is successful, it then gets easier to take larger and most expensive decisions.

Adi B. Godrej:

I am not a futurologist, but I think there will be tremendous development. Using IT to garner consumer insight, to understand their needs, and in market research, will add a lot of value.