How Yamaha’s CEO drafted the India global script

Come January 2018 and Hiroyuki Yanagi will move into his new role as Chairman and Representative Director of Yamaha Motor. His successor, Yoshihiro Hidaka, will now take over as President, CEO and Representative Director at a time when the company is in the last lap of its three-year medium-term management plan.

It is still not clear if Yanagi will continue to be proactively involved or assume a non-executive role. His interest in India was more than evident during this writer’s interactions with him both here and in Japan. Yanagi also understood the importance of India given that he headed operations here between 2004 and 2006.

This was the time when Yamaha was going through an extremely difficult phase. It had recently parted ways with Escorts and was trying to put its house in order all over again. Rivals such as Hero Honda had surged ahead while Yamaha, after a dramatic start in the 1980s, just lost its way.

It was around this period sometime in 2005 when I met Yanagi for an interview at the Faridabad plant where he spoke candidly of the challenges ahead. The next meeting was a brief chat at the 2006 Delhi Auto Expo where he was ready to take on a new assignment in China. Little did I know then that he was eventually on his way to becoming the top man at Yamaha Motor.

He had come down to Goa in 2013 for a product launch and it was public knowledge by then that the company was working on the world’s most affordable motorcycle. It was only natural for the media to label this as the next Nano in two-wheelers. This effectively meant that the ‘cheap’ association, which epitomised the Tata people’s car, would now extend to the new Yamaha offering.

Yanagi was not clearly amused with this reference point and took great pains to drive home the point that the bike would retain the DNA of Yamaha. Being competitively priced did not mean that it would lose any of its core values such as styling, design, power, performance and safety.

“The cheapest bike is not our goal and there seems to be some misunderstanding,” he said. “We try to make good products for customers, which includes performance and values. It just cannot be cost.”

It was also during this interview that he spoke of his confidence in India’s ability to emerge as one of Yamaha’s biggest markets globally. Beyond products, it had plenty to offer in terms of supplying components to the company’s worldwide operations with its strengths in cost-competencies coupled with quality.

India had, therefore, been identified as one of the four regions for global procurement of components, the others being Japan, China and ASEAN. “These are critical centres because of their huge industrial size and presence of good suppliers with whom we will try to work jointly,” Yanagi said.

The Yamaha strategy meant that advanced technology and high value-added businesses wold be developed in Japan while local adaptation could be carried out in regional centres like India. Yet, there was little to show in terms of market share though the company was making a revival of sorts by shifting its attention to scooters, which were growing rapidly as a product category. Yanagi was clear that the way forward would see a focus on premium motorcycles while scooters would fill the commuter requirement.

What was the affordable motorcycle all about in this case? The answer came through during the next meeting at the 2014 Delhi Auto when the Yamaha chief articulated his growth vision for Africa. Not only would this be the next focus point for growth but the responsibility of its operations would now need to be managed by India.

Yanagi then explained why the affordable motorcycle, to be produced at the company’s new facility in Chennai, would be shipped out to Africa. After all, this was a huge market but the more important point being driven home was the willingness to have an overseas arm handle a new market.

In a sense, this also epitomised Yanagi’s thinking of giving a new global face to Yamaha. In the 2016 annual report, the message came through loud and clear why it was important to increase the profile of multinational managers working in a Japanese entity.

“We are working to build an organisation that utilises global experience and knowledge. We will recruit superior management personnel regardless of their nationality or place of birth, and aim to have local managers fill 60 per cent of management positions at overseas subsidiaries by 2018,” stated the annual report.

“Furthermore, we are striving to further diversify our workforce by hiring non-Japanese managers at headquarters, promoting employment of non-Japanese personnel, and expanding on alternative work styles,” it added.

In fact, during one of his India visits, Yanagi told this writer that he was keen on seeing more local R&D hiring happen. After all, if Taiwan headed the company’s global R&D headcount with nearly 250 personnel, there was no reason why India had to lag behind. “Indian R&D should be bigger than them,” he had said.

As Yanagi moves on to his new role, it remains to be seen if he will continue to be actively involved in day-to-day operations or become a mentor of sorts to his successor.

It is important to keep the focus on India going considering that it is tipped to become Yamaha’s biggest market by 2020.

On a personal level, Yanagi will be missed unless he decides to come for the Delhi Auto Expo next year.