Driving ahead. How Maruti Suzuki will get to 4 million cars by 2030

What I have tried to do is to show how a manufacturing company can substantially increase its performance and competitiveness. A question nobody asks is why did Maruti, which was expected to fail and not reach production of even 1,00,000 cars, get to two million cars per year and is now fast moving to four million cars. Why have other Indian companies not moved so fast? I have tried to answer this. Ultimately, it is all about the management style.

It’s not the Japanese style. It’s what Maruti learnt from the Japanese. The management style that is mostly practised in India, is learnt from Americans and other western nations. But they are following a style from countries that are non-competitive in manufacturing. Which western country other than Germany is competitive in manufacturing? How many manufactured goods from the West do you find here in the market? They all mostly come from eastern countries. But we still continue to follow a management style which is derived from countries that have failed in manufacturing. If it were an effective manufacturing style, why is manufacturing here limited to just 15 per cent of the GDP?

At Maruti, we learnt new ideas from Japan. We then had the task of implementing them in Indian conditions. You can never take an idea from a country and just transplant it as it is. It always requires modification, preparation, education, and getting people to change their thinking. That was our task. Then it does not remain a Japanese style but becomes an Indian management style. If it was about Japanese style, then why have other Japanese companies not done as well as Maruti in India? Somewhere I had to get people to start thinking about what did Maruti do differently? What made us so competitive? The book is not about car making. It’s about the management style and manufacturing competitiveness.

Indira Gandhi died in 1984, a year after Maruti started selling cars. She had nothing to do with the management style. No government had any say in the rules, recruitment or management style we adopted. Industry for the past many decades has blamed the government for their failure to grow faster, saying the government should release animal spirits, and so on. But the government can only do so much.

The biggest differentiator for Maruti was the contribution the workers made to the company. In terms of designs, technology, taxes, there is not much difference between company A, B or C. But the differentiator is the style of management and the contributions of workers. Other differences are how frugal are you, and how ethical is the management. I mean this in a broad sense. How do you develop your supply chain? How do you motivate your employees? What is the contribution that your employees make compared to other companies? We implement seven lakh suggestions roughly every year on improvements in the factory. Most are given by workers, some by supervisors and managers.

Tell me how many manufacturing companies have grown to 40 times without raising extra capital for growth and without borrowing. Look at the Ambani group, look at the Tatas, look at the Birlas. We still have nearly ₹50,000 crore of cash. That is where the whole frugality of management comes in.

There was Hindustan Motors too. So are most public sector companies monopolies. But they didn’t do so well. Like Maruti initially did, they also had all the advantages and disadvantages. We worked with the same sets of laws as private companies. It’s how you get the best out of people. And when I say people, it’s not managers, engineers, executives, alone - it’s the blue collar workers. Our experience is that if you can motivate and train your working force in certain directions, they can make contributions that are impossible for the executive cadre to do because of the experience they have on the shopfloor. Workers who have been doing the same thing for several years can tell you how to shorten the cycle, reduce waste and be more productive.

Somebody has to still manage and fix the machine if it gets faulty. What will human beings do if the machines do everything? If you are knocking out jobs, it will create a big social issue.

Ultimately, human beings need to work, they need an income. People inventing things have to think about the social cost of their invention . Just because driverless cars have been created, can we put the 10 million drivers in India out of jobs?

Where artificial intelligence can help substantially is in the quality of decision-making, in making data-based decisions. It can help in repetitive tasks.

Let me put it this way. So far, in the last 20 years, can you name one area where Maruti has fallen behind?

We have not fallen behind, we have not started. Just because somebody starts late, that doesn’t mean we lack competitiveness.

If market share falls so what? We are going from two million to four million in the next six years or so, which means I am adding roughly 2,50,000 production capacity every year. Market share is only relevant if I am not able to sell all my capacity. But if I am increasing volume every year then this is not relevant. Suppose the auto pie in India grows faster than the capacity I am building, then how will I keep the 50 per cent share? I can only make sure that whatever I manufacture I should sell, why should I bother about market share.

It’s the same thing as share prices. How does it matter to me as a manufacturer what the share price is?

I am not looking for one.