Thursday, 14 February 2008

India’s TATA: Effective BPM and True "Next Practice" in Action

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Regular readers, training course and conference delegates who know me, know that I work with a much wider definition of BPM than many. They know that for me BPM is interpreted as Business Process Management and the definition I work with is as follows:-

"Business Process Management (BPM) is first and foremost a management discipline. It is about helping to deliver extraordinary results, through Innovation. This is achieved by being creative while focusing on successful customer outcomes, and communicating your strategy honestly to your staff and customers. This approach can be well Supported by new BPMS type technology, where appropriate."

To this end I am always on the lookout for great stories about companies who have made changes that have resulted in massive disruptions' in their marketplace. Of course such major disruption usually only occurs when organizations break the fundamental rules of their industry and rearrange the way they work, resulting in completely new business models.

To my mind one of the best and worst examples of this is the Ford Motor company. When in 1908 Henry Ford started shipping the Model T he forever changed the automobile landscape, or did he? Henry made it clear that his objective "I will build a motorcar for the great multitude." Meant that things had to change, it was never going to be possible to build and sell a car for the masses based on the old way of producing cars, he had to create new ways of building cars. More to the point he had worked out who his customers were, what they wanted and how much they might be willing to spend, he then set out to achieve that, while at the same time making money. When the final Model T rolled off the production line in 1927 over 10 million vehicles had been built and sold. To give an idea of just how disruptive the Ford approach was, in 1914, 13,000 workers at Ford made 260,720 cars. By comparison, in the rest of the industry, it took 66,350 workers to make 286,770!

However, just as this thinking led to the rise of the Ford Motor company, then surely it could also see the demise of the company. Even in Henry's lifetime and under his leadership the company has struggled to deal with change, fundamentally it has forgotten what the "secret sauce" was that built them up from nowhere. Of course Ford are not alone, most western car companies to the best of my knowledge are still building cars the same way as Ford did in 1908, so 100 years later we are still producing cars for the masses of 1908! Sure the Japanese and the Koreans have shown us how we can do the "faster, cheaper, better" dance, but in essence the formula for success seems to have been lost, until now!

It is my belief that just as the Model T Ford had a radical impact on the way cars were built and priced in 1908, the TATA Motors with the introduction of the "Nano" on 2008, could well have the same profound effect. Ratan Tata, chairman said at the launch "I hope this changes the way people travel in rural India. We are a country of a billion and most are denied connectivity. This is a car that is affordable and provides all-weather transport for the family." – Gosh, the idea of looking at mass market denied the opportunity of having cars because of the restrictive costs associated with the current offerings; I bet Henry Ford is smiling in his grave. It does not matter what the critics say the fact is that nobody else in the world is able to sell a car for 100,000 rupees (£1,300) and make a profit. But, I wonder how long it is before others have their own offerings.

The impact will eventually I am sure be felt all over the world, due you think that Bosch who developed a completely new low cost fuel injection system for this car won't be looking to use that same technology when selling against their competitors to other manufacturers?

Could we yet see £10,000 Land Rovers or £15,000 Jaguars? (For those that have not noticed, despite the protestations of some US dealers apparently concerned that brand would be devalued, it is looking increasingly likely that TATA will complete the acquisition of these two British marques in the near future).

As an aside TATA are not the only Indian car company to be making big inroads, while the Land Rover dealers were busy complaining to Ford about an Indian owner, elsewhere in the USA Mahindra Mahindra were finding that a whole new dealer network was willing to invest millions in setting the company up in the USA, if my understanding is right they already presold the 500,000 vehicles they were looking to sell into the US market – Just another example of consumers voting as they know best – with their wallets!

There is no doubt in my mind that this is an example of true BPM success, of course we will have to wait and see whether TATA will remember to keep using the special sauce and avoid going the same way as their friends in Detroit.

P.S. TATA If you are reading this then I would love to test drive one on my next trip to India :-)

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