Rajiv Bajaj: Being Original to Succeed

Name: Rajiv Bajaj
Profile: Managing Director, Bajaj Auto
Age: 45
Why He Won For spearheading Bajaj Auto’s strategic shift from scooters to motorcycles. And for forging an entry into large markets in China and Africa.


I’ve often pondered over a critical question: Why do 90-95 percent of all new products fail? This is a very fundamental issue because if the failure rate is so high, it clearly means there is something wrong with the tools with which we operate. For instance, would you go to a cardiac surgeon who has a reputation of 90 percent failure? For me, there’s only one conclusion: Our management tool kit is outdated.
For us, this wasn’t just an academic discussion though. In 2008, we were in all kinds of trouble. We had a string of failures, with the XCD, Caliber and Wind. Yet on the face of it, we had done almost everything right. We did all the R&D right. We had done all the manufacturing right. Our costs were under control. We had at least one version of marketing right. We backed the products with big ad spends, a large dealer network, and a good service and parts policy. So, what was really the issue?

A Mix of Left and Right
Now, there are two dominant ways that most consumer companies are run. At one end of the spectrum is the auto or consumer durables industry. It’s run like a quasi-engineering industry. It’s all about quality and technology. There’s a mad rush to do things better — you could call it left-brain thinking — very quantitative and logical. On the other extreme is the fast-moving consumer goods (FMCG) industry, where there’s very little physics. It’s driven more by psychology, where it’s not uncommon to find propositions that promise fairness of the skin or freshness of breath. In a way, that is more right brained — more creative, holistic and qualitative.

My view is that much of the current marketing ecosystem ­­­­­— marketing, market research and advertising agencies — are bred of the stables of the FMCG industry. They think that they can just repackage a product with some new sticker or give it some new name, some funny buzzword like PSPO. It simply doesn’t work because somebody makes a better product. And then there’s a small minority of CEOs and marketing directors who will go only by cold, rational logic. They often ask: Oh, I made a better product, why doesn’t the customer understand? Well, there’s something called herd mentality, there’s something called making a safe decision or peer pressure and word of mouth. So, what we realised is that you need to have a mix of both.

I’ve come to believe that we can’t operate like an FMCG company because we can’t sell a motorcycle by some psychological aura around it. On the other hand, we didn’t think we were entirely an engineering company because when we looked out at any market and  the products, they were not necessarily the best. The Maruti 800 is not the best product in the small car segment. It’s the same with the Hero Honda Splendor or the Pulsar. So, just being better in terms of physics is important, but not enough. So, we said to ourselves that we are in the fast moving consumer technology industry. We need a fair mix and balance of physics and psychology. So, if you look at the Pulsar, the technology of the DTSI [Digital Twin Spark Ignition] is the 50 percent physics it needs. And then saying “definitely male” or India’s most selling sports bike is the psychology that’s required.

And in my book, the best way to create brands is to create a category. So, if you create a category of sports bikes, the name you give it — Pulsar — also eventually becomes a brand. I’ll come back to why category creation is so crucial to weeding out failures in just a bit.

Don’t Confuse Cause and Result
I always tell my people that we live in two worlds; the world of cause and the other of result. The problem is we confuse the two. Take, for instance, our most famous campaign: Hamara Bajaj. Now the reality is Hamara Bajaj is not the cause of our success even in those days. It’s the result of it. It’s because we became so big, dominant and popular that that emotion found some echo. If we had started with Hamara Bajaj, it wouldn’t have had any credibility.

So, how do you tell the difference? I’ve usually found that the result lies in the material world, while the cause is usually found in the immaterial world. So, if you produce good profits, it’s a result where you can count the money. The cause of that is the strategy, which is no more than a thought. It is immaterial. That’s no different from what we do on the shop floor. So, if there is defective material, it could be because the tool has worn out. So, why did the tool wear out? It could be because it was not replaced. It wasn’t replaced because the guy who should have done it wasn’t adequately trained.

Now training is an immaterial thing. The tool is a material thing. Most people will stop by saying the tool wore out. Or that this man did not do his job and must be fired. Very few people try to understand what was lacking in the training, correct that and ensure that this problem does not happen again.

This isn’t a chicken and egg situation. For me, there’s never been any doubt that the means are more important than the result. If you focus on the results, when the going is good, it will be good. But every three years, you will complain that the result is not good and then blame it on someone else, instead of looking at the root cause. And that’s why you never fix the problem from the root and it keeps coming back.

Truth Is Always Counter-Intuitive
Most people, when they hear something, they react intuitively and say “Yes this makes sense”. They never pause and think: Can it actually be the other way? Nothing exists without its opposite. In fact, most research we did in the past with our groups of customers was about what we should make next. That was sheer rubbish. For example, it was Steve Jobs who said “I don’t think it is the customer’s business to know what he wants.” And my favourite line comes from BMW which says “It is less important for me to know the customer, it is more important for the customer to know me.”

If my brand is sharply etched out, I can call myself the ultimate driving machine. And the ones who want it will come to me and I will know them. But for me to go out and ask people how to create a Boxer — whether it should be a 150 cc bike for Rs. 40,000, a cross between a jeep and a tractor on two wheels or a motorised bullock cart for suburban rural markets — there is no customer research process that’s ever going to give me that idea. Some people believe that market research is a creative process. What we realised is that it is a reactive process.

So, for the Boxer example, how do I know whether it will sell or not? Or, how popular it will be? I can take that idea in the form of mock ups or sketches and bounce it off customers. That’s fine. Then customers will react to something. Whereas, if I just go with words like style, fuel economy, power and think I can create an automobile out of it, it is not possible. It is counter-intuitive thinking. The reason most companies are not able to nab on things is because most human beings don’t think contrarian. It is always about the path less taken, always about being different rather than same. We are always taught in school that familiarity builds contempt, whereas in business we behave as if familiarity builds desire.

And we learnt this when most of the products we made failed. Even we were a part of the 90 percent failure rate. Then we looked at the difference between the ones that succeeded and those that failed. And we realised that the difference was that the 10 percent were the ones with the first mover advantage that created categories. The rest were followers that tried to take some share of the category created by the rest.

Slogans Are Not Positioning Statements
Thanks to our consultant Jack Trout, we have come to understand that a positioning statement must really convey something meaningful to the consumer. So, somebody sells a small car and the ad says “you are the fuel”, what the hell does it mean? It means nothing, it is just a slogan. But if you just say India’s largest selling small car, it means something. If someone tells me I make six out of 10 small cars which sell in India, I will buy that car. So, the reason we don’t have fancy lines around the Pulsar is, we can easily say it is India’s most selling sports bike because we have 45 percent market share.

Old Habits Die Hard
In 2008, when things started to go wrong for us, I realised that the root cause was that we didn’t have the right strategy. Just a year ago, I had begun to be influenced by the work done by Al Reese and Jack Trout, one of the world’s foremost strategists. When I began reading their books, at first I thought here is another Porter, heavy stuff which takes two months to finish. But when I started reading, it was wonderful.

Even though I met Jack Trout briefly in Mumbai in June 2008, he did not agree to engage with us because at 74, it would be simply too difficult for him to come from the US. But after a year or so, he got in touch with us after he realised that our strategy — based on much of his thinking — was working. Finally, in February 2010, he was interested enough to travel to Pune. And since then, he comes once every quarter and spends time with our teams. He has so much experience that you throw a problem at him and he throws a solution back. Much of our thinking around brands, categories, markets and differentiation — real and perceived — has grown out of these interactions with Trout.

Of course, there’s another reason why I keep calling him. Old habits die very hard. The minute you have some success, you tend to become your good old bad self again. And so before we realise it, our ad agencies could drive us back in the gutter. So you need someone to keep you straight for 10 years, till it becomes second nature.
 
(As told to Ashish K. Mishra)



‘Rajiv will never do anything for the short term’
Abraham Joseph, Chief Technology Officer, Bajaj Auto

When Rajiv joined back in 1991 from Warwick University, he started a team which he called the streamlined manufacturing systems team because he had done his masters in manufacturing and he recognised that this company needed to improve a lot. We were in a complacent scenario. With a waiting period of seven years to buy a scooter, all that was important was to track the number of vehicles produced. And it would lead to a situation where quality suffered. Rajiv could see all this. He has always had that engineering mind and after his M.S. he had interned at Telco. He assimilated it very well and understood that a big problem would be coming up. That’s what happened.

Rajiv spent the entire first phase improving productivity in every area of manufacturing. You could see Rajiv’s involvement from a perspective of understanding engineering because he did not come as an MD of the company; he came in as officer on special duty. So, he spent his time trying to understand the business. It was important to gain respect. During that time he also understood that you can make an effective product but the customer may not want you.

So, we were making the best quality scooters we could but nobody wanted scooters anymore. After a few failures, Rajiv realised that Bajaj needed to be substantially different from the others. We recognised that very clearly in the mistakes of the past. We tried to be like others and lost out. That differentiating strategy was Rajiv’s guts. That is how the Pulsar was made. When the idea was first conceived we showed it to R. L. Ravichandran, the then general manager of marketing. He said, “If I sell 5,000 of this in a month I would consider it to be the height of my achievement.” We shot past that number within months of the launch.

At that time, this category was nothing. Rajiv understands people and he is ready to give responsibility to someone who has an idea or tries to do something. He is not a typical stuck-in-the-glass-house kind of person. He can see what’s happening and will recognise and appreciate things. 

Rajiv will never do anything for the short term. It’s always about what will give the company a sustainable position. I can say that he got the business genes from his father and the technical part he brought in himself. I think to have the right blend of both is rare and that is what works for him.