WEBVTT 1 00:00:00.000 --> 00:00:02.120 - I am with Anish Shah, Group CEO 2 00:00:02.120 --> 00:00:05.400 and Managing Director of Mahindra Group, for a new 3 00:00:05.400 --> 00:00:09.400 episode of BCG's CEO Moments of Truth series. 4 00:00:09.400 --> 00:00:12.400 Anish's carefully planned leadership transition 5 00:00:12.400 --> 00:00:14.440 launched at almost exactly the same time 6 00:00:14.440 --> 00:00:17.080 as the unforeseen global pandemic. 7 00:00:17.080 --> 00:00:18.760 How did he envision 8 00:00:18.760 --> 00:00:21.560 and enact a massive portfolio restructuring 9 00:00:21.560 --> 00:00:24.720 that would bring Mahindra Group back to its core 10 00:00:24.720 --> 00:00:26.720 and what principles did he apply? 11 00:00:31.120 --> 00:00:34.080 Anish, you lead the Mahindra Group 12 00:00:34.080 --> 00:00:38.400 as the first CEO from outside the founding family, 13 00:00:38.400 --> 00:00:40.800 and it is such a fantastic company. 14 00:00:41.880 --> 00:00:42.920 Just two examples: 15 00:00:42.920 --> 00:00:45.840 Mahindra & Mahindra commands the highest market share in 16 00:00:45.840 --> 00:00:47.120 the Indian SUV market. 17 00:00:47.120 --> 00:00:51.080 Mahindra Tractors produces more tractors than any 18 00:00:51.080 --> 00:00:52.960 company. It's a conglomerate 19 00:00:52.960 --> 00:00:56.640 that operates in more than 20 industries across more than 20 00:00:56.640 --> 00:01:00.480 100 countries, and you employ 320,000 people. 21 00:01:01.760 --> 00:01:04.640 Paint the full picture of the group for us. 22 00:01:04.640 --> 00:01:09.080 - I will start with saying that we are a purpose-led 23 00:01:09.080 --> 00:01:11.560 company and go back to an advertisement 24 00:01:11.560 --> 00:01:14.760 that our founders put in the Times of India in 1945, 25 00:01:15.600 --> 00:01:18.960 on the day this was founded. They talked about dignity 26 00:01:18.960 --> 00:01:22.720 of labor, about not cost, nor creed, nor color standing in 27 00:01:22.720 --> 00:01:27.000 the way of a meritocracy, about opposing antisocial 28 00:01:27.000 --> 00:01:31.240 trends. Today it would read like an ESG manifesto, but 29 00:01:31.240 --> 00:01:33.560 this was 1945. And that DNA continues in our company. 30 00:01:33.560 --> 00:01:35.560 We have always said that we lead 31 00:01:35.560 --> 00:01:37.640 with purpose and profits will follow. 32 00:01:37.640 --> 00:01:40.680 We operate in about 70% of India's GDP, 33 00:01:40.680 --> 00:01:43.080 and we have grown well with the Indian economy 34 00:01:43.080 --> 00:01:44.520 and now we are hoping to be able 35 00:01:44.520 --> 00:01:46.720 to take the Indian economy to the world. 36 00:01:46.720 --> 00:01:50.640 - In December 2019, Mahindra Group announced 37 00:01:50.640 --> 00:01:54.640 that there will be a one-year transition process for you 38 00:01:54.640 --> 00:01:56.680 to become the group CEO, 39 00:01:56.680 --> 00:02:01.080 and that one year window was going to start in April 2020. 40 00:02:01.080 --> 00:02:05.400 Now, exciting news, I'm sure a happy moment for you. 41 00:02:05.400 --> 00:02:10.080 Yet the transition window had not even fully started 42 00:02:10.080 --> 00:02:13.720 and the pandemic hit take us back to that moment. 43 00:02:13.720 --> 00:02:18.000 - It was truly an honor for me to be selected as group CEO 44 00:02:18.000 --> 00:02:19.560 of the Mahindra Group. A group 45 00:02:19.560 --> 00:02:23.880 that I've had tremendous respect for over many years 46 00:02:23.880 --> 00:02:26.360 came in as head of group strategy, so I had a 47 00:02:26.360 --> 00:02:27.680 good sense of where the group was. 48 00:02:27.680 --> 00:02:32.520 It was a group that had performance as one of its 49 00:02:32.520 --> 00:02:34.920 hallmarks, and for some reason we 50 00:02:34.920 --> 00:02:37.200 fell off a cliff. There were a number of decisions that 51 00:02:37.200 --> 00:02:41.040 were taken around largely investments in international 52 00:02:41.040 --> 00:02:44.160 subsidiaries that came back to create losses, 53 00:02:44.160 --> 00:02:48.400 and we lost about 70% of market cap in a period 54 00:02:48.400 --> 00:02:51.960 of 18 months post August 2018. 55 00:02:51.960 --> 00:02:54.720 It was the first time I would say in the history 56 00:02:54.720 --> 00:02:57.480 of the group that we were looking at potential losses 57 00:02:57.480 --> 00:03:01.680 for the year. First time as a CFO, not a great place 58 00:03:01.680 --> 00:03:04.240 to be to have that kind of a result. 59 00:03:04.240 --> 00:03:07.960 And that was all preCOVID and then the COVID impact. 60 00:03:07.960 --> 00:03:11.720 So the first month from a fiscal calendar 61 00:03:11.720 --> 00:03:16.320 of April was in a lockdown, so we had close to zero revenue. 62 00:03:16.320 --> 00:03:17.440 With regard to the company, 63 00:03:17.440 --> 00:03:20.200 cash was the first thing we had to take care of, 64 00:03:20.200 --> 00:03:22.800 and that's what we did very quickly. 65 00:03:22.800 --> 00:03:23.640 We raised about a billion dollars literally 66 00:03:23.640 --> 00:03:25.360 in just a few days. 67 00:03:27.320 --> 00:03:31.200 The next set of actions were to really help us get out 68 00:03:31.200 --> 00:03:33.480 of some of the challenges we faced. 69 00:03:33.480 --> 00:03:37.720 We made the toughest decision literally at the very start, 70 00:03:37.720 --> 00:03:41.560 which was two days before I officially got into this role, 71 00:03:41.560 --> 00:03:45.760 and that was to exit SsangYong, Korea's fifth largest 72 00:03:45.760 --> 00:03:48.720 car maker and a company with $4 billion of revenue. 73 00:03:48.720 --> 00:03:53.400 Post that, in the period of the next 12 to 15 months, 74 00:03:53.400 --> 00:03:55.040 we exited 15 companies. 75 00:03:55.040 --> 00:03:56.440 It's one that I look back 76 00:03:56.440 --> 00:03:59.400 and would say is probably the toughest set 77 00:03:59.400 --> 00:04:02.440 of actions I've taken because it's not easy to make 78 00:04:02.440 --> 00:04:04.480 that call, but it was the right call. 79 00:04:04.480 --> 00:04:06.640 These were businesses that were all loss making and 80 00:04:06.640 --> 00:04:09.400 therefore it was important for us to exit them. 81 00:04:09.400 --> 00:04:13.520 That's what created the momentum from a profitability 82 00:04:13.520 --> 00:04:16.240 and a performance standpoint. We pivoted to growth. 83 00:04:16.240 --> 00:04:19.960 So if I look back at the start, yes, 84 00:04:19.960 --> 00:04:22.080 it was very challenging, 85 00:04:22.080 --> 00:04:23.920 but there were a number of things 86 00:04:23.920 --> 00:04:27.280 that really helped make it much easier, which is the 87 00:04:27.280 --> 00:04:29.840 people that we had, the leaders that we had, the 88 00:04:29.840 --> 00:04:34.600 support that we had from our chairman and CEO at that 89 00:04:34.600 --> 00:04:37.840 point, Anand Mahindra, and that support really made it a lot 90 00:04:37.840 --> 00:04:38.880 easier to go through it. 91 00:04:39.760 --> 00:04:42.280 - So you exited 15 businesses. 92 00:04:42.280 --> 00:04:45.200 How do you think about portfolio management 93 00:04:45.200 --> 00:04:49.160 and what has been your managerial mantra, 94 00:04:49.160 --> 00:04:51.200 the main most important 95 00:04:51.200 --> 00:04:52.840 objectives that you were pursuing? 96 00:04:52.840 --> 00:04:55.360 How did you look at that whole portfolio question? 97 00:04:55.360 --> 00:04:59.600 - The key was to prune out things that didn't work very 98 00:04:59.600 --> 00:05:01.720 quickly, before they started becoming a drag. 99 00:05:01.720 --> 00:05:05.000 And it was important to drive scale and 100 00:05:05.000 --> 00:05:06.440 therefore the mindset 101 00:05:06.440 --> 00:05:09.960 that we brought in was, let's play big. 102 00:05:09.960 --> 00:05:12.480 Let's not play small in any place. 103 00:05:12.480 --> 00:05:16.520 - Well, as you know, BCG invented the matrix 104 00:05:16.520 --> 00:05:18.680 to look at conglomerate portfolios 105 00:05:18.680 --> 00:05:20.600 and to come up with a rational 106 00:05:20.600 --> 00:05:22.440 and well-balanced approach to managing those. 107 00:05:22.440 --> 00:05:24.080 So this is very close to my heart. 108 00:05:24.080 --> 00:05:26.520 If you look at the portfolio today 109 00:05:26.520 --> 00:05:31.520 and the dynamics across still more than 20 industries, 110 00:05:31.720 --> 00:05:33.760 how do you think that principle 111 00:05:33.760 --> 00:05:36.480 of portfolio management is going to evolve going forward? 112 00:05:38.440 --> 00:05:40.440 - I think the fundamentals stay the same, and 113 00:05:40.440 --> 00:05:43.320 that's where I think BCG has done some very nice work 114 00:05:43.320 --> 00:05:46.600 in establishing those fundamentals. The challenge 115 00:05:46.600 --> 00:05:49.000 is in companies that are not doing very well because 116 00:05:49.000 --> 00:05:50.080 how do you address them? 117 00:05:51.800 --> 00:05:53.800 Is it something to do with the market, 118 00:05:53.800 --> 00:05:55.400 the product, the leadership? 119 00:05:56.560 --> 00:05:58.560 What are different levers that can be pulled? 120 00:05:58.560 --> 00:06:00.840 And we've taken some of our businesses that were very 121 00:06:00.840 --> 00:06:02.360 small and not performing very well 122 00:06:02.360 --> 00:06:04.760 and transformed them into something very meaningful. 123 00:06:04.760 --> 00:06:05.840 And I'll give an example here 124 00:06:05.840 --> 00:06:07.440 of the electric three-wheeler business, 125 00:06:07.440 --> 00:06:10.880 and we were making combustion engine based three wheelers. 126 00:06:10.880 --> 00:06:13.520 We had a 5% or 6% market share, 127 00:06:13.520 --> 00:06:16.640 and we did contemplate should we shut this business down. 128 00:06:17.960 --> 00:06:22.000 And as we saw the trend for electric vehicles coming in, 129 00:06:22.000 --> 00:06:23.960 we said, let's pivot to electric 130 00:06:23.960 --> 00:06:27.000 and let's use the pace that we have from a manufacturing 131 00:06:27.000 --> 00:06:29.160 or distribution standpoint. 132 00:06:29.160 --> 00:06:31.360 We in fact drove the industry to electric. 133 00:06:31.360 --> 00:06:35.440 We got to at one point 60%, 70% market share, 134 00:06:35.440 --> 00:06:37.560 which has now settled down to 45%. 135 00:06:37.560 --> 00:06:39.360 Anish, what are you most proud of? 136 00:06:41.040 --> 00:06:43.000 I'm most proud of the fact 137 00:06:43.000 --> 00:06:45.320 that we could make the transition happen smoothly 138 00:06:45.320 --> 00:06:49.480 by maintaining our purpose, our values, our culture. 139 00:06:49.480 --> 00:06:51.520 That does not happen easily, 140 00:06:52.840 --> 00:06:56.480 especially when you have a new leader coming in from 141 00:06:56.480 --> 00:06:57.800 effectively outside the group. 142 00:06:57.800 --> 00:06:59.720 Even though I'd been there for five years 143 00:06:59.720 --> 00:07:03.440 and a few other leaders coming in from outside as well, 144 00:07:03.440 --> 00:07:06.640 maintaining that fabric was very important for us, and 145 00:07:06.640 --> 00:07:10.320 that's something I feel we have done very well and I am 146 00:07:10.320 --> 00:07:11.400 therefore very proud of that one 147 00:07:11.400 --> 00:07:15.400 particular part around keeping the Mahindra Group 148 00:07:15.400 --> 00:07:17.240 at the very top in terms of purpose and values. 149 00:07:17.240 --> 00:07:21.040 In some ways this was possibly a bigger challenge than the 150 00:07:21.040 --> 00:07:22.760 profitability challenge. 151 00:07:22.760 --> 00:07:26.240 We've had three leaders of that group over 75 years at 152 00:07:26.240 --> 00:07:28.360 that point, all three family members, 153 00:07:28.360 --> 00:07:31.160 and this was the first non- family member coming in. And 154 00:07:31.160 --> 00:07:34.280 there were obviously questions around, is this 155 00:07:34.280 --> 00:07:35.440 going to change our culture? 156 00:07:35.440 --> 00:07:38.840 That had to be addressed very directly. 157 00:07:38.840 --> 00:07:40.720 - Now, it's been quite a journey. 158 00:07:40.720 --> 00:07:43.400 How has this experience shaped you as a leader? 159 00:07:45.600 --> 00:07:47.720 - It has helped me learn many things. 160 00:07:47.720 --> 00:07:52.680 First is maintaining calm through crisis situations. 161 00:07:52.680 --> 00:07:54.640 Because there were multiple crisis situations 162 00:07:54.640 --> 00:07:57.560 that kept coming one after the other. Right 163 00:07:57.560 --> 00:07:59.240 after we navigated the first year 164 00:07:59.240 --> 00:08:01.200 and we were feeling good about things. 165 00:08:01.200 --> 00:08:04.440 The semiconductor crisis came on in a much bigger way. 166 00:08:04.440 --> 00:08:06.560 And the challenges of growth as some 167 00:08:06.560 --> 00:08:08.200 of our products did very well. 168 00:08:08.200 --> 00:08:11.560 Again, back to automotive, we had some very good launches 169 00:08:11.560 --> 00:08:13.440 and the demand was far greater than 170 00:08:13.440 --> 00:08:16.960 what we had expected. For one of the products, 171 00:08:16.960 --> 00:08:21.360 we had planned capacity of 3,000 a month 172 00:08:21.360 --> 00:08:25.400 and suddenly we get 50,000 bookings in 173 00:08:25.400 --> 00:08:26.720 the first three days. 174 00:08:26.720 --> 00:08:28.480 We've quadrupled capacity in the auto 175 00:08:28.480 --> 00:08:31.040 business in the last four years. 176 00:08:31.040 --> 00:08:33.280 So that again, is an exciting thing, 177 00:08:33.280 --> 00:08:34.800 but a challenge as well. 178 00:08:34.800 --> 00:08:37.600 The second is around people 179 00:08:37.600 --> 00:08:39.680 and around how we can get the best out of people. 180 00:08:39.680 --> 00:08:42.360 This is something that I've learned a lot from Anand. 181 00:08:42.360 --> 00:08:45.640 That's something that in many ways is much more sustaining 182 00:08:45.640 --> 00:08:48.360 over time and builds a much stronger team. 183 00:08:48.360 --> 00:08:50.320 The third is that you have 184 00:08:50.320 --> 00:08:54.240 to think big. In my strategic part that I laid out 185 00:08:54.240 --> 00:08:57.720 for the board, we in fact at that point said 186 00:08:57.720 --> 00:08:59.680 that we will grow market cap 187 00:09:00.600 --> 00:09:03.320 three x in the first year 188 00:09:03.320 --> 00:09:06.400 and an additional three x in the next four years. 189 00:09:06.400 --> 00:09:08.280 Now, A CEO typically doesn't go in 190 00:09:08.280 --> 00:09:11.240 and say that we will grow market cap nine x 191 00:09:11.240 --> 00:09:12.920 in five years. 192 00:09:12.920 --> 00:09:16.280 We actually grew 12 x in five years. 193 00:09:16.280 --> 00:09:18.600 But again, if you don't think big enough, 194 00:09:18.600 --> 00:09:20.200 then often you don't get there. 195 00:09:20.200 --> 00:09:24.120 - Where do you see Mahindra Group in five years from now? 196 00:09:25.320 --> 00:09:26.520 - Our aspiration is to be 197 00:09:26.520 --> 00:09:28.800 among the most 50 admired companies in the world. 198 00:09:29.880 --> 00:09:31.680 Numbers are one element of this. 199 00:09:32.960 --> 00:09:35.960 Being able to make a significant impact on society is a 200 00:09:35.960 --> 00:09:37.360 second key element of this. 201 00:09:38.280 --> 00:09:39.840 Or in some ways, maybe the primary one 202 00:09:39.840 --> 00:09:41.800 and numbers will will follow after that. 203 00:09:41.800 --> 00:09:45.000 We have four large businesses today 204 00:09:45.000 --> 00:09:47.640 and 10 what we call growth gems 205 00:09:47.640 --> 00:09:49.960 and a few other that are budding growth gems. 206 00:09:49.960 --> 00:09:53.160 And these are businesses that we feel can transform 207 00:09:53.160 --> 00:09:57.800 and scale, not just in India, but around the world as well. 208 00:09:57.800 --> 00:10:00.480 - Anish, thank you so much for your time. 209 00:10:00.480 --> 00:10:01.920 Thank you for sharing with us 210 00:10:01.920 --> 00:10:03.880 what you've learned, what you have done. 211 00:10:03.880 --> 00:10:05.400 - Thank you, Christoph. It's been a pleasure.