Secret Diary of Pawan Goenka, MD, Mahindra & Mahindra's | Biography Part-2 | Outlook Business
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Secret Diary Of A CEO 2017

"Always look for the silver lining during an adversity"
Secret Diary of Pawan Goenka Part-2

N Mahalakshmi

Pawan Goenka, MD, Mahindra & Mahindra

A ghazal and a newspaper ad were the trigger for me to return to India. It was not easy to bid goodbye to such a cushy job but Mamta and I had been thinking about returning home. Hearing Pankaj Udhas’s Chitthi Aayi Hai would reduce me to tears. And when I saw Eicher’s full-page ad for a vacancy, urging NRIs to return home, Mamta and I looked at each other and simultaneously said, “Yes!”. I decided to apply to a number of automobile companies and look for options on my next trip to India.  Telco would have been my first choice.

chithi aai hai vatan se chithi aai haiHad it not been for the following factors — my mother, Air India, the 1992 Babri Masjid incident and the charisma of Anand Mahindra — I may not have joined Mahindra & Mahindra. My mother never wanted me to be out of Calcutta for more than a day. Air India was on strike and running few routes and the only place I could visit in a day was Bombay. I decided to go for the interview at Mahindra. But on the day of my interview, the Masjid demolition had led to riots  and there was a bandh across Bombay. Only Anand Mahindra had come to the office, so he was the only one to interview me. His vision for R&D  clinched the deal because I could not think of a better opportunity for an automotive engineer. He wanted to produce a world-class automotive centre and I was raring to go. Mahindra also worked better because the posting was in Nashik, closer to a metro like Mumbai.  

I went back and tendered my resignation to my boss at GM, Nick Gallopoulos.  He broke my heart with his initial reaction: “Okay, see you.” That’s it? I prided myself on being his best teammate and this unexpected reaction was heart-wrenching. An hour later, I received a note that put me at ease — he wrote that he was too stunned to react and did not know what to say and that he would speak to me next day.  

pawan goenka family home nashikGM not just gave me the greatest time of my life, but also the comfort of experimenting with my career. The kind of confidence you feel when you know someone will back you is immeasurable. GM gave me that, both time and backing. Even in the nine months I worked at GM after I resigned, the company gave me my due promotion. And when I left, they said they’ll keep the door open for me for four years — they treated my absence as unpaid leave. How many companies would do that? It gave me great comfort, especially as we were a tad worried whether our kids would be able to adjust. I made two promises to Mamta when we were leaving — if the children did not settle down well, we would head right back to the US; and even if we decided to stay back in India, we would send them to the US for their undergrad education and they would have the freedom to decide their own future thereafter.

I was excited about getting back to India, and having a larger role, but I can’t believe it even now what really made me come down from a $120,000 CTC to a 7 lakh CTC. But we managed all right in India. This was one of the few decisions where I let my heart rule my head. I am glad I did it.

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mahindra R & DThe initial months were a little tough. Although Anand Mahindra and Bharat Doshi wanted me on board, it seemed as if the team did not share the same view, perhaps they saw me as an intruder as they’d been working together for a long time. I was taken aback when my boss Parthasarathy, candidly told me he didn’t know why I was hired but would prepare me for the future anyway.

Their reaction was not entirely misplaced. Anand Mahindra had taken a huge leap of faith in me. At GM, I was at the highest technical level but had very little managerial experience. I had zero exposure to marketing, sales, product planning or the plant. I had worked in a narrow field for the past 14 years and was a purely technical person dealing with lubrication and designing bearings to reduce friction in engines. No one would have considered hiring me at such a responsible position. Anand Mahindra did.

True to his word, Parthasarathy did support me well. Thanks to him and Venkateshwaran, I turned from a specialist in a narrow field at GM to a generalist in automobile engineering. Over time, we all got comfortable working together and things started to fall in place.

Mahindra did everything to make me and the family feel settled in India. Our house was ready when we landed, school for the children, phone connection, gas cylinder; everything was taken care of. But I was so shocked to see the so-called R&D centre. On October 13, 1993, I was at a small shed in Nashik where the engine testing was done. It was about two acres and I asked where the rest of the R&D centre was. “This is it.” Even my specialised R&D lab at GM was about 10x larger!

trying to impress a visitor with alan and bharatI didn’t let my disappointment come to the fore though, at the back of my mind I always knew GM was still waiting, if I wanted to go back. I was also lucky to not be assigned any specific project right at the outset. Instead, I spent close to six months just learning the tricks of the trade and getting comfortable with the people.

I couldn’t believe it when Anand Mahindra told me in 1995 that I would be heading R&D. It was really a steep learning curve between 1993 and 2003 — from building on my engineering prowess to delivering a product that all of us could be proud of.
We first developed the chassis, and when I looked at the completed framework for the first time, my immediate reaction was that it was great but unaffordable; all I could see was cost everywhere. We had to bring it down to a level where it became affordable for us but at the same time we had to retain the design. We did that and built our current day pick up on that chassis. That product, even today, is very sought-after, cost effective and reasonably profitable.

boleroThen came the Bolero. We had a product in Armada and we hired our first ever stylists, Ram and Shyam, who came up with the Bolero. That was right about the time we had set up our own dye shop, with the help of Fuji of Japan. I loved what I saw and when Anand came to Nashik and saw what we were doing with the Armada, he asked me what would be the investment. I had no clue, so I gave him a random number, something like 20 crore! He exclaimed, “That’s a lot of money!” but in the same breath asked if we would use our own dye. I had no clue whether we could or should, but I just blurted “yes”, and he said, “Ok. Approved.” That was the extent of business case development done for the Bolero. It turned out, 20 crore was not too far from what we invested. It also so happened that our guys could do the dye for it and Bolero became our biggest success, by far; even more than Scorpio in terms of number of vehicles we have sold (and the profit we have made).

Bolero allowed our designers and engineers to try their hand at something that was perhaps less risky and less of a stretch from where we were and prepared us to do something bigger with the Scorpio. In a manner of speaking, Scorpio was also done with a very simple brief: we needed to do a product that was a significant departure from what we had been doing until then. We formed a very small team of seven people, gave them an office and asked them to get to work. I was in charge of the project and since it was set up in Mumbai, I used to commute from Nashik.

scorpio days with jagan, bhaumik and winstonI was told — and no one has ever confirmed this, so I don’t know how true it is — that there was a very good reason why I was chosen to head the project. Apparently, everybody could see this was a big project so during one of the early project meetings, there was a lot of push and pull as to who should head it. My name was thrown in because everyone thought a junior guy, sitting in Nashik — I had only been in the company four years — would be completely harmless. Whatever the truth, I’m thankful to whoever suggested my name, for that turned out to be a significant career-defining moment for me. What I am today is, to a large extent, thanks to the Scorpio project. It allowed me to move out of pure engineering to look at business as a whole.

But Scorpio days were testing times on the family front. Mamta had two bouts with breast cancer. Most other women would have wanted the husband by their bedside, but Mamta, the amazing woman that she is, asked me to focus on my work and said, she will take care of herself.  She did not demand my time beyond what was absolutely unavoidable. She never gave me a whiff of how miserable she was. I shudder when I remember one particular instance when she was undergoing chemotherapy at Mumbai’s Tata Memorial Hospital. I was in Nashik, having a Scorpio review, when I got a call informing me that she had a reaction from the chemo and had been admitted to the ICU. She, in her feeble voice, told me that she was fine. Not to worry. I could complete my reviews and come the next day. I spoke with the doctor to check on her and to say that I will come the next day. There was a pause before the doctor said, “Dr Goenka, there may not be a tomorrow.” I dropped everything and rushed to Mumbai. It was the longest ever drive for me, from Nashik to Mumbai.

the future is here scorpioMamta’s attitude has taught me the biggest lesson in life — never be fazed by adversity; look for the silver lining instead. She always says that, in any situation, only 10% is what is happening to you and 90% is how you react to the situation. Throughout her treatment, she remained so calm and collected. She says she is blessed to have all the support and resources to go through her bad phase. Most others, who she meets in the hospital, do not have anybody to fend for them and lack resources in every way. Mamta’s battle with cancer gave her a new purpose in life — to help cancer patients survive the psychological trauma of the disease. She has become quite a speaker!

Those difficult days had to give way to something better. As a project leader, I got credit for the Scorpio but truth be told, three things worked for the Scorpio. Apart from the product itself, which was great, we did something different on marketing. Rajesh Jejurikar, who had just joined the company, decided not to call it an SUV, but a car – one that you can walk into — and instead of naming it Mahindra Scorpio, he called it Scorpio by Mahindra. The third factor was that people did feel a sense of pride thinking here was an SUV by an Indian company, and were willing to overlook a few shortcomings.

When the Scorpio was being built, our investor relations people wanted to showcase what we were doing at Nashik. But we had nothing to show them because it was all work in progress. I got a bright idea: I put barricades all around and said that I could not take people behind because it was confidential and all investers went back very impressed.

you are stronger than you thinkGiven how important this project was for the company, all the best resources were made available for the Scorpio project by Alan Durante (my immediate boss) and Anand Mahindra. I had the best of everything, including many gurus. Johnny Mapgaonkar, who was the purchase head, taught me all about negotiations and how to select suppliers; Winston D’Souza taught me manufacturing; Ajay Choksey was my finance guru; and from Jejurikar I picked up some  marketing basics.
Johnny taught me the Narasimha Rao strategy — essentially, let the other person do the talking and let him think he’s not getting through. He will keep coming down slowly to where you want to be. Whoever talks reveals his hand. That’s when I also learnt that negotiation is not about arm twisting — it is about creating value you can share, because both parties are sitting at the table to get something out of it; nobody is going to sell you something at a loss. It’s about creating value and sharing value, rather than transferring from one hand to another.

narsimha raoThose initial supplier meetings were exciting. For example, we had the choice of going to well-proven established suppliers of weld lines or a company such as Wooshin from Korea that had never before done a complete body weld line. The difference in price was 2:1. Johnny, Durante and I sat down to decide — nobody was brave enough to say, let’s do it, because it was a big risk. If Wooshin faltered on supply, the whole project would be back to square one. None of us had ever done a new bodyshop; we were all playing blind. So, we called the Wooshin team over to Taj Land’s End again, tried to build our own confidence in their capabilities, and finally Durante said, “Let's take the plunge”. We were on a thin budget — 600 crore — we needed to take many such risky decisions at every level. In the end, it worked out very well and many of these small relatively unknown suppliers have grown with us and become big.

CK PrahaladBharat Doshi and I visited CK Prahalad at his house in the US — Bharat was great friends with Prahalad. And we were discussing how to make this low cost, world class product a reality. And Prahalad said something very simple, “You need to show the suppliers the carrot in India right now and they’ll do anything for you because all these guys are hungry to get into India; it’s the biggest growth market.” He suggested that instead of spending money, we should demand money for the business we give global suppliers. We tried, and it worked like magic.

Lear Corporation had set up factories in India but had very little business and wanted our business. We negotiated with them much beyond Scorpio and we said, “You can have our entire seating business but you have to do a few things: pay a certain amount of money to the company upfront to get the entire business; bear the cost of engineering  and tooling  and ensure our current suppliers are not out of work.” Rati Puri came from an investment banking background and had just taken over Lear India. He was shocked at our audacity. We held our ground and said, “Well, yes, we are the largest possible business in India, so the deal is fair.” They signed the deal.

The advantage with Scorpio was that several suppliers were willing to work on the product because they could all see that the car had the potential of becoming a high-volume product in India. Most heartening was that we were able to take many Indian suppliers from “built to print”  to “art to part” suppliers.

***
alan durante & anand Mahindra

Much later, I saw Durante negotiating the deal with Renault. The most difficult part of the negotiations was to get 51% ownership. Renault wanted 51% because they were a big multinational company, they were bringing the technology and we would be riding on their strength. Durante was very keen on the partnership; it was his idea to get a partner to utilise our Nashik plant better, but he just did not budge. I saw the Narasimha Rao strategy play out all over again — and we got the 51%.
I first met Alan in Detroit, after I had decided to join Mahindra. We met for breakfast and his first question was, “Are you a US citizen?” I said no, to which he snapped, “What’s wrong with you?” I said I had never felt the need and now I would be moving to India, so it was unnecessary. He insisted that I apply for US citizenship and I did. During my Scorpio days, we had great fun travelling together all over the world — Europe, Southeast Asia, Japan. But wherever we went, he made it a point to remind me that it was only because of him that I was a US citizen and that was what was making my global travel so easy.

This is the second of a three-part series. You can read part one here and part three here.

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