Percy Barnevik called me from Hong Kong and said something totally unexpected. “Ravi, I am going to tell you something unholy, but you have to do this.” I was perplexed. “Volvo wants to set up operations in India and they want someone who understands the Swedish way. There was no one else I could think of but you.” I was working for Barnevik, who was considered a legend in ABB. What could I say if the super boss says go to another company? I was restrained in my response. “I have no clue about trucks and buses; I am an electricals person.” This was met by a quick response, “If you know a truck has four wheels, they’ll teach you the rest.” Matter closed. I was designated MD of Volvo India at 44.
In a couple of months, I found myself in Gothenburg, Volvo City. I was worried I was going into an industry I didn’t know much about, but that turned out to be an asset. When you work without the baggage of thoughts, you think fresh and you blend in the experience of other industries.
What a mind-boggling experience it was! We were introducing a concept such as a Volvo truck at a price 4x higher than rivals. Indians were used to antiquated trucks — it creaked a bit, broke down a bit, but it moved goods from point A to B, and that’s all that really mattered. And here I was, pushing some sophisticated foreign trucks with state-of-the-art technology and safety features that no one really cared for. Some people simply stopped taking my calls. “Are you nuts?” I was asked openly, even as I would say, “You don’t see the value.”
Right at the start, I had suggested to Volvo that we must introduce the medium range Asian truck, which will be more affordable, but they were clear they wanted to launch the best product globally. It was simply not the right product to begin with, but I went with the flow.
I thought the best way to cut the first deals would be through friends who could be persuaded to take that leap of faith. Transport Corporation of India had a fleet of some 5,000-odd trucks those days and as chairman, DP Agarwal could have changed our fortune with the nib of his pen. I went to his office, he offered me a nice cup of tea, I told him the type of trucks we had — very good features, guaranteed for 2 million km — and then he asked me the price. I told him what it was and he nearly fell off his chair. “Ravi, let’s not talk about these unrealistic things. We are in India, not in Europe. I know in Europe these kinds of things are very good, but not here.” This sort of rejection was something I was getting used to.
Volvo also had construction equipment — excavators, truck tippers and so on. I remember meeting Prabhakar Reddy, the construction operator in the mines of Kothagudem and Ramagundam areas of Andhra Pradesh, aiming to sell him 50 tipper trucks. I showed him the vehicle and told him to keep one for 15 days and try it out. He said it looked good but wasn’t happy at all with the air-conditioned driver’s cabin. “Are you crazy? The driver will switch on the air conditioning and go to sleep. He’ll burn my money.” I explained patiently, “Prabhakar, if the truck is not moving the air conditioning will automatically switch off.” He was relieved, but unconvinced. “I could buy three trucks for the price of one.” I had to switch to a short lesson in logic. “Three trucks will mean three drivers, higher running costs, and most of the time the trucks will be underutilised.” The maths probably did not add up for him, but he took a call to try it out, and then completely migrated to Volvo. Prabhakar Reddy inspired many other Reddy businessmen, and we were up and running.
The same story played out with buses. Everyone asked which Indian will pay so much for bus travel? This time, I said, “Are you mad? Indians want safety, they want to travel in comfort.” Volvo actually created a new category and the brand has become a generic name for luxury buses: “Are you travelling by plane, train, bus or Volvo?” But the conversion took quite some persistence. We took chief ministers on bus rides — Karunanidhi, Sheila Dixit, JH Patel… They all thought it was an idea ahead of its time. And I would insist, “If you don’t introduce it, it will always be before its time.” Somebody has to bell the cat— that was our marketing line. Once all of them came on board, there was no looking back.
We also started a training school to familiarise drivers with our buses and trucks. On his visit to the Bangalore plant, Jan Engstrom, president of Volvo buses, peeped into the classroom and wanted to speak with the drivers. He spoke in English, which I translated. I can never forget how one of the drivers stood up in tears and said this was the first time he had been enrolled in a class and been offered a chair to sit. He had never sat in a classroom in his life! That’s when I realised the real importance of our programme: the school gave respectability to drivers and taught them even basics such as personal hygiene. These men had pitiable lives — about a third of those who applied did not make the cut on medical grounds; they would either be short of hearing, visually impaired, acute diabetic or afflicted by AIDS. It occurred to me that I have never seen a driver in India wearing spectacles — they don’t even know what is correct vision or optimal hearing. But our driving programme had become such a big hit, all operators wanted their drivers trained at our 3-km driving track under the certification programme.
There was no way we could have grown the way we did unless we brought down the prices to more affordable levels, through localisation. It’s not easy to steer a highly accomplished, technologically-driven European company such as Volvo in that direction. I was told that we should be importing the entire bus body from Sweden. I explained that our survival was at stake, so they gave in to 30% localisation to begin with. Initially, the Swedes were highly suspicious of our vendors, and I had to pass through many gates to get a local vendor on board, but we accelerated quickly to 60%. That was because the minority who believed in the new paradigm were right at the top — Engstrom and the president of Volvo trucks, Karl Erik Trogen — both were wise men; they understood global change. Their backing helped me fight the conventional guys who thought these weird ideas of sourcing from a Third-World country would ruin the company.
Developing the local vendors proved to be a much bigger challenge than getting the nod for local sourcing. My purchase man, with several years of experience from Tata Motors, would say, “Let’s go with this guy. I have known him for 20 years and he is great”; the Swedes would say, “No. Get me his credentials, let’s visit them, get them audited…” The Europeans obviously had a very sophisticated system of ranking vendors on their quality standards, and we had to learn all of that in double quick time so as to not lose out on the market opportunity. But the team had so much energy, we were sprinting.
I was just beginning to enjoy the fruit of my labour at Volvo when I got a call from Jorgen Centerman of ABB. “How about coming home? Come back to ABB?” I replied, “I am quite happy in my new home”, to which he said, “You must be mistaken. Come over to Zurich and talk to us.” I went to his home in Zurich and Centerman said frankly, “ABB is going nowhere in India, we need you back. Here is the cheque book, make any investment, but we need the turnover doubled in three years.” In 2000, ABB India’s turnover was Rs.800 crore; Centerman wanted me to get it up to Rs.1,600 crore by 2003.
It was so difficult to convince Leif Johansson, Volvo’s CEO, that I wanted to move; after all, we were just emerging victorious after a long struggle. Meanwhile, I told Centerman that I would take on the responsibility for ABB India only if I were an empowered country head; I was so glad when he agreed and made an exception for India and China. ABB had different business segments, and each business segment had to report to its head in Zurich. I was very clear that it wouldn’t work; if I had to deliver, I couldn’t have the team report to someone in Zurich. There had to be accountability. I needed K Rajagopal, CFO; PC Rajiv, director HR; Harmeet Bawa, head of corporate communication and relations; and legendary business heads like Inder Sadhu, Amresh Dhawan and Biplab Majumdar as a team and all the plant heads united as a team; and that wouldn’t be possible if they were managed by Zurich.
Many years later, in 2009, I was returning from Switzerland when I was invited for a lunch by GE John Flannery, the country head of India. I flew down from Baroda and we met for lunch at the Rooftop restaurant at Taj, Mumbai. The global chiefs at GE wanted to know the mystery behind ABB’s fast growth during my time. There were distinguished guests for the lunch — John Rice, vice-chairman, GE and John Krenicky, head of energy at GE worldwide. I had only one advice — empower the country head to whom every vertical should report, and then watch the show. I told them that John Flannery should be made responsible for all projects in India, no one else. I was amazed at how seriously and swiftly they took my advice. Within 15 days, I got a thank you note from John Flannery saying he had been made the empowered country head! He became so successful that he was moved from India chairmanship to become the global head of the GE’s health business.
Truly, the business model that I was trying to champion had a lot of weight. The local people know the local reality. They are sufficiently exposed to the group, product development and policies; they can be the most effective people to represent a multinational locally.
When I came back to ABB, the executive committee of ABB brought me in because they only had Europeans in the leadership team at that time. They were all either French, German or Swedish. This was the first time they got an Asian face and a non-European perspective. They needed someone who knew the environment of the emerging world such as India, where you could do significant vendor development by local sourcing. But here, too, there were the conventional thinkers. Fortunately, I had the support of none other than Fred Kindley, the global CEO of ABB. He wanted to bring about some changes using global sourcing, and was looking for people to support his voice and effect new thinking.
It was a great feeling when the idea of global sourcing gathered momentum, and I found my views were counted. I was invited on the board of British Aerospace (BA). My uniform advice to all boards was to source from low-cost destinations such as India, and keep the home country the technology centre, because those places were expensive. BA did that too. It let UK remain the technology centre and sourced material from other countries, which allowed it to bring down the cost of everything from submarines and patrol boats to war planes and aeroplanes, improve the margins of the company and make it more competitive. I parroted exactly the same mantra when I was the chairman of the advisory board of Schindler, the elevators company, in India and Asia.
It was funny! On one hand, I was trying to make the Swedes take to the Indian way; back in India, we were trying to adopt global practices. I didn’t like what I saw on my first visit to the NGEF — a Karnataka government electrical company — there were large posters and stickers of various Hindu deities pasted on the walls. With so many workers of different faiths, I felt the workplace had to be neutral ground where no one felt uncomfortable and what bound the workers together was the work. We had a huge group discussion the same evening and the management of NGEF together with the union representative decided to remove all the posters. I was pleasantly surprised that none of the workers resisted the move.
I’m not sure if that was what gave me the courage to say no to Ayudha Pooja at the Volvo factory; instead, we decided to celebrate the day as ‘safety day’. The day would be used to showcase all the safety features introduced during the year, see how different shops fared on safety during the year, distribute awards for the shops with the best record, recognise individuals who contributed to the safety culture and so on. The change was not easy, but there was less resistance when I assured them that their half-day holiday and box of sweets remained unchanged. It was a lesson to me that to make profound changes, you should be able to communicate the benefits of the change convincingly to those affected. Dialogue makes a big difference. It was the same experience when we were introducing automation. I remember how fearful people were initially, but when we systematically introduced multi-skilling of people, they understood that their job would be secure, irrespective of automation. They could be moved from one function to another or from one location to another but their job was secure. That allowed us to move forward on productivity gains.
The most difficult bit was when I wanted to change productivity norms. I couldn’t come to terms with the fact that sick leave could be accumulated year after year. This was not a privilege, it was meant to meet your needs if you were down. If, God willing, you stayed well through the year, there was no need to carry it forward. But I encountered resistance from the employees when I announced this and also changed casual leave to emergency leave — because, really, there is nothing casual about business. But I encouraged people to avail their privilege leave. Strangely, people like to preserve their privilege leave and encash it, but I told them to take time out for the family because you can never get back the lost time. That’s something I learnt from my years in Europe — it’s important to take a break from work from time to time.