Introduction Those who still get to travel by the few Ambassador cars that are still around in the tourism industry will be still thrilled with the leg space and the relative comfort of the car, even when compared to the latest cars. Yes, it was and still is a very comfortable car.
However, it is no more manufactured and has entered the dustbin of history. So has its nearest cousin, called the Fiat. These were the two cars that literally dominated the Indian market for decades. That was before one gentleman called Mr. V. Krishnamurthy took over a company called Maruti Udyog, took on board some very good smart Engineer-MBAs on board, struck a collaboration with a Japanese company called the Suzuki (the present owner with a 100% equity share), introduced the small car called Maruti.
India was never the same again. We will discuss these examples, along with a few more, in the following paragraphs. What really follows is a history of missed opportunities. Of Management making Himalayan blunders.
In this article, we will discuss the examples with specific reference to a) Product innovation and development in the automobile industry b) Product innovation and development in the electronics industry c) Product innovation and development in the FMCG industry. The focus will also be on Indian failures and the lessons to be learned from them.
Product innovation and development in the automobile industry What was described above is one example of how Maruti changed the face of the Indian automobile industry forever. The scenario is still dominated by foreign companies. Only in SUV do we have the Tatas and the Mahindra and Mahindra, who have very good products. They are very good examples of what ought to be done.
Take leadership. It is said that Anand Mahindra shopped around the world and zeroed in on Pawan Gupta, the CEO of Mahindra and Mahindra's automobile products. It was he who masterminded the launch of the highly successful Scorpio. It is another story that Anand Mahindra took a very big risk by pumping in a full six hundred crores in developing the product with a team of Indian engineers, all of whom were totally empowered to do their bit their best to come out with a very good product.
Just contrast this with what happened to the case of Fiat. Even when the whole market was exploding, the company was hit with a major labor problem. As can be reasonably expected, the workers will always keep demanding higher wages. The Management did not take the workmen into confidence and strike a deal to reopen the plant and invest in product innovation. Management was keen to somehow ensure that they ended the production and marketing of the fiat car. The last new car was possibly sold in the year 2001. Well, the fact that even today the old Fiat cars are available for just Rs.50,000 and can be made to look like new cars by spending another 40,000 rupees is proof enough for the solid basic design of the car. If the owners had stayed back in business, invested a little in improvising the same car to resemble the Maruti in the matter of comfort to the customer, the Fiat would have become a force to reckon with. It lost the opportunity.
Hyundai, another foreign company from Korea, smelt a big opportunity. The then DMK Government had a futuristic vision of developing a suburb called Sriperamadur, some forty kilometers from Chennai, en route to Bangalore. The license was given. It has successfully manufactured hundreds of thousands of cars and has always given Maruti a big chase. The products are so good and the middle-class customers can eminently buy the product. Which they do.
The bank loans have made it so much easier too. The same labor troubles that hit Fiat also hit the Ambassador plant in West Bengal, a communist bastion. Still, the factory is gone and the G.P. Birla company lost all the opportunity. If it had only invested in some product innovation with the same ambassador, we would still be riding the ambassador. Two Management failures. Two big lessons for MBA students. Today, we have BMW, Volkswagen, Renault Nissan, and Ford in Chennai. That the TVS group, the leading auto-ancillary component manufacturers with a big focus and world-class products are based out of Chennai, reduces the cost of production and this is one reason that Chennai is called the Detroit of India.
Product innovation and development in the electronics industry This includes consumer durables. Videocon was a big name in television not so long ago. It today is an also-ran company. It was never able to make a dent in the hugely competitive air-conditioners industry. It also made mistakes in the marketing of televisions. It was the first to actually catch on the low-cost warrior game. However, when the two companies LG and Samsung from Korea came in, they were not able to withstand the competition. When someone gives the better product at similar prices, what will you and I, as customers do? Obviously, we will go to the guy, whom we think is best. This is exactly what happened to Videocon. They were unable to match the new products. Product development also happened late.
Exactly the same story has happened to Micromax. This Indian company did grow very fast and was the largest selling cell phone company just 36 months ago. Today, the new guy called Xiomi from China has far better quality that matches the Indian product. The rest, as they say, is history. Indian manufacturers are unable to do Apple computers in India. There is no one in India to think like Steve Jobs.
In cell phones, Jio from Reliance has tried to eat the lower end of the market with an Rs.1500 cell phone and a recharge of just Rs.49 that gives unlimited calls. The same phone also has internet. Most of these phones have been discarded within six months. Yet, the rural population and the semi-urban population of India, are always wedded to "use it and throw it" culture. Try to get a refill for a gel pen today. Refill manufacture is almost as good as gone. The similar philosophy rides the growth of Jio. For now.
However, Jio cannot just sustain with such a poor product at all. We also come across similar products in the same television and the air-conditioner industry. Onida, for example, was a superb product. Family infighting among the family members of founders allowed the other competitors to milk the market. Samsung and LG have all bits and pieces of the jigsaw puzzle covered. Now, there is no place for Onida.
For company after company, we find Indian companies have lost out in the race. What makes the Samsung product, for example so good? Picture quality and sound. It has a huge advantage as these two essential features have been so good. As good or if not better than even Sony. The giant Japanese company that is now fighting with the Korean street smart operators. However, Sony has the technology that is far superior to any Indian company. Our R&D expenditures are very low. The founders of most Indian organizations always think of importing technology from China. This is not a solution at all.
Product innovation and development in the FMCG industry V-care is a small company that is now growing so rapidly in the grooming industry. Based out of Chennai, this company has come out with a hair-dye that can be applied on the scalp without the help of even the traditional gloves. This is the best ever example of good innovation. Called VIP hair dye, this product is a big hit in the market. Hit, the product acquired by Godrej is a big success in the "banish mosquitoes' market. Similarly, the small company called Kalimark has invested in high-decibel advertising and has increased the market share of its soft drink, called Bovonto. It is still expanding the product mix and has innovated with a panner flavor and has an Rs.35 per bottle of a product called Vibro. Its capability to enter the vacant spaces of both Coca Cola and Pepsi is admirable.
Cavinkare came out with a product called Meera shampoo and snatched away some market from existing shampoo market. This traditional mix of Shikkakai as it is called makes the hair very soft. It is a big example of product innovation at its best. However, Campa Cola, the one-time superb soft drink sold out to Coca Cola and since then, the product is not in the market. Had Mr.Chauhan, who owns the Parle brand of biscuits not sold out, he would have perhaps reinvented the very good Campa Cola.
In the FMCG industry, it is often seen that only companies with a very nimble foot and abilities to change very fast, can succeed in the market. The others simply fade out. In the recent past, Pathanjali is riding the new 'organic" wave. It is a big wave and with rising consciousness of the harmful preservatives that are part of the MNC products, it is hoped that the Indian customer will still stand by Pathanjali products and shun the MNC ones. Already, in Tamil Nadu, Pepsi and Coca Cola are not that famous.
Conclusion The aforesaid examples are only indicative. There have been so many other failures as well. However, giants such as Asian Paints still dominate the Indian market. Just like another very company called Marico Industries does. Not every company is a failure. However, the examples of failures to invest in product development and the case studies in detail that are available in so many business magazines, published at different points in time,will make very good learning for any MBA student. Only only hopes that the mistakes are not repeated again. Corporate India has also learned some lessons and there are other success stories. These will be discussed in other articles.
A good article giving the insights and status of innovations and entrepreneurship in our country.
Yes, it is true that we have failed miserably in many areas but it was due to the international competition. When our economy was not open to the global giants there was nothing to compare. Today there is cut-throat competition in the industry and due to this globalisation, the weaker countries are exposed.
In our country, everyone had only one dream that is to get an education and get some Govt white collar job and then forget everything and relax. An economy does not grow with such notions neither the innovation gets encouraged.
Our education system and political environment were not conducive to entrepreneur growth. It is unfortunate to conclude like that but it is the fact. In many countries, children are taught skills and they start earning since early ages but we are simply pampering our youths by giving them all the facilities in the house for free. They do not know the value of money. They want some job where there is no work. It is ridiculous. What is the legacy we are leaving for the youngsters of our country?
Whether we blame Govt or society or individual families for it, it is still happening. So how can we dream that our product will compete with the products from Korea, China, Germany and many other countries who are aggressively flooding the world markets with their products?