The success of Maruti is usually seen as something that was guaranteed considering its partnership with Japan’s Suzuki, and as some critics point out, the government’s blessings. This perception gets corrected as one goes through Impossible to Possible, authored by RC Bhargava, chairman, and formerly managing director of Maruti Suzuki India. Bhargava rightly points out that Maruti was not born in the liberalisation era, but was a product of licence-permit raj. Further, it started off as a public sector company, which, during those times, were not known for being commercial successes. Even the start of the company was on a negative note, considering that Sanjay Gandhi launched a company by the same name around Emergency with government patronage, but it proved to be unsuccessful. After her return to power in 1980, Indira Gandhi nationalised the same company, and thus Maruti Udyog Limited (MUL) was born in 1981.
A PSU that was bound by government rules, recruited personnel largely from other PSUs and government departments—Bhargava himself was a 1956-batch IAS officer who had worked on deputation in Bharat Heavy Electricals Limited—should ideally have been a failure rather than a success, going by the norm in those times. But it became a great success, generating cash even before it sold its first car—the company never sought budgetary support from the government and always remained profitable. The government exited Maruti only in 2003 when it was listed, which gave Suzuki the majority stake, which is around 58% today.
When it started with its first car, the Maruti 800, it was only the third manufacturer of cars in India, but by the mid-1990s, global manufacturers started entering and competition intensified. Despite a surfeit of products sold in the country today by several global manufacturers, barring perhaps Tesla, Maruti continues to have a market share between 40-50%, with its cars selling the most, and the company even conquering the popular sports utility vehicles segment.
Bhargava quantitatively and qualitatively narrates the story of Maruti’s success against all odds, and apart from him, two other personalities form part of the story—V Krishnamurthy, the PSU veteran who was Maruti’s first managing director, and Suzuki Motors’ then president, Osamu Suzuki.
Bhargava lays down the bare details of how the trio build the company step by step, clear from the beginning that despite being a PSU, they will never run it like one. In this, they constantly received support from Osamu Suzuki.
To cut a long story short, the basic reason that Bhargava offers for the company’s success is adopting Japanese management principles and inculcating them among the employees of the company. He rues the fact that despite Japan becoming a great success in manufacturing after World War II, when it had to rebuild itself from scratch, India Inc has not learned or adopted those practices. Even the country’s engineering and business schools have not incorporated Japan’s principles in their curriculum. The fascination with American practices and principles puzzles Bhargava.
According to him, the core of Japanese principles is worker-management partnership, a relationship that in India and much of the US is seen as adversarial. Indian companies manage workers rather than making them partners in growth. Several real life instances have been cited by Bhargava here, which can offer good insights to students as well as leaders of India Inc.
In the Japanese model of management, corporate salaries are not very high and industrialists and businessmen do not lead ostentatious lifestyles. For instance, top management in our country are often paid 500 times of what a worker is paid. In Japan this ratio is 8-10 times. In absolute terms, and not taking into account the cost of living in the two countries, top manager earnings in India are far higher than in Japan, even though our industries are much smaller, writes Bhargava.
Two important practices relating to building worker-management trust deserve to be highlighted. First is that Maruti sent its workers for extensive training to Japan. Second, improvements and innovations at the shop floor take place through vital inputs from workers who have worked on machines for long years. In most Indian companies, managers tell workers what needs to be done, with the latter seen as mere blue collar workers, incapable of providing suggestions. If the management is able to show to the workers that they are stakeholders and the company’s growth leads to their personal growth too, there’s no scope for industrial tension. To prove his point, Bhargava mentions that Maruti also failed on this count when unlike the Gurugram plant, the workers of its Manesar plant were not sent for training to Japan, and that particular unit saw ugly labour trouble in 2012.
Bhargava offers several suggestions on how to make India a successful manufacturing nation, something toward which the government has been working since 2014. His conclusion is prescient: India cannot be among the top countries for manufacturing competitiveness only through government reforms and actions. The main role has to be played by private entrepreneurs. The attitude of blaming the government for lack of competitiveness of industry has to change to introspecting and identifying what can be done by entrepreneurs themselves. The pressure on governments to create a better environment should certainly continue, but it has to be supplemented by the industry identifying what changes it needs to make in its own style and ways of functioning.
Bhargava’s narration may sound a bit idealistic and utopian, but the authenticity cannot be doubted as he sent out detailed questionnaires to former Maruti employees on what they thought were the reasons for the success of Maruti before writing this book.
