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HindustanTimes Thu,18 Dec 2014

‘All firm heads are potential successors’

Manu P Toms and Tejeesh NS Behl, Hindustan Times   May 30, 2012
First Published: 23:36 IST(30/5/2012) | Last Updated: 23:41 IST(30/5/2012)

He could well be the last chairman of the $ 15.4-billion group carrying the Mahindra surname. However, Anand Mahindra says it is more difficult to establish your credentials when you take on the mantle of the family business because people presume that you are here because of your last name. In an interview with Hindustan Times, Mahindra says that one has to learn to swim against the tide. Excerpts:

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How important is the Mahindra surname for the future of the Mahindra group?
Right now if you see, there is no relative of mine working here. My daughters are in different careers. One is a film maker and one is into designing. They are committed to their careers.
 
So, how does the succession planning system work in the Mahindra group?
The board has a nomination committee. Every manager in our system has to designate three people who can be his possible successor in a “hit by bus scenario”. I have given some people’s names to take over my responsibility. At the group level, if we look at the heads of each company, all of them are potential successors.
 
How easy or difficult was it for you to establish your credentials when you took charge of M&M?
It is more difficult to establish your credentials. People presume that you are here because of your last name. If somebody from the promoter family take up the job, it becomes doubly difficult. You come in with a handicap because people think that you have not earned the right to be here. Therefore at every stage you have to prove that you are there for legitimate reasons.

Did that mean a pressure to perform?
There was no pressure on me from outside. My undergraduate degree was in film making. Certainly if I would have gone into steel industry — my first job was in Mahindra Ugine — with a degree in film making, the credibility issue would have been much larger. I always joked that one of the reason why I went to Harvard Business School was to acquire credentials to be taken seriously. And that helped.

But is a B-school degree enough to run a business where often you need to rely on gut-feel rather than excel spreadsheets?
There are incidents when an excel spreadsheet will tell you that this business will never turnaround. But the gut says this business will succeed.

For instance?
Scorpio rose out of an R&D project when we thought we “can we make 13 seaters instead of a 10 seater”. Allan Durand, the head of our auto division, told me that one of our R&D executive had envisioned a product. When they showed it to me on screen, it almost looked 80% similar to the final Scorpio. Till then we have never done any hardtop other than Armada. The amount was also substantial — Rs. 600 crore — the company had never invested that kind of money into any product; and we had never attempted a quantum leap in technology. Any left brain analysis would have advocated against it. At that time I had to take a decision.

How big a risk it was?
I was betting my job on the product, but not the company. If it failed I certainly would have lost my job. At that point it was pure gut instinct.

But you had taken riskier initiatives later, for example, your bid for JLR?
That is an example of how we look at risks. We were infact for a short time the preferred bidder for JLR. But we realised that even a 10% drop in sales would have involved huge amount of losses — far greater than the group could have afforded. That is why we never bet our company. Tatas went ahead and bid. I think next year there was huge decline in sales. Honestly we would not have survived that. We are not as large a group as they are. In retrospect what we did was right.


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