Volkswagen is at USD 300 billion in sales. And is close to bust. Sacking a 100,000 employees and selling its Crown Jewels.
Tata is at USD 50 billion and has an identical playbook. But it does not possess most of the strengths that VW possesses. German perfection vs Gujrat penny pinching. Free market vs subsidy mongering.
What you see at VW today is pretty much what you will see at Tatas tomorrow. Just like VW they neither make batteries nor motors for EVs. The European brand JLR should have become history years ago. And isn’t worth subsidising any more.
Here is where Vw has got to with the playbook that the Tatas are pursuing.
https://lnkd.in/gWGhK7t9
It is not if but when they will go the VW way. Strengths in fossil fuel cars are akin to those in film cameras when the world has gone digital. The EV leadership battle is not going to be won by subsidy mongerers or by traders. It is not a branding business. The current leaders are players like Byd in China and Tesla in usa. Both these companies build their own drive train and batteries. And have substantial success in productised software built for own use. And have made significant progress in autonomous systems.
Drive trains, batteries and system software need engineers to lead – not politicians or inheritors. The answer to battling cultural diversity collapse is not to involve family members. That brings in a dynastic model which drives away meritorious employees.
Reliance is already battling this. One of the leaders refuses to interact with the kids. The leader was not part of the system, he was THE system. The kids go bored to oil and gas meetings and spend their time in the meeting by being busy on the phone. The key talent disengages. But they will survive and thrive till Mukeshbhai is in control. After that maybe oil and gas will have to be sold. There isn’t much merit in importing crude to Jamnagar and the exporting diesel and petrol to Europe. They do get feedstock for petrochemicals but as the world goes green and rejects plastics, there isn’t much hope in petrochemicals either.
Whether it is Tatas or Reliance or L&T – the chances of them surviving on the ai age is looking more and more bleak. At the same time, I see startups gallop ahead very quickly. Zomato /Blinkit or Meesho or Aether all came out of nowhere and have built very substantial businesses with a lot of brain capital.
These old marquee companies don’t have much hope because they can’t sort out leadership and create suitable org structures which attract top end talent.
No good engineer wants to be parked like a book is parked in a library – as happens in Reliance or get abused and dumped on the side -as happens in Tata.
These cos are not configured to hire and retain good engineers. No engineer with any self respect will work for them.
Physical Retail for example is a dead industry. Yet it seems to be the focus of many.