World Class!

Become World Class! It is doable!

Advertisements

One keeps on hearing the word World Class, these days! What is World Class anyway? World Class means (an activity, a thing or a person of or among) the best in the world! The world is full of people, with thought processes or activities where someone is trying to do something or to produce something even better than its quality level at that time. This thought process came in my mind when my friend Shyam visited another friend Vijay’s manufacturing unit. Shyam said that Vijay has created a World Class facility. 

How does one become world class? How does one create World Class facility or products? Simply by being world class. To become world class, one needs to be open to the idea that there is someone always better than you! There is always something better than what you produce. You need design, product or service, consistency, ability to convince people to buy ideas or products at the price such that the organization remains continuously and highly profitable. The reason for this is that world class companies reinvest large % of their profits into R&D! This indicates continued resolve to improve on quality. Apple and Nvidia are such companies which are relentlessly going for better and improved products. They reinvest huge amounts in R&D. Another thing such companies do is to change their thought process 180 degrees, if required. Classic example is Microsoft. Once they realized that they will not be able to compete with Android and IOS, in cell phone arena, they changed their policies in such a way that they call themselves company making software products which are support systems for other Software companies. 

Talking of Vijay’s organization Connectwell, he was always thinking big and bold for more than 20 years. 20 years back the company was much smaller, but they were bold and could see eye to eye with large world class players. How did they do it? They have been taking part in Hannover Messe, exhibition of industrial products since 1997. This has been a huge investment. This shows that they have been profitable, bold and confident! I am sure initially they must have felt a bit down, looking at international competitor’s products. But they continued to take part with better products; I am sure the competitors must now be getting weary. Vijay’s continued and relentless drive to become and remain world class makes his company work harder, smarter and sharper!  

As against these, companies like TCS & Infosys have chosen to follow a different a path. I am not blaming anyone but it is a path that they wanted to choose. Recently, they used their cash kitty of 2 to 3 billion US dollars to buy back shares from public. If there were a threat of some other company buying them out, then it would be a smart strategy. But I feel that they don’t know what to do with the stock pile of dollars, they did not probably know how to profitably invest this kind of money to reinvent themselves. They probably want remain followers, instead of becoming leaders. There are Indian companies who have shown the hunger to become world class. Tally and Quick heal names come to the fore. They have relentlessly done things and kept their flag flying high with quality of their products!  

You don’t become World Class just like that. It is the people who make companies and societies World Class. Taking example from cricket, in the early 70’s Sunil Gavaskar, World Class diminutive Indian cricketer looked into the eyes of the opponents. He created a culture that Indians can become World Class. He was bold in his game but was a gentleman too! In early 80’s, after India won three consecutive major tournaments in three years, an Australian reporter asked him in an interview the secret of India’s success. Gavaskar asked the reporter, ” Have you seen the movies Jaws 1 and Jaws 2 and so on? ” Reporter was confused and said, ” I have not understood what you are saying.” Gavaskar said tongue in cheek, ” India’s success was same like Jaws, Luck 1, Luck 2 and Luck 3″. Gavaskar had in him to take on the world. Normally he showed it with his bat. 

Sachin Tendulkar story is even better known as he became a World Class act from the age of 16. He again was diminutive but his motto was practice, practice, and practice. He was never afraid to attack deadly bowlers looking into their face! He gave nightmares to the world class spinner Shane Warne! Sachin simply wanted to be world class. From these small islands of Gavaskars, and Tendulars India is becoming a super power in cricket and has created an assembly line of World Class players and the team! This is how nations become World Class. 

Whenever I travel internationally using Delhi or Mumbai airport, I can see that we have World Class infrastructure. Getting into other airports, I feel that India is getting better and better, in islands of supremacy. But this drive has to start in people, should percolate to more and more people. With success, we get confidence and confidence leads you to become World Class.  

What has people got to do becoming a World Class nation? Everything! If people are World Class, the nation can become World Class. To become World Class not everybody has to be World Class, but everybody in the system must be disciplined, knowledgeable in what they do. They should be passionate about what they do. It could be a policeman, it could be a pedestrian crossing the road. If you don’t cross roads by following basic discipline, the system gets chaotic. A construction site worker should be proud of his method of pouring concrete, the planner should be proud of the way he has planned. A grocer should be proud that he is not cheating his customers, profits will come automatically if he gets more and more customers because of quality of products he sells and quality of service he offers. His quality of service will improve only when all people in the shop are proud of the work they are doing.  

I will share with you how confidence about ones own quality helps. A team from India was to travel to Japan to visit an organization. They asked the hosts how much buffer time they should keep after traveling by Shinkansen before catching a flight. They got a reply that they need not keep any buffer because Shinkansen never gets late. It gets late only if  there is a major earthquake.

The system becomes World Class when the lowest denominator in the system becomes World Class, when the lowest denominator is proud of what he or she is doing! I see this attitude in many places world over, people will go out of their way to please the customer. Do we see this in India? Yes,  but only in islands. But for this to become a way of life, attitude of everybody towards public discipline, public cleanliness must change. This is because these are the most visible things in any society. We do see islands of such places in India but these islands must get connected and become a society of World Class things, services and products. It is Vijay’s of our society who have done it. Connectwell  (http://www.connectwell.com/global/home.aspx?lang=en&reg=IN) is doing it and I am sure this is passed on to the next generation. If all of us try to make an attempt, to make the small eco system around you, world class, it is doable. You can have surroundings around your home clean and neat; you can make your personal service providers like milkman, newspaper vendor, car cleaner, home support servants do things in a better way. Once they understand that it is doable, they in turn will tell their own eco system how to do things better. How to be relentless in improving quality of what we do, how we do. The chain has to continue.

It is pretty simple. When you wake up every day, tidy up your own bed….. yes, it starts with you. Make it tidy as if your work is going to be inspected every day! And yes, you yourself inspect it. It better be World Class!  

Auto Industry 2040?

Auto Industry Circa 2040. where will it be?

WOW! MMG! DISCO! These could be names of some of the leading auto component industries in the year 2040! Why have I selected the year 2040? Simply because everyone is talking of this year for introduction of electric cars in a big way; from this year onwards, the real downward trend in manufacture and use of IC engines in the cars, as we know them today, will begin. I am simply assuming that the cars will be available, similar to the cars of today. Masses of cars will be driven by humans, they will have a steering wheel and a power plant/train to give them. They will have some form of braking, electrical system handling various functions, wheels and body with fuel storage area, air conditioning and so on! Things inside could be fancier with more and more entertainment, superior navigation abilities, drivers may become more stress free as cars systems will be able to understand many things and may take over some functions from humans. Internet of things (IOT) will allow things that are not even thought of today.

This is part of evolution of human race but this could be culmination of major change that is taking place currently. The “new” car industry is putting its toddler’s steps today. Evolution is nature as everything in this world is always evolving! Basic driver for these changes is computers and computer chips. The car industry will be using different chips and will capture lots of data data generated by various systems. This data will be in endless loop and will allow cars to function more and more efficiently.

What will be the difference in the cars of today and those in 2040? Today’s power plant, the Engine & Drive train will be replaced by Batteries and Motors. Today’s drive train, gear boxes etc will be just be not there. The exhaust system as is known today will be simply not be needed because there will be no IC engine, both Petrol and Diesel. Gear box and the whole system is really not needed because their function can easily be handled by Electric Motors. Even today, in electric cars, there is a single gear which reduces the RPM to what is needed to drive the car at allowed speeds!

There are many companies that are manufacturing the components that are discussed above. These components may become redundant over a period of time due to introduction of electric cars. Bosch, Denso, Continental, Valeo, Aisin Seiki are some of the major players that manufacture the cluster of these components. These companies together manufacture products worth US $200/ billions every year.  These products may comprise of 40% to 70% of their current turnover. The giants must be already studying the questions that have come to my mind. How are they handling these questions? I am sure it’s a tough call to all of them though they have the where withal and deep pockets to handle difficult situations. Some have started making navigation products, some are making parking assist, camera -related systems. But suddenly new names are being heard in these discussions as vendors. CISCO, NVIDIA are some of them. Some are direct vendors to car makers and some are vendors to components manufacturers.  Where is the real scope for new development and business? Battery packs, battery charging technology to increase per charge distance that the cars can travel today! All other developments that are computer related can also happen in IC engine cars too! TESLA is already building a giga factory for their Battery Packs! So will the “new” component business be taken over by Car Manufacturers? Suzuki, Toyota and Toshiba are coming together in India for big battery plant! What happens to smaller manufacturers of these components? Will they survive the major change? Will “WOW! MMG! DISCO!” replace them? Only time can tell.

In car making, after a long time, new name TESLA, started coming into prominence. TESLA came mainly for the new product offering. It appears that technology like fashion goes round! Till first two decades of last century, IC engine based transportation was not very popular. Trains used steam, cars used electric power plants; but battery technology could not catch with the then needs. Hence IC engine cars and trains became popular. From the existing car manufacturers, some are already manufacturing electric cars more than what TESLA is producing. On top of that they have a running profitable business producing IC engine cars. But one thing is for sure they have the humility and know where they lack. Look at what Volkswagen Brand CEO Deiss has to say about TESLA! 

VOLKSWAGEN brand CEO Diess has said that VW which manufactured 5,987,800 cars last year has to catch up with Tesla which produced 83922 cars last year. “Tesla belongs among the competitors which has abilities that we currently do not have,” Diess said in the interview with “Inside”, a publication for VW employees. Around half of Tesla’s engineers are software experts, while at VW’s core brand it is a much lower proportion, Diess said. Tesla has good electric motors, a fast charging network, autonomous driving technology, internet connectivity, and a new approach toward vehicle distribution. “This shows that we need to significantly improve. We can do this. We measure ourselves against Tesla quite deliberately. Our goal: Using our abilities not just to catch up, but even to overtake,” Diess drives an electric VW Golf.

 Current giants have ready infrastructure and eco system to make and sell millions of cars. They of course lack Electric car eco system as mentioned by Diess above. Their main struggle will be recharging stations for electric cars; but TESLA is also going face the same problem! The question arises if TESLA, a loss making company, a start-up, survive? Let’s look at the startups from the Silicon Valley and the west coast, who really made it big in computer industry sunrise era. Google, Facebook, Microsoft, Apple they all became very big with the products/services that never existed before. TESLA is pitted against the giants for making existing products where the main “driver” is only a different technology! That’s a huge disadvantage. Fighting against giants, who have woken up a bit late, like Mercedes, Honda BMW, Toyota, GM, Ford, Fiat, Hyundai is going to be very very tough for TESLA! Some of these giants are also going to suffer or may merge! My take,Continental TESLA may cease to exist  by 2040 or even earlier as it is known today! Takeover? Maybe! 

 

Electric cars, are they round the corner?

Definition of inflection point: a point on a curve that separates an arc concave upward from one concave downward and vice versa. The term inflection point was first used by Andy Grove in his book “Only the Paranoids Survive”. Inflection point can be there in anybody’s life on in business cycle of industry. It indicates the total change in scenario or make and break situation. The diagram showing point of inflexion.

 Inflexion point

I visualize a major point of inflexion in automobile industry in near future. There are different views floating regarding when the Electric Cars will be mass produced. The year mentioned fairly regularly is 2030! That’s not really far! Why this is going to happen and whether it will happen at all will be based on many factors. Currently volume of Electric cars manufactured world over is not significant. But Nissan, BMW, Ford, GM, Mahindra in a small way and of course Tesla are already making electric cars. I have heard that Toyota plans to come up with a full electric car by 2019.

 2016electric cars predictiongraph

This is the forecast sale of electric cars as percentage of total car sales, for the year 2016 but I could not get the real figures. Japan at 9.7% is highest in the number of total cars produced and China at 0.9% is the lowest %. France, Great Britain, Germany, USA, South Korea, Spain are there in between.

 What will give the boost? What factors are going to push this production? When will the momentum gather for switch to mass production? When will the point of inflexion be reached? Main factors considered in usage of automobiles are its price, fuel cost, car driving  range, parts cost and main is the cost of ownership. Besides this battery charging infrastructure is going to be the most important aspect that will make or break this change.

 Price factor for electric cars appears to be in reasonable control even without mass production. In the cost of electric cars “Engine & drive train” needs be brought down; all other things remain same. When Tesla started producing cars, people looked at it as Elon Musk’s fancy! Tesla is working like a start-up but it is somehow managing to survive financially. Now they are also coming up with an affordable sedan. Slowly big giants like BMW, GM and others have woken up. Initial experiment started with Toyota’s Prius hybrid. Thinking was to just increase the fuel efficiency of existing car system and Prius hybrid was the first successful attempt. But it was definitely a minor change in thinking and not the game changer like fully Electric car. As per current thinking even  in India, Government has increased the Tax on hybrids. When asked, the minister said, “When Electric cars is the future why bother about hybrids!” Electric cars will of course need Government support by way of lower taxes to make them attractive for buyers. Government support will also be needed for battery charging infrastructure.

 Second factor is the cost of fuel. With many shocks offered by Petroleum politics, world has been looking to go away from fossil fuels. Plus the world has woken up to climate change and is aggressively looking to control pollution. Cars are known to be major pollutants. Stringent control is being sought on exhausts from cars. But this will happen only in newer cars, old polluting cars cannot be wished away. Volvo has made a statement that the cost of manufacturing car systems to match pollution norms in 2022/23 will be so high that they will stop making diesel engines. To overcome pollution issue, Germany has declared that by 2030 only electric cars will be manufactured in Germany. To achieve this target they will really have to work hard but German car makers have the technology, financial clout, will and wherewithal  to achieve this target; they are working very aggressively. Best non-polluting fuel obviously is electricity. But cost of producing electricity was a major factor hindering its usage in cars using battery banks and of course the cost of batteries. Solar and wind energy seem to be galloping ahead of other sources to make electricity cheap. Classic example is Germany. On a day in 2016, 85% of electricity produced in Germany, was from non-conventional methods.

https://energytransition.org/2016/05/germany-nearly-reached-100-percent-renewable-power-on-sunday/

With abundance of cheap electricity, on that day the rates of electricity went in negative in tendering process! Recently, California produced 67% of electricity, on a particular day,  by non-conventional methods causing serious disruption in electricity pricing mechanism! World over including India, Solar and other non-conventional methods are very aggressively pursued. By 2030 it looks like world will easily achieve the goal of cheap fuel in the form of electricity!

Currently when we travel by car, we do not think how much distance we are going to travel. This is because fuel infrastructure is fully established world over. Whenever needed, we just refuel and move ahead. This is not going to be so easy, at least today, in electric cars. There are two major points. First is charging stations and second is charging time. Both need to be vastly improved. Charging time is evolution of technology, in cell phones rapid charging technology is already available so maybe it’s a matter of time when we get this in car battery charging. Charging infra of course has to come up but when number of electric cars increase, the infra will come up. The range per charge is also the matter of technology so hopefully it will rapidly increase. Similar to what we do today, while driving long distance, we should be able to stop for coffee and wash room break and get batteries recharged. Lo we are on the way! 2030 very much possible. But my take is that this will happen faster in Europe, Japan & Korea because such things are national policies and are easier to implement  in these areas because of the smaller size of the nations plus most of European nations are developed nations.  In geographically large countries like US, Canada and China plus India, this change may happen region wise or state wise starting with highways. City limits will adopt faster as people can charge their cars in their own homes. 

 Replacement parts and cost of ownership are combination factors. In the electric cars, drive train, exhaust systems as we know them today, will simply be not there being replaced by battery packs, motors & drives. Less number of mechanical parts is going to definitely reduce the repairs and servicing cost. This factor has nothing to do with 2030. As the cost of ownership comes down, more people will be interested in driving electric cars.

 Another major change is going to be the nature automotive components industry. When major systems like drive trains & exhaust system are not needed, current manufacturers will find in a drastic reduction in parts needed by industry; over a period these will be only needed in old cars. With a mandate to supply parts for ten years, 2040 will be the last straw on the back of the Camel for this industry assuming by 2030 electric cars will be used in large numbers. How will current component manufacturers of these components handle change? Will they start making parts needed for electric cars? Do they have the technology? Only time can tell? How will Bosch’s, Conti’s, Denso’s and Valeo’s of this world handle the situation only time can tell. I am sharing one important information about change that has already happened. Nvidia Graphics, www.nvidia.com  producing chips and cards with their GPU technology are already vendors for Toyota, Mercedes, Audi, Honda, BMW, Volvo. This is because of rapid increase in usage of onboard computers to perform various functions including self-driving cars. Five years back, I am not sure if Nvidia name was much known in automotive world! Point of inflection? Yes my friends this is the point of inflection and in this business jungle, snipers in the form of technology are hiding! You never know when you will get your bullet! Yes, my conclusion,” ELECTRIC CARS ARE COMING IN A BIG WAY BY 2030”!