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It Would Be Good To Be In A Vuca World: Anish Shah, CEO & MD, Mahindra & Mahindra
In this conversation with Annurag Batra, Chairman & Editor-in-Chief, BW Businessworld Group, Shah speaks about the challenges that leaders face today, the need to plan for anything and also details some of his early experiences and the things that will take priority in his mandate ahead.
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Sitting at the top spot of the Mahindra Group, Anish Shah, Managing Director & CEO, Mahindra & Mahindra took over the role when the company was braving some very tough times. Shah, however, is a man with a plan, and this has been more than evident in every step the company has taken ever since he transitioned to the role in April 2021. In this conversation with Annurag Batra, Chairman & Editor-in-Chief, BW Businessworld Group, Shah speaks about the challenges that leaders face today, the need to plan for anything and also details some of his early experiences and the things that will take priority in his mandate ahead.
Mahindra was undergoing a tough time and the world was submerged in an international crisis and this is the time when you were transitioning into what would lead to your current position as Mahindra’s MD & CEO. Some of these would have been unprecedented challenges — how did you navigate these at the time?
Let me begin from 18 months ago. The transition was announced in December 2019, but the first step took place in April when I took over as the Deputy MD and CFO. If you look back at that time, our stock price had dropped 70 per cent since August 2018. The pandemic had begun and the nationwide lockdown was imposed. We were seeing significant losses with all our international subsidiaries; in two years prior, we had been clocking losses of Rs 3,500 crore every year with the international subsidiaries. Many new challenges were surfacing daily. You add to that a new team coming in place, without the ability to come together in person, and there is a set of circumstances that would be demanding for anyone.
This was the case with me as well. What helped a lot, however, were the roles I had been through in the past. Sometimes when you face difficult streaks, you will feel frustrated and it can be overwhelming but those are the things that help build a career. If I had not been through several difficult roles in the past, it would be very difficult to get past this.
On the face of it, the transition was taking place at a tough time. But, and I have said this to several of my colleagues, the role I had before this, which was to turn around GE Capital in India, was much tougher in many ways. One big reason for this also is that this role has many positives to it. The culture of the Mahindra Group, the leaders we have, the strengths of our businesses, and the trust that the consumers place in us, are all very significant positives.
So, staying positive…
Yes, as a leader, the first thing to do is to focus on the positives. It is very easy to get lost in the labyrinth of the tests and trials we face. But staying optimistic helped us tremendously. Also, we came from a great position of strength. We may have lost market share and market capitalisation temporarily but those things can be fixed.
The second is to be very clear on what needs to be done. The difficulty and its root cause must be identified. When we did that, everything became very clear. As we presented to the board, for example, the financial impact of Ssangyong and its impact on our market cap, the board unanimously advised we had to exit. Similarly, when we repeated this process with other businesses, it was the same reaction. Clarity of thought and required action is a must.
The third and very important is how do we do it. Taking the tough call is difficult but executing it is more so. Many emotions are attached and they have to be honoured because that is part of who we are. We have to balance the emotional with the practical aspect of what our investors want. We are here, placed by our investors. They invest capital in us and we have to return, generously. This perspective is very important and hence being able to execute is the most critical.
The fourth, and perhaps the most important, is the ability to build a strong team. Once you do that, you have to empower them and have them say what needs to be done. Working together makes a strong organisation.
One of my bosses had told me that, ‘Anish, you are as good as your team’. I have taken this to heart. I have kept a very high bar of who we bring into the team. Once you have a strong set of leaders, you empower them to run and that is what has keeps the company going.
While we are on the subject of challenges, let’s speak more on some of the external challenges. What are some of the top three or four megatrends that you see in this VUCA world?
The first is purpose. A company’s reason to be, its purpose, is very becoming important for everyone. At one point, many would ask questions on why we are focussing on purpose and spending money that could be returned to investors in another way. We particularly did not face this because our investors have always understood our reasons. But many companies have been asked about purpose vs. profits. Today, that has disappeared. Even consumers are looking at companies and questioning whether they are really doing good for the community. They want to be associated with such companies only.
When I joined the Mahindra Group, that was my first question –– what is the purpose and the culture of the company? And that is what attracted me. In fact, that is what attracted many of my colleagues to the Mahindra Group. This is becoming a lot more important. Companies that need to thrive and want to be successful have to begin with a purpose. The advantage that we have at Mahindra Group is that this is in our DNA. It is not something we have invented, this is who we are.
The second megatrend is around consumer expectations. Consumer’s demands from companies have risen significantly, especially in India. It is no longer an option to deliver something mediocre. With digital acceleration in the last 18 months, consumers are seeing a different level of service already and that is becoming the benchmark. We have to do better than expected. Companies not only have to adapt to this change but also deal with the fact that there are even start-ups that are meeting consumer expectations better than larger companies. So, how do companies change their process, and become more agile and react to the voice of the consumer? How do they more collaborative?
The third trend is uncertainty. You mentioned the VUCA (volatility, uncertainty, complexity, ambiguity) world. I would say that looks like a great world in comparison to where we are today. One would look back at that world today and say, it would be nice to be in that world. The world today is a magnification and multiplication of where we were. Leaders have to be able to manage that, live with that and create plans around that. This is a world where we need to create optionality to move into the future direction quickly. And this can only happen if we are able to deal with uncertainty in different ways.
You spoke about being collaborative and agile, and this reminded me of Rise, the one-word articulation of Mahindra’s purpose if I can put it that way. In fact, in the 75th AGM, Mr Anand Mahindra while sharing the company’s future vision also reiterated on Rise. How does Rise change in the time ahead?
Rise and its tenets remain relevant in our future as well. Let’s look at the foundation of the company. In 1945, our founders placed a newspaper, where they spoke about the principles under which the company was set up. That ad did not talk about setting up a money-making business but that it was there to do good for the community, to create an environment where diversity was valued. To create equality in the work environment that people would enjoy and ultimately to contribute to the country. That has been in our DNA since then. We hear about ESG (environment, social, governance) today but we have been living it for 75 years.
On the environment front, the work began for us in the early 2000s. This is where we took the leadership role. We put a team in place for this and made commitments around carbon neutrality goals, and launched projects to reduce energy usage. We have always felt that environment, social and governance are the key doctrines by which we operate. This is very important for us.
Even if you observed the leadership transition, the important aspect is the continuity in change. Our focus on Rise, on enabling communities to rise and do more with them, is going to continue in the time to come. During the pandemic, this happened naturally across all our businesses. None of our companies or our leaders waited for us to issue a central command on how to reach out to communities or do the needful to extend help during the crisis. All businesses had begun taking steps simultaneously because our leaders, and our teams, imbibe Rise.
I have to agree with you. In fact, we see and hear much about how every business now has to be a social business. But this can be misconstrued by some as well. What is your advice on how to approach this the right way?
Social business is not just about giving back to the community but it is doing so while growing and creating value. Anand (Mahindra) spoke about People + Planet = Profits. We see and live this on a daily basis. We know from our experience that we can balance doing good for the community and reward our investors at the same time.
It is known that Mahindra has been a top performing Nifty stock for 17 years but in this period, we also have been the leaders in ESG. The recent Havard Business School case study looks exactly into this and that is what we have to take forward. The more economic value we create, the more social value we can create. At Mahindra, we are also quantifying this. There are various methodologies used by experts around the concept of quantifying social value. This is important because then we can measure social impact as rigorously as financial performance and we can set and grow targets. Based on this, Mahindra Group roughly estimates that while we have driven 42 billion dollars worth of economic activity in FY21, the social and environmental impact we created was around 4 billion dollars. This is what we are driving together.
On the subject of social, Mahindra Group has taken many initiatives on diversity. However, in your current set of business leaders, across all your companies, you still do not have a woman in a leadership position. Why is this the case?
Diversity is very important, and I must tell you that in the first 12 hires we had at the group corporate office in our top leadership bands, nine of the hires were women. This is a journey that takes time because the most important aspect here is to ensure meritocracy, to ensure that the people we hire and promote are done based on merit. Hence, these senior women leaders have been hired based only on merit. This is critical for any organisation, and its people including our women colleagues. We have not compromised on this.
That being said, this is something we are focussing on in a much bigger way today. This is completely in line with our work culture as well, so I am surprised that we have not had more women leaders in our company. To some extent, this is also a function of what we are seeing across India, and the women leaders in India, even in the present day. We will change this and take leadership on that front. We will develop and groom all leaders equally, and we will give them equal opportunity. We have seen the value in diversity and we will continue to drive this as we move forward.
Mahindra Group right now is in more than 100 countries. You have acquired, set up offices, design studios and plants, and you are also global leaders in some categories. Give us a sense of your international ambition and where we will see you headed.
We are and we will be a global business. International is a very important aspect with regards to getting the best technology and being able to gain leadership position in international markets that also help us in India. Our primary focus here is to deliver the best global products to consumers. We have very high ambitions and at the same time being able to execute them. The expansion or entering new markets will depend on our specific businesses but broadly those are the guardrails.
My last question is slightly broader. We see many CFOs succeed to become CEOs, you are an example of this as well. What makes CFOs such great CEOs?
You are right that before this role, I was the CFO but in this case, it was a CEO that became a CFO. The CFO role was part of the transition. When the transition itself was first announced, given the complexity of our organisation, our board decided to do this in a very structured manner. As part of that plan, they advised me to take over the CFO role for a year. This really was a great move because it enabled me to see the details in all our numbers, to see our company and its various businesses up-close and be able to play a significant role in shaping it as well.
To your point, CFOs know the details of the company. They see all aspects and know the levers that need to be pulled in a world where investors are looking for more returns. However, I would still not generalise this. Because in the world today, we are also seeing the need to be creative, to innovate, to deliver much higher than expectations, to move quickly and handle uncertainty. There are leaders across all functions that can do this very well. The key is giving them early exposure.
This was the case for me. At the age of 29, I was in a very senior role in a large company like GE, where my peer was 12-15 years older than I was. At the age of 36, I was running a global company for GE across 30 countries, and at the age of 39, I was the CEO of GE in India. It is not about the function but about giving experiences, grooming talent, and allowing them to fail and learn. This is a very important element for any company in its future readiness, and we are very focused on this at Mahindra as well.