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“Focusing On Technology Without Design Is One Of The Challenges In India”
In conversation with Udayant Malhoutra, CEO & MD, Dynamatic Technologies and the poster boy of Make in India
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When a business embraces design as a management tool, it becomes a transformation engine helping write success stories. This column puts the spotlight on captains of industry who are design evangelists and have successfully employed strategic design thinking and design disciplines such as Branding, Packaging, Digital, Retail, Product, Textiles and more.
They will talk about how they have profited from design in conversation with Preeti Vyas, Chairwoman of Vyas Giannetti Creative, a design consultancy. A design veteran from NID, Preeti is also on the Governing Council of NID New Amravati as well as Chief Mentor of Designomics, a knowledge platform helping foster the understanding of the value of design.
Udayant Malhoutra is the poster boy of ‘Make in India’. He is the CEO & MD of Dynamatic Technologies that manufactures and supplies complex parts to marquee global brands like BMW, Audi, Daimler, Airbus and Boeing, and thrives on its design thinking. He is also the Chairman of the Amravathi-based National Institute of Design. A true design evangelist, Malhoutra believes India needs to have movement where “design becomes an element of our education system from school”. He talks to Preeti Vyas about his journey, design thinking and innovation at his company, business profit from design, among other things.
Let’s hear your story about your great success.
Well, if I may say so, we’re just on a journey right now. More than business accomplishment or size, the thing that I take the greatest pleasure and joy and pride in is the quality of business that we have built in India and overseas and the kind of customers we have – they are the best of their breed -- BMW, Audi, Daimler, Airbus, Boeing, Bell Helicopter, John Deere, Cummings. What’s critical to be a successful supplier across these industries is your ability to innovate and create value for these customers.
We’re not producing commodities, we are producing customised products and customising delivery models for each of these companies. And the reason I separate the two is that a lot of people think of design as what a product is designed like, what it looks like. It’s form, fit, and function, and also performance -- that’s design. But in terms of the delivery models and value creation model there’s a bigger design story -- that is design thinking. It’s why we operate manufacturing plants in India, in the US, Germany and UK. A lot of people express surprise as to why an Indian company would invest in “high cost economies” in Europe.
We don’t see them as high costs. We’ve developed a global delivery model which creates best value. For example, for Airbus and Boeing, if you take what India’s good at, we can train people and have artisanal craftsmanship at a very low cost. We have great engineers, so you can have 3D engineering skills at best value. When you are benchmarking across the board, the cost of capital is very high. You don’t have access to the best or certified raw materials that you need for aerospace and there are certain skill yardsticks when it comes to using AI and robotics when you want to have high performance repetitive production.
So we’ve created a hybrid delivery model where we have robotised plants in the UK to produce same detail parts that we then ship to India and there we have artisanal craftsman building these semi structures. The typical airframe manufacturers do the assembly in western economies and outsource part production to developing countries. We realised that the cost of capital needed to produce high quality parts in India with the kind of machines that we needed was prohibitive. And if you were to assemble in the West you are actually going against economics.
So we took this business model, turned it on its head and created amazing value for our customers, and a good business model for ourselves and it’s incredible. So we’ve had non-stop growth in aerospace. And I think that’s the secret of the success.
So there is a culture of design thinking. And everybody in your team is encouraged to think in that manner which means empathy for the customer as well as bringing in state-of-the-art technology and innovation, and to me that seems like cutting-edge, which is really what has worked for you.
Yes. I’ve been in the same company for 33 years and I’ve been surrounded by very highly qualified well-educated and skilled people. My job as CEO has been to be customer focused, to empower my team to take risk, and not to fear failure. I think the greatest obstacle in India is that we train children to make no mistakes, and if you don’t make mistakes, you cannot succeed beyond the horizons that they already have. I think a mixture of empathy and empowerment creates innovation for us.
Tell us a little bit about some of the turning points in your journey, which were design-thinking and design-innovation moments.
Well, when I was 20 we had no money. So how was I able to finance a business that was already steeped in debt? We went outside the paradigms of how you could finance it. I went out to the trade, not to the OEM market, but after-market, spares market and was able to get advances, post-dated cheques and delivery schedules for 4-5 months in advance.
I was able to go and talk to a bank manager and say that you discount these, keep your discount and I will give you back enough money. So that became an alternative form of working capital at the time. Similarly, going back to supply chain and committing to your suppliers that your word was your bond, and you start getting credit from them. So we were able to go beyond the traditional banking markets to finance the business through external stakeholders who normally won’t give you credit. So I think that the limitations you had allowed you to rethink how your business is done. Not just purely from the product angle, but just how you are able to wrap up a business. And we keep thinking of such innovative ways to do business to finance ourselves in innovative ways. We partner with great companies and we build a business that’s continuous and people wonder how the small company competes, and small is relative.
We do a roughly $250 million of sales, but are our competitors are $5-6 billion companies, so relatively very small but we keep winning orders and we keep doing good stuff.
You have really scaled up your business relationships with big brands through design thinking. Would like to talk a little bit about it?
You take a product, a hydraulic pump that we make. We are the world’s largest producer of hydraulic pumps. Now there was a time around 15-18 years ago when the technology level in the practice required increase in pressure rating from 3,000 pounds per square inch (PSI) to 4,000 PSI and across the industry people started increasing the frame size adding more metal. So we looked at that and we said can we do it another way? And when we looked at it, we modified the alloy. We actually designed an alloy that had greater longevity, tensile strength. It had better characteristics for continuing burst, and we used less metal in a 4,000 PSI pump than the old 3,000 PSI pump. So when the Industry was increasing the raw material and increasing cost we achieved the same result by reducing it. It comes from the idea of empathising with your customer. They wanted more but they didn’t want to pay more. And in trying to achieve that outcome, we found a way to do it even cheaper.
So I think, everybody talks about empathy, but empathy is as empathy does. As long as it’s a feeling, it’s a good intention. When we act, that act is real empathy. The circle gets closed.
The true steps of design thinking which is empathy, size, prototype, actual rollout — I think you pretty much follow the templates.
This building we are in, it’s a 45,000 sq ft innovation center called the JKM Science Centre. We have two design labs on these two floors. We have a material science lab on the first floor and above us we have a daycare centre for the children of the girls and ladies who work here.
So what we want is a situation where people when they’re working, they’re not thinking of their homes. They just think of the job. So we have a daycare centre upstairs where one of the engineers here can actually see her child right upstairs on a phone if she wants and so she’s comforted emotionally. The two design labs, one works on customer-centric solutions and the other on product-centric solutions. So one empathises with how to make this product better and maybe lighter, cheaper, more powerful and the second one is just listening to customers and designing stuff that a customer wants.
The material science lab is the service centre. So I think it really works. Well, for us, there’s something called JKM Life Centre which is above the other building. We have a badminton court and table tennis in there. We have a little Banko Mat there, you know where you could grow money and do whatever you want. It’s basically a place for people to go hang out. When you create these kind of infrastructures you dispense with hierarchies. The moment you dispense with hierarchies, it doesn’t matter if you’re the boss, or the juniormost person. It doesn’t matter where you are in the organisation. What matters is how good you are at that sport. It destroys hierarchy. So when you create an organisation which removes hierarchy, you have designed an organisation for a different type of ideation, action and camaraderie.
We have a putting green in front as well. So we have some people who are senior citizens because we hire at 20 and we retire at 75. Some are in their 40s and all these guys want to run off and play golf on the weekends. We’re not competing with other companies. We’re going to think that people come and love the place.
Design must be understood as a management tool, not just as a beautifier. How does business profit from design and how have you profited from design?
Firstly, design must make a better product that is more valuable to a customer that pays for it all eventually. The customer pays for everything that we have. Right? And if the product is well designed along with a great delivery model, then you create value that is shared with the customer, with your employees, with your other stakeholders like your suppliers or with your shareholders. And, of course, the government could take some taxes, right? So you have multiple stakeholders. Now good design will create enough of a surplus to take care of all your stakeholders and not just shareholders, not just your customers.
That is the first aspect of what we need do. The second is how you allocate it fairly. Sometimes you want to build a very long-term business? Sometimes you take an investment call to invest along. But then you get a sticky business that is with you for a generation or the next 25 years. Take the hydraulic pumps, for example. We’ve been in that business for more than three decades and we hold a great franchise, it has become a cash cow in the last 10 years. We built a really lovely aerospace business. We should be building it, but it has now started throwing cash. So we took one cash flow to generate a second business and both are throwing cash. Now the question is: How do we use some of this cash flow to convert a foundry business into third fountain of cash? So the first cut is creating value. And the second cut is how you allocate that value and distribute it among the stakeholders and I think both are two different things. I think I better the first and the second. I think we’ve been very successful in creating value for customers in particular.
You’re chairing the governing council of the new NID. What made you agree to that and what would you want from the institute?
Okay. In 1999, I became chairman of the National Technology Council that then got folded into the CII and became the National Technology Committee of CII. In my first year, we partnered with NID and created a Design Summit for India because to me focusing on technology without design is one of the challenges in India. We have the ability to engineer grid solutions, but they are not elegant, not necessarily elegant. I think it’s extremely important to be able to produce stuff that people actually die to get, and then come repeat customers. So along that way, I got very involved because I chaired that committee for many years and I continue to chair it right now.
One of the things that I realised was that the design community in India is very small. The way we see it, I as an entrepreneur and somebody who’s doing some pro bono work in design, we really need to have a movement where design becomes an element of our education system from school, from primary school. It should become part of our public procurement policy. And we need to make it into a movement. So for me, it was an extraordinary opportunity to chair a National Institute of Design being built in India’s most modern city — Amravathi — and to have a small role along with designers such as yourself, in building an institution. I think in 10 or 15 years if we can churn out students who can become entrepreneurs, design evangelists, you can change the way India is built.
The number of entrepreneurs that India is throwing up is incredible. Is there a message that you would like to give them from the perspective of the design evangelists?
If you look at India, we are at a historic moment. India is the world’s largest democracy and it’s also a developing country. In the next 20 years we’re going to have the largest mass migration on the planet in our country. We’re going to have five, six hundred million people who are from rural areas moving to the cities.
In the next 20-30 years we will build more than we have built the last 5,000 years. It’s our moment to build a great India or a terrible India. And the difference between the two is only design.