Talk by Dr. Bharat Balasubramanian, Daimler-Benz

It was a new quarter at the Department of Management Studies, IIT Madras and it was a new corporate honcho who took out time to address its students and impart wisdom from his enterprising career. So it was Dr. Bharat Balasubramanian, Vice President, Group Research and Advanced Engineering, E/E, IT and Processes of Daimler AG whom the student came in droves to listen, under the auspices of the Corporate Wisdom forum.

Dr. Bharat Balasubramanian started by introducing himself. He is an IIT Bombay alumnus who went to Germany in 1974 after graduation. He joined his present employer in 1977. He said that joining Daimler AG was a conscious decision on his part as he wanted to work in a hard core engineering field rather than go to the US or to the IIMs for further studies, as his batch mates did.

Dr. Bharat Balasubramanian gave a description of various units of Daimler AG as well as Daimler-Benz and various cars, trucks and vehicles that these premium brands make. He spoke of the challenges the company is facing, in the face of other premium brands and worthy competitors such as BMW, Audi and Volkswagen. Daimler AG and Daimler-Benz today are working on delivering better cars that give more value to the customer who chooses to go with their brand. This posed great engineering challenges in areas such as fuel injection systems as well as fuel quality, he emphasized. To counter them, he showed how his company was actively engaged in research and development projects. The Mercedes-Benz brand is a first-rate brand that stands for class, comfort and safety. So today the company was working hard to come up with technologies that gave top notch comfort as well as safety. For this purpose, the company has zealously invested in quality improvement processes.

He said that Daimler-Benz also had a R&D centre in India. He described about the initial challenges of setting up a new division outside of Germany as the company’s employees were wary of the unit taking away jobs from them and how initially the results were not up to the mark. That’s when he decided that the unit needed to fix the problem of kill the unit. Dr. Bharat Balasubramanian then worked hard at convincing the powers that be that if the company let go of this opportunity then someone else might pounce on it. He went for a Board of Directors revamp. Also as it was the Mercedes-Benz brand that was better known and respected in India, the unit was renamed as the Mercedes-Benz Research Center to make its presence felt as well as attract the best talent.

After listening to such an interesting career progression and its accompanying challenges, curious students poured in with their questions. On being asked how he managed the progression from a total R&D professional to a managerial role handling so many units, Dr. Bharat Subramanian said that the transition was an easy one. However, he had his share of challenges. As a part of the senior management he had put forward a thesis that the company change its focus. Initially 90% of the efforts were concentrated on the engineering side and only 10% on management. He suggested that Daimler AG give 40% efforts towards engineering, 30% towards processes and the rest towards management. This was unacceptable to a number of engineers at the company as they were adamant that the present setup was good enough and they were managing very well. After a lot of convincing on the management’s part, the employees were trained over a period of 3 years in management aspects such as sharing one’s vision with one’s team and working with an inter-disciplinary team as well as process aspects such as TQM. This process lasted 3 years at the end of which the management as well as the trained employees appreciated that the training helped them perform their job better.

On being quizzed why Mercedes- Benz didn’t have a great presence in India, Dr. Bharat Balasubramanian accepted that India was a small market for his company. He said that there was a big market for different segments of cars in India and their quality and price aspects were very different from premium brands as that of Mercedes-Benz. So the company would need to differentiate on this respect and come with a different car. In contrast, Europeans expected the same technologies in each car segment and were also very conscious of differentiating between the segments. That’s why Mercedes-Benz had a greater market in Europe than in India, he explained.

Answering question on the split between Daimler and Chrysler, Dr. Bharat Balasubramanian said that the relationship was set up because the company wanted a foothold in the US. However, Daimler AG was a premium brand player while Chrysler was a volumes player. The synergies that the two wanted was not really found as despite the tie-up, both operated as different units and reported profits individually. The combination also had massive cultural issues. Moreover, Chrysler, along with other American automotive giants such as GM and Ford, didn’t really attract the best talent. In contrast, the best engineers in Germany vied to work with each other to work for a company that produced a car such as Mercedes-Benz. So there was also a talent dissonance. To top all these, the brands didn’t match. Mercedes-Benz didn’t want to dilute its brand with the Chrysler association while Chrysler wanted to a brand of the masses; this resulted in a totally ineffective brand strategy. This taught the company a very important lesson – if you want synergies to come from an association you must share the same platform of operation. Even when 2 years ago when it became clear that a split was needed, there was no retrenchment possible in Chrysler as was the norm in the US automotive industry. Finally a majority stake of the holdings was bought by Cerberus Capital Management.

Commenting on the Tata Group’s famed attempts to make the 1 lakh car, Dr. Bharat Balasubramanian said that European car makers wouldn’t make such a car for their customers. He said that in this case Tata’s strategy was to attack the 2 wheeler segment users and give them a safer option than an open vehicle to travel with their entire family. However, such a car wouldn’t pass the crash tests that are a very important regulation to be met by European carmakers. In fact, two wheelers such as motorcycle have their own market in Europe as they command a distinct respect as a stylish way of travelling. Due to such intricacies involved, he surmised that the European customer wouldn’t fall for such a car.

In the end, Dr. Bharat Balasubramanian said that he felt that engineers from institutions such as the IITs were moving more towards sectors such as IT and Software Services rather than hard core engineering. To have a Mercedes-Benz come from India it was important that the best brains flocked to the automotive sector.