Finding a Higher Gear

Description

The Mahindra & Mahindra Group, one of India's best-known business houses, is trying to become bigger, more global, and more innovative-all at the same time. In India's post-economic-reforms gold rush, the group, whose 2007 sales were $6.6 billion, has invested in a slew of unrelated businesses, from aircraft manufacture to film production. The flagship tractor and SUV businesses are readying to make big bets in, respectively, the Chinese and U.S. markets. Anand G. Mahindra, the group's chief executive, warns that M&M will survive only by creating a culture of innovation. "Indian companies have almost caught up with the productivity frontier," he says. "What's going to distinguish us in the future is our ability to make products and services that capture the customer's imagination." He says that in emerging markets, businesses structured as groups of companies have an edge over rivals. "I believe that business families should behave like aggressive private equity companies. They must allocate capital, demand performance, create synergies, sustain value systems, and implement good governance practices, but they should let professional managers run the companies." That's why he won't mandate change, globalization, or innovation; he believes in giving the CEOs of the group's divisions tremendous autonomy. In this interview, conducted by two HBR editors, Harvard Business School graduate Mahindra discusses the advantages of creating a federation of companies rather than a conglomerate; the real role of the corporate center in today's world; and his personal formula for organizational transformation.

Keywords

Implementing innovation International business Organizational transformations