The Traction of a Billion Dollar Dream

Dr Sujatha Narayan, Senior Vice President and Region Leader, India Region, Wabtec Corporation, was the Guest of Honour at the MMA 66th Annual General Meeting. She spoke on the turnaround of Wabtec in the most trying times.

I shall share with you, some thoughts which are intuitive and experiential in what it takes to lead a company successfully in India. I would like to start by rewinding to December of 2016. At that point, I was running a business which was a part of 3M. It sold graphics, cleaning and architectural materials to a very wide segment of customers—banks, institutional owners and others. I got a call from a company called Faiveley Transport, which had just been bought by Wabtec Corporation, one of the world’s oldest railway companies, building components for trains and locomotives. It was for a Managing Director’s job and that sounded interesting. In the interview, I was asked by the hiring manager, “You’ve got a great track record with 3M, but how will you fit as a Managing Director for a company in the Railways? How do you think you can lead this company?” At that time, it was a hundred million dollar company, with about 800 employees.

The Three Pillars

If you look at the railway industry today, almost everybody is a mechanical or an electrical engineer. I have a Ph.D. in Polymer Science and all my work so far was in polymers and chemicals. I couldn’t think of a single large company with a woman CEO. I had no ‘Railways’ background. I am going to elaborate on the answer that I gave in that interview. Leading a company holistically as a leader, CEO, MD, GM or a business unit head is focussed around three pillars:

• The setting of the strategy
• Ensuring execution excellence of the strategy through the day-to-day business
• Taking care of the people

Setting the Strategy

It is the singular responsibility of the leader to set the strategy. This is one space that has absolutely no room for delegation. Your managers who run the day-to-day activity of the business do not have the time. They deliver the numbers and customer satisfaction that you need to generate the financials, for existence as a company that makes profits. You have the luxury of having the helicopter view of the entire business, the industry, the customer, and looking into the future and building the strategy. When I became a new MD, I kept my mouth shut for at least two months. I spent these months to learn from everybody that I could, especially the people who reported to me and the people who reported to them. Humility is one of the most basic competencies that a strong leader has.

It is extremely critical to spend the initial months learning, and then every day after that, even if you’ve been a CEO of a company for 10 years. With the kind of VUCA world that we live in, learning is really the key and you have to understand your business, industry, customers and their needs and your value proposition in the industry. You must have the intelligence to explain and understand what is happening to the future of that industry. That’s how you build a strategy.

Customers and Sales Team Matter a Lot

My recommendation is, spend tons of time with your customers and your sales people. Both of them talk a lot and so you will have a lot of learning from them. Many people make the mistake of spending a lot of time inside the company. What worked for me is that I visited every single customer along with my sales team, from different levels of the organization, to get a holistic perspective. Spend time with your engineers. They are the ones who understand your technology and your products. Spend time with old-timers. They will tell you about failed experiments, so you can save time not trying those again and in doing experiments that could potentially succeed.

The Power of Communication

Once you build the strategy, then—communicate, communicate and communicate. This is one thing that a lot of leaders keep close to their chest but I think it’s extremely important to communicate the strategy of the organization to all the employees. Not only does that drive performance and buy-in but also increases employee engagement and motivation for them to stay with the company. To give an example, we have created a billion-dollar vision for Wabtec in India, which is about a half a billion dollar today. We hope to become a billion dollar in three to five years. In every single town hall that I conduct and in every meeting that I go to, I talk about the billion-dollar plan. Today, I can bet that if you go and talk to any Wabtec India employee and ask them about the future of Wabtec, they will mention the billion dollar plan and that’s what they are rallying around. I see a tremendous amount of buy-in from the organization.

Execution—Managing by Gaps

Your job as a leader is to ensure execution excellence. If you are always in the midst of execution, then something is wrong with your organization, because, as the leader of the organization, you don’t want to be in the day-to-day execution. People believe in different ways of running a business and this is my personal philosophy. I strongly believe in the principle of ‘managing by gaps.’ I spent a lot of time creating a landscape of how every department was operating and how their leaders and teams were. I put them in red, yellow and green buckets. I left the green ones alone as they knew what they were doing. They were delivering results and doing the right things and I didn’t spend time with them. The yellow were people who were progressing and the departments that showed real gaps. When I joined the company, this is where I spent most of my time. There is a thought that we must address our ‘Pareto,’ and that the largest and most profitable businesses should get most of your attention. That is not how I operate, as I don’t believe in micromanaging or rocking the boat of things that are already doing well.

Rope in the Experts

When I joined Faiveley Transport, which was then a Wabtec company, I kept getting escalations from the team, from customers and from employees about our manufacturing. They kept saying that they were not able to deliver to customers’ requirements. Our on time delivery was very low.  Employees were leaving because they could not take the customer pressure.  When we looked into this, the problem was very clear. We had a market that had a very high demand. This is India and we are excited about how fast it grows. Then we had suppliers who were smaller companies and they were not as organized as we would like them to be. We did not have a great supply chain planning process. This is when I brought in a consultant –Deloitte—and with their support, we ran a huge supply chain transformation program. This set the stage for the company doubling in sales and many more times in profitability. This was the keystone of my success.

We often hear that consultants just come and tell you what to do, make pretty Power Points and charge a lot of money. From my experience, working with the right consultants has helped us a lot. We brought subject matter and external experts—not only Deloitte but also others—in different areas like customer centricity and reliability and even in our operations. You cannot have every single expertise within your company. We brought in an external company and drove customer centricity with an obsession. In every meeting, we talked about customers all the time. Why did we do this? My observation was that people were working for the P&L. It was all about delivering sales and profits. Not a single person was talking about customer needs. I had to reprogram their DNA for them to understand that the reason they have a pay-cheque is because they have a customer who’s willing to pay for their products. So we ran this thematically. Every year, in the last five years, we would pick a theme which represented a gap in the organisation and we would run it holistically.

At this point, people may ask, “If you’re focused around managing by gaps, then what about the large pieces that are working and how do you make sure that they don’t tank?” That’s where governance comes in. I use the Hoshin-Kanri methodology but there are a number of techniques by which you can monitor the performance of the business to ensure that things don’t go wrong. So in summary on the execution piece, I spend a large portion of my leadership time focusing on fixing the gaps that we have and ensuring that other parts of the business don’t break with a very strong governance process.

Managing People

Every time I have a job, I feel like my team is my family. That doesn’t mean you are going to protect them at any cost. You have to take care of performance issues just like you take care of a child that is not performing well in school, by addressing the child, giving resources and helping the child to do it. But one of my observations is—and this is not just in India or in the companies I have worked—that across the world, even the fundamentals are not in place. We have got companies who pride themselves in their HR processes. But fundamentals like clarity of roles and responsibilities, setting up objectives in the beginning of the year, these objectives and goals being SMART–that is specific, measurable, actionable, responsible and time-bound—periodic review processes, career development discussions, strong rewards and recognition and strong employment engagement activity are not really being done by the people who should do it; it is not the top leadership but every people manager in the company. That is where the lacunae is, and one has to spend an extraordinary amount of time systematising this in the organization, so that this process is well in place. Communication has been a big part of how we’ve driven success, communicating good news and bad ones. When we have a bad quarter or when we lose an order, we talk about it openly so that organization and every single employee will understand the challenges and what their role can be. I often hear how inspiring it is for them, not only to be part of the success, but also to listen about the failures and resolve within oneself on how we can turn it into a success the next time.

Reward Teams and Build Leadership

The other common issue that many of us as business leaders face is department politics. There’s a fantastic book by Patrick Lencioni called The Silos, Politics and Turf Wars. The way I address this is to drive all our initiatives, cross-functionally. We do not have public awards for individuals but only for teams, especially cross-functional teams. This makes people stop blaming each other. A management philosophy is developing in the new age companies where they don’t have departments. They just have groups of skills that work on various projects. The other concept that I am experimenting with is a concept of leadership pyramid. One of the mistakes we make when we are a small company is that the proprietor calls all the shots and runs the company. But as you begin to scale and get larger, you need more and more of your leadership involved in running the company. So the first experiment I did when I was the MD of Faiveley Transport, was to create an operating council which had myself and my direct reports. Then I created a layer of another 40 leaders called the senior leadership team. These leaders ran projects to drive themes like customer centricity, reliability and competitiveness.

Now I have taken it down to three levels. We are trying to pull more and more of our leaders and our employees into the execution of our billion dollar plan.

In 2019, I was in the US talking to our CEO and he asked me, “You’re a half a billion dollar company. What stops you from being a billion dollar company in five years from now?” That’s a big, scary goal but I said, “Why not?” Wabtec is in the largest rail transportation market in the world. This is a company that has invested very significantly for the last two decades. I have three million square feet of operational footprint and close to 3,000 employees. Why can’t we do it right?

Leveraging Three Pillars

We built the strategy of how we will get there by leveraging the three pillars—one is the large and growing market. The second is the low operational costs and the third is the high engineering talent. We presented this to our investors at the global investor meet and got buy-in from the board. We came back to India and pulled in this leadership pyramid. 110 people sat together and tried to figure out how we are going to move towards our 1Bn$ goal. Out of this came 14 work streams. Each of these work streams is driven by our leaders and cross-functional teams. We had a little bit of a delay because of two years of Covid. We went back and presented it to our global community on how we will get there. The nitty-gritties didn’t come from me. All I did was to set a vision and get people excited about it but the leaders and the team came up with ideas. Now I am going to present it to the board of the company.