Bangalore: The fast changing macroeconomic environment and the rapidly evolving technological ecosystem have brought insurmountable challenges for global businesses. Legacy business models are on the verge of collapse, as they are being replaced by innovative digital platforms. These digital platform business models are powered by a mix of real-time data and software algorithms, analytics, device based apps, internet along with digital payments and location based services.
In a tête-à-tête with Pankaj Maru of ETCIO.com, Mahindra Group‘s SVP – Digital Transformation, Jaspreet Bindra talks about how his role and his team helps group companies in transforming their traditional businesses using new technology platforms and discusses about CEOs ‘ top priorities, the evolution of CDO, the notion of digital versus business transformation and much more.
Digital transformation @ Mahindra
Bindra, who heads Mahindra Group’s Digital Transformation, says that his role is the industry equivalent to a CDO (Chief Digital Officer) and his responsibilities span across the group companies.
With no central plan at the group level, each company operates independently on a federation model and has its own strategy and planning activities. Almost all the Mahindra Group businesses are traditional legacy businesses like manufacturing, retail, hospitalities, financial services, agriculture, etc.
Given the traditional business nature, Bindra explains that as a CDO his team’s job is inward looking like how to transform those businesses or partially from its current to digital business models.
“During this process, IT only comes at the later stage; however IT is one component of what the whole digital transformation is all about ,” points out Bindra.
Continuing with the businesses and its structure, Bindra informs that the Mahindra Group is very unique from other large conglomerates in India or otherwise. Infact, unlike the Tata Group, Mahindra is minimally controlled, he reveals.
“It’s actually not a conglomerate but is called as federation which means that every business is independent and each one has its own digital vision,” Bindra stresses.
He works with few of the large businesses like auto, tractors, agriculture, financial services, retail and others, where his team undertakes multiple tasks such as process digitization using IT, which one of the key parts of the processes.
“Our focus area from digital transformation is around building new business models,” he says.
Digital Transformation @ Mahindra Group
Mahindra Tractors, which is the largest tractor makers in the world, has launched a small company Trinngo within the organization. Trinngo operates on a platform business model and offers Uber like services for tractors.
“And obviously for that you have to do a lot of technology and platform work to create an Uber like platform for tractors which will work both internally as well as externally with partners,” points out Bindra.
Trringo is actually trying to address the disparity between the numbers of farmers and tractors, whereby it lets farmers to rent their tractors to others. “This platform not only works through mobile app but also through phone because in villages you can’t expect everyone to open an app and start using it,” he explains.
Bringing businesses on digital platforms
Likewise Mahindra Group has other Uber like new platform-based businesses. Among them is smartShift – an intra city logistic transportation platform for small businesses and shopkeepers, while Carworkz – is an aggregator of garages and service stations providing car repair and maintenance services.
“The moment you start aggregating and collecting transaction fees – it’s a different business model and again all of these are built on technology platforms,” says Bindra. While these businesses are based around aggregation model, others, according to him, can be built using new technologies and transforming existing businesses.
Besides, the group is looking at new technologies like blockchain and working with global blockchain technology providers to identify used cases, create proof of concepts (PoC) and then build new business models. In fact, Mahindra Finance has revamped its discounting module using blockchain.
Citing Airbnb as an example, he says it completely changed the hotels’ business model which used to be around building hotels and providing rooms. Airbnb’s business model is about aggregating existing assets and using it by setting rentals for each asset.
Uber, Airbnb and many of the online market places like Amazon and Flipkart in India are platform business models, purely digital in nature leveraging real-time data, algorithms, analytics and data science and internet.
The Digital Transformation era and trends
Digital transformation in recent times has become a buzz word, echoing across industries in India and globally. “Yes, there’s has been a lot of talk around digital transformation now but the talk only has started recently,” says Bindra.
But the reality is that not many people actually understand what digital transformation is all about. “Digital transformation is about business models, culture, people and mindset, which is yet to be realised,” says Bindra.
However, there’s a difference between digital transformation and digital. In fact, Bindra points that going digital some 4-5 years ago meant things like building websites, digital marketing, SEO or apps.
There’s a misunderstanding of digital transformation as it is largely compared with technology but it’s not as technology can only enable it, Bindra implies. However he adds that usually it’s the BFSI sector that tends to lead in taking such initiatives.
The Rise of CDOs
The digital transformation wave to an extent has given a push to the need of a new C-level position of CDOs (Chief Digital Officers). Today, increasing number of large enterprises and organizations are trying to bring CDOs onboard besides the CIOs, to drive digital transformation projects.
CDO is among the top three priorities of CEOs, and in some cases it’s a top priority, according to Bindra. It’s because he says CEOs aspire from Facebook, Google and other digital companies and wants to be like them.
However, for organizations finding a suitable and experienced CDO remains a big challenge in India. “Frankly speaking there are probably not more than a dozen CDOs in India and not more while in the US, there are around 3000-4000 CDOs,” Bindra opines.
He explains that the CDO’s job role is a long term and the digital transformation in any organization cannot be achieved in 8 to 12 months time. “The CDO’s job and the digital transformation in any organization is actually a long term process that can take anywhere between 5 to 10 years and requires a lot of money and time commitment,” he states.
From the industry perspective, it’s a fact that there’s lack of understanding of CDO’s role and his tasks. Often it is misunderstood and compared with functions like digital marketing or an IT role; however it’s totally different, cuts across all functions and needs a long-term vision.
Digital Transformation still a long way to go in Indian organizations
Like the CDO’s role and functions, Bindra points that there’s also a difference between business and digital transformation as the former can also mean a whole lot of financial transformation along with business process re-engineering, plant re-engineering, social engineering and others.
In comparison with companies in the west, the Indian organizations have very recently started to experiment with digital transformation and probably are 5 to 10 years behind, notes Bindra.
In fact, citing examples of companies like Nike, Starbucks, Disney and GE, Bindra points that these companies started digital transformation at least some 10-12 years ago. “GE’s CEO had backed his digital transformation plan with a billion dollar investment and hiring of some 5,000 engineers from Silicon Valley,” says Bindra. These indicate how digital transformation has been a key priority for companies in the west.
Unlike in the west, companies in India operate in different environments and market conditions; and also face unique challenges that making it hard to follow some of the latest global digital transformation trends here.
“Our Indian market conditions and needs are different from the west, so we need to do it in a not-so-expensive, frugal Indian way without just trying to replicate what is being done abroad,” Bindra concludes.
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