April 2015 | Philip Chacko
Tata Strategic Management Group: Offering more than advice
Tata Strategic Management Group has transformed itself to profit from the many changes that have taken place in the consulting business in recent years
Evolution is a complex affair in the animal kingdom, playing out over many millennia and incorporating traits and mutations by way of sources and influences from near and far. Implausible as it may seem, evolution is just as complex when applied to business organisations, simply because change — and progress from one stage to another — happens in a crunched time frame and in circumstances that the subject is not always in control of. Tata Strategic Management Group (TSMG) has, over the past five years, understood the logic and the necessity of such change while recalibrating and recasting its offerings and approach.
“We were aware that we would have to adapt to a changing environment,” explains Raju Bhinge, the long-serving chief executive of TSMG. “Those changes were very real in the marketplace in terms of customer requirements, in the disruptions and discontinuities that consulting organisations such as ours would have to cope with. And adapt is what we have done.”
This has meant moving ahead from formulating management strategy to developing organisational, operational and marketing solutions to — the call of the present — driving implementation and change in a manner that has a direct bearing on the end results and benefits that accrue to clients. “Today, with the big consulting firms, client and market requirements demand a different outlook,” says Mr Bhinge. “Companies are seeking more and more value-based solutions; they want measurable returns that can be linked to the inputs we provide.”
Another factor that has altered the equation between consulting enterprises and their clients is the migration of countless former consulting professionals to industry. These people have the capabilities and the credentials to deliver what consulting firms once did, be it strategic advice or the expertise to improve, say, the sales function. “Most major companies have internal strategy groups, change management groups and the like,” says Mr Bhinge. “These groups do what we used to, so we have had to offer advanced solutions to more complicated problems. We have redefined what we do.”
To comprehend the TSMG of now, it would be useful to map the organisation’s birth and growth. Established in 1991 as a division of Tata Industries, the promoter company of the Tata group, TSMG in its initial avatar catered predominantly to Tata enterprises. Sure and steady success was secured on the back of top-notch talent, high-quality work and an expanding skill base, enabling the organisation to attract clients from the public and private sector in India as well as multinational corporations. Add to that, TSMG has from about 2010 been beefing up its research output and intellectual property framework.
Becoming a consulting powerhouse, as it describes itself, has involved plenty of effort on TSMG’s part. “We started as a consulting firm, but over a period of time we found companies were asking for the next steps,” adds Mr Bhinge. “What should their organisation look like, how should they strengthen sales, or what should be done on the operations side. That’s when we gradually began covering these points. We have since 2012 been getting our processes together: more multifaceted solutions, more verticals, etc. What we are now focusing on is solutions. The broad solution is known to most of our clients; what they want is implementation and support in actually realising the benefits and getting the job done.”
The need for results
The days of furnishing a report and the client engagement ending with that have passed. “Preparing a report is only part of the solution,” says Mr Bhinge. “We have to convert our theories into results; that’s where companies have the greatest need, particularly because it involves big changes in the organisation’s orientation,. Whenever a client so decides, we are there to drive implementation. This could be, depending on the situation, a quantifiable result, a milestone or the end point of the deal. It could be all of these things or a combination of them; basically, it is not just a one-point solution but an entire package.”
The shift in thinking has resulted in TSMG being able to better align its knowledge of functional areas — strategy, organisational effectiveness, sales and marketing, and supply chains and operations — with its proficiency in industry domains such as automotive and engineering, technology, chemicals and consumer and retail. It has also resulted in commitments to clients lasting up to 12 months or more and a deeper responsibility to ensure that tangible outcomes are obtained.
“Project sizes have become much more substantial,” says Pankaj Gupta, practice head, consumer and retail. “A typical project a few years back would fetch us money in the lakhs; now a typical project is counted in the crores. The scale of our engagements and the nature of the solutions we deliver are of a different order..”
Judging by the clients it has worked with in recent years, TSMG has got its equations right. Tata companies, among them Tata Global Beverages, , Tata Motors, Tata Sons, Tata Chemicals and Tata Power, continue in TSMG’s client list, accounting for nearly 50 percent of the business it generates, but the non-Tata clients it has served confirms the firm’s repute: Pfizer, General Electric, DuPont, Sumitomo, Toshiba, Sony, Godrej Industries, Bharat Forge, PI Industries and Indian Railways. “It was a compulsion for us to go outside of the Tata group and find our feet; it was vital,” says Mr Bhinge. “Learning how to do that was extremely difficult but we managed it.”
Being part of the Tata organisation can be a double-edged sword on occasion and in certain business segments. Direct competitors in industries where Tata enterprises are prominent are unlikely to hire TSMG. As for its clients from within the group, the procedure of bagging an account is not made any easier due to lineage. “There are no free lunches; that’s for sure,” says Mr Bhinge.
TSMG has for a while now concentrated its business gathering endeavours on mid-sized companies. This represents a sizeable chunk of the market, it is where the firm sees the most potential for growth, and the chance of a Tata clash of interest is minimal here. Multinationals looking to make an entry into India form a separate, and significant, category of clients for TSMG, which has accumulated a considerable amount of data and experience on Indian customers and consumers and in understanding the country.
A red herring on bagging business from within the country has been the corporate social responsibility (CSR) expenditure that Indian companies are now mandated to have. This legally enforceable regulation requires enterprises of a certain size to spend at least 2 percent of their net profit on CSR initiatives. TSMG anticipated a consulting windfall in the wake of the law being enacted but it has not turned out that way, what with companies finding all kinds of methods to define what constitutes a CSR outlay.
A problem of attrition
A bigger irritant is the attrition rate that consulting enterprises such as TSMG have to live with. Attrition rates in the business in India are at about 30 percent — it reaches, by comparison, up to 20 percent in the United States — and the figure is unlikely to come down anytime soon. “In general, attrition rates in consulting are higher than in mainline manufacturing and in services,” explains Mr Gupta. “Many of our campus recruits get into consulting with the clear intention that they will go someplace else in two-three years.”
Seeking ‘experts’ for specific assignments is commonplace for TSMG. Some of these professionals could be from fellow-Tata companies, some from the outside. “What’s crucial is the experience they bring to the table,” adds Mr Bhinge. TSMG can also count, where it has a special need, on the alliances and associations it has forged with Tata companies. “If a client requires help on the financial side, there is Tata Capital, for information technology there is TCS, and so on”
India is the broad canvass on which TSMG has the best insights. What has helped the firm in figuring out India and Indian sensibilities are the myriad industry reports and studies it periodically comes out with, the articles and analyses its people write, and its knowledge partnerships with industry bodies. There is also a social, not-strictly-business aspect to the information outflow from TSMG, which has published surveys on the well-being and security of women in India and on health and wellness foods in the country.
Commercial value is what TSMG is chasing. The downturn that afflicted India was one reason for that, as were the deteriorating climate for business in the country and the organisation’s own churn in thinking. “The next phase of growth will happen once we have all our pieces in place,” says Mr Bhinge.
The coming couple of years are going to be critical for the revamped TSMG, still the largest Indian-owned management consulting firm. With a team of about 70 consultants to bank on, this remains a tightly run ship, and one that has a better than even chance of catching a fair wind in its sails. “We have to be agile, we have to be one step ahead of the completion,” says Mr Bhinge.