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A Federation of Companies United by Values and Purpose Much Ahead of its Time

What does it take to build a common culture across a large group of disparate companies? This was the question posed by senior Mahindra leaders at a critical time in the Group’s history

Values, Purpose, Mantras – can these intangibles actually fuel growth? Mahindra’s financial performance over the years indicates that the answer is a resounding ‘Yes!’

Since 1995, when the Group comprised 17,000 employees in flagship M&M and a few offshoots, the group has grown to 150+ companies with operations in over 22 sectors and 100+ countries with more than 250,000 people on the rolls. Revenue has grown manifold over the last two decades -- from a Rs 44 billion level in the year 2000 for M&M to a group revenue of Rs1,427 billion at the end of FY20.

So, what happened in 1995?

It started with a strategic question -- What makes Mahindra unique? In the mid-1990s, the Group was a conglomeration of very disparate businesses – steel, auto, tractors, IT, financial services, chemicals and elevators. Some were Indian, some international, some newly launched and others about 50 years old.

Meanwhile, the business landscape was changing dramatically, and the marketplace was turbulent. India had started opening its fettered economy in 1991. Businesses accustomed to slow progress under the yoke of the license raj were suddenly faced with both freedom and competition from foreign brands.

Mahindra was scrambling to reinvent itself but there were cynical voices that doubted its survival against market competition because of the entry of global majors. “It was a time of huge change for us. We downsized. We reengineered business processes. We adopted IT and put computers on desks,” recalls Senior Vice President and Chief of Staff, Prochie Mukherji.

The external and internal flux made it even more critical for the group to define its identity clearly. What did it stand for? Which cultural aspects defined Mahindra as a successful business group? What set it apart from the rest?

In 1994, Harvard Business Review published an article that explored how successful companies were driven by a core philosophy that inspired employees. That article caught the attention of Prochie and Anand Mahindra (then deputy managing director). Feeling that the time was right, they started an intensive exercise to identify and articulate the Mahindra ideology – its core values, a common way of working.

The ‘quest’ for values

What were the Mahindra core values? That question led to a deep dive exercise to uncover Mahindra’s ‘real’ values, not a generic wish list but values that had been perceived and experienced by employees.

To identify these values, Prochie’s team spoke to dozens of people in key positions across the group, including veterans, key influencers as well as newcomers. They listened for hours to anecdotes about experiences, successes and failures.

In all, about 200 attributes were identified. These included the characteristics of the organization from its early days, emerging values, and even values that seemed specific to a particular business or unit.

The team presented all these 200 attributes to Chairman Keshub Mahindra, the managing director (Anand) and the top 100 leaders of the organization. Intense discussions followed and led to the final selection of five values that represented the core of the group, capturing not just its legacy, but its contemporary outlook and vision for the future.

The five core values are:

  • Professionalism
  • Good corporate citizenship
  • Customer first
  • Quality focus
  • Dignity of the individual

The top two were values that had been a part of the group since its beginning. The other three were values that had existed since the early days but needed to be strengthened critical differentiators that would continue to drive Mahindra forward. Each value was articulated clearly to resonate with people.

The Invaluable Edge video

In the same exercise, the group articulated a Core Values Statement that captures what these values represent:

‘Our Core Values are influenced by our past, tempered by our present and will shape our future. They are an amalgam of what we have been, what we are, and what we will be.’

The Blue-Chip mantras

The second pillar of the Mahindra Way is a set of common mantras that help guide each business in its growth trajectory. The mantras were defined in 2002, a year of crisis for flagship company M&M.

For a couple of years prior to this, M&M had seen declining levels of profitability and productivity. Turnover was falling, Profit After Tax (PAT) had plummeted 50%, Return on Capital Employed (ROCE) had dropped, and the share price had tanked. The tipping point came when M&M was removed from the Bombay Stock Exchange (Sensex) in 2002. The situation was, indeed, dire.

In response, Anand Mahindra organized Operation Blue Chip, an emergency conference in which 150 of the group’s top leaders were called to Mumbai.

It was at this conference that the Mahindra Group finalized four mantras for each business to follow rigorously.

  • To be the leader in the respective sector
  • To be innovative in operations
  • To leverage the potential of globalization

And, finally, the one aspect that had been missing:

  • To keep a ruthless focus on financial returns

To say that the Blue-Chip conference delivered results would be an understatement. Within a year, PAT doubled, and then doubled again the following year.

All was well once more…except that, it wasn’t. Amidst all the cheering and self-congratulation, we had taken our eye off the most important person – our customer. By 2004, Mahindra was ranked near the bottom of the industry’s customer satisfaction scores. A video that captured the dissatisfied voices of dealers and customers was played at the 2004 Blue Chip conference, and it opened everyone’s eyes.

That was the year Mahindra added a fifth Blue Chip mantra – To be a customer centric organization. Since then, it has used the Blue-Chip conferences very effectively to align the group on a common path and approach – introducing group-wide concepts such as Customer as Promoter Score (CAPS), customer-centric innovation, etc.

In a little over a decade since then, M&M’s profits have risen over 40 times and the stock remains among the best-performers on the Sensex. More importantly, Mahindra’s Blue-Chip mantras continue to play a vital role in keeping the group energized, agile and steady on a growth path.

Mahindra’s Purpose

The 1994 Harvard Business Review article that had inspired the articulation of Mahindra’s Values had also detailed the role that Purpose plays in successful organizations, stating: “Strategies can engender strong, enduring emotional attachments only when they are embedded in a broader organizational purpose… Senior managers must convert the contractual employees of an economic entity into committed members of a purposeful organization.”

Purpose provides inspiration for every employee. It is the answer to a key question:

Why do we come to work in the morning?

Mahindra’s Purpose was articulated in 1997 after the values exercise was completed. At the time, the group found resonance in Sony Corp’s purpose enunciated just after Japan had suffered a resounding defeat in World War Two: “We will create products that become pervasive around the world… Fifty years from now, our brand name will be as well-known as any in the world… ‘Made in Japan’ will mean something fine, not something shoddy.”

It was a powerful statement and it lit up a path for Mahindra. The group’s legacy of nation building was strong and continued to drive its choice of businesses. Mahindra clearly could play a key role in uplifting Brand India.

Encapsulating this idea, Prochie and Anand crafted a Purpose statement that would resonate with every employee:

‘Indians are second to none in the world. The Founders of our nation and of our company passionately believed this. We will prove them right by believing in ourselves and by making Mahindra & Mahindra Ltd. known worldwide for the quality of its products and services.’

The ‘Indians are second to none’ statement was one that employees took to heart, and even took it away with them when they left Mahindra’s employ. Its power as a personal motivator can be seen in a mail that Pawan Goenka received from a former employee who had left Mahindra and joined a multinational on an international posting. He wrote to describe how the statement had “changed his life” by continuing to motivate him to “step forward”.

As the years passed, India grew, and Mahindra evolved. The group had found success in the liberalized, global economy. A new generation of Indians had entered the workplace – youngsters who took India’s economic success story for granted. They didn’t need to be told that Indians were second to none.

Moreover, the group’s international footprint had grown over time and the India-centric Purpose was not something that would enthuse employees in other countries. The final trigger came when international agency partner Strawberry Frog told the group that Mahindra stood for a set of values and culture that was perceived and appreciated by all stakeholders – customers, employees, channel partners, investors and more. Clearly, it was time to articulate that essence of Mahindra. 

Circa 2009, it was time for RISE!

And that’s another interesting story.