Strategic Management Lessons that we all can learn from Rajiv Bajaj (part 01)
Everyone has their favorites, be it brands, sports, or personalities. Over the years, I have learned a lot from various business leaders such as Steve Jobs, Bill Gates, Al Ries, Jack Trout, and more, but the one that has been my go-to for strategic management is Rajiv Bajaj. If you aren't aware of him, let me share a brief introduction to this dynamic business personality who was ranked 42nd in India's 50 Most powerful people by India Today magazine. Rajiv Bajaj is the managing director of Bajaj Auto, a leading Indian global brand producing two-wheeler and three-wheeler.
Source: Bajaj Auto
This blog post is a part of a series of Strategic Management lessons that we all can learn from Rajiv Bajaj.
According to Harvard Business School professor Clayton Christensen, there are over 30,000 new products introduced every year, and 95 percent fail. As per the Nielsen BASES report, a study showed the failure rate of U.S. consumer products at 95 percent and European consumer products at 90 percent (Melgarejo and Malek 2018). Bajaj Auto has strived to defy this statistic.
It is a widely accepted notion that principles of management taught in Harvard Business School bring in good business. As per HBR, the vast majority of products don't succeed because they don't create a market they serve a market. Successful marketing is having the motive of being different rather than being better.
6 strategic management lessons we all can learn from Rajiv Bajaj
1) Marketing Warfare
Deciding your strategy is crucial for any business. The organization’s approach towards the strategy will decide its future. According to Rajiv Bajaj, being better (in terms of product) is a defensive strategy, being different is an offensive strategy, being opposite of the market offering is a flanking strategy, and being unique is a guerrilla strategy. To gain a competitive advantage in the market, the organization should use the perception of people about its product as an advantage, and the same should become the positioning of the product. Engineers often get confused between Replacement and Displacement in features of a product, in reality, they are opposite. As per Rajiv, the perception of people towards your product won’t change if you improve your product by 10% - 20% but a change of 23% - 30% will lead to a change in perception. When Bajaj Auto brought 10% - 12% efficiency in fuel, consumers didn’t show any excitement, but when Hero MotoCorp brought 15% efficiency in fuel, the market praised them. This is because consumers will accept marginal improvement from the leader but won't accept the marginal change from the challenger. If a company wants to adopt a guerrilla strategy, it will have to create a new segment in the market.
Learning: Customers don’t expect better changes but significant changes.
2) Avoid the trap of generalization
To launch unique products, companies can go for either individualization i.e. being unique or differentiation i.e. being different, but the majority of the companies prefer generalization. The principle of individualization led Bajaj Auto to foray into motorcycles. In 2007, Bajaj Auto shut operations of manufacturing scooters to start the production of motorcycles.
Learning: Be a specialist in one thing and do it the best.
3) Immunity of the organization
Being an ardent follower of Homeopathy, Rajiv Bajaj claims that the business climate i.e. the external market that the organization operates in does not affect the organization in a bad way but the organization’s immunity to the climate affects it. The immunity of the organization is based on its R&D, marketing, and supply chain. For instance, Bajaj launched a quadricycle called Qute that is exported in all markets except India, due to market regulations.
Learning: Emphasize building the organization's immunity
4) Building a strong brand
Creating a new product only increases the product line of a company, but creating a story behind a product builds up emotion and eventually creates a Brand. A product is just a part of a brand. When we think of coke, we think of many other stories and things that come to our minds. He quoted
products are built only in the factory, but brands are built in the minds of people.
As a brand strategy, Bajaj Auto acquired the metal of India's first aircraft carrier INS Vikrant and used it in the production of Bajaj V. This is a perfect example of Nostalgia marketing.
Source: Financial Express
Bajaj V was not just a simple product, Rajiv and his team created a story around it and made it a limited edition motorcycle.
Product + Story + Experience = Brand
Learning: If you need to create a brand don't just create a tangible product create a story behind the product.
5) Marketing is counter-intuitive
According to Rajiv Bajaj, “what your customers want is important, but what your competitor’s permit is even more important”. In order to be ahead of competitors, it is important to attack the weakness in their strength rather than the weakness.
For instance, Hero Motocorp’s weakness in their strength was/is that consumers consider Hero to be high on mileage but not the powerful bike. Bajaj Auto attacked its weakness and launched the brand Pulsar, a powerful bike with a fresh design and decent mileage.
Learning: Attack the weakness of your competitor's strength
6) Doing less can be more
For Rajiv, narrowing the focus or doing less is a successful marketing strategy. In order to communicate the product to the target market, a company must give a reason to buy the product. Bajaj Auto’s reason for its customers was a stylish motorcycle. In order to be successful in marketing, it is better to be quiet and observe the environment and then make decisions and act on those decisions. Do one only thing, but make sure you are the best in that one thing.
Learning: Less is more, narrow your focus
Melgarejo, R. and Malek, K. (2018) Setting the record straight on innovation failure. Nielsen BASES. Available at: https://www.nielsen.com/wp-content/uploads/sites/3/2019/04/setting-the-record-straight-common-causes-of-innovation-failure-1.pdf.