Rajiv Bajaj On Strategy

Ask Rajiv Bajaj what is strategy and he sums it up in a word: specialization. And that relentless focus on what you do best calls for “sacrifice” — of what self-styled experts and rivals, and even what daddy (Rahul Bajaj), thinks is best. In business terms, it meant exiting scooters — a segment many believe still has steam for growth — and narrowing the vision to motorcycles. “You can play 10 games and be the best in Pune or concentrate on one and be the best in the globe,” explains Bajaj. “It [the strategy] is the alignment of the front end with the back end. It is more about what you choose not to do rather than what you choose to do.”

Strategy also means being unwavering in what you think is right, without your ego coming in the way. So out goes the ambition to be No. 1 in market or revenue share; being a leader in profit share is the end game. And Bajaj Auto is numero uno on this front, with operating margins of 20.4% in the quarter ended June 2013, after adjusting for mark-to-market loss.

So how do three-wheelers — and the much-talked about quadricycle — fit into this strategy of specialisation? Well, there’s no dichotomy there, insists Bajaj, and it fits in with his thrust on profitability. “We specialise in motorcycles and make good money from them, but we make a hell of a lot more in three-wheelers,” says Bajaj using the analogy of McDonald’s which makes more money from fries than burgers. If you’re wondering about his allusions to consumer brands it’s simple: “We are now less of an engineering company and more a marketing one.”