Sandipan Chakaravortty*

Different Tata companies with different objectives embraced the singular path of innovation to achieve breakthroughs and triumphs. Perspectives on how innovation worked wonders for Tata Ryerson

Young Tata Ryerson, established only in 1997, has been growing at the rate of about 70 per cent every year. This is because of the agility with which we have innovated.

The steel service industry, of which we form a part, is itself an innovation. Steel service centres form a part of the services industry, having been born out of the need to bridge the gap between the supplier and the ultimate customer. These centres are in the business of sourcing steel, warehousing the correct inventory and cutting it to the desired shape and size, before making it available to customers on demand.

Since customers’ demands keep changing at a very rapid rate, the large steel suppliers cannot always cope. Small units like ours have an advantage because while elephants take time to turn, we can move like cats.

We take care to offer the best mix of products and service to our customers. This requires us to be very creative. Our company has carried out many small innovations in order to be ahead in the game.

Human resources
The catch in the process of innovation lies in the fact that you have to be able to commercialise an idea.

To meet our objective, we at Ryerson had to first figure out how to communicate our concept of innovation to all the people in the company and our associates. The process we used was to form cross-functional teams of officers and associates. There are 30 such teams across Kolkata, Jamshedpur and Pune. Each employee in the company is a member of a team. The only shortcoming is that these teams are still location-based.

Besides conveying the vision, we have to create an environment in which individuals are excited about their work. For this, we need to support failures and treat them as learning experiences.

If someone comes up with an improvised machine, even if we are not convinced of its feasibility, we allow him to run it for a while, instead of telling him right at the beginning that it won't work. Thus, the innovator sees the problem and learns from the experience himself. He is able to see what he could have done to prevent the problem. Personally, if I repair a car, I would also like to run it myself to feel how good the repair job was.

The only thing we should guard against is the repetition of a mistake. We cannot fritter away money. While we set some of it aside for innovation we also have to target a certain percentage of cost saving through that innovation. So, it is a trade-off between both ends.

To motivate employees to think differently, we have made a departure in our remuneration and reward system. About 50 per cent of the wages are 'variable’ under the new arrangement, which was successfully implemented last year. People usually tend to negotiate to reduce their load when given work. But the employees at Ryerson now ask for more work. This is because the more challenging work has a higher variable pay.

If employees want to be involved in work that gives a higher variable pay, they gun for the more challenging work. If they need training to do that work, they can seek that too. We have also set aside a budget for training.

While this system works well for performers, the people below the average lose out. Motivating such people is the next challenge. We train them and give them jobs that are more long term. However, they cannot expect big increments. If a person can only carry bricks, we try and give him a job that involves precisely that but he has to work more efficiently. He can try to carry more than one brick. But if he wants to skip that job and upgrade with training, we can help him with that as well.

We have teams on quality improvements, projects and business excellence issues, among other things. This helps us give people time to brainstorm for ideas.

Innovations
One of our first innovations was in our services to almirah-makers, our common small customers. Since they use 32 items produced by us, we have improvised a kit that includes all the 32 pieces, along with a lock. We sell this kit with the Tata Ryerson brand on it.

From the customers' point of view, the best advantage of this kit is quality assurance on all the items. This advantage makes us the one-stop shop for the customers. If our customers want to manufacture only 10 units in a day, they are able to regulate their purchase to 10 kits. We have managed to change their mindset. Meanwhile, our sales have gone up. We don't sell per ton any more but per kit, thereby making a little more money.

We are trying to patent this process. But there are many legal hassles. We have to pay a fee for every patent application — international, national or regional. In seeking a national patent, the process of enquiring if anyone else in the country is doing the same thing may take over three years.

There could be other complications too. If someone sells 34 pieces, instead of 32, what do we do? What do we do if someone says they will patent a kit for a wardrobe instead of an almirah? How much do we spend on patents? The problem is even bigger in the international arena.

Another innovation of ours concerns repair and replacement of equipments and parts. There are two ways of approaching the issue of machinery. One method, the easy one, replaces the malfunctioning elements of a machine. But the other solves the root cause of the problem.

At Ryerson, instead of buying new machines, we try to buy old ones and revamp them. We buy new machines only if we fail to work on old equipment. Reengineering old equipment into efficient and cheap machines for our use vastly reduces our costs.

We are looking at using this route to meet our expansion plans. A three-member team of engineers from the company will travel worldwide and evaluate old machines in places like Korea, Taiwan, Europe and the US. It will also scavenge for parts of old machinery and find the components best suited our requirements. We have narrowed down on two old machines from the US that we intend to cannibalise.

Future
Globally, the trend in the industry has been to take more and more work away from both the supplier and the customer. The point is to leave them free to concentrate on their core activity. We have to make their miscellaneous work our core activity.

Earlier, we had been doing only the cutting, slitting or pickling and packing of steel. We may wish to progress to activities like galvanising and colour coating. We will also take up small and precision-oriented tasks like OE distribution. This way we can get into niche markets.

We intend to offer total solutions for all metals and not confine ourselves to processing and distribution. We know well that we cannot survive if we do not innovate.

As told to Saloni Meghani

* Sandipan Chakaravortty is the managing director of Tata Ryerson.

Some like it hot Sandipan Chakaravortty narrates the dramatic rise of the pioneer in the steel service industry

Uploaded on October 2, 2004