How We Convinced a Major Company to Make Changes to Their Business Model
By Nikhil Vajandar, MSCM ’14
Within the last 90 days, more than 700 books with ”innovation” in their titles were released on Amazon.com.
And why not? At a time when innovations are rapidly changing industry landscapes, creating new markets, and destroying old ones, it’s no wonder we’re obsessed with writing about the topic.
Many organizations list innovation as one of their core values. And during this past summer, I worked with one such company, Cummins, as part of a summer project through Ross and the Tauber Institute.
As part of a three-member team from Tauber, we were to redefine business strategy for Cummins’ remanufacturing operations in China. The complexity of this project was staggering and only compounded by different joint ventures Cummins was involved with in China.
Many nights were spent sifting through large sets of data, searching for and attempting various options. We honed in on a few ideas to transform Cummins’ business model – the biggest being to focus on serving export markets.
The next challenge was to convince the company’s leadership that these changes were necessary. We intentionally used a conservative approach in our recommendations, and confidently presented a strong business case to the Cummins leadership team which covered all grounds of concern.
How did we do it?
- Strong fundamentals
Our reasoning was that Cummins should focus on what they do well, and invest time in the channels they fully own and control.
- Data support
Using data from trusted sources, we developed a robust financial model with risk analysis and an optimal timeframe for implementation.
- Understanding the culture
Stakeholder discussions helped us understand the strengths of functions and apprehensions about the Chinese market, allowing us to make appropriate recommendations.
- Weekly cross-functional review
Using a consensus-based approach to decision making, we were able to have smaller details of our overall plan approved before we presented our full recommendations.
The approval was almost instantaneous. And now Cummins has allocated 25 percent of the investment cost we proposed into their 2015 budget.
In the words of a Cummins Executive Director and Ross alum Norbert Nusterer (MBA ’96), we not only delivered a functional strategy but also a holistic business model.
Was this an innovative business model? Probably in parts, but we were surely able to transform our ideas into a business case that Cummins could not afford to overlook.
Nikhil Vajandar is a student in the Michigan Ross Master of Supply Chain Management Program and a fellow in the Tauber Institute for Global Operations.Nikhil and his team recently won the annual Spotlight! competition through the Tauber Institute. He graduates in December.