Most of what gets written about Samvardhana Motherson is written about a teenager and some silver bars. The far more interesting document would be the one on which somebody first wrote down that no customer shall be permitted to matter very much. That is the sentence the company was actually built on, and it is the opposite of what every supplier wants to hear.
The outline is known. Vivek Chaand Sehgal was eighteen when he went into a small silver trading business with his mother, Swaraj Sehgal, and the two of them later moved out of metal and into wiring harnesses, the nervous system of a car and one of the least photogenic products in industry. A harness is copper, plastic and labour, assembled to a drawing somebody else owns, priced to the fourth decimal, and judged entirely on whether the line stopped. There is no romance in it at all. Which is precisely why the decisions around it had to be good.
Two of those decisions did the work. The first was the joint venture with Sumitomo Wiring Systems, which is normally described as access to capital and is better described as access to method. A Japanese partner in a harness plant does not arrive with money, it arrives with an opinion about where the bins go, how a fault is traced back, and what a defect rate is allowed to be before somebody is woken up. You can buy a factory. You cannot buy the habit of running one, and a joint venture is the only shop that sells it. The second decision was to go shopping for component makers nobody else wanted, the distressed and the loss-making, and to fix them on the operating discipline the first decision had installed. Serial acquisition is a cheap sport if you have nothing to teach the thing you have bought. It is a compounding machine if you do.
Then comes the rule, which is where a person who has just had a very good espresso starts paying attention. Anyone who has tasted a single origin pulled badly knows the problem with purity. One bean, one farm, one harvest, and the whole cup lives or dies on a weather event in a valley you will never visit. The roaster who builds a blend is not confessing that his beans are mediocre. He is refusing to let any one of them hold the cup hostage. Motherson runs its revenue the same way, under the house formula known as 3CX15, which caps any one customer, any one country and any one component at a share of the whole. The business is a blend, deliberately, by written policy.
Understand what that costs. The single best day in a supplier’s life is the day a very large carmaker offers to take everything it can make. The cap says no to that day, repeatedly, on purpose. It turns down the easy revenue that would have made this quarter look wonderful and the next recession look terminal, and it does so in an industry where the customer list is short, the customers are enormous, and saying no to one of them is genuinely expensive. That is not caution. Caution is a smaller version of the same bet. This is a structural refusal to be anybody’s dependant, held to for decades, while the company grew into a global components manufacturer employing more than 205,000 people.
Which rearranges the story. The mother and son did not get rich because somebody carried silver up a staircase at eighteen. They got there because the partnership kept writing rules that were annoying to obey and then obeyed them, through every year when breaking one would have paid. The founding anecdote is the part that fits in a headline. The cap is the part that fits in a balance sheet.
Every ambitious supplier on earth wants one enormous customer. Motherson wanted a blend, and nobody who drinks the cup asks which farm it came from.
