Did Tata Motors just take a step towards the ‘platform’ future?

By acquiring a stake in a tech-leveraged trucks aggregator, Tata Motors shows that it is willing to invest on learning the rules of the emerging business models.

Did Tata Motors just take a step towards the ‘platform’ future? - CIO&Leader

Tata Motors announced yesterday that it has picked up a 26% stake in TruckEasy, a tech based freight aggregator owned by Loginomics Technologies Solutions Limited, a Bangalore based logistics company.

A 26% stake in a small start-up is a very small incident in the life of a USD 45 billion giant. Yet, this seemingly small step by India’s third largest company could well prove to be a giant leap for the large manufacturing companies that want to adjust to the new digital regime.

Be under no confusion. It is not yet another investment in a start-up with promise. The investment was not made by RNT Capital Advisors, Ratan Tata’s investment firm. Neither was it done by Tata Sons.

It was, as the company said in its release, a “strategic investment” by Tata Motors, through its wholly owned subsidiary Tata Motors Finance Holdings.

Why is it important?

TruckEasy was formed in 2015 in Bengaluru by three entrepreneurs’ – Nikhil Thomas, Vikram Kodgi and Avinash Achar. The company provides services for the transporting needs of businesses, using a tech based platform like Uber where users can book the trucks for transportation. At present, it provides its services within Bangalore and one of the stated reasons for this investment is to help it expand its business to other cities within India.

From Tata Motor’s point of view, the investment is significant because it points to Tata Motors’ acknowledgement of a shift in value creation equation in its business. In a traditional company, value is created upstream and pushed downstream to consumers in a linear fashion. Platform guru Sangeet Paul Chudary calls these companies pipe companies.

But companies like Uber and Airbnb that operate ‘platforms’ ‘allow participants to co-create and exchange value with each other,’ explains Choudary, co-author of Platform Revolution: How networked markets are transforming the economy and how to make them work for you and author of Platform Scale: How an emerging business model helps start-ups build large empires with minimum investment.

This changes the very design of the business model. While pipes created and pushed value out to consumers, platforms allow external producers and consumers to exchange value with each other.

TruckEasy which brings transporters and businesses together on a tech-enabled Uber-like platform can provide valuable learning to Tata Motors on how the model operates.

Tata Motor acknowledges as much. “This strategic investment in TruckEasy will provide Tata Motors an insight into the rapidly growing technology-driven transformation in the freight logistics space,” says the company statement.

“The data analytics provided by TruckEasy will be further used for research and development thereby allowing for better customization of product specifications in line with market requirements,” says Tata Motors, in its statement. “We can give deeper insights into the SCV usage pattern with our vehicle data analytics,” says Thomas, CEO of TruckEasy.

Data, of course, is the most important component of the platform model. “Data is the new dollar,” says Choudary.

There are three value creators in this arrangement. First is, Tata Motor’s insights into the dynamics of the logistics industries—the stated objective. Second is, its learning into the new emerging model of interactions-based platform model and finally, the data.  

Theoretically, there is another. Tata Motors could scale the platform to get into the logistics game in a bigger way. But that looks a distant possibility. Tatas had got out of the business a couple of years back by selling off their transportation company, Drive India (DIESL).

That does not mean that it would never go back to the business. If it does, the learning from TruckEasy would come in handy. But the present platform of TruckEasy may be too small and too narrowly focused to scale it up.

For the time being, though, both Tata Motors and TruckEasy are willing to talk about only the immediate priorities. “The driver community will be more confident on the aggregation business with Tata's entry,” says Thomas. Through this investment from Tata Motors, TruckEasy will be able to access our wide network to grow the supply side and also to expand to multiple locations country wide,” says Girish Wagh, President, Commercial Vehicles Business Unit (CVBU), Tata Motors.

This investment may be beginning of a new era for Tata Motors in particular and the logistics and automotive industries in general.

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