Insurance to Internet: Can Tata Digital’s new CEO Naveen Tahilyani fix Neu?

Naveen Tahilyani, incoming CEO of Tata Digital

Top executives at Tata Digital, which houses all the online shopping companies of the Tata group and operates the Tata Neu superapp, were taken by surprise on February 6 when they were summoned for a town hall by Tata Sons chairman N Chandrasekaran.

In a session that lasted 10-15 minutes, they were informed that Pratik Pal, a TCS veteran who has been at the helm of Tata Digital since its inception a little over four years ago and led the group into the digital commerce arena, will be stepping down. Naveen Tahilyani, the top boss of Tata AIA life insurance, will take over as the new MD and CEO within a fortnight.

A ‘rockstar’ CEO 

While tapping an insurance veteran to lead a company that operates in a fierce internet battleground may seem unconventional, those familiar with Tahilyani’s capabilities see it as an inspired choice.

An alumnus of IIT Madras and IIM Ahmedabad, Tahilyani spent over 17 years at consulting firm McKinsey before joining Tata AIA Life Insurance in 2015. He briefly joined Axis Bank in 2020 before being roped in again by Tata AIA later that year.

“Naveen has amazing clarity of thought, works harder than anyone I know and is very good at execution. He has great equity in the Tata system and has been chosen by N Chandra personally. We used to call him “the man, the machine” (in a good way),” said a former colleague who has worked with Tahilyani.

This person, who did not wish to be named, added that Tahilyani builds good teams and has a way of motivating people. “To succeed in the Indian digital ecosystem, one does not need flamboyant CEOs; one needs solid ones—he is definitely in that category,” Tahilyani’s former colleague added.

Two other erstwhile colleagues described him as a terrific problem solver. “If anyone can pull this off, it's him,” said one of them.

The third person described him as someone who is “sharp, practical and very well respected in the McKinsey ecosystem.”

A fourth person who has seen Tahilyani through college described him as “super smart, hard working and one of those straightforward, nice guys everyone respects.”

“He was a rockstar in the AIA insurance worldwide system. They wanted him in a global role out of Hong Kong but I think he chose the Tata AIA JV.”

Neu’s issues 

Tata Neu, a superapp that houses Tata’s existing and acquired entities, from Croma to Cliq to Big Basket to 1MG, was launched with much fanfare in April 2022, around the IPL. Billed as India’s first superapp, it hasn’t lived up to the hype.

While some are of the view that it lacks the ‘fail fast’ and ‘move fast and break things’ mindset of the internet world, the user experience wasn’t great either as Neu appeared to work like a portal to many sub-apps. While its membership programme NeuPass and its Tata Neu credit card won praise, many have installed and uninstalled the app within days because of its clunky interface. 

Culture clash 

While Pratik Pal was a skilled technologist and business leader, who had spent over 28 years at the group’s flagship, Tata Consultancy Services, he had never run a consumer-facing business.

The Tatas were hoping to fix this by putting together a tag team, where Pal took care of product, technology and backend operations while Myntra and CureFit co-founder Mukesh Bansal would focus on growth, new categories to get into, and research, serving as the front end of the operation.

Bansal was made the president of Tata Digital in June 2021 after the conglomerate invested $75 million in his fitness startup, CureFit. However, he barely lasted two years at Tata Digital—Bansal stepped away from daily operations and formally resigned in early 2023.

“One (Pratik) was used to compliance and dealing with clients in a B2B setup. The other (Mukesh) was an internet founder who liked to experiment, move things at a faster pace. There was just no way to bridge the gap and make them see eye to eye,” a senior executive at Tata Digital said.

The company has also been plagued by a series of top-level exits, as many executives appointed by Bansal have quit in the last couple of years

Neu’s positioning

Tata Digital saw its losses widen 22 percent from Rs 1,123 crore in FY22 to Rs 1,370 crore in FY23. During the same period, revenues rose from Rs 15.9 crore to Rs 204.4 crore.

A key reason why Tata Digital, which runs the Tata Neu superapp, has not grown much in scale is because awareness is low, said Satish Meena, advisor to Datum Intelligence, a market research firm focused on consumer technology.

That was despite the salt to software conglomerate having invested Rs 18,942 crore into Tata Digital as of FY23, as per Tata Sons’ annual report released on August 9 last year. The group is also looking for an additional $1 billion investment into the business.

“Tata Neu’s positioning is not clear; what are customers supposed to use it for? Like people open Myntra when they want to shop fashion, what does Neu offer? Users are not aware. Tata Neu needs to have a clear set of offerings that will ensure more people use the app and keep coming back to it,” Meena said.

To attract high-frequency users, Tata Neu is also gearing up to integrate with the Open Network for Digital Commerce (ONDC) and enable food delivery via its app.

Tahilyani, who has a proven track record in turning around the group’s insurance business, has his job cut out. It remains to be seen if can repeat the magic with the superapp.