In another session on CEOs role in a globalised economy, Tata Sons director JJ Irani said that the foremost quality that a leader should possess is to maintain credibility. Innovation and receptivity to ideas are the underpinnings of the success of a corporation, added Mr Irani.
In 1993, Tata Steels management set an objective to become the lowest-cost producer of steel and achieved the status by 1998, pipping Posco of South Korea, said Mr Irani, who was formerly Tata Steel MD.
Mr Godrej further said that a positive economic value added (EVA) is a good measure of sound business. The Godrej group experienced an eight per cent growth in return on capital employed (ROCE), 15 per cent growth in sales and 42 per cent growth in profit before tax (PBT), after implementing EVA.
Mr Godrej said he admired MNCs like GE, British Petroleum, Samsung, LG, Reliance and Infosys for their good performance. Mr Irani added that having the right attitude is important. Ideas and suggestions because they come from lower level officials/workers should not be discarded offhand.
Dwelling on ethics in business, Mr Irani said, had the Tata Group been flexible about bribing, it would have grown 100 per cent more than it is today. However, it would be the largest business group in the country after TCS is listed, according to Mr Irani.
Answering questions about diversification, Mr Godrej said that it was not good for all companies. It is a better practice to strengthen ones core competence. Sometimes, diversification is necessary if there are limits in the expansion of the existing business.