Few in Indian industry thought much of Ratan Tata when he first took over the reins of the Tata empire way back in March 1991. The man, the sceptics said, has little experience of running big companies. But JRD Tata obviously knew something about his prot?g? that the others didn?t. And today people are asking whether his successor can fill his big shoes. Well, JRD would have been proud of the legacy that Ratan Tata is leaving behind for Cyrus Mistry who, after working with Ratan Tata for a year as deputy chairman of Tata Sons, will occupy the corner office in Bombay House. What Ratan Tata inherited was a diversified conglomerate of 95 companies, across every conceivable sector, and while these firms may have been financially robust they were somewhat stodgy and inward looking. TCS, for instance, had made little headway although it had more than a 10-year head start over Infosys.
The junior Tata changed the way these companies worked and, in the process, has built a truly global conglomerate. The rationale for the big-ticket acquisitions that the group needed to scale up and to compete internationally, in whichever sector it had a presence, was always right even if it meant some pain in the near term. So eager was Tata to grow that in one year there were six acquisitions, in another, more than 12.
But perhaps Ratan Tata?s biggest achievement has been to instil confidence in his team and get the best out of them. Who would have thought back then that a company that made trucks could turn out a car? Indeed, the Indica is a fine example of how a leader can motivate his team to excel at something. And although the Nano may not have been a commercial success, the work was truly innovative, leaving the team at Tata Motors brimming with confidence. There are just a handful of events in India?s manufacturing history that could compare with the launch of the Nano, one of them being JRD?s setting up an airline nearly 80 years ago.
But Tata?s biggest gift to Mistry is not just the companies, most of which are market leaders and compete with the best globally, but the talented and motivated teams that lead them. Remember, Tata himself spent his initial years putting down the revolts from the satraps who refused to co-operate with Tata in his attempts to revitalise the group; Mistry, fortunately, will not have to deal with any of that. He has, from day one, a group that boasts the best professionals, encouraged to be ethical and allowed to take decisions. In today?s world of a myriad opportunities, recruiting and retaining talent is not easy, especially when corporate executives are looking to acquire wealth rather than work for a salary.
Had Tata not been able to win the confidence of his team, he may not have been able to globalise the business by successfully turning around the several global acquisitions, whether a Daewoo or a JLR. It?s not easy to do business in alien cultures but the Tatas have provvged they can work successfully with people across the globe; managing JLR better than Ford is no mean achievement. And it has been not just a morale booster for other Indian businessmen but a lesson for non-believers in the western world as well.
If the Tata Group today earns more revenues overseas than it does at home, it?s because Tata has had the support an efficient team to implement his vision. Not that he?s the hands-off CEO; on the contrary, he has led from the front, the ultimate man manager always willing to walk out on to the shop floor. Again, it?s a rare leader who admits there may have been mistakes; Tata conceded that the timing for the purchases of Corus and JLR may not have been perfect. The price may not have been right either, with the group needing to borrow heavily to fund the buyouts but, in the end, the decision to buy JLR, at least, hasn?t proved to be wrong.
Looking around at the world today, it would seem that Cyrus Mistry?s job will be tougher than Ratan Tata?s; he will have a hundred companies to look after, many of them already giants and some in the making. Tata?s taking over the group coincided with the liberalisation of the Indian economy and the death of the licence raj. While infrastructure may have been poor, there was also a huge opportunity to be tapped and Tata geared up for it by making his companies leaner and more efficient. Mistry has a ready platform but will be working to grow the businesses in a far more dynamic and difficult environment. In many ways, it would appear the two men are similar; both are recluses. Little was known about Ratan Tata when he took over from JRD, except perhaps his love for cars and aeroplanes. Not much is known about Mistry either, except that he runs the family construction business and runs it well. It?s not impossible then that Mistry will continue the good work.
shobhana.subramanian@expressindia.com