?Experience is not what happens to you. It is what you do with what happens to you.?
?Aldous Huxley
A global crisis was definitely anticipated. Naina Lal Kidwai and I had written an article in March 2006, ?The world is passing through strange times?.. there is need to be uncompromisingly watchful?.it is easy for companies to lose priorities in these good times.? Were we not smart? Even if two years early and hopelessly underestimating the devastation?
Single-mindedness helps when one faces a huge crisis. Hanuman?s journey to Lanka to find Sita had a clear mission focus. En route, he was thwarted?sequentially by Mainaka, Surasa and finally Simhika. In response he maneuvered, adapted, threatened and overcame to accomplish his mission. So has it been with corporate India.
The Tata response relied on coaching, collaboration and creativity. The leadership sounded a loud and early clarion call to managers to defer capital expenditure, conserve cash, hold market share, learn and share. It was not just about cost cutting, it was a call to work more smartly. For example, Tata Chemicals spent additional money on professional help to generate Rs 300-crore cash within 6 months over and above the management?s stretching cash budget. Tata Consultancy advanced its ongoing management renewal programme, Tata Steel and Motors rescheduled capital plans by over Rs 1,500 crore within a very short period.
Company managers learnt through the group?s collaborative platforms: the Tata Network Forums, the web-based Tata Knowledge Chain, and the Tata Management Training Centre. The management integration of international acquisitions was sharply accelerated. Tata Technologies established a new global organisation. Tata Chemicals appointed a single head for its global soda ash business; Tata Steel made new appointments to strengthen its change-driving leadership.
One overarching lesson lingers in my mind: the bigger the crisis, the greater the opportunity to coach, collaborate, share and learn. By doing it well, nature demonstrates that a chrysalis will be born. In some species, the members innovate, propagate their learning, and the learners apply the lessons. In some others, the members do not do so. Their trajectories are very different.
Blue tits and robins are both summer garden birds in England. During the 1900s, milk was transported in open metal cans. Both the species learned to peck the milk fat on the surface by perching on the rim can. After 1940, milk was pasteurised and transported in bottles sealed with an aluminum foil. The blue tits innovated by pecking through the foil, sharing the idea with the other tits, which did the same?all to their collective advantage. However, being territorial birds, the robins did not transmit their learning to each other. Robins ceased to get the fat on the milk.
Tata is stronger after the experience; the prominent companies have delivered solidly and so have the less visible companies. The TSR data (total shareholder return) for the decade from April 2001 till October 2009 shows that the heavyweights have delivered a stunning return of over 30% per year. Less visible companies have also delivered, around 50%–Rallis, Titan and Voltas. Perhaps the meltdown was a blessing in disguise!