NEW DELHI: Ratan Tata looks younger than ever. He still fills the shoes of a legend and immediately appears to be an icon both to the business media and to the common observer of Indian business.
Today, he has taken up his former role as chairman of Tata Group back from Cyrus Mistry.
When the board of Tata Sons voted to remove Cyrus Mistry out of the chairmanship of the group, Economist Swaminathan Aiyar pointed out like many other commentators that there was little clarity about what the performance parameters had been for Cyrus when he had taken over as chairman four years ago on December 28, 2012, and how he had failed the group on these measures.
Nobody knew. Every single expert came and asked the same question. “Shouldn’t the press release from Tata Sons have mentioned the reason for Mistry’s leaving?
The fact that news was not forthcoming induced some commentators to speculate that this may be:
1) A power struggle between two groups at the Tata Group
2) A restructuring to aid further growth in the Tata Group
3) Punishment for not handling group projects ably.
The companies that were coming to mind as a possible reason for Cyrus Mistry’s ouster were Tata Power, Tata Steel and Jaguar Land Rover.
However, for people such as yours truly who grew up idolizing Ratan Tata and the Tata Group – for people who never received Ivy League education as they came from humble origins but were inspired by the working conditions in the Tata Group and longed for a job, any job working with Ratan Tata and his dream projects, the answer is instinctively simple.
Cyrus was always a success as a chairman but a failure as a Tata.
Look at the other scenario – that of Infosys failing and looking for a new chairman. When Narayanamurthy stepped back in, the world at large ridiculed Infosys about going back to the old man again. However, Mr. N pulled Vishal Sikka out of his hat who pushed up numbers and made Infy feel better – at least in the stock markets.
The notable thing about Sikka is that he draws a salary of Rs 75 crore a year compared to Rs 16 lakh drawn by Shibulal, the CEO before Sikka in 2013-14. This was before Sikka joined as CEO in August 2014.
Remember Phaneesh Murthy? He was made director of Infosys in 2000 after he had established himself as an exceptional sales person. Then in 2002, he was sacked and removed from the directorship after being found to be guilty of sexual harassment charges. In doing so, Infosys was preserving its culture and losing a highly valuable sales person.
Remember John Akers? In January 29, 1988, Akers simplified the operations within IBM and created five new, highly autonomous organizations responsible or all of the company’s innovation, design and manufacturing. Akers had reportedly done this to reverse five years of stagnant growth. However, such a turning the companys processes upside down and later firing thousands to make the company leaner created an atmosphere of fear in the average employee in IBM.
The result: Akers was sacked and an outsider Louis Gerstner was found to replace him. Gerstner was from outside the infotech industry but he was famous for preserving the company’s culture while promoting growth.
Employees across the board in the Tata Group, were reportedly slowly getting that ugly feeling that they had to go to work to earn their living but they no longer enjoyed being Tata employees any more. This was in stark contrast to what had been earlier.
Now flashback to a comment Ratan Tata had made to a TV anchor who had asked why the chairman of the Tata Group drew a much meager salary compared to the Ambanis and other similarly respected business houses.
Ratan Tata had explained, “They are businessmen and we are industrialists.”
If you follow the path Cyrus Mistry had set for the Tata Group since he had taken over, it will be clear he was running it like any other company registered on Dalal Street. He was struggling with the profit and loss numbers and winning some – losing some.
The Tata Group is much more than that.
The mis-management of the Corus assets, the Tata-Docomo spat, fall in the standard of the Taj Group of Hotels across the country, the divestment of its assets etc point towards a non-Tata line of action and a highly non-palatable one.
If you ask any 40 plus and 55 minus middle class loser who is well read and made it to an above average job in India, working his butt off and his guts out, raising his kids in good schools and has denied himself and his wife the usual pleasures in life to keep his parents and kids happy – his dream job would be in a handful of companies.
Nine of those 10 companies would have either become extinct or would be transnationals. The 10th would have been the Tatas.
Who wants to work for Reliance, Airtel, Hindustan Unilever, LIC or other large Indian companies? Yuppies who had had exemplary education and always wanted to make big money.
Who wants to work for the Tatas? The answer is every hard working, honest middle-class young man who comes from a family of hard-working middle class, honest, well-read people.
The Tata Sons board has now sealed the fate of the Group Executive Council. The board has clearly stated that operating chairmen of group companies will not be changed. Principal shareholders and the board reportedly unanimously had felt that a change in leadership was due.
However, if it was purely performance then how come the company chairmen are not being changed? If Tata Sons and group companies are so sluggish and failing in front of other newly minted companies then how come there was nothing to indicate that something like this was coming?
Corporate performance is a public affair and change in leadership owing to poor performance is an equally public affair. Well, if it had been about performance then why wasn’t he replaced with someone who is a far bigger maverick from outside the Tata Group? Why was Ratan Tata asked to step back in?
The fact that there were no indication points to the fact that it may not have been about performance but more about culture.
Look at the other non-Tata chairman of the Tata Group. He was Nowroji Saklatwala (1875-1938). His mother Virbaiji was the sister of Jamshetji Nusserwani Tata. He joined the Tata group in 1899 as a clerk in Svadeshi Mills in Mumbai. Within twenty years, he rose to be the head of the firm.
Contrast this with Cyrus Mistry’s stint with the Tata Group. Other than being a director of Tata Elxsi and Tata Power before he became chairman of the Tata Group, he has no experience of being a Tata employee and knew little of the Tata culture.
What is the Tata Group remembered for?
Russi Mody’s managing Tata Iron and Steel Company (now Tata Steel) serving the local poor and also making lots of steel for the world and the Indian economy.
Ratan Tata’s dream of creating a car for the poor Indian who gets drenched in the rain on a two-wheeler. Sticking to that dream despite many setbacks and driving the test pilot car into the New Delhi auto expo and announcing “a promise to deliver a Re 1 lakh car is a promise.”
Compensating with ultimate generosity and largesse such as life support money and infrastructure all the victims of the terrorist attacks who were affected during the Taj Mahal hotel tragedy.
Tata Football Academy which is the only aspirational goal for any footballer in India.
Tata Institute of Social Sciences where more than half of middle-class India wanted to study but had to give up their dreams as they had to earn their daily bread of the failing family financials.
The Indian Institute of Science which is responsible for India’s greatest achievements in space and particle science.
What will Cyrus Mistry be remembered for?
He has sold off assets in nearly all large Tata companies and bought very little. He wanted the Tatas to be agile and profitable.
I mean that could be the perfect recipe for destroying an iconic institution. We may be talking about making Massachusetts Insitute of Technology, Mckinsey & Co, Rabindra Bharati University more profitable than respected.
Come on, Cyrus. You were never a Tata. You may be a cool businessman but were never, never a Tata. The Tata fire resides in every Indian’s heart who works hard to put food on the table. That is where Cyrus failed. He was making the Tata Group into a company which was any other counter on Dalal Street.
We can’t have that? Can we?
DISCLAIMER : Views expressed above are the author’s own.