Can Tata chief Chandrasekaran bite the bullet and take tough decisions?

When a legendary 'promoter' vacates the seat for a professional, the legacy can be overwhelming

Natarajan Chandrasekaran is an ardent fan of Rahul Dravid for the cricketer’s solid defence and his passion to add value to the team. “Remember, Dravid had taken up the wicketkeeper’s position in the Indian one-day team so that he could contribute more. That’s what pushing the envelope is all about,” Chandra, as he is popularly known, had said in an interaction with Business Standard a couple of years ago. Of course, he made no mention of the fact that Dravid was following his captain Sourav Ganguly’s advice that the additional job of a wicketkeeper would help “The Wall” consolidate his position in the limited overs playing eleven.

Like his favourite cricketer, Chandra has indeed pushed the envelope throughout his career and made sure that any negative perception about his leadership skills is nipped in the bud. For example, when he was the chief operating officer of TCS, a joke in the company was that the full form of the company actually was “Till Chandra Sees”. So the first thing he did after taking over as CEO was restructuring TCS into 23 business units — each having their own profit and loss accounts, CEOs, HR departments and business goals. Only eight senior executives reported to him directly. That was his way of telling the world that he wants decision-making speeded up and that he wasn’t interested in micromanaging. 

As he takes over the chairmanship of Tata Sons, the world is waiting to see how Chandra harnesses the power and agility of India’s largest private conglomerate. It’s obvious he has to empower many people, who can work under broad strategic directions set by the chairman’s office.

The biggest strength of the first non-Parsi chairman of the group is that he has an impeccable track record as TCS chief executive and managing director. That success will make his acceptance as a figure of authority by the rest of the senior leadership of Tata Sons and various operating companies easier. 

But the biggest challenge lies elsewhere. Stern School professor Aswath Damodaran hit the nail on the head when he told Mint that while the “cosmetic effect” (of having a chairman who is not part of the family) looks good, the real challenge would be whether Chandra can do something that the “family” doesn’t like — such as closing down the part that is not doing much any more.

But the problem with being the new boss of a conglomerate is that you are damned if you do and damned if you don’t. The job becomes more complicated if you have had a predecessor who has run the business for 20 years, is a part of the “family” and who has acquired a larger than life image. History tells us that often, when a legendary promoter vacates the seat for a professional CEO, the legacy can sometimes linger and be overwhelming.

So, can Chandra bite the bullet and take those hard decisions that can sometimes be seen as contrary to what the “family” wants? Or, as an outsider, can a professional manager like him take risks the way Ratan Tata did when he bet on a Rs 1-lakh car, or when he made those mega acquisitions abroad?

Bharti Group Chairman Sunil Mittal has found a way out by allowing his CEO Gopal Vittal to be in full control of Bharti Airtel’s operations, while he, as the promoter-chairman, takes those long-term risky bets. But in a conglomerate like Tata, this strategy may not work, as Chandra is himself the executive chairman. So that’s the first challenge for the new chairman — he has to figure out a working arrangement with Tata Trusts so that he and the board are allowed complete freedom on operations as well as the long-term bets.

The next challenge is to whittle down the number of misfiring subsidiaries in industries ranging from fertilisers to luxury hotels, cars and power generation. It’s a fact that the results of only two of the group’s main businesses stand out — JLR and TCS. Several of the group firms need some desperate restructuring that includes sale of businesses — for example, the UK operations of the steel empire, telecom, hotels.

So like his favourite cricketer, Chandra may also need a captain who would leave him alone after some initial guidance.