Don't be your own man: Message from Tata Group to its new chairman

Ratan Tata is a man of few words. So, when a man of his stature speaks, people listen carefully. But Tata may be hoping that not many would remember what he had said in the run-up to Cyrus Mistry’s entry into the corner office at Bombay House, after a rigorous, more-than-a-year-long global search process. Here are a few samples of his advice to Mistry just two weeks before his retirement as chairman of Tata Sons in December 2012, as mentioned in a Press Trust of India report at that time. 

- “Be your own man. I don’t think it is right to have a ghost to shadow over somebody. You should be your own person, you should take your own call and you should decide what you want to.”

- “I have told my successor the same things that I told myself when JRD (late J R D Tata) handed over the mantle to me. The first reaction of anybody is to be Mr J R D Tata because you are filling his shoes. I instantly told myself, ‘I can never do that’. I will never be him much as I try to imitate him. So I took a decision to be myself and to do what I thought was the right thing.” 

- “During the transition, Cyrus Mistry had asked me from time to time, ‘Is this ok, is that ok?’ I responded by telling him that he should look at things as ‘if I were not there because you should be your own person’.”

- “I think Cyrus Mistry should have his space and define where he would like it (the group) to grow.” 

- “We are very hierarchical. We don’t touch each other’s feet but we still almost bow down every time when one passes. That needs to change.”

- “Often, an unwillingness to have a course correction brings about the demise of an organisation because when you bring fresh blood into it, he sees things in another way. I am sure Cyrus will bring new ideas and new things.”

- “I have been constantly telling people to encourage others to question the unquestioned and not to be ashamed to bring up new ideas, new processes to get things done.”

Did Tata walk the talk? Even if one ignores Mistry’s accusation that he was made a lame duck chairman, the fact that as executive chairman of India’s largest corporate house, he was asked to get his decisions approved by a committee set up by the Tata Trusts indicate that he was hardly allowed to be “his own man”. An even more in-your-face action was the change in Tata Sons’ articles of association that gave the largest shareholder special powers in nominating, approving and removing chairmen of the group holding company. This was done just days before Mistry took the top job. According to article 104B, as long as Tata Trusts has at least 40 per cent shareholding, it can nominate one-third of the directors of the Tata Sons board. The quorum for a meeting of the Tata Sons board “shall include a majority of the directors who are appointed pursuant to Article 104B”. Mistry’s appointment as chairman of Tata Sons was only the second time the trusts and the holding company had different chairmen. 

All this suggests that Tata Trusts wanted to retain absolute control over the way Tata Sons and its subsidiaries operated. The point is simple: The owner (in this case, Tata who is the chairman of Tata Trusts) has been and is still the final boss. It is foolhardy for even an executive chairman to think that he could take decisions on his own. If that is true for others in India Inc, it’s true for the Tata group as well. The mask is off.

Just another point: Mistry’s choice may have been underwhelming, but what else can be expected of a selection committee, which grandly announced eight months into the search for a successor that it just cannot find a replacement for Tata and might have to lower the benchmark. “He (Tata) is a born leader and you can see this wherever he goes... We may have to change and rearrange the model in terms of what we are looking for,” R K Krishna Kumar, one of the members of the committee and then Tata Sons director, said in an interview published on the company’s website.

Four years on, Mistry has been called out as the wrong choice. If that’s the case, shouldn’t Tata and the honourable men on the selection committee carry the can too?