Ratan Tata: India's business icon and visionary who saw the future

For doubters that business can be a primary source of good, they just need to reflect on Ratan Tata. He symbolised precisely this. He was obsessed with the long-term value of Brand Tata and the group’s stakeholder orientation rather than mere shareholder benefit.  Enterprise and business in the West — and increasingly in India – have morphed into exercises of navel gazing into valuations, net present value of cash flows, and market capitalisation. This western capitalist system is either already broke, or surely heading to be broke soon. In the Shanti Parva of our Mahabharata, Bhishma advises Yudhishtira about adopting governance through Sarve Sama Hitam (welfare for all). Perhaps this concept inspired Gandhiji to preach and adopt Sarvodaya.

Having just authored the book, Jamsetji Tata — Powerful Learnings for Corporate Success, my mind is rather full of the legacy of Tata as an institution. As Ratan Tata has passed on, we mark that here stood a man who embodied the legacy of whatever Brand Tata stood for, embellished it, and departed into the long night, leaving the brand legacy for others to further enrich.

What is this legacy of Brand Tata? First, it is India’s most valuable brand estimated at about $30 billion. Second, Brand Tata has remained on the top of its list of peers for a gravity-defying period of 85 years – ever since 1939, when the size of India’s top corporations was first reported upon. As adumbrated by the changing list of Fortune 500 companies, this is unique. Thirdly, it is distinctive insofar as the people of India not only respect Tata, but also love the brand in some measure. How many brands can you think of which you respect and love? Fourth, the business has placed the community centre-stage and has done so consistently for well over a century. Fifth and last, Tata has kept embracing the future all the time. It started as a textile company, morphed into a hotel, steel and electricity company, then into chemicals and trucks, and into information processing and chips! Ratan Tata, following his four predecessors, has created a Living Machine, not just another corporation. How? By pursuing ‘perpetual value’, by focusing on perpetuating values rather than merely pursuing financial valuation.

Of course, there have been ups and downs. That is the journey of mortals as much as of companies. The great lesson that Ratan exemplified is that the company’s response after a bad thing occurs is the organisation’s defining culture. He led from the front when setbacks occurred as could be recalled from his response to setbacks, for example, the denial of an airline and airport licence in the late 1990s, the unfortunate Tata Finance episode, the need to relocate car manufacture from Singur in West Bengal to Sanand in Gujarat, and many more. Ratan Tata had oodles of character; he displayed that character through his actions rather than through bravado and public statements.

There are several publicly known examples which adduce to these attributes. In paying tribute to him, I refer to two that are not much known.

One example is from the 1990s. Ratan chaired a Tata joint venture with an international automation company. I succeeded him as chairman after a few years, and that is when I learnt this story. The first CEO had set up the plant in Pune, but just could not get a single order without offering a kickback. He shared his dilemma with Chairman Ratan Tata, perhaps hoping for a solution, some understanding and empathy. Ratan’s response was firm and decisive: shut down the plant if you cannot get acceptable orders! Such decisive clarity induced a different way of thinking in the CEO and leadership team. The joint venture secured proper orders, and the firm flourished. I had the privilege of taking over chairmanship of a company in which Sanskar and Neeti had already been incorporated! Embedding such values is priceless in a company and the story makes a good case for running enterprises with values right from the first day.

Here is another unknown example. In the late 1990s, I joined the board of an agrochemicals company in the Tata group. A few years later, for reasons connected with management leadership, the company ran up a huge loss in one financial year — huge for a company of that size. During discussions, Ratan Tata wondered whether Tata should just exit the business. I argued a strong pitch to turn around the company if it could get some initial financial support. After several discussions, he agreed while expressing his philosophical opinion that “turning around a loss-making company is socially more honourable than selling it”. Whoa, that was the statement of statements, demonstrating the live idea of perpetual values in a company. The good news is that the company was turned around and is now a profitable member of the Tata group.

Most CEOs in the Indian business environment these days come through as aggressive and articulate leaders with an inherent quality of subtle salesmanship. Many are singularly focused on valuations as the metric of performance. Media hype and award-distribution about the “best” among CEOs, companies, and start-ups heighten this public gaze on elan and macho qualities. Those metrics are great if the leader or institution also displays wisdom and enlightenment in the running of the company. There is no advocate for ‘wise’ capitalism or sustainable, humane, enlightened companies.

Ratan’s path would be a great one to follow if collectively, India Inc can achieve what economist Alfred Marshall said in 1910 about the founder, Jamsetji Tata, “If India had a score or two men like Mr Tata with thousands of men with the Japanese interest in realities, with virile contempt of speech-making in politics and law courts…India would soon be a great nation.” Silently, Ratan Tata has played that role by emphasising that corporate longevity with a long-term perspective (perpetual value) and benefiting society (sarve sama hitam) are valuable attributes to nurture within India Inc.

The writer is an author and former Director, Tata Sons, and Vice Chairman, Hindustan Lever