It is India Inc’s most closely watched succession and there is speculation on who will, or can, fit into the shoes of the Tata group chairman Ratan Tata when he lays down office in December 2012.
A five-member committee has been appointed for the hunt. Names that have popped up include Noel Tata, Ratan Tata’s half brother (son of Naval Tata’s second wife, the French-born Simone), ITC’s Yogi Deveshwar, PepsiCo’s (NYSE:PEP) Indra Nooyi and even Infosys’s N.R. Narayana Murthy.
More than speculating on the actual successor, one decided to quiz the unmatched chronicler of Tata stories – he has written 11 books and six of them have been on the Tatas – R. M. Lala on the leadership qualities required to make the cut for corporate India’s hottest job.
Even though he had hurt his back the previous day and is in bed, Lala’s sense of humour hasn’t taken a hit. During the two hours I spent with him in his flat in the gigantic Parsi Colony at Colaba Causeway in Mumbai, there are at least four calls from journalists digging for some information.
“Journalists are behaving as though I have Ratan’s successor in my pocket,” he chuckles, before warming up to the subject.
Why JRD chose Ratan Tata
He begins by recalling how 10 days after Ratan Tata was appointed chairman of the Tata group on March 25, 1991, Lala met J.R.D. Tata and asked: “‘Why did you choose Ratan, is it because of his integrity?’ And he said, ‘No, no. you can’t say that; that’ll mean the others don’t have it. I chose him because in my job you’ve got to have very good memory. To deal with hundred companies, you’ve got to be very sharp. Ratan has got a very sharp memory.’ Which was true and holds good even today… 20 years later.”
When I mumble how my memory is already fading, he says: “Trust me, Ratan has a very sharp memory, sometimes people wish he’ll forget and not remember the past. But he keeps quiet for a while and then catches them.”
So that is the first quality the successor will need, says Lala. The second, and as mentioned in Ratan Tata’s epilogue to Lala’s book The Creation of Wealth (see Box), the successor will have to be a person who can withstand political influence and steer clear of corruption; “in short, one who will not resort to ‘soft options’.”
The third quality, says the octogenarian, is vision. “The Tatas are, in some ways, limited by their big companies… steel, auto, chemicals, etc. But, in future, technology will have a role to play and the person who takes charge will need to be well tuned into that as well… because that is the future.”
Elaborating on the ‘vision’ aspect, Lala gives the example of Ratan Tata being put in charge of Nelco in 1971. At lunch one day “everybody went for Ratan, saying Nelco was losing money, and so on. Let’s not forget, Ratan was then very young. JRD kept quiet for a while and Ratan, recalling that incident, put it in a beautiful way when he said: ‘When you are duelling alone against odds, Jeh will come and duel beside you.’”
So JRD intervened and turned the whole conversation away. Both of them had the vision to see that the future belonged to electronics. “You need that kind of vision, not to go by the moment, but look ahead. So vision is important.”
But the group today being so much bigger, so different and more complex than when Ratan Tata took charge, would his successor require a different set of qualities? Or leadership qualities never change?
“Well, basic qualities do not change but adaptations change… the set of challenges Ratan’s successor will have to face will be different. Ratan had to contend with start-ups. His successor will be inheriting a well-oiled machinery, with no one to sabotage his work. I think it will be an easier run.”
Another quality needed, he adds, is good health. “Ratan is very strong physically. Otherwise, you can’t take these pressures; running hundred companies is no joke. This is such a big group, with well-known ethos and credentials; that is why people are so interested.”
If given a chance who would he root for?
“But I’m not given a chance,” he quips, adding, “It’s a very difficult choice. The Lord has protected the Tatas so far and he will lead us to the right path. So far the Tatas’ reputation has been protected… the image of ethics has been unsullied.” Lala believes that one thing the search panel will keep in mind is the “track record of the person they choose; that’s very important”.
“Ratan is at peace”
So how is Ratan Tata looking at the entire issue?
“Oh, he seems to be very much at peace… he is more at peace now than he was ever before.”
Lala has no clue what the Tata group’s chairman will do after retirement, but he had advised him 10 years ago to write his autobiography, “not only about his successes but also his mistakes, so that people in management can learn from it. He said he’d address himself to it but hasn’t had the time to do it. But once the successor is appointed he will be more at peace and find the time, I hope.”
When asked why the man who has done JRD’s biography didn’t do the same for Ratan Tata, as he knows the Tatas so well, Lala sighs, “Many people still urge me to do that but I have passed that state, and don’t have the energy.”
When I say that his back problem would pass in a couple of days and he would bounce back, he says, “No, my dear… my ( Beyond the Last Blue Mountain:) Life of JRD was the most difficult book to write.
When you are a living pioneer, an aviator, a doyen of industry and such a multifaceted personality like JRD, it is a very big job.”
And, he had cancer to combat during that time, which made the task even more difficult, he adds.
Coming to what he would remember about Ratan Tata as he lays down office, and what were the qualities that made him such a good leader, Lala says, “I think he has grown greatly in his job; either you grow in office or swell, and Ratan has steadily grown.”
On whether Ratan Tata would play a role in the decision, as he has said that the committee should decide, Lala says, “Sure he says that, but do you think he is going to let 20 years of his hard work go without a say? And he will still be the head of the Trusts (Sir Dorabji Tata and Sir Ratan Tata trusts) which have the largest number of votes and own 66 per cent of the group. JRD wanted him to be the head of all the trusts… he had told me so.”
This is what Ratan Tata said in an epilogue to a subsequent (2004) edition of R.M. Lala’s book The Creation of Wealth: The Tatas from the 19th to the 21st Century. Here he gives an idea of what he would like his successor to do, or rather, not to do:
“The people within the Tata group have displayed enormous spirit over the many decades that we have been in existence. I hope they will remain totally committed to making the Tata group what I think all of us would like it to be — the predominant business house in India, which amidst fast-eroding values, will continue to stand out as being a well-integrated, growth-oriented group with market leadership, operating with a high level of integrity, a great value system and uncompromising in its goal to achieve results without partaking in corruption, bribery and/or political influence
“If this is what the group looks like in the future, I would believe that I would have achieved the task I undertook. I would hope that my successors would never compromise and turn to soft options to meet their ends, and never allow the Tata group to join the growing number of companies in India which have shed their values, forgotten about their integrity, and close their eyes to maintaining ethical standards. If Mr J. R.D. Tata was able to uphold the values of the firm and if I have been able to carry on that tradition through my tenure, I hope the future generations in Tatas will recognise these traditions as being critical to the fabric and the fundamentals on which our group was built and grew so successfully for over a century.”
(Signed Ratan N. Tata, September 15, 2003)
On Ratan Tata saying at the AGM of Tata Chemicals that the media was unnecessarily speculating on his successor and the Tata group should not be looked upon as a ‘Parsi group’, R.M. Lala says the trigger for that comment was an editorial in the Parsi publication ‘Jame Jamshed’ that maintained that Ratan Tata’s successor should only be a Parsi and a Tata. “So he might have been responding to that. I too think that this is a very narrow-minded view.”
On the possibility of Noel Tata, the MD of Tata International, making the cut, he says: “As I said, the track record will be very important, but there is a magic in the name ‘Tata’. If you have the required qualities, and other things being equal, if you are a Tata, you will always be way ahead.”
Having said that, Lala wonders how Noel Tata was given the new responsibility at the Tata International at the “last minute. Why did they not train him earlier?”
He adds that unfortunately “Ratan has not got down to mentoring anybody, and this is not for lack of being told. I’ve told him six years ago: ‘Take six young and intelligent people, let them watch you, learn from you.’ Had he done that, it would have been such a useful input now. Even if none of them were selected, the training they would have got… going around with him, sitting with him, meeting the topmost industrialists of the world, would have been invaluable. Now, of course, he will mentor whoever is selected by the committee, from February 2011 till December 2012. There is no doubt about that.”
On the contenders in the reckoning, such as ITC ChairmanYogi Deveshwar, Renault’s CEO Carlos Ghosn, PepsiCo’s Indra Nooyi and Infosys’ N.R. Narayana Murthy, Lala says, “It is silly to mention Narayana Murthy… I think you are wise in sticking to qualities rather than persons!”
What about a woman at the helm of the Tata empire?
“Why not? But there aren’t many of them around. I don’t think that prejudice is there; but competence is important.”
When asked who he would like to see as Ratan Tata’s successor, Lala says, “The people I’d like to see there are too old… such as Jamshed Irani and R.K. Krishna Kumar.”
The conversation has to veer back to Noel Tata; after all, his father-in-law, Pallonji Mistry, is the largest individual shareholder (about 18 per cent) in Tata Sons and Pallonji’s son Cyrus Mistry is a member of the selection committee! “That’s true, but Pallonji has never pushed his weight around in the Tatas.
And as I said, other things being equal, Noel will certainly benefit. But he won’t get it just because he is a Tata. Earlier I had felt Noel had a 30 per cent chance, but now it is a bit less following Ratan’s statement that this should not be looked upon as a Parsi group.”