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The Tata Way

October 20, 2014 Leave a comment

Have you ever wondered what makes a business last many generations? If so, the Tatas can teach you some things.Tata began operating as a trading firm in 1868.Today,the business consists of round a 100 professionally managed companies. Read the essay below by Ratan Tata to get an idea of the attitude that builds multi-generational businesses:

“I believe it’s really important to have companies survive over the longer term. I hate to see major corporations disappearing from the scene because someone has cashed out, because the managers have been unable to escape their comfort zones, or because boards have not been sufficiently nimble to change with the times. When these things happen, decades of effort and innovation go to waste. It’s bad when businesses don’t fight it out, whether the enemy is a competitor’s new product, an industry-transforming innovation (such as transistors), or the impact of something clearly outside a company’s control (like climate change).

Disruptive events often provide the spark to change course or enter a new field, as opposed to allowing competitors to nibble at your feet. I was lucky to become chairman of Tata Group when previously protected Indian markets were opening up to foreign companies. The basis of competition had changed, and we had an opportunity to go overseas. Some people tried to block those reforms at the time. But their impact now is visible everywhere, particularly in the automobile sector—all global car manufacturers are present in the Indian market. Open markets have encouraged local companies to adopt new technologies, to become more creative, to lower costs, and to improve offerings to the consumer.

One of the big dangers for any business is complacency; the challenge for leaders is how to keep injecting urgency. I think much depends on how good a CEO is at motivating his or her team and generating the sort of excitement that leads people to do things in different ways. That doesn’t mean taking cavalier risks. People in Tata’s companies have been remarkably receptive to simple slogans such as “Question the unquestioned” and “Lead, never follow.” Managerial rotation is critical: we used to have managers who did not even rotate away from a single function, who started in manufacturing and finished in manufacturing or started in R&D and retired in R&D. Unilever is good at avoiding that, and we have learned from it.

Besides the ability to innovate, I believe an attachment to good values drives corporate longevity. It’s something we have had throughout Tata’s history and on which we never compromise. Values are in our DNA, and they have carried us into new markets, helped us redistribute our assets, and, ultimately, made us a successful global company.

One hundred years from now, of course, I expect Tata to be much bigger and more global than it is now. More important, I hope the group comes to be regarded as India’s best—best in the way we operate, best in the products we deliver, and best in our value system and ethics.”