Ratan Naval Tata Part-4

The Perfect Business Handlers !!!

Business As Unusual

To his credit, Tata didn't let the criticism and internecine battles deflect him from his chosen path. On taking over in 1991, he dusted off the 1983 plan and updated it, taking the newly-opened economy into account.

Now, the thrust was equally on technology-driven leadership, global competitiveness and being among the top three domestically, regardless of the line of business.

That meant rationalising the Tata business structure. The remnants of the era of government controls combined with independent functioning of group companies in decades past could be seen in the way the group had grown till then -- unstructured, with overlapping business across multiple companies.

When Ratan took over, there were three group companies manufacturing cement; five were involved in pharmaceuticals, while nine companies operated in the IT space. One of his first acts was to sell Tomco; swift exits from pharma and textiles and, later, cement, followed.

Management consultancy McKinsey was brought on board to help with the reorganisation. The Tata Group is still a diversified, salt-to-software group, but now there is a method to the business expansion.

Tata also paid attention to brand Tata. By 1998, there was a single group logo and the Tata brand belonged to Tata Sons. Now, companies needed to sign brand equity and business promotion agreements with Tata Sons before they got use of the brand name.

And Ratan was choosy about its use (stepmother Simone's cosmetics business, Lakme, which was later sold, and half-brother Noel's retail business didn't make the cut).

Zia Mody, managing partner at law firm AZB & Partners, which has advised the Tatas on acquisitions like Corus and Jaguar Land Rover, believes the group-culture Ratan Tata has created will stay on as his legacy.

"He has institutionalised processes. The reputation of the group and its guiding principles are uppermost in his mind while taking decisions," she points out.

Business historian and writer Gita Piramal has a different take on Ratan Tata's legacy. "Tata put 'design' into the group -- in mergers and acquisitions, engineering or cars or anything else. It is a very forward-looking strategy, putting new competency in very old companies," she says.