The current crisis in the Tata group underlines the importance of succession planning in big corporate entities in India, says V. Govindarajan (popularly known as VG), professor at Dartmouth’s Tuck School of Business, a Marvin Bower fellow at Harvard Business School and one of the world’s top management gurus. The author of The Three Box Solution: A Strategy for Leading Innovation also touched upon the new world order and the challenges and opportunities it presents to India, in an interview on the sidelines of an event hosted by the S.P. Jain Institute of Management and Research. Edited excerpts:
What lessons can Indian companies learn from the spat between Tata Sons and Cyrus Mistry?
It underlines how important it is to think about leadership succession and plan it out in a manner that works effectively.
What is your view on N. Chandrasekaran (chief executive officer and managing director of Tata Consultancy Services Ltd) being designated chairman of Tata Sons?
I really think Chandra’s appointment is a brilliant move by Tata Sons. The TCS experience of working with diverse industries (should help him) in leading the Tata Group. Secondly, TCS has really invented itself in the digital space and that is what is needed in every one of the Tata group companies.
But there are concerns on whether he will get a free hand...
I think your ability to get a free hand depends on your competence. He is an extraordinarily competent person. If you do a great job, people give you all the opportunities.
Is there a need for the Tata group to revisit the three-tiered structure of the operating companies, a holding company and the Tata Trusts at the apex?
I personally think it’s not a problem. The problem is going to go away—no one is going to talk about it once the Tata group gets strengthened under Chandra.
What kind of opportunities and challenges should India expect from the new world order that is emerging because of Britain’s exit from European Union and Donald Trump’s protectionist inclinations?
I think more than the challenge, it’s an opportunity. When the Donald Trumps of the world say protectionism, countries such as India, instead of (worrying about) exporting, should think of innovation for India. There is a large underdeveloped economy and a developing economy within the country waiting to be tapped. Sooner or later the world will open up and then we can take these break-through innovations abroad. Therefore, I think it’s a blessing in disguise. Let’s see this as an opportunity to drive innovation in India. Till then, it’s prudent to focus only on markets that are not protected. We need to change our approach and say why don’t we export more to emerging markets such as Africa.
How do you see the manufacturing sector in India when it comes to innovation? The Tata Nano was an innovation, but it failed.
As a country, India needs to focus on process innovation and high-tech manufacturing. That is where it will excel. Innovation, almost by definition, implies failures. If you look at Silicon Valley, there are many failures. The idea is to not get discouraged by failures as long as you gain something from it. What the Nano did was to fundamentally redefine what an automobile is.