The legacy of Ratan Tata is about the future more than the past
Summary
- The late former chief of the Tata Group is best remembered for the course he set, be it his commitment to India-centric globalization, capacity to resist fashionable trends or adherence to foundational principles—all of which should hold us in good stead.
Of all that Ratan Tata did, he will be best remembered for how he helped fulfil the vision of India’s founding fathers. When the country emerged from its dark days of colonial occupation, the new state’s architecture needed an industrial backbone.
This was necessary to generate not just jobs, but surplus capital for further investment, and, importantly, also to reduce import dependence. Led by J.R.D. Tata, the Tata Group took up the challenge as an industrial conglomerate committed to the cause.
Soon, however, Indian business groups collided with one critical problem: scarcity of capital, compounded by a lack of know-how in allocating it efficiently among group companies to maximize its effect.
It was only after Ratan Tata took over as chairman of the Tata Group in the early 1990s, around the time India opened up its economy, that we saw modern structures and processes put in place to manage such a vast multi-business group.
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These included distributed decision-making but a centralized emphasis on manufacturing excellence, people management and capital efficiency. As a result, in the 21 years that he was at the helm, not only did the group’s footprint expand exponentially, its revenues grew from $4 billion to $100 billion.
It can be argued that Ratan Tata was well suited for those challenges, having spent a large part of his formative years—and early days as chairman—overcoming turbulence. Brought up by a step-mother, after his parents separated when he was barely 10, he attended three schools, the last one in the US.
He studied architecture at Cornell University and then worked with a firm in Los Angeles, away from his immediate family and the Tata umbrella.
He came back in the 1960s and joined the group at the bottom rung, learning the ropes and ascending its hierarchy, conscious of the weight of his surname and displaying the humility that won him so many admirers.
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His first corporate challenge arrived in the form of a floundering Tata unit, Nelco, which he managed to turn around. Ratan Tata’s ascent to the corner room in 1991, as successor of the legendary J.R.D. Tata, was marked by an intense struggle with various entrenched power centres within the group.
Ratan Tata’s ability to overcome this hurdle, with reserve and equanimity but fierce determination, prepared him for the uphill task of making the group fit for purpose in a globalized world after India abolished industrial licensing and exposed India Inc to foreign competition.
It is customary to dwell on the past achievements of a departed personality. But towering figures such as Ratan Tata always leave a legacy that’s important to understand for cues to the future. One key lesson is his commitment to India-centric globalization.
Under him, the group not only sourced capital from overseas, but acquired storied global brands—such as Jaguar Land Rover—that could be managed from India, reflecting his firm belief in the country’s potential. Another was his ability to defy fashionable trends.
He persisted with the group as a diversified conglomerate, though trimmed into a more cohesive shape by shedding parts that did not fit in, such as soap-maker Tomco.
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Finally, he had the far-sightedness to continue with group founder Jamsetji N. Tata’s principle of the corporate surplus belonging to society at large and not just a limited circle of shareholders.