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Leadership Transition at Tata Sons : Convenient but short sighted and self serving ( unabridged version )

Source | LinkedIn : By Prabal Basu Roy

As a fellow professional, and without the crutches of a hallowed family name, it was indeed a proud moment to see Chandra, as we all call him, take the helm at Tata Sons….undoubtedly a journey nothing short of inspirational.

But this article is not about him. It is an insight into the leadership decision style at Tata Sons…the bane of its current difficulties as I have written about earlier. Stripped of all the effusive accolades in the electronic media, it is necessary to draw this distinction and examine this fundamental aspect in detail. Firstly, Chandra’s core leadership skills devolve around a clinical execution capability with a detail orientation. The IT sector has been purely a growth industry requiring a totally different set of management characteristics from those in managing complex turnaround situations requiring tough actions involving a highly unionized labor force across diverse manufacturing industries. This single industry exposure, that too restricted to only the services side of the business and not technology, products, innovation, design, etc.,is likely to be a serious handicap in managing an unwieldy, multi faceted, diverse business conglomerate of independently run, listed entities, often with mutually contentious agendas. Furthermore, the culture in the IT industry is one of youthful exuberance, service orientation, technological innovation and collaborative learning ….an anti thesis to the rough and tough shop floor realities of old world industries. Personally having worked in leadership positions on both sides of the spectrum, I can say that this cultural and skill set mismatch will be a major challenge… though charismatic leadership can overcome some of this. Tatas could have found a much better fit amongst professionals from across the globe including India who have had the opportunity to play in a much broader canvas.

Secondly, from a public shareholder point perspective, the primary task on hand is of increasing the management efficiency across the Tata Group sans TCS and Tata Motors… specifically in the areas of executive accountability and capital efficiency. The fundamental shift from grandiose visions, hi-octane strategic intent but unprofitable growth from Ratan Tata’s time necessitates hard questions on factual parameters like financial results and market cap growth as a result of such initiatives …. a tough job especially when a compliant media is itself a prisoner of its own making in passionately whipping up a larger than life persona based on his many strategic moves in the past decade. A newspaper claimed huge outperformance of Tata Group’s market cap from Rs. 8K Cr to Rs. 462K Cr under Ratan Tata’s tenure from 1991 to 2012 vs. a relatively mediocre Rs. 462K Cr to Rs. 850K Cr under Mistry since 2012.

Read On….

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