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Kevin & Jackie Freiberg

Chapter 2

Leading Nanovation

So what does the chairman of a $71 billion industrial group know about the dignity of the poor? Why would he care? The short answer is, it’s in his DNA. And it’s in the DNA of the companies the Tatas built. Ratan Tata learned through example, from over 100 years and three generations of Tata leaders who have modeled noticing, serving and responding to the needs of India and her people. For over 140 years the leadership tradition of “good thoughts, good words, good deeds” has become deeply rooted in the cultural DNA of Tata companies and Tata leaders.

Most of us arrive at our beliefs about leading people, building companies, creating corporate cultures, and serving customers through the individuals and events that have shaped our lives. So, let us unpack the story of this remarkable man a little more thoroughly. Our purpose is to give you a glimpse of whom and what has influenced the gutsy, global leader behind The People’s Car, the man Time Magazine called one of the 100 most influential people in the world.

Of all the companies in India, no one has a bigger footprint than the Tatas. As India’s largest conglomerate, the Tata Group owns about 100 different companies in more than 80 countries, with more than 350,000 employees. In 2009, their revenues were nearly $71 billion, with 65% of that coming from their operations outside of India.

If you live in one of the major metropolitan areas of India, you can drink Tata tea brought to you in Tata trucks made with Tata steel. You can build an IT infrastructure loaded with a wide array of Tata enterprise and business process solutions, assisted by Tata consultants. You can talk on a Tata mobile phone network and check your e-mail on Tata broadband on a computer driven by Tata power. At night you can sleep in a Tata hotel, watch Tata Sky TV, shop in a Tata retail store, put Tata salt on your dosa and finish it off with Tata coffee.

If you live outside of India—and particularly outside their current sphere of influence in Asia, the Middle East and Africa—you may only know them from the story of the Nano and their acquisition, in 2008, of Jaguar and Land Rover. But in coming years, you’ll be hearing more of them. You’ll be buying more Jaguars and Land Rovers. You’ll be buying Nanos. And don’t be surprised if your company sends you to the Tata Management Training Center to study their Business Excellence Model.

A legacy of making life worth living.

The Tatas have proved to be adventurous spirits with compassionate hearts and undaunted wills. Since the 1860s, they’ve dared to accomplish things for the sake of the country and not just for the bottom line. Jamsetji Tata (1839-1904, left), the legendary founder of the company, set the tone in the early years. He was determined to leverage his wealth to help Indians become self-sufficient at a time when the nation was still laboring under the yoke of British colonial rule. Most business experts and historians agree that Jamsetji Tata and his heirs led India’s first steps toward industrialization.

“We do not claim to be more unselfish, more generous, or more philanthropic than other people,” Jamsetji said in 1895. “But we think we started in sound and straightforward business principles, considering the interests of the shareholders our own, and the health and welfare of the employees the sure foundation of our prosperity.”

The founder’s egalitarian spirit, passion for nation building and concern for the disadvantaged became an integral part of the way he and those who came after him have done business. As you will see, the Tatas don’t just build companies; they build communities. They are highly engaged in raising the standard of living and improving the quality of life for people wherever they go.

WHAT IF?

The Tata’s have been engaged in corporate social responsibility (CSR) long before it became a fad or buzz word.

  • What if your company had a reputation for giving back, for community and nation-building?
  • What if your CEO and founders resided on top of the “Most Ethical Leaders” list?
  • What if your customers were absolutely convinced that your business does well for itself by doing good for others?

A humble pedigree. In spite of his last name, Ratan Tata did not inherit his position. While he is distantly related to Jamsetji Tata, the founder of the Tata empire, his family branch was not originally part of the business. His grandfather died young, leaving Mr. Tata’s father, Naval Tata, in near poverty. In fact, young Naval was a student in an orphanage when a wealthy relative decided to adopt him. That relative was Lady Navajbai Tata, the wife of Jamsetji’s second son, Sir Ratan Tata. Since she was childless, she was encouraged by relatives to think of adopting a child and the suggestion was made that young Naval was a good choice.

For Naval Tata, it was as if a fairy godmother had popped out of thin air and spirited him away to a new world.

With permanent residences in London and Bombay, Sir Ratan and Lady Navajbai were worldly and well traveled. They opened young Naval to a wider world than most people ever know. Sir Ratan was a man of fabulous wealth who spent more time on philanthropic works than he did on the business of Tata Sons, the family’s business holding company, which he left largely in the hands of his brother Sir Dorab Tata. Instead he founded a trust to build hospitals in India and funded a chair of social science at the London School of Economics to study the causes of poverty. They were early supporters of Gandhi’s efforts in South Africa. They travelled to Europe and Asia regularly and dined with famous people. But while it was a life of privilege, Sir Ratan and his brother lived in relative modesty, using the best part of their inheritances to create a pair of charitable trusts that today hold 66% ownership in the Tata companies.

A history of entrepreneurial philanthropy. Many of the pioneering educational institutions in India—including the prestigious Indian Institute of Science, the first institute for social sciences, the first cancer hospital and research center, and the first institute for basic research in mathematics and physics—were established over the years by the Tatas and the Tata Trusts. Today, the trusts alone distribute approximately $90 million a year. The combined development-related spending of the trusts and the companies amounts to approximately four to six percent of the net profits of all the Tata companies.

As a CEO, Ratan Tata is in charge of making a great deal of money. He’s also responsible for spending it on good works.

Think about that: for more than 100 years, much of the profits of one of the world’s largest industrial groups have gone to charity. And Ratan Tata, as Chairman of the Tata Group, manages a charitable empire with assets totaling as much as $50 billion dollars. So while, like most CEOs, he is in charge of making a great deal of money, he’s also responsible for spending it on good works, leading two of the world’s largest charitable organizations, focused on reducing global poverty.


No sense of entitlement – He earned his way up. While it’s true Ratan Tata grew up inside the Tata business—his father became a director and was an active leader—no one could say he was groomed to take over. In fact, he started off going in the opposite direction.


Ratan Tata was born in 1937. His parents separated when he was seven and he was raised mostly by his grandmother. He traveled to Europe and the U.K. as a child and was quiet and artistic. He headed off to America for his education when he was just 15 years old and, in the 1950s, studied architecture and structural engineering at Cornell. He had an early passion for flying and washed planes at the local airfield to pay for lessons.  He most likely would have stayed in the U.S.—he had a job offer from IBM—had not family members encouraged him to return to Mumbai. His grandmother, offered a simple and compelling argument: she was ill and wanted him to be near her.


Ratan Tata worked his way up inside the Tata organization for nearly 20 years and was given charge of an ailing electronics company belonging to the Group, which he led to profitability. Then, in 1981, was asked to lead a little-known and somewhat dysfunctional organization inside the group called “Tata Industries.” Tata Industries was intended as a think tank and incubator of new ideas in new industries. It was a mess and his job was to clean it up.


He was only months into the job when his mother fell ill. Torn between his new responsibilities and his family duties, he decided that since he had only one mother, he’d better go with her to New York’s Sloan-Kettering Hospital. Maybe distance from the business was a good thing because, as he sat there for weeks with little to occupy his mind, he began to formulate a strategic plan.

An ability to see over the horizon. He decided he would take Tata Industries in the direction of high-tech electronics, computer systems and biotechnology. He bet on a future that was, at that very moment, just being hatched in garage operations in places like Silicon Valley and Redmond, Washington. Cisco, Oracle and Microsoft all got their starts that year. Apple was just a couple of years older. Although Ratan Tata was by then in his forties, he shared the same ahead-of-their-time vision the 25-year-olds on the West Coast had: a world of wired (and soon wireless) technology that would bring computer access to everyone and change the face of business. Others in his position—including the then leaders at IBM—couldn’t see it coming.

They laughed at the idea.

So when people laughed at the idea of a “people’s car” that cost about the same as a scooter, it wasn’t the first time. “Question the unquestionable,” Ratan Tata likes to say. And then do something about it.

In 1981, he was asking all the right questions. His strategy in the 1980s paid off for Tata Industries and when, in 1991, JRD Tata decided to retire, he asked Ratan Tata to take over. Succession was a huge decision, one that would impact the Tata Group, its employees and shareholders, and India for a long, long time.

What did J.R.D. see in Ratan? We suspect he saw a visionary, much like himself, who had the capacity to think big and the courage to act bold. J.R.D. saw someone who would honor the values that drive the Tata empire, yet one who is unwilling to accept the status quo and gutsy enough unafraid to shake things up.

At the time, Tata Sons had a small stake in some 300 companies. He sold equity and restructured some of the companies and used the capital as well as revenue from Tata Consultancy Services, India’s largest IT firm, to gain control of the companies that were left. All in all, Ratan reduced the number of Tata companies to less then a hundred, making the Group more manageable. As you can imagine, these broad and sweeping changes were dramatic. Seasoned company leaders within the Tata companies might have expected Ratan Tata to leave them alone to run their own fiefdoms, as his predecessor did. Instead, Ratan did the unexpected. He retired them.

1991 was also the year the Indian government began the massive task of liberalizing its economy, returning production to public companies, encouraging entrepreneurship and opening India’s doors to the world economy. It was as if, all of a sudden, the world’s most populous country suddenly realized two fundamental truths: first, globalization wasn’t the same as colonialism and India could play and win in the global game; and second, the hundreds of millions of impoverished Indians were not a problem, they were an asset. In a world competing on brain power, hundreds of millions of educated Indians with a tradition of speaking English could be a very powerful competitive advantage.

In 1991, India realized they could play and win in the global game.

In this tumultuous power shift, India and The Tata Group could not have had a better person at the helm to guide them through those changes than Ratan Tata.

Listen to his words and you quickly get a sense of how forward-thinking Ratan Tata really is: “The vision I have for India in the next decade is of a nation with vastly improved connectivity in communications providing education, personal interaction, e-commerce, and telephony contact for the overwhelming mass of its people. I see our country being connected through major highway networks, thus shrinking the time required to move goods to the marketplace. I see our consumers exercising an unprecedented degree of choice, with the Indian marketplace becoming a vibrantly competitive arena, fully integrated with the world. Equally, I foresee that the ambitions of the Indian entrepreneur will not be confined to domestic boundaries and our immensely valuable human capital will leave its mark on the global marketplace.”

A globally respected group of companies.

Today, the Tata Group is one of the most respected companies in the world. But don’t take our word for it. In 2009 the Reputation Institute ranked the Tata Group as number eleven among the most reputable companies across the globe. In 2007, The Tata Group was awarded the Carnegie Medal of Philanthropy in recognition of the group’s long history of philanthropic activities.

“I would hope my successors would never compromise,” Ratan told us, when we brought up Tata’s reputation, “and never allow the Tata Group to join the growing number of companies which have shed their values, forgotten about their integrity, and closed their eyes on maintaining ethical standards. I hope the future generations in Tatas will recognize these traditions as being critical to the fabric and the fundamentals on which our group was built and grew so successfully for over a century.”

A generative spirit. Generativity is the care and concern for future generations. It’s about inspiring people to participate in creating a better world than the one they inherited. In our book NUTS! we defined generativity as, “…raising individuals, organizations, and communities to higher levels of moral development—the obligations, responsibilities, and rights associated with bettering the human condition in a just and civil society. It means using the collective wisdom, knowledge, and experience of leaders and collaborators to further the welfare of others.”

Ratan Tata was trained to think about
what was good for the company and
what was good for the world.

A generative leader asks, “Are the people who are touched by my power and influence flourishing? Do they have more freedom? Have I spent enough time in the trenches to genuinely understand their wants and needs, hopes and dreams? Do our products, services and business practices reflect this understanding? Is the business a better business and are the communities in which we operate better places as a result of both the process and end result of my leadership?” Given the legacy that was handed to him, these are questions that come naturally to Ratan Tata.

They are also questions that keep him up at night.

Why? Like we said, it’s in his DNA and in the culture of his company. His personality, his focus on the larger picture, the idea that leaders do well by doing good: those characteristics are not simply the idiosyncrasies of a powerful man. They are among the primary reasons that he was chosen for the job of Chairman of the Tata Group. He was selected for those qualities because they have always been among the characteristics of leadership in the company. And, for those characteristics, he’s respected the way Warren Buffet is in the States or Richard Branson is in Britain.

Gutsy leadership. It takes guts to move an organization in bold new directions and it takes guts to get out on the seemingly lunatic fringe where new ideas are given birth and new innovations are fueled.

Leading Nanovation is not for the faint at heart because there will always be opposition; naysayers who ridicule you and tell you why you are crazy. Whether it is breaking a union strike in Pune, buying steel giant Corus Group or pulling out of Singur to protect embattled employees, Ratan Tata has demonstrated the guts to stand upon his convictions and live his values out loud. He has also had the guts to lead the Tata Group to places few would have the courage to go.

We like what Britain’s Car Magazine said when they named him one of their 10 Men Of The Year in 2008: “Word of advice: don’t get into a bragging contest with Ratan Tata about who achieved the most in 2008. Not unless you can beat purchasing Land Rover and Jaguar from Ford, launching the world’s cheapest car, building a city car powered by thin air, exporting electric trucks to America and brazenly announcing your plan to buy a chunk of Ferrari. And perhaps also standing with dignity outside your gutted Mumbai hotel and announcing that terrorists will not defeat you.”

An authentic and quiet man with a streak of thrill-seeker.

Although he’s one of India’s most powerful and most respected leaders, Ratan Tata lives alone in a modest apartment in Mumbai with his two dogs. His favorite getaways include a bungalow across the bay from Mumbai and the lake house at the Tata Motor’s Pune plant.

Ratan Tata has three passions in his very private life: cars, aircraft and German Shepherds. Being the Chairman of India’s second largest automobile manufacturer not withstanding, Ratan is a “car guy” with an eye for design and a penchant for speed. He has an interest in Ferrari on many levels —Tata Consultancy sponsors Ferrari’s Formula 1 motor racing team—and could possibly own a stake in the company in the future. Engage him in a discussion about cars and you quickly realize that you are talking with an aficionado—who by the way, is genuinely and graciously interested in your opinion.

Ratan has also been an avid aviator for most of his life and flies the company’s Falcon 2000 business jet whenever time permits. He even co-piloted the Boeing F-18 and Lockheed F-16 fighter jets at the Aero India air show in 2007.

There is a story about him (possibly apocryphal) that paints a picture of a world leader who has a concern for the little things. Whenever he boards the company plane, he is greeted by a small brown dog. The story goes that the dog is a stray that showed up one day and Ratan asked his staff to care for it.

Apocryphal or not, the story is consistent with our own experience. On any one of our six visits to Bombay House (Tata Headquarters) in Mumbai we found ourselves stepping over a couple of stray dogs that sleep on the beautiful marble floors of the entryway where it is cool.

Why are they there? Because Mr. Tata makes sure they are watered and well fed.

Unlike many business tycoons, Ratan Tata he has no entourage and he shows few displays of wealth or privilege. He’s a private man who lives a private life. He likes to listen to music. He has close friendships with Zubin Mehta and Amar Bose, the founder of Bose Audio. He enjoys driving whenever he can, and is often seen driving a Tata Indica around Mumbai.

As we talked with him on various visits, both in India and in the United States, it is very apparent that Ratan Tata hasn’t forgotten where he came from. Perhaps it is the sensitivities one acquires in a difficult childhood or what one learns from a grandmother who modeled servant leadership and treated everyone with dignity. Maybe it is the weight one feels from the responsibility of upholding 140 years worth of legacy and deeply embedded values. Or, possibly it is the respect one gains from walking in the shadows of iconic figures such as Jamsetji and J.R.D. Tata.

Whatever it is, we were struck by the fact that Ratan Tata shares two things in common with every great leader we’ve met: humility and a lack of pretentiousness. He has neither the self-congratulation of an entrepreneur who made billions or the arrogance of a corporate infighter who clawed his way to the top. He does have the work ethic of one who shoveled limestone in the steel mill and the sophistication of one who has traveled the globe. He is quite comfortable with lawyers, investment bankers and world leaders, yet he is very down-to-earth, self-effacing, and approachable with his blue-collar employees. In our experience he is as interested as he is interesting.

Leaders do well by doing good.
Good thoughts, good words, good deeds.

There’s one more story about him that we find endearing. Once, as the story goes, while driving along Marine Drive in Mumbai, his car broke down. Stepping from it, he was recognized by a taxi driver who stopped to assist and offer him a lift. Embarrassed, India’s most influential man had to admit that he’d come out with no cash. The driver laughed and gave him a ride for free, just so he could tell the story.

After all Ratan Tata has done for India, it seemed the least he could do.


NANOBITE

  • Be generative—focus on the needs of a widely-defined public
  • In your care and concern for future generations you will find the impetus for innovation
  • Hang on to deeply-held values and legacy, but be willing to change strategy on a dime
  • Dream big without losing the humility to remember where you came from
  • Find the courage of your convictions—you’ll need it to face those who can’t see over the horizon

QUESTIONS

If we talked to people who know you as a leader,

what would they say?

  • Are you a global citizen—have you experienced other cultures? Have your life experiences prepared you to broaden your views of what’s possible?
  • Do you see over the horizon? Are you looking for solutions that will serve the next generation of employees or customers?
  • Do you have the guts to shake up parts of your business caught in the status quo?