Korn Ferry

The Father of Modern Indian Business

Glenn Rifkin

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World dominance isn’t exactly what most entrepreneurs in India in the early 1990s could have envisioned, given the country’s tight-knit business culture. But few had the vision of Ratan Tata.

Tata, considered a cross between Warren Buffet and Bill Gates, is described by many as the father of modern Indian business. He turned his family’s company into a $100 billion giant in everything from steel to hotels to cars to consumer products, capitalizing on the liberal­ization of India’s economy at just the right time. Ultimately, as the chairman and CEO of the Tata Group, he’d prove that timing is everything—for risk-takers.

“He was a transformational leader,” says A.D. Amar, a professor of the Stillman School of Business at Seton Hall University. “He brought Indian business to a level not seen before.”

 

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The original company, founded in 1868 by Jamsetji Tata, has a unique culture built upon the family’s deep roots in India. As immigrants from Persia, the Tatas arrived by ship in Gujarat and discovered a welcoming land where the discrimination they had once faced was nonexistent. Ratan Tata himself was adopted into the business-running side of the clan when he was a boy. He joined the family company in 1961 in an environment where birthright in the very complex family hierarchy counted as a distant second to a demonstrable leadership capability. Indeed, Tata’s first job out of college was shoveling limestone at one of the company’s steel mills.

He continued to work his way up through the ranks and became CEO in 1991. At the time, only 10 percent of the firm’s sales came from outside India. Tata led the firm on an acquisition spree, buying Tetley Tea, Corus Steel and a slew of other firms in disparate industries. Tata Group grew to more than 100 operating companies and more than 700,000 employees in nearly 100 countries. The Economist wrote, “You can live in a house, drive a car, make a phone call, season your food, insure yourself, wear a watch, walk in shoes, cool yourself with air-conditioning and stay in a hotel, all courtesy of Tata firms.” Over Ratan Tata’s 21-year tenure, the firm’s revenues grew more than fortyfold and profits grew fiftyfold.

Ultimately, Tata may be known for his risk-taking in the car industry. The firm’s car-making arm, Tata Motors, sells about 9 million vehicles annually. It had acquired Jaguar Land Rover in 2007 from Ford Motor Company for $2.3 billion, but Tata envisioned something bolder—a “people’s car” to meet India’s complex transportation needs. With growing urbanization among India’s 1.3 billion people, personal transport had become a crisis. Mass transit was either unavailable or unreliable. Pothole-filled roadways replete with livestock and unruly drivers characterized the landscape, and most families drove dangerous two-wheeled vehicles with a man at the wheel, his wife and baby behind him, and his older child standing in front. Tata believed that the Nano, his company’s no frills $1,500 model, would solve the problem.

Instead, the sales were not spectacular. “It turns out that people in a lower income bracket have the same sense of self-preservation as their counterparts further up the economic ladder,” the Guardian surmised in 2014. By 2017, reports of the Nano’s imminent demise began to circulate as sales in March were down to 174 units.

At nearly 80 years old, Ratan Tata remains a revered and active figure in Indian business. And he certainly doesn’t regret his risk-taking style. “I have a theory that everything moves in cycles,” he once told an interviewer. “You go overboard one way and then self-correct. Our minds demand a sense of uniqueness. Human beings demand that we keep looking for change.”

Authors

  • Glenn Rifkin

    Managing Editor, Korn Ferry Briefings

 

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