It has been nearly one month since Ratan Tata, the old bachelor started experiencing how a married man is subjected to family feuds. More than Cyrus Mistry, Mulayam Singh Yadav might be cursing Tata for hijacking news space, when his own well-orchestrated family feud started appearing in news.
Now, as Tata finds himself deep inside the imbroglio of starting the end of Parsi Business Empire in India, he has no one else, but himself to blame. After all, he forced Cyrus to accept the chairmanship in the first place. At the end of the day, after all cross-firings between both factions that now try to vie for the control of the group, Cyrus Mistry could establish himself as the victim. Even the worst of accusations or reasons for his removal could only portray, he was removed for running the group like a true businessman.
If he ran the business house like a good businessman, they why he was removed? This is the question. He was removed because, the position of Tata group chairman was not exactly the job of an accountant-cum-manager to decrease losses and increase profits. In his eagerness to exploit all his skills in business management, Cyrus Mistry forgot what the mission of Tata group was. The mission of Tata group is “To improve the quality of life of the communities we serve globally through long-term stakeholder value creation based on Leadership with Trust”.
In his book “A History of Management Thought” author Morgan Witzel quotes Ratan Tata saying ‘profit is a by-product of what we do’. The enhanced version is: “Companies are not machines for making money. They exist to provide value and service to their communities; profit is a by-product of that process.”
Well, it seems Cyrus has only considered to increase monetary value and took all decisions to cut losses from bad investments he had inherited. However, the expectations of the group from him is to play the role of a King. Perhaps, a little session between Tata, Cyrus and Pallonji Mistry could’ve avoided all this public embarrassment. It is of course naïve to think Ratan Tata did not try this option. In all probability, Mistry & Son might have prevailed over Tata.
Already much dirt was raked by both groups over the other disseminating decisions and actions that may or may not be probable reasons for the fight. No point of looking into those accusations and counters, for most of them were correct. Both Tata and Cyrus were speaking the truth. Only their reference points were different.
Tata wanted a person to provide guidance to the group. Mistry wanted to make the business profitable. There were some bad decisions that happened in the past. Then, there were bad decisions taken in all companies.
Consider the hard and black example of Kingfisher. Vijay Mallya requested the government crying from the roof tops to allow his planes to refuel outside India. Considering ATF used to 50% more in India, how the government expects any airlines to survive? Why the then UPA government was adamant in asking all airlines to buy fuel in India, especially when crude prices were so high in those days? The answer is to subsidize petrol and diesel to common people or to recover some of oil company losses? Of course, Vijay Mallya spent money lavishly instead of trying to save his business. Mallya had a list of external factors that forced his airlines go bankrupt. But, businesses are like that. Bigger the business, bigger uncertainties one needs to face. Rebecca Mark could flash her skin to convince Shiv Sena about the Dabhol Power Plant and when the project was in progress, it was much hailed for the way it progressed. What happened finally? Dabhol unit couldn’t make money. Enron filed bankruptcy, as many other decisions went wrong.
In fact, Cyrus wants to stay afloat by coming out of the financial mess the group was in. Tata wanted to fight back and honour the commitments of the group – come what may. If financial survival is on one side, prestige and honour are on the other side. And in all businesses, there would be some setbacks.
Frankly, Ratan Tata should have considered Noel Tata for the pole position. Noel was not considered considering his poor performance in Trent and other businesses he was associated with. Noel would have been a wise decision to lead the group, given his ‘less than perfect’ understanding because he would delegate it to the right people to manage the group, rather than doing himself. He would have got a perfect associate in the form of Cyrus Mistry to lean on.
Does past failures really affect? Not necessarily. Corn Wallis, who surrendered his forces to American army in the American war of independence was made Governor General of India. As Governor General, Cornwallis established the hold of British Raj over India. He was so successful in his Indian innings, he was reappointed a decade after he moved out from India. Does it mean, I am canvassing for Noel Tata. Well, No. I don’t know him personally.
Way Forward:
Well, it now looks like a corporate presentation. Both Tata and Mistry have already reached points of no return. Now it is time for Pallonji to step in and play the role of peacemaker. As Ratan Tata’s selection committee (in which, ironically Cyrus Mistry was a member) failed to find a suitable person earlier with much more time in their hands. It would be a mistake that the committee would be able to find a suitable candidate in four months, of which already one month has passed. Finally Tata may settle on some ex-executive of the group but none of them would be guaranteeing they would not travel down the path laid by Cyrus Mistry, for the simple reason that they all were trained in ‘managing’ business.
Perhaps, Ratan Tata had to settle down on Noel Tata only. Pallonji Mistry, the eternal intelligent man who haunts Bombay house can understand things and bring the combo of Noel and Cyrus to work together. This Parsi quartet shall keep in mind that it is not only their personal wealth and images that are suffering due to the ongoing dispute, but the image of Parsi community in particular, and brand name of Tata at large.