N Chandrasekaran & Tata Sons

Beyond The Obvious

Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.

– Marcus Aurelius

So it has finally happened. The TATA Group through its holding company, decided to move with alacrity to anoint N Chandrasekaran as the first non-parsi Chairman at the helm of the holding company TATA Sons. Given that the battle for control of the holding company shifted the field of engagement to the legal domain, there was considerable anxiety especially given that the group as a whole was losing reputation, value and equity on a daily basis. With the battle now shifting to the National Company Law Tribunal (NCLT), the matter is likely to come up for an express hearing given the sensitivity and the prestige of the matter involved. Chandra’s (as he is fondly referred to) elevation to the top job in the Group has not only been welcomed by the broader industry and markets, but is a reflection of the decisiveness with which the current leadership under the Interim Chairman Ratan Tata, seems to be reorganizing itself. Of course Chandra’s appointment is subject to clearances from NCLT as the matter pertaining to removal of Cyrus Mistry as the erstwhile Chairman is under consideration. Further a petition has already been filed to maintain status quo with respect to the affairs of Tata Sons, so Chandra’s selection is likely to need ratification.

So let us try and understand the significance of this decision. Chandra is a Group veteran having been with the crown jewel of the Group, Tata Consultancy Services, for over three decades now. He took charge of the company at a time when the global financial crisis had just hit and had left debris of institutions in its wake. Chandra not only skillfully managed this painful transition but also maneuvered TCS into a position of unassailable strength to become the most valuable IT company in the world just after IBM. TCS apart from Jaguar Land Rover happens to be the principal contributor to Group profitability and cash flows, accounting for nearly 80% of the Group profitability. Being India’s largest IT company with operations spread across almost 50 countries with a top line in excess of USD 16 Billion, TCS represents the pride, ambition and the excellence that the Group is known for.

The Obvious Gains –

Where does this appointment take the Group? Clearly there are obvious benefits and advantages this appointment brings, that come to mind. These include –

  • A TATA Group Insider – Has spent over three decades with TCS and TATA Group – understands the inner workings and dynamics of the Group
  • Relative young age – He is just 53 years and can potentially have a long innings at the helm
  • Strong Pedigree – Has successfully managed and maneuvered TCS – Group’s largest operating firm
  • Global Outlook – having straddled TCS operations across almost 50 countries, understands the challenges of running a global business conglomerate
  • Customer Centricity – More than half his time is spent traveling and visiting key clients across global markets
  • Managing Scale & Diversity – Successfully grew TCS into a USD 16 Billion global IT giant with over 3,50,000 employees
  • Leadership Style – Believes in collective and democratic decision making to augment leadership bandwidth and also improve decision making quality/ depth

TATA Sons faces a somewhat similar predicament and uncertainty as what TCS faced in 2008, given that only a handful of firms are contributing cash flows to the group kitty. Most of the firms are facing headwinds in varying degrees and there is a mountain of debt that needs to be serviced. The situation is quite demanding and needs careful and skillful handling in terms of managing the Group operating firms. It requires sharp focus, close attention and deep persistence to recreate a resilient business in shaping the destiny of the Group. More so, given that the Group is facing intense scrutiny both globally as well as locally, for the unwanted attention the removal of Cyrus Mistry brought in its wake. Given this complex background, it was evident that the Group needed a leader at the helm who was adept at managing challenging business environment and come with prudent, long term oriented strategic solutions. This is where Chandra’s ascent to the Chairman of TATA Sons assumes great significance.

‘Beyond The Obvious’ Value –

While the above are well distilled and broadly understood pointers, there are some deeper linkages that could perhaps become the vectors of building long term, enduring success at the TATA Group under Chandra’s leadership. These include –

  • TATA Brand – House of TATAs or the TATA Group is known as a proxy to Indian economy. It may not be an overstatement to suggest that it stands to represent ‘India Inc’ given its global footprint, size, scale, impact and touchpoints. So any adverse commentary on the Group is likely to negatively impact the potential of several other business groups. By decisively addressing the leadership challenge with an accomplished insider, TATAs will bring back the lost halo and prestige that the Group is known for.
  • Decisive Orientation – Chandra understands the importance and significance of achieving an internal orientation that aligns the objectives of the Trust, Holding Company and the Operating Firms into a unifying factor. This alignment will be defining to collectively gain promoter sponsorship for pushing through reforms as well as disruptive ideas
  • Institution Familiarity – Having spent three decades with the Group, as also led the Group’s largest business outfit for several years, he is familiar and aware of the institutional way in which the Group operates. Can hit the ground running with fast acclimatization and quick assimilation
  • Identity Supremacy – Is well versed with the underlying Philosophy as well as the Purpose that defines the priorities and pursuits of the TATA Group. He will be sensitive to the larger identity of the Group in terms of its defined outcomes, especially with respect to the social sector contribution. He has an acute understanding of connecting Purpose to Profit models and will use these effectively to forge closer synergies amongst operating businesses
  • Business Turnaround – Instead of taking the more comfortable path of looking at businesses as portfolio operation (which Cyrus Mistry tried to do at the expense of challenging the established collective identity of the Group), Chandra will bring a more nuanced strategic understanding to solve complex business problems and turning them around for enhanced profitability and value creation
  • Binding Force – Chandra is uniquely positioned to leverage global market access through the TCS platform and use it as a binding element to build deeper traction and linkages with global markets. Technology is a fundamental building block in virtually all businesses, thereby getting TATAs more invites to global high table of business
  • Deep Resilience – For a business group of the size of the TATAs, the most critical ability to drive through serious engagements is resilience. Critical changes will take time to demonstrate meaningful outcomes and given the fact that Chandra astutely navigated recent 4-5 quarters of difficult business period at TCS while managing stakeholder expectations, both within and outside, he will be able to bring that learning to good use
  • Team Builder – Chandra while being hands on, involved leader believes in giving sufficient latitude as well as autonomy to his management teams. He is known to build next generation leaders and has created extraordinary bench strength in a large business enterprise like TCS. Proof of this capacity building lies in the smooth transition of leadership mantle at TCS with his elevation to TATA Sons Chairmanship
  • Embraces Innovation – TCS under Chandra has been a proactive and significant investor in global innovation practices. This was made possible on account of successfully multiplying topline/ bottomline performances thereby creating sufficient capacity to channelise resources towards long term growth and value creating opportunities. Chandra will draw upon this significant strength and create a pan group, innovation culture to take the TATA Group into the next orbit

Clearly these are interesting times and the TATA Group has undergone an intensely disruptive event that may not only define its own destiny, but also the course of corporate trajectory in the country. In more ways than one it is seen as the template for managing diverse businesses that reflects abundant prosperity, shared objectives and long term value creation orientation. Chandra would be committed in his pursuits of the Founder’s vision and taking the Group forward towards higher purpose and sustainable growth.

The Road Ahead –

It is important to note that this will not be Chandra’s challenge alone. Given the adverse impact that the Group has gone through in the last 3 months, there is considerable effort required to bring it back to its glory days. It demands sharp internal alignment of purpose, priorities and pursuits in ensuring the entire team pulls its collective weight behind Chandra in this journey. He needs to assume the stewardship role in carrying the aspirations and hopes of the entire Group through the difficult waters. For that he will need to marshal all their support by commanding their respect and securing commitments unequivocally. It will not be easy but then Chandra comes suitably primed and prepared for the role. Given the overall situation and the challenges lying ahead, TATA Group could not have made a better choice.

Here is wishing N Chandrasekaran the very best in his new quest.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s