The New Boss Gets Set

27 Mar,2012

 

By Kala Vijayraghavan & Lijee Philip

 

In the second week of March, Cyrus Mistry, Ratan Tata, Ralph Speth and a few members of the senior management of Tata Motors dropped by at the factories of Jaguar Land Rover (JLR) in the West Midlands in the United Kingdom.

 

The visit of the chairman-designate and the current chairman of the $83-billion Tata Group along with the CEO of JLR coincided with the Geneva Auto Show at which Mistry and Tata had unveiled a concept compact car called Megapixel.

 

With sales at JLR up 35-40% in the past couple of months and with the success of the XF and XJ range, Messrs Mistry, Tata and the top brass discussed a plan to launch more products in the sporty space, said a person familiar with the matter.

 

He added that Cyrus felt the Jaguar brand needed to re-associate itself with the image of speed and performance, something it seemed to be moving away from. Also discussed were plans for common engine development between Tata Motors and JLR, sharing of technology and also of human resources. It’s been a busy four months for 43-year-old Mr Mistry since he was appointed deputy chairman of Tata Sons, the promoter of all key Tata companies.

 

The visit to JLR was just one of the many trips to group company offices and manufacturing plants. At the time of his appointment, the group, which has over 100 companies, had issued a statement saying Mr Mistry “will work with Ratan N Tata over the next year and take over from him when Tata retires in December 2012”.

 

Mr Mistry has been doing exactly that, with his agenda including meetings with key ministers and top officials of states in which the Tatas do business.

 

Unassuming Attitude Wins over Bombay House

Mr Mistry has also been meeting the top brass – as well as employees – of virtually every company in the group, including global operations. One of the few allowances Mr Mistry makes for himself whenever he is in town is an occasional brunch out – not at a fancy restaurant at the group’s famed luxury hotel Taj but at a quaint Parsi eatery at Colaba in South Mumbai called Paradise.

 

“He tries to visit the place once a week to eat his favourite chutney sandwich and, occasionally, dhansak (a Parsi meat and curry speciality),” said a person familiar with Mr Mistry’s schedule. It’s this unassuming attitude that has helped Mr Mistry win over most of the senior executives within Bombay House, the headquarters of the Tata Group.

 

“His induction into the group has been quite painless,” said the head of a Tata consumer products company. Mr Mistry met CEOs who made presentations to him on what their company stands for, says the head of one Tata company on the condition of anonymity. He adds that Mr Mistry has an eye for detail.

 

“The best part about him is that he is extremely approachable; and he has brought in the much-need freshness of youth and, at the same time, a composed and mature way of learning and questioning,” points out another CEO of a Tata Group company.

 

Messrs Mistry and Tata were unavailable for comment, and a spokesperson for the group did not respond to an email. Mr Mistry is understood to have held review meetings with the heads of small, relatively less successful companies within the group such as Nelco, Tata Bearings, Telcon and Tata Ceramics.

 

The options for such entities are either to exit (particularly if they are non-scalable) or merge them into other group companies, said a person with direct knowledge of the matter. “At the end of the day, the Tata Group will have fewer companies than it does now,” added this person.

 

Such restructuring measures won’t happen immediately. There are unlikely to be any big bang changes once Mr Mistry formally takes over in December 2012, top officials said. But the direction has been set – Messrs Mistry and Tata are finalising a plan for consolidation of various businesses with the focus on profitability and scalability.

 

“He is unlikely to rock the boat before getting the steering in his hands. But it would be wrong to assume there will be no changes. The organisation leadership needs changes and Mr Mistry is well aware of that. But it would be more evolutionary than revolutionary,” said a top group official.

 

Another senior group official said Mr Mistry has discussed the possibility of adopting a model that was practised by Mr Ratan Tata’s predecessor, the late Mr JRD Tata, in which some companies had their own chairmen. Mr Ratan Tata is currently the chairman of all flagship companies.

 

During JRD’s regime – and for a few years thereafter – Mr Russi Mody was chairman & managing director of Tata Steel, Mr Darbari Seth of Tata Chemicals and Mr Ajit Kerkar of Indian Hotels.

 

While such a move has its risks – creation of power centres being the main one – group insiders say Mr Mistry is of the view that professionals with talent and potential should be offered a comprehensive career plan within organisations; and such a plan should also provide an opportunity for an MD to reach the post of chairman.

 

Mr Mistry is also spending time on succession planning. He is in favour of encouraging cross-fertilisation of group talent before hiring from outside for top positions. “Cyrus will not be a carbon copy of Ratan Tata. He has to take the business to the next inflection point.

 

Several of the governance codes formed in a sheltered economy within the group need to be updated,” says Mr Unni Krishnan, managing director, Brand Finance India. “He will also have to bring in coherence in terms of handling businesses that are run outside India and which are growing fast,” he adds.

 

Agrees a senior group official: “The challenges faced by Ratan Tata were different and the times were different. Cyrus inherits a largely global group and, with it, a different set of challenges, especially of managing a disparate organisation in a volatile business environment.”

 

One critical element of Mr Mistry’s induction – which Tata is particularly keen on and personally involved in – is connecting with bureaucrats and ministry officials at every possible level. The focus is to expand Mr Mistry’s horizons beyond business, said a senior group official.

 

And if Mr Tata is making a special effort on this front, it may be because a chink in the group’s armoury has been in managing relationships with political leaders, said a person familiar with the matter. During the past four months, Mr Mistry has met the likes of Gujarat Chief Minister Mr Narendra Modi, Jharkhand CM mr Arjun Munda, Commerce & Industry Minister Mr Anand Sharma and Prime Minister Dr Manmohan Singh (as part of an industry delegation).

 

Mr Mistry has also been given the mandate to reinforce the Tata culture – one that is steeped in doing good – within group companies. A couple of weeks ago, the deputy chairman was by Mr Tata’s side when he inaugurated Harvard Business School’s first classroom in the country at one of the properties of group company Indian Hotels.

 

Two years ago, the chairman had granted $50 million to Harvard. “It would seem natural for Tata to want to make this sort of commitment of personal time (for the classroom) during Mistry’s induction,” says Mr Rohit Bansal, CEO and co-founder, Hammurabi & Solomon Consulting, who was present when the classroom was inaugurated.

 

Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

Photograph: Fotocorp

 

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