Friday, November 25, 2011

Ratan Tata successor

Just a few quick responses to the choice of Cyrus Mistry as Ratan Tata's successor. One, it is quite a surprise- I don't recall Mistry's name ever having been mentioned. Not the best advertisement for the Indian media's reporting skills. Two, the appointment has been welcomed widely and even applauded by a few. Not much is known about Mistry's managerial abilities although it has been noted that he has been on the board of Tata Sons for a few years now. But the fact that he is an insider and close to the Tata family, if not part of it, has gone down well.

This is most interesting since several professionals, including high-profile names from abroad, had been mentioned as possible successors. I believe the reception accorded to Mistry is a measure of how perceptions about family management and professional management have changed in India over the past couple of decades. No longer are family businesses seen as inferior to those run by professionals; if anything, a certain distrust of professionals has crept in.

Those are the positives. In the many reports on the succession, I see lack of experience, especially lack of international exposure, being cited as negatives. But much the same could have been said against Mr Tata when he took over. Mr Tata's own lack of international experience did not come in the way of his making huge bets in terms of the Rover and Corus acquisitions. His general lack of experience did not keep him from venturing into cars.

The most essential requirement for Mr Tata's successor is maintaining the Tata group's reputation for aligning business with social purpose (admittedly frayed in recent years) and the enormous goodwill it enjoys with the Indian public.  A second requirement is consolidating diverse businesses. A third is keeping the group's competitive edge in what can only be more demanding times ahead. As an insider, Mr Mistry is well placed to take care of the first. Whether he is up to the second and third requirements only time will tell. All one can say he has that he has cut its teeth in his family business that ranges over real estate, construction, infrastructure and allied sector- not really a game for soft guys. Mr Tata has picked several able CEOs for his many businesses, so it would be fair to expect that his choice of successor would have been carefully thought through.

Mr Mistry is seen in the newspapers today in an unbuttoned shirt and rolled up sleeves and is reported as having showed up at Bombay House in a not very fancy car. It does appear the young man has made the right beginning.

3 comments:

Neat Rat said...

Sir,

Though I do agree with almost everything you write here and wish him all the best in his new role, I will have to say that his name did come up quite a bit in the media coverage over the likely successors to Ratan Tata!

And the current reception notwithstanding, I could clearly see the media, in its zeal to pronounce favorites, steer clear of Mr. Mistry. I, at that time, had taken that to be as a sign of disapproval of familial successions. I am glad, though, that the reaction now is more merit oriented than anything else!

Anonymous said...

Though I do agree with almost everything you write here and wish him all the best in his new role, I will have to say that his name did come up quite a bit in the media coverage over the likely successors to Ratan Tata!

And the current reception notwithstanding, I could clearly see the media, in its zeal to pronounce favorites, steer clear of Mr. Mistry. I, at that time, had taken that to be as a sign of disapproval of familial successions. I am glad, though, that the reaction now is more merit oriented than anything else!

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