Fire-side chat with Ratan Tata, former Chairman of the Tata Group, as part of the Stanford’s View from the Top Speaker Series. Tata was Chairman of the Tata Group from 1991 until his retirement in December 2012. Here is the transcript of the full chat…[Event took place in March 2013]
Charles Atkins: Ratan, thank you so much for joining us today. It’s an honor to speak with you. And I know I speak for many here in the audience when I say that we’ve been looking forwards to this for quite some time.
Ratan Tata: Thank you, Charles.
Charles Atkins: I wanted to start at the beginning of your career. As the Dean mentioned, you were educated at Cornell as an architect and a structural engineer and plan to spend the rest of your career in the United States. But you returned to India starting on the shop floor, and I wonder what that was like as a young man returning from the United States to India?
Ratan Tata: Well, quite frankly, it was, as much a cultural shock. I’d been away for 10 years and, things had changed, and yet they had not changed, and the difference was quite substantive. In addition to its — I didn’t return to India to spend time on the shop floor. So I didn’t really understand what was being done. And several times during that period of time I thought of going back to the U.S., and pursuing my career as an architect.
Charles Atkins: You spent several years, as the Dean mentioned, moving around different parts of the Tata organization. Were you surprised when you got the call from your uncle in 1991 to be Chairman of Tata?
Ratan Tata: Yes I was. Mainly because, there were many contenders – handful of contenders for that position from his own team of of people. And it happened very suddenly, and you begin to feel that, the leader – he was there for 50 plus years as Chairman. And you start to believe that somebody’s immortal and that he’s going to be there perpetually. So when he calls you and says this is what he wants to do, it shakes you up and suddenly you feel all alone.
Charles Atkins: Right. And you faced quite a formidable challenge as the Dean mentioned. When you took over as CEO, the organization Tata, was large and sprawling with independent business heads that regarded their own, their own businesses, their own personal fiefdoms to necessarily play together well. And you went in to an economy that was changing rapidly. And your uncle was considered a titan of Indian business. And very large shoes for a young CEO to fill. How did you go about establishing your credibility as a leader in those early days?
Ratan Tata: I had two problems. One was with the actual market problems of a large business house that had operated very traditionally. And the other was internal to the company of several titans if you like, who didn’t want any change to take place. And I guess a certain amount of resentment also. So the first five years were akin to, Clint Eastwood, if you like which tended to be filled with trying to get these elderly, very prominent people out of the way. Not done with bullets, just done with persuasion and sorry to say with money. So the first five years were spent in creating an environment where change was possible.
And then, I’ve been blessed with an organization that has been displaying considerable spirit in wanting to make a change. And, many things that we did had not been done before. But I was always pleased to see that the response from the organization was tremendous. Without that, it could not have been done.
Charles Atkins: And one of the things that many of us here at Stephens, we study, is the inertia of organizations in the face of change. How did you go to inspire the leaders and front-line staff to believe in the vision that you set out and some of the changes that you wish to implement?
Ratan Tata: That was difficult and to some extent, I would have to humbly say that I failed. One of the first promises I made publicly was that we’d rationalize the group and reduce the number of businesses and reduce the number of companies. I often talk about the first thing that I did with great gusto which was to get us out of the soaps and toiletry business which didn’t seem to fit. And I ran head long into an issue of what were we doing. We were getting rid of a company that had second and third generation employees, it was an unheard of thing. And, who was this person that was making change for the sake of change?
Charles Atkins: Right.
Ratan Tata: And I got attacked from all quarters. The media attacked me, the stock market attacked me, and of course there was a resentment from within the company. So which company would follow now after this? That result was the new Chairman, seeking to succeed and not wishing to have failure, suddenly being bombarded from all quarters. There was no second company that got sold, and I put my tail between my legs and try to look at other forms of growing.
Charles Atkins: Right. And you’ve said in the past that risk is a necessary part of a business philosophy. And certainly over your career you’ve made some significant bets. And the Dean mentioned a number of the acquisitions. I would also think here of the launch of the Indica, India’s first indigenously manufactured motor vehicle. How did you get comfortable making such consequential decisions and, to your point, convincing others to follow you into them?