Ousted Tata Group Chairman Cyrus Mistry had given an in-house interview in September which was published on the Tata website. After the Tata Sons board took the decision this Monday to remove him, the interview too ceased to appear on the site.
In the interview Mistry spoke on a variety of subjects, ranging from his experience at the helm of the group, to his "Vision 2025", a long-term "sustainable, profitable growth" strategy; to his interactions with Ratan Tata; and about his worries that some group companies had taken on "significant debt".
What follows is the full text of the interview, retrieved from Google's web cache of the page. Parts of the interview - which need a closer reading in the light of Mistry's removal - have been marked in bold.
“After obtaining a deeper understanding of the group, I focused on identifying areas that needed special attention. Then, several important group-wide initiatives were launched, leveraging the newly formed Group Executive Council (GEC) and other group resources for implementation.”
“It was clear to me relatively early that one needed to confront the challenging situations facing some of our businesses, and ultimately this would entail hard decisions on pruning the portfolio. But I have learned through experience that if you want to do the right thing by all your stakeholders, there are no shortcuts. There will always be external influencers and so-called experts, who may be motivated by immediate transactional gains, goading us on to churn our portfolio. It is important that we develop our own prognosis based on knowledge and context, keeping all stakeholders in mind. We should not be afraid of taking tough decisions for the right reasons, with compassion.”
This has to be seen in the context of business growth, increasing cash from operations, and capital projects underway which will lead to future growth. As the group has been growing significantly in the past, the total capital employed has also grown. Proportionately, there has been increase in debt.
“Over the last three years, the gross debt across the group has increased by about 2 percent per annum in US dollar terms, while cash and equivalents have grown at over 10 percent, leading to a reduction of 3.3 percent in net debt in the same period. This excludes our financial services businesses, where debt is integral to the product offering and, hence, their model is different from other businesses. As of March 2016, the group had a net debt of about $24.5 billion. Capex has been on average $9 billion in each of the last three years. In the financial year 2016, cash from operations reached $9 billion a year and exceeded the capex.”
“At the group level, therefore, the aggregate debt is not something I feel concerned about. In fact, such aggregations at the group level could mislead, as the companies which have high cash generation, capex and debt are not all necessarily the same, and resources of different companies are not fungible with one another, as they are distinct legal entities with different shareholders. Of course, for a more meaningful discussion, these numbers would require to be viewed at each company's level.”
Interview Text
'We are building for the next 150 years, on the powerful foundation that we have inherited'
Cyrus Mistry's hands have been more than full since he took over at the helm of the Tata group in late 2012, and his imprint on the group and its companies has been distinctive. The chairman of Tata Sons has found a fine balance between modernity and tradition as he guides the group through demanding times and circumstances in a rapidly evolving business environment.
In this exclusive interview with tata.com, the self-effacing Mr Mistry talks about coming to grips with the responsibility of chairmanship, the multiple challenges facing Tata companies, the essentials of technology, innovation and customer centricity, and the continuing Tata commitment to societal causes.
How would you describe your experience since taking over as chairman of the Tata group?
When I assumed office as the group chairman, I was acutely aware of a few things. I knew I was not leading a single company, but was at the helm of a unique institution with a rich and glorious history. I was very conscious that we had a powerful foundation that had been nurtured over the last fifteen decades, and we now needed to build the capabilities that would allow us to succeed for the next 150 years.
For this peerless institution, this was more than a routine change of guard at the leadership level. It was a generational change. Many senior executives who had helped shape the group for decades were retiring around the same time. There was great institutional knowledge with them which I needed to imbibe before they called it a day. Therefore, my initial approach was to adopt a listening mode. A corollary to this development was that we filled the vacuum in the leadership team with a judicious amalgam of maturing leaders from within the group as well as lateral inductees who brought in fresh perspectives and new knowledge.
I also recognised that to successfully lead the group, instead of relying on the position of chairman as the primary basis of my authority, I needed to earn the trust and respect of all our chief executives, the boards of directors and external stakeholders. This meant building enough depth of knowledge about specific domains to ask the right questions, while exposing myself to a variety of views on geopolitics, technology and societal issues. A learning orientation on my part was essential.
After obtaining a deeper understanding of the group, I focused on identifying areas that needed special attention. Then, several important group-wide initiatives were launched, leveraging the newly formed Group Executive Council (GEC) and other group resources for implementation. On the people side, we initiated interventions to improve engagement and the quality of life. We developed a customer manifesto to enhance customer centricity. And the newly created position of Chief Technology Officer (CTO) at the group level has been instrumental in making technology and innovation a central pillar of our growth strategy.
Alongside these initiatives, there is an ongoing focus on performance management systems and the quality of the strategies deployed by our operating companies. Several measures have been taken towards this end, including reinforcing the need for performance and having clarity of strategy.
We have set out an ambitious ‘Vision 2025’ for the Tata group, to touch the lives of a quarter of the world’s population. What is the growth strategy identified to achieve this vision?
Each of our group companies is charting its own strategy and growth story, with the focus on sustainable, profitable growth. Each of these companies has identified the critical factors that make them sustainable over a longer time horizon. If we consider Tata Steel in India, for example, the fact that they are low on the cost curve, produce differentiated products and are a strong brand in the market, has helped them survive in a period when most steel producers globally are underwater. Similarly, the main factors underpinning sustainability in each company would be different.
The group has invested Rs 415,000 crore ($79 billion) in capex over the last decade. Our investment over the last three years alone has been in excess of Rs 170,000 crore ($28 billion). We recognize that growth has to be a function of the operating cash flows we generate. At the group level, over the last three years, our operating cash flows have grown by over 30 percent CAGR; but this, as we know, is not the appropriate way to use such data - our individual companies need to earn the right to grow. At the group level, we are focused on helping our companies earn this right by building strong operational cash flows and looking at their capital structures.
It is crucial that we do not look at our capex in isolation from our investment in talent, brands and technology. These will be the true differentiators in the future. To this end, our companies track metrics such as workforce engagement, customer focus, net promoter score and the number of patents published — these are also monitored at the aggregate group level — in addition to metrics such as Tata brand performance. The metrics show a healthy and positive trend, though we still have a long way to go to meet our aspirations for 2025.
How is the group responding to challenges posed by the rapidly changing global business and economic environment?
At our Annual Group Leadership Conference (AGLC) of 2015, I had articulated several dimensions of the powerful changes impacting our environment — geopolitical, social, economic and technological. We are already seeing many of these playing out. A significant number of our companies are particularly sensitive to the contextual environment in which we operate, and they are impacted to a greater extent by cyclical factors. Tata companies that are closer to the consumer, such as Titan and Voltas, tend to have less volatility and often have a smoother earnings graph.Our strategy at the group level is to get closer to consumers, to anticipate their needs. We will try and balance our portfolio to ensure that at an aggregate level we are more insulated from business cycles.
We will continue to invest in our strong business-to-business enterprises, where we have powerful drivers for long-term value creation. In all our businesses, we are emphasising the importance of corporate foresight and customer insight. Companies that are able to understand longer-term trends and anticipate evolving customer needs will be well placed to make the most of these changes.
What opportunities does the evolving business environment present to the group?
I see the rapid pace at which technology is moving — be it in digital, material sciences or biosciences — bringing both opportunities and risks. From the opportunities perspective, if we invest appropriately in research and development and combine that with a multi-layered understanding of customers, I believe there is a huge possibility for us to create new industries, new products and new business models. On the risks front, if we are not agile I think we will be left behind. A vital opportunity defining our times is the digital wave that is transforming all industries. Recognising this, the theme at AGLC 2015 was digital. We had Chandra of Tata Consultancy Services give a presentation on the digital future and I think it touched our leaders from across industries and geographies.
We are incubating three companies in the digital space at this point in time. Tata CLiQ, our e-commerce platform, is an omni-channel marketplace with curated products that deliver value to our customers. It is quite a unique positioning we have chosen. We also have Tata iQ, our big data play, which effectively uses data analytics to connect the dots with respect to our many consumers so as to ensure we have a more holistic picture of their needs. And finally, with Tata Digital Health, we are creating a platform where we are experimenting with different business models to build the de facto platform for healthcare in India.
I am delighted to see many Tata companies adopt different elements of digital in their operations, and our people using digital in the consumer and marketing side of their businesses. While we have had early successes within our companies, the more important aspect is that they are learning to use digital in a manner that brings value to customers.
In the context of the increased market volatility, what are some of the key leadership and organisational initiatives being undertaken by our companies?
Fundamentally, Tata companies need to have robust strategies to deliver sustainable, profitable growth. In this light, at the 2014 AGLC, I had emphasised putting value creation for the customer at the heart of our strategy. Further, harnessing innovation and technology as differentiators will drive growth, even in the face of change. The best companies future-proof their strategies by exploiting industry trends, and stress-test these strategies for sudden environmental changes.
Enlisting customer loyalty and building strong brands help companies weather many storms, and often enable the passing on of some of the volatility to the market. In the 2014 AGLC, we renewed our commitment to customers with a promise of building customer centricity as a cultural pillar. We promised to ‘develop’ a more profound understanding of the unique needs of our customers, ‘deliver’ pioneering products and services of outstanding quality and value, and ‘delight’ our customers with great experiences at every touch point. Fulfilling this promise in every instance is the key to having a secure place in the customer’s heart.
I also mentioned the need to have organisational speed and agility and an openness to change. I think, in the context of turbulent environments, organisational agility is crucially important, and this is one of the points I stressed again at the 2015 AGLC. We have organisations which have strong hierarchical structures, and processes that actually mirror those structures. If we have to be agile in today’s environment, we need to think of other organisational structures. This would involve having network structures which work alongside the traditional hierarchical structures.
Care should be taken to have the right composition of teams in such embedded network structures, which can collaborate and break through hierarchical processes where needed. In Tata Motors, 25 percent of the team comprises young talent in the company - this gives young leaders the opportunity to show their mettle with challenging assignments and to shine. A network structure is often implemented by setting up a number of cross-functional teams, and having a governance structure led directly by the top leadership.
What are the expected outcomes of the on-going thrust on innovation and technology in the Tata group?
Mr Ratan Tata was deeply involved in promoting a technology-oriented culture in the group. We are building on that strong foundation. The Group Chief Technology Officer’s role is to evangelise innovation within different group companies; we tell our Chief Executives that this is now equally their role.
The world has moved away from large industrial innovation labs to more distributed innovation at multiple locations. A lot can be done in a distributed manner in the digital space, in terms of virtual collaboration platforms for innovation. We may in the future also look at bringing together in a physical space some of our group companies to work on joint projects. What we are saying is: let’s evolve, let’s see what types of places and facilities we need, let’s look at the distributed model and see a combination of that with some of the physical spaces that we already have.
Across group companies, we recently crossed the milestone of 7,000 patent applications, and the number of patents secured each year by the top five Tata companies has tripled in the last three years. I think we have done a significant amount of work through Tata Innovista, the collaborative platform created by the group to promote innovation. In building this platform, I would recall in particular, Mr Gopalakrishnan’s contributions.
The Innovista model has, over the years, evolved into something quite fantastic. While some of the innovations are incremental, the ‘dare to try’ concept in Innovista does make us bold. At the recent forum of Tata Chief Technology Officers, I underlined the need to be bolder. We have to start taking bolder steps because true value in today’s environment will not only be created from incremental innovation, but the bolder and bigger strides that we take.
What benefits do companies derive from being part of a diversified business group in today’s context? Isn’t depth of domain knowledge a critical success factor?
There is no denying that domain strength is a critical factor for success in business. This may be more true in the future. Even so, the Tata group adds value to its portfolio companies by nurturing them, orchestrating greater synergies and helping them optimise their long-term performance.
It is also useful to note that the way in which a diversified business group such as Tata adds value is different from conglomerates or private equity funds. Tata as a business group, when compared with private equity firms, has distinct advantages as well as some drawbacks. From a nurturing perspective, the Tata brand, developed over 15 decades, adds huge value to our companies. This also makes exits more difficult as the Tata group has a deeper commitment to stakeholders and the brand cannot be transferred. On the other hand, the group can leverage resources across its large talent and leadership pools. With its global spread and reputation, it can capitalise on opportunities inaccessible to individual companies.
From a synergy perspective, even within the restrictions of separated legal entities, there are many opportunities for two-sided or win-win synergies, where companies act in their self-interest and enjoy mutual benefits. The sharing of best practices is an example where we have platforms for the synergistic benefit of diverse businesses. Private equity funds are rarely able to tap into such synergies, due to the imperatives of individual exits. Lastly, from a portfolio perspective, the group can take decisions with longer-time horizons for value creation. For instance, this allows the incubation of next-generation businesses with long gestation periods, whereas private equity funds have average lives of seven years to exit.
When compared with conglomerates, on the other hand, Tata companies benefit from the nurturing provided by their independent boards. The boards add a lot of value from deep domain expertise and through strategic guidance and good governance. At the group level, we have recently come out with our ‘corporate governance guidelines’, which provide a framework on the effectiveness of boards, and articulate the agendas of the critical board committees. In addition, rather than impose common systems and practices, the Tata group allows flexibility within broad guidelines so that companies can optimise for their unique contexts.
Could you elaborate further on our approach to corporate governance?
In keeping with the Tata ethos, we are fully committed to maintaining the highest standards of ethics and governance in the conduct of business by our enterprises. This includes emphasis at the group level on certain standards and longer-term aspirations; providing sufficient and needed autonomy to group companies and their boards to independently focus on creating value for all their stakeholders; and a variety of parenting styles that meet the needs of individual companies at their individual stage of growth and maturity.
Significant changes in the external world, including regulatory changes, have provided us the opportunity to reflect on our policies and practices in corporate governance. Our new ‘governance guidelines’ have been adopted by all our large operating companies in India.
A ‘board effectiveness framework’, comprising the six aspects required for the effective functioning of boards — composition, evaluation, learning and development, remuneration, succession, and process management — has also been put in place. Building on our tradition of governance and accountability, in each of these aspects we have tried to go beyond the letter of the law, by marrying current and emerging global practices with the values of the group.
All our companies have strong, independent and autonomous boards. Apart from meeting the basic compliance requirements in terms of independence, gender, and other requirements, we have been consciously working towards ensuring that the composition of the boards of Tata enterprises reflects the required functional and domain capability to steer them in the desired direction.
Our boards play critical roles in guiding management towards sustainable and profitable growth of Tata companies, and provide oversight on management and governance in these companies. While the executive leadership team develops the strategy, the board reviews the strategy, while challenging and guiding the leadership team. This includes giving feedback and inputs in setting aspirations, defining competitive and differentiated customer value propositions, making capital allocation efficient and ensuring that all expansion projects cover the cost of capital, setting the risk appetite and monitoring key risks, balancing short-term and long-term perspectives for all stakeholders, and agreeing on major strategic imperatives.
The Tata Business Excellence Model (TBEM) has been a mainstay for the group for two decades now. What are some of the key changes you have introduced in TBEM in recent years?
TBEM provides a platform for companies to focus on excellence and for leadership talent to share and learn best practices. Since its beginning in 1995, some 730 TBEM assessments have been conducted by mentors and assessor teams from Tata companies across the world. We have strongly leveraged the Malcom Baldrige excellence framework, and owe a debt of gratitude to Mr Tata for the visionary thought to adopt the model for the group, to Mr Jim Setna and Dr JJ Irani for their leadership in the formative days to institutionalise TBEM implementation, and to Mr R Gopalakrishnan for driving the TBEM agenda as an important pillar of the Brand Equity and Business Promotion programme to strengthen the Tata brand.
In the last three years, the character of TBEM has changed, with the assessment teams presenting to the board of directors of each Tata company. These presentations bring an independent reflection of the company to the board and provide assessment of the ability to convert strategy into actions. Accordingly, the expectations from the assessment teams (coordinated by the renamed Tata Business Excellence Group) are much higher.
An architecture that enhances the performance of group companies in a sustainable manner has been created. This involves assessments, deep dives, capability building and the sharing of best practices in critical areas for the group: safety, quality of strategy, customer centricity, operational excellence and technology.
Best practices have been identified in these areas based on the TBEM assessments of companies and on external sources. I would like to particularly commend EDGE, which now provides a group-wide digital platform to share best practices. I believe that leveraging the TBEM model and new initiatives being launched by the Tata Business Excellence Group will lead our companies to industry leadership.
Some of our businesses clearly face very serious structural challenges. How should we think about their future?
It was clear to me relatively early that one needed to confront the challenging situations facing some of our businesses, and ultimately this would entail hard decisions on pruning the portfolio. But I have learned through experience that if you want to do the right thing by all your stakeholders, there are no shortcuts. There will always be external influencers and so-called experts, who may be motivated by immediate transactional gains, goading us on to churn our portfolio. It is important that we develop our own prognosis based on knowledge and context, keeping all stakeholders in mind. We should not be afraid of taking tough decisions for the right reasons, with compassion.
“Compassion” is the key word. If there is one thing that I have absolute clarity on it is that the course of action selected should not undermine the moral contract with our larger employee base. As a result, I have chosen active transformation rather than revolution as our guiding policy. My approach is to ensure that we have a deeper understanding of the structural drivers for every stressed business and our presence in that context. We would then evaluate the leadership, strategy and operations of each business before we take any decision to exit.
Tata Consultancy Services (TCS) and Jaguar Land Rover (JLR) make significant contributions to the scale of the group. What do you think of the contribution of other companies to the group's overall portfolio?
We are of course very proud of the achievements of TCS and JLR, and their contribution to the total portfolio of our business group, which is the leader in India from the revenue, profit and market cap perspectives. But it is worth noting that even if we were to take out the top three global Tata companies — TCS, JLR and Tata Steel Europe — the remaining portfolio would still rank us as the second-largest business group in India, with respectable operating profits and market leadership in distinct sectors. The remaining portfolio of the group would have businesses which are domestic leaders in their chosen segments, such as Voltas in air conditioners, Tata Motors in commercial vehicles and Titan in watches and jewellery. It would also have companies such as Tata Global Beverages, Tata Communications and Tata Chemicals, which are global leaders with market leadership in multiple chosen geographies. In this context, it must be stressed that it is not necessary for all our companies to be global leaders, but they should aspire to be leaders in the markets they define for themselves. Across the group, we should have a vibrant portfolio of Indian leaders, global leaders and a few new ventures.
Some group companies have taken on significant debt. Your views?
This has to be seen in the context of business growth, increasing cash from operations, and capital projects underway which will lead to future growth. As the group has been growing significantly in the past, the total capital employed has also grown. Proportionately, there has been increase in debt.
Over the last three years, the gross debt across the group has increased by about 2 percent per annum in US dollar terms, while cash and equivalents have grown at over 10 percent, leading to a reduction of 3.3 percent in net debt in the same period. This excludes our financial services businesses, where debt is integral to the product offering and, hence, their model is different from other businesses. As of March 2016, the group had a net debt of about $24.5 billion. Capex has been on average $9 billion in each of the last three years. In the financial year 2016, cash from operations reached $9 billion a year and exceeded the capex.
At the group level, therefore, the aggregate debt is not something I feel concerned about. In fact, such aggregations at the group level could mislead, as the companies which have high cash generation, capex and debt are not all necessarily the same, and resources of different companies are not fungible with one another, as they are distinct legal entities with different shareholders. Of course, for a more meaningful discussion, these numbers would require to be viewed at each company's level.
With recent events in markets like Europe, there has been some speculation about whether the focus of the Tata group will now be more on its Indian, rather than international, operations?
I cannot emphasise enough that this is far from the truth. Today, one has to look at opportunities with a global landscape in mind for most industries. However, one also has to consider the business environment, and India is particularly well placed, when compared with several other markets, in terms of growth prospects in multiple sectors. We must, from that perspective, make full use of the opportunities being thrown up in India.
But no one should ignore the fact that the Tata group's international revenues are close to 70 percent of our composite turnover. The majority of the group's capital expenditure in the last three years has been in international geographies. At the recent AGLC, I had mentioned that two new markets, Iran and Myanmar, have opened up to us and several of our companies are gaining traction there. We continue to remain open to growth opportunities in India and overseas, through the organic route and through acquisitions. I must here appreciate Mr Ratan Tata's leadership and vision to take the Tata group global in the early 2000s, which has left us with a very strong platform. I think the onus is now on us to build on that, and to make sure that we not only have a global footprint, but that we create global mindsets.
You had to invest a considerable amount of time at Tata Motors, particularly when they did not have a managing director in place. Would you like to share your experience?
Tata Motors has always had a pioneering streak in its DNA, from the first commercial vehicles that were brought out under Sumant Moolgaokar to, more recently, India's first indigenously designed and built passenger car, the Tata Indica, that was launched under Mr Tata's leadership.
In the initial years with Tata Motors, I gained an appreciation of the complexity of the situation, with the company facing multiple challenges in its core businesses. We worked on multiple fronts to strengthen internal capabilities, and some of this work is beginning to bear fruit. Challenges continue to exist in both parts of the business, particularly in passenger cars.
The competitive landscape has changed significantly over the last five years. New original equipment manufacturers (OEMs) have entered the market with contemporary products developed on lean platforms that are engineered for cost and weight. We have seen the launch of more than 50 new passenger cars. Similarly, in commercial vehicles strong global competitors have made large investments at a time when the market itself is falling.
On reviewing the passenger car product plan, it was evident we had challenges in aspirational design, platform strategy, and an over-reliance on diesel power trains. These contributed to challenges in brand perception and the health of our dealership network. Product and service quality were areas that needed strengthening. On the other hand, I also saw that the strength of Tata Motors lay in its people. It had a highly committed, creative and capable set of people that could make a difference if called upon to do so.
To address all of the challenges that the company was facing, we identified eight strategic imperatives and set up over a hundred cross functional teams, comprising executives from various levels in the organization, but especially designed to ensure we gave an opportunity to our young leaders to shine. This strategy has paid dividends. The energy demonstrated by the teams and the results of their efforts have been incredible. Our journey has just begun, but we can already see the green shoots of a turnaround.
Tata Motors has jumped five places on the JD Power IQS survey 2015, from twelfth to seventh, reflecting our work on quality improvement. Improvements in service delivery are reflected in our securing the third position in the JD Power CSI Survey 2015. More recently, we ran an endurance event for the Bolt, the Zest and the Tiago. It was a testament to our new product durability; we broke a number of records running our cars for 50,000 km continuously over 18 days. Additionally, we secured the fourth position in the JD Power SSI 2016 results for sales satisfaction. We registered the highest improvement in rankings among OEMs, and outperformed the industry average for the first time. During the last Auto Expo in Delhi, we showcased some of our new products that will be launched in the next 12 months. These received a strong positive reaction from visitors. We have a rich pipeline of innovative products that I am confident will redefine Tata Motors in the future.
The Kalinganagar facility is India's largest integrated greenfield steel mill. How was the journey from conceptualisation to commissioning of the project?
Tata Steel decided in 2004, as part of its long-term strategy, to expand in India, which continues to be a growth market for the steel industry. After reviewing several options, Tata Steel signed an agreement with the Government of Odisha to build a 6 million-tonne steel plant in Kalinganagar.
However, there were significant challenges and hurdles in land acquisition and possession of the government-owned land in Kalinganagar for several years. An independent study in mid 2012 assessed a huge cost overrun and over a year's delay in completion, among multiple issues identified. Of the total project work, only 11 percent of construction had been completed by then. The first task before me was to strengthen the team leading the project and then put in place clear governance and robust review processes.
Key project risks were identified and measures put in place to address them and mitigate the risks. A closer working relationship with our principal contractors allowed the early sighting of warnings on likely issues and the finding of solutions. The apex governance mechanism included setting up a specific Board committee dedicated to reviewing the project. Frequent reviews helped pull back some of the cost and time overruns.
This is indeed one of the largest greenfield industrial projects undertaken in India in recent years and includes several engineering firsts for the country's steel industry. About 49,000 workers were mobilised at the peak of construction in 2015. Further about 50,000 cubic metre per month of concrete was poured for ten consecutive months, possibly the highest in India. Phase 1 of the project, for a capacity of 3 million tonnes, has been set up at a cost of Rs25,000 crore, including needed infrastructure for the full 6 million tonnes capacity.
Commercial production has commenced since May 2016 and will reach its rated capacity in 18 months. Tata Steel's Kalinganagar facility has the potential to grow significantly and produce world class and value added products for growth segments of the market. Kalinganagar is a demonstration of organisational perseverance and conviction in the building of an inclusive social and
business environment with a commitment to creating long-term value for all stakeholders. The experience has taught us a lot in terms of carrying out large-scale, transformative projects.
What, according to you, are the critical attributes of a Tata Leader? Is there a framework or construct in the group to identify and develop these attributes in our leaders?
Leaders define the culture of the organization by their actions. They inspire with clarity of purpose and vision, enable people to perform to their true potential, engage on a foundation of trust and mutual respect, and possess the capability to ignite a deep sense of commitment in their people. A Tata leader, according to me, is someone who is proud of being part of the Tata group yet humble in terms of the knowledge one still has to gain and the milestones one still has to achieve. A Tata leader is knowledgeable about his or her domain and, at the same time, endlessly curious because in today’s world there is no end to learning. A Tata leader is one who has depth and breadth of knowledge, is customer centric, empathetic to people, has an open mindset, an appreciation of technology in totality (the modern day equivalent of a scientific temper), and most importantly, a very strong value system and that is not subject to compromise.
The subject of building tomorrow’s leaders is one of paramount importance, and that is why we selected ‘Leaders 2025’ as the theme for this year’s AGLC. Based on in-depth interviews with a number of group leaders and extensive research over the last year, the Tata Group HR has developed a new Tata leadership competency framework, Tata Leaders. This is a set of eight competencies that highlight the critical leadership behaviours that will contribute to our success in the future.
The foundation of the framework is the group’s core values and ethos. These competencies will be the bedrock of a comprehensive leadership development architecture for the group. I believe that this architecture will attract, identify and develop leaders who can help the group realise the bold objectives laid out in Vision 2025, and beyond.
You have, in the past, spoken of the commitment that we as a group have towards improving the quality of life of our employees. How are we approaching this?
The core of any successful organisation is its people. More so in a group like ours, dedicated to improving the quality of life of the communities we serve - we truly believe that our people, in what they achieve every day, define our success.
We have commenced work on a holistic approach that goes beyond employee engagement. The ‘Tata Quality of Life’ initiative is based on the foundation of happiness at work and reflects our innate belief in the importance of employee well-being and fulfillment. I am delighted that the development of this initiative by our Group HR has progressed well and is ready for implementation. The journey that we intend to undertake will not only focus on the measurement of the employee’s quality of life, but also provide a framework for improving well-being at the workplace.
The ‘Tata Quality of Life’ initiative is a reaffirmation of our commitment to our people. This has always been our guiding force. I strongly believe that this could be a differentiator for us as a group going into the future, and I have urged all our companies to adopt this framework.
Doing the right thing in business — upholding our values — may appear to be straightforward, but this is almost never so. How can Tata companies ensure that they stay true to their tenets even during difficult times?
The Tata brand, the Tata culture and the Tata ethos are dependent on the value system of the group. This is our biggest asset. At the group centre, we are dedicated to upholding this value system. There is a series of communications that continuously happens from the group centre, cascading to our companies. Last year, we refreshed our ‘code of conduct’, which is benchmarked to global standards and comparable to the best in the world. It is for us to make sure that we can communicate this in a manner which makes the code a living document, and makes it easier to practise.
More recently, we have revisited the statement of our values to ensure that these truly reflect who we are and what we stand for. In particular, we have introduced the new value of ‘pioneering’ to celebrate and carry forward our legacy of being pioneers and innovators of various products, services and business practices.
Within the existing values, I was keen to articulate continuous learning and the promotion of meritocracy. Furthermore, it is not good enough for us alone to live the values; just as importantly, we have to make sure that our partners and associates also live these values. When we get into a relationship with a partner, it is our duty to make sure that the relationship is based on the fundamental values we share.
More recently we have done an organisational culture study across group companies, and after some introspection, we have started focusing on key areas to excel in.
What is the philosophy and intent behind our efforts in the area of diversity and social inclusion?
The Tata commitment to diversity and inclusion has a 148-year-old history. It might sound incredible today, but we had crèches for working mothers in the 1880s and maternity benefits in 1921. This spirit is reflected in Tata LEAD, launched in 2014 to celebrate diversity in all its forms, across gender, race, ethnicity, special abilities and more.
In the area of gender diversity, we want to double the number of women employees across the group and develop at least 1,000 Tata women leaders by 2020. A key step in this direction has been the launch of ‘Tata Mentors’, a unique cross-company mentorship programme that in its first phase covers women executives. I am pleased that this initiative has attracted enthusiastic participation from close to 50 of our companies. We have also launched a set of women-centric policies which address the needs of working women during different life stages. I congratulate all our companies that have adopted these policies, and I encourage others to do so.
The next area of diversity that we would like to embrace is working with the differently-abled. We are fortunate to have more than 4,000 differently-abled colleagues already working with us across the world. While we are researching the specifics and developing our approach for this area, the endeavour is to strengthen our programmes and processes to bring in more differently-abled individuals into the mainstream workforce. We were part of the group led by the Federation of Indian Chambers of Commerce and Industry that has developed an ‘accessibility index’ for workplaces in India. We are encouraging our companies to adopt the index to assess their readiness. This involves not just physical infrastructure and accessibility, but also identifying specific roles to earmark for people with special abilities.
To achieve the goals of diversity, we are emphasising leadership commitment, sensitivity and awareness among all our employees, the development of opportunities for diverse talent, and creating an environment where diversity can flourish.
The Tata group has been ahead of the trend in empowering traditionally disadvantaged groups through initiatives such as affirmative action and skilling. How do such initiatives impact business and do you see such activities growing?
As we pursue our mission, to improve the quality of life of the communities we serve, we must reflect that after almost 70 years of India’s independence, one among four of our population is still a victim of centuries of prejudice, discrimination and denial. Heart-wrenching narratives such as those we heard during the Tata Affirmative Action convention in May 2016 reveal the intensity of the need. Unless we positively discriminate to provide these sections of society their due share of opportunities, they will continue to languish.
As the Tata group grows, we will have more opportunities to facilitate education, skilling, employment and entrepreneurship for these sections of society. Such initiatives will help broaden the impact of India’s progress. A step in the right direction is prioritising efforts to create meaningful and sustainable livelihoods, by being innovative and inclusive in employing Dalit and tribal youth, and giving them opportunities to become entrepreneurs and, thus, job creators.
We need to appreciate the power of our collective might to address inequities in society. As we galvanise our efforts towards larger outcomes, we should gauge our progress through measurable and tangible results. As we move towards a more inclusive society, I look forward to seeing the wider impact of our affirmative action initiatives. That is how we can live up to the standards of the Tata group’s founders.
How is the group responding to the increasing challenges of sustainability?
We adopted a sustainability policy for the group in June 2015, with an approach that integrates our commitment to the preservation of the natural environment and to corporate social responsibility (CSR).
In CSR, at the group level we focus on three broad areas: volunteering, disaster response and group programmes. Our volunteering initiative, Tata Engage, encourages Tata colleagues to connect with society at large, to develop a deep understanding of our core purpose to improve the quality of life of the communities we serve globally. I am proud that Tata Engage delivered over a million volunteer hours last year, which places it among the largest corporate volunteering programmes in the world.
We have undertaken disaster response activities in the recent past in Jammu & Kashmir, Nepal, Uttarakhand, Andhra Pradesh and Tamil Nadu. I am grateful to our volunteers who have gone into disaster-struck areas and offered critical support in relief distribution, reconstruction and the rehabilitation of affected communities. We are identifying CSR programmes where our group companies can collaborate and create a bigger impact at the national or global stage. The first such initiative is in the area of skills development, under the banner of Tata Strive. In times to come, this initiative will help skill millions of youth and enable them to earn meaningful livelihoods.
On the environmental side, perhaps the most critical challenge is posed by climate change and global warming, reflected in several unprecedented weather-related calamities in recent years. We have a number of ongoing initiatives to address this problem, such as Tata Steel’s participation in the ultra-low carbon steel initiative and Tata Motors’ commitment to source 100 percent of its energy from renewable sources in the future. It is also a matter of great satisfaction that our corporate headquarters, Bombay House, has been recognised as India’s first heritage building to be ‘platinum rated’ by the Indian Green Building Council.
You continue to interact with Chairman Emeritus, Mr Ratan Tata. Would you like to tell us something about these interactions?
Yes, I continue to interact with Mr Tata, who is also the Chairman of the Tata Trusts, our largest shareholder. I need to ensure there is good alignment on strategy between Tata Sons and the Tata Trusts.
During my first year, I had the opportunity to concurrently serve, alongside Mr Tata, on the boards of many of our operating companies. One of the most positive takeaways from these interactions was the ease with which Mr Tata wore two hats. While sitting on the board of the operating company, his first duty was to the company and its board; equally, he represented the promoter company and its interests.
I have had the opportunity to visit JLR multiple times with Mr Tata. He has a very keen sense of design and an eye for detail. The credit must go to him for protecting the heritage of these two iconic British brands.
We share a deep appreciation for technology and the impact it can have on business and society. Mr Tata continues to provide active advice to our aviation and aerospace ventures as he is passionate about this space and the group could benefit from his significant domain knowledge.
What aspects of your work at Tata do you most enjoy?
I think it is a privilege to be part of the Tata group, and you are reminded of that privilege every time you meet a Tata employee. Whether it is in Canada in sub-arctic temperatures or at Kalinganagar in high heat, on shop floors or in offices, or while attending one of TCS’s energetic ‘blitzes’, I have had opportunities to interact with thousands of employees. After every such encounter, I return with the realization that I am exceedingly fortunate to be a part of the Tata group. I am proud to be a part of the Tata group.
Design and technology are my special love, both the excitement and the anticipation of creating something new, as well as the potential it has to improve the lives of millions across the world. Whenever possible, I try to take the time to visit our technical centres and labs, and I spend time with universities which are incubating next-generation technologies. In recent years, apart from the Innovista events and our chief technology officer meets, I have had multiple opportunities to visit the development centres of TCS, the Tata Motors Engineering and Technical Centre, Tata Chemicals and others. At the Tata Chemicals Innovation Centre, with each visit I leave happier with the progress being made, whether in nano-materials, food derivatives or specialty chemicals. I enjoy discussing the work being done with the young scientists there.
Could you tell us a bit about how you wind down during the time that you get away from work and business?
I am a voracious reader; I enjoy reading a lot of non-fiction. I used to play golf on weekends but I haven’t stepped on a golf course in the last five years or so. I could probably say I’m doing a bad job of keeping a healthy work-life balance!
The most important thing for me, apart from work, is my family. My wife, Rohiqa, happens to be my best friend and we will be celebrating our 25th wedding anniversary next year. The words in Mr Gopalakrishnan’s book ring true: everybody needs a Clementine mirror. Rohiqa does not hesitate to disagree with me or tell me when I’m doing something wrong.
I have two teenage sons. Looking at life through their eyes and trying to understand what is happening in their generation is interesting. The two of them are students — one in school and the other in university — and I grab every chance to chat and catch up with them. I also have two dogs who give me a lot of unconditional love. It is something I cherish and look forward to when I go back home!
(Note: The interview has since been restored and is available on Tata’s website. A Tata executive told Hindustan Times that the removal was an “operational mistake”. )
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