Better Learn These Things From Ratan Tata. Surprising?

The legendary business tycoon leaves behind a significant legacy.

Ratan Tata, who passed away on October 9 at the age of 86, was a special figure in Indian commercial history. His ability to blend international success with a reputation for moral rectitude was viewed as exemplifying the best aspects of the nation’s corporate culture. He was a combination industrial giant and revered secular saint. However, Tata frequently appeared to be a solitary exception to modern Indian capitalism rather than the primary exponent of it as the country’s commercial landscape became more rapacious and its growing group of billionaires richer. It is therefore difficult to draw conclusions from his career that apply to India’s future. However, there are a few things the nation would be well advised to adopt, particularly as Indian Prime Minister Narendra Modi looks to advance his goals to create a prosperous middle-income economy in the ensuing ten years.

In 1991, when India’s economy finally opened up following decades of socialist planning, Tata was chosen to head his family’s commercial empire. He became the chair of Tata Sons, the holding company that manages the vast Tata Group conglomerate. He gained praise for rationalising a team that had become disorganised during India’s communist era while producing steel, chemicals, automobiles, tea, and other goods during his first ten years in charge. However, his image was cemented in his second decade, when he began a daring worldwide expansion and acquired trophy assets like Jaguar Land Rover in 2007 and the steel giant Corus in 2007. Under his direction, the Tata Group evolved from a conservative, stoic Indian enterprise into a daring globalisation experiment, symbolising India’s own expanding aspirations on a global scale.

He was soft-spoken, intellectual, and, as his name implied, always kind and courteous. When you meet him, he gives a quite different impression than the billionaire tycoons who had by that time taken over Indian commerce.

Nevertheless, Tata’s stellar image and his inconsistent commercial record were somewhat at odds. Corus was ultimately written off as a costly failure. The Tata Group remained disorganised, with dozens of subpar businesses counterbalanced by a few high-achieving companies, most notably its technology division, Tata Consultancy Services, which Tata was not directly connected to. Numerous of his own trademark projects, most notably the Tata Nano, an attempt to create a compact, affordable car that would match Indian finances, were far less successful. In a 2012 interview, Tata expressed his disappointment at the project’s failure to reporters. “I don’t think it makes sense to express satisfaction. I’m feeling really down,” he said.

Nevertheless, there are a few things India may learn from Tata’s life. The first is the constant need to mend the damaged ties between Indian industry and the government.

In an interview, Tata was heard subtly criticising the Indian government, which at the time was a dormant, scandal-plagued government headed by Indian National Congress Prime Minister Manmohan Singh. Tata implied that India’s bureaucracy did little to support industrial firms like his own, forcing him to search for expansion abroad. With the mildest of criticisms, he stated, “I think India could definitely compete with China if we had the same kind of encouragement to industry.”

When the interview was made public, Tata’s press handlers lost it because they were afraid that the state would respond with harsh punishment for even mild criticism. The government would have been better off pointing out that Tata’s push for globalisation was more a reflection of India’s failings to enhance the domestic business environment—a task that is still, at best, a work in progress today—than it was of India’s achievements.

The significance of ruthlessness, which is not a quality usually associated with a corporate leader who is more frequently characterised for his kindness, is the second lesson.

Business magnate Cyrus Mistry was chosen by Tata in 2012 to succeed him. The transition didn’t work out. Mistry found it difficult to improve the group’s situation. Tata planned a boardroom coup to fire him in 2016. Following a contentious legal battle, Mistry criticised Tata for alleged shortcomings in governance, damaging his reputation. In hindsight, however, Tata’s callous move paid off financially as the business appointed Natarajan Chandrasekaran as its new chairman, who has since enhanced the group’s output.

The third, and arguably most evident, lesson from Tata is that India still has to make a painful trade-off between morality and commercial success. One of Tata’s lieutenants laments the difficulties of operating a firm in India from Bombay House, the group’s corporate headquarters in Mumbai. According to the lieutenant, there are always temptations to cut corners or demands for bribes or sweeteners when starting a new business or agreement. An ethical approach had a large opportunity cost.

In this area, the Tata Group’s record is not exactly as impeccable as its image would imply. It has also been involved in a few scandals over the years. However, even though it meant growing his company more slowly than savage rivals like Reliance Industries chair Mukesh Ambani and Adani Group founder Gautam Adani, who are currently the nation’s top billionaires, Tata was largely successful in leading a company that struck a balance between strong growth and moral behaviour.