strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: February 23, 2010
 / Spring 2010 / Issue 58

 
 

Too Good to Fail

“We had set ourselves certain goals,” noted Tata Sons chairman Ratan N. Tata in a 2006 interview, “chief among which was to go global — not just to increase our turnover but also to go to places where we could create a meaningful presence [and] participate in the development of the country.”

Past as Prologue

Like that of many long-running family businesses — Sainsbury, Toyota, and S.C. Johnson come to mind — Tata’s culture can best be understood as a reflection of the founder’s beliefs and ingenuity, honed through generations. J.N. Tata studied to be a priest in the Parsi religion (also known as Zoroastrianism), but pursued a commercial career because he believed he could do more for more people that way. As a fervent nationalist and entrepreneur, he sought to amass enough wealth and influence to elevate the Indian people and their communities, helping to prepare them for a struggle against British rule. Although he eschewed the priesthood, Tata remained loyal to the tenets of the sect. The bedrock of this tiny religion — there are only 23,000 Parsis in India and 100,000 worldwide — is the notion that a life well lived must dedicate itself to charity and justice.

“The culture of the Tatas comes from decades of leadership that espouses a set of corporate values that is quite extraordinary for any company,” says Tarun Khanna, the Jorge Paulo Lemann Professor at Harvard Business School and an expert on the company.

At age 29, J.N. Tata founded the Tata business as a small trading company. It prospered, and in 1877 he converted an old oil mill in Bombay (now Mumbai) into a textile factory and financed it with stock issued in India’s first private placement. After making a small fortune in textiles, he developed a plan for his family’s long-term role in India’s future. Starting with industrial infrastructure, he designed and planned India’s first domestic steel plant, to be located about 800 miles east of Mumbai. This meant taking on the racial prejudices and dismissive attitudes of the British colonial viceroys, whose approval was needed.

Then he moved on to expanding and improving education opportunities for Indians. In 1892, he created one of the world’s first charitable trusts, the J.N. Tata Endowment for Higher Education. This scholarship program sent bright young Indians of limited means overseas for training in science, engineering, law, government administration, and medicine. One early grant recipient, a woman named Freny K.R. Cama, would go on to become India’s first gynecologist. It was especially important to Tata that Indians be admitted to the civil service, which was closed to them under the British Empire; this would show that they were capable of governing themselves. By 1924, with some restrictions lifted by the British, one out of every five Indians in the civil service would be a J.N. Tata Scholar. (Today, the same scholarship is one of the most prestigious education awards in the country.)

In his final years, in a series of letters to his son Dorab, J.N. Tata laid out his vision for a new type of industrial community to be built near his steel factory (which was still under construction). He wanted widely available electric power; wide, tree-lined avenues; beautiful parks; and housing for workers that featured running water — then nearly unimaginable, and even today uncommon in India. Meanwhile, back in Bombay, he planned and built the Taj Mahal Palace, a hotel as luxurious as any of its European counterparts. A devotee of architecture and design, Tata chose the decor himself. On a trip to Paris, he picked out the wrought iron pillars that still stand in the hotel ballroom.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  1. R. Gopalakrishnan, The Case of the Bonsai Manager: Lessons from Nature on Growing (Penguin Portfolio, 2007): “The leader needs to think about issues at the edges of the spectrum of the obvious.”
  2. Ann Graham, “The Company That Anticipated History,” s+b, Summer 2006: How South African power utility Eskom Holdings Ltd. combined social leadership with business strategy to prepare for the end of apartheid.
  3. Ronald Haddock and John Jullens, “The Best Years of the Auto Industry Are Still to Come,” s+b, Summer 2009: The Nano’s prospects in context.
  4. Tarun Khanna, Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours (Harvard Business School Press, 2007): Macro view of today’s two great sources of emerging business creativity.
  5. Nirmalya Kumar, India’s Global Powerhouses: How They Are Taking on the World (Harvard Business Press, 2009): Profiles of ArcelorMittal, Infosys, Hindalco, Mahindra & Mahindra, Tata Group, and more.
  6. C.K. Prahalad, “The Innovation Sandbox,” s+b, Autumn 2006: Impossibly low-cost, high-quality products and services (including one from Tata’s hotel group) that start by cultivating constraints.
  7. Tata Group website: Comprehensive information, original interviews and stories, public media reports, and links to other resources about the company.
  8. For more thought leadership on this topic, see the s+b website at: www.strategy-business.com/global_perspective.
 
Close
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.

Close