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The appointment of Cyrus Mistry as Ratan Tata¶s successor sends a powerful message²that the Tata Group¶s core values will remain unchanged. How will that impact the group¶s internationalisation ambitions?
here is an old Chinese saying: µMay you live in interesting times!¶ The Chinese don¶t mean this in
a good way. To them, interesting times are times those that are uncertain and confused, when no one quite knows what will happen next. Interesting times are the times that test one¶s skills and resolve. By any standards, Cyrus Mistry is taking over at the helm of the Tata group at an µinteresting time¶. The group itself is sound enough. Ratan Tata leaves his successor a fine legacy of well-managed, focused companies, a values system that is arguably stronger than ever, and brand valued at around $50 billion. But the challenge facing Mistry is a formidable one. He takes over at a time when the group is committed to a strategy of greater internationalisation, even globalisation; and a time when the world economy is in tatters, the Western economies at least in the throes of the worst depression since the 1930s, and with one of the world¶s flagship currencies, the euro, seemingly on the verge of falling apart. These are tough times for any company seeking to venture into the international arena. Somehow, Tata needs to find a way of leveraging all the strengths it has in India, including its powerful reputation and its immense brand, and put these to work in international markets. But it won¶t be easy. A Force For Good I have in the past described the Tata group as a force for good, because I believe that to be the case. There is not space here to rehearse all of the group¶s many achievements over the last 140 years. Suffice to say that as well as the thousands of charitable projects that the group and its associated charitable trusts have developed and are continuing to develop, the Tata companies have also provided secure employment for hundreds of thousands of people and their families. At Titan, the watch-making and jewellery company co-owned by Tata and the state of Tamil Nadu, they talk not just about profits but about µlives transformed¶, people whose lives have been touched by contact with Titan and are the better for it. The Tata values of trust, reliability and social responsibility are deeply engrained in the group¶s psyche. I know of no other company that takes these values so seriously²especially not in the West. And there is no doubt too that these values are absolutely at the core of the group¶s reputation, and hence its brand. For this reason, the appointment of Cyrus Mistry makes absolute sense. The point has been made by others that Mistry as an insider will already be steeped in the Tata values and will know its culture. But here is an even more important point: the rest of India knows this. The rest of India knows absolutely that Mistry is regarded by Tata itself as a safe pair of hands, a responsible custodian of those values. It knows too that the plucking of a relatively young and relatively obscure figure out of the ranks to become the group¶s overall leader is nothing new. Ratan Tata was just such a figure. So too was JRD. Of course, it can be argued that Mistry is an outsider since he¶s never worked in the group and, indeed, anyone who is not a member of the Tata family would be an outsider. But, on the whole, Mistry is more in than out. His sister is married to Noel Tata and thus Ratan Tata is part of the extended family. He¶s not related by blood, certainly, but he is at least as close as the third chairman of the group. Besides, he¶s been a main board member for a while and his father Pallonji Mistry has been involved in Tata affairs for a long time²there is perhaps no other external organisation than Shapoorji Pallonji with a closer relationship to the Tata group. So, the appointment of Mistry sends out a powerful signal. It tells India that Tata intends to remain true to itself and its values, and that its customers and employers and people have nothing to fear from the appointment. In these µinteresting¶ times, that is essential. Whatever happens, the appointment is saying, you can still rely on Tata to continue to be Tata.
For some companies in the Tata group. And companies like TCS. For Tata to change its image now would require it also to make fundamental changes to its culture. Brands cannot exist without integrity. some want Tata to try to shake off its Indian image and become more international in focus. Tata¶s consumer brands are stuck with the label of being Indian. which operate in business-to-business markets. that won¶t be easy. And that task becomes exponentially harder still when you try to take it across the great cultural divide between East and West. This is so for two reasons. B2B players generally tend to know each others¶ reputations and are keen to do business with the right partner. Tata intended to change something fundamental about itself. was the right thing to do have missed the point. The first task of the leader is to protect and preserve and amplify and transmit those values. Tata Teleservices and Taj Hotels have also made major strides. But what signal is going out to the rest of the world. And that. regardless of where they come from. It might take India Inc at least that long to manage a similar turnaround in its image.That is the signal that is sent in India. it is probably intended to send pretty much the same signal. and is a well-known brand in its own right. any brand moving into a new market faces the immediate problem of competition from established brands. especially an internationally recognised figure as leader. One of the hardest things to do with any brand is to take it out of its home market and try to make it work in foreign markets. These have already dug in and have a loyal customer bases. Again. Japanese companies suffered from the same image. they know almost nothing about India. India means bhangra music and Bollywood. In that respect. they often associate Indian-made goods with low quality. appointing an outsider might well have seemed like a signal that. they probably think of services and IT consultancy. It is for this reason that. Meanwhile. In my view. And that could easily backfire. I suspect. And the road over the past decade is littered with the wreckage of Asian brands that have tried to gain acceptance in Europe and America. It is consumer-facing companies like Tata Beverages and Tata Motors that will find it hardest to be accepted by consumers elsewhere. Second. It might be that Indian service companies have an easier time given that India has a good reputation abroad for service quality. They must be believable in order to be trusted. the newly arriving brand has to give customers some very cogent reasons for switching from their old brands to the new one. It is not the leader that matters. would have been a terrible mistake. Tata Teleservices and Tata Steel. To most. especially established domestic brands. will also find the going easier. Tata¶s Indian-ness is part of . To most people. and find a way of translating and transmitting those values so that they are understood by an international audience. consumers in most parts of the world know almost nothing about Tata. The best course forward is for Tata to continue to be true to itself. In order to succeed. after 140 years. often painfully. Indeed. And if customers are already satisfied with their old brands. Strangers In A Strange Land And as I said. not just internationally but here in India too. that becomes very tough indeed. They turned this around to the point where Japanese firms became known as world quality leaders²but it took 20 years. that is a good thing. again in my view. India meansbhangra and Bollywood. there are a dozen more than have tried and failed. All those who felt that appointing an outsider. In the 1950s. I think this would be a terrible mistake. it is the values. If they are aware of India in an economic context. Consumers in most parts of the world know almost nothing about Tata. continue to live up to those same brand values. Not only are they unaware of India¶s huge manufacturing industries. in fact. First. For every Western company that has successfully exported its brand into Asian markets. this will be easier than others. to inspire the rest of the organisation to carry on to meet its goals. where the Tata group has ambitions towards international status? Well. TCS is already well-entrenched in markets all over the world.
. and convince the sceptical consumers of the West that it really is a business group based on trust. Fellow. and author. Tata has to stick to its values and reputation. Centre for Leadership Studies. Morgen Witzel. To break into international markets. occupy a good part of the time of Mistry and his executives over the two decades to come. Doing so will take time and patience and will. and they deserted in droves. and gives its customers no reason to be loyal to it. They wanted British Airways to be British. then this will become a source of lasting competitive advantage. because these are its enduring strengths.its image and its heritage. University of Exeter Business School. it has to get out there and tell its own brand story. there is only really one way forward. I suspect. Remember when British Airways tried to shake off its µBritish¶ image and become an µinternational¶ airline? Customers hated this. just as those people who know Tata want it to continue to be Indian. If it can get that story across. So. over and over again. reliability and social responsibility. Tata: The Evolution of a Corporate Brand. Take that away and Tata becomes just another international company.
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