Lack of planning behind Mistry’s unplanned exit?
Mistry submitted the first proper strategic plan to the Tata Sons board only in September this year
MUMBAI: Those who have worked with Ratan Tata talk of his love of a plan. His favourite question, often the first he asks, is: “What is the plan?”
If Tata Group executives are to be believed, Cyrus Mistry did not always have an answer to that question. And that may have been a big factor in his being ousted as chairman by the Tata Sons board on Monday.
An email to Mistry’s representatives did not get an answer. But Tata executives, who refuse to be named because of the nature of the controversy, claim that the first time Mistry submitted a proper strategic plan to the Tata Sons board was only in September this year, about a year and three months before his current tenure as director was to end.
They said members of the Tata Sons board and Ratan Tata, the chairman emeritus, had been giving feedback to Mistry for months. This feedback was not just verbal but also in writing, which may put Tata Sons on solid legal ground.
Those close to Ratan Tata say is tolerant of declining performance if there is a good plan in place. For instance, Jaguar Land Rover fell upon bad times soon after Tata Motors acquired it in 2008. But its top management had a plan. The company now shores up the performance of Tata Motors — perhaps the reason its CEO Ralph Speth was made a director of Tata Sons on Tuesday.
When Tata Nano was about to be launched, the group wanted a Berlin-based company to handle its publicity. But Tata executives wanted to do it themselves. When Ratan Tata spoke to them, he started by listing the things he wanted. A young executive said the plan covered all of those. Tata saw the plan, liked it, and cleared it in minutes. Later he wrote a letter of appreciation to the team.
Reports have pointed out that Mistry’s performance in numbers was not above reproach. If you take out Tata Consultancy Services, the software company that’s the group’s cash cow, and Jaguar Land Rover, a successful turnaround story and one of the best overseas acquisitions by an Indian business group, there is not much to gloat over. Tata Sons, the group holding firm, reported a 40% fall in revenue for 2015-16, to go with a 67% fall in profit. There was talk that watch and jewellery maker Titan suffered from a consumption fatigue in India.
This is where leadership comes in. That is why Ratan Tata told the group’s chief executive officers on Tuesday to focus on the market and compare themselves with rivals. And he told them to plan.