Four years before Jamsetji Tata came into this world, Andrew Carnegie was born in Scotland. JP Morgan was two years older than Jamsetji and John D Rockefeller was born in 1839, the same year as the founder of the house of Tata. These three entrepreneurs went on to become the business titans of America in the late 1800s. In time they earned the unlovely label of robber barons, because in building their empires and fortunes they adopted tough postures with labour and rigged or broke rules to favour their own businesses. After the American civil war, inventions such as electricity and the telegraph buoyed the country's economic growth, allowing entrepreneurs to redefine in their own minds where future opportunities would unfold. For example, by 1872 Andrew Carnegie had become convinced that steel would "lie at the centre of the world". As a well-travelled person, Jamsetji must have read and heard about these builders of wealth (although not the tag of robber barons, which was coined much later).
Until 1869 the Tatas had just trading interests. It is said that writers of the period considered the Tatas "backbenchers in the Bombay business world". It was Jamsetji who decided to break the mould, by venturing into industry through textiles. This was not the only evidence of his propensity for innovation. In Empress Mills, his first big industrial initiative, he introduced the ring spindle when the device had yet to come into general use in the US, where it had been invented. He also pioneered several labour welfare measures that were yet to become common. And he experimented with a new form of management whereby he became a salaried managing director, reporting to a functional board of directors. All of this happened long before the term corporate governance was even conceived.
Jamsetji was fired by a fierce sense of nationalism, a passion to advance the economic status of India. Economists say that all entrepreneurs must have some amount of greed and optimism. If that be so, Jamsetji must have had his fair share. The difference, of course, lay in what he did with the fruits of his entrepreneurship: he displayed a rare compassion for the less privileged and he helped build institutions for his people and his country. A few of these came into existence in his lifetime, but there were other, more important ones that found sustenance thanks to his unique legacy. Jamsetji replicated the wealth-creation characteristics of Carnegie, Morgan and Rockefeller — but he did so as a benign baron.
I recount these events for two reasons: first, history creates romantic notions about the past; second, it sheds some light on what I call the samskar, or values, of any given business. Much like individuals, business enterprises, too, have a samskar. It is the mark of a successful business that profits are earned competitively in the early days. It is a mark of a great business that, in addition, good samskar gets so deeply embedded that it becomes part of its DNA.
Arie de Geus wrote in The Living Company that an economic company is like a puddle of rainwater: a collection of raindrops, gathered together in a cavity. The other type of company is organised around the purpose of perpetuating itself as an ongoing community. This type of company is like a river. It is turbulent because no drop of water remains in the same place for long. This river finally flows into the sea, but it lasts many times longer than the lifetime of the individual drops of water which comprise it.
For 135 years the Tata 'river' has flowed on, exhibiting the qualities of the great rivers of the world: long traction, turbulence, growing might, the ability to overcome obstacles, and the tendency to share its power for the happiness and prosperity of those on its banks. In 1939, when the British government published a report entitled 'Indian Business and Nationalist Politics', the Tata Group was listed on top. In 1969, when the report of the Dutt Industrial Licensing Policy Enquiry Committee was published by the Indian government, the Tatas were again on top. When the results of year ending March 2004 are analysed, the Tata Group could well be on top yet again. But it is not so valuable to be at the top for business performance alone; it is far more important to be listed on top in the hearts of people, as a synonym for trust spread over several generations.
After a long career in a single company, when I contemplated joining the Tata Group in 1998, in the absence of my parents, I sought the blessings of my eldest sister. Not being well versed in business matters, she said, "Go ahead and join them. They must have good people; after all, they are always doing something for the benefit of those around them." That view sprung from the samskar brought to vibrant life by Jamsetji, and it is the same samskar that drives our business today. The Tata Group's shareholding patterns and profits are so aligned that of the more than $1 billion of profit after tax earned by it, approximately a fourth is attributable to the good causes that our trusts espouse. It is to this tradition that all of us pay homage when we begin work each day, and it is this tradition which we will be saluting all through 2004 and beyond.
R Gopalakrishnan is director of Tata Sons, chairman of Rallis India and Advinus Therapeutics, and vice chairman of Tata Chemicals.