March 2003 | Dr Irani spoke to Philip Chacko and Sujata Agrawal
My Tata years
Jamshed J Irani's visionary leadership turned a tired and ageing company into the world’s most efficient steel enterprise.
The saga of India’s steel industry has many heroes. A standout figure in this pantheon is Jamshed J Irani, whose visionary leadership turned a tired and ageing company into the world’s most efficient steel enterprise.
Dr Irani completed his masters in geology from Nagpur University before securing a doctorate in metallurgy from the University of Sheffield, England. He worked with the British Steel Corporation from 1963 to 1968, when he joined Tata Steel at the urging of JRD Tata, the late chairman of the Tata group.
He became a general manager with the company in 1979, was appointed president in 1985, and ascended to the managing director’s post in 1992, where he served till July 2001. Among the many positions Dr Irani currently holds is the chairmanship of Tata Teleservices. He is also a director with Tata Sons, Tata Industries, Tata Engineering and Tata International.
Dr Irani has received a host of honours for his sterling services to Tata Steel, most prominently the Willy Korf ‘steel vision award’ (2001), Ernst & Young's ‘lifetime achievement award’ (2001) and the 'platinum medal' from the Indian Institute of Metals (1988). In 1997, Queen Elizabeth II conferred an honorary knighthood on him.
Kicking off this new series, Dr Steelheart recounts a professional life packed with incident and achievement — and tightly woven into the Tata theme.
Thirteen is my lucky date. I joined Tata Steel on January 13, 1968, and I’ve never considered leaving the Tata group in the 25 years since — except once, and that was within a few months of taking up the job. I had put in my resignation and it was accepted even, but then a stroke of good fortune ensured that I stayed. I’ve never had cause to regret my decision.
I was, in a way, born into the Tata group. My father and my grandfather before him were employed with the Tatas and some of my early education was at a Tata school in Nagpur. Then, after completing my masters, I received financial assistance from the JN Tata Endowment to pursue doctoral studies at the University of Sheffield in Britain.
I had started working for the British Steel Corporation when Mr JRD Tata [the late chairman of the group] came to know of my existence. Being a Tata scholar was what brought me to his attention. Mr Tata had seen my academic review and he was impressed enough to write on the file that if ever this person wishes to come back to India, let him first knock on Tata Steel’s doors.
One fine day I got this letter from JRD’s office saying that the chairman had seen my file, and mentioning his comments on it. That’s what got me to come back. I met Mr Tata (this was in 1967) and he asked me to visit Jamshedpur, which I did before returning to England. After about a year I received an appointment letter, and that marked my entry into the Tata family.
Then came the resignation episode. I had been assigned to Tata Steel’s research and development department. It was a disillusioning experience; nothing much was happening there. I had a year’s lien on my job with British Steel. The people there liked me, I guess, because they said I could come back if things didn’t work out in India. That’s what I had in mind when I put in my papers.
The JRD intervention
It so happened that JRD visited Jamshedpur just before my proposed departure from Tata Steel. He spotted me in a crowd, came up and asked me, "Well, young man, how are you getting on?" I replied, "Not so well, sir, because I’m thinking of leaving." "Oh," he said and left it at that. I heard from others later that he took up the matter with the management, saying, "Look, here’s a guy we brought in from England. Why is he going back? Do something about it."
Two days later, I was called for a meeting with the company’s three directors, among them Mr Russi Mody, at Jamshedpur. They asked me what the problem was and I explained that there wasn’t much of a future in R&D, that we weren’t doing any real work in the area. So they suggested operations, an idea I was open to.
I was posted under a certain Mr Vishwanathan. My outlook about the company changed; I realised I had a future here. I started doing reasonably well, I suppose, because I was moved from task to task and given fresh exposure almost every year. I’ve never thought about leaving the Tata group in all the years since.
There’s a loyalty equation working here, but an employee must have more to offer the organisation than mere loyalty. There has to be knowledge, initiative, leadership; you have to contribute, you have to add value. You cannot sit on your backside and expect the company to pay you just because three generations of your family have been employed there. That’s what used to happen in Jamshedpur before we changed things.
We have this agreement with our workers that anyone who has worked for 25 years or more with Tata Steel can, by right, nominate a person to take his job when he retires. Which means that, theoretically, we can never reduce our workforce. We finally convinced the unions to keep this clause on the back burner.
Shooting from the lip
I was talking to a big union gathering back in 1993 or so, when we started our slimming exercise, about the need to do this when one fellow from the back stood up and shouted that all this is fine, but you have taken away the jobs of our sons. I shot back, "Don’t worry about your son’s job; worry about your own and mine, because if we don’t change, this company will shut down. Then, neither you nor I will have a job."
That was a defining moment for Tata Steel. Our workers stopped asking for jobs and started understanding our point of view; they started cooperating with us in our drive to reduce our manpower numbers. That’s how we were able to bring our workforce down from a peak of 78,000 to 44,000.
If I have to be remembered, it should be as an agent for this kind of change. In the late 1980s and early 1990s, Tata Steel was an old company with an old plant that was getting obsolete. Now we are an older company, but we have a brand new plant. The transformation we have brought about in the last 10-12 years has resulted in us becoming one of the most efficient steel companies in the world. The awards I have been bestowed with are a reflection of that.
These achievements would not have been possible without the mentoring I have received from within the group. Two names stand out: JRD, with whom I shared a warm relationship, and Mr Vishwanathan, my executive officer when I started out in operations.
I have always looked upon JRD as my foremost professional mentor. I remember this incident from back in 1991, when we were having a management problem at Tata Steel with Mr Mody and others. Mr Mody had his own agenda and there was a lot of rupture. I came to meet JRD in this regard and was waiting outside his office when he walked out. "Jimmy (that’s what he called me), what are you doing here," he asked and sat down beside me. I apprised him of the situation and he said, "Look, I’ve seen many such problems in my life. I will solve yours, trust me." And that’s what he did.
The chemistry of change
Mr Vishwanathan is no longer around, but there’s a truism of his that has remained with me down the years. On the day that I joined operations, he called me over for dinner at his place. "We all know you have been working for a more efficient company," he said, "but don’t try teaching our workers here how to make steel; they’ll feel offended. Try to win them over by making them change from within."
I’ve found this advice invaluable. You have to make changes from within (because people want it), rather than from without (because you want it). By the way, today, Tata Steel is a more efficient producer of steel than British Steel.
Change has been the driving force in the Tata group over the last few years. JRD lived in a different era and he had his own way of managing things. Ratan Tata, our present chairman, lives in a different era. Just as I was the change agent in Tata Steel, so he is with the Tata group. He’s a year younger to me and we were acquaintances back in my early days at Jamshedpur (my first year in the city coincided with his last there). After I joined the Tata Steel board in 1981, we got to know each other closely.
I think the attitude of the group as a whole is undergoing a transformation. The key to success lies in placing the right person at the top. The big difference between the time I joined the group and today is that we have become more entrepreneurial, more result oriented. We are not scared of taking tough decisions. This wasn’t an easy road for the group — with its traditional management structures and old boys’ club image — to take, but that’s what we have done.
I keep telling my workers and everybody else that the Tata house is known for distributing its wealth. What comes from the people goes back to the people. But unless you generate wealth, what can you distribute? Distribution means looking after the community in which you live, and looking after those people too who may not be directly connected to your industry.
Character, credibility, integrity
This kind of commitment is built into the Tata character. There are some other vital ingredients that go into the making of the quintessential Tata person: the ability to nurture long-term relationships and, most importantly, having tremendous credibility. There’s a passage in RM Lala’s book Creation of Wealth where JRD is quoted on this point. "We all believe in a certain way of operating," he says, "and I know that if I had done business the way some business houses do it, we would have been twice as big as we are today. So what we have sacrificed is 100 per cent growth, but I would not have had it any other way."
I remember going to Delhi a few years back to meet a minister. I started with my complaints — this is not being, that is not being done — when he stopped me in my tracks and asked: "Dr Irani, don’t talk to me about delays, but in the last five years how many things that you wanted have not been done by us?" Try as I might, I could not think of anything. The point is that we don’t pay ‘expediting money’ like others do, so we have to suffer delays, but in the long run these are never really debilitating. There’s frustration, for sure, but also the satisfaction that we stuck to our principles.
Take our dealings with Laloo Prasad Yadav. When Laloo became the chief minister of Bihar, I went to Patna to meet him. I told him (in Hindi, of course), "Chief minister, we will do everything according to your rules and laws. We will never you ask for any favours and we will never embarrass you. In return, you please help us maintain our rules and laws. We will help you in building roads and hospitals, in providing relief, whatever. But please don’t ask us for contributions for your party or for yourself." His response was a simple okay. And all these years he has never asked us for anything.
My greatest accomplishment, I think, is the credibility that I have built. Despite all the stuff that’s said about ethics, or the lack of it, in Indian business, I haven’t found it difficult operating in this climate. That’s the advantage of the Tata tag; there’s so much respect. The majority of multinationals who came looking to set up joint ventures in the wake of liberalisation, first approached us. I think we have turned down far more joint-venture proposals than we have accepted.
Making a difference
My greatest Tata moment wasn’t when I became Tata Steel’s managing director, because that happened after a major controversy. It would have to be when I was chosen to receive the ‘Willy Korf Steel Vision Award', which is given by World Steel Dynamics, an independent body that monitors the worldwide steel industry. The citation that accompanied the award mentioned many points, but the one that gratified me the most was about the fantastic spirit of our workforce in Jamshedpur. I would like to think I had something to do with that.
Jamshedpur is a place after my heart. My wife has settled there and that’s where I’ll be going once I retire. Mumbai has plenty to offer, but it’s an impersonal kind of place; I’ve lived here for more than five years and I hardly meet or know anybody on a personal level. It’s different in Jamshedpur; everyday life is extremely comfortable and it’s a great place for kids and families. Everybody knows everyone. Some people would see that as a disadvantage; I don’t.
Then there’s the Tata Steel culture itself. There’s a kind of commitment, to the company and the community that’s unique in the industry. It certainly made my job easier while I was there. That’s not to say that I haven’t had any disappointments; there have been plenty of those.
Not everything we wanted to make happen came about sans a struggle. Some people refused to see the obvious. When someone is cycling towards a ditch and you tell the fellow, "Please avoid it, please avoid it," and he keeps his eyes closed and heads straight for disaster — that’s disappointing. But I have too many great memories, about Tata Steel, our workers and the group, to dwell on the setbacks.