Message #2
You are only as old as you want to be.

Striking sensible synergies
The goal of SMFG does not stop at perception building. Its ultimate objective is to push ‘brand and services-driven revenues’ from the current level of 50 per cent of total revenues to 85 per cent by 2010 by making Tata a household name across diverse businesses. This can be done through synergies. After all, who could have imagined that there was synergy between automobiles and telematics, or that agro chemicals and information technology can come together?

The task gets even more complex when one has to harness commercially synergistic possibilities for a conglomerate with as diverse interests as pesticides, watches, hotels and information technology. But that’s exactly what the GEO is striking at.

The Group wants to use technology to reconnect and recombine various pieces of knowledge to its advantage. "The ultimate aim is to offer cost-efficient, complete and specific solutions to the customer without compromising on the individual identity of Group companies," adds Mr Chaukar.

The consolidation of the Group’s media buying under a single agency (see Ad value) is one such example. And more moves are expected in this direction. The aim? Portray more muscle and enjoy a stronger clout in the marketplace. Moreover, a many-companies-in-one-Group approach allows for packaging of diverse services into a solution. "A lot of skills and in-house resources can be utilised beneficially by other Group companies. We have both the skill building and domain expertise," says Mr Chaukar.

"When the auto companies and telecom companies were set up, we had no idea that there would be synergy between them. Today electronics accounts for over 20 per cent of the overall inputs in cars and it will go up further in the coming years," says Mr Gopalakrishnan.

Message #3
Stay independent, but flex your combined muscles.

The leading edge
When Ratan Tata became Group chairman in 1991, he ushered in an era of change. Ten years on, leadership equations within the Group have changed dramatically. New faces have come in, succession has been planned and the Group has slowly moved away from a personality-led to a team-led culture.

Change often causes disruption. Which is why it calls for leadership capabilities to create ‘organisational innovation leading to disruptive moves to influence the competitive context’. As Peter Drucker says in Management Challenges for the 21^st Century: "A change leader looks for change, knows how to find the right change and knows how to make them effective both outside the organisation and inside it."

That is what Ratan Tata did when he instituted the GEO in 1998 to act as the executive management committee driving decision-making and strategy for the entire Group. He redefined the whole gamut of management style, businesses and processes.

From a ‘command-and-control’ organisation with a ‘hub-and-spoke’ management structure, the Group has moved on to a distributed form of leadership. Success, obviously, revolves around people and knowledge-sharing processes.

"The biggest change that is happening on a continuous basis is that of the distribution of leadership. Like someone conducting a 100-piece orchestra," says Mr Gopalakrishnan.

"Different businesses need different leadership. The Tatas are growing younger. I want my successor to be 10 years younger than me," adds Mr Chaukar.

There is another change that is not as apparent. Leaders are now more open to admitting mistakes. "If something ugly has happened, it has happened. There is no point trying to hide things. The Tata leadership can face up to any unfortunate event," says Mr Gopalakrishnan. No words minced, and an obvious allusion to Tata Finance.

There is only one golden rule for the Tata leadership: keeping the trust of the Group. "I remember what Mr Tata told us at a meeting. He said that he will continue to trust all his managers, but once they lose that trust, he will go after them. I thing that is a very fair deal," says Mr Gopalakrishnan.

The primary goal of the Tata leadership has also been etched out: create leadership positions across businesses. The simple rule is that if a company cannot be within the top three in its category, there is really little room for comfort. Tata Consultancy Services, Tata Steel, Tata Engineering, Tata Power, Tata Tea and Tata Chemicals all demonstrate that leadership.

Message #4
If you want to be leaders, your companies better lead.

Hello tomorrow!
Restructure, shape up and perform. That’s the way to go at the Tatas. Exploring newer businesses and markets is very much part of the new strategy. As is consolidating the Group’s established strengths. Thus, TCS and the telecom companies will play a central role in the Tata of tomorrow. And why not? Given its size and breadth of services, TCS is by far the country’s most valuable private sector company.

The telecom sector, Internet, information technology and bio-informatics are the other key areas of the future. These sectors will not only grow but also drive other Group companies. Edutainment, logistics, healthcare and biosciences will mark the Group’s tryst with unexplored areas.

The GEO is already working on a blueprint for telecom through the merger of all convergence and broadband companies. A unified brand strategy is also in the offing. The merger process of Rallis and Voltas subsidiaries with the parents has already begun. Tata Power has taken over the transmission division of Tata International and its joint venture with Power Grid Corporation.

On a parallel road, the Group will continue to exit areas where it does not see leadership or value:

• Voltas selling Voltas Switchgear and furniture division.
• Tata Finance exiting non-core finance businesses.
• Tata Tea diluting stakes in Tata NYK and Tata Hitachi.

Also, what began with Tata Tea and Tetley will see its logical progression via a detailed game plan currently being finalised for the Group’s overseas foray through acquisitions by major Group companies. The telecom companies are looking at overseas opportunities to manage systems. TCS is reinforcing its overseas presence with big-bang plans.

The Group has set a target to double sales every three years and profits every four years. This has been tough in the face of the longest industrial slowdown in the country, but the Group’s goal is a long-term one.

The general spirit within the Group, then, is this: Change doesn’t happen by itself, one has to beat the drum.

Message#5
The Tatas are brushing up their act. Watch out.

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Uploaded on March 5, 2002