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Candida Moraes
Globalisation is redefining the way companies
do business. Alan Rosling, executive director, Tata
Sons, looks ahead at what managing business will be
like in a borderless world
In a world where change is the
only constant, strategy becomes a compass guiding business
to the shores of success. Companies must have clear
objectives and well-defined plans for achieving them.
This is easier said than done, of course! Because we
need dynamic long-term planning, as well as the nimbleness
and agility to change tactics whenever the exigencies
of the situation demand it.
In today's dynamic business battlefield,
strategy creates the macro picture; our assets are positioned,
we know what the competition is doing and we deliver.
Tactics help us to manoeuvre our way around unexpected
roadblocks, without losing sight of our strategic objectives.
Strategic planning for the future
involves making choices; only time will tell which of
our decisions was right. The only beacon which never
fails to guide us correctly is the customer. If we focus
on providing value to our customers, if we focus on
quality, other management decisions follow from that.
Excellence is the key to survival — today and in
the future.
On why size matters
In a world where scale does
matter, the Tata Group is sub-scale compared to its global
competitors in very many of our businesses. But this does
not mean it doesn't have a competitive advantage. Look
at Tata Steel; it has a cost advantage over much larger
international rivals. Yet, it also needs to scale up and
move beyond India's borders to become a regional player.
But scale can also be a disadvantage, for example, in
the luxury hotels business, where one can only have so
many properties; after a point they begin to lose their
uniqueness.
In certain industries, size is
very important. It gives an advantage in costs, reach
and technology. In other businesses, size matters less.
In the natural world, ants account for 10 per cent of
all biomass. These small creatures have found ways to
be incredibly successful, and can take on even the mighty
elephant. The question is, does one want to be an incredibly
dynamic and flexible but small ant, or an all-powerful
elephant?
We find a gradual decline of
traditional giant companies and the rise of new ones,
which is a natural process. The largest companies in
the world today are not the same as the largest 35 years
ago. Companies like Microsoft have come up virtually
from nowhere. But we also have enduring giants like
General Motors, which has survived by continually adapting,
changing and getting better.
On managing diversity
Whether conglomerates are optimal organisation strategists
is a hotly debated question today. Research shows that
premium conglomerates can create incredible value. One
of the best performing companies in the last 20 years
has been GE, which is extremely diverse. And there is
also a lot of research to suggest that diverse businesses
are particularly appropriate to dynamic, emerging markets.
So if we put these two together,
I think that the Tata Group probably has elements of
both. We have a way of managing diversity that is centred
around a strong belief in decentralisation. The companies
run themselves; they are not dependent on the centre.
On the other hand, there is an
advantage of being a part of India's largest business
conglomerate, particularly the Tata name and the value
it embodies, in terms of resources, in terms of people
and in terms of excellence (Tata Business Excellence
Model). We have demonstrated a proven ability in the
last decade to enter and do well in new businesses like
telecom, retailing and auto components. The key to success
is taking quick and good decisions, as well as their
managements seizing the initiative and taking responsibility.
On the challenges of the future
Hard work, preparation, research, thinking, getting
the value proposition right and serving the customer
better, can take care of the economic challenges. When
things change, reacting appropriately to the change
helps. The house of Tatas is, I think, amazingly placed.
Owing to our Indian base, we have a core competitive
advantage — our people. We have more high quality
people available at a lower cost than most of our competitors
in the international market place.
That Tata Motors, for example,
has been able to design and deliver the Ace at the price
it has, illustrates its competitive advantage. TCS's
ability to offer world-class quality and service to
its international clients using an Indian cost base
is its advantage over the rest of the world.
But these advantages will erode
as the competition replicates them. Besides, the cost
base will also increase in the future. What the Group
would then need to do is to move its competitive advantage
over time.
My guess is that the advantage
that it should be seeking in most of its businesses
is around technology, leadership and innovation.
On looking ahead
The scenario in Bombay House 10 or 20 years in the future
will be very different from what it is today. Thanks
to technology, we may not all have to be together under
one roof. There may be a more decentralised structure.
But the one thing that will not
change is the values of the Group and its desire to
serve customers well in the marketplace. So whether
the corporate centre looks different, whether it is
in one place or distributed, doesn't really matter.
What matters is that our soul, embodied in the Group's
values, will still be the same. And, what is more, we
will have successful world-class and larger scale companies.
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Uploaded on August 28, 2006
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