TATA Corus Job Losses – is this the Indian way?

In my book I comment on how in the run up to their acquisition of Corus, the TATA’s faced an absolute grilling from several quarters regarding their ambitions for the steelmaker, which today has announced job lay-offs for 1,700 staff in Teeside. Naturally, the unions were worried about the intentions of a firm that they’d probably never heard of. Sensing their discomfort, the firm put in place a programme of briefings in which their iconic CEO – Ratan Tata actually went and met with groups of people, including Parliamentarians, from the regions that Corus employed people.

At one such briefing, he made the point, which was well taken, that Indian firms don’t have it in their DNA to be vultures or become asset strippers. He looked them in the eye and said that not only were they buying Corus for sound strategic reasons but that he assured them that Corus would create more jobs, as he intended to take the firm forward. Sadly, not even he had predicted the global downturn and the circumstances behind this decision need to be presented so that no one jumps to any other conclusion than that the TATA’s tried everything to minimise losses, such as:

  • My sources tell me that the decision has been pending for over 8 months, and that the number of losses is smaller than what could’ve been the case.
  • The long term strategic partners, who pulled out, will be taken to court for failing to stick to their original commitments.
  • And finally, that there’s been an ongoing dialogue about the situation with all stakeholders for some time, so this comes as no surprise.

My reason for writing this blog is not to defend TATA, but to highlight that I wrote my book as a result of realising that the western markets need to know more about Indian firms who are increasingly making acquisitions in Europe & America, as a result of their improved understanding of thes histories and cultures of such people and firms, I hope they’ll be better armed to combat the negative headlines that often lead the news agenda as a result of my book India Inc. How India’s Top Ten Entrepreneurs are Winning Globally.

Does Uncle Sam get India?

Manmohan Singh should breathe a little easier now. In the run up to the visit, I can imagine that his blood pressure would be higher than normal for the simple reason that Obama has been busy cosying up to the Chinese and he’s also been lavishing Pakistan with a lot of attention – both states who have a fraught history with India.

I say that he must be breathing a little easier because Obama rolled out the red carpet for his first state visit, and said all the right things on the big subjects that define the current relationship.

In a TV interview, I was asked about the state of the US – India relationship, and rather than focus on the icy nature of historical bilateral ties, I decided to emphasise that the US and India don’t really have the luxury of avoiding each other, any more. The truth is that in the interdependent global economy we live in, US & India need each other to prosper.

Take the attraction for the US:

  • India’s middle class (approx 300m) is the size of the entire US population. This presents American companies with a larger market.
  • India’s demographic profile is a massive advantage. With nearly 40% of its population under the age of 30, you can imagine the opportunites that are thrown up for American service lead companies.

For India, the US has always been a major market, so it came as no surprise when I interviewed the ten entrepreneurs for my book (http://www.indiaincthebook.com), that the US formed the centre-point for their global expansion. Take for example:

  • There are more drugs from Indian pharma companies on US supermarket shelves than in India
  • That Mahindra & Mahindra has stolen market share from native American firms selling tractors to their own farmers
  • That, on average, Indian IT firms earn nearly two-thirds of their revenues in India
  • That Bharat Forge supplies components for 2 our of every 3 trucks in the US

However, what I’ve found is that the bilateral relationship in increasingly defined by the US – India Nuclear Agreement that was signed in 2008. With the market being valued at $150 BILLION(!) and American firms like GE and Westinghouse in pole position, they seem ( surprise, surprise)  eager for India to push on with its nuclear programme.

In its pursuit for energy independence, this visit gives Manmohan Singh and equally, Barack Obama something to smile about. It’s safe to say that Uncle Sam gets India.

Is Noel Tata down & out of the running?

Not so long ago, the view from Bombay House – especially amongst those who’d been with the TATA group for any length of time – was that the company needed a Tata at the helm after Ratan Tata retires, they’d almost suggest that this is what makes their company so special, and it was such talk that inflated Noel Tata’s hopes of one day succeeding his mega successful relative.

For this reason, I wouldn’t be surprised if Noel was miffed at reading Ratan Tata’s interview in the WSJ today, in which the iconic CEO makes it clear that the company has initiated a global search for the hot seat, and further to this, he’d prefer someone in his 40s – which effectively disqualifies his half-brother from the race.

Ratan Tata makes some great points, such as 65% of its revenues are booked outside India, making them truly a global winner, and that increasingly, their employee base is diverse and international – take for example, the UK where they employ almost 50,000 people – which in turn suggests that the firm requires a top calibre professional CEO with tons of commercial experience who can build on Ratan Tata’s success.

With the TATA’s the key thing to remember is that they, ultimately, always do what’s right. Handing such a treasure to someone just because they happened to be related simply won’t wash in today’s age. That’s why I used to be surprised when old hands at Bombay House use to suggest that Noel had a chance at being No1.

But, as all TATA commentators will tell you, Noel’s strength is simply that he has an influence in what happens through his father in law’s shareholding in the firm. Pallonji Shapoorji Mistry, after all, is no ordinary man – he owns a 18% stake in the juggernaut that generates a revenue over $70bn. So, for this reason, and as much as I’d like a meritocracy to drive this decision, it may be the case that Noel is down today, but you’re warned not to count him out.

You can read the full article here: http://www.livemint.com/2009/11/18142605/Tata-scouts-the-globe-for-succ.html?pg=1

3 hours for 3 minutes – update on India Inc

As a result of so many of us sitting on our PCs all day long, use of social networking sites like Facebook, Twitter, Orkut, LinkedIn seem to be popular to build communities of people interested in your views, which in my case is the subject matter of my book – Indian entrepreneurship and business.

Well, this week has been quite intensive as I met with the publisher and the PR team to talk about what lies ahead. I’m delighted that a few large organisations have invited me to talk to them and their clients / members about the book in January, here in the UK. My publisher thinks that there may be some interest in the book in Singapore, so we’re looking at the possibility of including a visit there when I undertake the promotional tour to India. May even do Dubai en-route.

Of course, had some good news that a couple of speaking engagements may take place in New York in April. Will look at visiting DC,  Harvard, Kellogg, and Silicon Valley on that tour. Should we look at other places also?

I forgot to mention that Youtube is also increasingly being used to promote books, so we shot a promo trailer in Canary Wharf last week, which will appear on Youtube soon. I couldn’t believe it took us three hours to film content for three minutes!

Let me know if you have any great ideas for the promotion of the book.

The book site – http://www.indiaincthebook.com goes live this week. Quite excited. Let’s hope you like it 🙂

Succession planning in Indian companies – the TCS way

In an interview I conducted for my forthcoming book on Indian entrepreneurs going global. I asked Mr Ramadorai, when he was the CEO of India’s largest IT firm – TCS, as to who he thought would succeed him, what became quite clear from his and those I asked this question to, was that a pattern was emerging within the boardrooms of Indian companies.

Two issues emerge – (a) whether in their succession planning, they’d consider external candidates and (b) whether they’d consider non-Indian candidates.

On the first issue, it seems clear to me that Indian firms prefer recruiting for top jobs from within their organisation. In the TCS example, Ramadorai’s successor – Chandra has long been seen as the heir apparant. In other similar situations, take Infosys as another example where the baton has been passed from Murthy, Nilekani and now to Krish Gopalakrishnan.

With respects to having a non-Indian at the helm, there aren’t many examples but the two obvious ones that come to mind concern Brian Tempest’s appointment at Ranbaxy, where after a brief stint, he was shifted by Malvinder Singh to a more supportive role, and the other being Alan Rosling, who Ratan Tata appointed to coordinate strategy at Bombay House, the TATA HQ in India. I recollect the look of horror on other industry veterans, when Rosling was appointed and had to represent TATA in global industry platforms.

The other notable example is that of Suzlon, which made the conscious decision to move their HQ to Europe and in tandem appointed a non-Indian as CEO, who has recently moved on, one suspects due to the move back to India for their global HQ.

India has a long way to go in its journey to become a economic super-power, and I believe that a healthy debate has begun in the boardrooms of these companies on issues such as this. In my view, I don’t think we’re too far off from seeing an external, non-Indian heading up a major Indian conglomerate.

Gazing into my crystal ball – I reckon the mother of all succession headaches surrounds Ratan Tata. I wouldn’t be surprised if Tata Sons opted for a (a) external person (b) of non-Indian origin (despite the prominence provided to Naval Tata as heir apparant as a result of his surname),  after Ratan Tata.

Watch this space…

Update on 'India Inc: How India's Top 10 Entrepreneurs Are Winning Globally'

Having completed writing my book and thinking that I’d fulfilled my end of the bargain, I’ve been even busier with other things related to this project. With advice from friends like Mark Kobayashi – Hillary & Alpesh Patel, who’re both serial authors, I’ve managed to make some headway in thinking about the promotion of the book.

So far, the book has received great feedback from esteemed and respected figures like Jim O’ Neill – author of the BRICs report & Chief Economist of Goldman Sachs; Lynn Forrester de Rothschild – of the banking family; Dean Dipak Jain – management guru at Kellogg School of Management; Chandrajit Banerjee – Director General of the Confederation of Indian Industry.. and a few more.

My next step in mastering how to use social media tools like Linkedin, Facebook, and Twitter in the promotion of the book. It’s lucky that my firm – www.saffronchase.com, has just launched a service that espouses the use of these tools for improving PR and government relations campaigns!

I’m meeting my publisher and his Indian distributor next week to discuss what we’re planning in India. Thinking of a tour of the key cities and university campuses in Feb / March 2010. Is this a good idea?

I’ve also been approached by an international bank with an offer to, potentially, sponsor the book launches globally. Looks like there’s going to be a lot of interest from sponsors for this type of book and the audience it could bring to them.

As a first time author, the experience has been fascinating. I may have been naive in thinking that all I had to do was write a book, but it’s proving to be fun and am looking forward to the journey.