Challenges of <i>jugalbandi</i> in a promoter-controlled business

Chandrasekaran will have to play his natural game while being a steward leader

Tata as an institution has always been inspiring and has remained a rich source of learning, including in the current turbulence at the top. Elevation of the chief executive of the largest group company as the chairman of the highly diversified group is yet another. One key question raised in this context is how N Chandrasekaran and Ratan Tata will work together. Will Tata push for a mirror image of the self to lead the group? What lessons from the Tata-Cyrus Mistry saga are relevant for the new pair to perform better?

Perform an impactful jugalbandi

The chairman of a group is the link between the promoters and the operating companies and has to play the delicate role of balancing the interests of all stakeholders. The relationship between the group chairman and the majority promoter, often representing not the same goals, is akin to that of two jugalbandi players, who are soloists on equal footing. There is friendly and healthy competition between the two, indicating independence in thinking but a combined synergy in making the audience happy. Each artiste has enough confidence in the self to match the other in all aspects of performance, which is fundamental to making a jugalbandi interesting and entertaining. In the context of business, multiple stakeholders are the ones who should be happy. 

Given that Ratan Tata’s previous jugalbandi ended in controversy, one may expect a quieter and sober start this time, particularly because of the huge demonstrated differences between the two leaders on various parameters. Performing jugalbandi in front of an unfriendly audience is risky, especially because the two soloists concerned have never rehearsed or played together. Changing from a guru-shishya relationship to artistes on equal footing often leads to issues of confidence, independence and ego, unless the guru makes special efforts to reassure, encourage and applaud the disciple to perform independently.

Turbulent weather to continue

The weather forecast for the new Tata chairman is not reassuring. Most group companies are facing multiple market challenges, including the crown company, TCS. While the competitive marketplace does not promise huge growth in profits, Tata Trusts is unhappy with its current dividend income that alone will help it perform its philanthropic activities. Should these companies somehow show profits compromising on their long-term strategy and social purpose of existence?

Governance is another front that needs to be tackled. The mud-slinging match between Tata and Mistry does not seem to be slowing down, let alone stop; there are likely to be more questions on the practice of the quality governance at the helm of affairs of the group. Regulatory watchdogs and governance activists will naturally seek explanations that the new group chairman will be obliged to provide. This is a slippery slope to ski on at any time.

Defining the role and process of engagement with the group companies will have to be done carefully. While J R D Tata followed a policy of fairly independent strategic business units (SBU), Ratan Tata had an involved engagement. Ratan Tata simultaneously brought a sense of entrepreneurship and globalisation into the group, though some of his decisions are still debatable. He also consistently raised the holding of headquarters in group companies and this is expected to go up further, reflecting deeper engagement. So the situation is quite different from the time when J R D Tata was the group chairman. The ownership responsibility of the holding company needs to be defined in the changed situation and factored in while defining the extent of integration or differentiation ideal between the headquarters and SBUs for such a diversified conglomerate. Given that Ratan Tata’s exposure to the major group companies is much greater than Chandrasekaran’s, there are possible governance challenges of promoter interference that need to be avoided, at least in the beginning.

Practise the baton change, empower

Like any family patriarch, Ratan Tata has the responsibility to ensure that the new chairman blossoms and establishes himself as soon as possible. He should create the space required for his successor to find his rhythm on his own. Chandrasekaran will have to play his natural game, and be a steward leader in his thoughts and action. Benchmarking across group companies and deciding in the long term for accomplishing the purpose of the organisation will have to be his hallmark. Decentralisation and empowerment of group companies will be critical. A combination of process orientation and value practice, as is done in TCS, will help him become a soloist ready to do the jugalbandi with Ratan Tata at the earliest. Family businesses are after all built for ever with continuity as a core feature. Individuals do not matter in this journey, but the institution does.

The author is professor and executive director of the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business