The Samajwadi Party (SP) dilemma is clearly caused by the discomfiture of the pater familias Mulayam Singh Yadav realising that there is little chance of the party returning to power next year in Uttar Pradesh thanks to its misgovernance. His aspiration of prime ministership is now well and truly beyond reach. Never in possession of sound judgement, he has been easily led by his sycophants to blame his son as the culprit.
Although more complex, the Tata struggle is also about preserving a legacy. Not much was known about Ratan Tata when he succeeded the legendary J R D Tata as the head of the group in 1991. The empire then was far-flung, with satraps such as Darbari Seth, Russi Mody, and Sumant Moolgaonkar running their respective fiefdoms of chemicals and tea, steel and automotives relatively independently. Ratan Tata managed to ease them out, not always amicably, and consolidated the control of Tata Sons, the holding company, in the first five years of his tenure.
The second and more conspicuous chapter of his legacy concerns his vast international acquisitions. In double quick time, the Tatas bought the Tetley Tea group, Daewoo Commercial Vehicles, Corus Steel, and the Jaguar-Land Rover (JLR) division of Ford. Most of these acquisitions were made in stiff international competition at high costs leading to overleveraging. In 2000, M S Banga, then the chairman of Hindustan Lever, told this writer that he would always think the $270 million the Tatas paid for Tetley way too high. This expansion was in the period of upbeat global climate. It fitted well with the overall optimism and expectations of India as an emerging large economic player.
To say that there is now a sea change is stating the obvious. Big Steel the world over is doing poorly. Tata Steel is no exception. Its European operations are under severe pressure and its bottom line has eroded. Its sales have declined in the June 2016 quarter compared to a year ago, with the net loss ballooning nearly tenfold to over Rs 3,000 crore. It has been trying to offload the British plants but without success so far. This is not sweet music to Tata's ears, who called the Corus acquisition the "defining moment" in history.
Other parts of the empire are not in the best of health either. Tata Global Beverages has not matched the expectations underlying the high acquisition cost. The glory days of Tata Tea being the first company to pay 100 per cent dividend in the 1990s are in the remote past. JLR is fitfully functioning, depending on the uncertain Chinese market for its profits. Last year, Tata Motors skipped dividend. Another one of Ratan Tata adventures has also not panned out. After opting out of Birla-AT&T (now Idea, and a powerhouse telecommunication company), the Tata tie-up with Japan's NTT DoCoMo resulted in an acrimonious divorce, with the Tatas facing a $1.2-billion demand from their former partner. All these must rile Ratan Tata, who finds Mistry too conservative and not up to snuff.
The fault, however, lies not in Mistry alone but at the House of Tata itself. The $103-billion conglomerate of over 100 companies has one star performer, namely TCS. It accounts for 16 per cent of the group revenue but more than half the profit. But for TCS, the House of Tata, stretching from hospitality to information technology, table salt to power generation and beverages to airlines would be just another wannabe conglomerate. In almost any era other than the 1980s, such a group would be considered unwieldy. The combination would also not meet with Jack Welch's celebrated dictum that each unit must be among the top two in its category, as many Tata units are either laggards or display a me-too strategy (especially steel, following Arcelor-Mittal).
It would be natural and justifiable for Mistry as both the CEO and representative of the single-largest stakeholder family to rationalise the structure and cut the flab, perhaps trim the behemoth into a more manageable and focussed business house, rather than a museum of everything. That of course is the very opposite of what Tata would want to hear, despite his initial advice to Mistry to be his own man. Hence the build-up of tension and the final Monday Massacre.
Much the same causation applies to the Yadav saga. The SP was no match for the ascendant Bharatiya Janata Party under Narendra Modi. Its caste and communal vote banks may well be undependable. Ergo, Akhilesh Yadav, the convenient scapegoat.
The casualty in this is the succession process. In every successful corporate and democratic entity, a smooth transition from one generation to another is absolutely essential for organisational health. It is entirely possible that not all designated successors would work out well, but that is little cause for the old guard to return, especially if the challenges the successors faced could be laid at the door of the Mustache Petes whom they succeeded.
The writer is a management educator and consultant