JRD's true legacy

It is customary to evaluate any leader's contributions soon after his passing. But it's probably more appropriate to do so much later, when things have settled down, when his successors have had the time to sift through their inheritance and grow into his shoes.

The 100th birth anniversary of JRD Tata offers one such opportunity to take a closer look at what this business titan left behind. What we see, at first glance, is growing evidence of the group's tremendous success. Tata Consultancy Services, the country biggest IT company and industry pioneer, has launched India's largest IPO.

The two flagship companies, Tata Steel and Tata Motors, have just announced some of their best results ever. Other major group companies are all doing fairly well.

The question marks are over the group's telecom companies""Tata Teleservices and VSNL ""which will soak up huge amounts of capital and even greater amounts of top management bandwidth in the coming years. It would be fair to say that in the decade after the passing away of JRD, the group has never looked fitter.

That's one way of assessing JRD's legacy. However, it is also worth looking at the odds against which his successor, Ratan Tata, battled. The fact remains that JRD did not leave a clean slate for Ratan, thanks to the way he chose to run the group when he was around. JRD held the group together by sheer force of personality. He picked many great managers to run various companies, and more often than not he encouraged them to think of themselves as de facto owners of the companies they ran.

This had its advantages. The sense of ownership was a key factor in the early successes of Tata Steel, Tata Motors (then Telco), Tata Chemicals, Indian Hotels, and Voltas. But, equally, it made the group a collection of satrapies, each with its own agenda and centrifugal tendencies.

It was against this backdrop that JRD had to make his most critical decision: on the succession. It would have been easy to pick one of his most successful managers as heir, and the fact that he chose someone with the Tata name""someone who hadn't yet had the chance to establish his credentials through performance""left JRD open to the charge that, in the end, he did what any family-owned businessman would have done: picked a family man as successor.

Today, it is obvious that he chose right. In the initial phase, it is probably the Tata name that helped Ratan consolidate his hold over the group and give it a strategic vision for the future: at the core of this vision was the need to get out of dying businesses and invest in new ones even while increasing group shareholdings in core companies.

As Ratan got the better of the satraps one by one, his ability to execute his vision increased. And today he has brought entrepreneurial thinking back to the Tatas without losing out on any of the values that set the group apart from the rest.

Finding the right man for the job was JRD's final gift to the Tata group. It will remain the toughest challenge for Ratan Tata, too, as he looks at the succession issue in the remaining years of the decade.