The Smartest Guy in the Room
Essay Preview: The Smartest Guy in the Room
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Ratan Tata has single-handedly saved the British car industry, and now hes ready to bid adieu
WHEN RATAN TATA WAS a boy in 1950s India, he had his portrait painted according to family tradition. “You were subjected to sit for the portrait painter for hours and hours,” Tata said in a quiet moment of reflection. “God, how I hated that, but looking at my portrait now I see in my hand I had a toy airplane. I loved them as a kid, and my love for cars and mechanical things came from that.”
This love — and the single-minded drive behind it — helped the Cornell-educated Tata become one of Indias most respected corporate leaders. He transformed the Tata Group into a firm with more than 100 businesses around the world, including British steelmaker Corus, and Tetley Tea. Yes, tea. Among the Tata Group portfolio, you will find consultancy services, power companies and hotels.
And of course youll also find Jaguar and Land Rover. Its easy to say he saved the two storied marques, but it goes even further: Had Tata not bought JLR, it could easily be argued there would be no British auto industry.
WHO IS THIS GUY?
You think of global auto industry leaders and there are arguably three giants: Fiat boss Sergio Marchionne, Volkswagens Ferdinand Piëch and Nissan-Renault chief Carlos Ghosn. But these days you must add Tata to that list — four of the smartest guys in the automotive room, if you will. Dare we call Tata the Piëch of India? Perhaps its better said that Piëch is the Tata of Germany.
Consider: He took Tata Motors from what was originally a forger of locomotives to a global powerhouse. Since manning the helm at Tetley Tea, its risen to become the worlds second-largest tea maker. The Corus buy came in August 2007; at the time, it was the largest-ever takeover of a foreign company by an Indian concern. Instantly, the Tata Group was the worlds fifth-largest steel producer.
Tata sips water in an upstairs meeting room at a newly opened Jaguar Land Rover dealership in Paramus, N.J., a showcase dealer just up the street from the companys U.S. headquarters. There are four other JLR executives in the room, but they sit quietly and let him talk. Hes soft spoken, unfailingly polite and has a ready smile. Tatas a good listener, and as such he considers questions carefully before he answers; obviously, he also learned from the adage that you have two ears and one mouth and use them in direct proportion. He comes off as humble — almost shy — and you get the feeling he could easily blend into any background if he chose. That he started his family business career in 1962 on the shop floor shoveling limestone and handling the blast furnace at Tata Steel likely has something to do with todays demeanor.
Over the next few decades he worked several jobs in the empire, including stints in its radio and electronics divisions. In 1981, then-Chairman J.R.D. Tata stepped down from Tata Industries, naming nephew Ratan as successor. At the time, some inside the company grumbled that Ratan lacked experience running a company on the scale of Tata Industries.
It was a short decade later when he was appointed group chairman of the Tata Group — thanks in no small part to his organizing Tata from a loose bunch of individual entities into a truly cohesive company.
Sitting with Tata, you cant let this calming demeanor lull you into thinking he doesnt have the toughness or acumen to power a company. In India, he is revered.
Was Tatas JLR purchase the perfect fit? The deal went down in March 2008 and Tata paid $2.3 billion. The buzz then said it was too much; but it was about half what Ford originally shelled out for the two brands (Ford bought Jag in 1989, Land Rover in 2000). JLR didnt make money under Ford. Well-publicized Jaguar debacles such as the X-Type and its anemic Formula One program, to name just two, killed confidence from the Dearborn-based masters that the British brands could succeed. As Fords Blue Oval struggled with its own financial woes, JLR sat on the shelf. Eventually, Ford dismantled its ballyhooed Premier Automotive Group and in stepped Tata to afford Jaguar Land Rover a fresh start without the woeful shackles of the past.
Ask people about Tatas management style and a common refrain appears: When he makes a deal, he takes the long view. Tatas ownership has unleashed JLR to be creative and take risks. He understands a companys historical significance while giving freedom to move forward. Just take a look at Tetley. Or look at JLR — theyre storied Brit brands that arguably would have become historical footnotes without Tata stepping in. This is a management style that looks out decades, instead of obsessing over market share or 10-day sales forecasts.
CHEMISTRY COUNTS
Maintaining the essence of the companies he buys empowers the people who work for him. “Its almost like working at a startup,” a JLR employee says of the boss. “The company is learning how to be self-sufficient after the Ford years, and Tata is a very nurturing parent. The investment back into the company is unprecedented, and the people are energized.”
For his part, Tata says he tries to preserve and build on Jaguars and Land Rovers heritages without blurring their identities. In fact, he has improved on them. Today, JLR is the largest investor in automotive R&D and engineering in England; it has two UK-based engineering and design facilities,