Ratan Tata's Biggest Contribution to Management Theory

He had the ability to see how things should fit together."

Arun Maira, who worked for the Tata Group for 25 years, puts on record Ratan Tata's greatest contribution in scripting the Tata Story. Humility and clarity were Ratan's foremost qualities. He did not want anything special.( This is enough of Tata’s contribution)

I remember when he was transferred to the Bombay office of Tata Steel from Jamshedpur. We were three of us, including Ratan who had the same designation. I think we were called 'executive officers'. The office in Bombay was very small. The other executive officer and myself had open tables around the clerks and junior officers.

Since Ratan had been brought to the headquarter, it was decided that it would be improper for him to sit in an open office and a cabin would be constructed for him. However Ratan said that unless the two of us had same sized cabins, he would not move into one.

Jamshed Bhabha, the director of Tata Steel and the National Centre for Performing Arts, was the Tata's person for style, architecture and decor. He was given the charge of building the three cabins side by side within a very small space.

Since Ratan was an architect, he wouldn't take no for an answer and so three identical cabins were built.

The question then arose as to which cabin would be given to each of us? So Ratan said, let's just write 1, 2, 3 on three pieces of paper and pick one. I was given one, he got the middle one and the third executive officer got the one on the side.

I won't tell you the rest of the story. You can read yourself [The Learning Factory, How The Leaders Of Tatas Became Nation Builders, Penguin Random House]. [laughs]

It is notable how humble he was and didn't want anything different just because he was a Tata.  He was very shy and therefore the title of the chapter on him in my book is called 'The Shy Architect'.

His second quality was clarity which came from his training as an architect. He had clarity about the big picture. He had the ability to see how things should fit together.

When he became chairman of the group in 1991, he was still struggling with the question that he was the head of a conglomerate, and conglomerates were and still are considered very bad for the stock markets.

It was a conglomerate, but J R D Tata's innovation was to create a group called Tata Industries, a wholly owned subsidiary of Tata Sons. Tata Industries would be the management company for the group. The CEOs of the various Tata companies would be on the board of Tata Industries. The heads of all these companies would meet every week in Bombay House for a formal meeting to discuss new opportunities for the group, as well as what was being learned by each of the companies.

JRD could present his ideas, but could not tell the companies what the Tatas wanted and this is a very important aspect that one can learn from the Tata management. There would be separate companies, but at the same time, there would be some cohesion amongst the companies and a sense of pride in being part of the Tata family and sharing the same values. Ratan then created the structure where people could meet, not in the governance capacity, but to share ideas and learn together, thereby connecting the whole group.

For example, HR managers of Tata companies could meet and share practices, similarly on quality through the quality council. This was a good idea of enabling a federation, leaving each company to be independent, and yet being able to learn together from each other - like it is in a flotilla of ships.

This was the biggest contribution to my mind that Ratan made to the Tata Group and to management theory in the world. He created a conglomerate structure where guidance comes through voluntary cooperation amongst independent entities.

I believe that this contribution made by Ratan must be on record. I therefore wrote about it in a book on management in 2003 that the Boston Consulting Group had asked me to write about my learnings in India about federal management, both at the government and business level. [Shaping the Future: Aspirational Leadership in India and Beyond published by John Wiley and Sons, Asia]

I begin that book with a story of Ratan's dilemma in 1991 when he became chair and how he had solved it by 2000 by architecting an architecture of a collaborative enterprise consisting of independent entities.