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Business

Who is Ratan Tata?

TOKYO -- Ratan Tata, 76, had no wish to become a corporate executive, no interest in corporate management and no intention of joining the Tata Group. He dreamed in his youth of becoming an architect. After graduating from the Cornell University College of Architecture, Art and Planning as an honor student, his career path seemed to be laid out. He set out as a budding architect in an office in Los Angeles.

     All changed after he was convinced by Tata Group's fourth chairman, J.R.D. Tata, to come home and join the conglomerate.

Tata Group former Chairman Ratan Tata looks on during the Geneva Motor Show on March 5, 2013, in Switzerland.   © Getty Images

     By acquiring basic knowledge on the production floors of leading group companies such as Tata Motors and Tata Steel, Ratan Tata developed the business skills and values he would take with him to the executive suite.

     He preferred working overtime in the office to parties and a flamboyant lifestyle. He chose to live in a simple apartment and drive a compact car without a chauffer. Rather than chase personal gain, he put his heart and soul into efforts to improve the quality of Indian life. He didn't mind using his own time and energy to try to improve his country's lot.

     Ratan Tata inherited most of his management principles from J.R.D. Tata, a distant relative, and continued a family legacy going back to the days of founder, Jamsetji Nusserwanji Tata. He often said publicly that he had two fathers: his biological father, Naval Tata, and his professional father, J.R.D. Tata.

     His true value as an executive shone through when he handled labor disputes. During a major strike at the Tata Motors Pune Plant in 1989, he did not compromise in negotiating with the union, which once turned to mob violence. Unyielding even against the violent threats of agitators, he put things back in order and overcame the crisis, bringing a degree of risk to his own life.

     In an oft-quoted speech to union leaders, he said: "If you hold a gun to my head, you have two choices. You can either pull the trigger or you can move the gun away. Because I will not move my head."

Clean

Rampant corruption plagues India's business world, but Tata sticks to his principles, paying no bribes. Bucking industry skepticism, he single-mindedly pushed forward the development of the Indica, India's first fully domestic car, and the Nano, the world's cheapest car. Those decisions were rooted in an unshakable management philosophy: never compromise.

     Ratan Tata says he was once a shy and naive person who had difficulty speaking in public. If he hadn't joined the Tata Group, he would have been working in the U.S. as an architect, leading an entirely different life, he says, appearing wistful.

     Between 1991 and 2012, Ratan Tata led his group's dramatic expansion, overseeing bold organizational reforms, corporate acquisitions and internationalization.

     His strong sense of beliefs and immense personal efforts were appreciated by staff. He drew creativity and ingenuity from his employees, becoming the architect of a massive corporate group that enriches the lives of India's people. But when it came to choosing a successor, he had a harder time.

     Initially he planned to nominate the next chairman by the time he reached the group's mandatory retirement age of 70. He approached good prospects, but one after another, they turned him down. So he gave up on retiring, and decided to stay on for another five years, until he was 75. He created a "selection committee" of five executives from inside and outside the group to objectively select a successor from a broad range of candidates.

     In the selection process, rumor had it that various big names came up, such as PepsiCo CEO Indra Nooyi. Eventually, the focus settled on Cyrus Mistry, 46, who is a member of the Mistry family, which at 18% holds the largest noncorporate share of the Tata Group holding company.

     Mistry is related to the Tata family through marriage. His sister is married to Ratan Tata's half-brother, Noel Tata. Mistry has little experience as an executive; his leadership skills are yet to be seen. Various challenges await him in steering India's largest conglomerate, such as restructuring Tata Motors, where business has been slow. Observers expect the group to undergo a rapid generational change at the top.

     "Since I've passed the chairmanship on," Ratan Tata says, "I shouldn't say much about managing the group. It would be unfair to evaluate Cyrus at this point. It took me more than five years to solidify my position within the group as chairman."

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