Simplicity, Synergy, and Scale.

Constituting one of the most respected business organizations on the global scenery, and being 150 years old as of 2018, ‘Tata Sons’ has confronted a great variety of challenges which do not alter, through the years, as much as we may think! Headquartered in Mumbai, ‘Tata Sons’ manages today a highly diversified portfolio of companies from all types of yesterday’s emerging and today’s leading industrial sectors.

One of the company’s biggest competitive advantages is its dual perspective in goal setting. At the one spectrum, the maximization of shareholder value and the financial satisfaction of its 4 million interested parties, they constitute the primary priority of the firm’s operations. At the other end of the spectrum, ‘Tata Sons’ is a genuine community-oriented company, whose shares’ majority is held by philanthropic trusts that fund domains in need, such as health, education, and development in the areas where the firm conducts business. Mr., Chandrasekaran, the chairman of Tata Sons, is the one who achieves such rare balance, especially during the age of technological outburst.

Chandra’s remarkable results as CEO of Tata Consulting Services (TCS) can hardly be summarized as the triplication of the company’s revenue, its development as India’s largest private-sector employer and, last but not least, the integration of new disciplines such as AI, blockchain, and IoT within TCS’s business cycle. These facts and efforts, combined with the division of the firm’s portfolio into strategic clusters according to every client’s sector, they all transformed Tata Sons from a trading company to a business empire.

What made it so special? Its founder’s, Jamsetji Nusserwanji (J.N.) Tata’s, humanitarian and liberal education. According to J. N. Tata, “In a free enterprise, the community is not just another stakeholder in business, but is, in fact, the very purpose of its existence.”

In July 2018, Chandra discussed with strategy + business about the corporate priorities and Tata Sons’ role as an accelerator of the Indian and the global economy.

S+B: You’ve used the phrase “simplicity, synergy, and scale” to describe today’s priorities for Tata. What does this mean in practice?

CHANDRASEKARAN: These capabilities are all related. As a business, you can’t scale if you’re not simple. Simplicity has multiple implications: the number of entities you have, the levels of management, the footprint your company has in terms of the markets, the number of products and services you offer. With the Tata companies, we’ve been in business for a really long time, so every company has evolved. With time, always you get complexity. So simplification is a priority. It is not limited to operational processes; it encompasses everything.

Simplicity across businesses — the “One Tata” initiative we have started — fosters synergy within the Tata group: with the parent company and intercompany as well.

S+B: Does the adoption of digital technology play a role?

CHANDRASEKARAN: In all of the Tata businesses, digitization is a top priority. It is a question of thinking through your own business model. Typically, the digitization of any business will disrupt a set of processes throughout the chain.

In each Tata company, we aim to have a chief digital officer, charged with thinking through what that industry’s digital platform means for them and their business. Each company has its own multi-agenda digital initiative. We don’t tell them one night: “By tomorrow morning, it must be this way.” They’ve got to figure it out. But digital is one of the three or four top items they’re thinking about — both for the here and now, and for the longer-term future.

S+B: Is financial discipline another top item?

CHANDRASEKARAN: Yes. That is more here and now.

Throughout the history of the Tata companies, we have built businesses whenever we saw the need. When our founder, or any of our earlier leaders, started a textile or steel company, or an automaker or a hotel, I don’t think they sat and created a spreadsheet. India needed a steel mill, a bank, an insurance company, or an airline — and the leaders created one. Pretty much the first companies in India in all these industries were started by Tata family members. Once the need was there, they figured out a way to run the companies profitably.

We are still balancing these two imperatives. On the one hand, the business need is important to resolve. On the other, we need the financial discipline to run a good, solid balance sheet. That applies to all the Tata companies, regardless of how they have been performing.

S+B: Are the financials different for Tata companies that compete primarily within India versus companies that compete globally?

CHANDRASEKARAN: No. In some businesses you go for growth rates, seeking cash flow in an expanding market. In other businesses you look at the demand that already exists. We have metrics in either case. We just have to make sure that we have the discipline to follow them.

S+B: At a time when many companies are focusing on single businesses, and divesting those that don’t fit, what does a conglomerate like Tata provide its member companies?

CHANDRASEKARAN: Many things. First of all, there is the brand. The goodwill people have for the group, including our financial strength and the credit rating of Tata Sons, derives directly from the heritage and credibility we have established over time. This reflects the power of our brand and values system.

The second is the quality of management, and of our talent. This includes a certain integrity. Tata companies will always do business in a certain way. The rules are established.

The third is the management tools that the companies share. We have a single performance model, which we call the business excellence model. We use it to drive operating performance, business performance, and excellence in everything we do.

Fourth, there is the “One Tata” approach I spoke of. It is focused on synergy: on bringing our best capabilities to bear for all members of the group. Each of the companies operates individually, but we leverage their strengths together in developing more comprehensive industrial ecosystems, particularly in India. For example, we might build an automotive ecosystem. Tata Motors has the capability to produce cars. Tata Power can build charging stations. Tata Communications can provide connectivity. We can all borrow technological expertise, marketing talent, and other capabilities from one another. Putting it all together gives us a holistic solution, particularly for major initiatives such as Smart Cities.