Four years before Jamsetji Tata
came into this world, Andrew Carnegie was born in Scotland. J. P.
Morgan was two years older than Jamsetji and John D. Rockefeller
was born in 1839, the same year as the founder of the house of Tata.
These three entrepreneurs went on to become the business titans
of America in the late 1800s. In time they earned the unlovely label
of robber barons, because in building their empires and fortunes
they adopted tough postures with labour and rigged or broke rules
to favour their own businesses. After the American civil war, inventions
such as electricity and the telegraph buoyed the country's economic
growth, allowing entrepreneurs to redefine in their own minds where
future opportunities would unfold. For example, by 1872 Andrew Carnegie
had become convinced that steel would "lie at the centre of
the world". As a well-travelled person, Jamsetji must have
read and heard about these builders of wealth (although not the
tag of robber barons, which was coined much later).
Until 1869 the Tatas had just trading interests. It is said that
writers of the period considered the Tatas "backbenchers in
the Bombay business world".
It was Jamsetji
who decided to break the mould, by venturing into industry through
textiles. This was not the only evidence of his propensity for innovation.
In Empress Mills, his first big industrial initiative, he introduced
the ring spindle when the device had yet to come into general use
in the US, where it had been invented. He also pioneered several
labour welfare measures that were yet to become common. And he experimented
with a new form of management whereby he became a salaried managing
director, reporting to a functional board of directors. All of this
happened long before the term corporate governance was even conceived.
Jamsetji was fired by a fierce sense of nationalism, a passion
to advance the economic status of India. Economists say that all
entrepreneurs must have some amount of greed and optimism. If that
be so, Jamsetji must have had his fair share. The difference, of
course, lay in what he did with the fruits of his entrepreneurship:
he displayed a rare compassion for the less privileged and he helped
build institutions for his people and his country. A few of these
came into existence in his lifetime, but there were other, more
important ones that found sustenance thanks to his unique legacy.
Jamsetji replicated the wealth-creation characteristics of Carnegie,
Morgan and Rockefeller - but he did so as a benign baron.
I recount these events for two reasons: first, history creates
romantic notions about the past; second, it sheds some light on
what I call the sanskar, or values, of any given business. Much
like individuals, business enterprises, too, have a sanskar. It
is the mark of a successful business that profits are earned competitively
in the early days. It is a mark of a great business that, in addition,
good sanskar gets so deeply embedded that it becomes part of its
Arie de Geus wrote in The Living Company that an economic company
is like a puddle of rainwater: a collection of raindrops, gathered
together in a cavity. The other type of company is organised around
the purpose of perpetuating itself as an ongoing community. This
type of company is like a river. It is turbulent because no drop
of water remains in the same place for long. This river finally
flows into the sea, but it lasts many times longer than the lifetime
of the individual drops of water which comprise it.
For 135 years the Tata 'river' has flowed on, exhibiting the qualities
of the great rivers of the world: long traction, turbulence, growing
might, the ability to overcome obstacles, and the tendency to share
its power for the happiness and prosperity of those on its banks.
In 1939, when the British government published a report entitled
'Indian Business and Nationalist Politics', the Tata Group was listed
on top. In 1969, when the report of the Dutt Industrial Licensing
Policy Enquiry Committee was published by the Indian government,
the Tatas were again on top. When the results of year ending March
2004 are analysed, the Tata Group could well be on top yet again.
But it is not so valuable to be at the top for business performance
alone; it is far more important to be listed on top in the hearts
of people, as a synonym for trust spread over several generations.
After a long career in a single company, when I contemplated joining
the Tata Group in 1998, in the absence of my parents, I sought the
blessings of my eldest sister. Not being well versed in business
matters, she said, "Go ahead and join them. They must have
good people; after all, they are always doing something for the
benefit of those around them." That view sprung from the sanskar
brought to vibrant life by Jamsetji, and it is the same sanskar
that drives our business today. The Tata Group's shareholding patterns
and profits are so aligned that of the more than $1 billion of profit
after tax earned by it, approximately a fourth is attributable to
the good causes that our trusts espouse. It is to this tradition
that all of us pay homage when we begin work each day, and it is
this tradition which we will be saluting all through 2004 and beyond.
R. Gopalakrishnan is an executive
director of Tata Sons and the chairman of Tata Honeywell and Rallis
India. He is a director of several Tata companies and also serves
on the board of ICI and Castrol India.