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Family does not matter

Ratan Tata’s successor should be capable to carry on his legacy. That’s all that counts.

india Updated: Nov 19, 2009 21:19 IST

Ratan Tata is merely returning the compliment when he says the corporate empire he heads could have an expatriate boss after he steps down in 2012. Indra Nooyi at Pepsi and Vikram Pandit at Citibank are among a growing tribe of Indians steering Fortune 500 companies. Mr Tata was responsible for much of India Inc’s appetite for cross-border acquisitions: in just under a decade he bought out Tetley, Corus, Jaguar-Land Rover and sundry other firms. He today runs a conglomerate that does two-thirds of its $70 billion business on foreign shores. Alan Rosling and Raymond Bickson have headed key divisions within the group like power and hotels, so it should come as little surprise if Bombay House is run by a foreigner.

When it happens, it will be a coming-of-age event in India’s corporate history. Our business tycoons share with most of their Asian peers an undue fondness for family and friends. Ratan Tata himself had to bring to heel a posse of professional managers in the sprawling Tata group after his uncle JRD Tata anointed him successor in 1991. The satrapies have since been dissolved and the group has acquired a tighter corporate identity. The Tatas are ahead of the Indian pack in aligning corporate governance with global practices and the group’s cultural milieu is not too daunting for the global manager. Carlos Ghosn at Nissan and Howard Stringer at Sony are proof that profit speaks the same language across continents.

Capability, and not nationality, will be the true test for succession planners in Bombay House. When he does hang them up, Ratan Tata will be taking off boots too big to fill. The 71-year-old came into his inheritance late, but persevered to dispel initial misgivings about being able to shoulder JRD’s legacy. His drive to put India Inc on the international stage will be difficult to replicate, as will his quest for billions at the bottom of the pyramid. The Nano and the Jaguar link up in Mr Tata’s vision for new markets. Managing India’s first multinational requires a marriage of frugality and expansiveness that is hard to come by. In a society where business houses seldom outlive the third generation, the House of Tata has kept growing during most of its 141-year existence. Odds are it will make yet another right choice in 2012.