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Ratan Tata had doubts about Cyrus Mistry's leadership, reveals new book
Ratan Tata questioned Cyrus Mistry's suitability as chairman-designate of Tata Sons early in Mistry's tenure, feeling regret over his dismissal in 2016.
Ratan Tata began to question Cyrus Mistry's suitability as chairman-designate of Tata Sons by the end of Mistry's first year as his apprentice, according to a recently published biography, 'Ratan Tata: A Life' by Thomas Mathew. The book reveals that Tata felt he suffered more from the decision to dismiss Mistry as Chairman in October 2016 than Mistry himself did.
The book claims that Ratan Tata began having second thoughts about Mistry even before the latter formally taking over the position fully.
Mistry was appointed in 2011 following a global search by a selection committee, with Tata's full endorsement, despite some concerns from seasoned members of the group. For a year, Mistry held the title of "Chairman designate" before officially assuming the role after Tata’s retirement in December 2012.
When approving Mistry's selection, Tata made two key stipulations. He insisted that Cyrus Mistry, then managing director of Shapoorji Pallonji Group, sever all ties with his former company to ensure a clear separation. Additionally, Mistry would undergo a year of "parallel running" alongside Tata to gain practical insights into managing the Tata Group, as detailed in the book, which draws from interviews with Tata, his family, and colleagues.
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The author notes that while Tata was initially impressed by Mistry during board meetings, he began to have reservations after observing some of Mistry's "sharp interventions." Tata started to question whether appointing someone whose values might conflict with those of the Tata ethos was wise.
The biography quotes Tata acknowledging Mistry's ability to identify strategic pitfalls, but he expressed uncertainty about whether Mistry would use these skills to benefit Tata Sons or uphold the group's core values.
Tata later expressed regret for not being able to evaluate Mistry fully, while some critics argue he brought the situation upon himself by stepping back from the selection committee.
Cyrus Mistry's removal
Mistry officially took over as Chairman on December 28, 2012, but was dismissed on October 24, 2016, when the Tata Trusts lost confidence in him, leading to a contentious fallout marked by boardroom disputes and legal battles.
The book cites Nitin Nohria, former dean of Harvard Business School, stating that Mistry's removal was one of the most painful decisions for Tata. Venu Srinivasan, director of Tata Sons, noted that the choice took a toll on Tata, forcing him to act against his principles.
According to the book, Tata wished that Mistry "should have been more dignified and graciously resigned after it became clear that he had lost the confidence of the directors".
"Even for me, firing him this way was not our style of doing things. Our lawyers said that if it is not a surgical strike, he would go to the court and litigations would follow," it said quoting Tata.
