The House of Tata and Indian Innovation

As a kid in pre-economic-liberalization India, I grew up with the phrase “import substitution,” and surrounded by a low-credibility innovation culture best captured by the following joke (which we retold in various forms): The US, USSR, Germany, Japan and India decided to collaboratively build a new rocket. The US supplied the design, the USSR the engines, Germany the manufacturing and Japan the electronics. Punchline: what did India contribute? We added a “Made in India” label. Today, fortunately, that joke wouldn’t work. There is a small but growing culture of true innovation taking root. A question that I have been pondering lately is “what is the DNA of the emerging Indian innovation culture?” Whatever the answer, it definitely includes the genes contributed by the House of Tata. And just what might those be? I can’t quite answer the question, but I can provide you with some raw material so you can come up with your hypotheses.

I have a great deal of affection for the group, its flagship company Tata Steel (where my father worked for nearly 40 years), and of course the group’s hometown Jamshedpur, where I grew up. So the question about the unique features of the Tata genome interest me at a personal level. Recent events though, have made Tata interesting in more objective ways.

Starting with the acquisition of Tetley by Tata Tea, then onto the acquisition of Daewoo’s ailing truck business by Tata Motors, and most recently, the minnow-swallows-a-whale shock of the Tata-Steel-Corus deal, the group is suddenly on the global economic radar. For the first time, we can ask about the group’s (and by implication, India’s) unique business identity in the global economy. The Tata group is now on the order of $21 billion in size, last I checked, which is probably a serious underestimate of its actual economic significance. Tata Corus is now the 5th largest steel-maker in the world, and set a record as the lowest-cost producer of steel a couple of years ago (Tata Steel was the epitome of unproductive bloat a decade ago). Tata Motors is developing the seriously innovative $2000 car idea, which if successful, should be a business model for the books for years to come. This is not the somnolent Tata I grew up with. This is an innovative (if not inventive) Tata. A Tata that has some business model tricks up its sleeve.

Certainly, if there is a signature aesthetic and high concept to Indian businesses, we should start looking for it in Tata.

But to get to the reality of Tata, you have to penetrate layers of opaque feel-good story-telling. Like any other large conglomerate, the story of its growth is shrouded in layers of hagiography and tales of royal screw-ups retold as glorious tales of redemption. There is your standard origin myth centered around Jamshedji Tata, this guy —

and the usual host of stories told by the usual admiring courtier-biographers, such as R. M. Lala (author of such works as The Creation of Wealth and several books on J. R. D. Tata, the third-generation Tata chairman of the group and focus of the largest personality cult among all the Tatas). The basic story is told well enough in the Tata Group wikipedia page, so I can get straight to the DNA question. Here are some starter thoughts:

• The Parsi Factor: At parties growing up, I’d hear jokes about “Parsiality.” That was a reference to the notable nepotism among the Parsis who, until recently dominated upper management in the Tata group. Other business-dominating ethnic groups of India, such as the Marwaris and Gujaratis, have usually been subject to worse nepotism charges though. Might there be something unique to the Parsi approach to business that explains Tata’s successes (and failures)? Is there a Parsi ethic at work rather like the Protestant Ethic? Certainly in India, the Tata brand evokes a great deal more trust than, say Reliance.
• History as a Nanny Company: I remember most vividly the enormous, benign and maternalistic presence of the Company in every aspect of daily life in Jamshedpur. The company would provide buses for the school picnics. We hung out in the company-sponsored British-style clubs (us plebs went to the United Club, which I just found on Wikimapia, wow!) . We learned Tata history in school, went to the the Tata Main Hospital when we got sick, ran schoolyard rivalries along company lines and vacationed in company guest houses. In fact the whole city of Jamshedpur was (and I suppose still is) organized around the various Tata companies that dotted the landscape. Even the town councils were run by the companies. A TV ad campaign by Tata Steel in the late 80s ended with the tagline “Ispat bhi hum banate hain” (“We also make steel”). A good deal of all this though, has changed. I am told Tata has transitioned from a paternalistic, indulgent, family-managed culture into a lean, professionally-managed, McKinsey-advised global corporation.
• History of Innovation-Infrastructure Philanthropy: The Tatas founded the premier research institutes of India (including the Indian Institute of Science and the Tata Institute of Fundamental Research) and gave slackers like me college scholarships. So, simply on the basis of raw infrastructure alone, research and technology in India wouldn’t even exist without the influence of the Tatas (J. R. D was close to Jawaharlal Nehru, so I am sure he had a hand in influencing the latter’s nationwide policies as well). Quite impressive, isn’t it? The Carnegies come to mind for a family with a comparable influence in shaping the innovation and education culture of a large nation. The next-best industrial house in India in terms of contribution to India’s innovation culture is probably the House of Birla, but I have no insight into that group.

So does all that add up to a unique innovation DNA? Is there a single word or phrase that characterizes it, like kaizen?