Tata bags Corus. Think Tesco, think Unilever

Jamsetji Tata

Update

Eighteen months after the original post of January 2007, Tata has acquired more global visibility through its acquisitions policy [Jaguar and Land Rover from Ford] and the launch of ‘the world’s cheapest car’.

The original post follows:

Indian company Tata Steel has won the battle to buy its Anglo-Dutch rival Corus. But what’s Tata like? In scale, Tata’s impact on the Indian economy at present can be likened to Tesco’s in the UK. But in other ways the company’s historic leadership and culture are better compared with those associated with the global conglomerate Unilever.

After a long running battle between rival suitors, The Ango-Dutch steel-maker Corus has been bought by the Indian company, Tata [January 2007]. Corus is itself a relatively unfamiliar name in the UK, in comparison with the historic British Steel organisation. This to some degree reflects Tata’s unobtrusive move to the centre of attention as a global player.

So what’s Tata really like?

Business travellers in India are quickly made aware of the country’s industrial success stories. Close to the top of everyone’s list is the Tata group. Visitors to Mumbai learn of the origins of Tata, perhaps first through ‘the other Taj Mahal’, the luxury hotel built by Jamsetji Tata, the founder of today’s corporate giant. They will perhaps be driven (definitely not drive!) in a company car, perhaps one such as the Indica better known in the UK as the City Rover. The will be unlikely to leave without being tempted into acquiring a Titan watch, another success story for Tata. They will learn how a familiar ‘British’ product, Tetley tea has been acquired by Tata Tea. They may also visit Jamshedpur, the model town founded by Jamsteji Tata, and the centre of Tata’s world-class steel operations. The town itself is an obvious parallel with the social vision of William Hesketh Lever, founder of Unilever, at Port Sunlight, on Merseyside.

The Tata dynasty

Jamsteji was to found not just a company, but a dynasty. Both sons (Sir Dorab and Sir Dorab) were to progress the company, and establish huge trusts). Later, JRD Tata (a son to a relation to the pioneering line of the family, and his French wife) founded Air India. He had progressed from his start as an apprentice, to lead the company over five decades.

The era had also seen the impact of another industry giant, in the romantic figure of Nathan Tata who had been adapted by Lady Tata after spending his early years in an orphanage. Through a combination of ability and more than a modicum of charm and charisma he was to become a major national figure and diplomat, sporting administrator as well as a business leader.

Today there is still a Tata at the head of the group. Ratan N Tata is a Cornell and Harvard graduate and continues the family’s involvement in the social as well as the economic well-being of the country. Unsurprisingly, he is a Tata ‘lifer’, having joined in 1962 and seen through his time the transformation of the company into a global player.

Tata and Unilever compared

An immediate comparison, based on scale can be made with Tesco, for its national impact, with its £1 of £8 in consumer spend passing through its UK tills. Tata contributes nearly 3% of India’s GNP. However, I am more taken by its similarities with Unilever. For example, Unilever employs more than 206,000 people and had a worldwide revenue of US$50 billion; Tata claims 2,46,000 people and revenues of $22 billion

The obvious product link is between Tata tea, now owners of Tetley’s. Unilever’s Lipton is still the leading brand internationally. However, for me, the link is not so much in products as in culture.

Unilever was also founded by a pioneer who started a dynasty. William Hesketh Lever (Lord Lever) created a model village, Port Sunlight, which still can be found a walking distance from the soap ‘manufactury’, and Unilever’s modern research laboratories. The Leverhulme research trust is one of the nation’s greatest philanthropic institutions; Tata’s trusts are as significant for India.
.
Assessment of corporate culture is a tricky business, and coming under increasingly scrutiny from campaigns promoted through the internet. However, Unilever and Tata have both largely escaped the vituperation heaped on other global giants.

Through my observations and contacts with both companies, employees and managers reflect a healthy culture.

Their leaders have at critical times followed a sense of ‘duty to history’
akin to fifth-level leadership principles and also to servant leadership.

By and large, this has protected the company from the damage that can be caused by Mandrill management

Students of leadership may find it constructive to reflect on the patterns of leadership found in Tata and Unilever in achieving ‘built to last’ companies.

Advertisement