The Tata Finance episode

The American financial sector is in the turmoil. From Bear Sterns to developments with Fannie Mae and Freddie Mac, the crisis unfolded and took companies like AIG and Lehman Brothers in the grip. Coveted institutions which took generations to reach the enviable positions were down in some months. It is all in the newspapers these days. Somewhere somehow someone made mistakes which reached the US to these conditions.

Do you think Tatas did a mistake by deciding to set up the Nano plant in West Bengal? Do you hold the CEO of the bankrupt US finance major Lehman Brothers guilty? Did George W. Bush do a mistake by invading Iraq? Any question, that can be answered in ‘yes’ or ‘no’ need not be asked. Bad decisions and mistakes happen; so do frauds. One person’s gain may be the whole system’s loss.

Every event has far reaching repercussions, both positive and negative. The only thing that matters is – how you deal with them and how you let the event affect you. This small case is a very important one, because such cases set examples for years to come.

Frauds happen – deal with them

What does a corporate house do when the managing director of one of its companies commits a fraud? Does it try to put a lid on the affairs or does it make an all out effort to ensure that the stakeholders suffer no losses? When Tata Finance was engulfed in a financial mess, the Tata Group took the latter approach. Before the fraud could be detected by the regulators, it was the Tata Group’s self disclosure that opened the matter up.

Rather than sweep the issue under the carpet, Tatas decided on a two-pronged course of action. First, the interests of the small depositors who had placed their trust in the Tata name had to be protected. Second, an open and objective enquiry would be conducted to bring the culprits to book.

Tata Sons and Tata Industries made available to Tata Finance cash and corporate guarantees amounting to Rs 615 crores. Not many industries would have put hundreds of crores into a company that was sinking and that too without being sure that any of it could be recovered.

Despite the promptness with which the Tatas moved, the public perception of the Group and the Tata brand was affected initially. But it was the right thing to do, and the Tatas did what was required to be done.

Ref.: Tata Review

Book - Case of the Bonsai Manager

‘The Case of the Bonsai Manager – Lessons from nature on growing’
R. Gopalakrishnan, Executive Director, Tata Sons
Penguin Books; Amazon [A], Rediff Books [R]

Recently one of our marketing professors made a very good point: that Western authors in management haven’t and can’t know the pulse of India and hence we can’t learn marketing by reading Kotlar and other Western authors alone. In the same arena, a question arises: how much valuable contribution Indian authors have made in the management writing? This book is also a part of the answer.

The author loves and watches nature and uses his experiences to pill off the intricacies of business leadership in a manner not found quite often. By giving examples of animals and creatures from snails to elephants, and then from the plant life, this book tries to reach out at the biggest problem from a different angle – what causes managers to get their growth restricted or shunted and hence they are reduced to being a Bonsai Manager….

The book has a slow pace and examples, though all Indians, are at places personal and couldn’t be seen without creating a good/bad impression about the organisations they deal with. Overall, here is a great book for managers and managers-would-be, and also is a brilliant book for nature lovers who want to see how their knowledge and experience can be converted (read marketed) into such a beautiful read.