For a conglomerate like Tatas, it is very difficult to manage the creative part of a business. Branding for example is critical to success.
My favourite line to any conglomerate claiming to be cat’s whiskers is to produce a Hollywood movie successfully. It is a great test to check out if you can indeed get your act together. The indian movie landscape is dotted with the tombs of several corporates who tried and failed.
Actually the ambanis and adanis do a far better job than say a Tata or a Birla. They seem to be doing a good job of managing their respective media empires. They succeed because of a direct connect of the Ambani or Adani families with the creative talent. Most Hollywood celebrities are quite honoured to be invited to a Ambani party.
Does this mean that the days of the professionally run, board managed conglomerates are over. Perhaps not. Cos like Infosys or L&T seem to be doing a great job with global sales accounting for a majority. World over, stock markets seem to reward promoterless, professionally managed, board run companies. There are exceptions like Elon Musk but that is one individual rather than a whole extended family poking their fingers in every possible pie. It is now well established as a trend, that family run businesses start fragmenting in the third generation and are over by the time the fourth generation takes over. One would expect the same law of averages to hit the indian tycoon families.
But coming back to Tatas, with Air India as something way bigger than what is easy to chew, a faltering Jaguar and a stressed Corus – their bread and butter is cartels (steel), government subsidies (Tata ebuses), defence (ideally without tender) and low value-add b2b businesses (like being an ancillary to Apple).
They have had zero success rate as a corporate venture capitalist or as an innovator themselves. The last innovation they came up with was probably to make table salt from a chemical process. TCS is a good business – but ai may knock a zero from the head count. This is not good for a business which bills per man hour.
It would be safe to surmise that the venerable House of Tatas is now in its last act.
And there is no other business house with the same respect in the horizon. Ask anyone on the street what they think of one of the emerging business houses and you will hear anything but respect. Which is quite unfair for a Ambani or a Adani – who have really contributed massively to import substitution and nation building projects. They may not have succeeded in the export markets for consumer goods but they seem to be ok in the commodity markets.
And only in the commodity markets
So who will make quality cars now ?