According to Mr. Narendran, CEO & Managing Director, TATA Steel, three essential ingredients drive managerial excellence. One does not guarantee the other, but all three are important in defining the future of business, growth and success. He was delivering the keynote address at the MMA Awards for Managerial Excellence.
Let me speak on managerial excellence the way I see it or the way I’ve seen it over the last 36 years of my professional career. So when you reflect on managing excellence, I think the starting point is your personal experience as a person. It’s to do with a value system; it’s about what you stand for; it’s about the dignity with which you treat people; it’s about the pursuit of—if not perfection—at least excellence in whatever you do: it may be education, sports, arts, hobbies, relationships, friendships… How deeply are you engaged? How authentic are you in your engagement? All these, in some sense, reflect on who you are as a person and what you are as a person. All of us evolve. We grow up with the value system that is embedded in us with our upbringing, then we try to preserve it or strengthen it as we go along. Then, you get married; you have children, grandchildren… And you also keep learning from those experiences and keep developing yourself based on the value system that all of you together as a family come in. To me that personal excellence journey is something that you go through all your life. It reflects in the authenticity that you are seen with, the credibility that you build, the trust that you build, and all this is very important because that reflects in your workplace.
The other day, a colleague of mine who teaches in a business school asked me what your advice would be for students who are joining MBA and how they can be excellent MBA students. I said that advice is very clear: You work hard; you do well in your grades and things like that. You can call yourself an excellent MBA student, but does that make you an excellent manager? You will become an excellent manager depending on how you deal with people, how you deal with situations, and judgments that you exercise… And all that depends on the foundations on which you’ve been built as a person. To me, personal excellence is a very important part of managerial excellence. Sometimes the hard work that goes behind personal excellence is not seen. I mean, often times you see it in sports: no successful sports person at any level has achieved success without a lot of hard work. Sometimes, sports people say that I’m called an overnight success because nobody has seen the 10 or 15 years of hard work that goes behind it. That, to me, is a very fundamental ingredient of managerial excellence.
The second ingredient of managerial excellence is professional excellence. I draw a distinction between personal excellence and professional excellence because, it’s like personal integrity and professional integrity; they’re not necessarily the same—personal integrity may be about the value system that I have; professional integrity is the way I behave in the workplace: Do I walk the talk? Do I stand by what I say? Do I say something in some meeting to get away with that meeting? Am I in a hurry to take the credit when it’s not due to me? Am I in a hurry to share the blame when I should have taken it? As a person, you may be a very honest person but, as a professional, are you an honest professional? Are you willing to stand up even if your neck is on the block or for whatever your team stands for? Professional excellence is slightly different from personal excellence. One does not guarantee the other, but both are important in your pursuit of managerial excellence.
The third part of managerial excellence is institutional excellence. How do you build excellence in the institutions that you can influence? If MMA has won the best management association award for 14 years, that’s a great example on how an institution has built excellence into its DNA—despite it having multiple leaders, there may be some common factors, like Captain Vijayakumar, but fundamentally it’s an institution which has consistently seen as excellent by the All-India Management Association. So how do you build institutional excellence? To me, it is one of the biggest challenges for managers. In the sphere of influence that we have, can we build that culture or DNA of excellence? So here, I go back to the company I work with. Tata Steel. I know Tata Steel better than I know any other company. I’ll give you a couple of examples or critical points in Tata Steel’s life where the DNA of Excellence was built and rebuilt in the company. The starting point was of course when Tata Steel was formed. The story of Tata Steel is actually the first atma nirbhar story: It was set up because at that time the founder of the Tata Group, J N Tata, felt that any country which needs to be able to stand on its own needs a power industry and a steel industry. Tata Power and Tata Steel were two of the earliest Tata companies. He conceived of a third one when he met Swami Vivekananda on one of his journeys. The Swami was going to Chicago to deliver his famous address, and they were discussing about how important science is for the advancement of any nation and hence the thoughts on Indian Institute of Science came up. The point is, sometimes the founding values also play a very important role. So when Tata Steel was conceived of, the founder passed away in 1904. But he had articulated what he wanted to his son Dorab Tata who then built Tata Steel. But there were so many dimensions of it which even today are relevant—probably more relevant today than it was then; for instance, he said, “The community is not just another stakeholder but the very purpose of our existence.” It resonates today when there’s so much of mistrust between society and corporates. Also, because people were coming from the countryside to work in the factories and they had no accommodation or place to live in and there was chaos in all such places, he got some of the leading thinkers of that time—Sydney and Beatrice Web, who were Fabian socialists and had set up the London School of Economics—to help plan Jamshedpur, a place where the workers can live with dignity. That was the spirit! Even today, I don’t know how many of you been to Jamshedpur, but we try to keep that ethos—the steel plant is in 1800 acres but we run a township of 15,000 acres—because that was part of the founding values of the group. So when you have a powerful purpose, when you have a value system, then it’s easier to pursue excellence all through the life of the institution because a lot of people are attracted by that value system. So over the years, professionals join the organization and everyone has an opportunity to go to the top.
In Jamshedpur, if I go and tell someone I worked for 36 years in Tata Steel, they’ll ask you, “Which generation?” So there are people who are in the fifth generation, sixth generation… People feel so emotionally connected to the organization that they want to work for it. One of my customers once said, “One of the things I find strange in your company is that everyone in your company thinks you’re the owner. In my company, I’m the only one who thinks I’m the owner.” The way you negotiate with me sometimes looks like it’s your money but you’re all just professionals. That’s the emotional connect you have with the institution. It’s not just the employees; we have multigenerational shareholders (5 million of them). When you have a founding value which is strong and if the purpose is good, then it’s easier to build institutional excellence because people join it for the value system not so much for the salary or something else. I’m not for once claiming that Tata Steel is a perfect company and that it’s an epitome of what a good corporate should be. All I’m saying is that at least the intentions are right and that, over generations, there is a responsibility each of us have to make sure that those intentions are not compromised.
I think, in the ’90s, soon after I joined the company, we went through an existential crisis. In ’91, when the Indian economy opened up, a lot of people wrote off Tata Steel simply because we were used to steel market where the prices were fixed by the government. We only had to be more efficient because the prices were fixed based on the costs of sale. We didn’t have much competition because you needed a license to set up a steel plant and import duties were more than 100%, so it was a very different era that opened up ahead of us in ’91. People were setting up steel plants closer to customers and we were far away from customers. So for many reasons we were written off: We had 880,000 people working for us at that time making 2 million tons of steel and doing 3 million tons of mining. The then CEO Dr Irani decided that it’s a matter of survival.
The Tata group itself was really questioning whether Tata Steel will survive, and that was another wave in the pursuit of excellence that we went through. While I’ve only read about the first part of the journey, but this part of the journey I experienced it. I was then a very junior person in Tata Steel but I could see the change which was being driven in the organization. We all talk of labour laws and how difficult it is to work in India, but in the 90s, Tata Steel reduced its workforce from 880,000 to 40,000 without a strike. We were very generous in our packages that we gave to our workers. So every year 4 to 5,000 people left the company and by the end of the decade we had come down to about 40,000 people.
Dr Irani realized that we need to learn from the Japanese. Mr Venu Srinivasan of TVS was one of the first proponents of this journey. They went and saw how the Japanese did it, and we had a team on TQM at that time working directly with Dr Irani. He took all the union leaders to steel plants in different parts of the world, to show them what productivity is right and convince them so that they could convince their members on the importance of this journey. We were a company where the joke was that if you wanted steel, you go and sit in front of the sales manager. The most important piece of furniture in his office was the sofa where you sat and waited for your steel allocation. Those were the days. You had to change the culture to become more customer oriented. So a lot of these changes happened.
Even within the Tata Group we had an excellence program which was based on the Malcolm Baldridge award; it was called the JRDQV Award. Tata Steel was the first company within the Tata group to win that award. Realizing how Tata Steel was a decade earlier, Mr Ratan Tata remarked, “It would have been the last company I thought could win that award!” Large, old, or complex organizations set up with the right founding values but operated in a different context can also change rather late. Tata Steel was already 80 years and could change. If you have the right leadership, right intention, right communication, right engagement with all the stakeholders (explaining to them why they need to change and what it means to drive that change), then you can still pursue that excellence journey.
Within a decade we became the lowest cost producer of steel in the world and are still in the top three or four in the world. We also constantly subject ourselves to assessments because you always need to look at a mirror otherwise you will not know and you need somebody else to show that mirror to you. Sometimes when you look at the mirror yourself, you don’t really see the flaws but when you have someone come in from outside and you tell them that what’s more important is not the award but the feedback then they take you seriously you give get your feedback and that’s how you improve. When you pursue excellence, it’s not about benchmarking with other people in the industry; it is about benchmarking with who is the best in that area and even today we do that. If you have to make benchmark maintenance, we look at aviation companies because their maintenance standards are very different: you can’t have a failure. It also depends on who you benchmark with. It doesn’t depend on which industry you are in. Excellence obviously as has been said many times it’s not a destination—it’s a journey, a mindset that you as an individual should have. Whether you’re an entrepreneur, a professional, a leader, or a manager, you should have it. As a professional, you should have it and then you can influence people. To pursue excellence as a team or an organization, it’s about consistently walking the talk. It’s not about saying all the right things but doing something else; it’s also about constantly looking at the future.
Organizations like ours that’ve been around for some time and had reasonable success have a tendency to talk more about the past than the future. The famous academic Vijay Govindrajan said that companies that only talk of the past don’t have a future. That’s also something we remind ourselves as much as we are proud of the past. How do we make sure that we spend more time thinking about the future, talking about the future, what are the changes which are going to impact us… Companies like Zetwerk are disrupting the value chain for fabrication. It’s an opportunity for us because we buy a lot of fabricated stuff; it’s also sometimes a challenge because many of our customers as they consolidate, then it’s a very different approach that we need to do work with them. So constantly looking out for what are those patterns which are emerging and how do we anticipate them, plan for them, and prepare for them. Even if you’re not able to predict all that’s going to happen, if you are better prepared for five or six or seven of the 10 things which are going to happen, you’ll have more time to deal with the balance things. So managerial excellence is when there’s a congruence of your personal value system, your professional value system, and institutional value system.
