Friday, May 13, 2016

Beyond the Profit Motive - The Example of Tata

This article was first published on, an online Family Capital Magazine, on May 13, 2016

No company evokes Indian business better than TATA. The legendary family business founded by Jamsetji Tata in 1868, TATA has established a domestic and international reputation that is arguably greater than any other Indian business.

When it comes to the numbers, TATA is truly impressive. The TATA Group is the holding company of 29 companies listed on the Bombay Stock Exchange. It accounts for 8 percent of the market capitalization of the Bombay Stock Exchange. TATA has made its mark in every major industry in India - steel, power, automobile, aviation, information technology, telecommunications, financial services, consumer goods, education, healthcare, and more.

But perhaps its role in the building of India and placing the importance of community before the profit motive are factors that have contributed most to its success - certainly from the point of view of many of its stakeholders. The journey of development of India can be traced through the house of TATA and the businesses that they ventured into. And during that journey profitability was not the only thing on the company’s mind. Indeed, nation building was just as important, if not more so.

For example, when the family built TATA Steel in Sakchi, now Jamshedpur, TATA also established an entire city around it. When the Taj Mahal Hotel was built in Mumbai, it was “to attract people to India”. When Tata Hydro Electric Power Supply Company was established, it was with the hope that Bombay would become a “Smokeless City”. And today the mission of the TATA Group continues to be: “To improve the quality of life of the communities we serve globally, through long-term stakeholder value creation based on Leadership with Trust”.

The early founders of the company - Jamsetji Tata, Sir Dorabji Tata and Jehangir Ratanji Dadabhoy Tata - worked to uplift the country and to improve the quality of life of the people around them. This was so central to their decision making that many times they put the importance of the community before their own wealth. In fact, profits were always secondary to Jamsetji Tata, and this tradition has been followed by his successors. But because they pursued excellence in whatever they did profits followed.

Sometimes in the world where instant gratification is so dominant in most societies there is a need to go back to the life and times of people like Jamsetji Tata and the other earlier pioneers of TATA to understand and appreciate their values just a little bit more.  
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