Blog: The Corporate Succession Story - Tata Group & Infosys


The Corporate Succession Story - Tata Group & Infosys

Succession planning as a process is as much about looking at the future as it's about looking at the past.
The Corporate Succession Story - Tata Group & Infosys

Recently in Indian corporate world, we saw two high profile succession stories go bad. The first one was the Tata Group and then Infosys. Both hugely respected business houses in India and abroad. Both had also put in place a very comprehensive and elaborate process for choosing the next person for the big job. 

In fact, the succession processes at both these companies are often quoted as one of the best in class practice. So how can such a meticulously crafted process go wrong?

Let’s start by examining the common factors in the succession process adopted by these companies:

  1. The Committee – Both companies depended on a succession planning committee comprising of senior and seasoned professionals who understood the business and the culture. The committee was tasked with identifying internal and external candidates suitable for the job. The committee also included a mix of internal and external individuals though the % of internal resources in the committee was higher in both cases.

  2. The Mandate – While both companies have strong histories and iconic leaders, they are also facing increasing pressures from more innovative players in their respective markets. Thus both companies were looking for a leader who could stay true to the historic values while also being able to bring the necessary change required to compete in the current dynamic business environment. This delicate balance is what the top leader will have to manage.

  3. The Founders – In both cases, the process began to ensure that founders or long-term senior leaders of the organization “retire” from day to day operations. This meant that the successor had a big shoe to fill in both cases. Ratan Tata & NarayanMurthy both are known for their impeccable record on business results and personal values & ethics. The new leader had to be as close to those standards as possible. 

Now that we have looked at few similarities before the process began; let’s look at if there are any similarities in the way this ended for both successors

  1. The Spat: We all know in both cases it started with a bloody war between the successor and the iconic leader and in both cases the iconic leader prevailed. In both cases, when push came to shove, other leaders stood behind the previous leader strongly and brought the previous leader back into the game. 

  2. The Duration: Both the successors, Mistry and Sikka, were at the helm of affairs for less than 5 years; a term considered fair at that level for them to make their mark. 

  3. The Decisions: Both Mistry & Sikka were publicly condemned for actions taken by them which were perceived to be going against the “historical values” of the organization. Apparently, they were unable to maintain the very balance between transformation and preserving old values & ways of doing things. 

The Lessons:

I must admit I stand very far away from the actual battlefield and am relying solely on what others are saying or writing about this to draw my lessons, but nevertheless here is what I learned from these 2 situations.

  1. Succession planning as a process is as much about looking at the future as it’s about looking at the past. I guess if both leaders had a very clear dialogue about what can change and what cannot; some of these grey areas could have been avoided. We all make certain assumptions and of course, when the stakes are so high, the assumptions about abilities and interpretations would be high too. 

  2. Reconciliation of the old & the new is critical for business success and survival at the individual level and even at the systems level. While the whole world is talking about managing the millennial in the workplace, I guess the real challenge is to manage a multi-generational workforce. In both cases, clearly, the leaders tried to push the envelope a bit too far a bit too soon. It goes to prove that building trust is a game of patience and while building it can take years, losing it is just a matter of minutes. 

  3. This also shows us that no succession process is perfect and I wonder if a 6 monthly review of the assumptions would have helped. The most surprising aspect for me in both cases is the washing of the dirty laundry in public. This indicates that there were a lot of unresolved issues which were brewing and were not confronted with care.

In the end, I have the faith in the long-term future of the business and honestly, my loyalties are still with the iconic leaders than the leaders chosen by them. This just goes to show that any new person in this role will have to patiently build his/her credibility in the eyes of multiple stakeholders over a longer period of time. The polarities of past & future will continue to play & the leverage will come from the balance. 

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Topics: Culture, #Corporate

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