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By A good CEO doesn’t wait until he is senile before hanging up his boots - and makes sure to groom an able successor
  • Published 15.01.13

Ratan Tata, the chairman of the House of Tata, hung up his boots when he turned 75 last month. “I am very conscious that I don’t want to have my shadow hanging over the group, a ghost walking the corridors, someone giving unsolicited suggestions or expressing an unsolicited viewpoint,” he told an in-house interviewer before his last day. He feels safe with such journalists; several of his interviews have been qualified with denials after publication. There was a time when he was reported as having called his UK employees lazy. Today, it’s a Financial Times interview. Tata Sons, the holding company of the group, has felt it necessary to deny that Ratan Tata spoke of a “venal business environment” in the country today.

Ratan Tata is not riding into the sunset, of course. He remains chairman of the Tata Trusts, which control nearly 70 per cent of Tata Sons. He may not be a ghost in the corridors of Bombay house, the Tata headquarters. But he can block any move if he doesn’t agree with it.

Indians always believe in honouring men and women who are dead or have become history. A prominent industrialist became a hero, even though he broke practically every law in the book and brought the worst of crony capitalism to India. The scamsters in Parliament and elsewhere are the beneficiaries and the descendants of his operational style.

The foreign press is not as sycophantic about people they feel are trying to break into their elite club — western multinationals on global conquests. The Economist has done quite a hatchet job on Ratan Tata, as Fortune had done a few years ago.

When a great man hangs up public face and his private insecurities, it is apposite to examine his achievements. In politics, people don’t retire; they continue long after senility has set in. In family businesses, it is often the same thing. In listed companies, however, the man on the street is sometimes a part owner. There has to be accountability.

How do you rate a CEO’s performance? Look first at succession. If there is nobody within to take over from him, he has used his megalomania to remove all possible challengers.

Look next at the age of his aides. If they are in the same bracket as he is, if there is no young blood around, he has perpetuated the rule of the fossils. The advantage is that he is safe. The disadvantage is that his companies will start going downhill in a few years. But that, of course, is to his advantage; somebody else will be blamed and the CEO’s halo will grow,

Look also at the worms that creep out of the closet once his day is done. They thrived during his regime. A new CEO will bring his own bacteria along.

Finally, is the company regarded as fuddy-duddy? From the CEO’s side of the fence, he may be upholding traditional values. From the perspective of the rest of the world, this is a company that is technologically challenged. Technology does not lie in getting your secretary to open a Twitter account in your name and behaving like an occasional twit. It lies in understanding how to utilise Twitter, Facebook and the next big thing around the corner. Twitter and Facebook will become obsolete, but the CEO will be obsolete before them. There are still CEOs in India who take pride in the fact that they have never used a computer. The technological vacuum at the top will only be revealed when a new generation takes over. It is not just the boss man; the coterie around him must go too.

Ratan Tata is just the provocation for this analysis; he is not the example. Don’t believe anything the Economist says. Ratan Tata is a great man. You can read all about his incredible achievements in the deluge of eulogies that have already started appearing in the media. And he has found a successor too. He’s an insider. He is from the very search panel that was formed to find a successor.



CEO age and experience distribution in India

Age (in years)

26-35 62

36-45 527

46-55 803

56-65 519

66+ 90

Average: 51


(in years)

Less than 5 42

6-10 60

11-15 145

16-20 304

21-25 355

26-30 397

31-35 308

36-40 219

41-45 74

46+ 54

Average: 26