Part I and II of this series of articles dealt with the evolution and functioning of the online media which many, including probably Mr. Ratan Tata, fail to grasp.  Part III dealt with the ‘promise of ethical business’ that ‘Brand Tata’ probably also meant, and salvaging that ‘Brand Tata’ now following the 2009-10 vehicle-recall example of  Toyota, another iconic brand that stands for safety and quality. Toyota looks to have succeeded by placing its promise before its profits.  Part IV, this concluding section, highlights the challenges for the Tata Group now as the two compared cases also differ where it hurts the most.   

Doing business anywhere in an ethical manner is something central to the concept of doing business itself; however the reputation of ethics in Tata Group has been further strengthened due to the various philanthropic activities that Tata Group has been engaged in, genuinely and proactively, over the years. Tata Group has also made its points on ethics known to its various stakeholders and to media many times in past, in a tacit or in an implicit manner.

Just days before the controversial leak of the tapped phone conversation between Mr. Ratan Tata and Ms. Niira Radia, Tata was quoted in media to have said how his group refused to pay a bribe, to seek an entry into the aviation sector. A bribe might have facilitated that process is the implied meaning, and as expected, the Business Group refused to do so. People perceived Tata Group to be different, because they viewed the Tata Code of Conduct in sharp contrast of ‘India’s culture of corruption’.

A promise in business always should come before profit. I don’t know if some eminent person ever said it. I came to know it from the business practices that one of my student claims to have been practicing in his entrepreneurial ventures. The promise that Toyota brought, tacit or implicit, is about safety and quality (or as per Akio Toyoda: 1. Safety, 2. Quality, 3. Volume). Most respected firms globally would never compromise their ethics or code of conduct. Increasing global scrutiny and suspicions have rather forced companies to be more stringent in their ethical standards, over the years.

Ethics, at the same time, is very difficult to be defined and that’s why I liked this article of William D Cohen (You’re Welcome, Wall Street). 

Toyota probably never openly and tacitly claimed that it makes ‘safer’ cars than its competitors, but that was the implicit promise that it created amongst significant section of its customers globally, based on the performance of its vehicles. The additional promise that Tata Group brings to millions of Indians is about ethical business practices. One may say that Tata Group never said so tacitly, but we can’t deny the implicit stand of Tata Group and this implicit understanding that many people in India or abroad may have about this group.

Such tacit or implicit promises, in normal times, work towards the advantages of the firms. However when things go wrong or even may apparently look to be going wrong, this advantageous position that firms did enjoy can quickly backfire. And that’s what we saw during The-Toyota-Product-Recall-Days of 2009 and 2010. That’s what we again have been seeing in social media over the Tata Group. The challenge Mr. Tata faces now is to further strengthen this promise of ethics in business practices, as commonly perceived by many members of the society against the ‘blue logo’ of brand Tata, and as it tacitly is implied in the Tata Code of Conduct (TCoC).At the same time following the footsteps of Mr. Toyoda may prove to be difficult for Mr. Tata due to the differences that these two contexts present. Mr. Toyoda acted as an effective leader, in a group facing a crisis as a company, and steered it ahead. Irrespective of the past achievements Mr. Ratan Tata might have had for the group, here his own individual actions might have been an embarrassment for the group.This article would only highlight two of these areas of that fuzziness which demand an explanation and actions from the Tata Group: 1.      Clause:13 of Tata Code of Conduct says

‘Third party representation

Parties which have business dealings with the Tata group but are not members of the group, such as consultants, agents, sales representatives, distributors, channel partners, contractors and suppliers, shall not be authorised to represent a Tata company without the written permission of the Tata company, and / or if their business conduct and ethics are known to be inconsistent with the Code.

Third parties and their employees are expected to abide by the Code in their interaction with, and on behalf of, a Tata company. Tata companies are encouraged to sign a non-disclosure agreement with third parties to support confidentiality of information.’

If one isn’t mistaken, Vaishnavi Corporate Communication should come under this category (third party representation). It’s seen in some section of media today how Ms. Niira Radia filed a petition in Supreme Court  to clear her name against the allegations that the leaked conversations may have created (and thereby to clear her firm from any violation of the ‘Code’, although a comment from one of the judges from the same court was in the line of  ‘profession is something honourable’).

Mr. Tata can’t probably state as Mr. Toyoda did that he hadn’t known about the problems. Unless, of course, Mr. Tata was wrong in judging veracity of ‘Vaishnavi Corporate Communication and its employees are expected to abide by the Code in their interaction with, and on behalf of, a Tata company’ from his interactions with Ms. Niira Radia.

It would also be difficult for the the whole Group to state again that they didn’t know about existence of confidential reports as mentioned in ‘The Radia Papers – Raja, Tata, Ambani connection’.

Irrespective of the pending Supreme Court judgment to Ms. Niira Radia petition, public opinion on Ms. Radia based on her 100+ leaked conversations is unlikely to change soon. Extending what Economist Jagdish Bhagwati said about Indian political leaders (‘public figures are considered to be corrupt unless proven otherwise’), another (spoof) article stated same years back for Indian business leaders (where CII stands for ‘Corrupt Indian Industries’).

Tata Group, if an exception from that definition that CII represents in that spoof article, should better act on Vaishnavi Corporate Communications on its own, than wait for the SC judgments. And violation/s of the Tata Code of Conduct, when scrutinized thoroughly, may not be limited in Clause 13 alone.

2.      The other one is about another article in Outlook that stated (author, however, is not sure about the credibility of following para, as no source has been cited in the following para):

 ‘This (engaging Vaishnavi Corporate Communications of Ms. Niira Radia for all the 90 Tata Group companies as their PR agent) did not go down well with some CEOs of the Tata Group companies—initially there was considerable scepticism about her abilities and the “hold” she had on the Tata supremo. But all that died down when everyone quickly figured out that “rnt will not hear one bad word about her”. 

Assuming that there is an element of truth in above paragraph, particularly the last line of it, it presents the iconic Tata Group in a poor light, not from ethics here – but on grounds of professionalism. It is not the professionalism that true business professionals expect from theTata Group.

Eventually it may be found that many of these apparent slips (of Tata Code of Conduct as in point 1 above) or allegations (point 2) - whatever be there merits now – were purly false. However transparency from the Tata Group in disclosing details of terms of engagement can nip such discussions in its buds, not eventually – but probably ‘right now’ itself. Denial does not help it – confronting the contextual situation with full honesty and integrity in a proactive way, as usually expected from the Tata Group, that too at its earliest opportunity, can eventually set an excellent example of ‘desired’ actions in any (real or unreal)crisis management case in management classes.

It may be relevant to cite Mark Hurd of HP on this context. As of now, anyone would think there may absolutely be no resemblence of these two cases – and I would fully agree. However good leadership not only converts present crisis into opportunities, but also ensures future crises, whatever remote and distant they may seem now, are avoided.

Here are selected portions of Mark Hurd from Wikipedia. The selection is merely to highlight the distant analogy:

‘Hurd resigned his position at HP (Chairman) on August 6, 2010, after an internal investigation uncovered …irregularities…On August 6, 2010, he resigned from all of his positions at HP, following discovery of inappropriate conduct in an investigation…The probe concluded that the company’s …policy was not violated, but that its standards of business conduct were. Hurd said he “realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP” and added that he believed it would be “difficult to continue as an effective leader at HP.”

Oracle Corporation CEO Larry Ellison, a close friend of Hurd…, sent an e-mail to the New York Times saying “the HP Board just made the worst personnel decision since the idiots on the Apple Board fired Steve Jobs many years ago. That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them. HP had a long list of failed CEOs until they hired Mark who has spent the last five years doing a brilliant job reviving HP to its former greatness”.

Here is what HP general counsel Michael Holston said on a conference call on that issue and development: “The facts that drove the decision for the company had to with integrity, had to do with credibility, had to do with honesty”. (Author here is not at all passing any judgement as author is not much aware of the developments related with HP and Mark Hurd, or of the controversy related with Tata Group now on the 2G scam. And intention of this series of four article is not to serve as endorsement of any views, or illustrations of any effective or not so effective management practices). However what needs to be noted here that HP or Oracle is again not just another company…they can be comparable with that of Sony or Tata Group, when it comes to managing business professionally and ethically. As an Indian, I probably would expect a higher ethical quotient from the Tata Group than the others mentioned here.

And the U.S., where HP is headquartered, surely is not a ‘Banana Republic’ as per Mr. Ratan Tata (however author increasingly gets the sense that the U.S. also is becoming one of that type, if not exactly the same).  The Wall Street will never be stupid enough to demand any such anti-Wall Street action from HP.

Point here is: Ethics is not limited to paying bribes alone. In case of HP, it clealy stated that its policies were not violated – but HP was not so certain on the implicit area of ‘standards of business conduct’.

Tata Group reputation, in this context, will not depend on the Supreme Court judgments alone on the pending cases. It will depend more on the internal actions that the Group can initiate, on a proactive basis. It essentially is about accepting that everything might not have been all right, and actions therefore are needed than merely denying any wrongdoing, whatsoever. 

It actually is in the control of the group – starting with Mr. Tata himself to all the top managers of the Group. The case is evolving, and may eventually die down (the author would be glad if that happens, with of course, due clarity); however to encourage Mr. Tata to initiate the bold steps as Mr. Toyoda did in a different context – here’s a quote from Abraham Lincoln (in his letter to his son’s teacher):

 ‘Treat him gently,
but do not cuddle him,
because only the test
of fire makes fine steel.’ 

Mr. Tata surely knows how to make the finest steel. He also understands what cuddling may mean, which, Lincoln didn’t suggest for his son.

Over to you, Mr. Tata…

 Before moving to academics, the author worked with a company that is enlisted as a Tata Group Company.

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