Business returning to old world values, the Tata way

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Madhusree Chatterjee | 09 Aug, 2010
In the footsteps of India's Tata Group - which is hunting for a successor right now - business houses across the globe are resorting to old world values of community service to sustain themselves in the long run, says British business historian Morgen Witzel.

"The house has always believed in service to community since it was set up in the early 19th century," Witzel told IANS. "It is one of the biggest values that the Tatas have brought to the world."

He said the industrial revolution had changed the business environment into a "dominant form of capitalism". But now industrial houses are looking at business as a relationship, a relationship that goes beyond the financial achievements to its contributions to society at large.

"I think companies across the world at large are looking back at the values that existed before the industrial revolution when businesses saw communities that made up the workforce as stakeholders. Industry houses are gradually waking to the fact that they cannot do business without the involvement of communities," said Witzel.

"It is a promising sign."

Witzel, however, has a different view on the current industry buzz on Corporate Social Responsibility (CSR).

"Corporate Social Responsibility is a terribly overused term of expression. It is the kind of thing the company says when it wants to do something else. The concept of CSR is just an add-on," he said.

Old world business ethics - the heart of which is service to the working community - should not be equated with CSR, he added.

Witzel, a senior consultant at the Winthrop Group in the UK, is in India to promote his book, "Tata: The Evolution of a Corporate Brand" (Penguin-Books, India).

The book traces the growth of the Tatas as a business house with sound community ethics to a global brand with foreign investments. It begins with the rollout of the first Nano, the budget car at his facility in Gujarat, and rewinds to trace the evolution of the company in the context of corporate branding.

"Branding is the sum total of experience of a business company by the stakeholders - customers, employees and the community involved," Witzel said.

The historian said three features that set the Tata group apart are "trust, reliability and commitment to the community service".

"Every global brand has to deliver on the first two features to build a brand. But it is the third that gives Tata its identity. The group believes in creating wealth rather than generating profits. What comes from people goes back to people."

Witzel said he knew of two British groups that have adopted a "360 degree business approach like that of the Tatas."

"The John Lewis Group in UK - one of the fastest growing lifestyle and accessories retail group - and the Cooperative Consumer Retail chain - take this 360 degree view in their business models," he said.

Several companies in the 19th century in Britain, Germany, France and the US had the same kind of holistic business outlook. But changes in ownership and political economy drove a lot of that ethos away.

"Only the Tatas sustained it because of effective leadership even through the years of change in the mid-1990s when the company built its business brand - by translating its goodwill and popularity into a name," he said.

The historian refused to comment on other business houses in the country because he felt he had "not studied them well enough".

The book talks about the challenges that Ratan Tata, the 72-year-old head of the group, overcame when he took over as chairman and rebuilt the linkages between Tata Sons and group companies.

Witzel quotes Simone Tata as saying that Ratan Tata brought a spirit of boldness back into the group.

He said the next few years are going to be critical for the group - expanding internationally and turning Tata from India's biggest brand into one of the world's biggest.

Last week, the media was rife with speculation about a possible "Tata successor". The company, which was described by British Prime Minister David Cameron as one of the largest producers in Britain, said it has launched a global hunt for a successor, considering "external as well as internal candidates".

Witzel is currently working on a book, "History of Management Thought"- a book about people's idea of management: what it is now and what it should be based on the practices in nations as diverse as India, Japan, China and the Western nations.