‘His British education blinded me…’: New book details the clash that tore Ratan Tata and Cyrus Mistry apart

In the intricate world of corporate leadership, Ratan Tata’s choice and subsequent disillusionment with Cyrus Mistry as the chairman-designate of Tata Sons is a story of ambition, values, and ideological clash. Years before Mistry officially assumed the role, Ratan Tata began to harbor doubts about his decision, setting the stage for a dramatic corporate saga.

Ratan Tata initially selected Mistry after an extensive global search, driven by two primary conditions: Mistry would need to sever his legal connections with the Shapoorji Pallonji Group, where he was previously a managing director, and he would spend a year under Tata’s mentorship to gain experience. This mentorship was expected to be a period of “parallel running” in 2011 that provided a hands-on approach to understanding the nuances of leading Tata Group.

During this phase, Tata’s eyes were opened to Mistry’s style—a style punctuated by what Tata perceived as “sharp interventions.” These interventions stirred a discomfort in Tata, planting seeds of doubt about Mistry’s alignment with Tata’s cherished values. Though Tata initially vouched for Mistry despite reservations expressed by senior members of Tata Group, his faith gradually wavered as he watched Mistry’s approach play out.

Reflecting on his choice, Tata attributed his initial inclination to Mistry’s British education. He confided, “Cyrus Mistry’s British education blinded me. I naively thought that the DNA of a person with such an impressive education would be different.” Tata candidly admitted his belief in the value of an esteemed education as somewhat idealistic. In hindsight, he lamented not being more involved in the final stage of the selection process, conceding that his absence might have contributed to a hurried decision by the selection panel when placed under pressure to decide by the end of 2012.

When Mistry officially became chairman, his venture into sectors that deviated from Tata’s core businesses led to mounting tensions. Tata grew apprehensive as Mistry pushed the conglomerate towards industries with potential ethical pitfalls, such as infrastructure, fearing it could tarnish Tata’s esteemed reputation. A notable incident was when Tata Power acquired Welspun’s alternative energy assets for $1.45 billion without board approval, marking a significant rupture in trust.

To navigate the escalating discord, Tata enlisted the support of Harvard Business School’s Nitin Nohria. This move was intended to mediate and foster understanding between the two leaders, but speculation ensued suggesting Tata was unduly interfering with Mistry’s leadership. As tensions reached a boiling point in October 2016, Tata resolved to dismiss Mistry, acknowledging that such an action would attract criticism. He reflected, “Even for me, firing him this way was not our style of doing things. Our lawyers said that if it is not a surgical strike, he would go to the court and litigations would follow.”

Looking back, Tata expressed a wish that Mistry might have chosen to resign gracefully upon realizing that he had lost the confidence of the board. “Mistry should have been more dignified and graciously resigned after it became clear that he had lost the confidence of the directors,” Tata mused, as the corporate dynamic unfolded in a manner that ultimately strained both men profoundly.

Nitin Nohria, reflecting on the period, noted that Tata experienced significant inner turmoil through the ordeal, while Venu Srinivasan from Tata Sons remarked on the substantial toll it took on him. In the end, the dissolution of their corporate union was marked by a clash of ideologies as much as business stratagems, underscoring the profound impact leadership decisions can have on a conglomerate’s cultural legacy.