'The Next Chairman Does Not Need To Build Tata'

'... that work is done. The task is to reallocate what has been built, with the courage of a founder and the discipline of an owner.'

The Tata Group has been here before: A chairman removed in a dramatic boardroom rupture, a long-running battle over governance and control, and questions over who really gets to decide the future of one of India's most powerful business houses. Nearly a decade after Cyrus Mistry's ouster, N Chandrasekaran'S departure has once again put that question at the heart of the Tata Sons succession.

But Vijay Govindarajan, Coxe Distinguished Professor of Management at Dartmouth's Tuck School of Business (external link), sees something bigger than another Tata leadership tussle.

In his assessment, Chandrasekaran's tenure was transformative: He stabilised the group after the Mistry upheaval, pushed a 'One Tata' strategy and built scale across businesses ranging from TCS to Tata Motors and Tata Steel.

The paradox, Professor Govindarajan, a former Marvin Bower Fellow at the Harvard Business School, says, is that Chandra's successor inherits an extraordinary portfolio -- but also an extraordinary burden.

The next chairman will have to confront the unresolved Tata Sons listing question, the Shapoorji Pallonji Group's exit, the regulatory demands surrounding Tata Sons, loss-making units and, perhaps most urgently, the threat to the cash engine that has financed much of the group's expansion: TCS.

The governance question may prove just as difficult.

Professor Govindarajan -- a New York Times and Wall Street Journal best selling author -- describes a structural fault line between Tata Trusts, which control 66% of Tata Sons, and the holding company's formal board and chairman.

The timing is striking. Chandra's reappointment became contentious after Tata Trusts Chairman Noel Tata raised concerns over the group's strategy and newer businesses; on August 12, Chandra said he would not seek another term, citing insufficient board support.

Ratan Tata's death in October 2024 further changed the equation. He had been the central figure who navigated the Trusts-Tata Sons relationship; Noel Tata, Ratan Tata's step brother, succeeded him as chairman of Tata Trusts days later.

In this e-mail interview with Prasanna D Zore/Rediff, Professor Govindarajan says the next chairman does not need to build Tata. He has to decide what to keep, what to change and where to put the group's enormous capital next.

'Ratan Tata's passing removed the single figure who could...'

Assessing N Chandrasekaran's tenure and biggest success...

Chandra's tenure was transformative. He stabilised the group, executed the 'One Tata' strategy of simplification and synergy, and delivered scale across TCS, Tata Motors and Tata Steel.

Did Ratan Tata's death alter N Chandrasekaran's position?

Ratan Tata was Chandra's patron. His passing removed the single figure who could balance competing interests and legitimise the chairman's authority.

Is the next chairman inheriting a crown of thorns?

For all the difficulties of the job, the incoming chairman inherits a portfolio that no other Indian business house and few global conglomerates can match. Look at the assets: The Tata brand, TCS, a diversified portfolio spanning strategic sectors, government standing, global footprint, talent depth and leadership bench, and a national tailwind.

The paradox of the next chairman is precisely this: The assets are extraordinary. The next chairman does not need to build Tata, that work is done. The task is to reallocate what has been built, with the courage of a founder and the discipline of an owner.

The successor inherits unresolved questions on the Tata Sons listing, the Shapoorji Pallonji exit, RBI's NBFC mandate, an unclear Tata Trusts-Tata Sons boundary, loss-making units, and a disrupted IT-services cash engine.

The Indian IT services industry, in general, has been significantly impacted by Gen AI. Add global tariff volatility, and it is arguably a challenging job.

'I lean toward an insider with outsider instincts'

Preparing for a post-TCS financial engine...

TCS has funded a large part of Tata ambition: Air India, semiconductors, EVs, batteries. Generative AI threatens the linear headcount-revenue model of Indian IT services industry including TCS.

The next chairman must diversify cash generation, reinvent TCS toward AI-native services (a work that has already started but needs to accelerate).

Another important strategic move is to become a leader in Industrial AI. The Tata Group has strong presence in manufacturing: Tata Steel, Tata Motors, and the like. Key is to build manufacturing for the future with AI-first principles.

The Tata Group can unlock tremendous new value by having a coherent Industrial AI and Physical AI strategy across its entire portfolio of businesses that is coordinated and orchestrated by Tata Sons.

Attributes the board should prioritise...

Prioritise three: Capital-allocation courage (willingness to shrink or exit legacy businesses), technological leadership (Industrial AI and Physical AI), and institutional temperament (patience with Tata Trust-Tata Sons complexity).

Charisma and operational polish matter less than the founder-mindset conviction.

Who could be the next Tata Sons Chairman: An insider like T V Narendran versus an outsider?

I lean toward an insider with outsider instincts. This is my personal viewpoint. Narendran understands Tata's cultural DNA, invaluable given Bombay House's complexity. At the same time, Naren is a transformational leader.

'Nation-building and shareholder returns are not opposites'

Government-relations capability of the next chairman...

Critical, but not decisive. Tata operates in aviation, defence, semiconductors, telecom and nuclear-adjacent sectors -- all license-dependent. Chandra's Air India acquisition and semiconductor fab depended on Delhi's trust.

The successor must sustain that credibility, but government skill alone cannot compensate for other attributes like strategic thinking and wise resource allocation.

IMAGE: Vijay Govindarajan.
Photograph: Kind courtesy Vijay Govindarajan

Balancing legacy with capital discipline...

Nation-building and shareholder returns are not opposites. They were reconciled by Ratan Tata's Corus and JLR bets. The next chairman must apply a sharper filter: Bets should have a defensible competitive logic and a credible path to returns, even if long dated.

Advice for the next Tata Sons Chairman...

Three priorities: a. Resolve the Tata Trusts-Tata Sons governance architecture; b. Publish a transparent five-year capital-allocation framework, including investments in Industrial AI and Physical AI; c. Engage Shapoorji Pallonji constructively on an exit path.

Photographs curated by Manisha Kotian/Rediff