Beyond Mere Economics: Does Your Company Have a Role Model?
Having a business model is common for a company. Does your company have a role model?
I recently taught a 2-week introductory course on Design Management to students at a high school in the San Francisco Bay Area. Throughout the course, the students divided themselves into groups and each group role-played the formation, product development, and growth of a fictitious startup. In the last session of the course, I introduced the students to the concept of having a “Role Model” for their companies. This was accompanied by a case study on Tata Group as a role model conglomerate. This post is a summary of that last session of the course and the case study that accompanied it.
It started with a conversation:
Q: Imagine you and your company earn a lot of money. How much is A LOT OF MONEY for you?
Students: One million. Ten million. Some even said a hundred million.
Q: What will you do with that money?
There were a lot of whispers but no one answered. So, I pitched in — May be get a nicer office, sports cars, a private jet, designer clothes…what else?
Q: How long do you expect the company to exist?
Students: 10 years, 25 years.
Q: We learnt about Business Models in previous sessions. Separately from that, have you thought of a Role Model for your company?
They chat amongst themselves.
Q: How do companies create a positive impact?
Students: Provide employment, economic development, they pay taxes, they give dividends to shareholders.
Q: Correct! However, all these are related to economics. Do you see any positive change in your city, society, or surrounding environment?
They chat amongst themselves. Someone says: “Money brings a lot of power.”. (I add, that’s right and with great power comes great responsibility (a dialogue from the movie — Spiderman)).
Q: What problems do you see in your surroundings/city?
Students: Lack of public transport, homelessness, health problems, stress
Q: Do you think a corporate entity can bring about a positive change there?
Students: (silence)
CASE STUDY: TATA GROUP
The Beginning:
This case study revolves around the Tata Group. Growing up in India, the name of Tata was ubiquitous. From salt to steel, from civil aviation to cities, from energy to education, from tea to technology … there seemed nothing the group was not involved with. It is a testament to their extraordinary influence that, growing up, it felt normal that as Companies grow and diversify, they get involved in their communities and do good for society. Today, this seems more of an exception than the norm.
As with any company that has existed for 155 years, Tata has attracted their share of criticism and controversy. However, they provide abundant examples of consciously interleaving economic growth, shareholder value, and societal and environmental good.
The Tata Group is a multinational conglomerate headquartered in Mumbai, India. It was founded in 1868 by Jamsetji Tata and has since grown to become one of the largest business groups in India, with operations in over 100 countries and more than 950,000 employees worldwide (Apple has around 165,000 employees and Alphabet, that is Google has around 150,000 worldwide in 2021).
Young Jamsetji started his career at his father’s trading firm. However, he soon realized that there was a need for India to develop its own industries and reduce dependence on imports. He bought an old oil mill in the city of Bombay (now Mumbai) and converted it into a textile mill. In a few years he sold that mill and started another mill called Empress Mill in Nagpur, a less developed city (compared to Bombay) in central India.
“The textile mills at Nagpur were Jamsetji’s laboratory, where he tried out his experiments in technology — and labor welfare. The excellence of his new plant was matched by his care for the workers. He installed the first humidifiers and fire-sprinklers in India, instituted a Pension Fund, and also paid accident compensation. He was decades ahead of his time and miles ahead of his competitors. The Empress Mill experiment showed that not only profits but people mattered to him.” — tata.com
After the success of Empress mills, Tata Endowment fund was established to support higher education for bright youngsters.
In 1903, Jamshetji’s vision of giving Bombay a hotel worthy of the city came to fruition. The iconic Taj Mahal Palace Hotel stands like a mirage by the Arabian Sea and embodies the indomitable spirit of ‘The City of Dreams’. The massive 240-feet high central dome of the architectural masterpiece serves as an official daytime triangulation point for ships of the Indian Navy, to this day!
Tatas supporting artisans through Crafts-based Livelihood Program named Antaran
Banarasi silk sarees are among the oldest heritages of Indian craft. This kind of saree is a hand-woven silk masterpiece and the handicraft enjoyed long patronage from Indian and European Royalty. However, with the advent of industrialization, the mass production of cheaper look-a-likes and synthetic materials led to the decline in demand of Banarasi sarees. The weavers of Banaras and their craft were staring extinction in the face when Tata’s Taj Group of Hotels stepped in. They commissioned the weavers to weave sarees for their front office staff. Since only a few weavers benefitted from this, they adopted more villages and worked on providing the weaver community with health facilities, education for their children, and a better working environment. Soon, the younger generation from weaving families, who had set aside their traditional handicraft and turned to other menial pursuits, returned to weaving.
To preserve, sustain, and further develop traditional Indian arts, crafts, and culture, the Tata Trust has initiated a Crafts-based Livelihood Program named Antaran. This program is geared towards reviving ailing handloom clusters (a group of villages that produce a certain handloom product) and nurturing artisans as designers and entrepreneurs.
Steel Plant and Planned City
In 1907, Jamsetji’s successor, Sir Dorabji Tata, established the Tata Iron and Steel Company (now: Tata Steel) to promote and accelerate the industrialization of India. The site was a remote, under-developed village named Sakchi. The Tatas envisioned Sakchi as far more than a mere row of workers’ hutments. They insisted on building up all the comforts and conveniences of a modern, well-planned city for their employees. Even before the first ingot was rolled out, Sir Dorab had established a hospital in Sakchi.
In 1919, Sakchi was renamed Jamshedpur in honor of Jamsetji Tata. Today, Jamshedpur is the largest and most populous city in the region which nevertheless retains its forests, ancient temples, and royal palaces. It is ranked as 2nd cleanest in India for quality of life and consistently ranked as being one of the cleanest cities in India.
The Tatas have played a key role in the development of many cities like Pune, Dharwad, Lucknow, Pantnagar, Mithapur, etc.
Education and Research Institutes for India
In 1909, the Tatas established the Indian Institute of Science (IISc) in the city of Bangalore (Its origins involve a fascinating, and accidental, meeting of minds between Jamsetji Tata and the renowned ascetic Swami Vivekananda)(Indian Institute of Technolgy, IIT was founded in 1950). Today IISc is ranked among the most prestigious academic institutions in India and has the highest citation per faculty among all the universities in the world. Since then, the Tata group has built many institutes, including the Tata Institute of Social Sciences (1936), a pioneer of social work education in the Asia Pacific region, the Tata Institute of Fundamental Research (1945), for research on atomic energy, and the National Centre for the Performing Arts (NCPA) (1986), the first multi-venue, multi-purpose cultural center to be built in South Asia.
Commitment to Sports
Apart from research and arts institutes, Tata has also supported the Indian team’s participation in the 1920 Olympics (Coca Cola sponsored Olympics for the first time in 1928). Since then, Tatas have created an ecosystem to nourish sporting talent in the countries they operate in. From supporting Himalayan expeditions to developing facilities for football, archery, and other sporting games, Tatas have shown their commitment to sports across the globe.
Salt to Satellite Conglomorate and Most Generous Philanthropist
Tatas also established their presence across sectors like Fast-Moving Consumer Goods and cosmetics(TOMCO, Lakme), electricity generation and distribution (Tata Power), aviation (Tata AirLines, now Air India), automotive (Tata Motors), beverages (Tata Global Beverages), home appliances (Voltas), software (Tata Consultancy Services), lifestyle accessories (Titan, Taneria), jewelry (Tanishq), and telecom (Tata Communications, NELCO). Each of their companies are generally viewed as key players in their sectors.
Accompanying this growth, the Tata Group has served as a custodian of public good and positive social impact through innumerable initiatives across education, health, environment, and social empowerment.
In 2021, Jamsetji Tata and the Tata Group emerged as the most generous philanthropists in the last 100 years, having donated over $102 billion for social causes (compared to e.g. Bill Gates: $74.6 billion, Warren Buffet: $37.4 billion, George Soros: $34.8 billion, etc.)
What aspiring entrepreneurs can learn from the Tata Group:
- Values, Vision, and Mission: The Tata Group was founded on the vision of Jamsetji Tata to create a business empire that would contribute to society’s economic and social development. As entrepreneurs, it is easy to focus the company vision and mission on a narrow problem, without necessarily considering or caring for the larger social context in which the company and its employees and customers operate. Tata’s examples show us that caring for society and creating world-class companies can be harmonized objectives.
- Organizational culture and leadership development: The story of Tata is not merely that of an individual or a family forming a company and making money. Rather, it is about creating and sustaining an organizational culture that encourages and emphasizes being the best in the market and increasing shareholder value, without compromising on social and environmental responsibility.
- Social responsibility does not have to wait: The Tata Group did not start their philanthropic work only after enjoying economic success. It started as soon as the company was established. It does not matter whether you earn a thousand dollars or a billion. What matters is that you are motivated beyond economic success and cultivate the mindset of giving back to society. For example, you may start by giving 5% of your profits to charity and then as your company grows in revenue and people, so can your giving.
About the course:
This was a 2 week course, a simulation on Design Management. In this course, the entire class was divided into groups who role-played as a real company. Each group designed and developed a new physical product for a target market, made critical design and business decisions, estimated product costs and profits, developed a business model, and decided whether to launch the project or abort it altogether. This course gave the students hands-on experience as they played different roles like a product or project manager, product designer, marketing manager, CEO, and CTO in a safe classroom environment.
