A Question of Identity and Governance

Airing unresolved differences in public is typical of a family business set-up. It is important to determine whether the Tata-Mistry feud is a role- or personality-based feud.

- Tatwamasi Dixit

Nobody expected it—surely not the Indian public. The abrupt ouster of Cyrus Mistry as chairman of Tata Sons in October this year has dominated media and societal discussions, leaving the public perplexed regarding the DNA of the institution which determines its identity.

The concept of identity, according to Indian scriptures, rests in triputi: Kartha (who I am), Karma (what I do), and these two, in turn, determine Kriya (how I do). These three aspects must be in sync to produce optimum results.

The Tata group started out as a family business and, with the professionalisation of the business over the years, possibly wanted to acquire the identity of a professionally-managed non-family business. However, the appointment of Mistry, an extended family member and shareholder, as chairman of the holding company as well as operating companies is indicative of adopting the family business governance model where the powers are vested in one individual. In contrast, the manner in which Mistry, the “family chairman”, was fired is typical of a professionally managed non-family business. Therefore, the perceived identity is ambiguous.

The learning here for family businesses in general is that it is essential for a company to have a clear Kartha identity, which must be in harmony with Karma (in this case, all the businesses of the Tata group) and Kriya (governance).