Simplification, synergy, scale: Chandra spells it out for Tata staff

Tata Sons Ltd chairman N Chandrasekaran on Tuesday asked employees of the group to focus on simplification, synergy and scale in order to take advantage of global expansion.

In a letter containing his year-end address to the over 695,000 Tata employees, he said the group needs to make its management and organisation structures simpler and impactful across businesses, helping it respond and react faster, bring agility and spur decision-making.

''It has been a year of significant change for the Group, and I believe that we are approaching 2018 with greater collective purpose as we work together to shape the future," said Chandrasekaran. "In order to achieve peak performance, we must focus on three things: simplification, synergy and scale."

He reiterated the group's ''One Tata'' approach, emphasising that the global economy is set to grow at 4 per cent year-on-year in 2018 - the fastest pace since 2011. This coming phase of the economic cycle will rotate increasingly towards developing markets especially India, he said.

Chandrasekaran, who assumed chairmanship of the $100 billion Tata Group in February after Cyrus Mistry was ousted by the board in October 2016, said he was convinced more than ever before about the future power and potential of the Tata businesses.

''The House of Tata remains a cornerstone of India's growth story, and will continue to play an influential role on the global stage. With our diversified global footprint and our presence in the lives of almost a billion consumers, we are uniquely positioned. In order to achieve peak performance, we must focus on three things - simplification, synergy and scale,'' he said.

After taking charge, Chandrasekaran has been focusing on reducing cross-holdings among group companies and exiting from businesses that are not significant. The group wants to create five to seven clusters, besides the three big firms. Entities serving the same function are to be merged to create a cluster of companies around infrastructure, defence, consumer goods, finance and travel.

Emphasising this approach, Chandrasekaran said, ''To thrive in a world of rapid change, we need to reduce complexity across businesses and simplify. This will help us respond and react faster.''

''It will also bring agility and spur faster decision-making across the group. We must make our management and organization structures simpler and impactful.

''To grow and innovate consistently, we must anticipate synchronicity. Unlocking the hidden productivity of the Tata ecosystem can catapult us to a new level of sustainability and performance.'' With digital revolution putting technology at the heart of all industry to deliver real time value to an interconnected network of users, Chandrasekaran said.

''At the house of Tata, we can distinguish ourselves in this networked world: first by being bold, enthusiastic and early adopters; and second by cultivating an obsessive focus on customer experience''.

Reiterating that the Tata group has presence in many sectors which have the potential to scale and significant opportunity to grow, Chandrasekaran added, ''We need to scale through growth, consolidation and collaboration.''

The Tata Group is selling non-core companies to make the loosely-held conglomerate leaner. The focus now is to strengthen balance sheets, reduce debt and develop scale under the new leadership.

Over the last few months, Tata Steel forged a merger of its UK business with German steelmaker ThyssenKrupp and debt-laden Tata Teleservices sold its mobile business to Airtel, bringing resolution to two of the most troubled businesses of Tata Group. Excluding Tata Consultancy Services, the empire has $25.5 billion in net debt.