Ratan Tata's Concerns Over Cyrus Mistry: Insights from the British Book on Leadership at Tata Sons

Ratan Tata started to question Cyrus Mistry’s leadership skills during a year of "parallel running" in 2011, before Mistry officially took over as chairman of Tata Sons.

Although Tata initially supported Mistry, he became concerned about Mistry's style and how it conflicted with Tata's core values.

Even though Cyrus Mistry was chosen after an extensive global search, Ratan Tata became concerned about whether Mistry would consistently follow the group's values.

Over time, Tata noticed Mistry's "sharp interventions," which suggested possible conflicts with the core principles of Tata Group.

Tata chose Mistry after a global search, with two main conditions.

First, Mistry had to sever ties with the Shapoorji Pallonji Group, where he had been managing director.

Second, he needed a year of mentorship with Tata to gain hands-on experience running the Tata Group.

By the end of that mentorship year, Tata felt uneasy about Mistry's approach. While Mistry was good at spotting strategic risks, Tata questioned whether he would consistently uphold the Group’s values.

Reflecting on his decision later, Tata admitted that Mistry’s British education had blinded him.

He thought someone with such a prestigious background would have different values and regretted not being more involved in the selection committee.

In December 2012, Tata issued an ultimatum to the selection panel, demanding a decision by the 28th.

He believed this pressure led to a rushed choice. Once Mistry officially became chairman, tensions began to rise. Mistry started pursuing ventures outside the core business areas of the Tata Group, which made Tata uncomfortable.

He worried that Mistry’s choices could damage Tata's reputation.

Trust between Ratan Tata and Cyrus Mistry weakened when Mistry stopped seeking advice from Tata Trusts on important decisions.

A major turning point occurred when Tata Power bought Welspun’s alternative energy assets for $1.45 billion without getting board approval. Tata saw this as a serious problem.

To resolve their differences, Tata invited Nitin Nohria from Harvard Business School to help support Mistry. However, rumors started to circulate that Tata was interfering in Mistry's choices.

By October 2016, Tata made the tough choice to remove Mistry from his position.

He knew this would bring criticism, stating that firing Mistry in such a manner was not typical for them. Their lawyers advised that if it wasn’t handled carefully, Mistry could take legal action.

Looking back, Ratan Tata wished Cyrus Mistry had resigned after losing the board's trust.

He believed Mistry should have stepped down gracefully.

Nitin Nohria said that Tata suffered more than Mistry because of the tough choice to let him go.

Venu Srinivasan, a director at Tata Sons, noted that the situation took a big toll on Tata.