Ratan Tata began questioning Cyrus Mistry’s suitability as chairman-designate of Tata Sons after observing him during a year of “parallel running” in 2011, even before Mistry formally took over.
According to the book Ratan Tata: A Life by Thomas Mathew and published by HarperCollins, Tata, who initially endorsed Mistry despite some reservations from group veterans, grew concerned as he noticed what he called “sharp interventions” from Mistry that hinted at potential conflicts with Tata’s core values.
Tata selected Mistry after a global search, with two conditions for succession: Mistry was to legally sever ties with the Shapoorji Pallonji Group, where he previously served as managing director, and a year of mentorship under Tata would provide hands-on experience in running the Tata Group.
However, by the end of this period, Tata reportedly felt uneasy about Mistry’s approach, noting that while Mistry had an aptitude for identifying strategic risks, Tata questioned whether he would uphold the Group’s values consistently.
Reflecting on his choice, Tata admitted, “Cyrus Mistry’s British education blinded me. I naively thought that the DNA of a person with such an impressive education would be different.” Tata regretted staying out of the selection committee’s process, calling his approach “very idealistic.” In 2012, Tata issued an ultimatum to the selection panel, requiring a decision by December 28. He later believed this pressured the committee into a rushed choice.
Once Mistry officially became chairman, tensions grew as he pursued ventures outside the Group’s core business areas. The book reveals that Tata became uncomfortable as Mistry led the conglomerate toward sectors susceptible to ethical issues, such as infrastructure, fearing this could damage Tata’s reputation. When Mistry stopped consulting Tata Trusts on major decisions, trust eroded further. A critical point came when Tata Power acquired Welspun’s alternative energy assets for $1.45 billion without board approval, which Tata saw as a “real flare-up.”
Tata brought in Harvard Business School’s Nitin Nohria to support Mistry, hoping to bridge their differences. However, internal rumors suggested Tata was interfering. By October 2016, Tata decided to remove Mistry, acknowledging it would bring criticism. “Even for me, firing him this way was not our style of doing things. Our lawyers said that if it is not a surgical strike, he would go to the court and litigations would follow,” Tata said.
In retrospect, Tata wished Mistry had stepped down voluntarily after losing the board’s confidence, remarking, “Mistry should have been more dignified and graciously resigned after it became clear that he had lost the confidence of the directors.” Nohria, reflecting on the decision, said Tata “suffered more than Cyrus in a way” due to the difficult choice, while Venu Srinivasan, director of Tata Sons, added that it “took a lot out of him.”