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Evaluating Managers: Ratan Tata or Cyrus Mistry?

Nov 1, 2016

In this issue:
» Which State Tops the Ease of Doing Business Rankings?
» When China Sneezes India Catches a Cold!
» ...and more!
Kunal Thanvi, Research analyst

Your typical jungle scene always includes a herd of elephants. Moving together is a strategy to keep predators at a bay.

However, every group has weak and vulnerable members.

This reminds me of a scene on the Discovery Channel. A group of lions detected a vulnerable member of an elephant herd...

They circled their prey. The attack was tactful: on the spine of the ageing elephant.

The whole lion pride enjoyed a meal. And once they'd had their fill, hyenas came in for the leftovers.

The organised strategy helps the lion. It's what makes him king of the jungle.

Mr Seng Hock Tan, CEO of Aegis Group in Singapore evaluates management quality in terms of lions and hyenas.

Lions and hyenas are both super predators. Comparisons are inevitable. However, certain differences make one superior to the other.

Lions have their pride in hunting i.e. they typically hunt together in a group.

They go after a bigger game; more food for everybody.

Despite their kingly status within the jungle hierarchy, there is no single dominant leader within a lion pride. Males have equal status, as do females.

Hyenas hunt in groups only when the prey is easy. After an easy kill, they disband.

Status within the heard is important to hyenas. The higher the rank, the more respect from the cackle.

But they do not build a team under a leader except when it immediately benefits them. Loyalty is weak. If a hyena becomes wounded or weak, the troop abandons that hyena.

The hyena recognises the lion's status. As the hyena's only natural predator, the lion commands the hyena's respect.

Mr Tan draws an analogy between these two predators and different management styles.

He argues that a lion manager is capable of building 100-story skyscrapers. Whereas, a hyena manger can only manage five stories.

Investing in a team and sustainable infrastructure takes a lot of time. A hyena manager does not have the patience for this. The hyena manager is better equipped to enrich himself by repeating the short cycle of building and selling five-story buildings.

Lion Manager Hyena Manager
Committed to ethical and moral values Has little interest in ethics and morals
Thinks long term and maintains a long-term focus Thinks short term
Does not take shortcuts Just wants to win the game
Thirsty for knowledge and learning Has little interest in knowledge and learning
Supports partners and alliances A survivor and an opportunist; work mostly alone
Treats employees as partners Treats employees as expenses
Admires perseverance Admires tactics, resourcefulness, and guile

As Tan says, 'The hyena manager is therefore an opportunistic trader, not an all-season builder of a lasting structure.'

Over the years, Equitymaster has used various tools to evaluate management quality.

Every manager will have some lion and some hyena characteristics.

The thrust has always been to find good businesses run by intelligent and honest managers who are more lion than hyena.

We've seen many good business models go for a toss when hyena managers try to scale up operations. These managers lack the teamwork, know-how, and patience to build the necessary institutional structure and culture.

But this is the groundwork needed to survive and grow sustainably, and its why companies run by lions become multi-baggers.

The India Letter team likes easy-to-understand businesses run by lions. They would never recommend a company without first meeting its management. And when they do, they always ask this question: Who are your business heroes? The answer can reveal whether they're talking to a lion or a hyena.

In the ongoing Tata fiasco, there has been a lot of discussion about the better manager. Interestingly, it has divided people in two groups.

One side judges Cyrus Mistry a better manager and the other retains Tata.

Even though both have some lion and some hyena characteristics. How do we judge them?

We keep it simple. The best criteria to judge, is by asking, 'Who is the better capital allocator'?

Who you think is a better manager, Cyrus Mistry or Ratan Tata? Let us know your comments or post them on Equitymaster Club.

03:45 Chart of the Day

In a surprising bit of news, the states of Andhra Pradesh and Telangana have topped the 'Ease of Doing Business Reforms Ranking 2015-16.' This annual ranking is conducted by the Department of Industrial Policy and Promotion (DIPP) and the World Bank. Gujarat has lost its top spot.

As reported in Livemint, the government has expressed satisfaction with the cooperation it has received from various state governments. Last year, only seven states implemented more than 50% of the reforms proposed. This year, 17 have done so. Last year, not a single state implemented more than 75% of reforms, this year, 16 have done so.

The ranking was based on six key reform areas: single-window systems, tax reforms, construction permits, environment and labour reforms, inspection reforms, and commercial disputes and paper-less courts. Clearly, India's states are rising to the challenge.

Gujarat Loses its Top Spot to AP and Telangana

In today's premium edition (subscription required) of The 5 Minute WrapUp, Rahul Shah discusses India's performance in the World Bank's 'Doing Business rankings. India's rank has improved by only one from 131 to 130 this year. But what does it mean exactly? Read it below...


We came across an interesting article in Livemint recently. India's dependence on China for technology-heavy imports has been rising sharply. There's a lot of noise about boycotting imported Chinese goods, the reality is quite different.

There's no data available to determine if the social media campaign of the boycott had any impact on Chinese imports. However, there is enough data to show that the two economies are entwined in a far deeper way than ever before. China is India's largest trading partner. If India were to try to reduce its dependence of Chinese imports, we would have to pay a steep price.

In purchasing power parity terms (at constant 2011 prices), China has already surpassed the US as the largest economy of the world. Thus, a shock to the Chinese economy will have serious spillover effects on other economies, especially India.

China is the leading market for many commodities, especially metals. Even a change in expectations about the Chinese economy has an immediate impact on global commodity markets. As a nation highly dependent on commodity imports, India is undoubtedly impacted by these moves.

Even moves in the Chinese currency carries a lot of weight these days. In August 2015, when China devalued its currency, global equity markets tanked. One month after the devaluation, China's equity benchmark was down around 20% and India's was down by around 10%.

But it's not all bad news. A Chinese slowdown can create opportunities for India. For example, we can try to replace China as the factory of the world, at least in some sectors. We also benefit from a fall in commodity prices. However, China's influence on the global economy is enormous and this is something that the cheerleaders of the Chinese boycott will find hard to digest.

Vivek Kaul has penned in enlightening piece on this development in the Diary titled "A Small Thought Experiment on Made in China".


The media, be it print, social or web has been abuzz about the ouster of Cyrus Mistry as the Tata group chairman with Ratan Tata being appointed as the chairman for the interim. On the whole, the media seemed surprised at this sudden decision. With both the teams seeking legal counsel, there will be enough fodder in the Tata-Mistry saga to write about. What really happened there? What is the truth? Vivek Kaul has an interesting take on these recent turn of events in a recent the Diary entry titled "Why Tata Fired Mistry".


After opening the day flat, the Indian stock markets moved above the dotted line. At the time of writing the BSE-Sensex was trading higher by about 90 points (up 0.3%), while the NSE Nifty was trading higher by 40 points (up 0.5%). Sectoral indices were trading mixed with metal stocks leading the gains.

04:55 Today's Investing Mantra

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll so things differently." - Warren Buffett

Today's Premium Edition.

Is India Really Improving as a Business Destination?

Does the latest ease of doing business report dent the government's claims of economic reforms?
Read On...Get Access

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Equitymaster requests your view! Post a comment on "Evaluating Managers: Ratan Tata or Cyrus Mistry?". Click here!

6 Responses to "Evaluating Managers: Ratan Tata or Cyrus Mistry?"

Dhanush Dhari Misra

Nov 5, 2016

Cyrus Mistry


Abraham Mathew

Nov 2, 2016

RAtan Tata is the lion. I could see the difference during the controversy during the large scale firing of TCS employees when Cyrus took over. Ratan Tata and Ramadorai never dismissed an employee even at the height of recession in 2008. Ratan Tata is a real instituition builder, Cyrus is a typical business man trying to make a fast buck.


sambhu sannyasi

Nov 2, 2016

Ratan Tata obviously is Lion.


parimal shah

Nov 2, 2016

I can not believe that Mr Tata was calling shots at the back.
Had that been the case, the DoCoMo issue would have never gone to the court and there would have been no bad press either.



Nov 1, 2016

Certainly Ratan Tata is much better than Cyrus Mistry. Ratan Tata has taken many innovative decisions, made changes to take Tata group to a different level. Mistry wants to close down loss making products or companies instead of making changes to make them viable and turning them around. Definitely my confidence level in Shri Ratan Tata is much higher compared to Shri Cyrus Mistry.


Nikhil Shah

Nov 1, 2016

It is not fair to compare Mistry with Ratan. Mistry was at the helm only for 4 years whereas Ratan was in the driving seat for about 20 years or so.

This is not a comparable comparison. However, I must say that the questions raised by Mistry should have been responded by Ratan for the benefit of the shareholders of the company. After all these were valid questions and as a shareholder you ought to know the answers.

Also, how can one just throw a chairman of the company without giving him the opportunity to explain his view point. Are we running a business or are we in the military where we have a coup?

Equitymaster requests your view! Post a comment on "Evaluating Managers: Ratan Tata or Cyrus Mistry?". Click here!
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