Stakeholder engagement
Despite trying, my interest around the very affordable Tata Nano and its mass-production birth pangs, refuses to budge. I hate to see this, but the project itself appears to be on a collision course—when I see recent reportage from the mainstream.
Mr Ratan Tata had my sympathy when I heard his chocked voice saying “It is for the people of West Bengal and Kolkata to decide whether we are unwanted or to accept us as a good corporate citizen.” And he lost it when I saw an unseen, and old news-clip yesterday. It was of Ratan Tata introducing Nano to the world, with a sly remark on how the choice of the name came about. “Buddho car, Mamata, or despite Mamata..”
I refuse to believe that someone with Mr Ratan Tata’s calibre can have such offhanded approach to stakeholders. Yet in that introduction, he demonstrated exactly that. A mild arrogance on the lines of “nothing can stop us now,” perhaps? I’d never know.
If history is any proof, corporations have been brought to their knees by a mere handful—time and again. And yet, they refuse to learn from the mistakes or misfortunes of others in their business fraternity.
Stakeholder engagement may sound like a corporate jargon lacking empathy, but it is a powerful tool if used early on, with honesty, and integrity. Stakeholder engagement is what Erin Brockovich did by approaching each one of those affected by PG&E’s actions.1
Nobody seems to debate the fact that it is not enough for companies to take the Government provided land, particularly in the background of unrest from primary stakeholders. It is not about being right, legally correct, or having the nose-up because of it. It is about facing reality.2 Those who do not take heed, end up facing the wrath of opportunists like Mamata Banerjee.
Doing business in a developing world is no excuse for Harvard graduates to skip chapters from their business management books. It would be a shame to see the Nano project wither away because of ineffective stakeholder engagement.
- Watch the film, if you haven’t already. It is mind boggling. [←]
- This does not only happen in India. Look at Corrib pipeline project for example. [←]
Chetan, the stakeholders argument will hold water if the farmers whose land was acquired and the youth that were employed had expressed sentiments similar to that of Mamta. On the contrary, they want Tata to stay on. I’m all for stakeholder involvement in corporate projects that have a large impact but I doubt Mamta has those noble intentions at heart.
Sep 2, 08 at 01:09This is a complex discussion.
, but they forgot India is democracy and has good media too 
which can’t be suppressed. They miscalculated as they did in underestimating Manmohan singh.
TATA announces a cheap car based not just on cheap labor or cheaper innovation but cheaper input cost (major part can be the capital cost including acquiring/leasing the land). Stakeholders of significant numbers have come together for multifarious goals.
1. Provide Trinamool Congress/INC congress to give schtick to communists in their local den.
2. Majority of the protestors are of particular community requiring religious alignment(try to guess what were stronger reasons to push Tasleema nasreen out of west Bengal)
3. INC also schticks it to TATAs for abandoning Maharashtra/Pune.
4. Bajaj/Mahindra and friends keep pushing their versions of cheaper vehicle (wonder where these protesting folks are getting funded from, what is Amar singh doing there ::)
5. Commies wanted this to come to get other folks in chinease way
FACTS
(for a significant period government did not allow external folks inlcuding media to get into singur while they were claiming it back)
- idiosyncrancies of the land laws rooted in old times.
1. Ancilliary units are up and running.
2. Majority of the landowners gave the land at the given price, folks who resisted were forced by the local CPI/Forward bloc folks
3. Most of the land is extremely fertile with non-land owners as well as original farmers being very dependent on it. (supposedly 4 crops are grown there every year - compare this with our areas - we are poor)
4. Government can’t return the land anymore
Ideally
Government should have facilitated the transfer without getting involved deeply and possibly chosen the infertile land. (Jindal/Reliance are doing the same).
Bigger problem is anywhere these SEZs or massive companies come up, local people are ignored for lack of skills and union problems resulting in massive insecurity.
Look at DLF etc in Gurgaon, most of this land too was picked up from farmers, but farmers were paid very well (did you hear of helicopter being used for the travel?)
As Patrix mentioned Mamta has not so nole intentions in stoking this, Mamta has spent lifetime to get limelight, this is the opportunity of the lifetime for her. She will not throw it away by bowing down. She is here for more than her share of 15 mins.
The companies which need bigger accountability are the oil companies - which bifurcated the leftovers of ottomon empire(persians have their own stuff to grind for) and setup the theocracies/supported the dictators/overturned the elected governments/pushed for imposition of the their version of democracy etc/involved in other unpostable stuff. Read Epic or watch Blood and oil.
Sep 2, 08 at 17:13The point I am trying to make here is that Tatas could have easily taken this risk into account, and put together a mitigation plan right at the concept stage, before pouring the money in. Any business with or without a prized project, and with significant stakes riding it would do the risk analysis. It has been over a couple of years that media has been reporting Singur’s problems, and Tatas just waited out, while taunting the stakeholders to take a hike. If you ask me, that’s stupid—to put it mildly. When a company worth a market cap of $165B does this, it shows how poorly they understand managing business risk.
West Bengal has had a record history of human rights violations second only to Gujarat. Tatas turning a blind eye to the way land was acquired by the WB Government is what is holding them to ransom now. They should have seen it coming. (That’s what I meant when I said skipping chapters from the management books is like waiting for them to tie a noose around your neck.) If you take that as your risk, and still want to proceed, then it is imperative that you go into arbitration and settlement mode with those stakeholders who are affected, and those who are unconvinced. And early. Get everyone involved to agree, or else no deal.
In fact, addressing the issues of those 1500 farmers, when a large number (11000) had already agreed, on hindsight definitely looks doable early on, than going into a deadlock with those fuelling the agitation now.
Actually by doing nothing, Tatas gave everyone enough time to re-load ammo and go after them—for whatever reasons (personal, political, business, greed, anything goes).
Like they say, the devil is in the details. It is not about those who agreed to the deal, but those who didn’t, or those who backed out—by coercion, change of mind, whatever.
I thought the word ‘opportunist’ said enough about what I think of Mamata and Co.
Again the devil is in the details: National Oil companies or International Oil companies? Today the top three international oil companies—ExxonMobil, Shell, and BP together—have less than 10% of the world’s market share. They’re actually engineering/tech contractors in a sense. They engineer, develop, operate, and decommission at the end of asset life.
Whereas the National oil companies own all assets, control national resources, most of them are Government owned (directly or indirectly). When you pay for a litre of petrol, you’re actually paying between 70%-80% in Government taxes. It would interest you to know that every Government makes a big chunk of money from oil/gas. Yet, the perception that oil companies are ripping you off is pretty common. There are reasons for that: Oil companies are not allowed to show taxes on their receipts—when you buy fuel at stations, nor are they allowed to make public statements about this. This is unlike every other non-oil/gas retail product in the market. If it was allowed, then people would clearly see who would require to have higher accountability.
Sep 2, 08 at 20:37Chetan you are right. WB also has the enviable record of record land re-distribution through India. Through 1977/naxalari movement - this state did which every other promised. So now it is difficult for them to go back and ask for the land back :).
OIL is different subject and I will get around to aggregated post on it rather than hijjacking your blog for the same.
There are two issues with OIL firms.
1. Today’s prices
2. Past and present follies
You have touched upon the pricing piece, which I agree - completely. If people work, take risks as enterprenuers they need to get rewarded. Even now the companies are not paid profits properly. The extra money will help them to push for the new alternatives, more resources. We as consumers also need the pinch so that we can find the alternatives otherwise hidden subsidized costs will come out in terms of inflation etc.
Comment about national companies - well aramco, venezuela, indonesian firms(suharto or sukarno’s cronies), yukos, piddly Indian firms, Libya have only recently become the owners and even now you hear the mnc firms cribbing about the nationalization.
Sep 4, 08 at 10:39Now accountability comment was specifically about past documented acts of intervention in nation states, overthrowing elected governments
Most of the revenue was siphoned off from the nations in terms of royalties. The bigger role was around the overthrow of iranian government, support of dictators/policies in venezuela/peru/nigeria/angola, underhand deals with Persian/Arabian world to simplest thing of overturning the iraqi decision to deal in euro vs dollars. Past has clearly shown the rulers of the middle east did not know what they were dealing with and doled out multi decade massive area leases for exploration etc. This monopoly over technology unfortunately does not have “open”(why should it be as the investment is from the enterprenuer and the investors) to allow the national companies to get access to them. Thus making them dependent on the cairns of the world.
specifically - http://www.mtholyoke.edu/acad/intrel/Petroleum/rand.htm - the ethics were kept on side and national interest was intertwined with the firm interest. Stakeholders were mostly taken away from discussion.
http://www.mtholyoke.edu/acad/intrel/energy.htm
Sep 4, 08 at 10:59Real stakeholder challenge is for Africa and its resource imho. In our case too - Bihar/Orissa/Jharkhand have a similar challenge. So much mineral wealth, so little local prosperity unlike the latest surge of russia.
Sep 5, 08 at 10:42