On a rainy day in the monsoon season in 2002, Ratan Tata, then CEO of Tata Group, India’s biggest industrial conglomerate, was on his way to the airport in India’s high-tech capital Bangalore when a scooter suddenly zipped by, lost control, and skidded while trying to make a turn on the slippery road. Nobody was injured, although the scooter driver, as well as his wife and two children, who were all on the vehicle, were not wearing helmets.

Witnessing that potentially fatal accident and recalling scenes of families riding around in such vehicles in precarious situations triggered a radical thought in Tata’s mind: “It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family.”¹ That random thought led Tata Motors, the automotive arm of Tata Group, to design a two-thousand-dollar car that would be the world’s cheapest. Launched in India in 2009 and called the Nano, the compact car provides access to affordable transportation to the emerging middle class in India.²

Developing the Nano wasn’t easy. There was criticism and disbelief that anyone would want to develop such a car, because no one believed there was a market for such low-cost vehicles.³ Tata’s motivation behind the Nano, however, was to create an entirely new market, one that could benefit not only his company but rival carmakers as well. “People in the industry said it wasn’t possible to build such a car, but now they feel they have to do it themselves [because we showed that it can be done],” he explained. “[Our success] proves there’s a large market at the bottom of the pyramid, a market big enough for others as well as for us. If we have started a trend, that will be satisfying to all of us.”⁴

Tata has described the Nano as a “people’s car” because it brings affordable, fuel-efficient, and safe personal mobility to many families who could never afford a car before.⁵ In many ways, the Nano is an embodiment of how a wise leader practices enlightened self-interest, an ethical philosophy that postulates that people who endeavor to serve others’ interests eventually end up serving their own self-interest.⁶ In other words, leaders who act and lead out of enlightened self-interest attempt to tread a middle path between two extremes in the motivation spectrum: total self-interest and selfless altruism. Tata, for instance, was deeply moved by the scooter accident he saw, as well the needs of a large portion of India’s population for better and safer transportation. Yet he wasn’t entirely selfless in coming up with Nano. He also knew that the small car market held the potential for huge sales because many people sought to enter the market and buy a car but could not afford expensive models. Indeed, the middle class in India is expected to expand from 5 percent of the population in 2007 to 40 percent over the next two decades, creating the world’s fifth-largest consumer market by 2025.⁷ India is poised to become the world’s fourth largest auto market by 2015.⁸

Tata’s philosophy was modeled on that of his great-grandfather, Jamsetji Tata, the founder of Tata Group, who said in 1868, “We do not claim to be more unselfish, more generous or more philanthropic than other people. But we think we started on sound and straightforward business principles, considering the interests of the shareholders our own, and the health and welfare of the employees, the sure foundation of our success.”⁹ In fact, a philanthropic organization, Tata Sons, holds the majority of shares in Tata Group, a diversified conglomerate made up of for-profit companies engaged in everything from information technology to chemicals and car manufacturing. More than 65 percent of Tata Sons is owned by charitable organizations created by Tata Group, a structure that allows a large portion of the company’s profits to flow back into the community for investment in social development projects. The Tata Group states that all its companies believe in “returning wealth to the society they serve.”¹⁰ Ratan Tata embodies this selfless spirit and fits the definition of a wise leader—one who “leverages smartness for the greater good.” For a corporate chief, he leads a relatively simple life, residing in a modest house with his dogs. He is also actively involved as head of charitable initiatives like Dorobji Tata Trust and Sir Ratan Tata Trust.

While both kinds of smart leaders tend to decide and act motivated primarily by benefits they can accrue for themselves, wise leaders like Ratan Tata make decisions and actions driven by something far beyond personal gains: enlightened self-interest and serving a noble purpose.