Sneak Attack!
A Spot under the Sun
The last guy who scaled the billion-dollar mark thinks MindTree’s plan needs some sprucing up. “MindTree is a good company but the problem is that it does not have a clear positioning,” says Lakshmi Narayanan, vice chairman of Cognizant. Narayanan credits Cognizant’s success to a clear position — Cognizant would be among the top five companies in the world in financial services and healthcare — and relentless execution. Even today, 55 percent of Cognizant’s revenue comes from these two segments. “I am unable to associate MindTree with anything. It seems to be too many things at this point in time,” says Narayanan. In the last ten years, MindTree has gone through three different changes in strategy — from consulting to access, agility and attention and now to this “collection of niches” strategy.
What MindTree needs is one, great execution and two, superb leaders for this is a people’s business. To enable execution, the company has been split into five business units complete with a CEO, profit and loss account and separate staffing and marketing teams. So Soota and Vice Chairman Subroto Bagchi have handed charge to the next generation of leaders. On April 1, Natarajan took over as the MD from Soota. While Soota will focus on finding new business models and M&A (25 percent of the new target will come from acquisitions), Bagchi will be in charge of grooming the next generation of leaders.
Now each business unit CEO must raise his business to a size of about $200 million in the next five years. To achieve this, he can do pretty much his own thing short of raising finance or changing the company’s logo!
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Image: Malay Karmakar
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Just like the Greeks, MindTree has left the Trojan Horse at the shores. It is hoping that clients will now take it inside the gates of their organisations
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The CEOs have much more freedom but they must be up to the task. The biggest reason many companies have remained stuck in the middle layer, says Bagchi, is because they got physically and mentally tired. “Creating a company is a very intense process, many of these first generation entrepreneurs simply burn out by the time they reach their fifties” he says. Soota is turning 66 this year and Bagchi, Natarajan and S. Janakiraman, all co-founders, will turn 52.
Last year, Bagchi stepped down from his operational role and now works full time to groom the next generation of 100 leaders, one of whom, he says, could become the chairman of MindTree by 2020. Bagchi has created one-on-one leadership programmes for each one of them. “If these leaders expand, the company grows,” he says. Bagchi works alone without involving the HR team and is answerable only to Soota and the Board of the company. In July this year, Bagchi was elevated to the vice chairman’s position. People close to the company say Bagchi will spend time in Europe handling some of MindTree’s more important customers, Volvo and Arcelor Mittal. Soota says, “The role is global and would not be restricted to any specific geography.”
Clearly, Soota is willing to take risks — by creating non-structured roles such as Bagchi’s — to safeguard MindTree’s future. This is why he has stated that 20 percent of MindTree’s revenues will come from new pricing models such as outcome-based models where MindTree will not be paid for effort but for results.
If MindTree succeeds, it could even break the vice-like grip that large companies like Infosys and Wipro have on their old clients. For example, one of MindTree’s largest customers AIG, (which it shares with TCS) is now re-tendering projects. The company wants its vendors to bid on the basis of a fixed price for three years, commit productivity improvements and reduce the cost of maintenance.
Before the slowdown, MindTree had very little chance of taking a larger share of these application development and maintenance contracts. But if it wins some of these contracts it could improve its market share in business.
Just like the Greeks, MindTree has left the Trojan Horse at the shores. It is hoping that clients will now take it inside the gates of their organisations.
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