What will Infy Do After they are Gone?

Image: Vishal S Shinde

The old guard relinquishes charge

handra Shekar Kakal may not be known widely to the outside world, but at Infosys Technologies, he is the leader of 12,000 people bringing in business worth over $1 billion. But there is a more important reason why this vice president of enterprise solutions must be watched. He is among the handful of future leaders who will shape the new Infosys in the next decade or so. He is one of the faces the world must get used to once the company’s iconic founders bow out in deference to age and change. But Kakal should do just fine. His mentor? Narayana Murthy himself!

Subhash Dhar, Ashok Vemuri, V. Balakrishnan and B.G. Srinivas, all Kakal’s peers, are now coming under the same limelight. These five are among a band of leaders being groomed to take over from the founding team of Murthy, Nandan Nilekani and S. “Kris” Gopalakrishnan.

Imagine being asked to lead the Roman Empire after Augustus. Infosys is no ordinary company; its reputation is globally enviable. Its leaders enjoy an iconic status. Inside the company, they virtually have a demi-god status. “They are brands and personalities of their own. It will be extremely difficult for anyone to replace them,” says Sudin Apte, country head of research firm Forrester.

As if that wasn’t tough enough, the new leaders would be required to develop their own script for running Infosys. If that means overturning the precepts under which Infosys has been run until now, so be it. This new band of boys is already tweaking the so-called Murthy Doctrine — a financial model that has invariably helped the software giant beat market forecasts over and over again.
It will be one of the most keenly watched corporate transitions in recent times — and one that is fraught with huge risk. Not without reason. No other promoter group perhaps has caught the public imagination in Indian corporate history in quite the same way as Infy has. The story of how seven middle class engineers created Infosys in Pune in 1981 with a modest seed capital of Rs. 10,000 is now part of business folklore. Yet, in five to seven years, practically all the promoters will no longer be involved in the day-to-day running of the company. That’s something Murthy had scripted back in 1998. He ordained that all founders would step down from operational roles when they turn 60 and leave the board at the age of 65.

Starting August 20, 2011, when Murthy will retire, the old guard will start putting more and more of Infosys in the hands of the new leadership. Within the next decade the remaining founders, who are now in their mid-50s, will start retiring too. The bench of leaders is already deep. Infosys Leadership Institute (ILI) has helped the company’s board to identify 50 senior executives. The founders as well as Infosys veterans Mohandas Pai and Srinath Batni each will groom a few of them. Kakal is one of the eight people being mentored by Murthy. “The key that we look at is consistent performance, because that gives a good indication of his ability to run a long-term marathon. The second, is he building something which is of long-term value?” says Girish Vaidya, who heads ILI.

Co-chairman Nilekani and current CEO and MD Gopalakrishnan have about a decade left on the Infy board. It’s not sure whether Nilekani will continue to give full-time attention to Infosys. Some believe that he could be setting himself up for an alternative career in public policy. Whether he eventually takes the plunge is not clear. The founders have a tacit agreement that they would not stay on as CEO for more than five years. So, Gopalakrishnan could step down by 2012 and it could be COO and director S.D. Shibulal’s turn to take over then. In the next five years, if a non-founder assumes a key operational role — as CEO or COO — it could mark an important turning point for the company.

Infosys without its founders at the helm is a difficult animal to define — a bit like Apple without Steve Jobs or Microsoft minus Bill Gates. No one quite knows how the transition will pan out. There’s a chance that it may not be as orderly as most things inside Infosys tend to be.
“I have been associated with founder-managed companies. The succession issue is a very difficult one, loaded with emotions and personal factors. It doesn’t go like a Swiss clock watch,” says Claude Smadja, independent director on the Infosys Board and president of Smadja & Associates Strategic Advisory.

For over three decades, all the key operational roles have been looked after by one of the founders. Murthy ran a very tight ship which had little space for anyone beyond the circle of founders. In three decades, only three professionals — Phaneesh Murthy, Batni and Pai — could get a seat on the Board.
Of course, this could change with the relatively new Executive Council (EC), the highest decision making body in the firm, just below the board. In December, 2007, Gopalakrishnan drafted five newbies — Kakal, Dhar, Vemuri, Balakrishnan and Srinivas — into the EC. They could eventually get a chance to join the board. One of them could even take over as CEO.

Before the EC was formed, Infosys had a more informal way of working. If there were any decisions to be taken, three or four executive board members — mostly the founders — would arrive at one. Now all those decisions are put to the council which meets every 15 days. Responsibilities are fixed, timelines are allotted and progress is monitored closely.
The EC has also made the decision making process more inclusive by taking it one level below the Board. It is an important part of grooming the next level of leaders. By assisting Gopalakrishnan and Shibulal, these leaders learn what it takes to run a large corporation. “It is a big step forward, because people who were only looking at their unit and thinking it was the world… now they have to look at the whole organisation and try to execute it,” says Srinivas, who is the senior vice president for the manufacturing segment. The new leaders are exposed to the Infosys Board and also have to handle analyst calls and media interviews, says Marti Subrahmanyam, independent director on Infosys board and New York University professor.

But here’s the moot point: Can a bunch of young leaders step out of the shadow of an iconic team of founders to bring in the discontinuity that Infosys now needs?

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