What will Infy Do After they are Gone?
The Murthy Doctrine
Under Murthy’s 21-year-long reign as CEO, Infosys built a unique DNA. To this day, the founders share his belief: They would always put the interests of Infosys above their own, the company would be profitable from day one, and they would accommodate each other. So if one of them became the CEO, the others would allow him to bask in the glory but continue to contribute to Infosys and support him from outside. Murthy also plumped for transparency and respect. He ensured Infosys ran a clean and open balance sheet.
Murthy understood how to manage shareholder and investor expectations. Since Dalal Street values predictable and sustainable growth, he evolved a complex model by which Infosys would be able to set an annual and quarterly guidance. It was clearly communicated to the external world and then in classic Infosys style, it would always surpass expectations.
Yet for all its success, Infosys remained a curious blend of American-style capitalism and South Indian conservatism. Murthy was extremely modern when it came to investing in brand building — creating an American-style campus, going in for Nasdaq listing, building a GE-style leadership institute. Yet he remained extremely conservative about bringing in outsiders into the company or spending money. So while its peers went in for global acquisitions, Infosys chose to sit on its $2 billion cash hoard, much to the chagrin of stock market analysts. Today, while the downturn may have acted as a trigger for the new-look to push through a raft of changes, there are some things that will always prove harder to change.
Every successful company has its own version of the Holy Grail. For Infosys, it is its home-grown Predictability-Sustainability-Profitability-Derisking (PSPD) model. The founders believe this has been the secret sauce that makes it the darling of the markets. It chooses to stay wedded to it and every new leader is expected to cut his teeth on it. They evaluate every business deal and proposal using these four criteria. Mastering this model is a key part of the leadership development process at Infosys. It is the PSPD model that allows the company to set its revenue and profit guidance every year and meet its targets quarter on quarter.
|
|
B.G Srinivas, 47, Board member - Infosys BPO and Infosys Technologies (Sweden) AB | |
Pai says discussions about guidance setting have always been extremely heated at Infosys. “Even senior leaders get butterflies in their stomach while setting the guideline,” he says. The February meeting this year, when the EC met to decide the guidance and ended up cutting revenue targets, was a particularly difficult one, say some who attended it. As a bellwether stock, Infosys could simply bring down the market, if it misses its guidance.
While Dalal Street loves the model, some complain that it makes Infosys too mechanical. “It is an engineer’s company and is too process driven, there should be some emotion too once in a while,” says a senior member of the leadership team, on condition of anonymity. But jettisoning this maddening obsession with processes won’t come easy. It’ll be even harder to recreate the same chemistry in the top team that helped build the country’s best known start-up.
Together, We Stand
Under Murthy, even though the founders shared common beliefs they had their individual styles of leadership and personalities. Murthy says they had complementary skills for which he chose each of them. While he was good with strategy and finance, Raghavan (a co-founder who left early) was good at human resources, Nilekani had great networking skills and was good with handling customers. Gopalakrishnan and Shibulal had strong operational skills and were good with technology while K. Dinesh was well-versed with quality. Ashok Arora, another founder who left early, had the strongest programming skills in the group. There were intense debates and discussions around all key issues. Murthy calls “Infosys the world’s biggest debating society”.
Even though Murthy handed the baton to Nilekani and then Gopalakrishnan, he has remained more than an active participant in Infosys affairs. As Infosys CEO for 21 years, he had laid a strong foundation for the company and continued to be an extremely hands-on CEO. Such was his conviction in the team and Infosys that in 1990, when all the other founders wanted to sell out to an external investor for $1 million, Murthy offered to buy them out even though he didn’t have the money in his hand.
It is obvious that Murthy has a profound influence on the company. Even today, senior leaders say that when a decision cannot be reached the team approaches Murthy. “Whatever he says, gets done, it doesn’t matter,” says Balakrishnan.
Everyone who knows him well knows that Murthy doesn’t take no for an answer. “He never takes an emotional decision, you have to back every thing you say with data,” says Balakrishnan.
Murthy is also a task master. Once, he demanded that Infosys had to prepare the full annual report within a full day of closing. “‘I don’t care how you do it’ he said. We stayed in the office whole night. And he was there in office too till 3 am with us,” adds Balakrishnan.
It is this intensity which makes people question how the company will cope when he leaves. One theory is that it will be Nilekani who could provide continuity and still make room for diversity.
But while the next generation leaders have the huge task of filling in the shoes of the iconic founders, they must also not become their clones. “We want to deeply embed the DNA of the company in the successive leaders, at the same time we don’t want to put in too many checks and balances as it will end up creating a huge bureaucracy,” says Nilekani.
It will be a tight rope walk and much of it will also depend on how hard the new leaders push for change. Given how large the personalities of the founders have become, it won’t be easy. “I’ll say they are making progress, from the first meeting of the EC to now, I think they are 60 percent there. But they need to be more hard hitting,” says Pai. “They are still very polite to us when they have to interject or make a point. The older lot is used to more vociferous debates because we have grown up together.”
Single Page View
I predict Infosys to be a stale business in 2-5 years time horizon.
