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BW Businessworld

A Journey That Was Infosys

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INFLECTION POINTS AT INFOSYS

Infosys Technologies founder and chairman N.R. Narayana Murthy hung up his boots on turning 65 on 20 August amidst "Best Wishes" phone calls, messages, emails and incessant interview requests. While Murthy continues to remain chairman emeritus at Infosys, he will not actively steer it. Instead, he will focus his energies on mentoring entrepreneurs through his fund Catamaran Ventures. He is also on the global board of HSBC, as well as of international bodies such as the Rhodes Trust and Ford Foundation, apart from academic institutions such as Stanford, Cornell and Tokyo Universities. He has even accepted more responsibilities such as that of being on the boards of National Payments Corporation and Public Health Foundation. Murthy met with BW's Venkatesha Babu at Catamaran headquarters in Bangalore. We took him down the memory lane to discuss the inflection points in the life of Infosys, the business leaders he admires, and ‘experiments' that did not meet the expected levels of success. Excerpts:

Organisation's interest over an individual's
In 1989, Ashok Arora (the 7th founder), my colleague, wanted to leave us. He was an extraordinary analyst, designer and programmer, but somehow did not perform well as a manager. When I asked Nandan (Nilekani) to take over banking, Ashok did not like it and chose to leave. Ashok was the best designer we had, and I was sad to see him go. Similarly, in 1997, Nandan came to me and said he wanted to be the next CEO. Nandan was fourth (in Infosys hierarchy after Murthy, N.S. Raghavan and Kris Gopalakrishnan). It goes to Kris's credit that he agreed to this in the organisation's interest, thus delaying his own CEO tenure.

Refusing the lure of an early buy-out
In 1990, an offer came to buy us out for $1 million. After nine years of hard work, none of us had cars, some did not have houses. After a four-hour discussion, finally, we decided to reject the offer.

Starting India's largest stock option plan
We decided that if we cannot match MNC salaries, we will introduce an attractive Esop scheme (The employee stock option was introduced in 1993. By some estimates, Infosys' Esop scheme is believed to have distributed at least Rs 50,000 crore in wealth.)

Ensuring a steady revenue stream initially
We imported a computer, which was rented out to MICO by the day and we would work on it at night (in the mid-1980s). We vowed that within six years, we would become independent of this arrangement and create other revenue streams. But initially, it gave us the cash flow cushion to do other things.

BUSINESS LEADERS MURTHY ADMIRES

J.R.D. Tata
The Tatas have demonstrated how to run an ethical business. They have taken care of their employees well. They have put the country's interests ahead of their own personal interests.

Bill Gates
In my lifetime, he (Gates) showed how to build a hugely successful company, with passion. He had a vision of ensuring that his software ran on every personal computer. He has more or less done that.

Bill Hewlett, Dave Packard
They built the original technology company. They built an open company, with a very progressive human resources policy. Their quality was fantastic. I remember using their software in 1968 and I could not find a single mistake in it.
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Kumarmangalam Birla
A very talented young person who has metamorphosed his group into one of the most respected ones globally. For all that he has achieved, his humility is something extraordinary.

Vindi Banga
An extraordinarily bright individual. I have seen him at close quarters, when he ran Lever (Hindustan Lever then, or HLL) in India and in his global Unilever role too. He is a credit to Indian managers and entrepreneurs.

K.V. Kamath
I was on the board of ICICI. I remember him making a presentation on how he would convert a development financial institution in five years into a universal bank, and I think he achieved it in less than that timeframe. An amazing individual.

Kiran Mazumdar Shaw
This lady, all alone, overcame extraordinary odds to create a wonderful company in the pharma sector. I have observed her from close quarters with tremendous admiration.

Stephen Green
A former chairman of HSBC and now a minister in David Cameron's government. He is the
most ethical business-person I have come across — a lay preacher whose touchstone for all decisions was grounded in doing the right thing.

LEARNING FROM EXPERIMENTS

Infosys Digital Systems
We had started this company in 1984 to manufacture electronic telex machines and concentrators. We soon realised that we did not have the competence to interface with the government, particularly the Department of Telecom. So we had to close the company in 1993.

Infosys Manufacturing Systems
My view was that in India it would be very difficult to manufacture any advanced technology (in 1989). Some of my younger colleagues wanted to do this and Infosys is an enlightened democracy, so we went ahead. The objective of IMS was to manufacture firmware, particularly in the area of digital signal processing (DSP). We did produce a chip to control induction motors. We worked with Ghent University of the Netherlands and Indian Institute of Science and leveraged our expertise in software. We thought this DSP could be used in all white goods in the international markets. While we were ready with a prototype, because of the (general environment of) friction towards business, we had to close the company in 1992.

Distribution Management Application Package (DMAP)
It used to be jokingly referred to behind our backs as Dinesh-Murthy-Prahlad package as we three were the architects of this. (K. Dinesh was a co-founder of Infosys, while D.N. Prahlad was one of the first employees at Infosys.) DMAP was a warehouse management, production and customer service package... ideal for an apparel company. Somehow, we could not make it an industry-worthy package, though we successfully installed it at Reebok. The only thing that came out of this experiment was that we eventually gave (the rights of) this package to an employee, Devdutt Yellurkar, who started Yantra, in which Infosys had a stake. Yantra was eventually acquired by Sterling Commerce for $170-180 million. While we made money, I was disappointed that we could not sell the package ourselves and did not scale up.

Software Terminal Package
In 1986, we produced a software package that could talk between an IBM Mainframe and a terminal. Somehow we could not fully articulate the value of the package to our customers and thus it did not take off. I was disappointed with this.

Personnel communication
iRace (an employee restructuring programme) was and is a good thing for Infosys. I do not consider it as any kind of failure (he emphasises). Probably some 300 people of 130,000 — less than 0.3 per cent — got impacted. Once we communicated better, everybody realised its importance and advantages.

(This story was published in Businessworld Issue Dated 05-09-2011)