Corporate Legacy: Almost A Perfect Record
Without doubt, NRN has built a rock-solid empire and left behind a strong legacy, but he is not without faults
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Hanging up your boots and fading gently is not something contemporary Indians are comfortable with; not even captains of India Inc. After all, the 94-year-old Mahashay Dharampal Gulati still runs the company MDH with an iron fist. It is even more difficult for Indian tycoons to not foist their children on companies and shareholders. So when N. R. Narayana Murthy quit as executive chairman of Infosys in 2006, the moment he turned 60, the IT legend became even more legendary. His fan following multiplied when son Rohan was not named the successor. The dizzying success of Indian IT added more sheen to his halo in 2011 when he turned 65 and became chairman emeritus.
But the halo dimmed perceptibly in 2013 leaving many fans quite disappointed. In a dramatic turn of events, in less than two years after his retirement, the Infosys board brought back Murthy as executive chairman effective 1 June, 2013, in a desperate bid to re-energise the IT company which was under performing then. This time, Murthy roped in son Rohan as his executive assistant to help him in his work.
Critics frowned upon his son’s induction into the company as it was against Murthy’s own policy that barred the founders’ children from joining Infosys. Justifying his son’s induction into Infosys, Murthy said, “The quickest and best way of my being effective is by utilising the competencies of a small team of people that I have been interacting with in the past two-three years, and one of them happens to be Rohan.” Infosys saw a string of high-profile exits. Among others, board members who resigned included Ashok Vemuri, V. Balakrishnan, and B. G. Srinivas — all top contenders for the CEO’s role. These exits were unexpected and sudden. Clearly, a section of people within the organisation were not happy with his comeback.
Former colleague and friend T. V. Mohandas Pai still rates Murthy as one the finest corporate leaders of India. But he does point out a flaw, consequences of which continue to haunt Infosys. Pai believes the only negative about Murthy is that he relied too much for too long on the founders to run the company. “Others who came later on and contributed as much were not recognised. His initial philosophy that the person best fit for the job should lead the company did not materialise. As a result, Infosys lost four generations of leaders in the last 20 years,” says Pai. This has affected performance. Infosys has delivered phenomenal returns to investors and shareholders no doubt. But that pales in comparison to what rival TCS has achieved. Ten years ago, the market capitalisation of Infosys was almost on par with that of TCS. But by 2015-16, the gap was yawning; Infosys reported an average market cap of Rs 2.77 lakh crore while TCS boasted of Rs 4.95 lakh crore.
To his credit, Murthy had the smarts and the wisdom to realise that Infosys badly needed to re-invent itself and completely revamp strategies to be able to survive. The traditional plain-vanilla IT services industry was moving to the digital era led by emerging technologies such as artificial intelligence, cloud, mobility, big data, and analytics. At this stage, Infosys needed someone who could bring in a fresh approach and be a frontrunner in the digital wave. Amid much speculation, one fine day Infosys appointed renowned technocrat Vishal Sikka, former executive board member of German software product firm SAP AG, as its first outside chief executive effective August 1, 2014, cutting short the tenure of then CEO and co-founder S.D. Shibulal.
Murthy resigned from Infosys, for a second time, abruptly ending his second innings initially meant to be for five years. He said his resignation was necessary to give Sikka a free hand to perform and execute independently. Explaining the whole unfolding of events, Murthy said, “When the board approached me, I had two mandates: to assist them in finding an excellent successor to Shibulal and create a strong foundation for future growth of the company. By and large, I have fulfilled both these obligations.” In the long run, this act of his might become a more defining legacy than the hype about Indian IT and its global conquests.
Murthy has, however, created ripples of controversies now and then. For instance, in 2007, he ran into one when during then President A.P.J. Abdul Kalam’s visit to Infosys, the company played an instrumental version of the Indian national anthem rather than singing the original lyrics. When reporters questioned him, he reportedly said that singing the national anthem would have “embarrassed” the employees of foreign origin. Earlier, his statements on the sensitive Cauvery issue have also sparked off protests across Karnataka with hundreds of farmers picketing the Infosys campus in Mysore. In 2015, at his convocation address at the Indian Institute of Science, Murthy caused outrage, when he said that nothing significant has come of Indian research in the last 60 years.
And yet, as the introductory write-up for this package clearly states, the effort here is not to belittle the achievements of Murthy and other captains of India Inc who towered over their peers in the 1990s and the first decade of this century. It is to re-examine their legacies and point out that they too were, after all, men with flaws. That doesn’t take away what Murthy built patiently and passionately.
The idea for Infosys was born on a chilly winter morning in January 1981 when Murthy along with six software engineers sat in his apartment brainstorming on the possibility of creating a company to write software codes. Six months later, Infosys was registered as a private limited company on 2 July, 1981. Nandan Nilekani, N. S. Raghavan, S. Gopalakrishnan, Ashok Arora, K. Dinesh, and Shibulal were the six engineers who went on to become the co-founders of the company.
A lot has been written about how Murthy borrowed Rs 10,000 (about $250 then) from his wife Sudha to fund the initial capital required to start the company. The front room of Murthy’s home was Infosys’ first office, and the registered office was Raghavan’s home. Infosys moved to Bengaluru in 1983, when it got its first client Data Basics Corporation from the US.
Naturally, everything was not hunky-dory for Infosys in its initial years. It was not immune to crises and had its own share of challenges to overcome. For instance, Infosys had its first crisis when its first joint venture with Kurt Salmon Associates in US collapsed in 1989. The company was on the verge of folding. One of the co-founders Arora even exited the company then. The others were unable to decide their next course of action. That’s when Murthy’s chutzpah worked wonders. He built confidence and told them he is going to stick by and make Infosys happen. They believed in him, stayed put, and the rest is history.
Without doubt, Murthy has built a rock-solid empire and left behind a strong legacy.“NRN leaves behind a rich legacy of compassionate capitalism — create wealth and distribute wealth,” says professor S. Sadagopan, director, IIIT Bangalore.
Pai concurs. “He created a business model based on open, transparent, and collegial culture where the best talent could come in with the best aspirations and achieve the best. He created a dream company for the educated middle class. Under his leadership, the stock has grown 3,200 times since listing,” he says.
Clearly, Murthy’s pros far outweigh his cons. He has not just built a company but created a legacy that will continue for many generations to come. India in general and the IT industry in particular would not have been the same if Murthy didn’t dream about starting Infosys. Hats off to NRN!
View Graphic: How TCS Stole The Thunder From Infosys