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Infosys: Demi Gods Too Have Feet Of Clay

Leadership is about not allowing differences to become intractable disputes

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With the recent Board meeting at Infosys bringing down the curtains on a defining public spat, which encompassed issues of governance, probity, propriety and dignified behaviour, I cannot but reflect on the events with a tinge of sadness. Sadness at the way an iconic promoter fell from grace after a lifetime of achievement, with his carefully crafted public image being severely dented. Sadness, too, at the bitterness of it all.

Was it a lapse of judgement that pushed him to take this path egged on by confidantes and consiglieres’ whose inputs were, at best, ill advised? Was it a case of being driven by self-assured hubris, so prevalent among successful leaders, where judgement is skewed by arrogance? Or was it simply the inability to let go?

We will perhaps never know. But what we do know is the result of this action. A company that was taking definitive steps towards a successful reorientation of its business model – led single-handedly by its CEO – has today lost its executive stewardship, eroded market value in billions of dollars and created instability in the ranks of its investors, customers and employees.

Worst still, is the impact on the Indian IT industry desperately in need of technological leadership at this critical juncture, and which simply does not exist in the Top 5 of the 6 leading IT companies barring Cognizant. Erstwhile CFOs, accountants and operating managers cannot be expected to possess the combination of core technological perspective and strategic capabilities necessary to combat the onslaught of four concurrent seismic shifts in the macro environment and reinvent the business model while simultaneously cannibalising the existing revenue streams to retain the industry’s relevance.

Infosys was in the enviable position in providing this leadership. The CEO search now will still prove difficult despite Nandan Nilekani being at the helm. No CEO with an international stature would prefer to join with his hands tied to the Sikka strategy, which is unlikely to change substantially. The Board has confirmed this recently. And compromising on a makeshift “nuts and bolts” CEO like the others is a mistake Infosys cannot afford to make.

Who will take responsibility for this state a publicly listed, iconic company finds itself in? I cannot recollect any other instance where a retired founder, with such a small shareholding, has had such a disproportionate influence on the final outcome. I admire Nilekani for stepping up to cleanse the mess but am saddened that the nation’s need for him to drive a much bigger agenda of change will now be significantly delayed.

Sadness, sorrow and anger provides an opportunity for deep reflection. What are the lessons learnt from this episode? Could these extraordinarily high costs of engagement been avoided? Taking a leaf out the Starbucks episode, where an equally iconic Howard Schultz ousted his mentee Jim Donald in 2008 would be useful. Starbucks was floundering from the effects of the recession triggered by the mortgate crisis in the US, just prior to the Lehmann financial crisis, and was experimenting with strategic changes to its business model. Howard Schultz, who had led Starbucks (and its acquiring company II Giornale) from 1982 to 2000, returned to lead the company and correct the chosen strategic path. This was done with full support of the Board. He stepped down in April and is credited for the immense value creation at Starbucks in this period with its marketcap rising from $13 billion to $84 billion.

Lesson 1: Work through the established mechanisms like the Board, while imposing your will to drive meaningful change. Interventions like the media, leaked e-mails, etc., only damage credibility apart from inflicting significantly high costs.

Lesson 2: For matters with such huge ramifications, credible alternatives must be provided – with defined accountability for the recommended course of action  – before rocking the boat.

Eschewing the basic principles of communication was central to this dispute. The Vedas describes effective communication as a series of three steps: shodh, vaad and samvaad – research thoroughly to ascertain facts, communicate the proposition based on the findings and then engage in discussions. This ensures genuine dialogue, sharing of viewpoints and creates space for additional insights in an atmosphere of tolerance and respect even when there is disagreement. Anekantavada, one of the core doctrines of Jainism, enunciates this basic principle, too, which influenced Mahatma Gandhi’s pursuit of Ahimsa. This was not followed in the Infosys episode where the basic “facts” – based on hearsay, camaflouged under the guise of a whistleblower’s complaint – were twisted to suit the narrative of misgovernance, when it arguably was a clash of cultures and management style. The communication through a high decibel, and often vitriolic, campaign in the media by a set of erstwhile mentees left very little space for samvaad. Despite this, R. Seshasayee and Ravi Venkatesan demonstrated significant magnanimity in continuously engaging (some would say placating) the specific set of minority shareholders demanding certain pre-consultative rights in decision making.

Lesson 3: Dignified communication is core to the resolution of such differences. If only the dignity and respect shown by the Board was reciprocated, the range of outcomes could have been substantially different.

Lesson 4: Leadership is about not allowing differences to become intractable disputes. How the doyen of the IT industry, with his famed sagacity and wisdom, missed this is inexplicable.
It is the substance in his character that makes Nilekani contribute positively in solving the most intractable problems and made him accept this role despite the potential risks to his formidable reputation.

I am elated that he has dealt with the Hobson’s choice regarding the disclosure of the investigation reports exactly as I had surmised and as any responsible leader of impeccable integrity would have done in the interest of the institution: thus exposing the lack of merit in the allegations levelled by his iconic, but arguably petulant, mentor.  

Lesson 5: In intricate, emotive and non-trivial situations such was this, rely on the epics for guidance. The Arthashastra helps us in guiding our thinking by putting the interest of the company above narrow partisan viewpoints to do what is “right” for the organisation.

In doing so, he too perhaps acknowledges that demi Gods also have feet of clay. As in Greek tragedies, lives of such demi Gods follows the classic cycle of destiny, hubris and nemesis. The outcome for all would have been so vastly different if they had the sagacity to acknowledge that dignity, elegance and decency are ultimately evident only in defeat. Only Seshasayee demonstrated this by gracefully walking away.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Prabal Basu Roy

A Sloan Fellow from the London Business School, Director and Advisor to Chairmen of corporate boards, the author has formerly been a Group CFO in various companies.

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