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Leadership Transition At Infosys

I trust Nandan’s judgement implicitly as I have had many opportunities to observe many of his decisions over the years

Photo Credit : Bivash Banerjee

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It is a déjà vu moment for me. In June 2014 when (Vishal) Sikka’s appointment was announced, the media went into an unprecedented frenzy, I too was called upon to do my bit on BBC. Whilst most commentators were at their effusive best my  view  was, as usual, reserved and contrary to the general exuberance and the three areas of concern indicated finally led to his departure in three short years.

Thankfully, Nandan’s (Nilekani) wisdom has ensured there was no media jamboree this time. This commentary is thus a view without the pressure of the customary attendant hype.

As I have written in these columns few weeks ago, it was a difficult choice for Nandan and team. The clock was ticking fast and not many leaders would offer their services in such circumstances, that too with their hands tied to the Sikka strategy. So, by definition, the final appointee would not be of a profile which would be too high. Hence, I see this outcome as a convenient combination of instant availability and willingness to take up the role with the known constraints rather than the luxury of finding the best man the company needed.

In my view Infosys will lose its technology leadership mantle which it had commenced building under Sikka. His strategy to combat the onslaught of the four concurrent seismic shifts in the macro environment - and reinvent the business model whilst simultaneously cannibalising the existing revenue streams to retain the industry’s relevance – was being watched with close interest by the entire IT industry desperately in need of technological leadership at this critical juncture and which simply does not exist in the top five of the six leading IT companies.  The net impact of this appointment now would thus be providing a clear playing field for Accenture as the unassailable leader in IT services globally followed by Cognizant.  Sadly no other Indian company comes even close and we will continue to do what Indian IT services has done best … copy the model which will be ultimately successful.

The other aspect which Infosys now acknowledges by inference is the lack of internal top leadership talent within the organisation. This should be a matter of grave concern especially since this was not a star global hire of some exceptional technology expertise. This says a lot about how the company has been managed during the last many years post Nandan’s tenure as the CEO where it had built an enviable leadership pipeline. The devastatingly short-sighted and self-serving policy of rotating the top leadership post amongst the founders, irrespective of their individual capabilities as relevant in the particular phase of the company’s life cycle, was directly responsible for the erosion of this formidable leadership pipeline within the company.

The CEO designate, Salil Parekh, of course has impeccable credentials and his abilities to manage employees, customer relationships, sales, etc., will be an asset to Infosys. But will it be enough to recoup its growth leadership position lost to Cognizant during the Shibu Lal years?  Given the nature of the services business the increasing differential is almost impossible to bridge now without aggressive acquisitions form the cornerstone of its strategy, which too is unlikely under his leadership.  Sky high valuations of  target companies, increasing the risk profile of the company will also add to this. His other significant challenge would be the complete lack of experience in managing a listed entity which requires skillsets totally different from those managing cost centres or captives. Value creation imperatives in Infosys are plenty but will require significant risk-taking abilities and management of investor expectations. Leaders of captives as a rule do not require these talents in their repertoire of skillsets.

The critical Infosys leadership challenge is one of driving strategic transformation on an unprecedented scale, ala a Lou Gerstner driving IBM’s transformation in the 1990s or that of Jack Welch at GE. This requires an entrepreneurial mindset and leadership traits demonstrated by the founders of Infosys whilst creating this formidable company. In my assessment this will be a formidable gap in skillset. He has significant advantages on his side though: active support from doyens like Nandan and Ravi Venkatesan in terms of tech leadership and guidance, a superb platform to build a great team, support from investors with recalibrated expectations, etc. But building future business models requires a new mindset and similarly building capabilities is a difficult process without significant risk-taking abilities.  Culture clashes are bound to happen when new skillsets are introduced as had happened with Sikka and team and it will need significant experience and courage to manage this a second time around.

The core issue with the leadership in the IT industry has been a classic one … one of not shaping a forceful response to the emerging disruptive trends in the last five years. There are enough international case studies to prove that it is the lack of a purposeful coherent response which spells the doom of  blue chips rather than the ability to forecast the coming storm. Kodak, Digital, Nokia amongst others are examples of this whilst IBM, Xerox and Apple are examples of those who succeeded. Having worked on both sides of the equation during my stints in Xerox and Digital, I can say it is already late in the cycle for the IT industry, but it will be interesting to see if Infosys can shape this response now.

Life is about choices one makes in the options given in the deck of cards handed by fate and circumstances. I trust Nandan’s judgement implicitly as I have had many opportunities to observe many of his decisions over the years. So in this very difficult scenario for Infosys, I would rely on the choice made in favour of restoring stability.  Having said that, driving strategic transformation of this scale has not been attempted in Indian IT ... and to do it whilst the train is running fast requires an organisational construct which would be new. Most CEOs in the IT industry are basically high performance delivery managers with immaculate execution skills and some financial ones. Strategy thus far has been restricted to adapting to incremental changes in offerings and business models ... again not what is being envisaged now. The IT industry needs its version of a Jack Welch or Steve Jobs to strategically transform - a tall ask!
 
Interesting times lie ahead: I wish Salil all the very best as he makes this difficult transition … both personally, for Infosys and the IT industry in general. I wish he helps us transition from what we have done best – follow and adapt, to lead.

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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