By | Ramesh Ranjan | Founder & Editor www.humanengineers.com
The saga of Infosys makes a good case for a soap opera.
In a country of 125 crores, a world population of 6 billion people and employing around 200,000 there is no one talented to lead Infosys Technologies other than one from the Founders. Wow, what an irony.
Microsoft, Google, Adobe, NetApp, Nokia, Cognizant, Harman International, Pepsico, MasterCard, Diageo, DBS, Reckitt, Global Foundries etc. have been able to find an Indian to lead global companies, but Infosys couldn’t find one other than their founders.
It reminds us of the 1980’s, when the Congress party and its propaganda machinery propagated “India is Indira and Indira is India”. So Infosys is Narayan Murthy and Narayan Murthy is Infosys.
The way the company is run is akin to a political party. No one dares the founders. All of them will have to toe in line with the dictates of the high command. Any one differing in opinion will be forced to quit or sacked.
A lot of fanfare was created in 2014, when Vishal Sikka was inducted as the first non-promoter CEO of the company, immediately after the unsuccessful comeback attempt by Narayan Murthy. All the founders quit the Board and a new set of Board members chosen by the Founders were inducted on to the Infosys Board.
Progress made by Infosys during Vishal Sikka
The Infosys stock – the Nifty IT index had underperformed by 7 pp when N.R. Narayana Murthy returned as executive chairman but outperformed by 20 pp during Vishal Sikka’s tenure.
Sikka joined Infosys on August 1 2014 and since then till his departure, the stock surged over 22% outstripping its rivals Tata Consultancy Services Ltd (down 1.44%), Wipro (up 7.79%) and HCL Technologies (up 14.51%).
During Dr. Sikka’s tenure as CEO, Infosys revenues have grown from $2.13B in Q1FY15 to $2.65B this past Q1, with strong margin performance and cash generation, throughout his tenure. Dr. Sikka’s approach to profitable growth delivered increase in liquid assets (including cash and cash equivalents) from $4.9B in June 2014 to $6.1B in June 2017, while paying dividends of over INR 19,000 Cr. (including dividend distribution tax) over these three years. (source : Infosys press release)
During Sikka’s tenure, Infosys grew substantially apart and made forays into Artificial Intelligence as well as other cutting-edge innovations, in a departure from its traditional strengths. They launched breakthrough new programs to drive innovation, education and entrepreneurship on a large scale.
These programs included
- Zero Distance, a program which was the first of its kind in the industry intended to drive grassroots innovation at a massive scale, through every employee,
- Design Thinking training, the largest program of its kind to drive creative confidence and problem-finding in every Infoscion, and
- Zero Bench, a bold notion of leveraging the bench as a means to drive additional value for clients.
- Employee attrition has decreased dramatically during Sikka’s tenure, particularly among high performers, utilisation is at a 10-year high, and client satisfaction is at an all-time high.
- The company launched more than 25 new services which rose to 8.3 per cent of revenue last quarter, from zero per cent in April 2015.
- Under Sikka’s leadership, Infosys developed and launched its artificial intelligence platform Nia, and already has more than 160 artificial intelligence scenarios deployed with more than 70 clients.
- Infosys has also ventured into new horizons both with design-thinking with clients and its start-up investment fund.
- Further, the Infosys US foundation has done inspiring work in bringing computer science education and a culture of innovating to the masses.
One wonders that with a stellar performance and in many cases outbeating its competitive rivals, what were the Founders especially Narayan Murthy were unhappy with or were they just cherry picking holes. In spite of inducting persons of the founders’ choice into the board, the Infosys management has not been able to satisfactorily address the latter’s concerns.
Sikka’s reputation as a high-performer was complimented by his high-flying lifestyle, which allegedly also upset some of the founders of the company. The first seed of unhappiness was sowed in Dec 2016 when Narayan Murthy asked the Board to improve its governance and expressed his unhappiness over the way it was being run.
The charges against Vishal Sikka were :
- Chartered Plane for his travel to meet his clients sometime
- High salaries to senior management and especially Payhike to Sikka
- Severance payout to former CFO Rajiv Bansal
- Vishal Sikka is not CEO material – email leak to media
- Panaya & Skava acquisition
In between Narayan Murthy is also quoted
“A lot of my founder colleagues told me not to leave Infosys in 2014. Stay a few years. Generally, I find that I am a very emotional person. A lot of my decisions are based on idealism and probably I should have listened to them,” he told the channel when asked what his biggest regret was, across his personal and professional lives.”
The two were often caught in a war of words, with the latter repeatedly taking pot shots at the former through the media. The last straw seems to have been an email that Narayana Murthy sent to his aides, which was published by a business daily, where he claimed that he had been told by independent directors that Vishal was more suited as a Chief Technology Officer than as Chief Executive Officer.
No self respected person would want to continue in such an environment. Enough is enough and Vishal Sikka put down his resignation to the board. The Board on its part backed Sikka and sought to put the blame on the Founders especially Narayan Murthy for his exit and bringing the Company to a crisis
“The Board is profoundly distressed by the unfounded personal attacks on the members of our management team that were made in the anonymous letters and have surfaced in recent months. As the Board has previously stated, a series of careful investigations found no merit to the unsubstantiated and anonymous allegations that had been asserted. The Board denounces the critics who have amplified and sought to further promote demonstrably false allegations which have harmed employee morale and contributed to the loss of the Company’s valued CEO,” said the company in its statement.
And then the drama unfolds like a Political party. They start issuing barbs, statements, props up supporters including media, politicians, employees to speak out in support of their leaders and also veiled threats.
Meanwhile the poor shareholders( remaining 87%) are poorer by 30,000 crores in market value and 10% erosion of wealth.
Then on 25th August, Nandan Nilekani is appointed as non-executive chairman and Four Directors including the Chairman were forced to quit and Vishal Sikka was packed off immediately with his full & final settlement.
What a drama, a soap opera in the full glare of the media.
Infosys & Narayan Murthy was one of the jewel in India’s Corporate governance for long. But after this sordid drama, can they continue to claim this ?
The reasons for drawing the sword against Sikka is not founded on facts.
- The style of leadership & management of Sikka vs Narayan Murthy were entirely different. Why shouldn’t it be so. The world has evolved and so too the leadership style. Just because Narayan Murthy travelled Economy class doesn’t mean that all future leaders and generations should travel economy class.
- Narayan Murthy lived a frugal life and was drawing a lesser salary but one shouldn’t forget that he & his family are worth around 4000 crores from Infosys Stocks. So if Sikka proposes higher salary for his senior leaders why should it be held against him especially when the company has performed well during his tenure and against his competitors. There are many other CEOs in the word including Indian CEOs who are drawing significantly more than Sikka.
- The allegation regarding the Panaya & Skava acquisition had been probed by an independent leading law firm and they found no irregularities. Is Narayan Murthy alluding that the Board influenced the 3rd party independent globally reputed Law Firm to exonerate them. If he has any evidence to prove contrary to the findings let him place it before the Board and the glare of the media, rather than taking pot shots like a Arvind Kejriwal.
- How cheap is it to time and again leak emails and communication to media taking pot shots against the Company’s CEO.
Where are the values viz: Trust, Integrity, Delegation, Empowerment, Collaboration, Team work, Customer Focussed etc. or is it just confined to the dictionaries.
It appears that this exercise was an excuse for the Founders to get back to power. Why did these leaders have to come back or attempt to come back. Was it a need to satisfy their “centre of action” need & get back to the glare of public attention like many celebrities go through or is it a sense of insecurity feeling of being left out or is it that they treat their organisation that they had so assiduously nurtured and grown as their child and hence adopt a paternal stance and feel the need to take charge of the straying child.
“”it was very “sad” to see a “good CEO” like Vishal Sikka stepping down as the CEO of Infosys, and added that promoters have no say after leaving a company. If something similar had happened in a western country, shareholders would file class action suits against the company,” said Reddy, founder and executive chairman of Cyient.
“Enough is enough. You have drawn first blood. Do not mortally wound the organisation by persisting in your actions. Let Infosys get on with its business, heal itself from the injuries that you have inflicted and again grow shareholder value. Learn to walk away, as you had promised when handing the reins to Vishal. The corporate governance halo that was conferred upon you is shrinking. Let it not disappear.”
The reputation that Narayan Murthy and his co-founders had built so assiduously over the last few decades has eroded and shrinking day by day. Its becoming a case of literally killing the goose that lays golden eggs and sadly by its own founders.
If the founders so felt that none other than the Founders are capable of running the company, why hide behind any pretensions. Then run it like a proprietor company. Why did they go public, why did they relinquish power in 2014 with a lot of fanfare saying that they are handing over to a professional CEO. Why not behave like the WIPRO, Reliance, Mahindra, Birla, Bajaj etc. have done. Ensure that only the family members run the company and retain hegemony and control over the business and pass on the heirloom to their children. Isn’t it tantamount to being hypocritical – public posture vs personal ambition harboured?
Are these Founders stuck with POWER, that when they are finally out of it, they struggle to cope with it and want to get back the POWER. You have to give up your power, and you can’t put a price on that. To succeed at the highest level, you have to quit giving your power away.
Knowing when to quit is a skill. It requires courage and self introspection to realize that its obvious that things aren’t going your way and its time to move on. Failure to do so, risks the reputation, image, credibility that Leaders had assiduously built over the years and many a times run the risk of making a fool of themselves.
Life is full of challenges and even more at work. It’s like a roller-coaster ride. There is bound to be ups and downs, twists and curls but it can’t go on and on. It has to come to an end. You have to try to disassociate yourself from work emotionally sooner or later. And see it as a game, as strategy, [so you can] think rationally. Sometimes you just need to draw a line under it, because actually you could end up losing even more if you keep going.
No one is indispensable. Give others a chance to succeed and lay back with happy memories of your hay days.
Remember that when the Sun rises it has to SET.
PS Finally to all the HR Folks, where is Organisation Structure, Corporate Governance, Talent Management, Succession Planning, Hi Potential, Career Development, Leadership pipeline development, Global Talent Pool, Managerial Courage etc. If a Infosys doesn’t believe in it, why will others pay heed to all these tall Talks. No wonder there is talk of RIP – HR.