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Friendship and co-founding a firm are different: Bagchi

Source | The Times Of India

Sbroto Bagchi stepped down as chairman of IT services company Mindtree on Thursday, relinquishing all executive responsibility in the venture that he co-founded in 1999 with nine others including Ashok Soota, Krishnakumar Natarajan and Rostow Ravanan.

Bagchi, who has also authored several bestselling business books and who ran a popular column in TOI a few years ago, was instrumental in shaping the vision for the company and helped build it to its current $600-million size. Bagchi will be replaced as chairman by CEO Natarajan, who in turn will be replaced by former CFO Ravanan. Edited excerpts from an exclusive interaction with Bagchi:

What about a position like chairman emeritus for you now?

There are two chairmen emeritus in the industry — N R Narayana Murthy and F C Kohli. We will leave it at that. I will stay on the board as a non-executive director.When we thought about governance, KK and I were very clear that the retirement age in India is 60. So it should apply to founders as well. If both of us were to step down from the company in an executive role at the same time, it’s an exposure. Second, we wanted to bring in a much younger CEO, one who is a lot closer to the CEO entry-level age of the industry. When we did an external and internal search, we finally settled on Rostow. If Rostow has to come in as CEO, then KK has to vacate his job.And then, logically , I need to vacate my executive responsibilities to make way for KK until he is 60.

You benchmarked both internal and external candidates for the CEO’s role. You decided to go with an internal candidate. What were some of the reasons?
There is a dominant school of thought that wherever you bring in an outsider, it’s a high-risk option. Anything that’s high-risk could be high reward, but that’s not necessarily linked. So the question, when do you take a high-risk option? Most scholars or observers believe that you should take a high-risk option when situations require a turnaround. In Mindtree’s case, the board felt that it’s not a turnaround job. An outsider is an untested commodity. If you had doubts on the internal candidate’s capabilities, it’s a different story. But if competence is not in question, then you had so much more time to look at cultural alignment and integrity.


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