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Murthy Returns

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It’s been over a year since Mr Murthy’s returned to Infosys. It was an unusual event that ruffled many feathers. Against the backdrop of a plateauing top line, dropping share price and impending recession, it came across as a desperate measure. He was obviously received by some with joy, some with relief, some with surprise, some with suspicion and some were even petrified. While this was not a new phenomenon in corporate history, it certainly was novel to India. Being one of the most admired companies in India it attracted everyone’s attention.

Through their actions, organizations are constantly communicating indirectly with the society, making impressions and building brand. Recent turn of events at Infosys has definitely exposed their chinks in the areas of leadership, succession planning and brand strategy. Find out how.

We are constantly told to treat remuneration as a confidential matter and are discouraged from sharing our salary details with other colleagues. But during his re-appointment, Mr Murthy’s salary was talk of the town; media announced it, press published it and people talked about it on roads. Surely it must have also been a part of organizational grapevine. Then his son’s remuneration was leaked. Son, who was not supposed to be the heir apparent or an employee, got a wild card entry. The popular Re 1/- director and his son’s remuneration was breaking news. Now, we understand that leadership is about personal credibility. Unless employees of Infosys are encouraged to discuss their salaries openly, there is a clear deviation from that indoctrination. What would be the cultural impact of this? It is clearly setting wrong example. Imagine, if all start following his footsteps by sharing their salaries with each other. If all start going back on their promise to their customers. And this is not stretching things too far or getting cheeky but credibility is about doing what you say you would do.

This pre-appointment salary announcement stunt may have been done to deploy some kind of political pressure on senior leaders who continued to draw fat salaries in spite of disappointing numbers or to create an impression on stakeholders and on market but it certainly left a bad taste. If there was any such challenge, one would look for more direct, transparent ways of dealing with them in order to create trust and positive force. That would set a right example. That would make leadership exemplary.

What would be the impact of putting pressure this way, if at all it was aimed at that? Leadership exodus has the answer. Some of Infosys’ priced assets are not coming back to work next morning.

It is certainly not to announce that borrowing monies from wife is a success formula when one says that he borrowed money from his school teacher wife to start business and see how far he went? So what is one really saying, by saying this? What is the payoff, what gains in such statements? Or what does one gain when he announces that he shares dais and committees with PMs and Presidents. I know three such big industrialists who do that but don’t announce it. Or what’s the payoff in accepting requests of, let’s say, a talented Sulajja Motwani (who did a TV show on successful Indian business leaders few years ago) to shoot and broadcast his humble life-style on national television three times over on prime time. Real humble people don’t announce that they are humble; they let the world discover their humility. So, perhaps this was all done to build a certain image. Infosys success story is about brand building. Their brand appeal was `common man who made it big’. Common man has hidden talents that need expression, loads of values, dreams and aspiration. It’s very attractive proposition. While this was an excellent brand strategy, the way they implemented it spelt doom for them. Their mistake was that they chose Mr Murthy to represent that common man. This strategy compelled them to have Mr Murthy’s humility, his intelligence, his vision be capitalised on, for which it had to meticulously go viral and when that happened, he seized to be humble. It’s like the Zen first principle. The moment you utter it, it no longer exists.  Unfortunately in their case, they had another problem. They oversold this story so much that their brand ambassador became bigger than the company.

Today we can’t underestimate the importance of branding. Brand is one of the most important business assets. Brand strategy is an important part of business strategy, particularly in case of US centric IT businesses. Most of them do similar things but all need to show some differentiation and branding comes in handy. There are organizations like Microsoft, Apple, Alibaba, Facebook in IT and Virgin, Birkshire Hathway etc outside IT where business owners are perhaps more famous than their businesses. They feed each other’s brand values. But their identities remain distinct. In case of Infosys, it became synonymous to Mr Murthy. And it was only him that his company brand kept drawing from. Is that a problem? It is, when the brand value drops as the ambassador moves away. The real brand in that case was Mr Murthy and not his company. This was a failure of strategy implementation. Along-side their branding strategy, equal attention was perhaps not paid to the process or delivery side of brand building. How interesting it is to see the way TATAs built their brand through a robust process, not around any person. It is really interesting to observe how some companies mentioned above have maintained distinction of identities in such a way that both feed each other without getting mixed up. In fact, Microsoft and Apple have also passed on the baton to a new management successfully.

Brands are easy for people to identify with, put their trust and money on. What a long rope you get when you create brands and make them big! Because people attach themselves to brands, because they almost introject those brands, they develop a great deal of attachment and hence forgiveness towards those companies. They don’t easily accept negative publicity even when it is factually correct; they attack the critic, like the US senator Mr Charles Schumer who called Infosys a `chop shop’ was attacked. So, while there are areas of obvious failure, they still are reaping the benefits of some brand being built. Many people still aspire to be a part of them.

Ultimately whether it is Mr Murthy’s success or failure that he had to be called back is a rhetoric question. Management science teaches us that organizations have `perpetual succession’, from a legal stand point. But people play pivotal role in business continuity. People build organizations but since they themselves don’t have `perpetual succession’, a strong process of passing on the baton is an essential element in business continuity. It goes beyond the comic provisions of BCP like not flying in the same aircraft. Infosys had enough time and infrastructure to groom internal leaders. Mr Murthy founded Leadership Institute in 2001 to identify and groom internal leaders to avoid this very situation he landed his company into. But some kind of strategy compelled him to hire Mr Kamath from outside (the company & business) to head the board. Infosys’ leadership strategy seems to be to have a big brand, big name, stellar personality at the helm of its affairs. It is otherwise difficult to justify not having anyone of the founders chair the board in that interim period.

What’s beyond comprehension is their rotational leadership. It raises one question in my mind, `is leadership about competence or about giving everyone a chance? To me it looks like a definite failure of leadership and succession strategy. TATAs look very clear on this front. They obviously run a more complex business conglomerate but their leadership transition was quite clear, systematic and smooth. With branding, leadership and succession strategy not working so much in their favour currently, they have forced themselves to micro manage again in order to steady their boat. I hope they pick up these cues and change what they should. It would be extremely embarrassing for them if Mr Murthy had to continue beyond three years or if he has to rescue them one more time in future.

One question needs to be answered is `what was Mr Murthy mentoring for all those years as a chief mentor’? He is really lucky his stakeholders don’t seem to ask that question.

Incidentally, a year after Mr Murthy returned, Infy revenue growth nearly doubled, they added 230 new clients. However they also lost 12 top leaders, 500 middle level managers and 18% other workforce in attrition. It is sad that Murthy had to return and so many people had to leave for revenues to grow. Wonder who will celebrate this revenue growth. A large chunk of these profits will also be wiped out if they were to replace those managers and leaders. And if they argue that it was necessary attrition, then they have to admit that they were top and middle heavy and their customers kept paying for it.

In spite of all these arguments, we want Infosys to solve all its problems, get real and get moving. We do want them to be successful and scale new heights. After all, they employ over a hundred thousand people. This means a lot for our nation. Job creation is value creation in true sense. Employment gives life to our dreams and there is unmatched joy when those dreams come true. Infosys itself is manifestation of a dream that common people saw. Hence their survival and growth is linked to the conviction of common man in his dream.

- Rahoul Joshii

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