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Analysis Share This Page
Infosys: A Matured Company’s Immature Behaviour
by Gollamudi Radha Krishna Murty Bookmark and Share

So, an end has finally been afforded to the ugly spat going on for the last several months between the present Infosys management and its founder shareholders by Vishal Sikka, who, disturbed by “the constant drumbeat of the same issues over and over again, while ignoring and undermining the good work that has been done”, and fearing that such a noise might cripple the ability of the company “to carry out any kind of a transformation, especially one that is as fundamental as transforming from a cost-oriented to an innovation oriented value delivery to clients”, has quit as Infosys CEO and MD. Or, has he sown the seeds for a new …?

Intriguingly, in a letter written to the Bombay Stock Exchange, Infosys’s board had expressed its strong support to Sikka but accepted his resignation, while of course, blaming “Mr Murthy’s continuous assault” for his exit. The Board has gone a step further by alleging that Narayana Murthy made ‘inappropriate demands” that are inconsistent with his demand for clean corporate governance. It has also announced that the outgoing CEO had agreed to serve the company as its executive Vice Chairman till a new successor is found – which should be not later than March 31, 2018 –to support the company “achieve a smooth transition”, a transition towards the planned for transformation at a salary of $1 for the rest of the period.

Now the question is: will Sikka’s resignation shut the noise? Will it help company focus on executing the new strategy and reach the lofty goal of $ 20 billion by 2020 that Vishal Sikka set to himself when he assumed the role of CEO and MD of the company in 2014?

An honest answer to these questions would be: “No”, perhaps. For, a section of investors are still not happy with the Board’s decision not to make the report of the investigation firm’s on the alleged whistle-blower complaints over acquisition of Panaya, which Mr Narayana Murthy demanded, to make public. Of course, he had been persistently questioning about the pay hike to Sikka and COO Pravin Rao, and the high severance package paid to Rajiv Bansal. Over it, reacting to the Board’s allegations made in the letter to BSE, Mr Murthy categorically stated, “I have not commented about his [Sikka] strategy or its execution since I have not seen him operate from the vantage point of an Infosys board member. My problem is with governance at Infosys.”

Which is why, there is a section of analysts who strongly believe that Sikka’s resignation by itself cannot put an end to the ongoing Tamsha. On the other hand, it has tanked the scrip in the bourse by about 13 percent—highest loss in a single day in the recent past—finally closing at 923.10 in BSE on 18 August, 2017. Over it, Sikka’s resignation has created a new problem: selection of a new CEO and MD for the company, which by itself is a great task in the present circumstances.

Amidst all this noise what remains as an enigma is: what prevented Mr Sikka to sit with the founders and share the findings of the investigation report on Panaya acquisition and silently but effectively put the lid over the “regurgitation of same nonsense” and carry forward his ‘change agenda’ in right earnest to create ‘value’ for the company. After all, a leader is supposed to listen to critics without being condescending and communicate himself directly with the aggrieved to ensure that they are satisfied. Isn’t it? Are we to believe that Sikka, who has been essentially picked up by the company with a “bias for a transformational leader”, is not aware that such a lengthy squabble that too, in public between the management and founder-investors, will erode employees morale, discourage prospective clients to opt for its services and ultimately the value of the company? These questions are equally applicable to Mr Narayan Murthy, one of the founders and the creator of Infosys, but more responsibility obviously rests with the person sitting in the driver’s seat to satisfy the aggrieved parties. Isn’t it?

This incidentally reminds me of what Bill McDermott, the American CEO of a German multinational, SAP advised executives: “Leading in any country is all about reading the room, respecting the culture, and understanding the nuances of how people perceive information. You have to care about what the culture needs instead of just focussing on your agenda and how to get it done” (HBR, November, 2016, pp27-30). And, perhaps to walk his talk, he, though kept the family home in Philadelphia, moved into a house in Heidelberg stating, “It’s significant symbolically, strategically, and practically for me to have a residence in Germany. I want our employees to know that I have no interest in moving our headquarters to the United States.” He concludes his eclectic arguments on how to lead an organization based outside one’s culture with a seminal advice: “Always try to act with humility, to be human, and to be yourself. Optimism is a free stimulus in any country.”

I am of the belief that if only Dr Sikka—‘the jet-set executive’ with a doctorate in artificial intelligence from Stanford university—had acted on these lines no flash points such as travel in private jets, extravagant monetary packages—a Rs 16.01 crore annual package for the CEO in 2016-17, a severance package of over 17 crore to a former CFO, and the $ 200 million worth acquisition of a loss-making Israeli firm—would have arisen triggering the reaction from the founders of Infosys who hitherto ran the firm most frugally driven by the philosophy of ‘simple living”. And importantly, they appear to be finding it very difficult to come out of that ‘inherited mould’, which syndrome is quite palpable from even a distance. Yet, it is unfortunate that Dr Sikka could not

Well, despite these unhealthy happenings at this healthy company, all is not lost, for there is still steam in the company for rising above the mess that has happened, and all that it calls for it to happen is: the warring parties must come to the negotiating table sans their baggage and orchestrate how to bury the past and move forward with “the strategic direction of the company” that was already set in motion and relaunch it into the emerging digital world for creating value for all the stakeholders. And this time round the responsibility to steer it forward, perhaps, rests more with the founders, particularly with Sri Naryana Murthy, else, as he feared, his creation may fade into oblivion right in front of his eyes. One just hopes that these wise people will no more act unwisely!

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26-Aug-2017
More by :  Gollamudi Radha Krishna Murty
 
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