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Want to become a successful manager? Ask Nandan Nilekani
Published on Mon, Jun 30 at 15:47 , Updated at Wed, Jul 02 at 11:49
Source : CNBC-TV18
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Excerpts from CNBC-TV18’s exclusive interview with Nandan Nilekani: Q: Did you ever expect Infosys to be at where it is currently? You were sitting in a 10x10 feet apartment and suddenly started off the success story. But what did you actually aspire for when the 7 of you got together? Was there a personal mission statement? A: Obviously, we had no idea it would reach this size and scale. But the desire was to create a new kind of a company different from multinationals, family-owned businesses, public sector companies and to create a company with a different ethos value system and put the employee and the person at the center of it. The size is a by-product of that. Q: What is the secret sauce that keeps all of you together? You have an idea or a dream but partners leave you along the way. What keeps the 7 of you and a bunch of people together? A: For us, Infosys is a calling; it’s like joining the Church or joining the Army. We are absolutely and fanatically committed to a great institution, which also outlives all of us. In a sense, we don’t want to create a one-generation company. We have to create a multi-generation company which lasts for hundreds of years and continues to do well. Q: When you started off, you decided to do something that had not been done in India before. It was supposed to be a different sort of a company and you have also created a different market and a whole new business model. How did the whole preemptive management and style of working come about? What are the parallels of preemptive management as sometimes you could be ahead of your time perhaps? A: The early 90s was a dramatically different change because the markets opened up, globalization started happening and liberalization. Large companies started coming into India, and we were a very small company. So, we were into a lot of introspection whether we had a future with competing with the big boys and either we get out of this game or go for broke or for the big time. So, we took a very calculative decision for the big time. Q: What is that checklist because entrepreneurs are supposed to dive in and take the plunge? Is there no checklist? A: There is no checklist, it is all about survival. Q: How do you sell yourself as a starter? A: The question comes, what is your core-strength? Even when we talked about positioning ourselves, it was very clear that we could not position ourselves as the biggest, the eldest or the most global. Q: It certainly cannot be based only on price? A: Yes. When I look at great entrepreneurs, they have the ability to convert their weaknesses into strength. So, we made that into the strength. Q: Was it easy to convince people to buy into your argument when you started off? Give us your examples or anecdotes of it. A: Let me give you an example: we did a market survey in 1991 or 1992, to look at what was our reputation for employees. We were nowhere on the list. We said this is not going to succeed because tomorrow if all these big boys come and they go to recruit in the IIT or NIIT campus, why will anybody join us? They will go and join a big name. Therefore, we said one of the key strategic things we have to do is build a brand as a company that is very attractive to the workform. Within four years we were able to go from nowhere to the most wanted company to join in the campuses. Part of that was, we invested in building a world-class campus. This was in 1992 or 16 years back. So, we raised capital, built a campus and invested in training, because we realised that people wanted to get educated and get better at things. We invested in a cool campus kind of culture. Q: When you go from seven employees to 1,00,000 and from two business units to 6-12 units, is there a checklist on how you should actually go about managing? A: The big change was driving backward instead of forward. In the Hindu rate of growth days, from 1981 to 1992, we used to do Rs 9 crore of revenue and then all huddle together. We did not have budgeting systems and that kind of stuff. We huddle together and asked what do we do next year? We said that next year we will do Rs 11 crore, about 20% of this year. That is the wrong model. Then we realised that the driving forward stuff doesn’t work. So, we said let’s drive backwards. This means deciding a target and then working backward and figuring how to get there. That is the key switch in the model. That happened at the time of our IPO. We did our IPO in February 1993 and you have to put a three-year projection of revenue. We put the projections saying that, we will be a Rs 50 crore company in three-years and then after that we started wondering how are we going to get to Rs 50 crore in three years. We opened and unlocked our imagination because then we realised that we have to do the following: we have to recruit more people, get the infrastructure, put more sales people on the ground, open more offices and build the brand.
Q: Infosys has always been seen as a conservative company but both you and Narayana Murthy have vehemently opposed this idea of Infosys being conservative. What is that judicious mix between taking risks and being conservative? Are there times when you should actually err on the side of caution? A: It is more about being prepared than about being risk averse. I go around these circles where I meet other CEOs like Warren Buffett, Bill Gates and Mukesh Ambani. They share one extraordinary feature; they have the ability to visualize the big picture and go to extraordinary levels of detail. That is required because you have to think big. Bill Gates said, “I want a PC on everybody’s desk”, and Mukesh Ambani wants to build a town bigger than Mumbai. But at the same time, they have the knack of getting into every little detail. They are not micromanagers, but they think through the details and have the ability to go from the picture to the detail and back to the big picture in milliseconds. So, this ability is required for all of us. Entrepreneurial tips from Nilekani: Puneet Puri, Director, Flying Films, asked, “One issue that I feel that an entrepreneur needs to learn is, how do you maintain a culture in the company? After you go beyond a particular size, would you lose direct contact with your subordinates when you have multiple layers of people between you and the last nodes? How do you ensure that your vision goes to them, as e-mails don’t work? A: Obviously, there is one part of it, which is the execution stuff - the e-mails, chat sessions, discussion groups, communications and orientation programme. There is the whole infrastructure that you need to create that. But it is a lot about leadership by example because companies have a culture and their own mythologies and stories. They get reinforced by leadership behaviour. So, by walking the talk of what you say and practicing it in your business, it has a huge impact. For example, one incident that you have with one employee in one part of the world can in today’s world resonate in the company for 24 hours. So, people get reinforced with that. The more they see that culture being practiced, it permeates into the system and has a huge impact. Rakesh Shukla, Founder and CEO, The Writers Block, asked, “How do you keep the ego separate? A: You have to decide where your ego gratification is going to come from. You can get your ego gratification from dominating the environment and having all the people saying yes or your ego satisfaction can come from creating a great company or from transforming an industry. It just depends on where you peg that satisfaction. So, if you can peg your satisfaction at the right level, then it won’t be an impediment at this level. Q: (Rakesh Shukla) The question is not one of satisfaction; it is about how it is perceived to be. It should not be seen as satisfaction that I am deriving but rather for the good of the company as what is good for the company is good for all of us. But it shouldn’t be seen as my picture only. A: That is a very valid point. Let us say that when we were a USD 100 million company, we said we want to be a USD 1 billion company. It was not just about articulating that we want to be a USD 1 billion company. It was about painting a view of what a billion dollar company would look like in terms of revenues, customers, employees infrastructure, sales, service offerings and all that stuff and then making everybody in the company participate in that vision. That automatically makes all of them buy into that vision and it becomes everybody’s vision. This notion of defining the future is not only a way to unlock the aspiration and imagination of people, it is also a way to align everybody to the same grammar. Q: Karan Gupta, Executive Director, Candico, asked, “So you set yourself a goal and recognize sources that you need to achieve that goal; whether it is a high-quality campus or employee surveys. This does not necessarily guarantee that revenues will follow. All you can guarantee is that you are putting resources in place. So, how do you meet that challenge? A: It is not just about the capacity of the system to meet the goal. It is also about which markets, products and services are required to meet the goal and how many customers are required, how much revenue per customer and how many sales people are needed to reach the goal. It is both the supply side issue as well as a demand side issue. So, you plan the whole thing.
Q: Sunny Bhatia, CEO, Colour Kraft, asked, “For a company who has dealt with issues like land allotment, e-governance and entrepreneurs like us face corruption almost every day, how did you manage to deal with this issue with so much sincerity and honesty? A: We are partly helped by the fact that our business and customers are international and we are not much dependent on the local ecosystem. But more importantly, it actually becomes an asset because people know that you don’t do that kind of a thing. So, they don’t even bother to ask you. Actually somebody was doing a case study on this. So, it actually creates a wall because they say, ‘these guys are all crazy guys, they don’t do any of this stuff’. Q: Jessie Paul, Chief Marketing Officer, Wipro, asked, “Narayana Murthy has often spoken about the triggers for becoming an entrepreneur. So, when he came to you and said join Infosys, what made you quit your cushy job? Did you think it was like an adventure and you can go back? Did you see it as a lifetime commitment at that time? A: For me, the risks were very low because I was only 25. The downside was not that much. But I did see it as something for life and not as a 5-year or a 10-year kind of a thing. Q: Around 25 years ago, did you see it as a lifetime commitment? A: I didn’t think I would work anywhere else. Q: Why was that? What was it that he told you that made you buy into his story well before Infosys was a USD 4 billion company? A: The opportunity to create something different, new, something which would be transformational and path breaking. That is exciting stuff. Q: But what was the reaction from your peers and family because everybody was probably going abroad, getting a job in Silicon Valley after IIT Mumbai? A: Aghast at the whole idea. Q: Did you have to take a battle with them to convince them? A: Yes, but I normally did the opposite of what my father told me, so this is one more of those things and no big deal. Q: Hitesh Oberoi, COO & Director, Info Edge, asked, “This is something which has puzzled me and I have been thinking about it for a long time now. On the one hand you have business houses like Reliance ADAG and Tatas who are into 30 different businesses. They start a new business every six month or one-year and those businesses become very big. On the other hand, here is a group of professionals doing Infosys, completely focused on just one idea and making it very big. But in the process, there must have been lots of opportunities which you may have missed. You had the capital and the resources. You could have had the best professionals to do it for you. What do you think is the reason? Is it because of the fact that we are professionals and that is how you were brought up and while these guys are from seasoned business families and that is how they think and they think very differently? A: There have been many professionals who have diversified. I don’t want to make it a professional versus a guy born in a business background. I just think that it was not our cup of tea. It was very clear to us. It is not that we didn’t try. We tried it and we tried to do manufacturing. We tried to make all kinds of gizmos but we were a complete failure and that completely turned us off that path in some sense. That was enough for us to blank out our mind to this diversification for 20 years. There are enough cases today of professionals who have quickly diversified and it’s fine. May be it is just our incompetence and inability to manage multiple industries. Q: Nikhil Velpanur, CEO, Lets Head To, asked, “I started my company at 19 years and have zero corporate experience. I have zero qualifications. So, how does a person like me go about now that my company is poised to grow rapidly? How do I go about building a team that has got people with phenomenal experience?” A: First of all, you should make a ruthless analysis of your strengths and weaknesses and then find somebody who fills all your weaknesses or find a bunch of people and be willing to recognize that. Don’t try to be smartest in everything because we are not, but identify what you are good at and what you are not good at. Be ruthless about it and then cherry-pick people who can fix that and then build a team. Q: But it is important to recognise you weaknesses? A: Absolutely.
Excerpts from from CNBC-TV's exclusive interview with Nandan Nilekani: Bhan: You spoke about set backs, you have seen some in your time at Infosys, take us through it if you can and how you actually dealt with it, how did you move on past the failure and the set back, and said we will still have to go when you got the target in sight? Nilekani: We thought we should diversify. We were into the software business and we got a hardware business as well. We tried to manufacture telex machines and CNC equipment. That whole thing was a total disaster. That thought us a couple of lessons. One was to stick your netting and The other lesson was that when in your core business, you should not mess around but just do that business well. One of our founders left us in the mid-80s, it was a very traumatic movement for us and it was the time when we would have either broken up or go big time. Murthy had played a big role in saying that we will go for it. From that point on we kept going and then there was no looking back.
Bhan: Was that a plan B? Nilekani: There was no Plan B.
Bhan: So if you were to split up, everyone would have gone their way? Nilekani: We actually had this mind game, we asked one and other, what you would do if we split up and everyone gave vague answer.
Bhan: What was your idea? Nilekani: We were talking about the late 80s, at that time Sam Pitroda was doing his telecom business, so I said I would go and help him.
Bhan: You could have given Sunil Mittal a run for his money? Nilekani: Not to help him (Sam Pitroda) do some water project. He was doing some drinking water missions. Many years later when they formed the knowledge commission and Sam was the Chairman. I joined because I remember that 20 years back I wanted to work with him and I got that opportunity 20 years later.
Bhate: Do you think it would have been much easier when you were a smaller company to make an acquisition?
Nilekani: We have a strong culture and we have strong expectations of the kind of company we want to buy. So that obviously limits our field. But I think there are two kinds of companies. Some of the greatest companies in the world have reached their size without acquisitions. Toyota is the world’s largest car manufacturer today with no major acquisitions maybe a small one here and there. Wall Mart has become the greatest retailer without acquisitions, at least within the US. So there are different models, so it’s each person’s perceptions. It also has to do with the state of the industry and where you are in that industry. We were there right at the beginning and we were there at the front of that transformation, so we could do it very organically. But had I come in late to an industry it would not be possible to quickly garner some market position organically. So a lot of that is contextual and situational.
Bhan: But you never got caught up in the frenzy, while everyone was going and doing that multi million dollar deals was there never a point when you thought that maybe this should be something that you should do as well? Nilekani: An acquisition is a mean to an end. It’s not an end in itself. Vikram Narayan: I am sure you are hit with a lot of changes. Like change in political environment, technology, companies getting merged or bought out. How do you manage the huge flow of information, which is probably going on your desk everyday? Nilekani: I have a mental model of the world. I can fit a fact into that model. So that way I can take a fact and either put it in the model or throw it out.
Bhan: What is this mental model? Nilekani: What is business? It is about customers and selling product and services. So every business can ultimately be translated into that model.
Bhan: How nimble footed have you been to deal with these changes. That is one of the characteristics of entrepreneurial companies, their ability to adapt really quickly? Nilekani: I don’t want to give an impression that we do everything well. I am sure we have messed up sometimes. Bhan: What have you done badly, where did you mess up?
Nilekani: In 2001, we didn’t read the dotcom bubble burst fast enough. We should have seen the dotcom bubble bursting earlier. We actually recruited a lot of people assuming this party was going to go on forever but it didn’t. Gopalakrishnan: Where do you draw the line between using intuition and going by the numbers? A: There is a big role for numbers. Especially when we crunch our business performance, sort it out by what is happening by customer, by region, by business, we get a lot of insights from numbers. But I think intuition plays a big role because at the end of the day when you are sitting there and deciding whether I need to hire 25,000 or 20,000 or 35,000 people next year, at the end of the day you are making a judgment call. You can do all the number crunching and talk to all the economists and get GDP growth rates and all that. But at the end of the day that decision is because you feel that the economy is going to do well or better. That is an intuitive thing. Bharadwaj: If you could just elaborate at what point in time do you decide to call it quits and move on? How do you manage this transformation of having something to nothing and starting from zero? Nilekani: First of all, if you decide to quit and be an entrepreneur you should do it as quickly as possible. If it is lingering, it probably won’t happen. So, you have to cut down the cycle time between decision and getting done. In our time was a little more difficult because today if you were to start as an entrepreneur and play your cards well, you can raise capital reasonably quickly. At that time we had to start from ground zero. Somebody asked me about what risks I took? Frankly I didn’t take any because I was 25. It didn’t matter. Whereas, for people like Narayanamurthy, and Raghavan another one of our founders they were 35 and at the peak of their careers. So, in my view the risk they took to give up well paying jobs with two young kids were much bigger risks than I took. Paul: How do you see the entrepreneurial ecosystem in India vis-à-vis other countries right now? Would you recommend any changes? Nilekani: Across the world, India is the place for entrepreneurship. There is a lot of research being done on capitalism. There are different forms of capitalism. Not all of them are good. There are state capitalism, the large state owned dominant companies. China would be an example of that. Then there is oligarchic capitalism, Russia is an example, where few guys own all the resources. And there are countries where there are thousands of entrepreneurs coming up and innovating. India and US are the two big examples. Every farmer in India is an entrepreneur. They have more difficult times than we have because they have to think about whether it is going to rain? Who is going to buy his stuff? Whether there are going to be weeds? etc. There are a whole lot of things to improve that eco-system and how to make the starting up of businesses easier and how to get capital to them. How do we create a market for liquidity? How do we create entrepreneurial support system? So there are a whole host of things. But I genuinely believe that this is the golden age of entrepreneurship in India. Bhan: What do you think is the single biggest challenge facing Indian entrepreneurs at this point in time? Nilekani: He has to do things in a more efficient and smoother environment. He has to go through battles that one doesn’t have to battle in other places. Essentially, the entrepreneurial ability and imagination in India has far outpaced the ability of the system to cope with it. There is a mismatch, as the entrepreneur is ahead of the curve and therefore the other stuff has not caught up. Therefore, one deals with this all other stuff. Paul: Is there any structured way you would like to pass on your lessons of entrepreneurship to the next generation, in the form of book or lecture? A: My colleague Shibulal is working with CII to create a sort of a support group, where existing companies mentor and role model other companies on specific business skills. Bhan: What is the book about? A: The book is called ‘Imagining India’ and its basically tracing India through the evolution of ideas. I feel that when ideas change that’s the only time when this country will change because everybody is so argumentative. To convince them takes time. Once they are convinced, it happens. So it divides the book into four kinds of idea. Idea that brought us here; idea that we agreed upon but yet to implement; ideas we argue about and ideas we need to anticipate about the future. Iyer: What did you think about competition, particularly when you were smaller and competition was bigger, stronger and better? Did you allow it to drive your strategy a lot? Did you not think too much about it? How did you deal with it? A: While its bigger, stronger and all that its also slower, more unimaginative, bureaucratic and sluggish. So there are always ways to figure out how to get around that. Datar: How do you manage a personal transformation from being an entrepreneur where you are a jack of all traits to a professional manager of a USD 5 billion company which is public and your up in the public eye? How do you manage that transition? A: The key to that question is constantly sitting back and introspecting about what your role and value add at that juncture is. In other words, my role and value add when the company was Rs 10 crore is completely different from when it is Rs 20,000 crore. Therefore at every point of this inflection you say, how do I add value now? Bhan: Give us an example of how you did it? A: In the old days we all sat in one room and sort of bumped into each other as we walked around. When we got into that phase of scaling up and public issue and all that, we realised that this model will never work anymore. We need to have a plan, budgets, and professional managers. Each of us was a finance guy and HR guy. We had to get experts in those fields. Then we realised that in order to have that we needed to have accountability, defined roles and decision parameters. When you go public, you realise a whole new set of issues. You deal with the investor community and with media. Then as you grow bigger you have to worry about branding and that again is a new role. Then you have to think about government responses. When you become bigger you become visible to the government. So, as you move there are new things that you have to worry about. You have to constantly think about, what to shed from what you did? What do I shed from my old activities and what are the new things I have to be taught? Bhan: What have you shed in your current avatar? A: I am clearly looking at longer-term things. That means really not being involved with the executive responsibility of running the company. Bhan: Is that hard to do though? A: No, not for me. Bhan: On a personal level how you have changed as a person? Nilekani: I have become more self assured, not self confident, but I am more at peace with myself. I think a lot of my success is pure serendipity. It’s luck. So I don’t think I am some fantastic guy who knows everything. I don’t. It just has to happen at the right time in the right place and with a right set of friends. So it is very clear that luck played a huge role, so I don’t let this to get to my head. Kumar: This question got out my complete paranoia of what’s happening all around. We are in the experienced economy and how recession-proof can our business be, is something that is worrying for all of us at any given point in time.
When we come up with the Nano, which is the cheapest car in the entire world, I am delighted that my country has got so much of intelligence in manufacturing, in designing and in creating the product. But this saddens me incredibly that we have created the cheapest product in the entire world. We are in this state of art whether it’s artistry or whether it’s culinary skills, whether it is just story telling. We are in the business of being able to create so many intellectual driven products that are completely recession proof, Why can’t we create a car tomorrow that can do worth crore and double cross the Ferrari. Nilekani: The Nano is an extraordinary piece of innovation. Let’s not knock it. I think it is brilliant. It’s awesome. The fact that young engineers below the age of 35 can get a car that everybody talks about is amazing. When I was in Geneva the other day with Carlos Ghosn the head of Renault-Nissan, he was waxing eloquent and saying that the future of car making is in India. This guy is a legend in cars; he is the guy who turned Nissan around and he, tells me that the future of car making is in India and he thinks like that because of the Nano. You can imagine what kind of an impact it had. Even though the Nano was not on display at the Detroit Auto Show, it was the only thing they were talking about. So, I think it is a phenomenal achievement. What you are going to see now is because of the rise in self-confidence because of the human capital that is going to get unleashed, you are going to see innovation and experience of a kind that you have never seen before. Dhanani: Is there in your opinion a certain right pace of growth for a business? A: Growth is in the mind. I remember once we were growing at 100%. Everybody said we were growing too fast. If we grow slower we are going to get more things done. We grew slower and nothing got done. So we might as well grow at 100% and deal with it, than grow slowly and not get it done. Kavita Narayan: This strong culture that Infosys has, do you think that can ever be a disadvantage for you to change, to do something completely different from where you stand for but still be very successful, is it kind of disruptive? A: Yes strong cultures, not Infosys but in general, both have an advantage and a disadvantage. The advantage is that they act as a great bonding and create scalability. But there are two situations, one is the way they would deal with the paradigm shift in their business environment and the second is the how they would deal with acquisitions. Acquisitions of a strong culture company or another company has to be integrated well otherwise there would be a cultural issue. So there are some challenges but in balance I would believe and look at the entire range of challenges and opportunities and strong culture helps. Thangam: As companies become bigger and bigger, there is a political visibility that comes around and inevitably there will also be political action, like the major leaders of your company have had. What is your view on that? Is it a good thing or is it a bad thing? Nilekani: We have to interact, we can’t live in a glass cage and a nice air-conditioned office camps. We have to interact, and we have to realise that business and politics are two different things. The problem is that when they start mixing up for very special reasons, there is obviously an issue of economic disparity and so we need to address that. While you and I may believe that entrepreneurs will build the future of this country and that entrepreneurship is the way to make it happen. But not everybody may believe that. We have to demonstrate that that is actually the way to go. If we believe that and whether we like it or not, we are professing a point of view of how the country should operate. So we have to take that point of view. Bhan: It has been a 27 year long entrepreneurial journey for you. All consuming, have you missed out on fun stuff? A: No, nothing at all. Bhan: So still manage to catch up with music and the food and all of that? Nilekani: Yes. I don’t feel deprived in any way. Bhan: The must do’s and the don’ts? Nilekani: First of all you must dream big because to dream big is at the same cost as to dream small - so why not dream big? It takes the same amount of mental energy and the fortitude. It is about perseverance. It is about long distance learning, deferred gratification. We didn’t see gratification for 12 years, when we are small and private. That deferred gratification, that perseverance of being, the loneliness of the long distance runner. It is lonely often but if you feel that you can get there, you should go for it. |
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