Desperate problems call for desperate solutions. Infosys, once the darling of the markets and undisputed icon of the IT industry, has lost the plot in recent times, ceding the second position in the pecking order to Cognizant. Indeed, if its guidance for the current fiscal is to be believed, Infosys will grow at just half the pace of the entire industry.
Something, therefore, had to give, sooner than later. And thus, Narayana Murthy has stepped out of the pavilion for a crucial second innings, like A.G. Lafley recently did at Procter & Gamble. In a way, it is not surprising that Infosys went back to Mr. Murthy. Both, the CEO S. D. Shibulal and executive co-chairman, Kris Gopalakrishnan, are co-founders and the only person with a greater equity and reputation than them is Mr. Murthy.
The return of Mr. Murthy is thus a tacit acknowledgment that the present executive management has failed to deliver the goods, something that the market and analysts have long been saying. In fact, Infosys’s current problems can be directly traced to its policy of rotating leadership between the co-founders. Though a nice gesture, this decision appears to have been made without considering the differing skill-sets of the co-founders. In a random group of five people, all talented, not everyone can have the same skills and abilities.
Thus, some could be exceptionally good strategists capable of seeing the large picture while some others will be good in execution. The rotation policy’s flaw was probably that it failed to take into account the different capabilities in the promoter group.
The second point is that in recent times the company probably spent more time and energy strategising for the future at the cost of focussing on execution. As an industry veteran pointed out, you can position your company for the future but you have to make sure that it is relevant for the present.
Shareholders, especially the institutional ones, have been flapping about over the falling performance of the company, and it is quite possible that the move is a reaction to their pressure ahead of the AGM on June 15. FIIs hold 40.52 per cent of Infosys’s equity forming a formidable group.
Rohan follows Murthy
The most disappointing aspect of Saturday’s developments though is the entry of Rohan Murthy, Mr. Narayana Murthy’s son, into Infosys as executive assistant to his father. Whatever happened to the understanding between the co-promoters that they will not bring the next generation into the company? Talented and qualified as Mr. Rohan Murthy is, to see him parachuted to the top in this manner is jarring. This is no different from the various other industrial houses in the country where this is routine practice. The move also makes it appear as if the talent cupboard in the company is bare, which may not be true.
Infosys has always held itself up to be different in its high standards of corporate governance, and this move is a blot on the canvas. For a company where the promoters hold just 16.04 per cent equity, Mr. Rohan Murthy’s entry is surprising indeed.