Mohandas Pai, former CFO and HR Head of Infosys, was a key part of the core executive team that piloted the company during its growth phase of the late 90s, and early part of the last decade. In this interview with The Hindu, he shares his thoughts on the recent happenings at Infosys. Excerpts:
How do you see the return of Narayana Murthy into Infosys in an executive position?
Narayana Murthy coming back is very good for Infosys because what the company went through was a crisis of leadership. It was not firing on all cylinders. It did not focus on selling; decision-making was very slow. The back-office people were dictating policy. It was taking time to close deals, and the sales staff was demotivated. Some of these legal cases also seem to have overwhelmed the company. People, especially in sales, left as a result. People were not pulling in the same direction.
But the fact is that the company has a strong leadership level; it has a great brand, and it has an excellent delivery mechanism. None of that has changed. What has changed is only at the top.
With Mr. Murthy coming back, there will be renewed focus on sales, incentivisation of the sales people, and once sales happens, delivery will perform. There will be empowerment at the top because the next level of leadership like Ashok Vemuri, B. G. Srinivas and Bala (Krishnan) … Mr. Murthy will push them.
The company took silly decisions like cutting the travel budgets of people. If you have to sell, you have to go meet people. You can cut anything but not the travel budget. Mr. Murthy will push here.
As executive chairman, he has to ensure that the management team performs, is empowered, and incentivised. He will do all that. Therefore, his coming back is the best thing that could have happened.
Was there a fundamental issue with Infosys 3.0?
What is Infosys 3.0? It was a strategy to morph into a solution/enterprise-led consulting company. It is a natural corollary for Infosys which had built up about 25 per cent consulting and enterprise solution-led work. The idea was to expand that, and change from selling projects to selling solutions. For this, the front-end needed more powers than the back-end. Those at the back-end such as people deciding pricing, legal aspects and so on had to be subordinated to the front-end. That didn’t happen. This is a management challenge, as it had to let go. The management had to be self-assured, which it was not. And that stalled the sales engine.
Do you think the passing of the baton to the founders ought to have been much more carefully done?
No, I think the next generation should have been put into place as leaders, and the founders should have taken a back seat when Mr. Murthy left. It should have happened at that point in time but it didn’t. That’s why the company is facing a challenge now.
Do you think Mr. Murthy will now ensure that the top leaders are qualitatively better?
No, he will ensure that they perform better. He understands sales, and it’s always said that sales people are the most important in the enterprise. He will make sure that it happens.
What do you think of the original philosophy of rotating leadership among the co-promoters?
It is basically flawed. You have a group of people who have been extremely successful for many years. They have created great value. Its human nature when you have created great value to become defensive and not aggressive. What you require is aggression in the marketplace for which you have to change the management team every 5-7 years. In the last 3-4 years, the company became defensive.
Will it be right to say that the IT sector has changed but Infosys failed to?
Look, all that is wrong. Competition is still doing very well. Why? Because the top management goes out into the market, and grabs deals. You know, clients say that competition closes contracts in a matter of 24 hours whereas Infosys took three months for the same thing.
Why couldn’t the company get someone from outside?
Look, the company has grown on the back of Mr. Murthy. It responds to Mr. Murthy well. It was the unfinished agenda of Mr. Murthy to put the next layer of leadership into place. He didn’t do that but put his faith in the founder group, which was a mistake. Second, the company had a COO from 1999. In the last few years, there was no COO. So, it all coincided. Mr. Murthy was not in the chairman’s seat, you had the last of the founders as the CEO, whether he was good for that or not is a debatable point. When you were a $100 million company you had a CEO and a COO. When you were a $2 billion company, you had an executive chairman, CEO and COO and a good CFO. When you are a $7 billion company, you have a non-executive chairman, a CEO and no COO and a change in the CFO where an extremely capable person had to step down. So where is the management team?
Will it not be awkward at the top level with an executive chairman, an executive vice-chairman and a CEO?
When Mr. Murthy is there, there is only one boss and that is Mr. Murthy. That is very clear. Except when he was the non-executive chairman, there has always been only one boss. If he had devoted some care at that time, things would have been different now. He’s strong, everybody listens to him,, and he’s very decisive. He takes responsibility for decisions.
Do you think the present leadership will step down ahead of their respective terms?
That is for the board to decide. I strongly feel that the board should take accountability for what has happened in the last two years. This is basic corporate governance, and Infosys is symbolic of the best in corporate governance practices.
Talking of corporate governance, what kind of practice is it to bring the son into the company, even if it is only as executive assistant?
In a desperate situation, you cannot stand on niceties. You have to solve the problem, and if that demands a little bit of compromise in what is not core, then you do it. Mr. Murthy has said he wants his son to help him because he has been out of touch. An executive assistant’s post may be one of power but is not one of control, is not client-facing and is not business-leading. Don’t read too much into it.
Look at it this way. Three quarters down the line, if performance does not improve, you know that Mr. Murthy is accountable, right? So empower him, give him whatever he wants.
But is this not a breach of his own guidelines of not having relatives in the company?
Yes, it is a breach of the guideline, it is a breach of his norm on retirement age, it may even be a breach of everything that the man stood for. But the situation today is desperate, drastic action is required, and the board has asked him to return because it feels he can change the situation. Give him a chance to do that. If tomorrow the situation changes, everybody forgets all this.
So, he’s taking a huge risk by agreeing to return?
Absolutely. He’s taking a huge amount of risk to turn around a corporation which has fallen into bad days.
So, will Mohandas Pai go back if called upon to by Mr. Murthy?
What is the point of my going back? The problem with the company is not one of having leaders to execute the strategies. They have excellent people in Ashok Vemuri, B. G. Srinivas and Bala. All three are extraordinarily talented. Why do they need someone like me? If someone like me goes there, I will be overriding their ambition making them feel inadequate and they will all leave. In the last 25 years, I have seen three generations of leaders leave because the founders blocked the positions for themselves. Do I want another generation to leave? If the three people above leave, what is left in the company? There is another layer of people below them who are very good. They must be given their day under the sun. It’s a bad idea for me to go back. I wanted the next generation of people to come in. That’s why I left but I found another founder getting the position and I said it’s a bad idea.
Have you got any feelers from Mr. Murthy?
I don’t want to comment. I’ve met him, and discussed many things with him but I don’t want to comment.
How long the investors and the board will give Mr. Murthy to turn things around?
Well, we should see results in maybe 3-4 quarters. I don’t believe there’s anything fundamentally wrong with the company. If he has to acquire companies to build revenues, he will do it. He will push people, and if he has to let go some people to finetune the organisation, he will do that too. He’s ruthless in executing his vision in all matters except the founders. You can trust him to create a high performance culture in the company and turn it around. I’ve worked with him for 17 years and I know him very well. His only weakness is his loyalty to his founders and that has let him down.
Is the whole thing done to pre-empt shareholder pressure?
Well, yes there was shareholder pressure. The annual general meeting was the flashpoint where people would demand action.
What happens after Mr. Murthy leaves?
Mr. Murthy’s job is manifold. One, he has to rev up the sales engine because that is the starting point to set things right. Two, he has to empower people to perform their jobs. Three, he must restructure by shifting power from the back office to the front. Four, he must put the next generation into place, and empower them to do well. And I will categorically state that in 2-3 years he should walk into the sunset, along with his son so that his legacy remains.
He has taken on an unbelievable burden at the age of 68. That’s why you must admire him and empower him.
In retrospect, was it wrong for him to retire at 60?
No, it was the right thing. It’s a young person’s company and you must have younger people with more passion and energy running the show. The point is that he didn’t put the right leadership in place and only he could do it.
What is your take on whether Mr. Murthy will now succeed?
Ninety per cent I will put my bets on his success.
What is that 10 per cent doubt?
The 10 per cent doubt is because he must not tilt in favour of his son. And he must not tilt in favour of his co-founders.