Opinion Culture vs Strategy
It’s the wrong battle for Infosys to be fighting at this moment. Both founders and board must recognise this
Infosys is making an effort, it seems, to address the concerns raised by its promoter, N.R. Narayanamurthy. On Thursday, it announced the appointment of its independent director of six years, Ravi Venkatesan, as a co-chairman. Murthy had recommended Marti Subrahmanyam. That apart, the company also announced it would spend Rs 13,000 crore in dividends or share buyback during 2017-18. Two ex-CFOs of Infosys had made a strong pitch for buyback pointing to cash reserves of Rs 40,000 crore that have been lying idle in the company’s books. Clearly, the board led by its chairman R Seshasayee wanted to buy peace and minimise distractions that CEO and MD Vishal Sikka talked about in his email to the company’s 2,00,000-plus staff. But it is not clear if Murthy’s concerns on falling standards of corporate governance — high severance packages, CEO compensation — have been addressed. The company had engaged law firm Cyril Amarchand Mangaldas in February this year to take inputs from the promoters, evaluate them and then make recommendations to the board.
The ongoing confrontation between the founders and a professional board-led company may be far from over. Proxies representing the founders have already complained the Rs 13,000-crore payout is not good enough. While Murthy himself has remained silent, the appointment of Venkatesan as a co-chairman has also been taken with a pinch of salt by those backing the founders who prefer to wait and see if the core issues of transparency and disclosure raised by Murthy are indeed attended to by the board led now by two persons — chair and the co-chair. In this melee, the company’s results have been disappointing, Sikka’s variable pay has dropped as a consequence, even as the entire information technology sector braces for new challenges in a rapidly changing external environment.
Given this backdrop, where Sikka is strategising to reinvent the company that was once the toast of India at every global forum, and Murthy is trying to preserve its culture, it looks like the board and the founders are fighting the wrong battle. Management guru Peter Drucker said culture will eat strategy for breakfast. But it is also true that culture needs to be refined and tuned for gaining competitive advantage. The new management is doing that, and as it does, trying to take the culturally-rooted founders along. Having taken a remarkably bold decision to walk out of the board, founders, including Murthy and Nandan Nilekani, can offer their ideas and advice if they feel compelled, but they must let the management take a call. That will let the company focus on growth and building shareholder value.
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