30 Aug 2017 19:38 IST

Infosys imbroglio: A cultural disconnect

Both content and context are equally important for a CEO to succeed in sustaining a company’s culture

In the eminently readable book Failing to Succeed: The story of India’s first e-commerce company, the author, K Vaitheeswaran, observes: “There is something about Indians who come back to India after studying or working in the US. Most of them are convinced they are fully equipped to run businesses in India without realising that India is completely different, and they need prior experience here.”

Does this throw some light on the Infosys imbroglio? Does Vishal Sikka — oddly enough, NRN’s CEO recruit — fall in this category?

Managers are broadly oriented in favour of Content or Context. Content-oriented CEOs focus on the substance of the company’s strategy, technology and structure. They firmly believe in analysis and the power of the right answer. And they rely heavily on specific functional strengths such as marketing or technology.

Content and context

Context-oriented CEOs focus on the environment in which decisions are made. They are concerned with values, purpose, culture and processes that create sustaining engagement across the enterprise.

A CEO needs both orientations — if anything, more of the context than of the content.

Does Vishal Sikka happen to have the wrong combination? More of the latter than the former? An outstanding technologist who does not see the importance of ‘shared values’, referred to as the heart of the “happy atom” by the authors of the bestseller In Search of Excellence.

Does that explain the culture conflict that we saw — the salary package, the CFO severance pay, the Palo Alto office, the chartered flights and the Panaya acquisition?

Hands-on, value-driven

Peters & Waterman, celebrated authors of the above book, propound yet another tenet, “Hands-on, Value-Driven”. It is said that Field Marshal Montgomery, the architect of the Allied victory in the Second World War, spent more time at the war-front than at the war office.

This is the true sign of a leader. And not just any leader, but what Jim Collins in his book Good to Great calls ‘Level 5 Leadership’. A Level 5 leader transcends the ladders of capability, contribution, competence and effectiveness and demonstrates enduring greatness through a paradoxical combination of personal humility and professional will.

The latter attribute, even if not the former, characterised Spanish conquistador Captain Hernan Cortes, who, when he landed on enemy shores at Veracruz with his men, asked them to burn their boats so that his troops had only two choices — to succeed or die.

When you combine the discipline of culture with the ethics of entrepreneurship, you create the magical alchemy of a great enterprise. A leader of such a venture will stay close to his troops — the 180,000 knowledge workers of the company — and not on another continent.

Level 5 leaders

Management history abounds with stories of such leaders. Darwin Smith of Kimberly Clark was one such. He took over a company whose stock had fallen by 36 per cent, and created a stunning transformation without changing its alchemy

Infosys, like the Tata group, required a Level 5 leader. Was Sikka a Level 5?

Collins describes the role of a governing board in picking a Level 5 leader. He says: “Boards play a key role in picking Level 5 leaders. The recent slew of cases of boards being enamoured with charismatic CEOs, especially “rock-star” celebrity types, is one of the most damaging trends for the long-term health of companies.”

Collins has another interesting conclusion to his celebrated book. He says that all great companies are managed by home-grown timber, not imported from outside.

Both in Tata Sons and Infosys, the Boards have not covered themselves with glory through their conduct. Passing the baton is a complex process. What is the Board’s responsibility in this exercise?

· To determine what is best for the company

· To choose options that result in as close an outcome to this as is possible

· To complement and provide balancing support in

either content or context, as required. And then,

· Have a monitoring system whereby course correction can be made.

· Create a climate of trust and candour.

From all the reported information available, the Infy board did none of the five, above. Thanks to entrenched practices, Boards hardly make the right choices. And when such a Board comes out with an open scathing attack on the entrepreneur who founded the organisation, they also become accessories to the grievous impairment of the culture that created the organisation.

Culture at the core

So, at the core of all this is culture. Like the lawn at Oxford, tended over a 100 years, an organisation builds its culture blade by blade, brick by brick. It is the raison d'être of its existence. You disturb it only at a company’s peril. We have any number of examples where separation took place because of cultural disaffinity — Carly Fiorina of HP, Douglas Ivester of Coke, John Walter of AT&T, Michael Ovitz of Disney, Rick Thoman of Xerox.

In fact, when Ivester, an accountant by training and hence predominantly a content-oriented manager, proved incapable of managing Coke’s most treasured cultural asset — its image, The Wall Street Journal commented, “Ivester knew the Math but not the Music to run the world’s leading marketing organisation”

Culture is a strong issue. It is fundamental to every good organisation, as argued by Deal and Kennedy in their classic book: Corporate Culture. “The early leaders of American business, such as Thomas Watson of IBM, Harley Procter of Procter and Gamble, and General Johnson of Johnson & Johnson, believed that strong culture brought success. The people who built the companies for which America is famous all worked obsessively to create strong cultures within their organisations.

So, Narayanamurthy is right. And perhaps so is Ratan Tata!

Prof Philip is President, XIME, and former Director, IIM-B. Prof Anantharaman is Provost, XIME and former Adjunct Professor, Harvard Business School.

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