The Year that Was: What Will Infy Do After They Are Gone?

Chandra Shekar Kakal may not be known widely to the outside world, but at Infosys Technologies, he is the leader of 12,000 people bringing in business worth over $1 billion. But there is a more important reason why this vice president of enterprise solutions must be watched.

He is among the handful of future leaders who will shape the new Infosys in the next decade or so.
Subhash Dhar, Ashok Vemuri, V. Balakrishnan and B.G. Srinivas, all Kakal’s peers, are now coming under the same limelight. These five are among a band of leaders being groomed to take over from the founding team of Narayana Murthy, Nandan Nilekani and S. “Kris” Gopalakrishnan.

It will be one of the most keenly watched corporate transitions in recent times. Starting August 20, 2011, when Murthy will retire, the old guard will start putting more and more of Infosys in the hands of the new leadership. Within the next decade the remaining founders, who are now in their mid-50s, will start retiring too. No one quite knows how the transition will pan out. For over three decades, all the key operational roles have been looked after by one of the founders.

Of course, this could change with the relatively new Executive Council (EC), the highest decision making body in the firm, just below the board. In December, 2007, Gopalakrishnan, the current CEO and MD, drafted the five newbies into the EC. Earlier, decisions were arrived at by three or four executive board members — mostly the founders. Now all those decisions are put to the council which meets every 15 days.

The EC is an important part of grooming the next level of leaders. By assisting Gopalakrishnan and COO and director S.D. Shibulal, they learn what it takes to run a large corporation.

But can they step out of the shadow of the iconic founders to bring in a new way of working that Infosys now needs? The slowdown exposed the chinks in its armoury. Its rivals Wipro and Cognizant are growing faster. But can Infosys effect the transformation without straying too far from the so-called Murthy Doctrine?

The Doctrine is a financial model — the Predictability-Sustainability-Profitability-Derisking (PSPD) model — which allows the company to set its revenue and profit guidance every year and meet its targets quarter on quarter. They evaluate every business deal using these four criteria. Mastering this model is a key part of the leadership development process at Infosys.

It’ll be even harder to recreate the same chemistry in the top team that helped build the country’s best known start-up. Even though Murthy handed the baton to Nilekani and then Gopalakrishnan, he has a profound influence on the company. Even today, senior leaders say that when a decision cannot be reached, the team approaches Murthy. This is what makes people question how the company will cope when he leaves.

But while the next generation leaders have the huge task of filling in the shoes of the iconic founders, they must also not become their clones. It will be a tight rope walk and much of it will also depend on how hard the new leaders push for change.

(Additional reporting by Neelima Mahajan-Bansal)

- This article was earlier published in Forbes India magazine dated June 19, 2009

WHY DID WE DO THE STORY
Infosys is a company with a long line of founder CEOs and a strong home-grown culture that could be difficult for an outsider to fit in. Only three outsiders have found a position in its board of directors in nearly three decades. But the founders are now aging and will not be able to hold executive positions once they reach the age of 60. So the question on everyone’s mind is just who will be the first non-founder CEO at the company.

Surely, Infosys Leadership Institute at Mysore is designed to be a fountainhead of home-grown management talent, and the company had inducted five young business leaders to its executive council, but the inside story of how the company was grooming its next generation of leaders hadn’t been told before.

It was only our second issue when we asked on our cover: Why are Murthy and Nandan packing their bags at Infosys? It was met with a lot of scepticism. Infosys executives later told us that when the story broke, they received several mails asking them if Nilekani and Murthy were quitting.

WHERE DOES THE STORY STAND
For people who thought we may have jumped the gun on this story, the answer came within three weeks. In late June 2009, Nilekani announced he was leaving Infosys to head the government’s Unique Identity Project. In October, Murthy announced that he was setting up a venture capital firm Catamaran along with his wife Sudha. Upon retirement from Infosys in August 2011, this is what Murthy will do full time. The executive council, headed by S. Gopalakrishnan, takes all major decisions and might be expanded with six or seven new faces.

In 2012, Kris Gopalakrishnan will finish five years as the CEO of Infosys. If past practice is any indication, Chief Operating Officer Shibulal will become the CEO. That will also be the time when outsiders begin to take top leadership positions in the company. Murthy will retire in August 2011.