Welcome back, Nandan Nilekani
Such is Nandan Nilekani’s goodwill—which, unlike that of N.R. Narayan Murthy, has only grown exponentially with time, and also because he has maintained a studied silence during this unsavory episode -- that all classes of shareholders, employees and customers are genuinely happy with the final outcome.
The question of who is right or wrong has now been effectively relegated to the background. That he has put up his hand despite all the potential risks to his reputation if this goes wrong is a testament to his deference to Murthy and the substance in his character which makes him contribute positively in solving the most intractable problems which come his way—something the nation has witnessed first hand with Aadhaar.
Nandan’s charismatic leadership will be useful for all the priorities he outlined of which three are immediate: restore confidence of all stakeholders; attract a high profile CEO; and reconstitute the board’s governance doctrine including shareholder communication and succession planning.
Though Murthy will surely have inputs, Nandan must take his own decisions as Infosys has had the misfortune of having relied on Murthy’s opinion on the succession issue thrice—and gone horribly wrong each time. First came the infamous policy of a musical-chairs type rotation of founders having a shot at the top job, thus virtually forcing out Nandan at the peak of his career and installing founders without the skills which were appropriate for the company. Second, there was no element of succession planning involving the huge managerial talent base the company had built leading to many high profile exits. Third, the Board, and the CEO, were handpicked by Murthy whilst handing over the reins of control and he has some thinking to do for the current mayhem in this regard.
The CEO search will be difficult despite Nandan being at the helm. One reason is because the company’s strategy is pretty much set — its current strategy, put in place by Vishal Sikka is unlikely to change substantially.Settling for a makeshift “nuts and bolts” CEO is precisely the kind of mistake Infosys should not make given the forces of disruptive transformation currently underway in the industry. Interestingly, the Board has decided to go back to Egon Zendher, the same placement agency which recruited Sikka, overlooking the obvious and, eventually, all-important, cultural mismatch.
The other challenge is to overhaul, or create, sustainable Board processes and institutionalize them. If there was indeed such a break down in governance in just three years under former chairman R. Seshasahyee as is being claimed, the obvious inference would be that such institutionalized processes did not exist despite the halo of good governance under Murthy and team from 1981 till 2014.
Nandan also faces a Hobson’s choice with regard to making a full disclosure on the Panaya report. Everyone in a position of responsibility will agree that a full disclosure is not warranted for reasons of confidentiality of statements made by various employees, prudence, organizational decorum and also the non-disparaging agreement signed by the company with Sikka. Moreover, it raises the spectre of another round of debilitating counter responses which the company simply cannot afford.
But Seshasayee and some of the others had to leave for just this reason—not making the report public.
The core issue in the Infosys saga is how boards function when not in the control of a promoter or a dominant professional as an executive chairman. Due to behavioural and cultural underpinnings in our character traits, this is rare in India and we will witness how this plays out in L&T post A.M. Naik and ITC post Y.C. Deveshwar. There is no other company in the BSE 100 Index which has this situation except some private banks whose dynamics are not strictly comparable. This is unique in the case of Infosys. There is nothing wrong, in my view, of the promoters retaining a say through appropriate board representation; what is painful is the ambivalence of a position with regard to this question. If Nandan can fix this, keeping all interests in mind, he would have done a great service not only to Infosys but other companies as well.
This article would not be complete without a word on Seshasayee’s graceful exit and former co-chairman (and now director) Ravi Venkatesan’s dignified silence despite all the uncharitable comments they have been bombarded with in the media. In both of them, I see the fast diminishing trait of choosing to walk away quietly for a higher cause in the interest of the institution.
Nandan has been the Brahmastra used in this battle : the only weapon left in Murthy’s armoury to swing the debate in his favor. This is similar to the Stafford Cripps mission to engage Russia in World War II and which ultimately changed the outcome of the war. Nandan has lots to achieve whilst cleaning this up and, given his skills in aligning conflicting interests towards a common cause, he is best placed to handle this delicate mission—but I hope he does it fast as the nation needs him for a much bigger agenda of change than what he has been forced into by his iconic mentor.
Prabal Basu Roy is a Sloan Fellow from the London Business School and a chartered accountant: he presently manages a PE fund, advises start-ups and has formerly been a director and group CFO in various companies.