BackDealing with complexity at Cognizant
Cognizant’s chairman on the dangers of living in a safe zone, grooming leaders, and growing complexity in IT business
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Chennai: Cognizant Technology Solutions Corp.’s board members are in India to meet leaders across business units and learn how the teams are driving strategy in their portfolios. John E. Klein, chairman, 71, who has been on Cognizant’s board for 13 years, spoke in an interview on the growing complexity in the information technology business, grooming leaders, role of the board and the new leadership structure. Edited excepts:
Cognizant is becoming more complex with newer technology and business models; so at the board level how do you keep up?
In one sense, things don’t change very much over time. Most of the board members have been in the industry for a long time. Ever since I have been involved with them, we’ve never changed our fundamentals of putting our people first. We hire the best talent and train them in not just technology, but on our DNA, which means putting the customer first, and understanding our ethics.
In our company, we don’t tolerate egos very well. The board gets involved in the ground level by meeting with employees and customers. We involve the customers in board meetings and strategy sessions where we understand their top issues, and work with them on it. We also spend a lot of time on strategy. Every year we spend three days with outside experts to tell us about the marketplace, technology, the competitive landscape and then we play that against what the customers tell us, and marry those things to fine-tune our strategy.
In these 13 years you have been with Cognizant, what has changed at the board level?
We try to maintain continuity, with respect to executive continuity and board continuity, but technology has changed and we are spending more time now talking about Horizon 3 (H3) or SMAC (social, mobile, analytics and cloud). We believe that with the population of our customers and demographics of the world, people are more tuned to using social media. A huge amount of data is accumulated on their buying habits. So we have the SMAC. That is a really dramatic change for us. We think it will have a major impact on the marketplace. We are seeing more customers than we anticipated at this point of time who are doing SMAC-level activity, and we are engaged with them.
One of our strengths over time has been to not react to the market, but anticipating the market. We anticipated the importance of having a strong front-end machine and adding the consulting capability, which served us very well.
We have not seen many companies freeing up their CEOs to execute something futuristic. How did you decide Francisco D’Souza should be the one to lead H3?
We looked at what is coming along and were convinced cloud is real. We talked about it for two years before we did anything. We looked at analytics for a period of time. So we wanted more emphasis on this.
And out of that, we had Gordon Coburn (president), who is capable of handling a lot of the fundamentals of the traditional business, and we had Frank (D’Souza), who is a great strategist and engineer, all excited about this new area. It was logical for us to create this opportunity for Gordon, and to free Frank to put him on what is going to be a major contributor for our future growth. It became a natural evolution of things, than a decision.
How did it happen so naturally, because we find a lot of CEOs are stuck with operations?
Maybe it is because of the no-ego stance. It came naturally for us to say Gordon will handle H1 and H2, and Frank will be perfect for handling H3. It was not a difficult decision for the board, or Frank. And it is working extraordinarily well.
How do you look at failures while betting on newer things at the board level?
I think we have enough experience on the board to say that if we don’t fail, we are not trying hard enough. If you live in a safe zone your whole life it is not going to be exciting.
How important are young leaders for the company at the board level? What do you look for in a board member?
What we look for is significant experience at the CXO level and global experience. The last two people we added—Michael Patsalos-Fox (60-year old who retired as senior partner of McKinsey and Co.) and Leo S. Mackay Jr (51-year-old vice-president, Lockheed Martin Corp.)—no one knew them. It took us 18-20 months to find the right talent. With the age of the board, we wanted younger talent who were current in the marketplace and will be with us for 10 to 15 years. And with our time commitments, it is tough to get a current operating executive in a company. We were blessed to get Mackay.
We don’t believe a 35-year-old or 50-year-old may have the time available to add the value we require. It is very difficult, early in one’s career.
In the IT services sector, boards and founders look inside their companies to find their next leaders. Is that being closed? Is the culture flexible enough to challenge what you have been doing?
I don’t believe that is the case with Cognizant. We spend a lot of time creating a knowledge and talent base in the company to fill slots and keep the DNA. But we are not naïve enough to believe we have all the answers. When we make an assessment that we want to be in a new area where we may not have the expertise, without any hesitation we will go to the marketplace to bring that person. You saw it when we got in consulting and Mark Livingston came in. He was readily accepted.
With a growing pool of bright leaders, you may have more candidates worthy of being CEOs. So is it a possibility that a model could evolve where you have more than one CEO?
Sure, they could. I don’t think we are constrained to provide opportunities even in today’s environment. So we could have CEOs of individual businesses and it wouldn’t be a problem. I’m not saying we will, but it is a possibility.
As these businesses and leaders evolve into larger businesses, what would be the challenges for the board? Would you have an advisory board for each of these businesses?
We may do that over time. We may get additional talent and they don’t have to spend the amount of time that we spend at the board level. We have done that in the past with Malcolm Frank (executive vice-president, strategy and marketing), who used to be CEO of a company and was on one of the advisory boards. After many years of working closely with us, he wanted to drive our global corporate strategy and marketing. But I was a little concerned because, psychologically, after calling the shots in a company as a CEO, it is difficult to let go. I had a long conversation with him on understanding his drive. Thank god he prevailed over me because he is today a fabulous asset to the company.
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