Some have more risk appetite than others. The thing to realise is that either way there is risk. If you don’t do anything that’s a risk. If you try new things, that’s also risky. Generally, I believe that the risks of commission are better than the risks of omission. It’s better to try something and fail than sit around paralysed. The probability of finding success is greater if you’re trying new things.
Are large Indian IT companies taking enough of these risks and trying new things?
When I was at business school, one of our professors wrote an equation on the board, and he said, age X time X success equals difficulty of change. The larger you are, the longer you’ve been around, the more successful you have become, the harder it is to change. And if you look at some of our truly iconic IT services companies, they have all three -they are large, they have been around for 30-40 years, they have been stunningly successful. So the difficulty of change is truly quite large…the thing to realise is that large companies in any industry are typically not very innovative.
What are the biggest mistakes that Indian IT is making?
I think the biggest challenge is to embrace new disruptive trends with full commitment, as opposed to making anaemic efforts. That’s not easy -it’s very difficult. What you need during such times is a pilot-copilot approach -a CEO-COO approach. And the CEO focuses on the new, and COO makes sure that the old machine is running well. Cognizant has had that model for a while, Vishal is trying the same model here at Infosys -same at Microsoft, with Satya focusing on the new, and Kevin Turner focusing on wringing more juice out of the old
Are boards of these companies doing enough in identifying next set of leaders?
Is it time to also take a fresh look at the composition of some of these boards?
There was a recent FT article on how dangerously weak most boards are on technology. It’s probably true of IT companies as well. If you look at the board of Microsoft, there’s not a lot of tech -they are beginning to change that. But traditionally what you were looking for were people with diverse expertise, diverse perspectives -but during a period of great technological change, you need at least a few who understand technology and what’s coming. And that’s one issue. Do we even have the right people on some of these boards? So you need a board that has a good mix of tech and non-tech.
We’re also now starting to see a shift towards bringing in CEOs from outside, as opposed to internal guys, especially in traditional Indian IT…
Too much of what is going on right now is musical chairs -someone from company A is going and becoming CEO of company B. That may be useful, particularly if this person is coming from a more successful company. But what you really want in this kind of environment are people with radically different perspectives.
Brings up the question -how useful or effective are some of these internal leadership programs that companies have where they’re spending millions of dollars every year?
Every reasonable company does a lot of leadership development. Many of them send their leaders to Harvard and Stanford and whatnot. But the point is that many of them are still not in good shape. They still have to look outside to fill the top slots -so one wonders what’s going wrong here? There are two or three things that are going really wrong. Firstly, there is a lot of pretending.There is an illusion that a company is taking talent development seriously. But in reality there is very little focus or commitment. In a lot of good companies you can get all the way to the top simply by hitting your numbers.That’s what boards need to do -don’t reward CEOs for simply hitting the numbers, also insist on what is he or she doing to develop talent and that has to percolate downwards.The second thing is there are a number of really wrong ideas about leadership development and talent. One of the wrong ideas is confusing high performance with high potential. The second really bad idea is that in the talent processes of these companies, they look for something called Ready Now. If you really look at how leadership development happens, people get thrown into the deep end of the swimming pool and then they either learn to swim or drown. It’s like entrepreneurship. Third one is that the talent processes of most of these companies are extremely democratic.Everybody must be treated the same and they must go through a talent process. If they do well, they get promoted in two years. If they don’t do well, they’ll get promoted in four years. This is called the escalator.
Are most companies sacrificing leadership development for short-term profits and targets?
If you look at training, it’s mostly a discretionary expense. You can dial it up in good times, you can dial it down during bad times. Here, we are talking about leadership development, not training -you can’t dial it up or down during good times or bad times.And that’s why if you don’t have a CEO who is personally passionate about this, nothing is going to happen.
Indian IT services doesn’t seem to have the right kind of talent to make the shift towards next-gen services…
That’s right. If you’re talking about things like analytics and artificial intelligence, it takes a very different set of capabilities and skillsets. In that situation, you have to bring in talent from outside -they won’t be interested working in an IT factory environment, so you have to create a different environment. And that has organisational challenges.
For full interview visit http:www.economictimes.com