Ratan Tata and Narayan Murthy, the two mega stars of the Indian IT industry have failed to fathom the fundamental rule of business building and retaining
Both, the Tata group of companies and Infosys — the two darling business groups of India — have been in the news in recent times for sad reasons. leading promoters of these two groups came out in the open, on television channels to vent their anger against their own companies.
Ratan Tata, former chairman of Tata Sons and NR Narayana Murthy, the ex-chairman of Infosys, took voluntary retirement from their own companies. Ideally, both these gentlemen should have completely dissociated themselves from the affairs of the company. They should have withdrawn their shares from the firm; they should have been emotionless and should have enjoyed their retired lives. They should have refused to poke their nose in the affairs of the company. To sum it all, they shouldn’t have stayed in the company's affairs. Problem started when they were not doing what they were meant to. But they should blame nobody but themselves.
With high running passion in the global circle, in favour of promoters leaving their business to employees, both, Ratan Tata and Murthy jumped into this global dance floor. In a fit of passion, both decided to leave their companies in favour of persons who are not their blood relations. But they failed to understand the psycho-socio-economic consequences of their own decision. They failed to distinguish the cultural differences between countries, between regions, between religions and between companies. This basic failure costed them dearly. Both of them were dancing to the global business tunes — maintaining distance from their business empire. For not even a minute did it appear in their minds to analyse the consequences of leaving their dreams to their employees.
They failed to distinguish the difference between the dreamer who built their company and the employee who, without emotions, was entrusted with the job of taking the company to the future. This happens only in India.
In fact, promoters distancing themselves from their own companies was just a fashion of the season. When the world understood the grave consequences of this failed fashion, India started picking it up. The worst victims of this wrongly predicted moves are the Tatas and Infosys. Today, the original promoters feel alienated from the companies which was started by them. Tata and Murthy are now faced with embrassing situations. It took a long time and pain for the Tata scion to get out of the mess he had created. Cyrus Mistry was chosen as the Tata Sons chairman by Ratan Tata himself. When Mistry started working with his own mind and started enforcing disciplinary rules on the staff, insiders drove a wedge between him and Ratan Tata.
The usual tune “it was a great company when you were leading. Now it is falling” was sung inside the ears of Ratan Tata. His ego was boosted and ballooned. Finally, Mistry was ousted. Despite working hard to make the Tata group of companies profitable, Mistry was given trouble after a few years. He was not comfortable with the $18 billion debt which the Tatas were facing. Mistry pruned the company's losses and cut down wasteful expenditure. On the pretext of compromising the company's ethics, Mistry was removed.
At Infosys, Murthy did the same mistake as Ratan Tata. He allowed an outsider to head the IT giant and then felt the ego inside. Vishal Sikka was appointed as the Chief Executive Officer of Infosys. Before joining Infosys, Sikka was a member of the Executive Board of SAP. Just after a few months of leaving SAP, Murthy led Infosys and picked him for the top job. How can an outsider, with no emotional bondage with the company, which arose up on more emotional investment than capital investment, take the company forwardIJ Sudha Murthy, wife of Narayan Murthy, once said, “NRN is the world's best venture capitalist. He made this multi-billion Infosys company with Rs 10,000 which I saved.”
Murthy, however, failed to understand the depth of emotions and cultural connect when he decided to choose Sikka. Instead, he should have continued to hold the top job to make sure that the company works on humanitarian and ethical grounds. Now, Murthy is worried that the Chief Executive Officer and the Chief Financial Officer and also other top people are drawing hefty pay packs when the company has unleashed a big lay-off tsunami.
In short, the two mega stars of the Indian industry have failed to fathom the fundamental rule of business building and retaining. Only an insider with an emotional connect, mostly family members of the promoters, can take the company forward. This is India and this is a different planet and a game of business.
(The writer is the Dean of Nehru Memorial College, Trichy)