The return of Narayana Murthy (NM) to Infosys has evoked mixed response from
analysts, stakeholders and general public. While a section welcomed his return
as Infosys , which was moving in southward direction during the period from
August 2011 when NM retired from
Infosys, and therefore was badly in need of a savior, another section has made certain remarks based on his
announcement at the time of retirement a couple of years back that neither he
nor any of his family members would be at the helm of Infosys.
It should be noted that , it was the Board of Infosys
which recalled NM to head the organization and
put Infosys on the growth path . Everyone knows that it is NM the
founder of Infosys who was responsible for the outstanding growth it has recorded
in the 20 years between 1981 and 2002
when he was its CEO. While he continued thereafter as Infosys’ chairman and
Chief Mentor and only in August 2011 he disengaged himself from Infosys , his only
connection with it being a shareholder , along with his family members of
substantial quantum , , none of his family members holding any position either in employment or in
management of Infosys
Ever since NM’s retired from Infosys, it has been
witnessing troubled days ,what with drop
in volume of revenue and profits. More than these monetary indicators , the
management was in a confused state; the team consisting of capable
professionals – both the board and the operating team -lacked direction and the
absence of the magic touch of NM became evidently visible with sliding growth and thus disappointing its
stakeholders
With the return of NM to the organization which NM
fondly founded and nurtured for the 25 years . Infosys is expected to be rebuilt in 3 years time . To quote NM
” The challenge is daunting and the task of rebuilding a desirable Infosys
will take at least 36 months. In the process, there will be some tough
decisions resulting in pain as we move forward, ….during the last two years,
the focus got blurred on winning highly-competitive, large revenue-yielding outsourcing projects. The strategy is to
focus on opportunities from consulting-led end-to-end solutions, leveraging
technology for higher margins, developing intellectual property-(IP) based
solutions to delink revenues from effort,
It is not an exaggerated statement if we say “Narayanamurthy” is
synonymous with “Infosys”. In fact ,
Infosys may consider adopting the brand “Narayanamurthy Infosys,”to take
further advantage of the value attached to the phrase !!!
The lesson for promoters of
corporates in India from this is
–promoters have to be actively involved in the management of
every company., regardless of the battery of professionals the promoters may
utilise for the company’s business . These days the promoters possess the
knowledge in the business of the
companies promoted by them , know-how
and the skills required for running a business and managing a company. Thus Promoters
do not depend on executives ; rather the
executives assist the Promoters
in achieving the goals set by the Promoters for the company . Gone are the days
when the Promoters were merely passive investors with focus on return on investments
made by them in a venture ,leaving the
entire management to the executives ,hired by the company. However, today the
scene has completely changed . with Promoters , well versed all spheres of management
of a corporate set up and the knowledge in the line of business ,although they
may not be professionally qualified in the line of business of the company they
own.
True, in the current scenario where corporate entities have been widely
held through listing of the shares in the company and the PE investors taking a
considerable chunk , the role of Promoters has undergone significant changes .over the
years. Yet, companies (listed companies included) which are led by the
Promoters occupying an Executive position
in the Board have seen remarkable growth
with clear direction and guidance for the operating team from the Promoter led
board. There could be certain exceptional cases where the promoters caused the downfall of the company they promoted but
the % of such failures on account of the mismanagement by promoters is very small.
If the promoters are serious about the continued growth of the company
promoted by them they should ensure the managerial personnel at the helm of the
affairs is from the promoter family , as
the laid back style of management of promoters , allowing professionals outside
the promoter family to manage the company has only seen the downfall of such
companies. The reason is simple . The seriousness and the involvement of the
promoters which is the foundation for the health of a company cannot be matched
by any person outside the promoter family . Also, in professionally run companies, the tug of
war among the professional managers , their desire to reach the pinnacle of the
management by any means (in most cases it would be through elimination of
fellow managers) , their attitude to become responsible for all areas in the management
of a company even though they may not have the required knowledge or experience
in certain fields, all result in affecting the company in the
areas of finance, marketing ,technology,
quality and most important – the standing
and reputation of the company in the market. . The secret for success of any
company lies in the ability of the promoters remaining as the head of the
organisation and making best use of the professionals in achieving the company’s
goal . As saying goes, professionals are good servants but bad masters – they need
good masters to get the best out of them . it is also to be noted that majority of the professionals
will always have an eye on greener pastures and only towards that , would work
for the improvement of a company one serves ( to publicise his contribution to
the present employer- for the attention of the future employer) unlike the
promoter who is willing to pledge his personal assets , when required for the benefit
of his company
While the intention is not to make disparaging statements about
professional managers , there are many a
case of corporates run by professional managers which have slid into red is an eye opener, for the promoters – a message for
them on what they should not do. Even lending institutions, investors and technology
partners, consider companies headed by promoters as preferred entities for
alliance which should not be overlooked by the promoters. The umpteen cases of successful
revival of sick companies with active
involvement of promoters is a simple example – for the promoters to be in
control of their company.
