Infosys: Making sense of leadership & organizational challenges

When the numbers accumulate & a trend is discernible, we can make a conjecture or two.

The current CEO of Infosys, S.D Shibulal has said that at 18.7%, the attrition rate has reached uncomfortable levels. He considers this to be more worrisome than the exit of nine senior executives, quite a few among them being C-suite contenders.

Both instances are of course, related. No two ways about it.

Why is Infosys facing so many challenges? A significant part of the answer lies in the decision to rotate the top-leadership among all company founders. This is the primary conjecture.

Let us trace the journey from then to now.  Emotions have a big role to play.We are all emotional beings.The story of Infosys is cherished corporate folklore.It has inspired millions of success stories in India. We rightly revere people like Narayan Murthy for their integrity-bound achievements.  Founder-owners make tremendous sacrifices in the cause of their enterprise success. It is their baby. The world invariably respects their commitment to safeguard their baby.

Keeping the top-position in the company founders circle was a reflection of the same commitment to safeguarding Infosys’s success. The world consented. Who argues against a company that can do no wrong?

As we look back now,has the decision to rotate company leadership served the company’s best interests? Till the going was good, this question was rarely asked. Wise observers must have been uneasy about this preordained ascension to the top job. Smart observers  pinned all their faith on Infosys being on systemic auto-pilot: a company so strong on all strategies, systems & processes that the choice of leaders is incidental to company success. Continuing success staved off any debate on the leadership rotations. They seemed to matter little, then. Unknown to all but the discerning observers, they mattered a lot.

For this decision impacted both leadership development & organizational development in Infosys.

Leadership development is an iterative process; one that has to recur & repeat itself all the time. When critical leadership structures are fenced off from this process, they weaken the ability of a system to stabilize itself in the long run. Performers from the ground-up accumulate strategic insights along the way. If strategic positions that can leverage these insights into actions are out of reach, something significant has been lost. When performers leave, they carry their unused strategic insights, but also a chunk of operational excellence.This is the blunting of business edge. Relatively more apparent to the visible eye.

Far more significant, because it is so subtle, is the loss of the human edge. Assured leadership creates a rarefied atmosphere. Such leaders are no longer able to read the signals of health or wellbeing from the strains & stresses of the bulky organization beneath. The human processes that spark everything into organizational life need responsive leadership to first understand them, and then take action. Infosys’s decision to cocoon off its top leadership & insulate them from the ‘churn’ of organizational life made them unable to either read the signals or design a response. This is like the brain controlling all the functions of the body without any feedback  on the body’s continuing well-being. This slowly impairs the brain into errors of judgment as the brain can’t make sense of what’s happening.

Sense-making is an evolutionary process. Infosys robbed itself of sense-making at the highest level because the leadership was not evolving with the changing times or the changing systems.

The effects of systemic decisions sometimes lag a lot in time & space. But cometh they do.

When Narayan Murthy came back to the helm, it was the final straw for super-performers. If merit counts & key challenges require distinctively different strengths; a case can be made for a deserving candidate from a diverse gene-pool than a ‘confined’ choice of people with exposure to the same life-experience. And if super-performers believed in this argument  & patiently awaited their time to ascend to the top, Murthy’s comeback must have been tough to bear. Their recent exodus makes us realize how its possible that many super-performers  quit Infosys in its heydays as they could not see their way to the top.

What now? Two fundamental lessons stand out.

First, we must think through the answer to how much leadership matters in the long run and in what way? There are two differing perspectives. The first perspective is that a leader has make-or-break power in the fortunes of an organization. The second perspective is that an already successful organization is on a performance auto-pilot where leaders are simply overseeing the controls to maintain the course. Infosys’s decision to rotate the top job within the founders circle seems to straddle the two. In not having clear & focussed intent, the energies were scattered.

Second, a company can do a million right things in the right way, but faltering on a crucial few things can render everything else futile. Infosys has all the resources in this world to avail of, and it will surely bounce back . But if the company founders somehow travel into the past & reach that point in time when they made this leadership decision, they knowing what they now know, will hopefully think through the long-term consequences of a decision made in good faith. And that bit is so important: made in good faith. Can we penetrate the good faith for substance & sustenance; in equally good faith?!

Here is what Peter Drucker says about success. “Success always makes obsolete the very behaviour that achieved it. It always creates new realities. It always creates, above all, its own and different problems. Only the fairy tale ends, they lived happily ever after.”

Wisdom!