Azim Premji and Infosys’s Vishal Sikka made joint statements about the
stresses and tough times that lie ahead in the Indian IT sector and how the
global factors have caused immense uncertainty – I agreed, for its been 2 years
that I have been – through this blog, making a case that greed, unsound
economic decisions and self-fulfilling political pursuits by nations and
central banks have pushed the world to a brink of dangerous unanticipated
consequences and that the present prices of ‘pretty much’ all asset classes are
But this piece is about strategy. I read
this word so often that I am now almost sick of it. Speak to an over enthused
student at a business school – he wants to excel in strategy and make a career
out of it, speak to a new CEO – he would talk of a 10 year strategy and vision
and make the incumbent employees feel scummish for
their lack of strategy and vision, speak to a consultant (highly paid youngster
at probably the
big four with all authority and no responsibility) and he would regurgitate
so much on strategy through his 100 page presentation that the customer would
really start cursing the historical past, when the consultant wasn’t on board.
orchestrated wars to take over other nations and land masses across the oceans,
strategy made sense. A strategy once made could remain relevant for 50 years as
letters and information could be sent/received over sea/horses at most twice a
year. Officers of invading nations had orders to execute a decision and the
same could be reviewed only after a few years. Results to judge successes or
failures was possible – at best – over a decade.
fortune 100 company crash or a claim by wikileaks to make Hillary lose a
winning US presidential election or a unfounded misinformation that encourages a nation
to invade another and create a world havoc that is likely to have a century
Vishal Sikka is or what he stands for or what he brings to the table and I have
nothing against him. He is just a case in point because I remember him as a non-promoter
Indian to get the highest salary in India, to get an annual compensation of
about 6 mill USD besides all the stock options. But I read 3 newspapers
everyday to have a fairly good memory and to form an opinion.
in June 2014 as the first non-promoter CEO, he was the next big thing in India.
He talked of strategy and he talked of vision and the world took notice. The stock price of Infosys soared and he became the
poster boy. At the time of his joining, the annual revenues of Infosys were
about 6.9 billion USD and he talked of a six
year 2020 vision of 20 billion in revenues. ie a approx. 2 billion
increase in revenues each year. And he maybe got more bonus. Many of the
rockstar executives who built Infosys over last 2 decades, allegedly quit out of frustration.
Jack Welch who made a fortune for himself but made the most ruthless
organisation by firing 5-10% of workforce every year. As Simon Sinek says, companies
that sacrifice their people for numbers rather than numbers for people aren’t built
rate of FY17 Infosys will achieve about 9.5 billion USD in annual sales. With
three years to go for 2020 – a 3 billion USD per annum increase.
to play. The multitude of global factors and externalities are so diverse that
any CEO or alleged strategist who talks of a 10 year or a 5 year strategy is only
fooling himself or the board.
(call it vision) for next 5-10 years. But having a 5/10 year strategy and a promise
can help you get a bonus but all that matters is the next few quarters.
on vision and strategy not realising that merely a tweet, a simple
geo-political externality or an event on which no one has a control can change
the dynamics of our aspirations and strategy overnight.
- Growth is important – and imperative.
Don’t put so much pressure on CEOs that they are forced to make specious
- Preserve cash – When a Brexit or a
trump hits you – no one knows. Cash is king and cash is the one that will help
you survive in tough times.
- Leveraging created on the assumption
of ‘future growth of present revenue run rates’ (sounds almost as exotic as CDO’s of 2007 isnt it) is a
sure shot recipe of disaster.
- The Baniya style of business has stood a test of time
over 200 years, till Goldman arrived on the scene and
changed the rules of the game. Live within your means and borrow
what you can pay from present income – not future income.
- Every decision maker must have a skin
in the game. Convert decision making executive’s present bonus and compensation
into future equity if you want the organisations to survive.
- Conservatism isn’t a bane, it’s a
virtue. For fools are full of confidence and
wise are always in a state of doubt.
- Every present expense must pay for
itself – strategic decisions taken in present for future issues without having
a control on future are likely to be disastrous and not reflective of a sense
of ownership or good leadership.
- Stop expecting month on month or
quarter on quarter. Allow your CEO’s to work in peace and keep a quiet watchful
eye. Fire them if you don’t like them but don’t create noise and disturb them
every single day.
- In an ever connected highly efficient
world make a 3/6 month strategy – if at all. Anything more than that is gas.
- Keep a watchful eye on people talking of 300 years of vision
and balance sheet (surprisingly same people couldn’t retain their CEO for more than one). Anyone reading this will probably be dead in less than 40
years and anyone talking of 300 years probably has no plan at all.
And lastly for GOD’s sake – stop
talking about strategy and start working on culture.
Manu also writes in Huffington Post