Recently Wipro’s
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
unsustainable.
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
unsustainable.
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.
Well strategy is fashionable, it
sounds great – but in reality its bullshit. As Peter Drucker says Culture
eats strategy for breakfast everyday
sounds great – but in reality its bullshit. As Peter Drucker says Culture
eats strategy for breakfast everyday
200 years ago when nations
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.
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.
Today all it takes is a tweet by Trump to make the price of
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
long ramification.
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
long ramification.
Disclaimer : Now I don’t know who
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.
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.
When Sikka joined Infosys somewhere
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.
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.
This reminds me of the despicable
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
to last.
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
to last.
So as time progressed Sikka’s rhetoric of his vision became louder and the performance became quiter at about 7.9 billion USD
in FY 2016 but he still maintained the gusto of his rhetoric.
in FY 2016 but he still maintained the gusto of his rhetoric.
The last Q3 FY17 results of Infosys
are due on Jan 13th 2017 (oops that’s a Friday) and Sikka already warns of tough times
ahead and by the way all of it is the fault of BREXIT and Trump.
are due on Jan 13th 2017 (oops that’s a Friday) and Sikka already warns of tough times
ahead and by the way all of it is the fault of BREXIT and Trump.
And going by the HY (half year) run
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.
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.
Whats the
point:
point:
Its not Sikka’s fault. He has no role
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.
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.
Its good to have a general aspiration
(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.
(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.
Companies are wasting too much time
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.
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.
Boards must realise and encourage the
following:
following:
- Growth is important – and imperative.
Don’t put so much pressure on CEOs that they are forced to make specious
commitments. - 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
Manu, I'm so glad to have well meaning and grounded leaders like you. Culture is what has always set companies apart…just like families. And cultures need great leaders. Leaders that (like Mr. Sinek says) eat last , and give people a big 'Why'. Thanks for holding the culture and leadership flag high. This country and the world in general needs more leaders like you.
A wonderful insight Manu.
So true Manu,very well captured. In my opinion Employees should be the strategy instead Strategy controlling the employees.
In the light of your post manu, I am wondering what stratgies/vision/leadership qualities may have worked for my enginerring classmate,the present CEO of ADOBE, to take him and the company to the position where it is now!!!
Thank You for the reflection Joe, I am sure Your frnd would have got all the facets of leadership right in an ever changing/dynamic environment. And definitely he is an outlier in all respects. It would be good to get his opinion and maybe opine / reflect.
Increasingly large number of executive hours are wasted in strategy rather than actual delivery. But thats my personal opinion pls.
whats your line of work Joe?
Well construed Manu. A good one !! Strategy certainly have shortened its span due to high paced business environment. Now anything beyond 3-4 years can be a more like a vision. Culture inculcation is definitely a long term thing.
It is true Manu that present day executives armed with excellent presentation tools and hugely available published information on market and trends do overemphasise on long term strategies.They are also quite adept at defending failure of their strategy by blaming external or general market conditions and by the time owners realise that something is amiss these executives hop on to their next job.Owners or shareholders must see that senior appointments are based not only on
perceived potential but proven performance is given more credence.
Nicely articulated Manu. Though, I'm not too sure whether "culture Trumps Strategy". I'd rather believe they work together to enhance the success of one another. What matters really is an aligned strategy and culture. Our Defence forces is an apt example. Nevertheless, what I have witnessed is culture to to be a key driver of corporate strategy. The best business scenarios are the ones that allow you to have your cake and eat it too.
Wow what an article
What a fantastic articulation of the bogus humbug the corporate uses. The only people who can strategies are the Government's and that also long term strategy. Consider both fannie may and Freddie mac were privatised by the government 38 years before going bankrupt.i think all the corporate leaders who can see so much in the future should be immediately inducted in the government:)
Having sustained persistent jabs by the company's co-founders for several months now, Infosys CEO and MD Vishal Sikka has resigned from his post.
Sikka's resignation letter was presented and accepted in the company's board meeting held on Thursday.