Narayana Murthy - Final Part

And what has been your biggest achievement?

In some sense, articulating the need for respect and convincing my colleagues to accept it. . . and then we said we will accept deferred gratification. We started with only Rs 10,000 as equity. We took very low salaries, we spent less than what we earned, we paid dividend, we paid tax and put money back into the business. . . our lifestyles were very, very simple.

What has kept the core Infosys team together all these years?

Clearly, the value system. We have always put the interest of the company ahead of our personal interest.

Even today whenever there is a discussion, the moment a person is convinced that this decision is in the interest of the company and that there is no vested interest in the person that is propounding that idea, then everybody stands up and salutes and . . . we go ahead. . .

How do you resolve differences?

We use facts, we use data. That is why we say, 'In God we trust, everyone else brings data to the table.'

What do you think went wrong in the case of Satyam, and how did it affect you?

I was disappointed, disgusted. The IT industry has done a pretty good job of raising the country's image in the world and Satyam has hurt it.

Satyam is a classic example of a company with a feudal culture where there are different sets of rules for the king and the rest of the employees. There is opacity due to a centralised authority and in such an environment best practices are subordinated to quick profits. Opposition is impossible. In such a culture, the rest of the people are afraid to question the king even if they perceive something is going wrong.

This is not a case of failure of entrepreneurship. . . It is a case of greed and ego of some super managers. That is not capitalism. Capitalism is all about creating an environment where individuals can leverage their innovation and entrepreneurial skill to create better opportunities.

The real character of the person can be known only through what he does when nobody is watching. It is the value system that determines the core of an individual.

What five things should young entrepreneurs do to succeed?

I have talked about it in the book, too. The five things are:

1. You must have an idea whose value to the market should be expressible in a simple sentence, not a complex or a compound sentence. . .;

2. You must have a team that brings mutually exclusive, but collectively exhaustive set of skills, expertise and experience;

3. The market must be ready for your idea. If the market is not ready for your idea, doesn't matter how smart your idea is, you will not succeed.

4. You need a good value system, because entrepreneurship in the beginning is all about sacrifice, hard work, deferred gratification, disappointments. It is the value system that creates confidence in each member of the community that other members too are doing the same to make this company succeed. . .

5. You need funds. . . but that is easy, finance is not a problem.

What does money mean to you?

You know, the power of money is the power to able to give it way it. You definitely need a certain level of wealth to take care of your material needs, no doubt about it.. housing, health, basic necessities. But beyond that the power of money is to make a difference to those people whose need is much greater than yours, to whom the value is much higher than the value that you can assign to the money you have, or for whom the difference will be much higher than what it is for you. So essentially, the power of money is the power to give it away. . .

Will your children join Infosys?

My son is doing PhD at Harvard. He is a spectacular student. My daughter is an MBA from Stanford. So both are extremely well qualified. But I believe that they probably would say that it is so much better to run their own marathon on their own legs than on my shoulders.

Is there a message you would like to give the Indian voters?

I am a member of the advisory board of JaagoRe campaign which aims at getting a billion Indians to vote. It is by Janaagraha and Jasmine Shah is the coordinator. I do believe that it is very important for every adult Indian to exercise his or her franchise.

In a democracy the most powerful instrument that any voter has is his or her vote and that opportunity comes only once in a while. . . so they have to make sure that they do this very diligently, very wisely and with utmost focus on merit so that the best candidate is sent to govern the nation.

You had plans to teach at American universities post retirement. Are you pursuing that idea?

No, not really. Tell you what, I have been on the board of Unilever, HSBC, various universities. I realise that it is difficult for me to be at one place for more than ten days.

And you can't take responsibility to teach a course unless you can stay put at the university for an entire term, or at least for about two to two-and-a-half months.

I went to Stanford as a Visiting Fellow for two terms, and I gave certain lectures and also attended some classes. It was a wonderful learning after a long time. I attended a course on Mathematical Modeling in Healthcare, and another on Decision Sciences. So I spent two weeks in the fall term and two weeks in the spring term at Stanford.

Is the World Economy in Deep shit!!!!

One can surely say this when the Richest of Richest also start suffering and start declaring their losses.. 

I am talking about Warren Buffet -What's the Advice from one of the richest people living?- whose firm Berkshire reported first quarterly loss since 2001's third quarter when the company suffered large insurance losses as a result of the Sept. 11 terrorist attacks. Warren Buffett's company reported a US$1.5 billion first-quarter loss as it wrote down its ConocoPhillips investment.

Toyota is reporting a 436.94 billion yen (US$4.41 billion) net loss for the fiscal year through March, a larger loss than it had forecast and its worst result in company history.

Royal Bank of Scotland on Friday reported a first quarter loss of 857 million pounds, and the bank's chief executive said the company faces two very tough years ahead.

Telecom Corp., New Zealand's biggest listed company, on Friday reported a 40 percent fall in nine-month net profit to 322 million New Zealand dollars ($191 million) from a year earlier due to tougher competition and lower profit margins.

IMF has recently been revising the predictions of the economy starting to come out of the doom from the previous 2010 to little later in 2011. This is something alarming as most of the corporates have been keeping tabs on their investments & planning on their new projects, have been saying that they are expecting the reserves to last only for next 6-8 months unless things start improving soon.

One can only wait and watch......................

 

Narayana Murthy - Part 4

Despite the fact that India's stature has grown globally, there is criticism that only 30 per cent engineers are employable in India. Do you agree?

You know this industry -- my own IT industry -- on an average recruits about 200,000 to 250,000 engineers a year. And we produce about 400,000 or so.

In that sense possibly about 50 per cent engineers are absorbed, and hopefully other sectors employ the rest of them. It is difficult for me to believe that 70 per cent of the engineering graduates are unemployed. However, this year it could be different because the recruitment levels of all companies have gone down.

What do you think could be done to make higher education in India better?

To enhance the quality of our higher education, we can do five things:

One, enhance the autonomy of our higher education system;

Second, encourage them to collaborate with world-class institutions outside India, within India too, but most of them are outside India... ;

Third, bring in a sense of meritocracy in the selection of students and the appointment and promotion of faculty;

Fourth, create incentives for our faculty members to do more world-class research; and

Fifth, remove any licensing in the education system. We gave up most of industrial licensing in 1991. It is silly that we continue licensing of our educational institutions.

Talking about higher education... even the recommendations made to the Knowledge Commission have not been implemented? Why does this happen?

The Indian society is a society of ideas. It is a society that has revered talk. In this society, articulation is mistaken for accomplishment. We are quite satisfied with our voice, with our writings. This is not a society that is focussed on execution.

Frankly, the problem is due to our caste system and the dominance of Brahmins in our society for long period. The Brahminical system said my job is to think of the higher worlds. My job is to think of connecting you people with God. I don't want to do anything that has a relationship with the real world.

Now that is a problem that has played havoc with the Indian culture. So, here in this culture, if you do anything with your hands, it is considered less honourable that anything to do with your brain.

Here everybody wants to be an engineer, nobody wants to be a technician. So when a society does not value implementation, execution, what happens is you create more and more reports and nothing gets done.

For example, (Reliance Industries Chairman) Mr Mukesh Ambani and I gave two reports on how to improve the higher education system: one to (then prime minister) Mr Vajpayee and one to Dr Manmohan Singh.

Second, there has been the Knowledge Commission. Nothing has happened. Third, in 1998 I was a member of the IT Task Force -- which was headed by Mr Jaswant Singh -- and that task force submitted its report somewhere in 1999 0r 2000.

Nine years and I don't think even one suggestion has been implemented. And we made 108 suggestions! So that is why I am not a big fan of ideas in India.

My brother-in-law is a famous professor of physics at Caltech and he tells me it is very easy to come out with an idea. But to validate that idea he and his doctoral students will have to work hard for six months, one year... sometimes two years. That takes 20 hours of work each day for two years. So it is important to come out with new ideas, but it is even more important to execute them.

We are not a nation of doers; we are a nation which believes that our articulation is our accomplishment.

What would you say has been your best business decision?

My best business decision is clearly sitting down with my younger colleagues and together coming to the conclusion that our objective must be to seek respect from every one of our stakeholders -- respect from customers, respect from employees, respect from vendor partners, respect from investors, respect from government of the land, and respect from society. . . I can tell you that that is the best decision that I have taken.

We had a four-hour-long discussion in 1981. Somebody said we must be the company with the most revenue, somebody else said we must be the most profitable. Finally, we all agreed that we will become the most respected company in India. Our logic was very simple. If we seek respect from our customers, we will not shortchange them; if we seek respect from our employees, we will treat them with dignity and fairness; if we seek respect from our investors, we will follow the best principles of corporate governance; if we seek respect from our vendor partners we will be fair with them and sympathetic to them; if we seek respect from the government, we will not violate a single law of the land, and if we seek respect from our society, we will give back to the society.

And then we said revenues will come, profits will come, market capitalization with come.

And in 1999, when Economic Times instituted their award, we were the first company to win the award of the Best Company of the Year, ahead of all multinationals and corporations much bigger than us! To me, that has given us the greatest satisfaction: the fact that we chose respect as the most important objective.