Infosys’ Blunder: Throwing Baby With The Bathwater

by L Subramanyan    Aug 18, 2017

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And finally… the denouement happens – Vishal Sikka resigned as the MD and CEO of Infosys! And the worst part of this event is that nobody, including Narayana Murthy (and his band of brothers) will be happy. As this writer had argued earlier, Murthy’s attacks on Infosys, its Board and individuals was not just misplaced but highly damaging for the reputation of the company. It was equally ironical that Murthy was attacking Infosys and its board for the very act that he was guilty of – lack of corporate governance!

As a shareholder, former founder, ex-chairman, Murthy, by making unsubstantiated allegations, leaking mails to the press, disclosing board minutes with external parties, is as guilty of deviating from the path of corporate governance, which he accuses the company and the board of. By going public with his frequent outbursts on these issues and raising the dubious argument of ‘compassionate capitalism’, Narayana Murthy will probably go down in India’s corporate history as the only founder, ex-chairman who actively helped damage the company, explicitly and implicitly.

Read more: Sorry Murthy, Compassionate Capitalism Is So Much Baloney!

That said, I believe that the Board has committed a grave error. If the Infosys board indeed believed that Murthy’s actions are not in the best interest of the company, as it has claimed in the press release, and that Vishal Sikka was indeed the CEO who was instrumental in taking Infosys to the next level, again as per the company’s own press release, then it should have simply closed ranks behind the CEO and not allowed Sikka to leave.

By publicly denying all of Murthy’s charges and accusing him of dishonorable intentions (which is apparent from the press release), the Board has thrown the gauntlet at Murthy. Then why accept Sikka’s resignation? What purpose does it serve? What message does the board want to convey? Is it that while Murthy is wrong, and Sikka is doing a great job, Sikka still has to go as the sacrificial lamb to the very large and public persona of ex-chairman? Again, what purpose does it serve – to the customers, shareholders, employees and the world at large. 

The Board would have been well served had it asked Sikka to continue and take on Murthy in public – that would have sent a very strong message to all the stakeholders that the Infosys board has teeth, and intent and is not chary of showing both, irrespective of the other party.

Everybody that I have spoken to about this issue have asked me just one question – Why? Why is Murthy behaving like a spurned bride? The man who used to be the poster boy of corporate governance going to the levels of leaking mails and letters to the board, to the press? What exactly is his angst?

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Read more: Vishal Sikka vs Infosys: Corporate Governance In Question

My simple explanation to this is “I think he is bored”. Honestly, going by the performance of the company and the changes that Sikka has brought in, the Board of Directors of Infosys seems to be doing a commendable job with Sikka as the CEO, in running the company. Consequently, there is very little role that Murthy can have in advising Sikka or ‘mentoring’ him, something that he would dearly like to do.

Secondly, the once-great man has no committees to chair, unless Nasscom throws something his way.

Thirdly, with Nandan Nilekani, the other co-founder, former CEO, gaining great popularity in the country, cutting across all sections of the society, with the hugely successful Aadhar, across the entire political spectrum, Murthy, in his own mind, feels he needs some stone to grind. Something to bounce back into the popular imagination as the guy-who-came-back-from–cold-to-rescue-the-company-he-founded, something that he failed the last time. I can’t think of anything else, since all the parameters by which one would normally judge a company are in fine health in Infosys.

Knowing his antics, I am certain that the last word in this rather ugly episode has not been spoken. Murthy is likely to hit back as to how his ‘concern’ for the high standards of corporate governance that Infosys had been known for, is being misunderstood by the company, how his ‘compassionate capitalism’ is being ignored by the board, as to how he admires Sikka personally and how ‘hurt’ he is by this episode.

The board has behaved in a dignified manner and ought to just continue to ignore him, while trying to get Sikka back into the operational mode.

No sacrifice is enough to satisfy anyone’s ego.

[‎L Subramanyan is Founder & CEO Trivone Digital Services]