The Infosys saga: Nandan Nilekani reminisces

Nandan Nilekani, Co-Chairman and MD, Infosys in a discussion with CNBC-TV18’s Shereen Bhan shared his experiences about starting up a business from ground zero to managing a multibillion dollar company.

Jignesh Bhate, CEO, Molecular Connections, VIkram Narayan, CEO, Zendie, Jayadev Gopalakrishnan, CEO - Tinfo Mobile, Vishwas Bharadwaj, Co-Director, Spectrum, Aniruddha Paul, Head of Change Delivery at ING Vysya Bank, Karthik Kumar, Director, EVAM, Siraj Dhanani, CEO - PharmArc Analytic Solutions, Kami V Narayan, Co-CEO, PreMedia Global and Saral Thangam, MD, Lotus Labs joined the discussion to find out about the various challenges faced by Infosys, the personal transition of Nilekani and the use of intuition and numbers in business.

Nadan Nilekani said that one of the lessons he learned was to stick your netting. The other lesson was that when in your core business, you should not mess around but just do that business well . He feels that an acquisition is a mean to an end. It’s not an end in itself.

Excerpts from from CNBC-TV's exclusive interview with Nandan Nilekani: 

Bhan: You spoke about set backs, you have seen some in your time at Infosys, take us through it if you can and how you actually dealt with it, how did you move on past the failure and the set back, and said we will still have to go when you got the target in sight?

Nilekani: We thought we should diversify. We were into the software business and we got a hardware business as well. We tried to manufacture telex machines and CNC equipment. That whole thing was a total disaster. That thought us a couple of lessons. One was to stick your netting and The other lesson was that when in your core business, you should not mess around but just do that business well.

One of our founders left us in the mid-80s, it was a very traumatic movement for us and it was the time when we would have either broken up or go big time. Murthy had played a big role in saying that we will go for it. From that point on we kept going and then there was no looking back.

Bhan: Was that a plan B?

Nilekani: There was no Plan B.

Bhan: So if you were to split up, everyone would have gone their way?

Nilekani: We actually had this mind game, we asked one and other, what you would do if we split up and everyone gave vague answer.

Bhan: What was your idea?

Nilekani: We were talking about the late 80s, at that time Sam Pitroda was doing his telecom business, so I said I would go and help him.

Bhan: You could have given Sunil Mittal a run for his money?

Nilekani: Not to help him (Sam Pitroda) do some water project. He was doing some drinking water missions.

Many years later when they formed the knowledge commission and Sam was the Chairman. I joined because I remember that 20 years back I wanted to work with him and I got that opportunity 20 years later.

Bhate: Do you think it would have been much easier when you were a smaller company to make an acquisition?

Nilekani: We have a strong culture and we have strong expectations of the kind of company we want to buy. So that obviously limits our field. But I think there are two kinds of companies. Some of the greatest companies in the world have reached their size without acquisitions. Toyota is the world’s largest car manufacturer today with no major acquisitions maybe a small one here and there. Wall Mart has become the greatest retailer without acquisitions, at least within the US. So there are different models, so it’s each person’s perceptions.

It also has to do with the state of the industry and where you are in that industry. We were there right at the beginning and we were there at the front of that transformation, so we could do it very organically. But had I come in late to an industry it would not be possible to quickly garner some market position organically. So a lot of that is contextual and situational.

Bhan: But you never got caught up in the frenzy, while everyone was going and doing that multi million dollar deals was there never a point when you thought that maybe this should be something that you should do as well?

Nilekani: An acquisition is a mean to an end. It’s not an end in itself.

Vikram Narayan: I am sure you are hit with a lot of changes. Like change in political environment, technology, companies getting merged or bought out. How do you manage the huge flow of information, which is probably going on your desk everyday?

Nilekani: I have a mental model of the world. I can fit a fact into that model. So that way I can take a fact and either put it in the model or throw it out.

Bhan: What is this mental model?

Nilekani: What is business? It is about customers and selling product and services. So every business can ultimately be translated into that model.

Bhan: How nimble footed have you been to deal with these changes. That is one of the characteristics of entrepreneurial companies, their ability to adapt really quickly?

Nilekani: I don’t want to give an impression that we do everything well. I am sure we have messed up sometimes.

Bhan: What have you done badly, where did you mess up?

Nilekani: In 2001, we didn’t read the dotcom bubble burst fast enough. We should have seen the dotcom bubble bursting earlier. We actually recruited a lot of people assuming this party was going to go on forever but it didn’t.

Gopalakrishnan: Where do you draw the line between using intuition and going by the numbers?

A: There is a big role for numbers. Especially when we crunch our business performance, sort it out by what is happening by customer, by region, by business, we get a lot of insights from numbers. But I think intuition plays a big role because at the end of the day when you are sitting there and deciding whether I need to hire 25,000 or 20,000 or 35,000 people next year, at the end of the day you are making a judgment call. You can do all the number crunching and talk to all the economists and get GDP growth rates and all that. But at the end of the day that decision is because you feel that the economy is going to do well or better. That is an intuitive thing.

Bharadwaj: If you could just elaborate at what point in time do you decide to call it quits and move on? How do you manage this transformation of having something to nothing and starting from zero?

Nilekani: First of all, if you decide to quit and be an entrepreneur you should do it as quickly as possible. If it is lingering, it probably won’t happen. So, you have to cut down the cycle time between decision and getting done.

In our time was a little more difficult because today if you were to start as an entrepreneur and play your cards well, you can raise capital reasonably quickly. At that time we had to start from ground zero.

Somebody asked me about what risks I took? Frankly I didn’t take any because I was 25. It didn’t matter. Whereas, for people like Narayanamurthy, and Raghavan another one of our founders they were 35 and at the peak of their careers. So, in my view the risk they took to give up well paying jobs with two young kids were much bigger risks than I took.