N.R. Narayana Murthy’s successor will have to be a bold risk-taker, open to radically new ideas. And some voices on the board think K.V. Kamath is the man for the job
by Mitu Jayashankar | Nov 1, 2010
S ometime last year, N.R. Narayana Murthy, chairman and chief mentor at Infosys Technologies, asked Jeffrey Lehman, chairman of the nominations committee at the company, if he could take time out to meet with M.S. ‘Vindi’ Banga over dinner in New York City. Lehman is entrusted with the task of finding Murthy’s successor by July next year. Banga, one of the front runners to take over as chief executive from Patrick Cescau at Unilever, the world’s largest consumer goods company, had just been beaten to the post by Paul Polman of Nestle. Murthy was keen for Banga to take over from him after his term ended. Not much is known how the conversation progressed that night.
Later in the year, Murthy invited Banga to Infosys’ headquarters in Bangalore to meet the others on the board. He’d pitched Banga to the others as a strong contender to his chair. At the meeting, Banga made a presentation on corporate governance, which he delivered with much élan. “I have enormous respect for Vindi. Yes, I’d like to see him on the board,” Murthy told Forbes India.
Soon after Banga left though, Lehman informally told Murthy the board would much rather back K.V. Kamath, non-executive chairman at ICICI Bank and an independent director on Infosys’ board. Kamath’s formidable reputation precedes him. Credited with building the largest private sector bank in the country, he’s got a lot going for him.
The younger leaders on the executive council (EC) at the company like him because they see him as the guy who asks all the tough questions at board meetings. To his credit though, he hasn’t shaken things up too much, perhaps in deference to Murthy’s presence. That said, fact remains, his tough guy image has spooked the founders a bit.
He’s popular with the second line of leaders at the company as well. They appreciate his incredible ability to groom professional CEOs, a breed almost missing at Infosys now because all along it has had one of the original promoters at the helm. Add to all of these the fact that Kamath is a Kannadiga — which can be handy when managing tricky political winds in Bangalore — and it’s pretty obvious why the board is rooting for him.
But Kamath isn’t the kind of man given to lobbying for a job and is said to have remained quiet through all the noise around him. Sources close to him say he wouldn’t mind taking on the challenge at Infosys. His legacy at ICICI bank is at the crossroads. Chanda Kochhar, his successor as chief executive, is now driving her own agenda. Besides, many of Kamath’s carefully nurtured CEOs have chosen to move out of the bank. It is a very different place now from what he had built.
Kamath declined to comment. Lehman says, “The board and founders have been thinking about it for quite some time. It’s a matter of great importance to this company. Murthy is a truly remarkable person and not easy to replace. The process of finding his successor is well on track.”
n the normal course of things, the appointment of a new non-executive chairman wouldn’t be such a life-altering decision for a company. But then, Infosys isn’t just another company. And neither is Murthy just another chairman. He was the best CEO and CFO rolled into one that the company ever had since the time it was founded in 1981. He’d figured how to manage the complex interplay among the co-founders.
He also attracted fierce loyalties. Last year, for instance, Mohandas Pai, the head of human resources at the firm, told Murthy he’d throw in the towel the day Murthy hung his boots up. Murthy didn’t take too kindly to that. He promptly spoke to the Nominations Committee and asked them to counsel Pai why it isn’t such a good idea.
Even as he did all of this, he built an amazingly predictable cash machine that delivered consistent margins. There was one other thing about Murthy: As CEO, he was always willing to put his neck on the line and take tough decisions. In 1995, when GE held a gun to his head to drop its rates, Murthy decided to pull the plug, well aware that he was sacrificing a quarter of his existing business. Not only did Infosys recover all the lost ground in less than a year, it went on to post double-digit growth next year.
The outcome today is a $4.8 billion company with operating margins of 33 percent, a market cap of $39 billion, which makes it bigger than Accenture and cash reserves of $3.9 billion, making it the bellwether for the Indian IT services business.
But the model he built (delivering offshore services for application development and maintenance) is aging now. “Whatever decisions he took — building campuses, training, processes and quality — were good in a different time. Now we need a new thought process,” says a senior executive at Infosys.
