Success and its discontents
The architect of HCL’s journey from a struggling $700-million company to a $4-billion IT role model says to succeed you have to be a paranoid and ‘perpetually unhappy company’
Vineet Nayar kicks off the conversation with a reference to Carlos Ghosn, the legendary leader of the Renault-Nissan alliance, whom he met recently in France. “Carlos sees himself not as the biggest, but with an aspiration to be the biggest. And, therefore, he said, ‘I have to take a big bet way ahead of the bet becoming a reality.’ So, frugal engineering – the axis around which he turned Nissan – was not enough and he has now bet big on the electric car, the Leaf.”
To Nayar, what matters the most is taking those bets to stay ahead of the curve. So, whether it was driving a cultural transformation of employee centricity at HCL back in 2000 or the aggressive innovation during the slowdown of 2008 – a move that helped HCL reinvent itself and grow above the industry average in the past few years – Nayar believes that “like a race car driver, when you’re driving straight there is nothing you can do if somebody is ahead. [The change] is always on the bends”.
We’re at Rare Eastern Dining, or RED, the oriental restaurant at Radisson in Noida, which is just a stone’s throw from Nayar’s office. RED is his favourite Chinese place; he’s here once a month with his family and knows the Singaporean chef well, so, I am spared the hassle of figuring out the menu. Nayar orders for both of us, starting with stir-fried Wasabi prawns, salt-and-pepper corn, some vegetables, honey chicken and steamed rice, writes Shailesh Dobhal.
So, what’s the next bend he is looking at, I ask? “The IT contracts that were signed pre-2008 were one-sided. And now when they come up for renewal, they will seek different terms.” Obviously, the incumbent vendors will resist the new terms and, here, Nayar sees an opportunity to move in for the big kill. “Only five per cent of the renewal market used to change hands earlier. Now, it is 30 per cent, suddenly creating a $15-billion market.” And since HCL is the first mover, ready with case studies, the history, it will gain the most according to Nayar.
Nayar grew up in Pantnagar – a small town in the Terai – and did his engineering there. He took his management degree at XLRI, Jamshedpur and has been with HCL since then. “The school I attended was run by catholic nuns, the Sisters of Notre Dam. The principal was an American, the history teacher an Australian, so, fortunately I had an international outlook from the start,” Nayar says, recollecting his school days fondly and adding that he picked up his orientation towards technology there. “Pantnagar was the mecca of agricultural research and every second household in the town had someone who had been to the US for research. That place has given a lot to me.” No wonder Nayar’s non-governmental organisation (NGO), Sampark, is doing a lot of work among underprivileged children in Pantnagar, like creating toilets for girls, schools, content for teacher training and so on. Nayar had planned to work full-time with Sampark in 2005, but then the CEO role at HCL came along. “Though Sampark has done a lot of work there, I am not too happy with the impact it has created, given my own standards of frugal social innovation.” Nayar says these days he spends a lot of time with global NGOs like Oxfam and Save The Children in conversations on innovation.
I touch on the issue of Nayar’s NGO trust selling its entire stake in HCL for Rs 133 crore last June, a move that the market did not like as the stock tanked four per cent. “But it is up now,” Nayar says, making light of the issue. But didn’t different people read differently into it? “I do things that I think are right. I am not a get-everything-right person; I get 90 per cent of the things wrong and 10 per cent right. My sense of timing was determined by something else, and if I were to do it again, I will do it the same way. And this is because what defines me is not my job alone, I am an animal of many other things and one set of people cannot define what I should or should not do.”
Was HCL’s transformation just something that happened with the right leader at the helm? After all, how do you institutionalise innovation? Nayar, who suggests I call him Vineet, takes me through his management thesis on it. “You can never, ever predict a big idea, [but] you have to smell your way to one. And to smell you way to a big idea, you need the eyes and ears of a listener and the nose of a dog.” So, when HCL incubates anything, like the Total IT Outsourcing, the organisation tells people that it doesn’t need their ideas. “Instead [we say] something is [already] happening in the space and we tell them to just go and figure out what business we can do in this space. This way people are more interested in converting those landscapes into opportunities rather than justifying the innovation they may have done,” says Nayar
Nayar says all revolutions, social and in business, come out of dissatisfaction. “Gandhi, for instance, spent a humongous amount of time convincing people why they should be unhappy with the British Raj. So, the first step towards any change is to understand that the status quo is not good enough, creating positive dissatisfaction as I call it.” Creating dissatisfaction is not enough, you have to show a vision for tomorrow, too, and connect the dots of strategy, according to Nayar.
Well said, but can an organisation stay in a state of perennial unhappiness? Isn’t there a danger of rocking the boat too hard? “Suppose you’re standing on the ledge of a building on fire and you know the only way out is to jump, but you also have a 100 colleagues standing along with you. How do you convince them to jump? And you have only 30 seconds to do it. You cannot say the solution for us is to jump because you have not created the threat with the status quo. You have to say I assure you if we keep standing here we’ll die. So, in companies when leaders want change, they have to first reflect and then direct the conversation to what would happen if they maintain the status quo.”
The food is good, especially the prawns, and Nayar is full of praise for the chef and staff at RED. I try and get Nayar to speak more about his passion for the outdoors. “Why do people climb mountains?” Nayar asks. And he answers the question himself: “Because they’re suckers for transformation.” An avid trekker, Nayar ponders why one is so excited to put oneself in discomfort. “Because there is joy in doing something that is difficult.” Nayar says what made HCL’s topline move from $700 million to $4 billion is not going to work to reach the $10-billion mark. “Massive work has happened in HCL over the last year in rebooting itself,” he adds.
But if market is celebrating HCL’s industry-beating sales and profit numbers, what metrics does Nayar use internally to keep the dissatisfaction-pot boiling? “Where is the billion-dollar customer? Where is the transformation that has completely changed the shape of the [client’s] company? [As an IT vendor], have you done a Nissan on the company? The world belongs to the company that is ready for the pain in the joint. We’re ready for a headache, which is Total IT Outsourcing, but the pain in the joint is ‘I have no revenues,’ and we have to be ready for that.” But if it was so simple, everybody should have got it, right? “Why do small-town boys like Dhoni or the Olympic medalist do so well? The passion, the desire, the hunger is low in big city [folks] and the same is true for big companies. So, the only way for a big company is to be paranoid [all the time]. I am a big believer in being a perpetually unhappy company.”
Nayar says he’s planning to cycle to Agra with a bunch of friends, and the next trek is to Kanchenjunga. So, how does he pick up his treks? “Well, there are more learned friends of mine who apply their mind to it, and I am one of those who just say yes.”