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Infosys: A Story of Cultural Differences

Pallavi Mody

Author: Pallavi Mody

Date: Mon, 2017-09-18 18:08

The conflict between founding patriarch Narayana Murthy (NRN) and the first non-founder CEO Vishal Sikka has led to Infosys and the country being in an embarrassing situation. How does one explain such an awkward state of affairs? Differences in Mindset and Cross-Cultural issues explain the Infosys saga. This article attempts to explain it within internationally acclaimed frameworks.

The dictionary defines Mindset as, ‘a fixed mental attitude or disposition that predetermines a person’s responses to and interpretations of situations’. Needless to say  NRN and Sikka belonged to two very different mindsets. NRN represented the middle class, conservative and Spartan mindset whereas Sikka showed traits of millennials- spontaneous, flambouyant and risk-taking. No wonder, NRN objected to exorbitant bills of charter flights and the severance package of ₹ 17 crore to Rajiv Bansal.

Prof. Hofstede, a Dutch social psychologist is considered an authority in explaining the Cross-Cultural differences. He has conducted one of the most comprehensive studies, covering 99 countries, of how values in the workplace are influenced by culture. His most popular books, Cultures and Organizations and Software of the Mind, have been translated into 20 different languages.

Prof. Hofstede defines culture as “the collective programming of the mind distinguishing the members of one group of people from others”. His model of national culture consists of six dimensions; Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long Term Orientation and Indulgence. 

The current conflict at Infosys can be explained by the cultural differences. Sikka embodies American culture. He migrated in his early twenties to US. He did his graduation, post-graduation and doctorate from the US university system and became a citizen of US. NRN on the other hand represents Indian culture.

Applying Hofstede’s cultural dimensions to compare US with India, one finds significant differences in the scores on three dimensions; power distance US (40) India (77), Individualism US (91) India (48) and Indulgence US (68) India (26). What does this mean?

A high score of power distance, as in India, (77) indicates that society is hierarchical and there is unequal distribution of power. Family patriarchs/matriarchs rule till their death; is a common practice that is accepted in India. The jJob of a typical head is of preserving values, traditions and the name of the family or the business. Did we hear the words, ‘good corporate governance, transparency, fairness and accountability’ coming out as the main concerns from NRN? Is NRN still trying to exert power?

Undoubtedly, NRN and the founding team have created the iconic Indian brand, Infosys, from scratch. Established in 1981, Infosys is a NYSE listed global consulting and IT services company with more than 198,000 employees. From a capital of $250, the company has grown to become a $10.4 billion company with a market capitalization of approximately $34.5 billion. Infosys pioneered the Global Delivery Model and became the first IT Company from India to be listed on NASDAQ. The employee stock options program of Infosys created some of India’s first salaried millionaires.

A high score on Individualism, as in US (91) indicates that it is a society of individuals who think in terms of ‘I, Me and Myself’. People lack interpersonal connection and value personal freedom and privacy. On the other hand, a low score on Individualism, as in India (48) indicates that there is strong group cohesion. There exists large amount of loyalty and respect for members of the group, as was evident among team Infosys. People in India would show respect for age and wisdom and would not mind suppressing feelings to work in harmony. Sikka’s irritation over the repeated allegations was quite evident in his skype communication to the board of Infosys and media as he tendered his resignation. Didn’t the board deserve a personal visit by Sikka even if he signs off?

A low score on indulgence, as in India (26) indicates a restrained behavior. Frugality is a virtue. Infosys was rewarded for its team’s perseverance, loyalty, commitment and restraint. Extravagant, boisterous and indulgent Sikka was frowned upon. Is there a trait of extravagance in his decision to acquire loss making firm from Israel named Panaya for $200 million?

Vishal Sikka’s appointment as CEO in 2014 was a response to a strategic decision. Infosys was looking for a change. As the model of labour arbitrage was getting exhausted, Infosys needed to rediscover itself. Sikka was brought in to drive innovation, information management based on artificial intelligence and transform the company.

Three years down the line, there was growing realization on both sides. They were in a conundrum called mismatch of cultures. With Nandan Nilkeni returning as Non-Executive Chairman, the bridge between the investors, founders and board has been built. Nandan would bring the continuity of culture and values that have been at the core of Infosys. After the board gets reconstituted, the next job is to find a suitable new CEO.

Is it difficult to find a CEO who can lead tomorrow’s Infosys by maintaining Indian ethos? If the largest technology companies of the world-Google and Microsoft are led by the Indians, rooted in Indian culture, it may not be difficult to find a good culture fit for Infosys.

Originally published at: https://goo.gl/d2wBao

 

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Comments

Thank You, Pallavi mam, for providing insights on the Infosys split. It is true that the NRN and Vishal Sikka had differences in mindset. While NRN can be said to have a frugal mindset, Vishal Sikka can be said to be more flamboyant. But I beg to differ that this difference in mindsets is a result of the cultural differences between India and USA. Vishal Sikka also came from a middle-class family. Though he moved to the USA in his twenties still he had his roots in India. In the past year two of the biggest firms in India, Infosys and TATA, have seen the exit of their CEO’s. These two exits are similar in many aspects. There was a significant age difference between young CEOs and the previous CEOs. Both the CEO’s tried to bring radical changes within their organization. In both the cases, there was continuous interference from the advisory boards and their ex-bosses. The above aspects point towards a conflict that might have happened due of the generation gap between the new and the previous bosses. Also, in both the cases there was no clear planning to groom the future leaders. Vishal Sikka wasn’t a part of Infosys before he was made the CEO while Cyrus Mistry was the first Non-TATA chairman of the group. Thus, it can also be said there were major ideological differences as the new bosses of the company were relatively outsiders. Cyrus Mistry tried to do cost cutting by closing the projects that weren’t profitable for TATA. Due to this TATA’s might have lost some credibility and thus it was against the company culture. On the other hand, Vishal Sikka tried to change the frugal attitude of Infosys to a more flamboyant one. Thus, they weren’t able to assimilate the company culture. Thus, it was a mix of not understanding the company’s culture and the generation gap which caused the conflicts in TATA and Infosys. The situation could have been much better handled if there was a training program for the top-level job was in place. Companies like Google, Apple and Microsoft had a change in leadership in the past few years. In all these cases, they appointed a person who had worked with the previous leadership for a significant number of years. Thus, they were groomed by the previous leadership for their upcoming roles. Indian companies also need to the same. The next leader needs to be identified much before the current leader has to be replaced and then that person should work closely with the current leader. Thus, by grooming the next leader such a situation arising due to generation gap can be avoided.

Very nicely explained! In today's era of globalization, the world has shrunk to a very small place where you are much unlikely to work with a colleague having same cultural background and mindset as yours. It therefore becomes imperative that we all become sensitized towards the cultural differences and try to respect each others' mindsets and opinions. One can only impose his ideas on his coworkers and subordinates to an extent but at the same time the subordinates need to understand the expectations of their superiors. What's needed is a win-win situation.

A combination of cultural differences as well as unanswered queries: First of all, thanks for providing an in-depth analysis of the situation at Infosys arising from the rift between the CEO and the founder NRN Murthy. Well, up to a certain extent it looks as if it was all due to a difference in thoughts between two leaders from different generations within the same company which had led to such an embarrassing situation. But, this may not be the only reason which had led to the differences followed by resignation of the CEO Mr. Vishal Sikka as NR Murthy has built this company all by himself, and must have come across innumerable persons within the company, and also within their board of directors. There may be certain differences in opinions, but he had held the company together and has developed it to such a level that any new entrepreneur can dream of. In the recent conflict between the CEO and himself, many things were not clear to NR Murthy and his questions were not clearly answered. He has raised pertinent questions regarding corporate governance concerning certain transactions by the company. He deserved a data oriented response from the board with fact based explanations, but most of them were replied ambiguously and having no clear cut justification Sikka resigned from the post of CEO by blaming NR Murthy, saying Sikka was not allowed to work independently and he had to face continuous pressure from NR Murthy. Given the fact that there is a significant cultural difference between the two persons at the top post having a very different up-bringing, Vishal Sikka and NR Murthy could not think alike and the former being disturbed had resigned from the post of CEO, facing lack of independent thinking and decision making. But, that may not be the only reason and many facts were not transparent between the CEO and the founder NR Murthy.

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