INDIA’S SEMI- CAPITALISM
At its best, Indian capitalism is a worldbeater. At its worst, it is self- destructing. In their own and very different ways Infosys and BCCI are perfect examples of how, in India, the success of an enterprise can so easily lay the seeds of its downfall. At its peak, Infosys wasn’t just the poster child of the Indian IT industry. It was, in fact, a role model of Indian capitalism. It showcased the potential of raw enterprise which grew without any support from the Government. It proved that an Indian company could deliver world- class services. But perhaps, most importantly, in the peculiar context of Indian business, it was a standout example of a truly modern company, one that was not controlled by a single family or a dominant shareholder. None of the founder- promoters of Infosys holds big stakes ( 5- 6 per cent mostly). Infy was shorthand for what other businesses wanted to become when they grew up.
Until, of course, the company made the extraordinary decision to recall its founder- CEO, N. R. Narayana Murthy, as executive chairman. There is no doubt that Murthy shaped Infosys. Unlike other Indian leaders, he actually stepped aside when the going was good, handing over the reins to Nandan Nilekani, who in turn stepped down after a five- year tenure in favour of fresher minds. Unfortunately, Infosys missed a trick by mechanically passing the baton on to each of the founders. The firm effectively closed the door on outside talent which could have taken it to the next level of success. In the event, Infosys began to decline, challenged by adverse market conditions in the West, high employee attrition rates and an inability to move up the value chain ( i. e. the next level).
The decision to re- induct Murthy seems a desperate attempt to cling to a once glorious past. Sadly, it has flouted best practice norms. At almost 67, Murthy is above the age of retirement ( 65) stipulated for non- executive directors. Incredibly, he has insisted on the appointment of his son Rohan as his executive assistant. Surely, Murthy could have picked a talented youngster for this role, without succumbing to nepotism. In the end, Murthy may or may not make a difference— remember the context for the IT industry now is very different from when he was last at the helm— but his return has exposed not just Infosys but the lack of maturity in Indian capitalism.
Unlike Infosys, BCCI was never a shining example of good corporate practices. But it was a powerful example of entrepreneurship against the odds. It took some genius to make India the financial superpower of cricket in the short span of a decade, overturning 100 years of dominance by England and Australia. That it happened in the 1990s ( well before the economic boom of the 2000s) makes the feat more impressive. The mastermind of Indian cricket’s success story then was Jagmohan Dalmiya. Like Murthy, he has made a stunning comeback. But it will not change BCCI.
The BCCI needs to now evolve into a professional corporate entity. For that, its management needs to be freed from the control of a handful of powerful individuals ( including Dalmiya and Srinivasan who act like owners, not managers), just like Infosys’s management needs to be freed from its founders. The world’s best companies are run by professional managers, not owners. Despite its considerable success, Indian capitalism still has a long way to go.
IN THE END, MURTHY MAY OR MAY NOT MAKE A DIFFERENCE— REMEMBER THE CONTEXT FOR THE IT INDUSTRY NOW IS VERY DIFFERENT FROM WHEN HE WAS LAST AT THE HELM— BUT HIS RETURN HAS EXPOSED NOT JUST INFOSYS BUT THE LACK OF MATURITY IN INDIAN CAPITALISM.