HUMAN FACTOR
Very few in corporate India would like to be in Infosys Chairman R Seshasayee’s shoes at this point. In his explosive media interactions in February, Founder N R Narayana Murthy had made two critical points: The chair of the Infosys board “must accept responsibility” for corporate governance failures and “atone” for it; and the board must appoint a co-chairman.
While Seshasayee termed the first point as just a media hype and said that the board listens to everyone’s advice with responsibility, the company’s board caved in and accepted Murthy’s demand to have a co-chairman. It’s an irony that Seshasayee had to defend that decision. And the best he could manage to say was that Infosys needed “higher bandwidth to be able to deliver leadership”. It’s an extraordinarily vague statement — no one cared to explain why a company with a board comprising some of the most formidable names in industry, a strong managing director & chief executive officer and a chief operating officer needs a co-chairman who was anyway a part of the board.
Ravi Venkatesan, the new co-chairman, has a formidable track record, no doubt. But even he couldn’t explain the rationale for the new role clearly and said, “on some of the critical areas, Seshasayee will take the lead while I play the supporting role; in other things, I will take more of a leadership role, while he and others take the supporting role”. Surely, there could have been a clearer articulation of the roles and responsibilities of the co-chairs. In the absence of that, one tends to agree with proxy advisory firm IiAS’ observation that having more than one person leading the board is more likely to create factions. The appointment of a co-chairman also changes the power balance at the board. While it may not undermine Vishal Sikka’s position — it will, in effect, add a layer of complexity to his influencing ability, unless Infosys is treating the shared leadership model as just a stopgap arrangement.
On his part, Sikka gave a philosophical answer: “Vincent Van Gogh once made a painting called ‘Two Chairs’, but it is actually a painting of one chair”.
Consultants say the failure of the dual chairman model is more about lack of communication as two strong people will invariably work in different ways. Dual leadership also means a lengthy decision-making process and contradictory viewpoints. The fact is that a coleadership model has hardly worked anywhere for long.
It didn’t work in Wipro, Deutsche Bank, Research in Motion, makers of Blackberry, Citi and Oracle, among many others. After three years of struggling to restructure Deutsche Bank, and convince shareholders, analysts and even employees of their new strategy, Anshu Jain and Jürgen Fitschen had to hand in their resignations abruptly. Deutsche scrapped the double-leadership arrangement immediately and handed over the role to John Cryan.
Oracle’s Larry Ellison appointed not one but two people to fill his shoes. But the results were far from satisfactory. Many also say Wipro Chairman Azim Premji’s decision to have a dual CEO structure was faulty and just didn’t work. As a result, Wipro had to shift to single CEO structure. In RIM, too, the experiment flopped and led to the abrupt resignation of Jim Balsillie and Mike Lazaridis. They had a great run initially, but faltered when it came to difficult strategic decisions. There was confusion all over the organisation as the co-leadership model led to silos and divided loyalties to individuals.
Co-leadership slows decision-making because there are more individuals involved than the traditional hierarchy and it slows implementation because it takes more time to communicate and achieve consensus. The situation worsens if co-leaders conflict with each other. And the last thing a board of directors wants to be involved with is dispute resolution during a power struggle. That precisely happened when Sandy Weill and John Reed, co-CEOs at Citigroup from 1998 to 2000, clashed. They were both strong people with strong views when it came to determining the company’s direction. And the duality didn’t really do them or Citi very good.
Infosys would do well to remember that improving organisational effectiveness can’t be accomplished through unnatural changes in the top management structure. Even if the co-chairs view each other as equals, that doesn’t mean that they always agree. When they don’t, who decides? If the answer is the board, then what was the need for a co-chair? These are important questions, and Infosys will have to address them soon enough.