A leader can make or break a company. No wonder, companies tend to hire exceptional leaders as CEOs at times of financial stress. In most cases where transformation is actually achieved this is done without mass firing. Middle level managers who are at the heart of a company continue unchanged.
Steve Jobs took over as CEO of Apple in 1996 and transformed a loss-making company to one of the biggest, most successful technology companies in the world. Ever since his demise, the company has lost half of its market cap. Terry Semel after becoming Yahoo CEO converted a loss of $93 million in one year to a profit of $43 million. Ed Whitacre came out of retirement and transformed GM, in one year from 2009 to 2010, from a bankrupt company to a profitable one.
Nandan Nilekani is another and perhaps most visible role model for IT leaders to emulate. He has delivered in both corporate and public sector environments. Infosys struggled for a time after Nilekani left but TCS another major IT services company from India is going from strength to strength with first S Ramadorai followed by N Chandrasekharan at the helm.
When Ramadorai took over TCS in 1996 it was a division of TATA Sons. Its revenues then were just $160 million dollars. In 2009 he retired with TCS annual revenue of over $6billion. N Chandrasekaran continued from where Ram left and the company to grow from strength to strength. Chandrasekaran then graduated and became the Chairman of the TATA group. I had the privilege to serve under Chandra and found him to be a great leader and inspirer of people.
What did these leaders do to transform TCS into one of the greatest IT companies in Asia?
Ram encouraged the company to evolve as it grew bigger and business became more complex. He encouraged innovation and group heads could experiment, take new solutions, approach new customers with a caveat that projects do not make losses. He empowered managers to take decisions.
The change was gradual. As the size of the company grew it was divided into specialized units. Each unit head was made responsible for profit and loss. The unit head selected his team, hire resources, undertake business development, deliver projects, and manage team performance. Collaboration between groups and business units was encouraged. No one breathed down your neck and the working atmosphere was relaxed.
Ram’s style was low key and non-threatening. It was his overall persona; not one or two transformative events or actions that pushed the company into the fast track mode. You could send him a mail in the late evening and be sure you will have a reply in your inbox next morning.
The role of the CEO also changed and he became more and more focused on visioning, mentoring, strategies, coordination, and supervision. During this period the company evolved from a manpower supplier company to an end to end solution provider during his tenure.
In India, we have hundreds of struggling start-ups, dozens of mid-sized companies and a few large ones too. Such companies are, often afflicted with inadequate leadership. Entrepreneur or family-owned inherited leaders find it particularly difficult to lay themselves off and make way for someone more capable to run their company. I have many such companies during the course of my advisory work.
One of my client companies that have been in the IT services business for decades has been consistently showing below the industry average results. Companies that started the business with them have outstripped them in performance decades ago and are now one of the biggest and most successful companies in India.
This company and many similar ones try and fix the problem by hiring top honchos from successful brands like TCS, Wipro, Infosys, etc. On their advice the company re-structures reorganizes and resorts to all the remedies in the company transformation trade book yet is unable to achieve a breakthrough. The reason for poor performance is obvious to the outsider but is rarely recognized by the leader. Such companies see a regular stream of top executives coming in and exiting. Most exits are out of frustration, fatigue, or after a spat with the owner.
As the company grows and acquires manpower and assets the successful leader shows some of the following additional and critical traits.
- Team management
- Mentoring and motivation
- Value inculcation
- Promoting excellence
These values and traits are universal and are essential to the success of any entity be it in the East or the West.