By Cassandra Mascarenhas
As the Member of the Board of Directors of the global technology services company Infosys, and the Head of administration, education and research, Finacle Human Resources and Infosys Leadership Institute, Mohandas Pai has carved out a place for himself in the booming Indian IT sector.
He was appointed the Chief Financial Officer (CFO) from 1994 to 2006 at Infosys and voluntarily relinquished his post of CFO in 2006 in order to lead efforts in the areas of human resources, education and research. Currently in Sri Lanka to discuss the impact of leadership in this decade and the next and the vital issue of how leaders should know to step down from their posts, Pai expanded on his views on leadership to the Daily FT, drawing upon the example of Mahatma Gandhi. Following are excerpts from the interview.
Q: In economic terms, what changes do you foresee in the years to come?
A: I believe that the world is at a transformation today, in the sense that in this decade, we have seen the world change in economic terms from being a world of the developed countries to being a world of the emerging markets. The collective GDP of the emerging markets is going to become larger than the GDP of the developed markets. For example, the total GDP of the emerging markets right now is about $25 trillion as against about $35 trillion of America, Europe and Japan. In this decade, we are going to see for the first time in human history about 50 per cent of the world’s population in the emerging markets going at 8 per cent. It means that emerging markets’ share of the world GDP will double in 10 years. So a huge transformation in terms of economic prosperity will take place in this decade; it is a period of unprecedented growth and this will in turn require great leadership in the business community, political community and the social sector in the emerging markets.
Q: In your opinion, what principles should a leader follow in order to make an impact in this decade and the next?
A: I use the example of Gandhiji, Mahatma Gandhi and his life, drawing parallels about leadership. The reason is that in the last millennium, the greatest leader to be born was possibly Mahatma Gandhi. Nobody had the power that he had of leading people and because of his leadership qualities, half the world’s population moved from slavery in colonial times to freedom and the entire world that we see today is shaped by the freedom movement that he led in India.
Gandhi was a man of great vision; so I said that every leader needs to have a vision. The vision should be backed up by strategy. Gandhiji had the strategy of using non-violence as a means to achieve his vision of leading his people to freedom. The vision has to be communicated effectively because he was a great communicator and he was able to communicate and spread the message of freedom to millions of people, many of them who were illiterate, semi-educated or otherwise. His message had a very clear tone to it and Gandhiji believed in leadership by example. He always led by example and he never did anything that he would not like others to do and he always made sure that he demonstrated his leadership at all times.
Now leadership is all about courage and he demonstrated courage in the face of insolence and might, in the face of the guns and the bullets of the British Raj. He demonstrated very clearly courage. How Gandhiji was innovative in providing solutions. His idea of the Dandi Salt March, his idea of total freedom and his idea of the Quit India Movement were indeed innovative steps and the way he led those movements were tremendously different and perplexed the colonial powers.
Gandhiji was a person who believed in a value system and led his life based on truth and integrity and all those qualities that make a person great because leaders need to have integrity and a value system and Gandhi always believed in making leaders out of others. During the freedom movement, in India and other places, a number of political leaders came up and if you look at the history of the post-Second World War in the world, the leaders who came up, came up primarily because of the liberation movements in their own countries which were based upon Gandhiji’s principles of non-violence. Gandhiji also had the foresight and the ability of perfect timing so he timed his movements and at different points in time, he responded to the needs of his people and he knew when to step back and when to go on; he had an impeccable sense of timing. He made sure that at all points of time, the freedom movement was in the public domain before all the people of the world. He accepted failure, whenever things failed; he stood up and said that he alone is responsible for any failures and that his followers were responsible for success.
Lastly, he made sure at all times that he developed people and he knew when to step aside. Leaders lead by their ability to know when to step aside. Too often we see leaders cling onto power much past the expiry date, they want to cling onto power and don’t want to leave. Gandhi became the president of the congress at a point in time; he stepped aside and he became a lone person fighting for freedom with others following him and he let others have their moment as well. So I said that these are the 12 principles that define Gandhiji’s leadership style and these are the principles based upon which corporate organisations could lead today. Like I said earlier, the examples that I have taken from his life; the principles are eternal, they are principles that can be the principles of leadership remain the same, whether you are a leader in business, politics or the social sector because these principles are time inviolate.
Q: How important would you say is good leadership in any context?
A: The fact is I think that leadership is going to define the success of societies, of nations, of communities and corporations. If you look at the history of any company in any country, the success comes because they had great leaders and leaders have a responsibility to create an ecosystem around them for success. If you look at companies like General Electric, Jack Welch obviously led, but after he stepped down — well the company hasn’t done as well as it should have because some of the principles were not followed. If you look at a failed country like Libya today, Gaddafi became a leader at the very early age of 27 but he destroyed the social system and did not create an ecosystem for the country to grow. As a result, today Libya is almost like a failed state. If you look at various countries, communities and companies, you find that the principles that Gandhiji laid down in his life are the most relevant and behind every successful company, you find the same set of principles.
Q: Could you give an example of a company that has benefited from good leadership?
A: Well I could name Infosys in India as a successful company, it has followed all these principles and we have had a great leader like Narayan Murthy, he had a vision, a strategy — to attack the global market, he communicated his vision effectively, he led by example and followed all his principles. So he and his colleagues created a company of a 130,000 people, with six billion dollars of revenues and operations in 72 countries. This is a company started with a capital of 10,000 rupees in 1982. This is a remarkable story for any country; any market anywhere so he was a great person and the last 20 years in Indian business, Narayan Murthy defined the business ecosystem. He was obviously the icon of Indian industry.
Q: What other business moguls have made such a strong impact on the Indian economy?
A: In fact if you look at the Indian industry, ever since India gained its independence in 1947, there have been three great business icons that each had a distinct style. In the first two decades of our freedom, there was J.R.D. Tata of the Tata Group — a very genteel, a person of the old school a person with very clear ideas about what to do and did it very well and laid the foundation for the Tata Group. In the ’70s and ’80s, there was Dhirubhai Ambani, who was a person who started from the bottom with nothing at a time when India was controlled, a Socialistic republic where the government ruled supreme. He managed the system well to get licences, the quotas and he built world-scale plants. He raised capital from the public, always strove for excellence and operated on a world scale. We could argue that he broke a few rules in whatever he did, but the end result was unbelievable. The end justified the means. He did something very unique – he showed the Indian industry how to think on a global scale.
The ’90s and the past decade were the decades of Narayan Murthy who showed India how to create a global company based upon intellectual output, based upon almost no capital and based upon a globalised model and good corporate governance on creating a transparent ecosystem, on creating a culture of merit and excellence and he earned respect for Indians all across the world. These are the three distinct success stories. So I think Infosys stands out clearly as an example of the principles that Gandhiji exemplified in his life an in the freedom movement.
Q: What are your thoughts on how corporate governance and transparency are being implemented on a global scale?
A: Well corporate governance today globally has its roots in the Anglo-Saxon Protestant work ethic. The work ethic states very clearly that the individual needs to do a honest day’s labour and needs to be compensated, that corporate resources and individual resources are separate and that the duty and the obligation cashed from the individual and the organisation. The Protestant work ethic that is the root of corporate governance globally and these norms have spread but the world has different business models. In the West, it has progressed to a kind of moral based, professional management of companies, the separation of ownership and management; that there is capital available in the markets and there is a market mechanism for corporate governance.
In the East, in the Orient, in the countries of Asia, maybe India, the family businesses dominate because the society is based upon family values. Family as a mode of social organisation is predominant where the role of the individual is subservient to the role of the family. There are large family dominant organisations where the patriarch takes care of the needs of all the employees. Very patriarchal family dominated organisations are not based upon a professional management. It is now changing, but it does have its own plusses and minuses. During times of crisis, the family treats the business as its own and stands by the business even while it suffers the ignominy of failure. They dominate top leadership, not allowing others to enter but it has its own good points too because in the East and in Asia, family-types of organisations naturally dominate because people are obedient to authority, they don’t ask questions and people look for stability not instant rewards.
Individualism is not as prevalent as it is in the West but today we are moving towards a situation globally where separation of management and ownership is coming in because capital needs are high, competition is getting intensified and the best talent has to come out. So there is going to be a global mix of the Eastern model and the Western model but the idea of corporate governance is based upon the Western model. We have to find a mean, like the Buddha says, between the West and the East to come up with the best system and that system is yet to come but the norms of corporate governance, of openness and transparency is definitely expanding and I think that the East also has good corporate governance.
India has excellent corporate governance, there are some failures, the West has its failures and I think China is moving towards it; because it’s a state dominated sector not very clear how the market mechanism works. India I believe is at the forefront of corporate governance outside the Western countries and Japan has its own form but still is imperfect, so is the Korean model, both models which are based upon a handshake between big businesses and the government which is not a very transparent system. So when you talk about corporate governance, its contextual, the principles are there, each country has its model and I think India clearly stands out.