S t r a t e g y + M a r k e t i n g + A n a l y s i s + R e s o u r c e s + T e c h n o l o g y

OCT-NOV 2004 VOL 3 ISSUE 4

seán meehan
sumantra ghoshal

mtv ’s
charles chau
on global branding
girish agarwal

charles
phillips
oracle
nirmalya kumar

on

s performance
ramadorai
donald n sull

on
leadership at TCS
12 www.thesmartmanager.com Rest of the world........US$5.00 UK..................................£2.50 USA................................$3.50 India...............................Rs100
 SMART LEADER

leadership:
indian
footprint,
global
design
by S Ramadorai

The discipline of knowing what you can do before

you utilize a resource is core to TCS's culture. It's
one of the elements which has enabled TCS to
become the world's fifth most profitable IT
Shantanu Zagade

company. In an exclusive to The Smart Manager,

S Ramadorai, TCS's reticent CEO, talks about
what it takes to achieve performance manage-
ment as well as his personal leadership style.
s ramadorai page 1

S M A R T L E A D E R S Ramadorai

The soft spoken, bespectacled 59 year old

CEO has worked in the world's fifth most
profitable IT company for 32 years and
says he was never tempted to leave n He
enjoys the challenge of working in an innovative
part of a huge empire whose owner rarely
interferes n He started out as a junior engineer
and was later entrusted with the task of
establishing a beachhead in the USA in 1979 in New
York n He holds a BSc in physics from Delhi University,
an engineering degree in electronics and telecommuni-
cations from the Indian Institute of Science, Bangalore,
and a masters in computer science from the University of
California n He enjoys reading, Hindustani and Carnatic music,
golf and long walks n The New York Times’ science supplement is his
favorite read n His father worked in the government's audit department n He
grew up in Delhi in a secure family environment n Candid, circumspect and self
critical, he is a good listener but does not shy away from stating his mind n He
would prefer consensus, but is unafraid of decision taking n Controversy comes with the
CEO's job, he says n Don't take it if you can't handle the heat n He spends 45% of his time
with customers, the same with employees, and balance with stakeholders and analysts and in board meetings n

T H E S M A R T M A N A G E R Oct-Nov 04 www.thesmartmanager.com

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S M A R T L E A D E R S Ramadorai
s ramadorai:
indian footprint, global design
a t TCS we have a dream: to be Global Top 10 by
2010. Our strength comes from our wealth of
talent, world class customers, the global organization and
Tata support. To achieve our dream, the challenge is greater
focus on the customer, on the employee and on building
competence in the organization. There can be no wavering
from that focus. The second challenge is speed. To make a
good organization better requires continuously working on
improving a razor sharp focus at a speed which is unmatched.
Why so much emphasis on speed? In IT (Information
Technology), much of your performance is measured in
terms of speed. Speed means, if you take a project, the
execution must be faster than what you did yesterday. If
you take customer responsiveness, it must be faster than
what you did before. Anticipation of everything: whether
it is an employee whose well being you have to continuously
worry about; whether it is creating an infrastructure where
you have to be proactive with respect to the organization to
address it; whether it is building competencies in a new
area, be it bioinformatics, manufacturing, embedded systems
or whatever - performance depends on how quickly you
move into that space so that you can reach the market in
anticipation of the needs. This is what we have been doing
in the past, but I know we have to get faster.
By focus I mean we have to get the desired competency.
Today customers want to know how much we understand
about the space in which they operate. It may be a financial
services company, it may be a telecommunications company,
it may be a healthcare institution: the question they will ask
is, "You have been in this domain for so many years, are
you able to identify the challenges that we as an organization
T H E S M A R T M A N A G E R Oct-Nov 04
have? As a trusted advisor, can you tell us what to
address?" So domain competency becomes very, very critical.
And a consulting mindset with an execution capability
makes the difference.
a dream without alignment is just theory. A personal
goal for each employee aligned to the company's vision: that
is how we wish to set the organizational structure. If
everybody is not aligned, a vision of being one of the top ten
IT companies in the world does not make any sense.
Alignment is the key. At the end of the day people must
believe in what the organization wants to achieve and be
able to see their role within that chain. A vision if understood,
becomes that much more meaningful.
This need for alignment has led us to do a phenomenal
amount of work in performance management. Performance
management begins with clear individual appraisals. The
employee asks himself or herself what he or she wants to
do in the next one or two years; whether there are mechanisms
in the organization to address his or her wants and needs.
At the managerial level, we ask ourselves: does the organization
look at a set of generic growth paths for everybody in the
organization. There is a continuous assessment of how a
person is performing vis-à-vis those goals. This assessment
evaluates how that goal translates into a competency and how
that competency translates into a meaningful deployment
in terms of value addition to the self, value addition to the
business unit, value addition to the organization.
Appraisal takes place at all levels. At the junior level the
measures are simple, and include the training hours per
employee. Essentially an individual, who may be new to
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S M A R T L E A D E R S Ramadorai
a VISION has to be AGGRESSIVE because that is when
PEOPLE BELIEVE in the IMPOSSIBLE
the company or who may be one or two years old in the
company, must have a goal. It may be a simple one: such as
a person asking oneself if he or she is spending enough time
on a value adding activity. It gets more complicated and more
meaningful for those driving a business, driving a project or
driving an activity in the organization.
The discipline of knowing what you can do before you
utilize a resource has to be inculcated as a culture in the
organization. In the early days of the company, hardware
resources were scarce. The government decided the computers
we could import. When I joined as a software engineer, we
had a very very restricted configuration and we had to use
it optimally. Everyone was allowed only three compilations.
If a person did not complete a project, or a program error
free after three compilations, he was grilled: have you done
adequate desk checking? Have you quality checked the code
you have written before it goes in the machine for program
compilation? To justify himself, he had to even go to the
head of the organization. Those were days of artificially
inflicted restrictions in terms of foreign exchange, computer
configuration, the number of users. We had to extract every
ounce of performance from the machines. It created a culture
where every resource is used optimally.
For EVA improvement, the efficiency of capital utilization
is key, whether it is human capital or physical capital. While
conscious of this, nobody should police one another. We
want an environment where every individual employee in
TCS asks herself or himself whether he or she is optimally
utilizing his or her time, energies and efforts to do something
innovative. If the answer is no, then they should ask what
the organization can do to improve the situation. We have a
culture of self appraisal and self discipline, and from that
comes self initiative.
A dream is like a hundred meter race. If you do it in
eleven seconds, the next bar is doing it in ten seconds. The
next bar is can you go below the ten second level. There is
no stopping, no end of story, no last milestone. Challenges
T H E S M A R T M A N A G E R Oct-Nov 04
are continuously being set in the organization, which is made
up of people. A good vision is one where there is a difficult
milestone, a stretch milestone, but one which you honestly
believe is possible if you put the right teams in place, the
right leadership in place, the right management in place,
and it addresses the needs of the customer. That's what we
have done from the beginning.
Growth without profitability is meaningless. In the
beginning, the challenges of growing from a 1,000 people
organization to a 5,000 one were many. The systems,
training, procedures and processes: everything is different
in the two situations. The next challenge was to grow from
5,000 to 10,000. To grow to that milestone, we asked
ourselves, what structural changes do we need to make
before we make the attempt? Today we are 32,000 strong,
without counting CMC, and we are looking at what
we need to do to become a 50,000 people organization. This
is one dimension.
The second dimension is revenue. The first stretch target
was to be a billion dollar company, which we reached in
2003. Now we want to be a $10bn company but growth
without profitability is meaningless. So can I put a benchmark
on what kind of profitable number we should look at? What
is the productivity per employee or revenue per employee
that we should achieve? What type of customers, what
segments, what geographies, what industries verticals and
what kind of initiatives? We look at a number of dimensions
to arrive at the areas we want to excel in, based on the
accumulated competencies of the organization.
It is this process which gives us the confidence to look
at the next milestones. To us, and to me personally, a vision
is a moving target and a target you set for yourself. It has to
be a very aggressive target because that is when people
believe we can achieve the impossible.
A company's mindset has to be to encourage
innovation in the workplace. In the end, how do you
align the entrepreneurs and the leaders inside the
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S M A R T L E A D E R S Ramadorai
the LEADER'S ROLE is to RESOLVE
the ISSUES, and take a CALL
organization? As an organization grows we don't want to
lose either innovation or the entrepreneurial culture. The
dilemma can be met through a number of ways. For example
by encouraging innovation in terms of ideas, encouraging
open dialogue, and creating as many connections as possible
across the system. TCS is not a very hierarchical organization
and there are no boundaries saying that if you have to meet
the CEO, or a vice president of the company, you have to go
through a chain of commands before you can meet them.
Access is completely open for any person with an idea to
meet anybody in the organization.
Then we have created a number of forums where an
employee can suggest any idea as an investment and a
potential opportunity for the company to grow. These are
promoted by the leaders and an ownership is put. Essentially
it is like seed funding, the activity is funded for a specified
number of years. But there is a constant measurement of
how that activity is doing. After a period of twelve months
we ask, "Now that we have been at it for the past twelve
months where are we on this journey? Is it worthwhile?
Let's ask the researchers, let's ask the innovators as to what
they feel about it."
Another form of innova-
tion we encourage is
within a project
itself. The team
finds out what
kind of innova-
tive ideas they
can try out on
the project.
Some are simple
things like may-
be building tool
sets which
T H E S M A R T M A N A G E R Oct-Nov 04
improve maintenance of a certain code or a testing procedure.
Or perhaps developing a business tool which improves the
capturing of the business requirements in a dialogue with
the customer or the customer's users.
We have created different communities with the specific
aim of evolving ideas. Communities in terms of open source
technology working within the company. Communities in
terms of project managers or quality committees where the
practitioners of quality get together. They share best practices
and churn a lot of activities together and make themselves as
visible as possible in the company so that there is something
for everybody to see. The house magazine may come out with
a column by the quality people or a column on an open
forum on bioinfomatics and what TCS is doing in that field.
We are trying to say, let's talk about what is happening. It is
done through our corporate communication exercise.
In an open environment, people will give conflicting
advice, multiple advice and suggestions. The leader's
role is to resolve the issues, and take a call. You will always
get conflicting advice but you have to apply rational thinking
and avoid decisions based on personal biases. If you have
taken a decision based on the facts, based on the situation,
based on the inputs you have, that's the best you can do.
And you must be able to clearly articulate your thinking if
your board or bosses ask.
You cannot wait for consensus forever. There is a time
for everything but maybe you have got to fix a time for
yourself. It could be that you say, "We are going to deliberate
this particular issue for the next two hours." You may brood
over an issue, you may call for a meeting again, meet a
number of people collectively and individually, but at the
end of the day, if the time has come to make a call, you
better make a call. And later, if something goes wrong, don't
blame it on the advice you received.
We don't worry about failures but we must know
the cause of failures. I believe that opportunity, or the
reduction of opportunity, is not going to happen because of
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S M A R T L E A D E R S Ramadorai
the way I DEAL with FAILURE is to LEARN
FROM it and then put it BEHIND ME
one failure. Innovative ideas by definition may or may not
succeed. If we put our money somewhere else, for instance
in a start up company which is not a part of TCS, and if
that company goes bust, it is no different from investing in
a start up within your system and that not succeeding. What
is important is to understand whether we exited at the right
time or whether we carried on too long, whether the leadership
understands the complexities involved or the challenges
involved. It is no different from a project because by definition
all projects are not successful. There are some projects which
do not go very well because of project management gaps,
because of lack of understanding of the customer's
requirements, because of customers changing requirements
repeatedly, because of our people not having the full
competency to interpret the way the customers wanted it.
Typically two out of ten projects succeed, we should be
comfortable with that figure. We may not be trying out as
many innovative ideas as we would want to but at any
point of time, we have 20, 30, 40, 100 innovative projects
going on in the company, and if we classified all of them, it
is possible that the success rate in risk taking projects may
not be anything more than two out of ten.
For myself, the way I deal with failure is to learn from it
and then put it behind me. It is not that you are not going to
be unsuccessful every time, so it's best to forget it and move
on. Frustrations will always be there. Often decision making
is too slow. In some cases, one loses a deal inspite of one's best
efforts. In some cases, one tried an area where the company
did not go the way it should have gone. I've looked for an
acquisition and it did not go the way I would have liked it
to go. I deal with such situations by extracting the best learn-
ing rather than worrying too much and brooding over forever.
At the end of the day there are going to be under
achievers in any system. We have to accept it. Besides
the vast majority of average performers, there are going to
be exceptional performers who have to be recognized
separately, and of course the under achievers. For under
achievers, we have a counseling and performance
T H E S M A R T M A N A G E R Oct-Nov 04
enhancement plan. We give them a chance, giving clear
feedback on areas of improvement. The shortfall in
performance could be for various reasons: deficiencies, lack
of focus, problems at home - so we tell them - try once again.
However it could also be due to a supervisor or a manager
bias. So in some cases, we may change the supervisor, change
the manager. If we do not see an enhancement in performance,
which is an extreme case then, we counsel them into alternate
options that would be better suited to them.
We try to seek out what causes attrition. Some attrition
is due to people wanting to migrate abroad, some people
who think that if they make a career somewhere else it is
better, some people who think that they may get better
compensation elsewhere. In 2000, during the Y2K problem,
we analyzed the sources of attrition and what causes
attrition in people, including whether there is a stress related
activity with the organization pushing for more. But I think
we are very comfortable with the way we are managing
attrition, that we are fair both to people who have not
performed well and those who have performed well and
have been placed on a faster trajectory. And at the same
time, we recognize that steady performers are the backbone
of the organization and cannot be ignored.
It is difficult to spot leaders and the Peter Principle always
operates. A manager is one who manages a project, manages
a set of people. A leader by definition leads from the front
by example, leads by building people, and leads by creating
something that is long lasting. A project survives for a point
in time. A leader is one who has a long term view and looks
at more dimensions than just managing a project. And there
are very few of them. Just as two out of ten innovative
ideas may succeed, the ratio of leaders to managers may
be very similar. Out of a sample size of ten, only two
may be real leaders.
There is no single defining dimension, no set of traits
that make a leader. You can't say that someone satisfies these
criteria, hence he is a leader. You spot leaders through a
combination of interactions and observations, by throwing
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S M A R T L E A D E R S Ramadorai
you may have your OWN PRESSURES, but the FACT that you
FOUND the TIME to LISTEN is a MAJOR TRAIT
challenges, by a feeling that you think there is something in
the person that sparks and you are willing to put a bet on
the person, and help shape the person. After the event you
might say, yes these are the criteria I saw. Honestly speaking,
there are times when a person has asked me, why did you
choose me for the job, and the real answer is that I didn't
have anybody else at that point in time.
Only experience tells whether you are making a serious
mistake in choosing a person. When that happens, and the
limitations show up, be the first one to tell that person. As
a professional person and one concerned about the well being
of a fellow professional, you should be honest enough to
talk about the problems. Just because you have put your
bet on him doesn't mean that you have to keep him in that
position irrespective of whether he performs or not. There
has to be counseling, an acceptance of limitations, of caliber
and competence; that there are others better and more
capable for the same leadership position. The person must
have the choice to stay or to leave, and be prepared to do so.
Trust and fairness are perhaps the most important
values at TCS and the Tata group as a whole. The belief
that we can trust this organization, that the people in this
organization are caring and sharing, is very special. Whenever
I had an idea, there was always somebody willing to listen
to me. To give an example, when I wanted to invest in a
start up company in California, or form a collaboration with
an educational institution, or attend a senior manager
development
program in an
university, I don't
think anybody said
that this is not for
you, that this is for
somebody else. And
of course, fairness
hits both ways, one
concerning you and
one concerning your
T H E S M A R T M A N A G E R Oct-Nov 04
people. Do you care about your people? Do you stand up
for your people?
If a person comes to you with a problem, the easiest
way is to say that I do not have time for you. The problem
does not disappear, the person disappears. But by listening
at that point in time, when the individual comes to you
with a worry, half the problem is solved because the person
feels that this organization cares. You may have your own
worries, you may have your own pressures, but the fact
that you found the time to listen is a very major trait and
very few people understand these things.
Today we are moving away from the paternalistic
approach of guidance. I think Indians by nature are caring
but they also like to create an impression that they know
what is good for you. Even as parents we do that. We always
say, "I am your father, I know what is good for you, you
should do engineering." Today this attitude doesn't work.
Today children say, "Yes, I hear you but I will make my own
choices." Are you receptive to that? That is the shift from
the paternalistic view to a professional view. It means
moving to the human dimension where you are accessible,
available as a mentor, as a person who is willing to listen.
Mentoring is about building somebody. It comes
naturally to me. If I can build an institution for the future,
leave people to take care of the institution, that's the best
contribution I can make. And the only way I can make that
contribution is by empowering people and making them grow.
The same thing
happened to me. I
do not think that in
all the years I have
worked here, I have
had to be bothered
about what my
boss may think of
me, or whether he
could be angry, or
whether he would
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S M A R T L E A D E R S Ramadorai
ENTREPRENEURSHIP is a combination of UPBRINGING
and the ABILITY to ACCEPT CHALLENGES
appraise me negatively next year. If those were the
fundamentals of the company's culture, I would have
probably left the organization long ago. To me, so long as
there are challenges and people recognize that you are overall
adding value to building an institution - and at our level we
need to look at whether we are building an institution for
the future - whatever benefits I get is fine. It is not at the
cost of the institution that I get some benefits, and that's a
great thing to do. You have got to be so clear that everything
you do should be long lasting. And it should be there for
everybody to see and everybody to judge.
My father, V Subramaniam, worked for the government
in the Indian Audit and Account Service. So we grew up in
Delhi and he made sure that all of us went to a good school.
I studied physics, went to the Indian Institute of Science,
Bangalore, then I went abroad for a masters in computer
science. There I received an offer to join the Tatas, and he
wanted me to come back. In those days if you got a job in
Tatas, people thought it was the best career in the world. I
had opportunities in the USA, but he wanted the best for
me. So that forced me to come back to India, and I have not
looked back other than to ask, are there enough challenges
within the company for me.
For anyone, if the answer is no, then you had better
start looking at something different. But for those situations
where there are enough challenges, you have to do your part
of the work and grab them. When I joined the firm, my boss,
FC Kohli, suggested I maintain hardware. So I decided to
maintain hardware. When we planned to import technology,
he suggested I go for training to the US. I did. When I came
back, he asked me if I would sell the computers we were
importing. So I got into selling situations. Then he said we
have to start up our operations in the US. And I did that.
When challenges comes your way, grab them.
Basically my mentor challenged me because he thought I
was capable despite the fact that I did not have any
experience in that field. A lot of fellows might have said,
"Why should I go break my head on all these things. I might
T H E S M A R T M A N A G E R Oct-Nov 04
as well continue as a programmer, which is a safe, sound,
non-challenging job, or challenging to a limited extent." And
once you have taken on a challenge, you start wondering
how you are going to make it successful because otherwise
it is a problem. So you prove yourself as an entrepreneur,
because there is no option but to succeed.
When moments like this come, you have to grab them.
And that is what I tell younger people. You have got to
decide where your vision is, where you see yourself going to
be. You may not say that you want to be the CEO of this
organization, but there is nothing wrong in saying that I
want to look for that position. In my opinion there is very
little of difference between being an entrepreneur and being
an entrepreneur in an organization which itself is a part of a
big group. Entrepreneurship is a combination of upbringing
and the ability to accept challenges. Entrepreneurs search
for challenges and learn from them.
Money is never the key motivator. Recall the old Silicon
Valley days when people said they were going to change the
world, that they have an idea which will make a difference
to the world. Money became a primary motivator
subsequently. And that's when the bust happened.
Any controversy has to be handled quickly.As I said
earlier, speed is critical: your point of view must be visible
very clearly very quickly. You do not want to be in a situation
where you are trying to defend, because anything that you
have to defend is to that extent a problem. Yes, there will
sometimes be situations which you have to defend. At that
point, the key thing is to understand the essence of the
controversy and where the organization figures in the
controversy. And the earlier you share this understanding
with people in the organization, the better it is. The last
thing they want is to know from outside about something
that is happening, that something is being hidden from them.
It is the CEO's responsibility to completely take control
of the situation and drive it. The composition of the
leadership team depends on the nature of the controversy,
and the leadership team has to be responsive and responsible,
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S M A R T L E A D E R S Ramadorai
if a CONTROVERSY, small, big or large ERUPTS,
there is NO point in BROODING OVER it
but the buck stops with the owner of the organization
namely the CEO. There is no denying that fact. And every
CEO needs to understand the responsibility before accepting
the CEO's position.
If a controversy, small, big or large erupts, there is no
point in brooding over it. There is no point in letting it bother
you, on worrying why it occurred in the first place, or why
people are saying this, why the media is saying that, why
the reporting is negative. You have to know how to get
along in life, else your personal health will be affected and
that will affect the health of the organization. According to
me, unless you have that mindset, you are not fit for the
CEO position and you should not be in that position.
When an organization is supportive, opportunities
are employed. Both the Tata group and Mr Tata have
been great sources of strength. When I took over as CEO,
Mr Tata became chairman of TCS and over the last eight to
nine years, my interactions have increased. He has
shaped TCS along with me. Support has come in terms of
our forays into China and Latin America, in terms of our
acquisitions, particularly CMC in 2001. The acceleration
of growth from 1996 to 2004 was phenomenal on all
counts, be it employee count, revenue, geographical presence,
inducting non-Indians into the company. And there is
increasing synergy with other Tata group companies.
The telecommunications part of the Tata Group and the IT
part of TCS is a powerful play, and a differentiator from
any other company. The combination of automotives
and IT or chemicals and IT offer potential opportunities
which can be leveraged phenomenally. The Tata Business
Excellence Model and the quality framework of the
group as a whole, and the fact that TCS won the JRD quality
award this year is again a group effort where TCS
participated in the group journey. Here some of the best
practices from the group forum came through very
effectively. These are some clear positive initiatives
and learnings from the group to TCS as well as from TCS
to the group.
T H E S M A R T M A N A G E R Oct-Nov 04
To be world class there has to be continuous, quantifiable
improvement, not mere intent. The organization must be
able to do every project in a shorter time than the previous
project of the same kind. For example, if a company rolls
out a stock exchange system or a billing system or an
inventory system in twelve months, the question to ask is,
can we deliver in ten months, eight months, six months. In
terms of quality, which today is a hygiene factor, the question
to ask is, what is the quality of my deliverable in a Six Sigma
framework? Is it at a four sigma, three sigma, two sigma
level? When will it reach a six sigma level? This is one measure
of performance. Another world class benchmark is domain
competencies: what is the productivity and efficiency of
the workforce? Another world class benchmark could be
the revenue per person or the revenue-profitability ratio. If
you measure TCS today, within the global context and in
the information technology space, TCS stands fourteenth
in terms of revenue, fifth in terms of profitability and nineth
in terms of number of employees.
All these world class benchmarks are interconnected.
But at the end of the day customer satisfaction and employee
satisfaction are the single most important drivers, and
everything else is an operational parameter. Do 100% of the
customers, 90% of the customers or X% of customers want
to do business with us? Does a customer want to deal with
a company's people because they address all the dimensions
of quality: being fair to customers, going out of the way to
deliver value, being concerned about the customer's well
being and at the same time being fair to its own people?
From an employee perspective, people should feel that
they enjoy working for the company, that it is a place where
there is learning for them, and because of that, they can add
value to themselves, and in the process add value to the
company. It is not just the company deriving value. n
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