Entrepreneurship and The power of Proactive problem-solving

February 22, 2021 | Posted by BPR Team << back to blog

Visionaries: They might come around only once in a generation, but their impact leaves the landscape forever changed. N.R. Narayana Murthy, Chairman Emeritus of Infosys, is an embodiment of the spirit of Indian ingenuity and an enduring inspiration to entrepreneurs everywhere. Mr. Murthy, a Padma Vibhushan Awardee, is often hailed as “Father of Indian IT Sector”. Through innovative global delivery models for IT services outsourcing, Infosys was instrumental in making the Indian IT story a success.

This Thursday the students of Great Lakes were privileged to be part of a townhall-style Q&A with Mr. Murthy. He addressed student queries and shared his thoughts on a variety of topics such as building new ventures, future of the value chain in IT and the new Indian education policy. Here are the excerpts from the address:

As the head of your own VC firm, Catamaran Ventures, what do you look for in an entrepreneur when you decide to fund a venture?

The tagline of Catamaran Ventures is: From ideas to outcomes. We want to help entrepreneurs solve problems in areas like education, healthcare, nutrition, and shelter. As for what we look for in an entrepreneur, we look for competence. But also, learnability, imagination, courage, deferred gratification and of course a sound value system. And by learnability, I mean the ability to extract information out of specific situations and solve unstructured problems.

Some of you will definitely become entrepreneurs. You will transform this country in ways that I cannot imagine. To me, entrepreneurship is about transforming the power of an idea into jobs as well as transforming into outcomes. To succeed as an entrepreneur, you need two things. First, have an idea that has never occurred to anybody else. Such ideas create discontinuity in the marketplace. However, such ideas are rare, and most ideas improve upon existing ideas. If that is the case make sure your idea outperforms all existing ideas in cost, productivity, comfort, cycle time etc. It should have some clear distinct advantage.

Second, you must be able to express your ideas in a simple sentence. Anything you can express simply becomes easy for your investors, customers, and employees to understand. Lastly, conduct a quick, inexpensive test marketing exercise.

Have Indian IT companies moved up the value chain to the maximum extent possible?

Moving up the value chain in IT services means doing work that provides higher business value to our customers than what they pay. On the vendor side, the vendor must strive to get more per capita revenue from the employees. However, the per capita revenue of Indian IT companies has either remained the same or reduced because companies are doing lower value addition work like BPM. Revenue earned per employee today is between $30,000-50,000 and this figure has not changed significantly in the last 20 years. Why? One reason is that we remain reactive problem-solvers in tech areas, the customer presents a problem, and we try to find a technical solution. Our education system has not helped Indian youngsters become proactive problem recognizers. Also, the Indian mindset has not evolved to sell business value to the customer, our salespeople still sell mostly on price. This reduces every market to a commodity market.

As a leader, how do you remain positive under circumstances when your luck seems to have deserted you?

God has been kind to me and Infosys. Many of my classmates were much smarter than me and had better ideas. But they did not get the opportunities I got. Luck is an important factor for entrepreneurs. But remember chance favours the prepared mind, so it is important to first work hard. Always introspect on your failures. I founded a company called Softtronics in 1976 and I soon realised there was no demand and the business failed. I then analysed and understood that the domestic market for software in 1976 was limited. If I wanted to succeed, I had to shift focus to the export market. This paid off in the long run.

How should an entrepreneur handle the multiple roles they need to perform, especially in the initial stages of the venture when the cash-burning rate is high? What functions can be delegated, and which should not?

When I started Infosys, I brought in six younger colleagues of mine. They had hardly 1-2 years of experience. My philosophy has always been to pick youngsters with good learnability, give them huge responsibility, review constantly, and gives them opportunities to develop. I recognized in each of them certain strengths and delegated the work accordingly. I took responsibility for finance and sales and spent most of my time reviewing, developing checklists, and having constant discussions when problems arose. You can delegate any function if your cliques have high learnability, discipline, and develop checklists.

Checklists are extremely useful in improving work productivity. For instance, the ideas in the book ‘The Checklist Manifesto’ by Atul Gawande, once adopted by US Hospitals, saw 99% of the infections in the operation theatres get eliminated. Whenever you start a new initiative discuss with your colleagues, develop a checklist and put it in a reusable knowledge management system. Skills can thus be delegated if constantly reviewed.

Despite having high quality higher education institutes such as IITs and IIMs, why is it that India is lagging in research and innovation? Do you believe the new education policy will address some of these concerns?

The need of the day is to transform our children from reactive and apathetic people into proactive problem recognizer. IITs are good education institutes but they don’t do much original research. It all starts with the mindset cultivated; a good education system teaches students how to learn. We must instil curiosity, ruralism, respect for cultures, not being afraid of learning from outside India and Socratic questioning. Unless it can bring about this change in mindset I don’t know if the education policy will help our children. It is a good attempt given the circumstance. We must strive to encourage students to ask questions, have open-book examinations and learn to define their own problems to solve.

You have said in the past that the managerial renumeration must be a fair multiple of the compensation of the lowest level employee in the company. In your opinion, should the floor be raised, or the ceiling be lowered?

I believe managerial renumeration should be based on three fundamental principles. One, a fair multiple of the salary of the lowest level employee at the company. Second, full transparency on details of compensation with shareholders. And third, accountability by linking the variable part of the compensation with the long-term performance of the company. These days experts believe a ratio of 70-80 between the compensation of the CEO and the median salary at the company seems fair. In some well-run global corporations, the salary of the CEO is discussed with a few top shareholders. Their opinion is considered before a decision is made. This unfortunately does not happen in India.

To address the second part of the question, my view is that the best way to bring down the ratio is to increase the floor level for employee compensation. In some cases, we may need to reduce the compensation at the highest level when it has gone out of hand. But remember no leader succeeds in a vacuum, they need to bring out the innovation and commitment from every employee at the company for the company to succeed. It is good for senior management to voluntarily show self-restraint and take a justifiable share as compensation. Employees will recognize this, and it creates an environment of confidence and enthusiasm.

Written by Priyanka Murali, PGPM 2021 and Bhoomi Shah, PGDM 2021

<< back to blog

About Us

TERM ZERO

Media

Rankings

Accreditations

NIRF

Campus

Blog

Annual Events

Full Time Programs

PGPM

PGDM

EXECUTIVE EDUCATION

Corporate Programs

PGXPM

PGPM Flex

MBA in Business Analytics

Family Enterprises Management

Ranked 6 ^th

Faculty

Research

Centers of Excellence

Conferences

Campus Recruitment

Internships

Placement Reports

Leadership Series

Talent Listings

Ranked 6 th

Ranked 6 ^th