Last month the $400 million IT services firm MindTree named Subroto Bagchi as its new chairman, filling in the top post nearly a year after co-founder Ashok Soota quit to start his new venture. Bagchi, one of its founders, replaced Albert Hieronimus, who was appointed as the non-executive chairman of the company following Soota?s exit. Bagchi, co-founded MindTree in 1999, along with Soota and others. In his first interview to the media after the chairmanship announcement, Bagchi talks to Darlington Jose Hector & Debojyoti Ghosh about his dreams, challenges and more. Excerpts:
Probably, chairmanship was not the role you had been looking for. Over the years, you have seen it all. There is nothing left to be seen as far as MindTree is concerned. So, how is the feeling?
I think you have exactly said it. No, this was not the role one was looking for. Not because of lack of ambition but because of few other things. The biggest fulfillment for me was to create MindTree with other co-founders. If I look back, many incidents have happened, but they all look like merely acts of running up to MindTree.
MindTree happened to me when I was 42. I was blessed and fortunate to have many good things come my way. But there is always something coming up next. What Viktor Frankl sums up as ?something to look forward to.? If you look at that book ?Man?s Search for Meaning? it says that ?some people have something yet unfinished to do.? That becomes a big driver that you have something unfinished to do.
So I, in the last 13 years had, and in the next 7-8 years will have, something unfinished to do. Today if you take me out of chairmanship and leave me where I was, still I will have something unfinished to do as far as MindTree is concerned. I did not have my eye on chairmanship. It did not mean anything significant to me.
Do you see this as an advantage?
I think it is an advantage because you are not consumed by power. You understand that power is an energy source and that it must be used for a larger good. You are a custodian and user of that energy, but you are not the energy. I think it is an important leadership quality if you have healthy detachment with the ideas of both office and power. Look what is happening today in our state (Karnataka). Is chief ministership the only way to do good for Karnataka (referring to the Yeddyurappa?s power struggle)? If it is limited only to that, then you look at one kind of capacity within yourself. It doesn?t matter whether you are chief minister of a state or chairman of a company as long as you have something to achieve.
It is said that MindTree has not realised its full potential. So in your tenure, if you have to prioritise the top five things you would want to do, what would they be?
I was asking the finance team the other day to give me a list of companies that have hit the R2,000 crore mark and in how many years they have done it. With all the top five-six companies in the country who have crossed the R2,000 crore mark, the average time they have taken is 25 years. And we have done it in 13 years.
It is an interesting perspective. People can have any perspective about you, but one needs to be comfortable with what you are and what your pace is. It is very important to feel good about who you are. Cognizant did it in 10 years. You can always say that we came in much later, and we had better management perspective so more was expected from us. But I think sometime you have to take things the way they are.
We are not building a company to impress anybody. We never wanted to put MindTree on steroids. MindTree was our own child. Just because you want your child to grow, you don?t put your child on hormones and steroids. A child has his own pace and capacity and you fulfill that. Our perspective was more towards building a sustainable and memorable organisation. And if you see all those companies, who have crossed the R2,000 crore mark, except for Infosys all had parentage. And MindTree has been the only other.
Infosys and MindTree are set up by professionals, while all other companies had parentage.
Now, where do you go from here and what is your priority. My priority first of all is to give faith to the system both inside and outside; tell our employees that we have got a great platform here. We are a R2,000 crore company with a strong workforce of 11,000. But we need to understand whether we want to be content with our achievement or use this platform as a springboard to achieve greater heights. I want to send the message internally that this is the time to set the company up for year 2020. I want to focus on some of the long-acting goals within the company.
How do you take off from here?
In terms of the take off points, one is identification of what these long-acting goals are and making the investments in those areas. We have to look at the positioning of the company. Till now, MindTree was seen as the best mid-size company of the country. And that has brought us so far. We want to reposition MindTree now as an expertise-led company. Both internally and externally we are seen as a culture-led company. In the next 8 years we want MindTree to be expertise led and culture backed.
Next comes the branding of the company. If you have a brand for today that means you are dead for tomorrow. So when we are looking at MindTree to create a brand for 2020, we are looking at the values the company will stand for. To get the positioning right and brand in place, we have hired branding expert Siegel Gale, who have done extensive work in the last 8-9 months. We expect to roll out the new positioning of the company over the next 12 months. To build the company for 2020, it is important to create the right brand platform. We are around 11,000 people now and more than 50% of our workforce is below the age of 30. We have to create a brand that resonates with the young workforce.
The next area that we need to look at is leadership and for that we have hired Korn/Ferry, who has done our leadership assessment. According to Korn/Ferry, MindTree is a complex creative organisation. The personality of the leaders becomes the personality of the company. We need to move MindTree from a complex creative organisation to a more action-oriented company. Now with all the assessment we know our gaps. We now understand where the holes in the company are. So if we are looking at becoming an expertise-led organisation it is not just about domains or verticals, but other areas where we need to get expertise. My current priorities include overall positioning, leadership, branding and preparing MindTree for success.
How do you plan to prepare for this?
Getting business and meeting our topline were never issues. If you see our growth pattern, the company has grown at 20% CAGR. Where the company did not do well is managing profitability because we were putting our heads into too many things. So the issue was not growth, the issue was focus. You want to focus on certain areas where you want to be significant to your customers.
In order to do that you have to look at larger sets of areas. So, if we look at Nasscom numbers, it is talking about building the $100 billion industry to $200 billion by 2020, which means that both the industry and companies like MindTree have to prepare for that kind of success. And as Indians we don?t prepare for success. I would help MindTree to prepare for success by focusing on building infrastructure.
We have a very ambitious infrastructure creation plan. We would add 2 million sq feet of space in Bangalore as well build a brand new campus in Bhubaneswar. The campus in Bhubaneswar will be on 20 acres land that we got from the government. We will pump in R250 crore in the next five years to build the facility. Physical infrastructure is very important. When you have the physical infrastructure, you build the intellectual infrastructure and on top of that you build the emotional infrastructure. The Bhubaneswar facility is very important for us. In the next 15 months, we want the facility up and running because we will add 4,000 people next year.
So to build an expertise led company you need to have expertise at the entry level. In the next 6-8 months a lot of my own time will go into figuring that out as to what kind of people we need to build MindTree into a memorable company. And memorability here is about building differentiation.
You mentioned gaps within the organisation. Where do you see these gaps?
When Korn/Ferry did our leadership assessment we figured out certain gaps within the leadership team and the company. So now, we need to get people from outside to fill in those gaps. We need to be a lot more action oriented company and it could be in marketing, human resource management or technology. It could be the sales effectiveness of the company to nitty gritty things like building capacity for large complex process.
As an organisation, we are shifting our focus from culture led to expertise led but culture backed. We want to get invited to larger deals. Till now the largest deal that we have got is in the range of $100 million sometime last year. Typically our deal size is about $5 million, $10 million and $50 million. But we need to go to the next level where you are invited for much larger parties.
For that it requires different kind of expertise.
One area MindTree is particularly strong is manufacturing. It is also an area where the average deal size is not as high as in BFSI. Would it mean, now you would like to develop expertise that would give you higher returns?
Manufacturing is one such space. But if you look at manufacturing, it is quite complex, which includes factory automation, computer integrated manufacturing and packaged application. We are very strong in travel and transportation around 55 airlines in the world uses our applications. We also have deep expertise in the insurance vertical. One of our earliest customers in the insurance space was AIG, who still remains a strong and vibrant customer for us. There are very clear cut verticals where we will focus on. So coming to your question, the overall vertical strategy has not changed but we might fine tune going forward.
Interestingly earlybirds like TCS, Infosys and Wipro who came in during the 70s and early 80s have gone from strength to strength. But other companies, which were equally talented and enjoyed great management bandwidth couldn?t do match up. Can you explain that?
To answer this you need some detachment, you cannot be present inside the system to explain. I can only give you some basic answers. People have tried to replicate the past and that won?t work. You can?t say five companies have done things like this so we should also follow that path. Industry has been very adaptive in terms of management thinking and management perspective.
The second thing is that high performance companies are genetically engineered for that. Genetic engineering is about nurturing parental attention in early stage. If you look at all the top companies who have crossed the R2,000 crore mark, expect for Infosys, all have got parentage. Look at MindTree as a company it was not just about management competence; it was some unseen power that helped us to survive the first five years of the adversity that the company had to go through. In the early stage, for the first 10-15 years, you require parental attention. And you can?t get that from a venture capital (VC) firm. It is not their job to give parental attention and nurturing. VC wants an exit option in 3-8 years.
Some key investors clearly believe that MindTree will be a billion dollar story in the near future. How do you feel?
Each one of us has a different personality. My style is that I would love to work when I figure out what to do. Numbers actually has so much meaning for me. The day I run out of the five things that I have mentioned earlier, I am out of business, I am dead. I am at my best when I know what to do. You cannot get obsessed with numbers. Frankly, my perspective is to build something of value for the world and the world will come to you. You don?t think about the size of the company. If you go back into the history of some of the top companies even they didn?t know. Even for someone like Murthy (Infosys founder) it was an apparition, a large vision and not a game plan.
Do you feel some of the bigger players are feeling tired? Wipro tried the dual CEO model but probably it was not yielding the best results, so they opted to go for TK Kurien who now seems to be whipping the company back to shape. Are some of these big players struggling to see the way around?
I don?t know about Wipro…I can?t comment on the company, but I feel there is some amount of truth in what you said about tiredness.
The industry has invented less than what they were required to do. It did more of the same. If you look at the initial period there was lot of hard work. Then there was a long period of more success than failure. And the success has certainly overshadowed the failure.
The industry should have done talent management better. I think for far too long people stayed at the top. When I see companies like Cognizant whose CEO is 42 years of age, it is a fantastic example for the industry. You cannot have three generations of workers in a dynamic business like IT. Today if you look at most of the companies the age gap between the decision makers and the entry level workers is the age gap between a child and a grandfather.
In MindTree going forward we will definitely push the age bar down. There is a compulsory retirement at the age of 60 now for executives. We will push that down.
Now coming to Ashok Soota….he has not been around you for some time. How much of that has affected you as a person and as a professional? Is it a factor at all for you?
You know, it?s not easy. Ashok has been one of the co-founders of the company, and one of the most respectable figures in the industry. And to imagine that he moves on after 12 years and there will be no emotional set back is like travesty of the truth. We miss him, I miss him. When I look back in time, I have been at my very best whenever there was an outstanding leader around.
I have risen and enjoyed myself.
I have been a Ninja to Ashok not just in MindTree but before that also (in Wipro).
He is now in a competing space, so it may not be always possible to pick up the phone and talk to him on deals. Do you do that?
No, we have not done that so far, but if a time comes for that we can always do that. But, again remember that people are not squabbling over the same pie. Ashok has left a great legacy, we wish him luck. I personally miss him. I think about him every now and then. I had learned great lessons from him, but a time comes when new paths get created and you move on.
Again what is the purpose of life…my purpose of life is, along with KK (MindTree CEO Krishakumar) and others to take MindTree to its next level. And his (Soota) purpose is to build his own company. If we begin to get narrowly focused then it is not a life worth living. By the way we don?t meet for deals but Ashok and I met just the other day and we talked about moving on in life and letting go.