A Report on a Leader

Mr. Narayana Murthy

Subject: Strategic Management

Submitted To: prof. Richa Pandit

Submitted By:
Sandeep Puri 68 Pankaj Sabhaya 82 Sonam Parmar 83 Dharmik Kariya 85 Mehek Desai 91

NARAYANA MURTHY A true leader is one who leads by example and sacrifices more than anyone else, in
his or her pursuit of excellence -NARAYANA MURTHY, Chairman, Infosys.

INTRODUCTION:
Born in Mysore, Karnataka on 20 August 1946, Murthy graduated with a degree in electrical engineering from the National Institute of Engineering, University of Mysore in 1967. He received his master's degree from IIT Kanpur in 1969.Murthy's first job position was at IIM Ahmadabad, where he worked as the chief systems programmer. In1972 he went to Paris where he was part of the team that designed a 400-terminal, real time operating system for handling air cargo for Charles De Gaulle airport. After IIM Ahmedabad, he started a company named Softronics in 1976. When that company failed, He joined Patni Computer Systems in Pune, before founding Infosys in 1981 along with six other professionals

After settling down in Pune, Murthy founded Infosys in 1981 with an initial capital injection of Rs 10,000, which was invested by his wife Sudha Murthy. Murthy served as the CEO of Infosys for 21 years and was succeeded by co-founder Nandan Nilekani in 2002. At Infosys he articulated, designed and implemented the Global Delivery Model which has become the foundation for the huge success in IT services outsourcing from India. He held the executive position of Chairman of the Board from 2002 to 2006, when he became the "non-executive" Chairman of the Board and Chief Mentor. In August 2011, he retired completely from the company and taking the title Chairman Emeritus.

Murthy has also served as an independent director on the corporate boards of HSBC and has served as a director on the boards of DBS Bank, Unilever, ICICI and NDTV.
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He had humble beginnings, and all his decisions are rooted in his simple upbringing, that had an emphasis on family and community values. His lifestyle gives no hint of his wealth. The Murthys, a closely-knit family of four, live on a frugal household budget. The two-bedroom flat in a middle-class locality of Bangalore gives no hint from the outside of its illustrious resident. The only indulgence that he permits himself is music. All the members of the Murthy household believe that hard work and an attention to detail are the only ways to do anything. Irrespective of what environment Mr. Murthy finds himself in, he has always been able to change it for the better. Narayana Murthy always wanted to contribute to society and create quality employment. This to him is the best way to make a difference.

AWARDS RECEIVED BY NARAYANA MURTHY:

The Distinguished Alumni Award for 1998 from IIT, Kanpur J R D Tata Corporate Leadership Award for 1996-97 Ratnabhushan Award from the FIE Foundation for 1997 Business Leader Of The Year Award for 1997 from Business Barons Featured in the Asia week Power 50 (June 2000) - a list of Asias Most Powerful People Top Entrepreneurs of the Year 1999: Business Week Businessman of the Year 1999: Business India "The Stars of Asia" for three successive years, in 1998, 1999 and 2000: Business Week Co-Chairman of the Indo-British Partnership Member of the Asia Societys International Council and Board of Councilors of the University of Southern California School of Engineering Member of the Wharton Business Schools Asian Executive Board

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INFOSYS FOUNDATION:
Infosys is the place where Mr. Narayana Murthy had put his all energy and strategies to develop and bring change. Infosys was co-founded in 1981 by N. R. Narayana Murthy, Nandan Nilekani, N. S. Raghavan, S. Gopalakrishnan, S. D. Shibulal,K.Dinesh and Ashok Arora after they resigned from Patni Computer Systems. In Feb. 2001 Infosys Technologies was voted as the best managed company in Asia in the information technology sector, in leading financial magazine Euromoneys 5th annual survey of the best managed companies in Asia .By 2000,Infosys market capitalization reached Rs.11 billion and by 2001.infosys was one of the biggest exporters of software from India. Narayana Murthy had built an organization that was respected across the country with his sound management skills he seemed to have taken Infosys to the principal of success in two decades. From a turnover of rs.1.16 million in 1981 Infosys had grown to Rs.19 billion company in 2011. In 1996, Infosys established the Infosys Foundation, to support the underprivileged sections of society. At the outset, the Infosys Foundation implemented programs in Karnataka. It subsequently covered Tamil Nadu, Andhra Pradesh, Maharashtra, Orissa, and Punjab in a phased manner. Infosys has set up a new campus in the state of Orissa near Udaygiri. The new campus is a better equipped than the previously existing branch in Orissa. It will be more energy efficient, will save more water and has a capacity of 15,000-16,000 employees whereas the older one had a capacity of 5,000-6,000 employees. As Mr. Narayana Murthy was the founder of the Infosys, he had been used many policies and strategies for building up the Infosys at a top level. There were many firsts to Narayana Murthys credit. Infosys was the first co. to push for off-shore software development as against body shopping that was coming during the 1980s.he championed corporate governance in India. Infosys was the first Indian company to follow the US generally accepted accounting principles (GAAP) disclosure norms before

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going for a NASDAQ listing in1999.In late 2000, Infosys became a total software service company. It had set up development centre at Toronto as part its globalization strategy .

NARAYANA MURTHYS SOURCE CODE BEHIND INFOSYS SUCCESS STORY:

The PSPD model is what has worked for Infosys: Predictability of revenues, sustainability of revenues, profitability, derisking Invest in well understood, proven products and not just R&D The most powerful style of leadership is by example When dealing with investors, always under-promise and over-deliver Give stakeholders bad news proactively and early. Obsolete innovations before the competition does it for you. Have a healthy sense of suspicion and respect for the competition Markets come and go but as long as the three attributes Speed, Imagination and Excellence are alive, you have a future Everybody needs incentives but not just money. People want challenges, opportunity dignity, respect intense competition, and quality time For long-term success, you need to surround yourself with people who are smarter than you Put public good ahead of private good as it leads to private good in the long term Sarcasm has no place in the organization. Any idea is great, deserves cheers and should be encouraged Opt for higher revenues always instead of depending on controlling costs Controlling costs is easier if people own stock and know the power of P the price earnings ratio Be transaction-based to avoid groupism. The organization should have one goal, one vision.

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THE STRATEGIST:
From the beginning, Narayana Murthy focused on the worlds most challenging market the US He had two reasons for this. First, there was no market for software in India at the time. He believed that Indian software companies should export products in which they had a competitive advantage. In 1987, Infosys entered into a joint venture with Kurt Salmon Associates (KSA), a leading global management consultancy firm. KSA-Infosys was the first Indo-American joint venture in the US.

In 1988-89, Infosys set up its first office in the US. Reebok of France was looking for a software system to handle its distribution management at the same time. Infosys bagged the contract and developed the Distribution Management Application Package (DMAP) for Reeboks French operations. Infosys decided to use this package to create a standard application package for similar operations of any company. In 1989, Infosys bagged another major contract from Digital Equipment.

In the early 1990s, with the opening up of the Indian economy, many export-oriented software companies were set up in India that created the momentum: Infosys leveraged this very successfully. By mid-1990s, Infosys was competing not only with Indian software majors like Tata Consultancy Services and Wipro but also with overseas players like Cambridge Technology Partners and Sapinet, which offered software solutions. Narayana Murthy believed that Indian software professionals had the ability to deal with complex projects. Analysts felt that unlike elsewhere, Indias sharpest minds were heading for a career in software, and the best of these aspired to be at Infosys. Infosys also competed with consultancies as Anderson Consulting and Ernst & Young, which positioned themselves as information management specialists.

In 1994, the joint venture with KSA was dissolved. In 1995, Narayana Murthy created Yantra Corp. in Acton, Mass. US. Around the same time, Infosys entered into a joint venture with Satyam Computers and DCM.

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During 1998-99, Narayana Murthy planned to position Infosys as a true global company global clients, global operations, global staff and a global brand image. In 1998, to support his global ambition, Narayana Murthy listed the shares of Infosys on NASDAQ through American Depository Receipts (ADR) issue worth US$75 million. With this, he took the Indian software industry global. Narayana Murthys global strategy comprised three features. The first one was the global delivery model. The model emphasized on producing where it is most cost effective to produce and selling where it is most profitable to sell. Cost effective production meant doing as much of the software development work in India and profitable selling meant focusing almost exclusively on foreign markets, particularly the US. The second feature of the strategy was moving up the value chain which meant getting involved in a software development project at the earliest stage of its life cycle However analysts felt that for this, Infosys would have to compete with big companies like Cambridge Technology Partners or even Andersen Consulting, and that could be tough. Agreed Narayana Murthy, Yes, it is not going to be easy. But we dont have to be unduly concerned about unmitigated success. We may succeed in some and not in others which is not to say that we will not succeed as consultants. The third feature was the PSPD. According to Narayana Murthy, there are four fundamental tenets of any well-run business. One: predictability of revenues; two: sustainability of the predictions; three: profitability of revenues; and four: a good derisking model. De-risking meant that Infosys had put limits on its exposure to businesses of various kinds. For instance, it limited its exposure to Y2K projects to less than 25% of its total revenues because this was a business that could disappear overnight and Infosys didnt want to take the risk.

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PEOPLE MANAGEMENT:
Analysts felt that one factor which helped Infosys to grow at a faster pace than others was the low employee turnover. The turnover rate at Infosys was around 11% as opposed to industry average for software companies of over 25% during the 1990s. Infosys retention capability was a function both of its rigorous selection procedures as well as proactive HRD practices. About 80% of the middle and senior level executives were promoted from within the organization.

Infosys provided many facilities to its employees, which were intended to take care of both the professional and personal needs such as ticketing, credit cards or house loan applications, crche facilities for kids, a gymnasium to work out etc.

Infosys was one of the first companies to adopt an employee stock option plan (ESOP) and create additional wealth for its employees. Narayana Murthy believed that employees created wealth and unless Infosys had a mechanism to make them principal shareholders, it was unlikely to grow. By 1997, 500 employees were awarded stock under the ESOP. By 2001, Infosys had about 2000 rupee millionaires on its staff and more than 213-dollar millionaires.

Analysts felt that Infosys had one of the best reward systems in the industry. Most employees in Infosys were paid high salaries by industry average for software companies. Narayana Murthy said, My employees seek challenging opportunities, respect, dignity and the opportunities to learn new things. I keep telling them that my assets are not this building, the business or foreign contact my assets all 8000 of them walk out of the gate every evening and I wait for them to come back to me the next morning.

Employees were encouraged to communicate with each other and with the higher management about interesting ideas and ways of solving problems through the electronic bulletin boards. To improve communication, the managing director sent mails
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every fortnight. There was also a concept called the Chairmans List and an annual excellence award. However, groupism was not encouraged. Narayana Murthy explained, Everything is judged on merit. Ego doesnt come into the picture. Our transactions are zero-based so there is no history sheet. Different people compete then they have a discussion, one solution is accepted, one person wins, they smile and go out to lunch. Because the group of people is very smart, there has to be a uniform distribution of wins there are no overt or covert prejudices.

LEADERS IN THE MAKING:

In August 2001, Narayana Murthy set up a Leadership Institute in Mysore, India, to manage the future growth of Infosys. The institute aimed at preparing Infosys employees to face the complexities of a rapidly changing marketplace and to bring about a change in work culture by instilling leadership qualities. Commenting on the institute, Narayana Murthy said, It is our vision at Infosys, to create world- class leaders who will be at the forefront of business and technology in todays competitive marketplace. We believe the Leadership Institute will play an instrumental role in equipping Infoscions to be leaders, contributing to the advancement of the IT industry.

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STRATEGIC LEADERSHIP ACTIONS:

We can also call Narayana Murthy as a GREAT LEADER; He had worked at the Infosys like he was the real leader of the Infosys. According to the management guru Peter ducker, a leadership is," To gain followers requires influence but doesn't exclude the lack of integrity in achieving this. Indeed, it can be argued that several of the world's greatest leaders have lacked integrity and have adopted values that would not be shared by many people today. He has some different qualities as a leader, His Underlying principle Simple living-high thinking Under-promising & Over-delivering Performance Oriented Strategy ( Customer is the King) Social being

His leadership style is, Trust is the foundation of leadership His approach is visionary Dedication and commitment towards work, highly ethical and hard working Employee satisfaction leads to organization's success High influence on employees Emotionally expressive and warm

And Mr. Narayana Murthy proved himself by done great leadership in Infosys. In the Infosys, as a leader he had been used different strategies which are part of the strategic management. There are two types of strategies. 1. Internal strategies 2. External strategies
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SUPPLY CHAIN MANAGEMENT STRATEGY:

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1. SUPPLY CHAIN PLANNING:

Enterprises can experience SUSTAINABLE benefits by utilizing services across major business processes offered in collaboration with our alliance partners:

Synchronize planning cycles with those of customers, suppliers and partners. Develop an accurate, reliable view of market demand by identifying market trends and predicting changes in customer preferences

Reduce cost structure Instill a culture of cost control Raise visibility throughout the organization Increase speed by streamlining and automating the business process

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2. SOURCING AND PROCUREMENT

Enterprises can experience TRANSFORMATIONAL benefits by utilizing services across major business processes offered in collaboration with our alliance partners:

Improved supplier management by helping the organization to locate suppliers with the best prices and location

Cost reduction and procurement savings by increasing productivity and lowering the cost of purchasing staff

Improved documentation as all transactions are electronically tracked and the reports help the organization to move ahead

Increased speed by streamlining and automating the business process

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3. SUPPLY CHAIN EXECUTION

Enterprises can benefit by UTILIZING service offerings across business processes.

Real-time monitoring of information and tracking with predictive and proactive issue/ event management across locations including supplier and logistics partners Effective management of multiple order capture and sales channels with interactive customer experience and lowered shipping and handling costs Optimized delivery commitments based on available and expected inventory derived from production schedules, returns, refurbishments and expected receipts Improved efficiency of warehouse processes such as inbound, outbound and storage and reduction of disruptive changes to operations with increased visibility and WMS event management Flexible transportation processes with real-time ability to modify logistics and fulfillment activities with enhanced tracking and tracing

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4. ENTERPRISE ASSET MANAGEMENT

An organization can experience TRANSFORMATIONAL benefits by utilizing service offerings across their major business process in collaboration with our alliance partners:

Improved Asset Management Increased productivity, increased OEE and lower cost of ownership Improved regulatory compliance as all the transaction are electronically tracked and the reports help the organization to move ahead on track

Increased speed by streamlining and automating the business proces

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CORPORATE LEVEL STRATEGY:

Global Delivery Model: Producing where it is most cost effective and selling where it is most profitable.

Moving UP the value chain: Getting involved in a software development project at the earliest stage of the lifecycle.

PSPD

Model:

Predictability

of

Revenues,

sustainability

of revenues,

Profitability, De-Risking for Risk Management.

Actions Taken: Expansion into low cost countries like Mauritius, Philippines, Thailand, and Mexico etc. Improved Quality capabilities Emphasis on delivering high value services Currency hedging for predictability of revenues. Investing heavily in training centers

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Diversification Strategy: NEW MARKET: India, Middle-east and Australia

NEW PRODUCT: Consultancy and package implementation services in relatively growing sectors esp. healthcare, life sciences and aviation sector, and KPO services. RECOMMENDATION: Changing Brand image from low value service provider to high value service provider. RESULT OF STRATEGY: Difficult to achieve overnight (possible in long term)

Market Development Strategy:

NEW MARKET: India, Middle-east and Australia
CURRENT PRODUCT: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and retail) and software products (financial products).

RECOMMENDATION: Since these are fast developing IT market, Infosys needs a paradigm shift in focus from US and EU markets to these markets.

RESULT OF STRATEGY: Likely to yield good result.

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Product Development Strategy

CURRENT MARKET: USA and Europe
NEW PRODUCT: Consultancy and package implementation services in relatively growing sectors esp. healthcare, life sciences and aviation sector, and KPO services.

RECOMMENDATION: Concentrate on building expertise in these domains by strategic acquisitions

RESULT OF STRATEGY: Likely to have good result. (Better the company acquired, the better the result)

OTHER STRATEGIES:
CONCENTRATION:
90% of Infosys revenues from American and European nations.

VERTICAL INTEGRATION:
Infosys made a bid to acquire a European major, Axon consultancy to improve its business in European markets, but finally called off the deal due to high valuation. Otherwise, Infosys has always believed inorganic growth.

INNOVATION:
The Software Engineering and Technology Labs (SET Labs) at Infosys is the center for applied technology research in software engineering and enterprise technology. SET Labs conducted 24 Innovation Workshops with customers from the US and Australia, to identify research collaboration possibilities. Infosys promotes a favorable work environment that encourages innovation and meritocracy.

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