'Should have given more space to CEO'

Happiest Minds, the company co-founded by IT industry veteran Ashok Soota along with 11 others in 2011, is in fine fettle. According to Soota, by its third year, it had touched a $50-million run rate, had more than 100 customers, and 1,500 employees - well on its way to becoming the fastest company in the Indian IT services industry to reach $100 million in revenue. However, the company in October announced the resignation of its founder CEO and MD. In an interview to Business Today, Soota reflects on his tough decisions, leadership style, the separation of powers between the executive chairman and the CEO.

BT: When you have a CEO leaving in three years, what does it mean for a start-up? When do you decide that you have to let a CEO, or senior executives, go?

Ashok Soota: I will categorise them into two broad groups: sales jobs (country heads) and leadership roles. The opportunity costs in a sales role are so high - it's not just what the man is costing you, but it is the business you are not bringing into the company. To that extent, you can't afford to take more time. The good thing in sales role is that the numbers speak for themselves. Has the person built an adequate pipeline? Is he providing leadership to his team? It's a position with the highest rate of mortality. In those roles, every single person like an onshore country head who doesn't work out well, probably costs you half a million dollars (salary, indirect costs, travel, office that you will set up). And I am still not adding an opportunity cost. Those you can't extend and you have to take a decision. In other positions, you have to give people adequate time. You have to see if there is something in the structure that is preventing them from being effective. Is he being given enough space and headroom? Have a dialogue in terms of his KRAs and what is the bottleneck in terms of achieving those. But after you have gone through the process, in fairness to the organisation, you have to take a call. But I do believe whatever you do has to be handled with care and kindness. I don't go by standard notice periods. Help them to get a job while in the job. 

BT: If you go by the numbers you have cited, Happiest Minds seems to be doing well. So why did you take that call?

Soota: It is a very difficult call to take when the numbers are met and yet, you feel that the person concerned hasn't delivered the value the role required. It can even happen in a sales job. A sales head can say he has met his numbers and that he has bagged a large contract. But if it is a large order, everybody from the senior management onwards gets involved and helped you bring it in. Were you able to bring seven-eight decent sized wins? Those are the ones you would have contributed towards. Sometimes, it is the system that delivers. So you have to analyse and go beyond the numbers and look at the genuine value-add by the person.

BT: If you look at the demographics of the company that you lead now, or even at Mindtree, both have employees and leaders who are young (At Happiest Minds, the leadership is in the 40s). You are now 73. What sort of issues do you face because of this generational gap?

Soota: I am not sure if those issues would crop up because of demographics. Because there is a CEO and MD, a lot of the day-to-day dealings of employees are directly with the CEO. The years that I have spent in the industry helps in networking and in the relationships I bring in. My role is to help them in their areas  and not do day-to-day reviews. At the same time, call a spade a spade when necessary, when they are not measuring up. I don't think its age per se...look at the very next generation. In my Mindtree days, my Indian co-founders were the ones who found it difficult to call me Ashok whereas the youngsters who came from college had no hesitation. In Happiest Minds, this is not the case at all. The industry has become more informal. The important thing in demographics is that there should not be barriers in what people should be telling you. Everybody wants a feedback. It should not require guts. It should come easily and naturally.

BT: How has the nature of leadership in the IT industry changed?

Soota: You now have people running multi-billion dollar industries at the age of 40 plus. One major difference is that barring the owner-entrepreneur set ups, managerial talent in IT came from other industries. I was a manufacturing guy. Now, there are guys who are from the IT industry. That makes a difference. They understand the power of technology. While I look at it only as a consumer, they look at it both in terms of what the consumer wants, and what the consumer doesn't understand. The business has also become demanding, 24/7. You do need younger leaders.

BT: Are you still as energetic as you were at Mindtree or Wipro? I would have thought you would step back and let others take over? That doesn't seem to be the case here.

Soota: The first eight years of Mindtree and the first two years of Happiest Minds are very similar in terms of my involvement. The reason is that I had to get the company started. Leverage my relationships to the maximum. In the first two years, I might have made six-seven trips to the U.S. The previous year, it was two trips a year. This year, I made just one trip. I intend that to be the pattern - one trip to the US and one to the UK. I won't even visit the minor geographies. In this business, you can spend quality time with the customer when they visit India. Jet-setting is not required beyond a point, at least in my role. 

BT: Who sets the agenda in your company now?

Soota: CEO and MD. We have an executive chairman structure, then there is CEO and MD, and there are presidents and CEOs of each businesses. It is a difficult thing for the CEO - he needs enough headspace between the chairman and him; he also has to allow enough headspace to the people below him. Then the question is what does he have in terms of charge and control? So we defined the primary responsibilities of the executive chairman, the CEO and MD as well as others. That was there in the job description. We have a framework. I am not accountable for year-to-year results. I am responsible for achieving our five-year vision. The business CEOs are responsible for achieving the year-to-year results. My job during the course of the year is adding value, making sure we course correct. A business CEO is under tremendous pressure because now we have profit targets. So if you are sacrificing the future to meet profit targets, if you are hesitating to invest enough - I am responsible for the long-term vision, and  I know if you don't make the right investments. My job is to direct better, long-term decisions and make sure that the short-term is never achieved at the cost of the future. Other aspect is anything liked to the culture, the brand of the company, fund raising, decisions on IPO, governance -  those are responsibilities I would never delegate to anybody.  But everything is done along with the CEO and MD. I take the onus of that. Acquisitions are a joint responsibility.

BT: Do you breathe down a CEO's neck?

Soota: At Mindtree, I changed from a CEO and MD role to an executive chairman role. I needed to make a transition myself. In the process, did I give KK (Mindtree CEO Krishnakumar Natarajan) as much authority as he wanted? I continued to retain the strategy role. In retrospect, I shouldn't have done it. Because I was associated so strongly with the company, it continued to be seen as my company whereas he should have been at the forefront. Subroto (Bagchi) acquired visibility because of his own personality, writing, and other things.  And yet the guy running the company was KK. He was the least visible.

BT: Was that the problem at Mindtree - the headspace KK did not get while you were around?

Soota: I can't say. You have to ask him. I am just saying if I look back, I would have certainly not retained strategy.