Business and IT in Sync at Cognizant : Lakshmi Narayanan

Interview Questions

Full Interview with Lakshmi Narayanan

Lakshmi Narayanan:

Yes, we've had our setbacks. We made some mistakes but fortunately, at that time, the industry was growing so rapidly that our mistakes didn't hurt us too much. For example, in 2000, during the Y2K remediation period, we clearly went overboard. Close to 50 percent of our business was Y2K or Y2K-related, knowing fully well that after 2000, there was going to be a decline. We did have some kind of a decline after the Y2K problem was solved. Another thing that has hurt us was not investing in our own systems. It's like a failure on the part of our CIO for not demanding more or not investing in technology. We were so busy with growth that we were just managing - not investing - in systems. Managing growth became difficult because we did not get sufficient help from systems. We managed it only because people worked 12 to 14 hours a day. Over the past two years, we have been investing heavily in systems, putting together a PeopleSoft solution and an Oracle solution that have gone global. And there is a new, experienced CIO. That has given us the ability to scale up rapidly.

 

Lakshmi Narayanan:

The role of the CIO is extremely important in today's context because the key competitive advantage in any industry - be it manufacturing or services - is technology. Even more so in the services industry, where the efficiency of office processes and productivity is determined purely by the deployment of technology - both information technology and communication technology. It's also more relevant to us because we operate on a global delivery model and people in different parts of the world have to follow the same systems, same communication methods, so that we all work of the same page. Further, when we do acquisitions - we've been doing some small ones - we don't compromise on our systems. Whoever comes in, they have to immediately follow our systems. To that extent, the CIO serves as the backbone, so that other things can be attached for growth.

 

Lakshmi Narayanan:

It is very important for a CIO and his team to understand the business. The CIO has to understand the business as much as, or even better than, the CEO. He needs to understand the model, its uniqueness, and key parameters. It's only then that the CIO can make a significant contribution. The CIO needs contribute to both, what we call 'the numerator' and 'the denominator'. The numerator is: how can technology help improve the top-line? The CIO needs to ask, how can new business opportunities or existing business ones be better served by using technology? The denominator is the cost part. How can the CIO use technology to reduce costs of operation. When both happen, you have a double benefit. And that's something that CIOs want to be able to quantify and present to the CEO. Second, CIOs need to constantly benchmark themselves against global standards. The global mindset is very important.

 

Lakshmi Narayanan:

He has to be strong in both, but must clearly be a technology person first with a very good understanding of business. If he's a strong businessperson, some headbutting is likely to happen with the business people. If you look at large corporations, over a period of time, CIOs have come from the business side and many CIOs have eventually gone into the business side. This emphasizes the point that technology and business are very important.

Lakshmi Narayanan:

Traditionally, the IT and HR departments have been viewed as cost centers, which exist merely to provide reports, manage data, ensure that the results are published on time, and so on. Clearly, the new school of thought is partnership. Here is a unique professional capability that is available and that can be leveraged effectively to influence both the 'numerator' and the 'denominator'. Once such an approach is taken, then the relationship is at a peer level between the CIO and other executives.

 

Lakshmi Narayanan:

It has changed over a period of time. It must - because individuals have to reinvent themselves every three or four years if they are to take on something new. During the initial days, it used to be very hands-on. We were more hierarchical, where top-down commands were given to build a team. The next stage was empowering the people. As you grow larger, it is not possible to run a hierarchical organization. You put down the broad parameters and values, and the next set of leaders will need to be hands on. And that trickles down. That's the second stage, what we call 'embedded leadership': essentially, look to create leaders across the organization who can take ownership for a part of the business and deliver results. Finally, once you have a good managerial team, you just have to inspire and excite them. Tell them about the opportunities and innovation in the industry. Leaders don't have to explain - they lead by example.

 

Lakshmi Narayanan:

One of the first things that come to mind is: strategic discipline in what we want to pursue. Given that we want to use technology to deliver business results to customers, our orientation and discipline have been in those areas. We've not expanded into areas that will take our focus away from the core strategy. In terms of operations, there are several differences (between our competitors and us). For example, we invest a lot more on the front-end of the organization (in people and capabilities) than in the backend office infrastructure and campuses. In terms of locations, while most local companies work out of Bangalore, we chose Chennai, so that we can dominate one city and get the best talent. The third difference is that we want to get the best talent. Here, growth is a key parameter. In order to attract the best talent, we had to provide better growth for people within Cognizant. To provide better growth opportunities, we have to grow faster and better than the rest of the industry. We decided that if we have to compromise on margins for higher growth, and getting better talent, then so be it. We will operate on a lower margin than the rest of the industry, but provide better growth opportunities. Fourth, while the industry said, 'We want to be the biggest' and 'We want to get to $10 billion', we said we are not about size. That's not what we are chasing. We will focus on customers and deliver a different experience to them, so that it is not only easy to do business with us, but also exciting for them to partner with Cognizant. If it is just about delivering against just SLAs, that's not good enough. There must be energy in a relationship.

 

Lakshmi Narayanan:

The mindset needs to be different. The mindset is: we have to bring the best talent, best capability, best method and technology - no matter where it comes from. It could be coming from people in India or people overseas - it just doesn't matter. The mindset is: get the best to work in order to provide a superior solution to the customer. As a result, people think beyond boundaries. The culture is one of customer-orientation.

Lakshmi Narayanan:

Both customer and employee satisfaction are measured. There are two ways of measuring customer satisfaction. We could do an internal dipstick to find out how we are doing in our relationship with our customer. But, the best way to get any measure is through external, independent, third-party market surveys. We've consistently engaged an external market research agency that goes out, administers questionnaires, talks to our customers, and gets both qualitative and quantitative feedback. More aptly, we have a strategy session with our board every year. Our board of directors wants to know if strategy needs tweaking for the next year or two years, given changes in market conditions. Every time we have this meeting, we call some of our key customers. They openly tell the board what they would like us to do or what they don't want changed. This goes into our strategy plan. They help us quite a lot in maintaining that strategic disciple. Similarly, with employees, an external agency carries out a survey. We've been doing this survey consistently for several years. It gives comfort to our 40,000 employees that they can be free to say whatever they want to say. It is used internally to determine employee satisfaction levels and best practices that need to be replicated.

 

Lakshmi Narayanan:

There were two or three key decisions that came out of the employee interaction. First and foremost is: no restrictions on any of the employees. We do not expect them to sign service agreements that will tie them to the company. We invest in their training, but do not expect them to commit to the company. The focus on the individual is very high. Reward and recognition is another area where we are constantly challenged. Every time we do an employee survey, the scores on all parameters are high, but rewards and recognition are always a few notches lower. This is an area where we work with employees. The third is strategy and leadership. We ask employees whether they like the leadership of this company, and whether they think the leaders can deliver results and take the company towards its strategic goal. If these scores start slipping, we try to provide opportunities for people in the lower rungs to move up rapidly.

 

Lakshmi Narayanan:

It has helped us, and it's something we are proud of. While other companies have the same level of attrition or retention, it is on the back of conditions and service agreements. But without all that, if we are able to maintain that high level, we are very happy about that.