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Playing the doubles game with a new CEO

December 15, 2017 08:59 IST

In cases such as Infosys, a new CEO will have to play the game with not only the chairman, but also with the COO and the board of directors, and perhaps retired founders, each being a different game with different set of capabilities and attitudes, say Kavil Ramachandran and Sougata Ray.

Illustration: Uttam Ghosh/Rediff.com

Infosys has opened a new chapter with the appointment of a new CEO.

Hopefully the veterans on the board and the founders have learned some lessons from the recent episode.

 

Most of the irritants that cumulatively grow to take monstrous proportions come up after the honeymoon.

As Infosys turns over a new leaf, while it is expected that Nandan Nilekani will facilitate the induction of the new CEO, some level of preparedness is required to relaunch the company to the path of global excellence while keeping local harmony.

Doubles game is not easy

The fundamental assumption in playing a doubles game of tennis is that the partners understand each other very well, both in terms of their technical competence and emotional setting.

In cases such as Infosys, a new CEO will have to play the game with not only the chairman, but also with the COO and the board of directors, and perhaps retired founders, each being a different game with different set of capabilities and attitudes.

Another challenge of playing the doubles is to ascertain if one player is constantly drifting from the pre-agreed formula.

This can happen with both the players overstepping their boundaries as they have understood them. Typically, the players have the “dilemma” of whether to bring up such instances for discussion.

In the absence of a structured review process, the “dilemma” will become “deviations” that finally lead to “differences” and “disputes”, and final showdown.

In both Tata and Infosys, the “outsider” CEOs had to leave after a lot of fireworks.

In both these organisations known for high-quality governance and reputation of board members, there was clear evidence of a lack of homework done dynamically.

More and more organisations seek further professionalisation and rely on “outside” talent for CXO positions. Therefore, it is useful to discuss some of the possible steps to avoid such costly mistakes.

Prepare ground rules

Organisational transition from one orbit into another is not easy, particularly if it has been comfortably positioned in one for a long time.

Such a journey would involve substantial changes in strategy, structure and people, thus calling for review of the existing organisation culture and decisions on revisiting business values and processes.

Hence, it is important to arrive at some ground rules of functioning between the pairs of doubles game players.

Managing the “no man’s land” -- clarity about handling ambiguity: When two players start playing an aggressive game with strategic stakes for their survival, it is normal to face situations where there exists lack of clarity about whose domain the ball falls in.

This is where the individual’s values and power orientation make a difference.

It is useful to have a game plan between the two players about handling balls that fall in the “no man’s land”.

Define degree of freedom: Increasingly, shareholding of several original promoters is declining, though they continue to be treated as “promoters”.

While discussion on the continued relevance of such a category is important, for the time being, the board and the chairman should upfront define the degree of freedom delegated to the CEO.

Responsibilities of the board is the utmost when a new doubles game begins with the arrival of a new CEO.

Integration with the existing team: Situations such as that in Infosys crop up when a new CEO comes up with ideas for sudden large-scale changes without adequately preparing the ground.

While the CEO should have “full freedom” for making changes in strategy, structure and key people, careful consideration is needed to make the change process in tune with the organisational values and norms.

The pace of change is also to be appropriately calibrated so that the changes happen as smoothly as possible.

Any insensitivity of the new CEO to the possible downside effects including disenchantment and revolts should be anticipated and contingencies planned by the board to avert any avoidable crisis.

Kavil Ramachandran is professor and executive director, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business, and Sougata Ray is professor, IIM Calcutta.

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Lessons for India Inc: How best to induct a new CEO

Kavil Ramachandran and Sougata Ray
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