SPARK OF THE CORPORATE
Vineet Nayar took charge as CEO of HCL Technologies in 2007.Prior to that he played different roles as trainee, president and finally vice chairman in the company and transformed the company into an exemplary firm of new generation; with his exceptional managerial skills and highly practical oriented and value driven leadership.
Under the leadership of Nayar HCL flourished as a company with consolidated revenue of $3.1bn, as on 31st Dececember 2010.The enthusiastic workforce number reached 72, 267, who are obsessed to create maximum value to the customers and an instinct of innovation; working around the world in 26 countries, providing an array of services in Software-led IT solutions, Remote infrastructure management, Engineering and R&D services and BPO for nearly1000 firms. HCL provides services globally along key industry verticals like Financial services,Manufacturing,Consumer services, Public Services and Healthcare.
After Vineet Nayar stepped in as CEO as successor of Shiv Nadar, the revenues of the company were tripled and the market cap of the company was doubled. He was able to move the workforce with his most famous philosophy “Employee First and Customer second”. This philosophy of his sounds strange, but it worked magic at HCL and the company created 34% percent revenues even at the time of turbulence. The return on stock for HCL is currently 34percent and in last three years it was 100percent. Today, HCL is fourth among top IT companies of India and it made its way to stand beside other global companies like Google, Cognizant, Apple and Lenovo as a company with a turnover of $2bn and a compound annual growth rate of 30percent. This was all possible because of the CEO who could have a telescopic vision of the company
"You need strong convictions as a CEO to keep your nerve; CEOs in the traditional sense are fast becoming irrelevant ..."
Graduating in electronic engineering and attaining a masters in management from XLRI, he began his career in 1985, as a senior management trainee at HCL. There he tackled with various sales and marketing issues in HCL finance, HCL investments and the HCL-HP venture. He had five successive promotions in first seven years of his career. In 1992, he stepped up in his career as general manager for Strategic Group Diversification.
Nayar as a Comnet Boy
In 1993 he became founder of Comnet a start-up company, where he pioneered and processed Remote Infrastructure Management services. HCL Comnet was amongst the first to perceive the potential of network management in the country. HCL Comnet currently monitors and manages over 25,000 devices for more than 76 clients. Today HCL is a global expert in the domain of network management and quality-promise to provide customized and cost-effective infrastructure .Comnet is the place where Nayar nurtured and practiced his policies and advocacies of his philosophy “Employee First Customer Second”. Finally after years of working on the philosophy he strongly formulated it and reaped the result of what he sowed.
In 2005, he became the president of HCL technologies and with in a very short period transformed the company, piled up its revenue, broadened its market base and crated a trust in the customers by signing up mega deals. This made him to sit in the office of CEO in 2007.From there on he got involved by heart and soul with the employees and pushed an envelope of trust within them. He implemented his philosophy and created innovative and value –driven culture .Later in 2010 he took up the responsibility of vice president. HCL is now a remarkable leader in the Global arena.
More about Nayar
Vineet Nayar was born in 1962.He did his schooling at Air Force Central School, Nagpur. Most of his schooling was in Uttarakhand, Kendriya Vidyalaya, Gol Market. He was in a mixed medium. His father passed away early and his mother and elder brother had to work hard to educate him. This later made him a leader with ground realities. He did his engineering at Gobind Ballabh Pant Engineering College, Pantnagar in 1983.He emerged as masters in management from XLRI, Jamshedpur in 1985;which is one of the best management colleges in Asia.
As a boy from small town in the beginning of his career at Delhi he felt that; in a city the competition was very high and intense. But, in a small town the competition is not that intense but the level of self confidence is high. A competitive guy bought up in the atmosphere of racing to win does not develop confidence, which is needed to succeed in life. He felt that a small town guy with 70% versus 90% (city guy) will be more of an assured person than a city guy.
When Nayar was working at Comnet he turned down the offer as CEO at HCL technologies, because he felt that in big firms innovation and restructuring will be at a very slow pace. Where as, in Comnet reengineering was done every two years. He wanted to do something more than a job. He was scared that in a big firm he would be more an administrator; managing more people and nothing more than that. He was afraid that he would not live up to the expectations of the job. And a year later he made up his mind to take up the challenge as CEO in 2007 and thought that it would to interesting to build upon this large opportunity. The employees of HCL were proud of its heritage and felt bad that the company had lost its sheen and was not getting its due for what it had achieved in 30 years in the IT space. There were several talented employees with a hunger to transform HCL and Nayar wanted to be a key person behind the transformation.
As a philanthropist he started a non-profit organization called SAMPARK in 2004; which provided education for the unprivileged children. This organization also offered scholarships for engineering graduates; thus encouraging young talented sparks of the nation. Recently Nayar divested a million shares stake in HCL, worth Rs 43 crore, in a bid to raise money for his charity SAMPARK, which works towards children's education in India. He thinks “we all owe to our country and world and that we should give back in some or the other way”. This all depicts his humanity as leader and his patriotism towards the country.
Leader of Vibrant Thoughts
Vineet Nayar is a leader with disruptive thinking. He always opened new channels of thought which took him to the new horizons of leadership. He is a frank and straight forward leader whose thoughts on different issues of management and leadership were totally different from the ones we heard earlier. He is the first leader, who could think in z-axis, and often made us think; oh this could also probably be the way to management and leadership. Just quoting management philosophies is one thing every leader can do, but he who implements is the real leader, seen in Mr. Nayar. Nayar’s outstanding radical ideas really inspire the corporate world. Here are a few revolutionary ideas which moved many leaders and intellects around the globe. Employees first Customer Second, 360 degree feedback, in a talk about ‘cloud’ he once said “cloud is bullshit” and explained the reasons for what he said, once he commented that “American graduates are unemployable” and cited reasons for his comment. This shows his outspoken and fearless nature and deep rooted knowledge base he has and his amazing perception of management trends and techniques of Y-generation.
Employee First Customer Second
"The role of the CEO is to enable people to excel, help them discover their own wisdom, engage themselves entirely in their work, and accept responsibility for making change”.
CEO, Vineet Nayar, won the ‘Leader in the Digital Age Award’ (LIDA) at the CeBIT 2011show in Hannover, Germany. The LIDA award honors, outstanding Enterprise 2.0 leaders.
Vineet Nayar becomes the FIRST global leader to be presented with this award by CeBIT, the world's largest trade fair showcasing ICT
The award recognizes Nayar for his “revolutionary corporate philosophy of Employee First Customer Second”
Nayar recently took centre stage globally through the release of his book ‘Employees First, Customers Second - turning conventional management wisdom upside down’ which has been ranked No. 7 on Amazon UK’s listing of ‘Best Business Books of 2010’ and also been rated amongst the ‘Best Business Books of 2010’ by the Library Journal of America. This Harvard Business Press bestseller has been welcomed with rave reviews across the globe by business leaders and scholars alike.
HCL takes pride in its philosophy of “Employee First” which empowers 72,267(employees) transformers to create a real value for the customers.
Vineet Nayar is an acknowledged management visionary and a radical thinker who architected the company’s “Employee First, Customer Second (EFCS)” strategy, which transformed HCL’s business, starting in 2005. This managerial approach was created to drive an inverted organizational structure, create transparency and accountability within the organization and to encourage a value-driven culture.
HCL’s Employees First, Customers Second (EFCS) philosophy is centered on the belief that organizational focus and structures should be inverted to focus on the ‘value zone’- the place where frontline employees interact with customers and create real value for them.
Under Vineet Nayar’s leadership and fuelled by the EFCS philosophy HCL Technologies had embarked on a transformation journey in 2005 during which the company’s revenues increased by over 3.6 times, net income rose by 91 per cent, and Market Cap doubled..
Digital age is powered by human knowledge and HCL’s Employees First, Customers Second philosophy is a testament of this basic truth. Nayar feels that organizations need to put humans back into business by unleashing their potential and passion towards value creation and innovation.
Nayar with his employees
Nayar believed, a company culture that fosters and strives to develop and train employees as well as clarifying the overall vision of the organization has helped HCL rise like a phoenix above all odds in the last few years to become one of the top runners in the IT industry in India and the world. It was not so long before when the employee motivation and enthusiasm was at the bottom rungs, but through careful analysis and a change in the management style, Vineet Nayar, the CEO of HCL Technologies Ltd., has been able to turn around the graphs from negative to a solid positive for his company and has made Employee First, Customer Second (EFCS) not only a catch phrase but a model to follow.
360 Degrees Feedback
This 360 degrees feedback is an appraisal tool innovated by Nayar, the main aim behind this was erasing boundaries between hierarchy and feel open to share the ideas,querries and so on .
360-degree appraisal technique was implemented by Nayar as an employee development tool, but not the way it is typically used. He created a 360-degree process where anybody can give feedback to anybody, including the CEO, Mr.Nayar. The company posted the results internally so that all employees can see them. Good or bad, workforce learned from the results. It’s open, it’s transparent, and the impact was positive. Nayar found that this practice was motivating people to change their behavior. They tried to give their best. Nayar made it clear that the 360-degree feedback sends a very powerful signal to employees that it is not just their manager’s opinions that are valued; the opinions of employees are also valued. At the same time, he made it clear that this model of openness; 360-degree was used for developmental purposes only – the results were not tied to compensation. Nayar really believed that the future of management is people working in a highly collaborative way, similar to how you see people interacting on the web today. In that context, how you are perceived by your peers is vital. In HCL’s 360-degree assessments, the company felt that simply putting up the results on their intranet would itself encourage individuals to make the necessary behavioral changes, as people generally want to be esteemed by their peers. Often there was no need for the organization to take any action as such, as the act of exposure itself would often produce the desired results.
These 360 degrees first started as a blog called “You and I,” in which Nayar encouraged his employees to ask him questions in the open. The only rule he made was that when the employee ask the question, it must have his name attached. All 70,000 employees should see their questions and the CEO’s answers. At first, Nayar was depressed by the result, because he mostly received negative questions that made HCL look bad. People said things like, “Vineet, I don’t accept what you’re saying.” Or, “You lack vision; you haven’t articulated what the company’s size and scale will be in 2010.” So he held an open house with a group of employees “that he was feeling pretty bad” and nobody was saying what was positive about HCL. Nayar thought that he has unlocked a genie that was spreading demotivation in the employees.
Everyone who gave you feedback in a 70,000-plus employee company can see your review, you get some feedback that bruise the ego, and some that may even be unfair. But on balance, the benefits gained from this kind of transparency in terms of increased employee loyalty and commitment to the company, and in constructive professional development for the manager, far outweigh, than any negatives.
Cloud is Bullshit
Cloud computing technology is the top ten latest technologies which would have rapid growth in the coming years. But, why did Vineet Nayar say “Cloud is bullshit”.Let us see the reasons for this controversial statement in Boston.
Vineet, Can you elaborate on your statement this morning that “Cloud is Bullshit?” Vineet Nayar: My view on Cloud is that I always look for disruptive technologies that redefine the way the business gets run. If there is a disruptive technology out there that redefines business I am for it. If there is no underlying technology there, and it is just repackaging of a commercial solution, then I do not call it a business trend. I call it hype.
So, whatever we have seen on the Cloud – whether it is virtualization, if it’s available to… now before I go there, and the reason I believe what I’m saying is right, is because you have now a new vocabulary which has come in Cloud, which is called Private Cloud. So now it is very difficult, so what everybody is saying is “yes, it is private Cloud and public Cloud” So, in my vocabulary Private Cloud is typically data center and when I say Cloud it is about Public Cloud. So let’s be very clear about it.
All the technologies that have come in so far—whether it is VMware on virtualization, which is the driving force in cloud, or Azure or Spring—are available for the enterprise customers to implement in their data center and to create a robust infrastructure which is a shared platform for their applications to deliver to their consumer. So the question I ask is: “Why should they step out from their data center and go into somebody else’s data center which is shared?” Why would they do that?
They would do it because they believe that with shared infrastructure, assumption one, they will get a better return on investment. Now, that did not happen with grid computing with IBM and IBM on Demand has been a very big campaign.
Is there something I see out there that tells me it will happen now? Yes, it is happening where your usage requirement is time bound—that means you need it for three months for SAP testing, you need it for one month a year for tax consolidation. But, am I going to put my IP on the Cloud, am I going to put my financial accounts on the Cloud, and I going to put my HR applications on the cloud? I have not seen any technical reasons for that to happen.
Then the second reason you can do that is there is commercial benefit that somebody is offering you, which is flexibility of you being able to use the infrastructure at a higher or lower on a significant level—that means you can go up 50% or down 50%. When you look at the pricing available for those kinds of flexibilities, they are commercially unattractive. Which leads me to believe that whoever is selling services of variable infrastructure as Cloud is selling them as leasing connections, rather than selling them as true variable connections? I don’t have a problem with that because there is no underlying technology which makes sharing more productive rather than not sharing. So if there’s no underlying technology, obviously it has to be leasing connections.
And then we go to applications like leasing of Azure, which creates a bus so you have to create more efficient applications rather than inefficient applications. I believe Azure will be a standard tool for creating applications inside the organization so that people, whenever they use those features and services, will use them inside the organization. So, do I need to I need to go out on the Cloud to use azure or spring? The answer is no. the only reason I would go out on the Cloud is for shared services—for applications which are not available for me to buy. Salesforce.com now you can buy as an enterprise license. So the purity of the Cloud is also going away. And you will see a lot of Salesforce.com being inside the enterprise because they will reuse their existing infrastructure.
Now, public citizen services are an area which would lend itself to application sharing. And the same is true with communities coming together—export communities, auto component manufacturing communities—whose owners on a standalone basis are not big enough to buy an ERP system but can come together and buy a shared ERP system.
Now, you can force me to call it Cloud. Or you can force me to say that they will an entrepreneur out there who will see an opportunity to construct a data center, construct and ERP, charge everybody a fee and say that my business is to serve you—and you create a shared services platform.
So my view is that I have not seen anything from a technology point of view which is not available for the enterprise for usage for me to get very excited and saying, “Hey all of this is going to move to the Cloud.” And that’s the reason I’m not as bullish about the Cloud as somebody else is.
American Graduates are Unemployable
Let us see why Vineet Nayar made this tough to hear statement about American graduates, who themselves feel very superior compared to graduates of other countries. You made a comment in New York that 50% American tech graduates are unemployable - is this applicable to Indians too?
In June 2009, Vineet Nayar created quite uproar by commenting that American tech graduates are unemployable. He made this comment while talking to some technology enthusiast and officials in New York City. When an official wanted to know why HCL, a $5 billion company with more than 3,000 people across 21 offices in 15 states, was not hiring more people in his state. Vineet Nayar’s short answer was: because most of the American college graduates are “Unemployable”. According to Daily Tech, Nayar called American technology graduates as inferior to graduates from countries like India and China, because they are not as disciplined as their counterparts in these countries. Americans are most interested in developing “the next big thing” and getting rich than in focusing on “boring” (but important) technology and business methodologies like ITIL, Six Sigma, Nayar reportedly said.
I said it in America and therefore it was taken in an American context. Today’s youth are unemployable. The IT industry trains its new recruits for six months. I am sure manufacturing and retail industry also does the same. If they are really employable, then what is the point of such an extensive training? I feel the gap is at out primary education level. For instance, the IIT test has nothing to do with the CBSE syllabus. The IITs are telling you that whatever you have studied in school is not relevant. At the industry level - we hire and train them and make them realize whatever you studied in college is not relevant.
Nayar’s advice for Young People
What’s your career advice for young people?
When you come out of college, you’re raw. You have energy. You want to experiment. You want to learn. You have hopes. You have aspirations. You want to be Oprah Winfrey. You want to be Steve Jobs. You want to be Bill Gates. You want to be all that. Slowly, over time, you lose it. And by looking in the mirror every day as you get older, you fool yourself that you’re O.K. There has to be another way of looking in the mirror and revisiting what you really want to do.
So I would say, maybe at the end of college, write it down honestly, in 100 words or whatever it is, and put it in a box. I call it the magic box. Revisit it once a year or once every two years and say, how honest are you to that? Don’t let anybody run your life. That, in my mind, is very, very important. You should be in control of your life.
Work-life balance to integration
Enduring success in today’s dynamic world. One has to be quick, flexible and guardedly spontaneous. Hanging on to processes, just because they were a best practice in a yesteryear, isn’t likely to bolster a company’s performance.
For today’s generation, the challenge is not about ‘balancing’ work-life, but about ‘integrating’ the two. Work is increasingly seeping into personal life and vice-versa. And to make the combination tick, employers need to ensure employees are able to achieve their life’s goals through their work.
Youth can be depended on to be responsible, to have a vision, to have the discipline to see it through. The sooner more businesses realize this, the sooner we will be able to capitalize on the energy, ideas and value that this generation brings to the table. I can’t see why anyone would fail to recognize this win-win situation. Can you?
Nayar’s Life Lessons
Lessons from global meltdown
Courage to walk away: The very first learning that emerged from what is now being termed as a financial Armageddon was the need for courage: The courage to carve your own path and walk away from the herd. We in India were born with this lesson as we gained independence with ‘non-violence’ in an era of World Wars. In the US financial world, we saw Warren Buffet display the courage to walk away. Back in 2002, when companies began toying with exotic derivative instruments, Warren Buffet termed derivatives as ‘financial weapons of mass destruction.’ Few listened to him then but today he stands out as the voice of sanity.
Save it for a rainy day: The second lesson is the forgotten power of savings. The ‘savings mentality’ has always been a hallmark of the Asian culture. India, for one, has always had a high rate of savings – a phenomenon that is getting eroded with a new culture of consumerism sweeping across our cities today. Interestingly, America, which is home to 5% of the world’s population, accounted for 30% of global production and 37% of global consumption during boom times! On an individual level in the recent crisis, the ninja loans reflect this mentality, but collectively it made the entire country vulnerable to risk. And there were those who saw the warning signals.
Caution, compliance and governance: The role of the American regulatory bodies can be debated till kingdom come. If investors such as George Soros and Warren Buffet and economists such as Paul Volcker saw it coming, why couldn’t the American financial agencies? The fact is that caution, compliance and governance are self checks that business needs to bring back. What was so extraordinarily complex about the bubble that a few investors could see and regulators could not? But the danger here is to get over-dependent on regulatory direction and therefore over-regulation. Lesson here: We have no choice but to think on our feet, keep our radar scanning the environment constantly, and not follow the herd blindly despite what the regulators have allowed.
Look ahead – A lot has been written about the fall and a lot is yet to be written. However, it is time we stop reading and start looking ahead. The world will emerge from this crisis the same way it has from many such crisis before¬¬ – stronger. We need to look ahead as organizations and convert this crisis as an opportunity to transform the today for a better future. The people who look ahead will come out of this as winners, and I do hope more and more people start doing just that.
In 2005, when the times were good, economists Paul Volcker and Clyde Prestowitz pointed out that America was vulnerable due to all the leveraging, and predicted that a financial crisis could soon hit its shores. This has come true and – be it at a macro level or a micro level – it highlights a forgotten lesson on the power of savings and that that we should leverage only to the extent we can afford to service our debt. Its time for a “back to basics” approach, old fashioned as it may seen. Save and plough back in good times, and not fritter liquid assets away.
Lessons from World cup Cricket
These are just some of the thoughts that crossed Nayar’s mind as he watched the excitement on the cricket field last month. He would love to know what your reaction has been to this exhilarating sporting action. Do you think it could have lessons for our youth?
Think global: The world is your stage today. Think of yourself as world leaders in your field just like Team Dhoni. Young leaders are looking far beyond being the best in their team, organization or nation today. There has been no better opportunity to develop a global leadership perspective.
Ignore the naysayer’s: Self-belief, backed by determination and a disciplined effort, is the mantra to success today. So ignore anybody who tells you otherwise and persevere with confidence in your ability. The Indian team had more than its fair share of doubters, who believed they would not make it beyond the second round. But they shut their mind to such negative analysts and kept up their chase with conviction.
Articulate clear goals: I learned a valuable piece of advice early in life. It is not important where you are coming from; what is important is where you are going. Leaders of tomorrow have a clear vision about what they want to achieve. Team Dhoni had their eyes set on the World Cup victory even as they focused on winning each match. So while you chase your daily task lists, make sure they all add up to your larger goals.
Bank on experience: All through the tournament, team India leaned on the experience too. The little master Sachin Tendulkar, their bowling spearheads Zaheer Khan and the explosive Virender Sehwag. Their value was not measured by just match performances. It stayed a constant and helped the team build on its strengths. It is essential for Gen Y to build bridges and learn from the experience of more experienced colleagues. For some problems are best solved with experience.
Build the right support system: The necessary support systems were created and banked on by Team India. Beyond the expertise of coach Gary Kirsten, they took the necessary learning from bowling coach Eric Simmons, mental conditioning coach Paddy Upton, even motivational speaker and extreme adventurer Mike Horn on how to deal with adversity and stress.
Renew yourself, constantly: Given the dynamic world that we live in, there is no one set of parameters for becoming a leader. Every day is a new day and you will need new skills and knowledge to deal with every new circumstance. So there is need to constantly upgrade and update one-self to stay ahead. Team India too found itself lagging behind in fielding skills in the early stages of the World Cup. They made a monumental effort during the tournament to upgrade their skills to turn this around and reaped the advantage.
Hold onto to your belief through adversity: As in life, there will always be ups and downs in any career path. But if you hold on to your belief through adversity, you will draw upon your reserves of strength to pick yourself up in a low patch. There were several cricket experts who wrote off India’s prospects following the South Africa defeat. However, much to their surprise Dhoni and his men held on to their conviction and came through flying.
Have a larger purpose: As I wrote in a previous post, profit and purpose are not necessarily contradictory. A larger cause drives you on when fatigue threatens to pull you down, inspires you when you are losing hope. As a case in point, Team India dedicated their victory to the victims of 26/11. Even within their team, they drew inspiration from securing a World Cup for Sachin, a legend who has broken endless records but had so far been denied a World Cup victory for the past 21 years.
Stay calm in swirling waters: This is perhaps the most important lesson that we can draw from the World Cup. When the opposing team and millions of supporters are reacting passionately to every single shot, the difference between winning or losing could be a calm unruffled head which can think clearly and make the right decisions on the go.
Play as a team: In the world of Gen Y, I see more and more leaders who do not lead from the front. They walk with their team, building and drawing on the strengths of every individual. They come together as one unit, so that on a given day if one part fails to perform, another takes the lead to provide support.
There is no doubt that the environment ahead will present many a challenge to our youth leaders. Staying unperturbed and alert could well be the final key to success.