Mr. N.R. Narayana Murthy, Chairman Emeritus, Infosys, recipient of Rotary Club of Bombay’s Ramkrishna Bajaj Award for Good Governance, in conversation with ARRFC & PDG Sandip Agarwalla
It’s a great afternoon. What a wonderful turnout for the legendary Mr. N.R. Narayana Murthy. I don’t know how many of you recall that Mr. Murthy has been to our Club before. And when I say before, I mean long back, around 2000, when I was the programme committee chairman for PP Adi Dastur. I had made a cold call to his Bangalore office, his secretary came on the line. I introduced myself and said I was the programme committee chairman of the Rotary Club of Bombay. He said, “Will you send me an e-mail if you want to invite him?” And I did.
He called me back the next day and said Mr. Murthy was agreeable to come, but it would have to be on a date of his choice. I said, “Whatever date he chooses.” And then the rest is history. It was one of his first lectures on corporate governance and I remember we had an overflowing house that day too. We are very grateful that you are here with us once again today.
Also in that meeting was our member Gajendra Patni, of Patni Computer Systems, whom you worked with initially before branching out on your own. I remember he was sitting in the first row, and you acknowledged his presence very graciously. He was thrilled to be recognised by you.
So, I would like to start our conversation today with your early years, as was mentioned by PP Vineet Bhatnagar in his introduction. You’ve often mentioned borrowing ₹10,000 from your wife to start Infosys. What does that moment mean to you today?
Well, there are many people and many things I owe gratitude to. One such person is Mr. Deepak Parekh. Like Eklavya observed Dronacharya from a distance, I observed that the first and most important ingredient for the success of a corporation is to benchmark yourself against the best global corporations. That’s what Deepak taught me, from a distance.
When we went to seek a loan of ₹1,00,000 — my wife and I — they were so hospitable, so kind, so nice. I said, “Somehow this appears like a Maya Jala, it’s not real.” Then my wife said, “No, wait till we get to the lawyer.” We went to the lawyer — he was also very kind, very helpful.
So, what Deepak taught me was the most important thing I learned: if you want to succeed, have the best customer focus in the world and keep improving it.
Similarly, my wife has been an extraordinary supporter. I don’t know of anybody achieving anything worthwhile in life without the unstinted support and commitment of their life partner.
It’s not just the ₹10,000 that mattered — that happened in a particular context. Two of my younger colleagues did not even have the small equity they were supposed to contribute, and I was very uncomfortable with them taking a loan from the other five people. I said, “Let me ask my wife if she can loan it to all seven of us, and then we will repay her at the earliest.” And we did.
So yes, the initial sum was given by my wife. But there were umpteen occasions when I received help, support, confidence, and encouragement from her. I won’t get into those because they are too numerous and would take too much time. I will always remain very grateful to her because, without her support, encouragement, and generosity, I don’t think I would have achieved even a fraction of what I have.
That’s wonderful. We all know, even today, how gracious and compassionate she is. And I think it started very early on when she had blind faith in you and supported you. But looking back, Murthy saab, what do you think was the most defining turning point in your Infosys journey?
There were several, but I would like to pick one.
In 1995, a Fortune 10 corporation that was working with four Indian companies came to India to renegotiate terms. They wanted us to reduce our rates. They had sequestered us in different rooms at Taj Residency in Bangalore. I had a discussion with all my younger colleagues, and they were all very insistent that we should simply accept the new terms because our competitors — TCS, Wipro, and others — were all signing on the dotted line.
But I told them I didn’t agree. If we wanted to invest more in our employees, provide better compensation, better training, and create good physical and technological infrastructure — all of that is funded by one entity, and that is the customer. Therefore, it is our responsibility to respectfully and humbly convince them.
As the negotiation progressed, it seemed they were moving from room to room, and others were signing. At around 4:30 pm, they were to come to our room. All my colleagues voted to go along with the reduction, and I understood their concerns. They were bright and grounded in reality. We had gone public in 1993 — this was May 1995 — and the company in question made up 25% of our revenues.
They said, “We can’t imagine anyone giving up 25% of revenue so soon after listing.” I realised there was no point arguing. So, I stepped out to the reception area and made a call to my wife. I told her, “So far, you have looked after our children very well, and I’m grateful. But now, I need to make a decision that will require me to be away from home for about 300 days a year for the next three to four years.”
She said, “Don’t worry, I am 100% with you.” So, I went back, and when the representatives came, I respectfully explained why they should not insist on reducing the rates. They were not in the mood to listen because the other companies had agreed. Then, I told them, “I fully understand and respect your position, and we will transition all the work to whomever you choose, within the timeline you want, in a harmonious way.” And we did that.
I came back home, and from that day until May 1998 — five years — I went around the world. In those days, we hardly had money. We’d sometimes have dinner at McDonald’s, stay in motels near the airport — those were the only places we could afford.
Fortunately, in that journey, my two colleagues, Nandan and Phaneesh, even though they initially disagreed with me, gave their full support. The three of us together — I’m glad to say — not only made up for the loss of that 25% revenue, but actually accelerated faster than our competitors.
So, in some sense, it was a turning point because it brought to the minds of my younger colleagues that a plausible impossibility is better than a convincing possibility. And what is needed is confidence, hard work, high aspirations, and determination. I think that was a time when these words meant actual reality, and I’m very happy that, in some sense, that was the turning point.
So, clearly, lessons to be learned by stepping out of your comfort zone, as you said, and you drove home that point very, very well. Now, you’ve talked a lot about leadership and values, which were shown by you at that critical stage. What are your non-negotiable values as a leader even today?
My daughter, when she was small — she’s almost 44 or something now —asked me, “Who is your God?” I told her, fairness is my God. Fairness is the most important attribute of a cultured and civilised person. Fairness is following the golden rule: do unto others what you want them to do unto you in a given context.
The beauty of fairness, I have found, is that even the person who loses that transaction will leave that meeting with a sense that, “I know the other person tried his best to do something good for me. However, the data was not in my favour.” And he or she would say, “Next time, I will bring better data to the table.”
So for me, fairness is the most important value. The moment I say fairness, it brings into play honesty, transparency, and accountability. As you people know, these are the three pillars of good corporate governance.
I would say that for me, a good professional is one who has two attributes, of which one is competence. Competence is very important because you can’t do anything worthwhile for the corporation without it. But competence alone is not sufficient. Every professional must have values. That is why in the byline of Infosys, at least as long as I was the Executive Chairman, it said: Powered by intellect, driven by values.
Therefore, I would say that values are extremely important. What is a value system? I think that’s something very important to recapitulate. All of us know it, but it’s better to remember: a value system is a protocol for behaviour amongst the various members of a community that enhances the trust, hope, and confidence of every member of the community in every other member.
So, I think the non-negotiable is fairness, which translates into honesty, transparency, and accountability.
Wonderful. How beautifully this belief in fairness resonates with Rotary’s own four-way test — the first dictum, which says, “Is it fair to all concerned?” That’s a 100-year-old dictum which we live by.
Now, moving on to technology and innovation, which the world is rapidly seeing evolve today — what excites you most about today’s technology landscape? Artificial intelligence, space tech, or something else?
Well, these are the days of artificial intelligence. Everybody talks about it. Everybody writes about it. AI actually has two aspects. One is what is called supervised learning or trained learning — which is what machine learning is all about. It’s basically about running, in mathematical terms, multiple regression with a large number of variables, which is very difficult for human beings to do. But this is predictable.
But the more enticing, the more difficult, the more valuable part of AI is what is called unsupervised learning or self-learning. That’s how a child learns. This is where all of us have to exercise caution in using AI. This is where ethics become very important. Unless we install suitable guardrails, we may be putting the members of society in a very difficult situation.
So the challenge we have is: how do we leverage the power of unsupervised learning — which is the more important one compared to supervised learning?
Like, for example, all of you know that nuclear fusion is much more important than nuclear fission. Fusion is how the sun produces energy. Fission is what Fermi and others, including Einstein, were successful in producing in the 1940s. But fusion is much cheaper — though more difficult. Some experiments have taken place recently.
Second, I would say we need to look at genomics. Thanks to the use of computers in the medical area—in genomic sequencing and gene editing—there was an experiment in the University of Pennsylvania, I believe, where a child had been told he would not live more than 15 days. A doctor — of Indian origin — performed gene editing, and the child is healthy today. So I do believe there is a great opportunity for us to produce solutions and cures for a lot of health problems.
The third area that excites me is what is called IoT—that is, the Internet of Things. It’s the ability to control machines to perform tasks in the way that you want, using computer technology, transducers, A-to-D converters, and D-to-A converters. Already you are seeing so much of it—refrigerators, autonomous cars, etc.
I would say that if we can focus on AI, genomics, and IoT, these are the three major areas for our nation. I believe we’ll be able to progress a lot. Because at the end of the day, technology is about reducing cost. It is about enhancing productivity. It is about bringing better entertainment, better healthcare, better quality of life, and so on.
This is easy to achieve if we remain the masters of technology rather than its servants. And this is where unsupervised learning in AI has tremendous opportunity for us — to benefit from all these technologies, as long as we use them in what we term an assistive manner. If you use them as assistive technologies for your betterment, you will be the winner.
How do you see India contributing to the next big wave in global tech innovation?
India, by and large, has been a reasonably good user of technology. I don’t think we have invented anything innovative or worthwhile — except in the area of the Indian software industry.
That is where, much against the wisdom of the West, Infosys and other companies articulated the global delivery model. Infosys proved that it is possible to produce high-quality, high-productivity software on a remote basis in scalable, talent-rich, technology-enabled development centres in cost-competitive countries like India. IBM has used it. Accenture has used it. Everybody in the world has used it.
As late as 1974, in a conference in Bethlehem, Israel, software engineering experts said it was not possible to develop software remotely. But I am happy that, in some way, India has contributed. Other than that—and this is something Western companies have since adopted and used—I don’t know if there is any other innovation that India has brought to the table that the world has adopted. I may be wrong, but that is my view.
So, you have been interested in startup investments and the entrepreneurial ecosystem. What is your advice to young founders who chase funding before finding purpose?
Well, they are young. They’re full of energy. They have bigger dreams than I had during my time. So I don’t know if I want to chastise them.
However, my belief is that they must articulate the power of their idea in a simple sentence. Not a complex sentence. Not a compound sentence. No “nevertheless,” no “ifs,” no “buts.”
For example, they must say:
“My idea reduces cost better than any other existing idea.”
“My idea improves productivity better than any other existing idea.”
“My idea enhances revenue for the corporation better than any other.”
That is the first thing. I find that most entrepreneurs I talk to are not in a position to express the power of their idea in a simple sentence. If they did that—if they convinced the venture capitalists—I have a feeling they would be much more successful in leveraging the funding they get.
But you know, everybody lives and learns. We have all lived and learned. So that’s what I would say.
You’ve seen quite a few. Is there a new-age Indian startup or entrepreneur you admire today?
For the last five years, I have moved away from business. When I turned 75, I said I’m not going to be involved in any business. I don’t go to Catamaran. I have no role there. Infosys—I left in 2014. Therefore, I don’t know if I am very much in touch with leading-edge ideas.
However, I do know one person who is working on a very complex idea in work taxonomy. It’s a very complex idea, and if he succeeds, I think that idea will add tremendous value. But because it is such a tough idea, as always, there are “ifs” and “buts.”
But, you know, as I think it was George Bernard Shaw who said—and his words were later quoted by Robert Kennedy—“Most people see things as they are and wonder why. I dream of things that never were and say, why not?”
This is that kind of idea. And I hope he succeeds. My best wishes, and I hope he does.
Looking to India’s future, what changes would you like to see in India’s education system to help nurture innovation and leadership?
Well, I have spoken about this for the last 35 years. We have to move from rote learning to a problem-solving orientation. To do that, there are two steps.
First, we have to teach children the science behind what the world around us is. What is the meaning of saying the sun rises in the east? Why is it that, in the morning when the sun rises, it’s all orange? Similarly, when the sun sets, it’s all orange. Why does the decibel level of sound reduce as a car moves away from us? I can go on giving examples.
In teaching the children, if we use various scientific theories behind all these phenomena, so that children start appreciating the world around them through science, then they will start asking questions.
For example, even when Einstein started thinking about the special theory of relativity, he observed that the perihelion of Mercury was not fitting into Newton’s laws of motion. He asked, “Why?” Before Einstein, Newton’s laws and Maxwell’s equations were the two greatest things, right? There must be some reason. That’s when he started thinking in terms of the special theory, and then he graduated to the general theory.
So the point I’m making is that we have to teach our children the science behind nature.
The second step is to ask questions like, “What is it that I can do to overcome the obstacle that I see?” For example, when the telegraph was invented and later the phone was invented, it was because Alexander Graham Bell asked, “Why can’t I speak to somebody who is half a mile away from me?” There must be a mechanism to do that, and that’s how telephones came.
Then somebody else said, “Why can’t I see somebody who is five miles away from me?” and television came. So, in other words, if we help our children ask questions and see if there is a path in science towards overcoming obstacles, then I believe our children — they are second to none — will also be in a position to bring in inventions and innovations.
But if we stick to the current method of rote learning, it’s going to take a lot of time.
What role do you see for women in shaping India’s next big success story?
My own view is that women have already played the most important role in advancing the world in general, and India in particular, by bringing up children — of course, along with their life partners — in the right way. They’ve already done a great job.
But in keeping up with the times, we need to leverage this extraordinary capability not just at home, but outside too.
To do that, we need to change our work culture so that women can fulfil both home duties of bringing up extraordinary children and succeed in the office.
For example, when they give birth to a child, they must be given sufficient time to ensure they are with their children. Second, there must be flexible hours. Third, there should be crèches in the offices. Fourth, it should be possible for them to do whatever little work they can do — work from home, etc.
Experts need to sit down and ask: What are the obstacles to women adding even more value? And then provide solutions to those. It will happen.
If you could give one life tip to a 20-year-old today, what would it be?
This question applies to every 20-year-old, not just entrepreneurs. I would say that every 20-year-old — or even younger — should seek respect from society.
In the context of a corporation, for example, the first vision statement of Infosys was: We want to be India’s most respected company. Some of the younger people asked, “How will respect help us?” I said: If you are respected by the customer, it means you have delivered whatever you promised — on time, within budget, and with quality, like we received from HDFC.
If you want respect from employees, you must create an exciting work environment. You must be fair to them. You must ensure the fruits of your corporation are shared properly with them. You must protect their dignity, etc.
You must make sure that the tired mind that leaves the office every evening comes back enthusiastic and energetic to add even more value to the customer the next morning.
If you do that, your employees will respect you. These employees will become brand ambassadors and bring in other good employees for your corporation.
If you follow the finest principles of corporate governance, your investors will become long-term investors and recommend you to other investors. Your existing customers will recommend you to prospects.
If you obtain respect from politicians and bureaucrats, they will create rules and laws that help you succeed even more.
Most importantly, you should seek respect from society — because society contributes employees, customers, investors, vendor partners, politicians and bureaucrats. Therefore, the most important entity you should seek respect from is society.
So that’s what I would tell every youngster.
Now, coming to entrepreneurs, there are two important principles to follow. One, which I mentioned earlier while talking about Deepak and HDFC, is: you must have global benchmarks in everything you do — particularly in customer focus. And ensure you have access to the market for your idea. That is the most important thing. Without easier access to the market, you will not succeed as an entrepreneur.
The second principle is: hire people who are smarter than you in some way. I think that is what H.T. Parekh did at HDFC — and in some sense, that is the secret of that great man.
So, to all those who want to be entrepreneurs — have the self-confidence to hire people who are smarter than you. There is nothing as important as the power of human mind.
RAPID FIRE
One book that changed your life?
Actually, there are three books.
- The Protestant Ethic and the Spirit of Capitalism by Max Weber.
- My Experiments with Truth by Mahatma Gandhi.
- Peau noire, masques blancs (Black Skin, White Masks) by Frantz Fanon.
Your childhood role model?
- My father — a strict disciplinarian.
- My mother — a very kind and generous person.
- My high school teachers — they taught me so much.
- Even later, my other teachers. In fact, most recently, I instituted a scholarship in the name of my first boss at IIM Ahmedabad, Professor J.G. Krishnaiah, when he turned 90.
So, I would say that I have learnt a lot from so many people.
Tea or coffee?
Coffee. That’s very clear. That was an easy one.
Your proudest personal moment outside of work?
Outside of work, when my son got his PhD from Harvard. And when my daughter delivered the commencement address, my daughter and my son-in-law. It was the first time in the history of the US that a husband and wife gave a joint commencement address at a major university. They did it at Stanford.
Bangalore then versus Bengaluru now?
Bangalore then, was a retired man’s paradise. Bengaluru now, is a concrete jungle.
Morning person or night owl?
By and large, I used to be a night owl, but nowadays I’m a morning person. But for me, when there is a task at hand, it doesn’t matter—morning, night, etc.
One hobby you wish you had more time for?
I would say improving my piano skills. I am a great fan of Western classical music. Even now I practise, but I’m not good enough to hold a public concert.
Well, thank you so much, Mr. Murthy. That was so invigorating and refreshing.
ROTARIAN ASK
- I was wondering—in that example from 1995, when you said that you didn’t take that job, the 25%—couldn’t you have done both? Taken the 25% and gone out and got more business?
No. Again, it is the fairness worm in me that prevented me from doing it. If I were to reduce the price for that extraordinary company — I have tremendous respect for them even today—when I was negotiating with somebody else and trying to get more and more business, I would have to accept a compromise.
I’ll tell you—I’m very proud that as long as I was the CEO, we had a 30% premium to any other software company. Because I have never believed in doing business cheap.
What is very important is to provide the best quality possible and charge appropriately. I have always believed in the concept of value leverage. Value leverage is value divided by price.
I always believed that if the two of us are competing: if I am giving my product at ₹100 and I am able to show the customer that they will derive ₹200 worth of value from me, the value leverage I am giving is 200/100, which is equal to 2.
On the other hand, if you go to the same customer and say, “Look, I am giving you a product that is very similar, but I’m going to charge you ₹120. I am going to demonstrate to you mathematically that my product will give you ₹300 worth of value,” your value leverage is 2.5. And I can assure you—they will all buy your product, not mine.
So therefore, I never looked at only the top line. I always looked at the top line and the bottom line.
- So, I would like to be enlightened on the role of the independent board of directors in India—how it should be improved to make it contributory and vibrant. Thank you, sir.
Well, I think that’s a very important question. That’s a question for which there could be an hour-long lecture. But the role of an independent director is to ensure that there is good governance in a company.
What are the aspects of good governance? That there is fairness, transparency, and accountability of the agents—or the senior management—to the shareholders, which is exercised through the directors in general, and independent directors in particular. They are the more critical instrument of that.
Now, to do that, the independent directors must ensure that the management has an appropriate strategy in the given context. As the context changes, obviously, they may have to change even that strategy.
Second, they have to ensure that there are systems—there are policies, systems, and processes—that will ensure that this strategy works appropriately.
Third, there are systems to ensure that there are proper controls, and checks and balances, so that nobody will defraud the company, and that all related-party transactions are according to the law and properly disclosed.
Fourth, that these independent directors have the capability, the competence, and the value system to choose the appropriate CEO.
Then—well, I can go on and on—but they must also make sure that the management does not create any undue advantage to itself at the cost of the shareholders at large. I would say that, if we can have someone deal—there are a few more points, but as I said, this is a big topic. There is a way to do it, which I have followed. Right from 1998, we had peer evaluation of all directors—not just independent directors, even the executive directors.
And those people who came below a certain sigma of the mean—I would sit down with them. I would ask them why they were not able to perform. Is there any way we could help, or is it that they are not competent enough to continue?
So, as long as peer evaluation is there—not by some external firm, because they will not do a proper job. They want more and more business from you, so they will keep everybody happy.
I would say that there are a few more things. As I said, this is not the time for that. But I think we can improve the level of corporate governance.