The turning point for a Company

THERE’S COMES A TIME IN A COMPANY’S HISTORY WHEN IT MUST SEIZE THE DAY OR BECOME IRRELEVANT

V I V E K K A U L

In the movie 1942: A Love Story released in 1994, all the characters keep saying “Shubhankar da aa rahe hain” throughout the first half of the movie, building up the expectations of the audience for his arrival. Shubhankar da (played by Jackie Shroff) finally arrives around half a minute before the interval. Until that moment, the movie was a love story, and from that moment it becomes a movie about the freedom struggle.
But why are we talking about movies here? The point I am trying to make is that there comes a moment in the life of individuals and businesses, when the story changes or needs to change, making the past insignificant to some extent. I can personally vouch for this. Five weeks into my first job as project manager at a small IT company in Pune, I realised that working in IT was not really my cup of tea. I quit, wandered into academics for a while and then landed up in journalism. This, of course, more or less made nearly five years of studying computer science (three years of BSc and two years of MBA) useless. But in the process of figuring out what we really want to do with our lives, it is more important to first figure out, what we do not want to do. Businesses also experience this phenomenon time and again. Some learn and adapt, others don’t and for some others, by the time they realise that things have changed, it’s already too late.
Take the case of Nokia, the largest mobile phone manufacturer in the world. The company started in 1865 as a groundwood pulp mill. It gradually became an industrial conglomerate and among other things produced paper products, tyres, footwear, communication cables and consumer electronics. In the early 1990s the company realised that its Shubhankar da moment had arrived and the story had to change. It started concentrating on its telecommunication business and divested most of its other businesses. The company’s bet turned out correct and it became the largest mobile phone manufacturer in the world.
In the days to come, the company continued to bet on its existing mobile phone business but failed to see the smart phone revolution coming (the story had changed again), leading to its world market share dropping to below 30% in the first quarter of 2011. Another interesting example is of the newspaper, The Statesman, which at a certain point of time was regarded one of the best English newspapers not only in India, but in Asia. Of course, the paper remained stuck to its past glory and failed to realise that readers did not just want news, but were also looking for masala.
Sony is another great example. The company changed the entire music business with the launch of the Walkman. But it failed to see the story changing and handed over the mp3 player market to the likes of Apple, on a platter. The same can be said about the British Broadcasting Corporation which did not foresee the rise of 24-hour news channels. CNN grabbed the opportunity during the First Gulf War in the early nineties.
Bharti Beetel, which revolutionised land-line phones in India by launching push-button phones, also failed to see the story changing and remained stuck to selling push-button phones, when more and more consumers were moving to mobile phones. Ironically, its sister company Airtel became the biggest mobile phone company in India. The company has recently started selling mobile phones. Now imagine: during the days when Airtel was a growing company, Bharti could have sold its own mobile phones (under the Beetel brand) to consumers who bought an Airtel connection and thus, could have been one of the biggest mobile phone companies in India.
Brand consultants Al and Laura Ries, have an explanation for this in their book War In the Boardroom, "The biggest mistake of logical management types is their failure to see the rise of a new category. They seem to believe that categories are firmly fixed and a new one seldom arises."
But not all companies fail to see the story changing. Take the case of Hindustan Unilever. Nirma detergent started selling at Rs 3.50 per kg at a time when Unilever’s Surf used to sell for around Rs 15 per kg. The low price of Nirma made it accessible to consumers, who till then really couldn’t afford the luxury of washing clothes using a detergent and had to use soap instead. To HUL’s credit, they did not remain stuck in their past and realised that the story had to change. They thus went ahead and launched their Nirma killer, ‘Wheel’ detergent, which eventually beat the sales of Nirma.
Or take the case of cigarette major ITC, which has a gross margin of nearly 50% in the cigarette business. But at some level, it realises that in the years to come, the cigarette business may not be the best one to be in, despite its prevailing monopoly. Several states in the US have successfully sued cigarette companies since the 1990s. The suits have claimed that cigarettes cause cancer. Chances are, similar things may happen in India in the years to come. To prepare for this, ITC has been trying to develop a parallel FMCG business. The company is preparing for its Shubhankar da moment.
The moral of the story is to stay relevant, companies and individuals need to figure out when their Shubhankar da moment might come and be prepared for it.

30 lessons from Naryan Murty

Employee Number Four, Mentor Number One

NR Narayana Murthy, who steps down as Infosys chairman on August 20, is a role model for not just what he achieved but also how he did it. Here are 30 lessons from Murthy, one for each year he spent at company

1 Seize Your Gandhi Moment
Murthy, a self proclaimed socialist in the mid ‘70s was jailed for 72 hours in Bulgaria. The experience taught him that entrepreneurship and job creation is the way to alleviate poverty.
2 You might fail, but get started
Learn from mistakes and move on. In 1976, Murthy founded Softronics, a company that lasted a year and a half. When he realised that his first venture wasn’t taking off, he moved on.
3 Think Big. Don’t Hesitate to Start Small
In 1981, a determined Murthy started Infosys with Rs 10,000 he borrowed from his wife. In few years, Infosys went on to become one of the largest wealth creators in the country.
4 Cut Yourself a Slice, Not a Large One Always
When Infosys was set up, Murthy took a pay cut while salaries of other co-founder’s were increased by 10 percent. According to Murthy, a leader needs to show his or her sacrifice and commitment.
5 Lend a Hand and Throw in a Foot Too
After Murthy convinced seven of his colleagues, there was a problem. Nandan’s future inlaws were not sure about him. Murthy met Nandan’s uncle and convinced him.
6 Own Up, and Then Clean Up
In the ‘80s Infosys developed an application for a German client. Murthy noticed a single character error and informed the client immediately.
7 Trust in God, But Verify with Data
In God we trust, the rest must come with data, is perhaps Murthy’s favourite statement. When confronted with difficult decisions, he tends to rely on data.
8 Keep the Faith
Infosys almost wound up in 1990. Murthy did not want to sell the company. He asked co-founders if they wanted out and offered to buy their shares. All of them stuck together.
9 Get Involved
Infosys won a contract from Reebok in the early ‘90s. Seeing the founders involvement, the software, was nick named ‘Dinesh, Murthy and Prahlad.’ Infy veterans still recall those days.
10 Sharing is Caring
After the IPO, Infosys decided to share a portion of its equity with employees. This helped them retain talent and gave employees a sense of ownership. Murthy is proud of having given away stocks worth over Rs 50,000 crore to employees.

11 Treat your People Good, but Your Best Better
Murthy always had a thing for good performers. And he rewarded them well. When Infosys decided to give its employees stock options, Murthy insisted that some shares be given to good performers through the ‘Chairman’s quota.’
12 Hire a Good Accountant, Even if he is Argumentative
A young, argumentative Indian, was asking too many questions at an annual general body meeting of Infosys. More impressed than irritated, he hired Mohandas Pai, who went on to help Infosys list on Nasdaq.
13 When in Doubt, Disclose
Keep your books clean and leave the cooking to the chef. Murthy’s philosophy about being open and transparent has given the company a lot of credibility. He often says, “When in doubt, please disclose.”
14 Leave the Family Out
Murthy told his wife that only one of them could be with the company. Murthy, along with other founders, said that none of their children would work for Infosys. This left no room for nepotism at Infosys.
15 Don’t be a Pushover
In 1994, when General Electric wanted to re-negotiate rates, Murthy said no to selling services any cheaper. This helped Infosys not to be overly dependent on any one client.

16 Make hay While the Sun Shines
In late 90’s, India’s tech companies made use of the Y2K opportunity to make themselves known in the global market. For Infosys, it was a great opportunity to enter into long-term relationships with their customers.

17 Brand-aid First, Get Clinical
When the sexual harassment case against Infosys’ top sales guy Phaneesh Murthy threatened to tarnish the company’s brand, Murthy decided to quickly react. He let go of Phaneesh, and settled the case out of court despite Phaneesh wanting to fight it out.

18 Mind your Business, you’ll See Things Coming
Murthy carries and updates a mental model of Infosys’ business all the time. According to him, every leader must have a model, consisting of six to seven parameters that might affect business.

19 Keep it Simple, Not Silly
Keep your life simple and straight. That way, you get to work more and worry less. Murthy is known to be frugal with money. Despite being one of the richest Indians, he leads a simple life. However, he does not cut corners on buying books or brushing up on literature.

20 Founders Keepers, but Not Forever
Murthy's decision to not allow founders to continue with the company after the age of 65 set another standard for the company. This way, younger leaders at Infosys had a greater chance at the top positions.

21 Talent Spotting and Division of Labour
Murthy is known to have an eye for talent and a talent for dividing labour. Nandan was given sales responsibilities while Kris and Shibu did the tech stuff. N S Raghavan was asked to handle people and Dinesh was assigned quality.

22 Hold on to Your People but don’t Cling
Letting go is never easy but its not good to cling on to your colleagues either. Amongst the founders, Ashok Arora, Nandan Nilekani and K Dinesh have quit Infosys. Infy veteran Mohandas Pai has also left Infosys.

23 Give, it only gets you more
In 2010, the Murthy's donated $ 5.2 million USD to Harvard University Press for a project that aims to make India's classical heritage available for generations to come. He is also supporter of the Akshaya Patra Foundation,

24 Do it First and Do it Right
Infosys did many things first. And most things right. For example, it was the first Indian company to list on Nasdaq. It was the first Indian company to make it to the Nasdaq 100 list and it was the first Indian company to attain the highest level of quality certification.

25 Perils of Being a Poster Child
Being the poster child of Indian IT industry, Infosys and Murthy have been at the receiving end of many criticisms. The company has been accused of taking away American jobs and been called a “chop shop.”

26 Get Rich. Honestly
Rich businesses were considered to be dirty in the days when the country had a socialist bent. Infy was a company which got rid of this sentiment. Murthy, with his ‘no compromise’ policy on greasing palms and doing ethical business, set the standards.

27 Do Not be Afraid to Court Controversy
Ever since Infosys became a success, Murthy was under constant public glare. This did not deter the straight talking Murthy from courting controversy or voicing his opinions openly.

28 Invest in Learning
With big investments in training, development and building facilities, India’s IT bell-weather has always been keen on grooming the younger generation. Murthy drove the culture of learning in the company in its early days.

29 Never Lose the Common Touch
The big man of Indian IT kept his personal life simple. He lives in a simple, middle class house and flies economy till date. Murthy has always been accessible to people around him.

30 Do Good, Look Good
Murthy knew the importance of creating an image for Infosys. He invested in creating a sprawling, world class campuses early on, bigger than any other company’s headquarters in the country, that would make his global customers feel like they were in a global office.

AZIM PREMJI CHAIRMAN, WIPRO
He is a visionary, is forthright and resolute in action. His contribution to the industry has been phenomenal. and his efforts have been instrumental in putting India on the global map. I wish him the very best for the next phase of his life.

S GOPALAKRISHNAN CO-FOUNDER, INFOSYS
When I was in the US during 1993-94, Murthy said the action was shifting to India and asked me to come back and take charge of the support functions. I wondered then why, but later realised that it helped me with very good learning.


SD SHIBULAL CO-FOUNDER, INFOSYS
After many unpleasant conversations with Mr. Murthy, I finally decided to take his advice and get a diary. The impact it had on my professional and personal life was phenomenal.

NS RAGHAVAN CO-FOUNDER, INFOSYS
Whenever we got requests from ministers and bureaucrats, Murthy would say hire only on merit. There were repurcussions but Murthy was always clear not to give in to pressure.


MOHANDAS PAI FORMER INFOSYS LEADER
He always spoke about how he hired his co-founders and why they were the best because he had hired them, making us angry and despondent. He heard my arguments gladly, always patient and sparring with him was the best.


K DINESH CO-FOUNDER, INFOSYS
After an interview with Patni, I was waiting in the corridor when Murthy walked up to me. He told me that he would make me the offer but his concern was whether I would accept it. He said it would be a risk but it would be worth it. And what a turning point for me.


NANDAN NILEKANI CO-FOUNDER, INFOSYS
The best advice Murthy gave me is to take honest feedback with grace and humility.

BLAST FROM THE PAST

FOUNDING MEMBERS

MILESTONE...

The clinic of tomorrow

THE CLINIC OF TOMORROW

When you walk into a dispensary in the near future, a doctor will be able to immediately get your medical records off your phone, diagnose your ailment instantly, and administer suitable drugs with a pain-free needle. What sounds like science fiction is fast being turned into reality by talented scientists across the world

Mihir Patkar

Great technology is rarely something that revolutionizes our routines and habits. More often than not, great technology is something that seamlessly blends into our routines and habits to make them hassle-free.
In the future, the procedure of a check-up at your local doctor’s clinic will be the same as what you go through today. The three steps will remain the same: Establishing the patient’s history, diagnosing the disease, and then treating the malady. But the way these three steps are carried out is what will mark the medical breakthroughs, making our routines easier and painless.
ESTABLISHING PATIENT HISTORY
The first thing that any doctor wants to know is the patient’s medical history. Now, at some point or the other, we have all forgotten to carry an important piece of paper during a visit to the clinic. But you have never forgotten to carry your phone, have you?
Storing all your medical records on your cellphone ensures that the doctor can always get the information he or she wants. Research companies such as Vital Record already have systems to digitize all your medical records, which are then stored on a secure server on the web.
They have also developed a mobile app called Med Records To Go—available for all major mobile operating systems—that will let you access your online medical records securely on your phone to show to the doctor.
The types of personal medical information that can be viewed on the cellphone include identification and general medical data, vital signs information, physicians, prescription and non-prescription drugs, medical history, treatments, emergency contacts, and so on.
Apart from clinical visits, this data could prove to be crucial if you find yourself in an accident or any emergency situation, since an attending doctor would be in a position to access your medical history immediately.
DIAGNOSING THE DISEASE







Once the doctor has your medical records, a few tests are usually needed to be able to diagnose your disease. Today, it means running around several departments of a hospital and waiting for hours or days to get the results. In the future, the doctor would get instant results through revolutionary lab-on-a-chip technologies.
Take, for example, the new “health chip” by European boffins at SINTEF (the largest independent research organisation in Scandinavia), which looks like a credit card and contains a complete laboratory. The chip is engraved with a number of very narrow channels that contain chemicals and enzymes in the correct proportions for each individual analysis.
“The health chip can analyze your blood or cells for eight different diseases,” say Liv Furuberg and Michal Mielnik of SINTEF. “It is capable of carrying out the same processes as a large laboratory, and not only does it perform them faster, but the results are also far more accurate. The doctor simply inserts the card into a little machine, adds a few drops of the sample taken from the patient via a tube in the cardholder, and out come the results.”
The device has been successfully tested to detect cervical cancer, and the researchers are now working on other diseases.
Still, this method does require the painful procedure of drawing blood. But if a group of US-based scientists have their way, your entire diagnoses could be done simply by breathing into their gizmo.
A team at Purdue University has developed a special material to rapidly diagnose patients by detecting chemical compounds called “biomarkers” in a person’s respiration, in real time.
“We are talking about creating an inexpensive, rapid way of collecting diagnostic information about a patient,” said researcher Carlos Martinez, adding that this would just give an indicative result, which would require further tests to confirm or pinpoint the disease.
The team was able to successfully detect diabetes in lab tests, but warned that such breathalyzers are a decade away in actual practice.
TREATING THE MALADY
When the doctor knows the ailment, you finally get what you came for: the medicine to make you better. But given that each patient’s needs are individual, it’s important for a doctor

to figure out which drugs are helpful, and which will cause side-effects.
British researchers at Imperial College London invented a handheld device called the “Snip Doctor”, which analyses a person’s saliva for specific
signs that could indicate a reaction to prescribed medications. It looks for specific DNA sequences that may be used by doctors to indicate how people are likely to respond to certain drugs, providing results in under 30 minutes.
“If the most appropriate drug dosages could be determined at the earliest stage, it could reduce the number of people admitted to hospital ‘when medication goes wrong’. Most importantly, it could also minimize the trauma that repeat hospitalisations have on people and their families,” says chief scientist, professor Chris Toumazou.
As for administering the injection itself, there are several studies being conducted to make pain-free needles, given the number of people across the world who are scared of it – not to mention kids.
The ‘Ouchless Needle’, developed by medical design company BellaNovus, is a disposable attachment for syringes, which delivers a short spray of vapo-coolant onto the skin before the needle goes in. The vapocoolant spray immediately refrigerates the skin, thereby reducing the feeling of needle penetration and making the injection more comfortable.
But this still doesn’t take away the trauma and initial fright of seeing a big, fat needle about to prick your skin.
That’s where
microneedle patches come
in. An array of tiny needles,
no longer than the width of a hair, are placed over a larger surface (usually the size of a small coin) to distribute the force of impact. By just pressing the patch into your arm, the drug is administered, and it’s practically pain-free.
It’s a bit like how a nicotine patch works, but not all drugs can be absorbed by the skin itself – some need to be pumped in. For this purpose, Babak Ziaie, a researcher at Purdue university, and his team have developed a tiny pump that’s activated by touch from the heat of your finger and requires no battery.
“It takes 20 to 30 seconds,” Ziaie said. “It’s like a bandage – you would use it and discard.”
1. ‘Med Records To Go’ lets you access your online medical records securely on your cellphone 2. SINTEF’s health chip can analyze a patient’s blood cells for eight diseases. The doctor simply adds a few drops of the sample taken from a person via a tube in the cardholder for instant results 3. BellaNovus’s ‘Ouchless Needle’ is a disposable attachment for syringes, which delivers a short spray of vapocoolant onto the skin before the needle goes in. The spray refrigerates the skin thereby reducing the needle prick 4. Microneedle technology that could replace injections is made up of tiny needles placed over a large surface. By just pressing the patch into your arm, the drug is administered pain-free 5. The ‘Snip Doctor’ can analyse saliva samples to indicate how a patient is likely to respond to certain treatments

Debt of countries and INDIA as destination for FIIs

India Still Best Bet For FIIs

While The US Rating Downgrade Is Likely To Trigger Panic Selling In Local Markets, It May Actually Make India An Attractive Investment Destination In The Long Term — Provided Crude Falls And RBI Halts Monetary Tightening

Partha Sinha | TNN

The decision by S&P, the global ratings major, to cut US’s sovereign rating by a notch to ‘AA plus’ from ‘AAA’ is something that has no precedence. So for foreign fund managers as well as institutional dealers in India, this is something they don’t understand and hardly anyone has a definite clue how to react to it. As a result, brokers are certain there could be some knee-jerk reaction and selling after Monday’s opening bell.
However, most FIIs are expected to be on a ‘wait-and-watch’ mode for a few weeks from now, see how things pan out in other parts of the world and then take a decision on their India portfolio, institutional dealers and fund advisors said. Infact, in one of the scenarios that could emerge over a period, fund managers say that FIIs could actually look at India as a preferred investment destination.
“In the short term, there would be pressure on the market because the problems will not go away in a hurry,” said Shankar Char, head of sales trading, ICICI Securities. “Since no one has ever seen something like this, there will be volatility,” he said.
The silver lining is that such volatility is expected to be short lived, probably extend for just a week or two, market players said. However, they warned that in case if any of the two other ratings majors—Moody’s and Fitch—also cut US sovereign ratings, volatility and uncertainty could increase.
THREE SCENARIOS
As things stand now for FIIs, three phases are likely to unfold over the next few months that could be assigned to this unthinkable incident of US ratings downgrade. Some of the hedge funds, registered with Sebi as FIIs, will sell when trading begins on Monday. This is because most hedge funds are momentum traders and in times of uncertainty they prefer to be in cash.
On the other hand, long-term FII funds, like pension funds and insurance companies, will not sell in a hurry but will wait to have a better understanding of the implications and then take a decision on their India exposure. For the long term players, there are not many alternative markets that offer them good growth and chance of a better return than India, institutional dealers said. “Since there are quite a few positives in the Indian market, after this downgrade, money will not go back to the US,” said Dharmesh Mehta, MD, institutional equities, Enam Securities. “We won’t fall as much as other markets,” Mehta said.
During the third phase, that is likely to unfold after a few months from now, India could actually start attracting more foreign funds than before. This is because if crude prices fall, that could bring down government’s subsidy burden on petro products, pull down the rate of inflation, and also might help RBI’s in not raising the rate of interest in the economy. The combined effect, market players believe, could again lure foreign fund managers to invest in the Indian economy. This is something that was witnessed after the dust settled on the Lehman collapse and the recession that followed in September 2008.
So far this year, FIIs have pumped in just over $2 billion into the Indian market, compared to about $29.4 billion in 2010, Sebi data reveals. Institutional dealers feel there is no way last year’s record inflow could be surpassed this year, but 2012 could be a much better year for FII inflows.
G7 finance ministers to discuss crisis
Finance ministers and central bankers of the Group of Seven major industrialized nations will confer by telephone on turmoil in the financial markets on Sunday, a senior European diplomatic source said. The source said Friday’s unprecedented downgrading of the United States’ credit rating by Standard & Poor’s had added a global dimension on top of the euro zone’s debt crisis, raising the need for international coordination. French finance minister Francois Baron, who would chair such a meeting under the French presidency of the G7 and G20, said in a radio interview it was too early to say whether there would be an early G7 meeting. G7 finance ministers and central bankers are due to meet in early September in the French city of Marseille. REUTERS

Cost of borrowing for the US may go up by a few percentage points. But that would not really affect us... (It’s) life as usual (for India). Dollar still remains the dominant and a potent currency in the world Pratip Chaudhuri | SBI CHAIRMAN

I see the US downgrade, and indeed, the continued global slowdown, as signs of a structural shift of the epicentre of economic activities towards the east. Both short and long-term investment flows into India could accelerate, provided we don’t continue to shoot ourselves in the foot, politically speaking
Anand Mahindra | VICE-CHAIRMAN AND MD, MAHINDRA & MAHINDRA

The impact of the US downgrade, from AAA rating to AA+, on business is not yet known. It is too early to gauge the impact. If there is a double-dip, it is really bad news for the industry. But companies and customers are better prepared these days so... the impact will not be as bad as the last recession
Kris Gopalakrishan | CEO, INFOSYS TECHNOLOGIES

The announcement is a formalization of what the numbers, which were already in public domain, were saying. In the short term, there could be some pain because of the impact on sentiment. But even if there were no downgrade, we feel the RBI should pause on rate hikes for India to maintain growth
Shikha Sharma | MD, AXIS BANK

As stated by S&P, the downgrade is more a reflection of the political situation in the United States rather than the economic fundamentals. Given that Fitch and Moody’s have retained sovereign ratings, it may be too early to remark on the immediate impact on business and investor confidence
T K Kurien | CEO, WIPRO

In the short term, it could result in a fear psychosis that may lead FIIs to withdraw from the US market, triggering panic selling in India. We will have to see how the commodity and other markets react. A lot also depends on how the recovery takes place in the US Harsh Mariwala | CMD, MARICO