Why Indian founders never hang up!!!

 

 

It is widely believed that Indian founders never hang up. They hang on to their positions ever so stubbornly finding it extremely difficult to hang up. The recent spat between founders of Infosys and CEO Vishal Sikka only accentuated the issue. If this can happen in Infosys which is the bellwether company of Indian Software one can well imagine the situation in other private organizations which are managed by families. Something similar also happened in year 2005 when Vivek Paul a professional CEO then employed with Wipro quit rather unceremoniously leaving everyone puzzled and perplexed on his sudden decision. After that Girish Paranjpe and Suresh Vaswani, were also dumped by Wipro in the year 2011. Cyrus Mistry also found the going quite tough in Tata Group and was finally axed in the most bizarre fashion.

These are professional CEOs of high repute who took the organizations on a high growth trajectory but in India there are some cultural issues which founders find it hard to iron out with professional CEOs. CEOs cannot be treated like a docile housewife who wears a veil and obediently follows the instructions of her in laws. Times have changed and such housewives are now extinct species.

In early 80s and 90s things were entirely different these are the same founders who brought about a revolution in Indian business space. Indian companies were made the model of corporate excellence matching the best in the world. These companies set the new bench marks in corporate governance for others to follow suit. Mind you all was not hunky dory, odds were stacked against them, but founders must also realize that the era of 80s and 90s is well past us and businesses have to be nimble, they must adept, they must change for it is often clichéd that change is the only constant in this world.

Professional CEOS try to break the tradition, they restructure the organizations, and formulate a new vision.  They generate admiration, goodwill, resistance, resentment and genuine puzzlement. They try to change things which are sacrosanct and which are against the belief system of existing founders. They ask questions and challenge beliefs. Those beliefs which were the very tenets which laid the foundations of these multibillion dollar empires.

But why it doesn’t happen in US? There has to be an explanation to it. How the founders smoothly hand over the reins to professional CXOs and let them run the very organizations which they founded. Larry Page and Sergey Brin did not hang on to their positions despite holding 14 percent in stock of Google and after restructuring Sunder Pichai was anointed as the CEO of Google. Similarly there are many such examples of world class organizations like Microsoft founder Bill Gates, Virgin Group founder Richard Branson wherein the founders have quietly passed on the baton to professionals and rarely interfere in the day to day working of CEOs. These organizations are doing much better vis-à-vis Indian companies which are still stuck in the age old quagmire of founders tightly holding on to their possessions.

All this brings us to the most pertinent question as to why Indian founders don’t hang up and play golf in their post retirement years?

 

Cultural Issues:

“We’re a very, very old firm.”

It’s been a tradition in our country for the family patriarch to have all the controls in his hand.  For him handing over the control even to his sons who obviously are the natural hires is a big pain and here we are taking about handing over to a rank outsider, a professional.. Just forget it!! From the time immemorial we have read the tales of King Dashratha and Dhritarashtra holding on to their kingdoms, wanting to continue to rule till their bodies were snuffed out of life.. Similarly for a founder giving up on a business which he set up, nurtured  and brought up for so many years to such levels is not easy. Suddenly giving over the reins to somebody else is one of the prickliest issues. There are trust issues as well which often crop up as was the case with Infosys. As a founder you can take the pay cut, you might also work for free as you have enough kitty in the bank but why do you expect the poor fellow to work for charity, he has chosen to be CEO of your company albeit the fact that he had hundreds of other options and an opportunity to make millions elsewhere. After all he is running the show and he deserves all the money, every bit of it. If you don’t trust him with his judgment then what was the point selecting him in the first place.

Identity Crisis:

 In India an individual is known by the organization he works for or the business  he runs. There are pre conceived notions which are very hard to break. Founders face severe identity crisis once they hang up their boots. They are no longer part of the very organization which they founded. They don’t know what to do with the new find time as they don’t have any other goal. In US and in other western countries people have their own individual goals, some people want to take up golf seriously and become professional golfers. Others want to explore into the uncharted waters, some want to pursue music or dance or sports or want to excel in things which they could not do earlier because of paucity of time, join a choir, go to an expedition in Africa but for Indian founders these are all luxuries and wasteful expenditures not worth their time and effort. That’s why most of them struggle with their new found freedom, they don’t know how to introduce themselves to others as for them their identity is confined only to work and they can’t think of anything beyond that.

 

Philanthropy:

 

  This one is reserved for ladies. As per company’s law 2% of profit has to go to CSR and all these philanthropic responsibilities are given to the wives of the founders. For them it is too menial a job to handle. That is why most of the philanthropic ventures in India are poorly managed because nobody wants to take interest and for a man who  built a billion dollar empire going to serve in such small ventures goes against their very nature. We are a poor country with opportunities galore and if some of our visionaries can take up the cudgels we can surely go far. Bill and Melinda Gates foundation is one of the best examples of how philanthropic ventures are run. How many Indian founders have pledged their wealth to charity. Hardly any. In our religion though it is mentioned that we must distribute part of our wealth to charity but these millionaires and billionaires find it so very difficult to part with their wealth. Compared to Bill Gates, Warren Buffet, who have pledged their entire wealth to charity our millionaires made newspaper headlines by giving away very little.

Angel Investors:

Now this one seems rather interesting. They have the money and they can multiply it manifold without doing much, they can be angle investors to startups. There are  plethora of startups out there in want of funds to take forward their venture. But there is a catch in this, startups are looking for funds not unsolicited advises and they don’t have any seats to offer on their boards. That is where our founders fail miserably. They not only want to invest but want to have their say as well and wants things to be done in a particular manner. All the above factors make them a repugnant angel investor who is not liked by the startups.

Now, golf balls are out, the luxury holidays are out there is not much to do in these philanthropic ventures so what choices does the poor old man have. Play with grandchildren maybe, enter into politics, many have tried their luck into that as well but without much success. Let us leave politics to the politicians for it is way to a muddle to get for the businessman to enter into. Let them be king makers not king themselves.

 

 

Left with no other option, instead of disassociating them from the day to day running they start getting into the affairs of the very organization which they have nurtured over the years and that gives them identity as well. Keeps them in the limelight, gives them an opportunity for interviews for photo ops and to get published in newspapers,  get visible on business channels, and what better opportunity to hog the limelight than flaying the present incumbent. Media which is always looking for TRPs pick up these stories, and vilifies the poor CEO. Then once again starts the long drawn process of finding a new CEO which often results in one of the founders or his son having the reins till the time another scape goat is found.

Whereas Google has grown from scratch to a $600 Billion company and  new kid Facebook  to $ 500 Billion company our bellwether companies are lagging behind with a market cap hovering around $ 40 Billion. There is a new animal Artificial Intelligence which is soon going to eat away most of the business. Day in and day out there are new challenges but our founders are  busy  squabbling on the pay packages of CEOs  and  are obsessed on finding the new people who can keep them and their egos satisfied.

With all the squabbling and search for the right candidate let’s say growth Good bye.

Founders didn’t hang up but growth certainly did!!

7 Comments

  1. The article ignites our minds on key points that lower the motivation of highly talented CEOs enriched with golden experience of yrs….There should be some higher authority that overlooks CEOs as founders of these bellwether companies are not dynamic in their approach.Very well written…..

  2. I am really impressed by this article. You explained each and every bit well and took into consideration every question that might arise in the mind of the reader.
    In my opinion, and yours too I suppose since you mentioned it, in India, we attach a lot of emotional value to materialistic things. In the west, for example, they buy a car, drive it for a few years, 5-10 tops and sell it off. In India, especially in middle class families, one holds on to his car which was bought by hard earned money because he feels an emotional connection to it.
    A lot of these founders have humble beginnings. They’ve seen what it is like to be a nobody and they’ve also seen how it feels to be revered in the business world. As such, they do not want to let go of their legacy.

    Again, repeating myself I must say a very well written balanced piece.

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