The chief executive officer of HCL Technologies, one of the world’s fastest-growing information technology services companies, and author of Employees First, Customers Second, the book which charts his dramatic transformation of the business, explains why he decided to turn his business upside-down.
Q: Why did you embark on such a radical transformation?
A: We had no choice. Even though, in 2005, HCL Technologies was achieving an annual growth rate approaching 3%, we were actually losing market share and mindshare to key competitors. I knew it was just a matter of time before the cracks began to show. Once that happens, things can fall apart very quickly. We decided that we needed to fundamentally transform our business model to stay alive.
Q: Why did you take this particular route?
A: Because our frontline employees are the ones who create the most value for customers and, therefore, are the ones who contribute most to our company’s vitality and growth. We found that our organisation structure was actually limiting their ability to create value rather than enhancing it. Only by “turning the pyramid upside down” ― which simply means making managers accountable to the employees who create customer value, just as employees are accountable to the managers who determine strategy ― could we change the equation.
Q: What did you achieve?
A: We transformed the company from a second-tier provider of discrete IT services to one of the fastest-growing global IT services companies in the world. We increased our revenues and our market capitalisation. We built long-term relationships with important customers and increased the value of our engagements with them. We improved our customer and employee satisfaction ratings. We reduced our rate of employee attrition and were named the best employer in India.
Q: How did you achieve it?
A: We achieved great change through a series of seemingly minor actions that I call “blue ocean droplets” ― which I adapted from the ideas in the book Blue Ocean Strategy ― which simply means that a small initiative can produce a large wave of change. We did not undertake any major technology initiatives or top-to-bottom reorganisations. We introduced new methods of communication, new ways to evaluate and develop talent, and new approaches to business planning. No single initiative or activity can be identified as the key factor in our transformation but each played a role.
Q: Why did it work?
A: It worked because we asked for everybody’s help and got as many people as possible involved. We opened up our processes and built trust and let people see what was really going inside the organisation. When people feel that their help is genuinely needed and wanted, it is amazing how much productive energy pours out. Intractable problems get solved. All kinds of new ideas spring up. The company becomes alive as never before.
Q: Why don’t more companies do this?
A: Because too many executives and managers are more concerned about protecting their own positions than they are about improving the company. They cling to the centuries-old management approach that was based on hierarchy and fed on the power created by position. These managers don’t want to share information and don’t want to open up their processes because they are afraid that it will be revealed that they actually create little or no value.
Q: What should strategists take away from this book?
A: They should realise the obvious: that strategy is nothing without execution and that successful execution depends on the genuine engagement of the people who are directly involved.