12 Valuable Business Leadership Lessons from Narayana Murthy

N.R. Narayana Murthy

N.R. Narayana Murthy

The best way to train oneself to become an effective leader is to follow an effective leader. 

One of the most successful entrepreneurs and a truly acclaimed leader has written such a heartfelt and instructive letter that it can be mined for highly valuable business leadership lessons.

Chairman Emeritus of Infosys, N. R. Narayana Murthy (NR) started this company in the 80’s with Rs.10,000 ($300 or so, at the time).  Assembling a bunch of enthusiastic, like-minded people, NR worked the company through tough competition, evolving technology and difficult business environment to make Infosys one of the top Indian software companies. 

NR’s article first appeared in the Annual Report of Infosys for 2010-11 and was written upon his departure from the company.  Every time I read the letter, I am floored by the man’s simplicity and high-thinking. 

In this post, I’d like to bring out some great leadership thoughts and lessons that NR has mentioned in this epic letter.   

1.        Generosity as a virtue of a good leader

This is the foundation on which good team work is built.  I have written about sharing knowledge and coaching/mentoring a protégé being good qualities of an effective leader, but NR also talks about sharing wealth as a leadership virtue.

2.       Crisp and actionable definition of strategy

Victor Cheng credits NR with providing the best definition of strategy.  Without beating about the bush, NR straightaway links strategy to net income margins.  If there is no improvement in net income margins, then you don’t have a strategy.

In non-organizational assignments or initiatives, we can equate net income to “end-result”.  Strategy should be a marked improvement in “end-result” and that should be measurable.   As a leader, you are responsible for the “end-result”.

3.       Respect from stakeholders as primary objective of the company 

Applying a very broad definition of the term stakeholder, NR includes employees and politicians also in this category.  Clearly, to gain respect from such a varied group of people, NR and his organization would have had to do business very ethically, effectively and efficiently. Moreover, his good leadership ensured that the team kept the interests of a varied group in mind.

4.       Ethics violation and resignation of a co-founder were very disturbing 


Two things struck me when I first read this. 

The first one is that NR accorded a high importance to these two activities: (a) ethics (read: company reputation) and (b) people focus, especially a co-founder with whom there were long and strong ties.

The second aspect is that NR personally paid attention to these and made sure that he was closely involved in the ultimate resolution.

An effective leader does not shirk responsibility away from such stressful but hugely important decisions. 

5.       Continuously monitor the composition of the team

The performance of a successful organization is heavily dependent on the team that the leader assembles.  Differentiation comes from innovation and innovation comes from sharp and smart minds.  NR puts a high value on employees who are his sharp and smart minds. 

His thoughts about a leader being responsible for providing growth opportunities for his people even if it outside the organization, are quite uncommon.  Not many business leaders would agree with this, but NR takes the organizational boundary out of leader-mentee relationship.

6.       Leadership by example is what creates trust in people

If there is one thing in common amongst all effective leaders, I’d say it is leading by example.  In an earlier post I have mentioned about Hanumant Singh, and NR looks to be cut from the same cloth.  If a leader is all about “do as I say” and not “do as I do”, the effectiveness will be lost very soon.

7.       Values

NR emphasizes utmost regard for values.  In fact, in the letter he describes a superior organization as one where employees at all levels are driven by values and no employee is high or important enough to put up with non-compliance.  An effective leader stamps his or her culture on the organization and a leader with a good value system automatically passes on those values to the people around him or her.

8.      Comfort with ambiguity

NR calls the ability to take bold and firm decisions with incomplete information in an environment of uncertainty as a hallmark of effective leadership.  He advises to use as much data and modeling as possible to clearly eliminate bad decisions.  But then he cautions against analysis-paralysis and recommends bold and quick decisions where required.   

9.       Important decisions require a calm and composed mind (equanimity)

The part where NR took a decision for Infosys to walk away from a huge business from a single client is a classic example of equanimity.  This has been highlighted earlier in our blog by Dr. Vikram Dravid.  Staying calm under pressure is indeed an enviable quality that effective leaders possess.  The likes of NR go one step further and can take crucial decisions with a calm mind! 

10.  A great tip on how to to make decisions

This valuable nugget is a template on how to make decisions.  NR states that every leader must have a mental model of his or her business.  This model should contain at least five to seven parameters that determine sensitivity to revenue and net income.  Without the ability to perform such quick sensitivity computations, a leader will not be able to make bold and quick decisions.

Revenue is important otherwise you will be cutting costs all the time.  Net income is even more important because unless revenue is higher than costs, your actions will not be profitable.  For non-business tasks, this means that leaders must identify the top 5 factors that affect their “end-result”.  They should be ready at all times to perform a quick computation and get a gut-feel as to whether to go with a certain proposal or not.

11. Laser focus on exceeding expectations of the customer

NR provides another crisp definition of a customer as one “who puts food on our table”.

If you look at your customer thus, you will accord the highest respect for this entity.  Respect then translates into importance.  And all actions towards the customer such as openness, fairness, transparency, honesty, etc. become part of the company culture.

12. Global bench-marking

NR believes that global bench-marking helps in competing with the best and serving the customer better.  We have always maintained that only what can be measured can be controlled.  And only what can be controlled can be improved.  NR’s stand on bench-marking totally advocates this approach.

Use the comments sections to share your thoughts and other articles/letters that may have caught your imagination in a similar way.

Image: (c) http://commons.wikimedia.org/wiki/File:NRN_inauguration.JPG