Bengaluru, NFAPost: Talking about life lessons as a top-notch corporate captain, Infosys Founder N R Narayana Murthy on Friday said “disclosing bad news (about a company) is transparency, not hiding it.”
Speaking at the second day of the India Global Innovation Connect (IGIC) organised by Smadja & Smadja, Narayana Murthy, one of the highly respected corporate captain’s around the globe, gave this piece of advice to the entrepreneurs assembled. He shared a couple of inspirational anecdotes about how safe it is to disclose bad news about the company.
Murthy brought to life one of his toughest decisions to severe business tie-up of Infosys with a highly respected top ten corporations of the world which his partners including Nandan Nilekani and Shibulal, opposed, which was bad news.
Disclosure of this bad news did not do great damage to Infosys, instead, it benefited the company, Infosys Founder said. He also shared a similar conversation between him and Ex-Infosys CFO T A Mohandas Pai.
“We had kept aside a certain amount of money to start our office in Boston. Those days RBI took its own time. So finally Mohan (TA Mohandas Pai) said why don’t we invest in the secondary market. I have tremendous respect for Mohan because he is one of the brightest that I have come across. I said okay. And we lost some money,” Narayana Murthy said.
“So, there was a discussion on whether to disclose it. I said friend. Disclosure transparency means disclosing bad news. Transparency is not disclosing good news. So I said we have to disclose and we disclosed. We did not suffer,” he added.
Sharing yet another experience of seeking benefits out of disclosing bad news, Murthy spoke about discontinuing business with a highly respected company which was among the top ten corporations in the world in 1995.
He said it is always best to bring bad news early and proactively. “If you don’t do that you will not be able to sleep well and there is always an anxiety in other parties’ minds because they also have sources to get some access to information. It is not like you are the only one to have access to information, right!,” said Narayana Murthy.
“So, my view is that always bring bad news early and proactively. Let me give you one example. In 1995, I made a very tough decision. I was the only person who made that decision. There was Mohan. There was Nandan, Kris (Gopalakrishnan), Shibu (Lal) and Phanish (Murthy),” he said.
“Everybody was against it, respectfully declining to continue with a highly respected top ten corporations in the world. I thought it was not there. I thought we wouldn’t be fair to our employees. Other customers … etc etc. But once we made that decision. Nandan (Nilekani) and I went to Mumbai and we held an analyst meet on our own. Nobody expected us. It was totally voluntary,” Narayana Murthy said.
“We told them that look, we have taken this decision not to continue with this highly respected company. They formed 25 per cent of our revenue. We went public in 1993 and this was 1995 May, and we laid out a plan on how we would bridge that gap and grow fast. Our share price didn’t suffer. Because so many people told us at that time that you are the first company in India that brought bad news to the team,” he said.
“So, my request to all of you is, it is better to be known as a respected individual than a very smart individual. So even if people say that you’re not that smart, it is okay but if people say we can trust you. We can trust this man, I can tell you that it has much bigger value than being the smartest guy. So my request to the wonderful entrepreneurs is to let the bad news take the elevator and let the good news take the stairs.
“When in doubt, disclose, and that principle is very enduring and will not hurt the entrepreneurs. It is like going to the doctor at an early stage. Doctor will find a solution for you. If you hide it, then it will be … we also have experienced it,” Narayana Murthy said with a laugh.
