New order guru

BUSINESS:Vineet Nayar's business book may not leap off the shelves at you, but he has practical advice on how to invert the traditional management pyramid – advice that he himself has put into practice, writes RICHARD GILLIS

EMPLOYEES FIRST, Customers Secondhas to be one of the worst book titles ever, loaded with all the sex appeal of a health and safety manual. Nor is the central story of Vineet Nayar's book one that shouts "read me or die!" from the airport bookshelf. Nayar is chief executive of HCL Technologies, an Indian IT services company that has undergone tremendous growth over the past five years. The oh-so-terrible title also gives the game away as to the book's "big idea" – that effective staff motivation leads to better results. This is hardly news; it's been the territory pored over by every guru since FW Taylor sold Henry Ford his ideas about scientific management.

So, why is Nayar getting such attention from business schools and the MBA circuit? Take Tom Peters: “Rumour has it that Vineet Nayar has invented a whole new way of configuring and managing an enterprise. I’m on the verge of the verge of declaring that Mr Nayar could be the next Peter Drucker.”

Okay, so “on the verge of the verge” may be the definition of hedging your bets, but Drucker? His is not a name that is bandied around lightly. He is the guru’s guru, the man Jim Collins (Good to Great, current sales in the gazillions) suggested created the “ideas culture” to whom every business book author owes a debt. Likewise Gary Hamel, no slouch in the biz aisles himself, says: “Nayar and his colleagues have created an organisation that encourages extraordinary contribution from everyone, every day. If you doubt it’s possible to turn the pyramid upside down, or wonder whether it’s really necessary, I urge you to read this thoughtful and timely book.”

Pressed by such weighty endorsement, I arrange to meet Nayar in a London hotel just off Hyde Park. He’s in town for the day (they are always here for “just for the day”) before flying back to Bangalore.

Nayar listens carefully to questions, pausing to give at least the impression he is giving some thought to his answers. Again, this is rare. Interview questions can often be the cue for a pre-prepared monologue, heavily laden with quotes from the book.

“I’m not a guru,” he insists. “I’m a businessman. But the message from my experience at HCL has a broader application. Specifically, we had a young workforce who bring a different set of expectations to the workplace than did their parents.” This is new territory, he says. And indeed the demographics of business, along with the explosion of digital and social networking technologies, have huge implications for any large organisation, be that private sector or public.

Many people can say this sort of stuff. The difference is, Nayar has done it. In 2004 he was head of a subsidiary company, HCL Comnet, when he was invited to have a go at the big job – chief executive of HCL. At the time, it was a $700 million (€545 million) turnover company, but with a growth curve that was worringly flat compared to others in the sector. Market share was slipping and it was losing its best people to the competition. Within five years, it was growing in double digits and has emerged as one of the success stories of the Indian tech boom of the last decade. The book answers the question: “How did they do it?”

A simple question arises frequently in the book, one that is often overlooked – or ignored, for being too difficult to answer. Who is adding the most value to the business? Nayar noted that, within HCL, it was Generation Y whose ideas and familiarity with technology could be key to the business’s future. “They believed in collaboration and loved to learn,” says Nayar. “They loved sharing, from information and music to feelings and ideas.”

He points to his own family experience to support the “huge” shift he says has taken place as one generation of employees gives way to the next. “When I grew up, I virtually outsourced responsibility for my career choices and aspirations to my parents, who made the decisions as to what I would study and what job I would do. When I have this conversation with my son and daughter, they make it very clear that decisions as to their career future are out of bounds to me. They will figure it out. I’m one of maybe eight or nine influencing factors. Command and control management has given way to collaboration, not just at work but at home, too.”

This is the human capital of the world economy today he says, noting that it was frequently these young Gen Y-ers who were the public face of the organisation, the ones who did the work in what he calls the “value zone”. Without them, the company was merely layers and layers of management and aggregators with controls and processes, who offered customers nothing. Between those layers, lies a “trust deficit, which will only get wider unless we put our minds to different ways of working”, says Nayar.

“We saw that management didn’t live in the value zone, or anywhere near it,” he says. This is the way big companies work. You go in at the bottom, you work your way up until you don’t meet the customers any more. This is the pyramid Nayar has been trying to invert, one which bedevils many organisations not prepared to be quite so honest as he was in looking in the mirror.

There was a time when the value creation within a large tech business resided in the research and development (RD) or marketing functions – the people who created and sold the products. But this has changed, he says.

“Now customers can choose between many technologies, from a variety of suppliers, all of which would probably enable them to achieve their goals. The value zone now lies in the way technologies are brought together and implemented – the ‘how’ of our offering more than the ‘what’.”

The logical conclusion is that the traditional management pyramid must be turned upside-down. This has such huge implications for the way the business is run it is usually bypassed in favour of some other less onerous tinkering, or re-engineering. Not least of the problems is the cultural change required when the management function becomes a service to the workforce, not its superior. “The new order of things was ‘employees first, customers second and management . . . third’.

“When the recession came in 2008 and 2009, our resolve to change was severely tested – but we kept at it,” he says. “When I told the workforce the future of the business depended on continuing on the road we had begun together, I meant it with all my heart.”

He’s modest enough to suggest his was an experiment that doesn’t apply to all companies, and that the idea of writing the book was incidental to the success the company has achieved along the way. “It is unproven but thought-provoking. This is the approach I took when sitting down to write the book.”

Once the eureka moment has been discussed, Nayar’s book becomes the story of how it was put into practice. It moves from the idea to the implementation which, let’s face it, is both hard work and less interesting to read about. But this is the difference between him and the gurus who praise him. He did it; he didn’t just write about it.