How CEOs can align the leadership team with corporate goals
In order to be a successful CEO, it is more important to recruit highly motivated people instead of constantly focusing on motivating the team, said Nitin Rakesh, the CEO of Mphasis, a Bangalore-headquartered IT services firm with annual revenues approaching $1 billion.. Rakesh assumed the role in January 2017 from previous CEO Ganesh Ayyar. Once that motivated team is in place, the CEO must involve it in shaping the company’s goals and developing strategies to achieve them.
In that process, consensus should not be confused with agreement. Everybody on the team must commit to deliver on the agreed-upon goals, even if they do not personally buy into them or it hurts their personal ambitions, Rakesh said. He has imbibed those lessons over a career that includes his roles as CEO and president at Syntel and managing director at Motiwal Oswal Asset Management Co. He shared his insights into what makes for a CEO’s success in an interview with Knowledge@Wharton.
Below is an edited version of the interview.
Knowledge@Wharton: You believe that a CEO’s job is not to define a strategy, but it is to derive it by working closely with a team of highly engaged individuals. Could you explain what lesson you have learned here?
Nitin Rakesh: It’s fairly common practice to associate the chief executive officer’s job with that of the chief strategy officer. I don’t think it’s fair to have that faith and belief from all stakeholders, especially shareholders, the board, and employees. [After joining] Mphasis as CEO, when I met employees and other stakeholders, it wasn’t uncommon for me to hear them ask me in a Q&A session, “What’s your strategy for Mphasis?” That got me thinking about a couple of things.
Firstly, it seems fairly presumptuous of someone to hand a company a set of strategic choices, when there has to be a strong correlation and a congruence between capabilities and conceptualization of the strategy. Strategy is not going to be adequate unless it is combined with capabilities and culture of the company. Secondly, the best way for people to embrace or believe in a strategy is when the CEO involves them in defining it.
That’s the best way to create buy-in. That’s the most effective way to create a consensus-driven approach. You have to share the process, guide it, and shape the strategy. The best answers come when you get a team of highly engaged, talented people in the room, and have an open dialogue and debate and discussion about strategic choices. In the end, you put your stamp on a way that it’s congruent and you can measure the progress, and you can come up with an operating plan. You then have a team with people that have already bought into it, because they feel part-owners of the strategy.
Aligning Strategies with Client Needs
Knowledge@Wharton: How does the process of defining a strategy with this committed group of people work?
Rakesh: The best way – at least it’s worked in our experience – is to have a number of what we call “whiteboard” or “brainstorming sessions,” typically starting with the client or the customer or the problem that we’re trying to solve, put through the lens of the here and now. Typically, you have multiple ways to define limited priorities and then try to marry them with the direction that the businesses are moving in.
“Identify the upward trends, and take a slight bet on what are those choices that you will have to make from a technology perspective, and derive those answers.”
We also get a reflection of our clients’ businesses, given that we are in technology services. It is about mapping where we stand today – what are those changes and the forces that our clients are dealing with, and how can we equip ourselves to become able partners with them? In this process, you do scenario planning, but more importantly, you try to map where we are today with outlines. Where are our clients headed? Identify those common themes. Identify the upward trends, and take a bet on what are those choices that you will have to make from a technology perspective, and derive those answers. Then again, you set strategies within a set of choices. What things would you choose to do, and what would you choose not to do?
We follow that process over six months, and effectively answer questions like what industry segments or geographies we are most closely aligned [with]. How do you align your capabilities? How do you then derive a common message that you can take to all stakeholders?
Revisiting Motivation-Driven Success
Knowledge@Wharton: It is often believed that the job of a leader or a CEO is to motivate people, but I understand you think that’s wrong. How so?
Rakesh: This is one of those lessons that was hard for me to learn. I always used to believe that as CEO I always have to be motivating people who work for me – people who own those P&Ls and business units that make up the company. Then I realized that the real answer really is not in trying to motivate people all day long, but to get a team of self-motivated people together, set their priorities and then let them free to work their magic. All this while, you continue to give them guidance and anchor them. You then put in place some control mechanisms. But more importantly, getting a team together of highly self-motivated individuals is a much better way than trying to motivate everybody on the team that may or may not have the self-motivation.
Knowledge@Wharton: How do you define the attributes of people who should be on the leadership team? What do you look for?
Rakesh: As you get into the concentrated times that we are living through right now, with disruption at its core, [we need] people to be self-motivated, [and] be excited about the change that the world is going through, because that’s when they will embrace the change and try to make the most of the opportunity.
Secondly, from that ability to see it as an opportunity comes the passion to work for the clients and for the employees. Thirdly, to marry those two, [you need] the ability to execute on the vision, which means to align with the vision and the goals. Opportunities are executed in a way that you can make something happen for the business, because in the end, we do work for our stakeholders.
Knowledge@Wharton: You’ve also said that people often believe that business is all about people, but that isn’t right, either. You’ve changed that to say that business is all about the right people. Going back to the same question about motivation and self-motivated people, could you explain how you define the “right” people?
Rakesh: It’s very closely tied into the previous discussion we had on the amount of self-motivated folks on the team. This is something that I remember reading a long time ago in James Collins’s book, Good to Great. I think there, the concept was to “get the right people on the bus, and the bus will find its destination.” The bus is trying to find its destination, and then tries to drive the people in that direction.
“When you get a set of highly talented, self-motivated people in the room, you expect them to bring ideas and opinions, and it is incumbent that you have the openness and the culture of debate to drive the right decisions.”
In my book, you need people with a growth mindset – people who are willing to learn and change and embrace change. You also need people who see beyond personal ambition. Ambition has to be foremost about the company. It is above and beyond gamesmanship and the ability to derive outcomes that define those attributes of the “right” people.
Consensus is Not Necessarily Agreement
Knowledge@Wharton: When you get very highly motivated, passionate people together in a team, one of the biggest challenges that leaders face is getting consensus, and getting all the people on the same page. What is your approach to that? How strongly do you feel that people should have the ability to disagree, both with you, as well as with one another, in getting to where you need them all to be?
Rakesh: It’s a great segue into one of my other big learnings. My personal managing style has always been one of openness and transparency. I have always fostered a culture of debate. When you get a set of highly talented, self-motivated people in the room, you expect them to bring ideas and opinions, and it is incumbent that you have the openness and the culture of debate to drive the right decisions.
That doesn’t mean that everybody has to agree with every decision, but it does mean that everyone has had an opportunity and the chance to voice their opinion. Some may have a much stronger opinion than the others, but that’s the whole reason why it’s important to debate and arrive at the best ideas.
I think sometimes people confuse consensus with agreement in the room, and I don’t think that is always going to be possible. Part of my learning was to go through the culture of debate and openness, and you, in the end, decide that this is the direction you should go into, unless you forcefully and practically drive this agreement to commit.
I realized that just having a culture of openness and debate and letting people agree to disagree doesn’t foster the right environment. You need to have them to commit, and you could move forward with the decision you made. That’s a subtle difference in the way you can get people behind the decision.
Commitment and Ambition
Knowledge@Wharton: Could you explain further what you mean by “commitment,” and how do you execute towards commitment?
Rakesh: Firstly, it’s not a black or white decision. Every decision will not have 100% agreement from every stakeholder or personnel team. I’ll give you a real-life example. We were discussing as part of one of our strategic sessions the opportunity offered by various segments of the cloud in a competitive market. Each of those segments is a juicy prospect for us, because multiple segments are growing in excess of 20% a year. When you are trying to form a business that is future-ready, you have to discuss and debate every possible segment of the market. We debated on which segments of the market are most suited and have the best answers for us to succeed. At the end of the discussion, we decided that we would not play in two segments. But of the 10 people in the room, two people didn’t have the fullest conviction on [that consensus] because they felt they were losing an opportunity.
“Sometimes people confuse consensus with agreement in the room, and I don’t think that is always going to be possible.”
Eventually, while we understood their position, they committed to support that decision in all forms and manner, because that was the best thing for the company. It may not have been in alignment with their personal opinion, or in one case, in their personal interest, because we were asking one person to let go of the bulk of business that he had built fairly recently.
The way you drive that is to think of the institution first, by putting the corporate objectives first. Eventually as CEO, my job is to then step in and help break the tie in some of these decisions and carry them to total commitment and execution. What we don’t want to do is deal with the same issue the next time we discuss something of the same nature. So very consciously and very openly driving this culture of debate, yet [securing] commitment on the final decision once a decision is made, is a subtle but very important difference.
Knowledge@Wharton: I’m glad you mentioned corporate objectives. Very often in these open debates, especially if you have self-driven, self-motivated people, what you’re seeing play out is people’s ambitions. The question that arises is how you get people with the right kind of ambition involved? What kind of ambition do you want for people who are on your team?
Rakesh: Ambition and aggressive ambition are often misunderstood. We definitely want people who are ambitious and who have the hunger and the passion to try hard. That ambition, first and foremost, has to be about the company, and not about individuals. If you align everybody in that direction, then you cut away a lot of the cross-purpose effort or one-upmanship or the gamesmanship – and essentially, that becomes the very principle you embrace.
This is not easy. In many cases, you will ask people to let go of something that may hurt them in the short-term, but the real answer is really in the long-term. If we do the right thing for the institution, everybody will benefit, everybody will get along better, and everybody will have an opportunity to grow. That’s the message that eventually resonates with the people, because they’re all tied into the same objective, which is overall company growth.
Finding the Right Successor
Knowledge@Wharton: One of the hardest decisions for any CEO is finding a successor. What are your views on that? How should a CEO go about choosing a successor and plan for a successor’s success?
Rakesh: It’s one of the most complex subjects. It’s also one of the hardest to execute. Firstly, we embrace the principle that says, “Good things work with each other, and great things work for each other.” When you do that, it goes back to the point that we were discussing, which is putting the institution first. When you do that, you also create an environment where you’re creating the ability of people to step into each other’s shoes and roles. We often have plans in place that we put for succession of our business leaders, unit leaders, P&L owners, and people in the C-suite.
Most importantly, it’s not adequate to [merely] define and execute a succession plan. A succession plan doesn’t end with just appointing a successor. There’s a common saying: “No success without a successor.” I’ve extended that based on my personal experience to: “No success without a successor’s success.” That means you have to be invested not only in finding a successor, but also in making that successor successful. A number of the principles we’ve discussed come into play as you do that.
“We definitely want people who are ambitious and who have the hunger and the passion to try hard, but that ambition, first and foremost, has to be about the company, and not about individuals.”
Knowledge@Wharton: When you think about your own leadership journey – not just at Mphasis, but even before that – what is the biggest leadership challenge that you have faced? How did you overcome that challenge? What did you learn from it that you can share with other leaders?
Rakesh: One of my biggest learnings, having lived through at least two different organizations is firstly, the only problem you want to ever strive for is the problem of growth. Then you have the reverse situation, which means when you have negative growth, you create a set of problems for which you are hard pressed to find solutions. I had to live through that phase for a couple of quarters. It puts immense pressure on the organization, on the leadership team, on the CEO, the relationship between the CEO and his team and also the relationship between the CEO and the board and the shareholders.
I wouldn’t wish that on anybody, but it was an incredible learning that you have to be proactively planning. You have to proactively keep your early warning systems in place, so you don’t have to take some of those very harsh decisions that end up being taken when you have consequences from negative growth. For me, growth was at the center of challenges, and that’s the challenge I’d love to solve the most, and not the other way around.
Knowledge@Wharton: Do you have any final comments?
Rakesh: The [CEO’s] role is about keeping on learning. I don’t think we can stop learning or have an attitude that “I know it all.” It goes back to a phrase that I commonly share: “We are just like doctors and lawyers – we are always practicing.” I think CEOs are also just practicing and trying to get better.