Francisco D'souza is reinventing Cognizant, the role of the CEO and, if it all works out, the industry itself
In October 2009, one of our former colleagues Elizabeth Flock asked Francisco D’Souza a question: Which is the one book that influenced you the most?
Frank, as the now 43-year-old CEO of Cognizant Technology Solutions is known to friends, came up with an entirely clichéd answer. Built to Last by Jim Collins and Jerry Porras, he said. Because it provided him with a framework to establish a “cult like” culture focussed on core values. And that once this culture is in place, a firm doesn’t need personality-led leadership. End of the day, Collins and Porras argued, no single person in a firm ought to be bigger or more important than the team and its collective mission.
While it is not our intent to take anything away from a book many CEOs consider mandatory reading, we’d like to believe there was an earlier influence on him—that of the legendary French writer and aviator Antoine de Saint-Exupéry. “A chief is a man who assumes responsibility,” Saint-Exupéry wrote. “He says I was beaten, he does not say my men were beaten”.
How else do you explain the motivation of a man who’s got the gumption to hand over everything he helped build over the years to his team, follow instinct, and throw himself into unchartered territory? In Frank’s mind, there seemed no other way to build a framework that puts everything at stake, including his own future and that of his firm. It isn’t the kind of thing most people we know of do.
Think about it for a moment. As early as August last year, a day after it had overtaken the formidable Wipro and was within striking distance of overtaking Infosys, we documented the atmosphere at Cognizant on our website (www.forbesindia.com). “...it means the company has a certain momentum, which to a large extent stems from its leadership....I’ve seen the same momentum in Infosys during the early part of the last decade when NRN Murthy had handed over the reins to Nandan [Nilekani]... Each time you visit the campus, you felt the air was charged with something. Cognizant gives you the same feeling these days. That is its most dangerous weapon.”
Like many people, we assumed the most intuitive thing for any leader would be to put all of their personal might into going for the kill and displace the incumbent—in this case, Infosys. But not Frank. His attention was elsewhere.
The world around Frank was changing at breakneck pace. His American customers, especially in financial services, healthcare and life sciences were talking a language peppered with words like cloud, mobility, social media, big data, and how all of these would change the landscape Cognizant was operating in.
Then there were people around him like Malcolm Frank, who heads strategy and marketing at the company, telling him that clients were facing dissonance in their organisations. Over the weekends, people were busy on mobile phones or tablet devices and connecting with their friends on social media platforms like Facebook and Twitter. But when they came into work on Monday, they were staring at enterprise applications built during another era.
When looked at from that perspective, clients were talking one language. But companies like Cognizant and their ilk were speaking in a different tongue. “Every one of our clients is trying to figure out how to make Monday mornings seem like a Sunday night. They were facing a crisis and we have to help them,” Malcolm says.
This was particularly critical for Cognizant, because its story is all about growth. On that count, it was doing pretty damn good. While everybody else in the business was growing on average at 18 percent, Cognizant’s pace was a furious 33 percent. But it came at a price; in this case, lower operating margins. So, while everybody around was holding on to their purse strings, Cognizant awarded its people an average bonus of 150 percent. For every Rs 100 that its peers in the business earned in revenues, their operating profits were higher. Wipro, for instance, kept on average Rs 25 to itself, while TCS earned Rs 29 and Infosys Rs 36. Cognizant, on the other hand, could keep just about Rs 19-20 to itself.
“We are a revenue focussed company, our margins are lower than our peers, and when you have that model people get too focussed on growth,” says Gordon Coburn. “If you look at the landscape of IT industry, it is littered with companies that did so well that they went out of business.”
The evidence was there for all to see. Digital dominated the landscape during the minicomputer era. But it failed to prepare itself for a distributed computing world. When client service came of age, it looked like Cambridge Technology Partners would be the next big thing. But it ended up as lunch for Novell as the internet era dawned.
His world view is interesting. He believes the technology business doesn’t follow a straight trajectory. Instead, it follows an S curve. That means there are some years that are more important than the others. “In our view 2012 is a very important year, just like 1999 (when the internet era was born) and 1992 (when ERP was created). We are seeing a new IT architecture, no one knows what it is called as yet, but it will change this industry,” says Malcolm Frank.
Cognizant’s top management don’t sit in a single location. While Mehta was in Dallas, Chandra was in Chennai and Frank and Gordon were based in Teaneck, New Jersey. Every weekend, and on some weeknights, the four of them would get onto late night calls that ran for hours on end discussing how to implement the model given the nuances of Cognizant.
(This story appears in the 11 May, 2012 issue of Forbes India. To visit our Archives, click here.)