Put any CEO of a large corporation on the spot and ask them to choose people from history who have inspired and shaped their leadership skills, and the trio of Nelson Mandela, Martin Luther King and Mahatma Gandhi might not be an unusual selection.
All three spearheaded movements that ultimately led to seismic changes in society. But it wasn’t because of the direct action they took that these three historic figures were chosen as leadership heroes by Vineet Nayar, former CEO of Indian software company HCL Technologies (HCL). “I don’t think they did anything,” Nayar says, when asked to justify his choices. “Instead they enabled people to do what they thought in their hearts was the right thing to do. That is the future of leadership.”
Nayar’s refreshing approach to leadership, outlined in painstaking detail in his book Employees First, Customers Second – turning conventional management wisdom upside down and in a new book Collective Genius: The art and practice of leading innovation by Linda A Hill, Greg Brandeau, Emily Truelove and Kent Lineback, is that if the CEO of a business believes they are the “owner and the doer,” they will not accomplish anything. The vital skill business leaders need is to empower people within an organization to contribute their skills and input to encourage innovation rather than stifling it.
Nayar followed this approach when he took the helm of HCL in 2005. The company, founded in the mid-1970s, had flourished during the 1980s and 1990s, but faced serious challenges. Despite an annual turnover of US$764m, which was growing at a cumulative rate of 35%, HCL was perceived as living on past glories. Having joined in 1985, Nayar had worked in management roles – including heading up a successful startup business within HCL – before taking the top job. This helped to hone his leadership skills, but didn’t prepare him for the shock of realizing how far the company had slipped, with existing customers reluctant to renew contracts with HCL and new business opportunities scarce.
The answer lay in defying conventional wisdom by putting employees first and customers second. Nayar believed that since staff are the closest interface with the customer they are the new value zone for companies: the place where value is truly generated for customers.
By doing so, Nayar inspired employees and customers and set HCL on a journey that has made it one of the fastest-growing, profitable global IT services groups and, according to BusinessWeek, one of the 20 most influential companies in the world.
Nayar and his team implemented the employee first philosophy by creating a sense of urgency, enabling staff to see the true state the company was in and inspire them by showing them what it could become. They inspired trust by increasing transparency in communication and information sharing. He inverted the organizational hierarchy by making the management and enabling functions accountable to the employee in the value zone and helped staff fulfill their potential by fostering an entrepreneurial mindset, decentralizing decision-making and allowing them to own ‘change’.
An online help desk called Smart Service Desk was developed so staff could raise issues, and an online channel called ‘U&I’ enabled employees to directly ask Nayar about the business. He didn’t just consult about small issues, he invited colleagues from across the business to weigh in on strategy.
Nayar also used U&I to crowdsource business ideas. He put the plans of HCL’s top 300 managers on the portal, before inviting 8,000 other managers in the group to review them and provide input online.
In a dramatic move, he also invited every employee to appraise him on an open platform that everyone in the company could see. This exercise in reverse accountability inspired staff across the organization.
Six months after Nayar unveiled his strategy, HCL won a US$330m outsourcing deal with DSGi – the largest in India’s history. Further deals soon followed. Revenue increased six-fold to US$4.6billion in the eight years Nayar served as CEO (he stepped down in 2013 to focus on the Sampark Foundation, a youth charity he established in 2004).
“The lesson for those hoping to lead innovation is clear,” write Hill, Brandeau, Truelove and Lineback in Collective Genius. “The last thing you want is a team that defers to you as chief innovator and simply implements your vision. That was the kind of organization Nayar inherited and had to change to save it.”
You can’t know in advance what direction you will need to go in to drive change. Transformations that evolve from the inside out are more likely to last.
Allowing managers and other staff to drive company policy can produce measurable improvements and release previously untapped creativity.
Organizations should be structured to serve customers. Like Nayar, don’t be afraid to reinvent the organization if it’s necessary to transform the business.