Story of HCL’s success

If you are an avid investor in stock market, you wouldn’t have failed to notice how HCL Technologies stock price has grown year on year from 2009 to 2012 (~Rs 90 to ~Rs 500), the period in which Information Technology companies in India went through tough times due to recession (and still continuing). It is almost a five times growth when compared to one of the best marketed IT companies of India Infosys Technologies whose stock price had grown around only 100% from ~Rs. 1100 to ~Rs. 2200. The answer to the above puzzle resolved after going through a fantastic video in YouTube (http://youtube/6P2GV1lMtuw ) in which HCL’s CEO Vineet Nayar shares details about the company’s initiative of “Employees first, Customers Second” a major transformation initiative the company has embarked upon five years ago.

The transformation option that any Organization has before it is basically two

  1. Innovate on what you do? – Basically this is about coming up with innovative products / services that you render to your client. This is not that easy as you know there are 1000s of failed new product initiatives for every one block buster product like iPad or iPhone and there are 1000s of failed new services for every Starbucks…The second option is on
  2. Innovate how you do it – This covers the operational aspects of how you handle it differently than others to deliver superior value to your customer

HCL decided on option (2) that is on “Innovate on how to run the company” as its preference and uses the below simple three step approach that is presented below

  1. Create dissonance of where you are today. Come out of complacency and be unhappy with your current situation. Vineet says it is the starting point of transformation as he feels if you are not unhappy, the transformation would never happen. This is true for individuals as well as Organizations
  2. The step 2 is to create a romantic future of tomorrow. Something like number 1 IT services company in the world, the most innovative company, ambition to create the next iPad or iPhone etc
  3. Think through and implement the small little steps one should take to move from point A to Point B

On “Innovate on how to run the company” he talks about two critical aspects of HCL’s “Employees first, Customers Second” initiative

  1. Redefining managers role in an Organization to bring in motivation, energy and enthusiasm to the people who they lead and
  2. Employees role in creating value in an Organization

He explains the first one with a nice story of 2 boys fighting for a girl. These two boys where fighting with each other all alone for some time, then over a period of time they start fighting with the help of 10s, 100s and 1000s of supporters and at some point though the two boys know for what they are fighting for but none of their supporters remember it.

Finally the first boy understood that if he has to win the fight, he has to fight aggressively than the opposing group and start fighting much more aggressively but interestingly the second boy thought to win the game it is not about him fighting it out, it is all about making the 1000s of his supporters fight against the other group with energy, enthusiasm and motivation. Hence the second boy decided to drop the sword and get into the mode of coaching others who are fighting for him.  It is not that tough now to predict who would win the game and hence the role of managers is to motivate, equip, support and energize his team to win the game than he getting into the game. Many times managers don’t understand and fail

Similarly managers outsourcing the above role to HR managers are not an option and the role of HR managers is only to coach managers to perform what they are supposed to do as a manager rather than coaching 1000s of his team members ….

Now regarding role of employees in value creation and why employees first and customer second, Vineet says the answer lies in answering the below fundamental questions

  • What is the core business any Company like us are into? – It is all about creating value for customers. More the differentiated value it can create, better the business growth
  • Where the value does created? – It is obviously at the interface between customers and employees
  • Who creates the value – It is the employees in the interface between you and customer create the value
  • Hence what should be the business of managers and management should be? – Nothing other than ensuring the team is energized, encouraged and motivated

Thus the above forms his reasoning behind why employee first and it is a logical answer for the customers to accept as it ultimately increases the value these employees generate for their organization

Now in terms of initiatives he has put together to make it happen, he talks about a star organization instead of a pyramid organization. In a pyramid organization “only the employees are accountable for management” whereas in a star Organization “Not only employees are accountable for management, it is also the management accountable for employees”

On initiatives HCL has put in place to make the star organization possible, Vineet shares about the below key initiatives

The first step they did is to create positive dissonance among 1000s of its employees on how bad their current situation they are, both in terms of current competition as well as possible new competition. This primarily happens by letting know everyone transparently on how poor the company performs on several of weak parameters. Though it is a risky step, Vineet said he decided to do that as there is no other to create dissonance otherwise we would all rest in past laurels

The second step is to gain complete support and acceptance from employees for the initiative to innovate on how they deliver services. They decided to do it by building a high level of trust between employees and management – pushing the envelope of transparency further and further by sharing both positive and negative news about the organization to everyone and next by opening a portal where anyone can question about anything to the CEO and the CEO answers to these questions personally. The interesting part about this initiative is that the person who asks the question should disclose his identity and his questions / answers are published to 1000s of HCL employees. Though everyone were pessimistic initially saying no one would ask / share critical feedbacks to the CEO by asking tough questions, interestingly he says even today 99% of questions he gets is on areas of poor performance of organization than to do with good things about HCL. This helps everyone to understand their weakness and put in place right initiatives at all levels to strengthen the same

The next initiative is about breaking the conventional 360 anonymous feedbacks to 100% transparent one where anyone can share feedback about anyone (Not just in the zone of control but on anyone who are under zone of influence) in 70,000 people organization and all feedbacks about the managers are published publicly in a portal including the feedback that the CEO of HCL receives from people who work with him.

The above few are some of the few successful initiatives among many failed ones and more such initiatives are detailed his book

The results of the above are obvious though he thinks it is irrelevant as he feels what their strategy is simple and logical and if at it doesn’t reflect in the results, it can only due to failed implementation and not due to the bad strategy

  • In 2005 – 2010 HCL is the fastest growing company in recession
  • First Indian company which has increased in headcount in UK and US by 1000s during the recession period
  • Rated no. 1 in employee satisfaction
  • Increase customer satisfaction (went up 26% )

He concludes finally by saying in knowledge based industry put together initiatives that places “Humans first” if you want to succeed …



One thought on “Story of HCL’s success

  1. Do we have data on attribution in HCL , before and after EFCS? Also what was the industry attrition levels during this time period?

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