"The slowdown in the telecom sector has hurt us more than it hurt our competition"

"Innovations is a structured methodology and there is nothing miraculous about it"

He is a little shy," Wipro's head of corporate communications warned Business Today of Azim Hasham Premji. Last month, when BT's R Sukumar met with the 57-year-old Chairman and Managing Director of Wipro, he was anything but. Excerpts:

In the short-term, has Wipro's emphasis on technology services hurt it?

Well it slowed us down. The telecom sector accounted for 28-29 per cent of our business. That market has taken the biggest hit. Even now, in the ramp up that has taken place, that sector has been the slowest to catch on. So, it has hurt us more than it has hurt our competition. But this is a business of high expertise. It has been going through a bad patch, but it will recover.

What was the reason for making Wipro's new venture, Wipro Lifesciences and Healthcare, a separate division?

This market isn't new to us. Wipro-GE Medical Systems is a $200 million (Rs 980 crore) business. Wipro Biomed is approximately a Rs 100 crore business. Wipro Technologies has a $5-7 million (Rs 24.5-34.3 crore) healthcare practice. Everything was fragmented; we pulled it together. Wipro-GE continues as a separate company, obviously, but we have leveraged its expertise.

Second, the whole area is a large market opportunity. Healthcare is a $25 billion (Rs 1,22,500 crore) market growing at 20 per cent. Life science informatics is a $1.6 billion (Rs 7,840 crore) market growing at 25 per cent. We think we can get a decent share and build a large business. We'll do that organically and we'll do it through acquisitions. We've been in active negotiations on those.

There have also been reports on negotiations with Deloitte?

I will not confirm or deny that. But I do not know the origin of this.

But you are open to acquisitions...

In it consulting?

In IT consulting.

Without question.

Are we likely to see fresh investments in your consumer care business?

We are likely to see fresh investments. We are likely to see marketing investments. We think it is a strong brand business. I think it is a business in which we've consistently made good money-(it has a) very high return on equity.

You've recently embarked on an initiative to make Wipro more innovative. How do you get a company to innovate?

We periodically identify thrust areas as a corporate initiative. Five years back it was quality-a major corporate initiative, led by me. Because we thought that was a game changer.

So we invested seriously in building a differentiator through Six Sigma (a statistics-heavy quality technique pioneered by Motorola and popularised by GE) and through SEI CMM 5 (a certification signifying quality of processes in software companies, named after Carnegie Mellon's Software Engineering Institute).

That initiative is centrally orchestrated; it is centrally measured; it is centrally put into objectives for each and every person and influences his decision making.

Two years back we launched an initiative on digitisation or e-enabling the company. We saw that as being critical to speed, for being able to dialogue with employees, for being able to reduce lines of communication with the customer.

We identified innovation as a major corporate initiative a little over 15 months back. We needed a game changer. We needed a game changer for our existing businesses and we needed a game changer with our customers. We needed additional sources of revenue.

Our definition of innovation is very simple. It is applied creativity: how do you use a structured, pre-defined methodology to draw ideas from people, to sift through the ideas, to support, at various milestones, the good ideas that can result in products and services, to back those products and services so as to achieve a quick ramp up in the markets. It is a structured methodology and there is nothing miraculous about it.

Has this initiative been launched across the company?

We have now launched this initiative in two of our businesses, Wipro Technologies and Wipro Infotech. We will shortly be launching it in Wipro Consumer Care and Lighting. And then in Wipro Healthcare and Life Sciences.

We have identified 4-5 themes in Wipro Technologies, three themes in Wipro Infotech and we are looking at projects in those themes that we can bring to commercial profit. It goes through a structured methodology. And it gets periodically reviewed. At my level it gets reviewed every quarter.

Project teams are formed, project leaders and marketing leaders identified for each of the themes; they are made accountable; their remuneration package is modified. A substantial part of their remuneration is linked to the commercialisation of the products and services-very much like intrapreneurs. It doesn't work perfectly, but we're learning. They can make big money like very very top quality salesmen can make big money.

Wipro has always been a process-heavy company hasn't it? Six Sigma, SEI CMM Level 5... these are processes that have really driven the company's growth...

It is very difficult to manage high quality growth without good processes. In one way, processes force some amount of culturisation... You have cultural continuity. You have a good process for inducting a person. You have a good process in terms of training for leadership.

All these methodologies-SEI CMM Level 5, Six Sigma-have very heavy process orientation. You can say that it makes an organisation a little more bureaucratic, but as a trade off it acts as an anchor for managing growth.

But these are processes supposed to be having a strong business orientation...

Hopefully. Not necessarily all. To an extent we tend to be a little more bureaucratic than we'd like to be. Things are nailed down into processes. The government is one extreme. A start-up which has nothing in terms of structure is another. I think we are reasonable. How do you induct 4,000 people? In our peak year we inducted 3,800 people. Now we are back to ramp-up mode. We've added, in the first two months of this year, 500 people.

With all these processes, do you think Wipro has arrived as an organisation?

Nobody ever arrives. The business we are in is ruthlessly competitive. And the competition is very good. It is not easy to compete with an IBM Global Services or an Accenture. They are world class service organisations. Unless you are constantly transforming yourself you are finished.

There is the impression that Wipro was slow to issue stock options; slow to share wealth...

We were the first company in India to start a stock option programme in 1984. I must have personally spent 250 hours of my time designing this programme. It was absolutely pioneering. Our thrust was, how do you reward senior management for wealth creation. The earlier people who are with us have really become wealthy because the programme was directed at senior people. I think we redirected it about six years back to make it more broad-based.

You go to an employee today and ask him, would you like Rs 100 as a bonus, paid over five years-in other words, if you stay only for two years you get only Rs 40-or would you like a stock option, a vast majority would opt for the bonus. That says a lot.

I don't think you can necessarily say a stock option programme is the be-all and end-all of remuneration strategies. For a short period of time, 1998, 1999, 2000, that was how you created a brand in the marketplace.

There's also been much said about your considerable holding in Wipro, around 85 per cent...

A little less than 85 per cent.

That's led to some questions on succession. What role will your family play in the business in the future?

We have a systematic succession map for every position including mine. Neither of my two sons is part of the succession plan. That's not to say they will never hold this position, but they aren't part of the plan at this point in time.

In a professional organisation, you look to the talent within and outside and decide who the successors are. They need not be family members. That doesn't eliminate them.

But they will go through the grind.

They have to go through the same ladder-climbing anyone else has to. At the end of the day, this is a large complex organisation with a market capitalisation of $8 billion (Rs 39,200 crore).

The worst thing you can do to the investor community, which includes me, is to get the wrong person into a leadership role. It's very expensive. It's much cheaper to give my son $500 million and tell him to go and blow it than to get him into a leadership position where he destroys half the value of the company.

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