There were always questions on whether two men –or women- can co-exist at the top. One more answer to that never ending debate was added by Wipro. In 2008, Wipro appointed two people, Suresh Vaswani and Girish Paranjpe at the helm, as joint chief executive officers. This debate of joint leadership is best exemplified in large global corporations, with large operations in two continents, notably of Anglo-Saxon origins. Unilever Plc is another example which moved to a single line of command in recent years.
While appointing these two as the joint CEOs, Wipro had said that the company has tremendous opportunities to grow in its sectors, and by appointing two CEOs, it is giving the twice the leverage to capitalise on these opportunities. Paranjpe headed the finance function at Wipro, and was the president of the finance solutions division, before becoming the joint CEO. Vaswani held multiple positions as a leader in the company, and was the president of Wipro Infotech (India, Middle East and Asia Pacific IT business of Wipro) and of global practices (enterprise application services, testing & technology infrastructure services).
While the justification for having joint CEOs is usually to combine their rich experience and complementary skills and so on, the common belief is that it is a please-all strategy. Choosing one over the other could send the losing contender straight into the arms of a waiting rival. A hurt ego combined with incredible talent could see the rival benefiting more. Another could be not being sure which of them is actually a better candidate, and this co-ownership gives the board time to figure. The disadvantages of two leaders does mean that decision making would take more time and unity of purpose may not always have the same urgency and clarity of thought.
When things are going well, it does not matter but when performance falters, the structure comes under question, as it has in global corporations such as Unilever, where it was thought that the dual structure was an impediment.
Wipro’s performance in 2010-11 has been a bit disappointing, as the company has not done as well as peers such as the market expected. In the December 2010 quarter, its IT Services business’ income rose by 5.6% over the previous quarter while net profit was up by 3%. In comparison, Infosys Technologies’ net profit was up by 2.5% while that of Tata Consultancy Services was up by 9%. Therefore, Infosys and Wipro appear to have done similarly on the profit front, with TCS leading the way as far as outperformance is concerned. Whether performance had anything to do with the resignation of the two CEOs is not known.
No official reasons have been given for the exits. Some clue that the joint leadership role is not a preferred one emerges from Wipro chairman, Azim Premji’s statement: “The Joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times. With the change in environment, there is a need for a simpler organization structure.” The resignations are effective February 1. Interestingly, both will continue to work with TK Kurien, till the end of the quarter, to ensure a smooth transition.
TK Kurien is a rather intriguing choice for the CEO’s position. The Wipro website lists his current position as the President Wipro EcoEnergy, the clean technology business division of Wipro. It says he “runs some of the critical growth engines in the organisation’s overall business plans.” He has been the CEO of Wipro’s healthcare and life sciences business and the telecom service provider business. He is a member of the Wipro corporate executive council.
He is a relative newcomer to the IT industry, having worked in GE X Ray from 1997 to 2000 and before that he was the CFO of GE Medical Systems (South Asia). Wirpo could have well promoted somebody from within the IT services hierarchy who could take over the leadership role. So, he appears to be somebody who is a Wipro man, having worked there for 10 years, and has the confidence of the board, but may also bring an outsiders’ perspective to the IT services business, if that is what is required to attain the desired growth path.
The Wipro share price was down by about 3.5% at the time of posting.
Read the Wipro statement here.
From the web: An interview in the CIO magazine of both CEOs, an indepth article on the subject by India Knowledge@Wharton and 20 questions with Girish Paranjpe in the FT.