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Organizational Resilience | BSI and Cranfield School of Management
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Combining the functions of strategy and
risk at Infosys
An interview with
Deepak Padaki
,
Executive Vice President -
Corporate Strategy and Chief Risk Officer, Infosys
Infosys is a global leader providing technology services and consulting to Fortune
500 companies, enabling clients to create and execute strategies for their digital
transformation. Infosys employs a team of 199,000+ innovators across the globe.
In the fast-moving world of technology services, Infosys has to stay current and up
to date on new technology. Organizational Resilience is critical to success, “at a time
like this when there is high disruption, a lot of change, a lot of unknowns”.
Infosys has 32 risks that it tracks at an organization level. The 32 risks encompass
four core areas: strategy, strategy execution, operations, and external risks.
Technology is “disrupting our own business”, especially when you look at things like
automation technologies, which “are fast disrupting the services-oriented model
that we’ve had for over 30 years now”. Infosys recognized the need to change the
business model, and the failure to change the business model was one of the
biggest risks to shareholder value: “you always have risks like business continuity,
operational risks, fraud and compliance, but we felt the biggest risk to longer-term
shareholder value was strategy and the successful execution of strategy.”
Infosys saw the need to change its business model back in 2008 because it
“was more paranoid than some of our peers regarding the eventual effects of
commoditization”, but at that time it “probably overestimated the market’s readiness
for what we were trying to do.” However, in the last two years, it has become even
more obvious that “the old model won’t be sustainable as it is for too long.” Infosys
is now moving from a pure services model to a “software plus services” model to
gain a better profit contribution and margin by means of investing in intellectual
property. It recognizes that this change is not unproblematic, “There is a gravity of
the whole traditional core business that lends itself to inertia. As that’s making you
money, you are weighed down by it and it takes effort to gain escape velocity, so you
don’t really focus on the new stuff.”
The new strategy emphasizes innovation, which was a distinct shift from what had
been Infosys’ philosophy for the previous 20-25 years. In the past it “was running a
services model with factory-like efficiencies, with a high amount of standardization,
homogeneity, and high productivity.” It was recruiting 25,000 new employees from
undergraduate colleges every year, who were trained so that they fitted into the
process quickly and correctly. The systems in the company “were geared for scale
and transactions, over agility, innovation, creativity and fast failure”. Now Infosys is
moving from that to an environment where it is saying “everybody needs to come
up with something new, and they need to innovate.” To bring greater alignment to
operations and decision-making in the company, and lower risk to the strategies
that it has adopted, Infosys has combined the functions of strategy and risk. Deepak
is now “both the chief risk officer of the company looking at enterprise risk and also
the head of strategy, because we felt that these are two sides of the same coin.” A
core function involves monitoring “what is happening with the competition, what is