Describing the company’s performance as ‘satisfying’ in an analyst interaction in April, Premji laid out the rationale for a joint-CEO structure: ‘A joint-CEO structure is the best way forward to leverage the depth of our leadership and maximize the opportunities that are ahead of us. Girish and Suresh have worked closely over the last ten years in spearheading the growth of Wipro’s IT business and will work together to jointly shape and drive the vision, strategy and results of the newly structured IT business.’
Notably, his decision to institute a joint-CEO structure was one of the few times that the chairman had not really agreed with many of his closest executives, including the then head of human resources, Pratik Kumar, who was of the view that a single CEO in Suresh Vaswani was probably a better idea. Kumar, though, declined to comment on the matter.
The appointment of joint CEOs wasn’t a unanimous board decision either. ‘There were reservations about the appointment of the joint CEOs to start with. But in these matters, the board would defer to his decisions,’ says a former board member, on the condition of anonymity. ‘The joint-CEO experiment was expected to fail. Azim was of the view that Suresh and Girish were insiders and their complementary leadership skills would help the company deliver. Azim thought a strong client relationship would help Suresh, and Girish would lead the delivery. What Azim and some of the board members failed to realize was that you needed different skill sets to lead the company,’ he adds.
It was bound to end badly.
Friday, 21 January 2011, was a day that many current and former Wipro
leaders remember vividly. Only a day earlier, one of the former leaders, who reported to one of the two CEO, had been asked to fly down from Europe to Bangalore. Wipro
had asked more than two dozen of its senior leaders who reported to both the CEOs to be at the company office in Electronics City that Friday by 8.30 a.m.
None of them knew at that time that only two days ago, on 19 January, after a marathon seven-hour meeting, the board had decided to ask the two CEOs to leave.
‘The discussions went on for some time. But the decision [to sack the joint CEOs] was not unanimous,’ says the board member cited above, who also says that ‘performance’ was the reason behind the sacking.
On Wednesday, 19 January, the board started its meeting at 10 a.m. Sitting outside the boardroom, Vaswani and Paranjpe were busy going through their reports, which they expected to present before the board. Normally, they would have been called in by 11.30 a.m.
However, on that fateful day, the call from the board remained elusive until 4 p.m. Vaswani, who was getting restless by 2.30 p.m., started pacing up and down, wondering why it was taking so long for the board to call them in.
When the co-CEOs were finally ushered in at 4.10 p.m., they were surprised to see only four board members in the room. In addition to Premji, former nomination and remuneration panel head Ashok Ganguly, former audit committee head Narayanan Vaghul and current board member William Arthur Owens were present. Premji was looking at the sheaf of papers before him on the table.
As both CEOs sat down, Ganguly spoke: ‘The board has come to a decision that it will no longer have the joint-CEO structure and instead will have a single CEO run the company. The board has decided to appoint T.K. Kurien as the next CEO.’
Vaswani and Paranjpe were too shocked to ask for the reason behind their sacking. Still, after a couple of minutes of silence, Vaswani said: ‘Well, since you have decided, we can only request that we be given a graceful exit.’
‘Of course,’ replied Ganguly.
A couple of minutes later, the meeting ended. As Premji got up, Vaswani extended a hand to greet Premji and wished him good luck.
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‘Good luck to you too,’ Premji replied. That was the last time Vaswani spoke with Premji.
What really happened to trigger one of the most dramatic CEO exits in the Indian IT industry?
Media reports of the time mentioned Cognizant displacing Wipro from its perch in the October–December quarter as the reason for the board’s decision to pull the plug on the two top leaders.
But this isn’t a convincing argument for two reasons. First, Cognizant had been growing faster than Wipro since 2007, and when the New Jersey-based company toppled Wipro from its ranking, it wouldn’t have come as a surprise. Second, from mid-2002 until 2010, senior executives had been warning Premji to dump the company’s approach of choosing profitability over growth or risk being overtaken by Cognizant.
Paranjpe and Vaswani were expected to work with Kurien through the March quarter to ensure a smooth transition, and both men were busy doing the paperwork as part of the termination. They believed their departure would follow the script agreed upon between them and the board.
Then came the shocker.
On 23 January 2011, when Wipro’s management met with the media, as the company announced its third-quarter earnings, the outgoing CEOs were absent. In one of the interviews with the press, Premji broke the promised agreement of saying that the CEOs had stepped down voluntarily and hinted that under-performance had been a key reason that had led the board to sack them.
‘To be fair to our previous two CEOs, they were more reflective, more management by consensus. But the whole cycle of decision-making got delayed. We lost time. TK is willing to make the big swings,’ Premji told Business Today magazine a year later in February 2012.
Excerpted with permission from HarperCollins