Extreme makeover Featured

7:00pm EDT November 25, 2007

Syntel Inc. was about to be left in the dust.

It was about 10 years ago, during the technology boom of the 1990s, and everything in the technology solutions field was going global. Local IT shops were drying up; being replaced by large, well-connected companies with the clout to provide their customers with a wide array of technology services.

In much the same way that neighborhood five-and-dime stores were being pushed out by big box retailers, small companies like Syntel were finding their share of the market growing smaller and smaller each quarter.

Bharat Desai, Syntel’s co-founder, chairman and CEO, faced a decision: Stay small and hope the market would still find a place for his company or ditch the small talk and begin to rapidly scale the company’s capabilities.

It didn’t take long for Desai to come to the conclusion that a complete corporate makeover was the only way for Syntel to survive.

“Lots of companies we competed with 15 years ago are gone because they didn’t make that transition,” Desai says. “Many companies we competed with in the last 10 years have attempted that transition and stumbled. But we thought that was so important to our survival and future growth that it was with a single-minded focus and passion I drove that.”

It was a process that required a complete change in mindset for the company’s employees, which numbered just more than 1,000 at the time. It also required tireless communication on the part of Desai, along with an unwavering belief that this was the right course of action for Syntel’s future, even as skepticism became evident among the company ranks.

Buying in

At first, Desai’s plan was to phase in a few new offerings here and there while still keeping the old business model intact.

It didn’t take long for Desai to realize that riding the fence between old and new wasn’t going to work.

“We figured out that the two business models have very different success factors,” he says. “Some of them were actually at odds with each other. You can only drive one culture successfully in a company, so we decided that globalization was the future.”

It was at that point that Desai realized exactly how radical of a mindset shift such a move was going to require. In any overhaul, the momentum has to start at the top. If those in upper management don’t believe in what is about to happen, they can’t expect anyone else in the company to buy in.

Desai began by laying out the need for change to every employee, presenting statistical evidence that showed in what direction the market appeared poised to move.

“I showed them how the services economy would globalize and what that meant, why our clients were going to embrace it, what some of the macro drivers were that are compelling businesses to move in that direction, and how our roles would change as a result of that,” he says.

Over the first year to year and a half, Desai and his leadership team tried to get as many people on board as possible. In any change situation, there will be people who jump on board right away, others who need some more convincing, and some who just aren’t going to budge.

Desai says people tend to find their category early in the process.

“You actually identify the traits quite early,” Desai says. “The people who aren’t going to make the transition are giving excuses as opposed to working to find solutions. What happens is that you find some people buy in and some simply don’t. You try and help some people along, and sometimes people change and see the light, and sometimes they don’t. Mindset changes are difficult.”

The employees who are the most adaptable can actually effect change themselves. Many times, they are thinking about change in ways that you haven’t.

“You obviously want the people who are running ahead and redefining the objectives as they go along,” Desai says. “There might have been some things that you didn’t think about or some new opportunity that comes along that they wanted to grab.”

For those who aren’t as receptive to the impending change, you have to resign yourself to the fact that either they are going to come along after a period of time, or they aren’t, and you’ll have to move on without them.

Desai conducted a transitional period that lasted between 12 and 18 months. During that time, he offered mentoring and training programs through Syntel’s human resources department. The goal was to allow employees to develop new skills and to give every person in the company a real sense of what the future was going to look like, allowing everyone in the company to draw his or her own conclusion about whether Syntel was the place for them.

“People want to be successful,” Desai says. “Most people don’t come to work and say, ‘I’m going to do a lousy job.’ But people sort of self-assess and might say, ‘This might make sense for Syntel, but it is not for me.’ Those are perfectly acceptable answers as long as both sides are very clear in their communication. People themselves select and decide what they want to do.”

Staying on the message

When you think employees aren’t going to want to hear what you have to say, the temptation might be to dance around the topic, use vague language and avoid definite statements.

Desai says that’s the worst thing you can do, especially in a time of change. If you aren’t straightforward with your employees, you will lose their trust. And if you lose their trust, you won’t have much else.

That’s why, as much as Desai would like to always give his employees good news, he says the most fundamental thing you can do when communicating is inform your people correctly.

“The fundamental and most important thing a leader has to have is trust,” Desai says. “If you cannot inspire and win trust, you cannot be effective as a leader. It doesn’t matter what the message is. People will see right through it if you aren’t telling the whole truth.”

In the months after announcing Syntel’s new direction, Desai embarked on a series of town-hall meetings across the country where he reinforced the need for change. He augmented his in-person communication with a series of print and electronic messages.

The goal of the multipronged communication approach was to keep Desai’s messages in front of every Syntel employee.

“My goal was to meet every single employee in some form or another,” he says. “We sent out communications, we built posters and rolled those out. We did e-mails; we did focus groups. They had to hear it from me, and they had to have the chance to ask questions and internalize the methods. When you are trying to drive major change, you have to lead that from the top. You have to be very crisp and clear in your communications, and you have to ask questions and respond to them as honestly as you can.”

But even the broadest communication strategy won’t entirely shut down the rumor mill that inevitably starts when an organization faces an uncertain future. Rumors of selling the company or downsizing always seem to pop up, even if you intend to do nothing of the sort.

Rumors have a way of clouding the messages you want everyone to hear. But that doesn’t mean you should alter or abandon your strategy. You simply have to accept that there is going to be some gossip fluttering around, and unless it gets out of hand, press on with your communication as planned.

Desai says that if you and your senior leadership are saying the same thing and allowing it to cascade throughout the company, you stand a better chance of eliminating rumors before they spread.

“You can’t squash every rumor,” he says. “You just have to be clear and consistent and honest with communication. And you have to have a plan of communication. It has to be top-down; it has to be cascading. And there has to be a mechanism within groups.

“Here, I just did what I thought I had to do. I communicated honestly, and I knew I had to lead by example and ensure that the leaders are all bought in to it. It’s important for a leader to have a one-on-one dialogue with their key lieutenants, to make sure that they are completely bought in to the plan.”

Many rumors aren’t malicious in nature. They are a way people fill in the blanks when they aren’t getting the whole story.

“Rumors come up because there is not an effective way to answer the questions people have on their minds,” Desai says. “So you have to find settings to address those issues. Also keep in mind that not every issue will have an answer. If it doesn’t, tell them that.”

Moving ahead

Syntel has successfully performed its transition to a global technology solutions provider, and now has more than 10,000 worldwide employees and $270 million in 2006 net revenue and is projecting 2007 revenue around $330 million. But Desai wants to see to it that Syntel is never again in a change-or-die situation like it was a decade ago.

Change can be a complicated and sometimes messy process. Any time you steer your company into uncharted waters, a degree of trial and error is going to be involved.

It’s the biggest reason why Desai wanted to make adaptability a permanent part of Syntel. He and his leadership team spent many months trying to find employees and managers who could implement change so that Syntel would develop an identity as a company that is always looking for better ways to do things.

The key to that is staying ahead of the curve with a culture that embraces change and values innovation — a culture that is sparked by the innovative people Desai has helped place in key spots in the company and that is fed through encouragement from upper management.

“Innovation is the frontier where all progress happens,” Desai says. “We all accept that, but a lot of larger companies somehow lose that as they get larger. So we created a mission to create opportunities for our customers by harnessing our talent, passion and innovation.

“It really goes to the DNA of the company and the culture. You have to re-engineer your DNA to make it work. We started to do that by asking how we can promote innovation.”

In much the same way Desai promoted his plan for change, he now promotes innovation. He gets out among his employees and spreads the word through communication and positive reinforcement.

“We applaud innovation and celebrate their successes,” Desai says. “We run contests where we have clients come in and be the judges. So we’re saying innovation is a good thing and giving positive feedback to people who show successful adaptation of that concept.”

But perhaps the most important part of building and sustaining an innovative culture is to allow people to learn and think for themselves. Risk can be an uncomfortable word in the language of business, but it is an essential part of growth through innovation.

“You have to be very understanding that not every idea will succeed,” Desai says. “One of the ways I do that is by encouraging risk-taking, getting people to understand that if you aren’t failing enough, you’re not taking enough risks.

“Failure is great for helping you adapt and learn. You learn much more from failure than from success.”

HOW TO REACH: Syntel Inc., www.syntelinc.com