Vineet Nayar, CEO of $1.5 billion IT services company HCL Technologies Ltd, attributes the company’s transformation to Blue Ocean Strategy.

Vineet Nayar

He says being a services company, rather than a product company, was a real challenge to go off and find ‘blue oceans.’

While at INSEAD for Leadership Summit 2008, Nayar took the opportunity to meet one of the co-authors of Blue Ocean Strategy, W. Chan Kim.

Nayar told INSEAD Knowledge that the day he took over HCL Technologies in 2005 someone gave him a copy of Blue Ocean Strategy.

He found it on his table and, to this day, he has no idea who gave it to him.    Fortunately, he says, he had a half an hour to spare and started reading the book. The ideas fitted in with his own plans for the company.

“I intuitively applied it to the company,” he says, “That’s what I was telling Professor Chan (Kim) and he was amazed by the way we had used Blue Ocean Strategy.”

“It had a profound impact on our way of thinking.  So we applied those five principles of Blue Ocean Strategy in our own intuititive way, and it has worked pretty well.”

HCL Technologies decided that not only did it have to be in a different business to its competitors, it also had to deliver its business differently.

Nayar maintains it’s very easy to create blue oceans of uncontested market space ripe for growth for product companies, predominantly because they are innovation driven.  So it is good, he says, for companies for example that sell computers, such as Apple and Samsung, or sell cars like Toyota.

But he adds it’s very difficult for services-related companies where innovation is not necessarily the end product.

So, in the Blue Ocean frame of thinking, HCL Technologies switched its focus to value from concentrating on volume.

An employee-oriented business

Another move was that the company decided to put employees, not customers, first – because employees are the product that customers are buying.

A further radical overhaul was linked to the accountability of the CEO. Instead of a ‘command and control’ form of leadership, Nayar adopted a democratic model, where employees remain accountable to the organisation, which he believes is more productive.

“An employee is not a tool in the hands of a CEO, but a CEO is a tool in the hands of the employee – if you do that you will unleash the energy of 50,000 employees in the world which is unbeatable!” 

HCL Technologies has also aimed to make the firm as transparent as possible – so much so, that Nayar is confident that if his employees change jobs they will not find anything to match it.

In short, the company’s Blue Ocean Strategy was that it concentrated not on the end product, but on the way it conducted its business. The result was that it evolved as a value-focused company that was completely different to its competitors.

“There are some businesses which you will not do, there are some things you will not do, and some things which you will focus on,’ the CEO says. “But those things you will apply and that’s how success comes in.”

And the results of these initiatives?  According to Nayar, HCL Technologies’ market capitalisation has doubled since it adopted Blue Ocean thinking. The company is among the fastest growing IT services companies today. And, Nayar says, its stock is one of the best performing in India’s information technology sector.