Mr.KV Kamath has been replaced by Narayan Murthy in Infosys and people are praising both of them. I don't want to spoil the party for Kamath fans but I want to point an analogy from Statistics to explain my point. "The Coefficient of Determination" represents R Square, used in Regression Analysis for explaining the movement of a dependent variabl...e attributed to the movement of the independent variable. So, an R square, short for Coefficient of Determination, of 95 means, that the dependent variable's movement is attributed 95% to the movement of the independent variable.
Take Mr Kamath's achievements in Banking. There are paralleled by few other stalwarts, no doubt, like Mr Aditya Puri, Mr Uday Kotak and Mr Rana Kapoor. But in all fairness, if a Coefficient of Determination be used to judge his performance in ICICI Bank, as he took over from Mr N Vaghul, it must be said that the Banking Credit itself grew by leaps and bounds during his tenure, for the system as a whole. If I hazard a guess, it grew from Rs.7 lakh crores to Rs.56 lakh crores in the last decade. What does it mean? It means Mr Kamath's rise in Banking could have been matched by anybody else sitting in his place because the basic platform captured 80-95 per cent of the action from the demand for banking credit, which just grew astronomically. I am not deriding Mr Kamath's achievements here; I am only suggesting that we should evaluate his performance fairly and objectively - how much has come from independent variable (his ability) and how much has come from dependent variable (bank credit). Now, lets contrast this with his tenure at Infosys which has been quite forgettable until Mr Murthy decided to take his stewardship back. In the last three years, Infosys has been the victim of both internal turbulence - many seniors leaving the company for greener avenues or different avocations - and external turmoil. Compared to the metric of Bank Credit which grew at an average of 14% p.a. in the last ten years or so, IT industry in India grew in single digits, the world's big spenders in IT curtailed their budgets, shrunk their balance sheets, hived off unprofitable units and all this resulted in immense shakeouts, rationalisation and hardship for companies like Infosys. The famed "thirty plus" margins of Infosys can no longer be granted and Mr Kamath's tenure became a rocky one - his invincibility became a muslin thread that gave away to the shocks of the subprime crisis. You could also argue, in another perverse manner, that the Peter Principle (Every employee rises to his own level of incompetence) has applied brutally here too. It will be interesting what the Coefficient of Determination test will prove here for Mr Kamath's innings at Infosys. This is the framework I would like folks to evaluate Mr Kamath. I don't mean to disparage the man and his achievements. I met MR Kamath atleast thrice in my stint at ICICI Bank and have enormous goodwill and regards for him. But I don't want to be carried away by blind followership.
Disclaimer: I hold shares in ICICI Bank even today.
Take Mr Kamath's achievements in Banking. There are paralleled by few other stalwarts, no doubt, like Mr Aditya Puri, Mr Uday Kotak and Mr Rana Kapoor. But in all fairness, if a Coefficient of Determination be used to judge his performance in ICICI Bank, as he took over from Mr N Vaghul, it must be said that the Banking Credit itself grew by leaps and bounds during his tenure, for the system as a whole. If I hazard a guess, it grew from Rs.7 lakh crores to Rs.56 lakh crores in the last decade. What does it mean? It means Mr Kamath's rise in Banking could have been matched by anybody else sitting in his place because the basic platform captured 80-95 per cent of the action from the demand for banking credit, which just grew astronomically. I am not deriding Mr Kamath's achievements here; I am only suggesting that we should evaluate his performance fairly and objectively - how much has come from independent variable (his ability) and how much has come from dependent variable (bank credit). Now, lets contrast this with his tenure at Infosys which has been quite forgettable until Mr Murthy decided to take his stewardship back. In the last three years, Infosys has been the victim of both internal turbulence - many seniors leaving the company for greener avenues or different avocations - and external turmoil. Compared to the metric of Bank Credit which grew at an average of 14% p.a. in the last ten years or so, IT industry in India grew in single digits, the world's big spenders in IT curtailed their budgets, shrunk their balance sheets, hived off unprofitable units and all this resulted in immense shakeouts, rationalisation and hardship for companies like Infosys. The famed "thirty plus" margins of Infosys can no longer be granted and Mr Kamath's tenure became a rocky one - his invincibility became a muslin thread that gave away to the shocks of the subprime crisis. You could also argue, in another perverse manner, that the Peter Principle (Every employee rises to his own level of incompetence) has applied brutally here too. It will be interesting what the Coefficient of Determination test will prove here for Mr Kamath's innings at Infosys. This is the framework I would like folks to evaluate Mr Kamath. I don't mean to disparage the man and his achievements. I met MR Kamath atleast thrice in my stint at ICICI Bank and have enormous goodwill and regards for him. But I don't want to be carried away by blind followership.
Disclaimer: I hold shares in ICICI Bank even today.
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