Knowledge@Wharton: Would you explain the concept of the process to empathy ratio?
Bagchi: Yes. This is actually not a scientific explanation. I, like any MBA, would talk about P/E ratios [price-equity ratios]. You talk about one of the indicators of the financial health of an organization through P/E ratios. When I was raising MindTree, one day it occurred to me that we were putting too much of an emphasis on process and building of process and process as an enabler. I found that the Human Resources folks — we actually call them People Function folks in MindTree — were becoming more process-centric, and process does not solve all problems. Process works only when it is given life through empathy. I didn’t know how to drive home the point, and then it occurred to me that we could have a different take on the P/E ratio concept. I called those folks and said that we need to balance every process with empathy. Think of it as a new way of looking at the P/E ratio. Deal with every situation partly by looking at process and partly by looking at empathy.
Physical infrastructure you can buy. Intellectual infrastructure you can create, borrow, or inter-network. But emotional infrastructure is the most nebulous and most difficult to build. It offers the most sustainable competitive advantage.