Q. NI has been a debt-free company throughout your tenure. So, what has your fiscal management policy been?
A. Well, this area, again, is something my background, coming off of the farm, helped me a lot. I’m fairly conservative, financially. When you experience success in terms of growth, you tend to do stuff like hiring too many people to do a job. You need to clearly understand the role of ‘profit’ for a growing organisation. If you are not clear about that–you can make a lot of wrong decisions.
Also, understanding how not to over-commit, which is a very, very easy thing to do.
Q. Did you ever set a benchmark as to what the profits should be?
A. In 1987, based on our prior years, we started with what we wanted to grow into in terms of profit and it was basically 20 per cent growth and 18 per cent profit before taxes. The 18 per cent number was a number which we needed to earn so that we wouldn’t have to take money from someone else. Because, when you take money from someone else, they start telling you what to do and when someone else is telling you what to do, then you are not really autonomous. The 20 per cent was based on the fact that we wanted to create a career path for people and if you grow less than 20 per cent, especially in India where market factors dominate, you do not create a career path for the people who you want to be joining your company.
Q. Do you also define what percentage of the profits should get reinvested into the organisation’s future expansion and R&D? If yes, can you share the formula?
A. We target 16 per cent of our revenue to be invested into R&D – 8 per cent to maintain our existing products and 8 per cent for new product development. We also target 36 per cent of our revenue for sales and marketing, and 6 per cent of revenue for general and administrative functions.
Q. What is the secret behind maintaining a continued growth over the years?
A. NI has a strong track record of sustainable growth and profitability because we are managed for the long term. We believe the fundamental drivers of our long-term sustained growth have been new product R&D and a strong sales force. Over the last few years, we invested aggressively in innovation through research and development, with the output being new products that build on our highly differentiated platform. Similarly, with our strategic investments in developing a strong sales force, we are positioned to help our customers find ways to lower their costs, improve their productivity and help them bring their own innovative products to the market quickly.
Q. How important is India for you, as a market?
A. NI IndRA (India, Russia and Arabia) represents one of the company’s fastest growing regions, and we are excited about the significant outcome of NI’s strategic and long-term R&D investment in India. As India’s influence on the global marketplace grows, the NI India team collaborates with hundreds of customers in universities, SMEs and multinational corporations to nurture local innovation and accelerate productivity.
