Satyagraha For Freedom From Corruption

Gandhi ji, in his book “History of Satyagraha in South Africa” narrates the coinage of the term Satyagraha and the journey of the movement. It is an amazing story of sacrifice, determination, and moral courage. Hence, I wondered whether we can use the concept to fight corruption in this century.

The irony is that Gandhi ji started the Satygraha movement in South Africa because Europeans passed unfavourable laws for Indians. They were scared of Indian traders and professionals taking a huge slice of the business, hence passed laws to restrict their liberty to live and trade freely. Greed was at the crux of it since there were plenty of natural resources in South Africa for Europeans, Blacks, and Indians. Now India is being destroyed by the greed of its leaders and public.

Gandhi ji’s story stands in stark contrast to the Anna Hazare led fight against corruption. Hazare’s was packaged as Gandhian inspired struggle but as results showed it was far from it. Hazare took the stance of my way and high way on the Lokpal Bill, whereas Gandhi ji believed in negotiation. Moreover, Hazare’s was a publicity driven exercise of a few fasts and he quickly distanced himself from it when he faced failure. Another aspect was that though thousands turned up in support at the initial stage, no one made use of that energy constructively and directed people to do something more than shout slogans on the streets. Hence, the euphoria disappeared after a short while, as the educated middle class needed an action plan to maintain their commitment.

It brings back to our understanding of Satyagraha. We generally confuse it with “passive resistance” and it was the same situation when Gandhi ji developed the concept a century back. Below are few points from the book:

1)      Satyagraha

Gandhi ji considered Satyagraha as a soul-force. The Satyagrahies never used physical force even when they had the capability for it. In Gandhi ji’s word – “Satyagraha is soul-force pure and simple, and whenever and to whatever extent there is room for the use of arms or physical force or brute force, there and to that extent is there so much less possibility for soul-force. These are purely antagonistic forces in my view, and I had full realization of this antagonism even at the time of the advent of Satyagraha

2)     Passive resistance

The term “passive resistance” originated in Europe as a weapon of the weak. It was generally used when other options of fighting were not available. It was a method used by people without voting rights, or lacking public support. The people were not averse to using arms for attaining their goals. But they did not go for it because they didn’t think they would succeed with it. Hence, passive resistance was more of a strategic manoeuvre than commitment to non-violence.

3)    Difference between the two

Gandhi ji described the fundamental difference in the concepts in the following paragraphs -

 “The power of suggestion is such that a man at last becomes what he believes himself to be. If we continue to believe ourselves and let others believe that we are weak and therefore offer passive resistance, our resistance will never make us strong, and at the earliest opportunity we will give up passive resistance as a weapon of the weak.

 On the other hand if we are satyagrahis and offer satyagraha believing ourselves to be strong, two clear consequences result from it. Fostering the idea of strength, we grow stronger and stronger every day. With the increase in our strength, our satyagraha too becomes more effective and we would never be casting about for an opportunity to give it up.

 Again, there is no scope for love in passive resistance; on the other hand, not only has hatred no place in satyagraha, but it is a positive breach of its ruling principle. While in passive resistance there is a scope for the use of  arms when a suitable occasion arrives, in satyagraha physical force is forbidden even in the most favourable circumstances. Passive resistance is often looked upon as a preparation for the use of force while satyagraha can never be utilized as such. Passive resistance may be offered side by side with the use of arms. Satyagraha and brute force, being each a negation of the other, can never go together.

 Satyagraha may be offered to one’s nearest and dearest; passive resistance can never be offered to them unless of course they have ceased to be dear and become an object of hatred to us.

 In passive resistance there is always present an idea of harassing the other party and there is a simultaneous readiness to undergo any hardships entailed upon us by such activity; while in satyagraha there is not the remotest idea of injuring the opponent. Satyagraha postulates the conquest of the adversary by suffering in one’s own person.”

 4)    Freedom From Corruption

Considering the above definition of Satyagraha and the differences highlighted by Gandhi ji, I haven’t seen very many noteworthy cases of mass movement of Satyagraha. Hazare’s movement just entailed short-term sacrifice and not a long-term struggle. When the public disappeared so did he.

The Satyagrahies courted prison and lived a simple life to fight for their cause. Hence, the question is that do we lack commitment and determination for long-term struggle to root out wrong habits. Is it possible and realistic to expect people to make these sacrifices in the present age of instant gratification. Can we expect Indian public to take a vow not to take or give bribes and kickbacks? Will it be expecting too much from the citizens to sacrifice a few luxuries. Will the public stay committed to the cause or leave it when it gets bored, to participate in the next novel thing.

We need to seriously think of eradicating corruption on this Independence Day. India has come a long way in one century but the corruption is eroding its sheen and destroying the country from within. We must not forget the sacrifices a whole generation of Indians made to ensure that the next generations live with freedom. Let us pledge to keep our souls free of greed.

Wishing all Indians a Very Happy Independence Day.

References:

History of Satyagraha in South Africa by M.K. Gandhi 

The Money Worshipers

money worshiper

The Global Index of Religion and Atheism Report 2012 results indicate that just 59 percent of world population was religious last year. Even India, the land of prayers and spirituality is showing a declining trend in belief in God. In 2005, 87% Indians believed in religion. While in 2012, 81% Indians declared themselves religious.

In Indian society,  the focus has shifted on earning money in the last decade. Money has become the new God.

The belief is that money makes one happy, though psychological studies show it is an open question. Some studies show that money does contribute to happiness; some show that beyond a point, money doesn’t add anything to happiness quotient. On the other hand, the law of diminishing returns applies to money as well. Nassim Taleb analysed that after a certain point, the pleasure in earning more money is less than the fear of losing it.

I don’t have the answer to whether money makes a person happier. Yes, it does provide a whole lot of comforts. But beyond that, there are others aspects of life that contribute to happiness. So the question is why we see more people willing to compromise their morals for the sake of money. One hears often this explanation from a person who is compromising morals for money – “You know the world has changed. What to do?” Basically, they are saying – “I have changed and I want to blame my greed on the society rather than take individual responsibility”. We want to avoid analyzing our thoughts and motives deeply, because we will get very unpleasant answers about ourselves.

A joke really sums up these thoughts – A man bought a new Mercedes and parked it in front his house for neighbors to see. While he was getting out of the car, a truck drove close by, and disjointed the door of the car. The man called the police, who came immediately. The man said – “This truck driver damaged my car,  see my car door”. The police officer said – “Sir, do you realize that your arm is also detached”. The man replied – “Oh shit, my Rolex is damaged”. It might sound far-fetched that a person doesn’t realize physical damage to self, but most of us do ignore the internal damage pursuit of money causes us.

Quite a few of our prayers to God revolve around money. God, get me this deal (subconsciously – I will earn a lot of money). God, give me a good spouse (subconsciously – a rich spouse so that I can live in luxury). We are not above bribing God too. We promise to do x,y, z if we get what we want. However, if we face difficult times our faith disappears. We are unhappy and miserable. We don’t think that God may have gifted us the sword to cut our greed. We ourselves can remove the chains tying us to the greed.

Rabindranath Tagore in Gitanjali displays his profound understanding of the same. The English translation of the incredible verse is below:

He whom I enclose with my name is weeping in this dungeon. I am ever busy building this wall all around; and as this wall goes up into the sky day by day I lose sight of my true being in its dark shadow.

 I take pride in this great wall, and I plaster it with dust and sand lest a least hole should be left in this name; and for all the care I take I lose sight of my true being.

 I came out alone on my way to my tryst. But who is this that follows me in the silent dark? I move aside to avoid his presence but I escape him not.

 He makes the dust rise from the earth with his swagger; he adds his loud voice to every word that I utter. He is my own little self, my lord, he knows no shame; but I am ashamed to come to thy door in his company.

 ‘Prisoner, tell me, who was it that bound you?’

 ‘It was my master,’ said the prisoner. ‘I thought I could outdo everybody in the world in wealth and power, and I amassed in my own treasure-house the money due to my king.

 When sleep overcame me I lay upon the bed that was for my lord, and on waking up I found I was a prisoner in my own treasure-house.’

 ‘Prisoner, tell me, who was it that wrought this unbreakable chain?”

 ‘It was I,’ said the prisoner, ‘who forged this chain very carefully. I thought my invincible power would hold the world captive leaving me in a freedom undisturbed.

 Thus night and day I worked at the chain with huge fires and cruel hard strokes. When at last the work was done and the links were complete and unbreakable, I found that it held me in its grip’.”

For all our human insight and wisdom, we have tied ourselves in chains. We don’t want to break them, as it will require a lot of strength, so we continue to complain about them. We forget, a rose blooms on a stem of thorns.

Closing thoughts

 When we think about happy times, most of us have some memories of childhood. It was the age of innocence where we couldn’t even count money. All that mattered was the love of our family and the mischief we could get into with our friends. We walk such a long distance in our adult life to pursue things, than be blissful internally. It is out of fashion to discuss it, as the cynics will call us utter fools out of touch with reality. So let me open the question to you.

References:

  1. Global Index of Religion and Atheism Report: Number of Atheists Increased on Global Level
  2. Gitanjai – by Rabindranath Tagore 

 

Price of a Soul

Soul

At fourteen, I read Ayn Rand’s “The Fountainhead” and fell in love with it. It is one of my favorites and last week I read it again. I still found it mind-blowing. This time, Toohey’s character got me thinking.

In the last few chapters of the book, Ellsworth Toohey speaks about his devious plan to portray mediocre people in the media as supremely talented to gain power over public. He planned to rule the world by ruining the thought process of the public, demolishing the careers of great thinkers, and glorifying stupidity.

His conversation with Peter Keating, who was one of his experimental puppets, reveals the crux of human behavior and our vulnerability for exploitation. He said –

“It is only about discovering the lever. If you learn to rule one single man’s soul, you can get the rest of mankind. It is the soul, Peter, the soul. Not whips or swords or fire or guns. That is why the Caesars, the Attilas, the Napoleons were fools and did not last. We will. The soul, Peter is that which can’t be ruled. It must be broken. Drive a wedge in, get your fingers on it – the man is yours. You won’t need a whip – he will bring it to you and ask to be whipped. Set him in reverse and his own mechanism will do your work for you. Use him against himself.”

Isn’t this what our education system and media done to us?

When was the last time our teachers taught us – “Lie down on the grass and let your tensions drain away. Look at the vast expanse of sea to be at peace.” They teach students – “Own a lot of land and you will be rich. Get a ship to cross the ocean with your merchandise.”

Our education system on the pretext of teaching fundamentals and preparing us for life, teaches us that conformity, obedience and pursuing a career for success are the greatest virtues. How many schools teach children that creative thinking, being different or spending extraordinary time on hobbies just for simple pleasure of life, is something worth pursuing and achieving?

By teenage, the fashion magazines decide the length of hair, size of waist and color of dress that are suitable for the season. If a teenager refuses to follow, others label the poor kid weird.

As we grow older, the competition becomes of the gadgets we have, than our thoughts and principles. The neighbor has an iPod, Mercedes and x, y and z. So I also want the same. Have we every compared ourselves to say “the neighbor has such excellent thoughts for humanity, works diligently for the benefit of humanity and always  walks the high road on principles, hence, I want to be the same.”

If we aren’t thinking in these lines, then I would say Toohey’s words are correct, our education system and media took our souls not the devil. Moreover, if we are questioning how it has happened, then the following quote of Toohey’s captures the problem though said with a different slant.

“Make man feel small. Make him feel guilty. Kill his aspiration and integrity. That’s difficult. The worst among you gropes for an ideal in his own twisted way. Kill integrity by internal corruption. Use it against itself. Direct it of a goal destructive of all integrity.”

The key is – “Kill integrity by internal corruption.” From childhood, we are taught success matters. Success is equal to money plus position. Organization position gives power. That puts you in top bracket of society. This idea of success destroys all integrity within us. For the sake of money or position, we are willing to make compromises one after another. Without it, we feel small and useless. The drive for money makes the man poor in character and principles. At the start of our careers, we willingly hand over a part of our souls for a few dollars. By the time we retire, we are uncertain whether we have a soul left.

Then we lament on lack of ethics and profess horror on breach of ethics by the people we have put on the pulpit. In most of our adult age, when we haven’t had a serious thought on ethics or made an effort to learn ethical behavior, can we really assume it will occur by itself? We want to delude ourselves into thinking we are a good people, living a principled life because not thinking in those terms will destroy our self-image. . We cannot face the fact that 99% of us have conducted some crime or the other sometime in life. We cannot afford to face reality if we want to live.

Closing thoughts  

Ayn Rand aptly put it – “Enshrine mediocrity and the shrines are erased.” By putting money as a standard for measuring success, we have enshrined mediocrity of character. Nobility of character lost its glory when money epitomized the crowned king of success. They why show surprise, anger or disgust when our much hyped heroes breach ethics. Should we punish them or the society for teaching them the wrong definition of success? Can we punish a person for doing a better sales job on selling their soul than the rest of us?

 

References: 

Free download of the book The Fountainhead.  

Participative Leadership Originated In 4th Century BC In India

My last post on Indian Management Model generated a common comment – “India already has a management model where obedience to the boss comes first!” That is the common perception so I decided to delve deeper into the subject. Where did the authoritarian style of leadership come from in India?

The common perception of modern day CEO was that a CEO had all the answers. He was all knowing same as the prior period kings. In this century, the management mantra is that CEOs don’t have all the answers and should have the ability to ask the right questions. They need inputs from all to form decisions. Therefore, the shift clearly is towards participative leadership style.

After some research, I found that authoritarian leadership style originated from the Greek terminology “autocratic leadership”. My view is that Indian history is full of examples of participative leadership. Let me explain this viewpoint further.

In Ramayana, the main characters considered obedience a virtue. However, Buddha propagated the view – question everything, don’t take anything at face value. Subsequently Mahabharata is full of characters doing exactly as they please, breaking all the rules and getting into a lot of trouble. In it, Krishna asks Arujuna to fight his teacher Dronacharya, his elders, most of his relatives and friends since they were supporting unethical Dhurypdhana.

kautiliyaFurther, Kautilya’s Arthshastra gives a full process for the king to take decisions after consulting his ministers, officials and public where required. He discussed participative leadership in 4th century BC. Surprised! Let me share his thoughts with you.

1.     Discuss with ministers and employees

The king shall deliberate over matters with a number of people as required. It states that “No deliberation made by a single person will be successful; the nature of the work which a sovereign has to do is to be inferred from the consideration of both the visible and invisible causes.”

2.     Obtain outside counsel

It further mentions that discussions should not be restricted to ministers and their direct reports. The king “shall sit at deliberation with persons of wide intellect.” Hence, it discusses the concept of consultation from people outside the ministry.

3.     Encourage constructive confrontation

Next, the Arthshastra mentions that the king should hear all opinions even contrary to his. It states – “He shall despise none, but hear the opinions of all. A wise man shall make use of even a child’s sensible utterance.”

4.     Selection of advisers

Then Arthshastra states that king should not select people on a random basis or those who have no clear idea of the execution of work required. It states -“He shall consult such persons as are believed to be capable of giving decisive opinion regarding those works about which he seeks for advice”. Hence, qualification and knowledge of advisers is a prerequisite.

5.     Opinions of competitors

Kautilya does not suggest that advice should be sought from friends and allies alone. He states – “nor shall he (king) sit long at consultation with those whose parties he intends to hurt.” Hence, getting competitive information and viewpoints hasn’t been ruled out.

6.     Number of advisers

Kautilya advises that in the normal course of business the king should discuss with 3-4 ministers. He states that discussing with one minister is useless, as he will advise “ willfully and without restraint”. Discussing with two would not help as “the king may be overpowered by their combined action, or imperiled by their mutual dissension”. Discussing with too many minsters will cause a great deal of trouble and slow down the process.  I think Kautilya has adequately covered modern day challenges of selecting advisers.

7.     Method of discussion

Last but not the least, Kautilya defines that the king should choose to hold a collective meeting or individual interactions depending on the situation. In his words – “The king may ask his ministers for their opinion either individually or collectively, and ascertain their ability by judging over the reasons they assign for their opinions.”

Closing thoughts

Kautiliya comprehensively covered most of the aspects of participative leadership in his Arthshastra.  Authoritarian leadership appears a western concept and not an Indian concept as is commonly believed. The style took major hold during industrial revolution. With globalization and increasing complexity of business, participative leadership is gaining ground. Concepts of collective intelligence and crowd sourcing are garnering strength.

Moreover, the main concept of Hinduism is – everything that is created is destroyed and everything that is destroyed is recreated. If it is true, then history repeats itself. Then isn’t it better to understand the historic management concepts and learn from them.

Lastly, in the creation of new world order, nothing is sacrosanct. In words of Jalaluddin Rumi – Don’t be satisfied with stories, how things have gone with others. Unfold your own truth.

References:

1. Arthshastra by Kautilya

Winner of the Competition of Bullshit Quotient Book

Thank you all for participating in the poll and the competition held in the post “A Book Review – Bullshit Quotient“. Over a 100 people voted and mostly in favor of the views expressed by the author Ranjeev Dubey. Ranjeev has personally gone through the comments and chosen a winner. He has also expressed this thoughts on the various comments. Read below, as I am sharing an unedited version of his opinion.

My thought as I read through the thoughtful comments posted by your followers was mainly at the high level of comprehension here. Why we nevertheless allow this endless repetition of culpable double speak is a moot question. Why this clear understanding of the reality on the ground does not translate into a program of change is another moot question. I can draw your attention to the following nuggets that I particularly liked:

“The business of the company is to deliver value to the stakeholders/shareholders. Everything else is incidental. All the stuff about delivering value to customers is BULLSHIT. – M Seshagiri Rao:

“Small practices often have no audit trail. Accountability is ensuring that you understand and carry out the actions of the law, with ethical and moral actions. So, the laws are there, [but] the government is in the hands of those who thrive on power, regardless of having the right to vote, that doesn’t even matter…”- Joanne McNamara:

“As a cynical private investigator I have found that the bigger the lie, regardless of the circumstances, simply means that there are more person involved.”- Jeff Moy

“To add to the misery, a nation in need of an inspiring dream, is fed the empty corporate drivel”. – Amey Kawale

But at the end, the prize goes to the one who goes beyond the points made, to the next level so to speak. And for me, the winner is:

“Commercial organization sometimes fail to realize (or take the ostrich approach to the fact) that they don’t exist in a vacuum, but within an ecosystem where the (mostly competing) interests of companies, customers, employees, regulators, environment and the larger society are required to be optimized. This was the stated (though in a different way) objective of the concept of Trusteeship, which sadly has gone out of the window gradually after Indian independence.” – Deb.

Thank you all, and especially, thank you Debashis

Rajeev Dubey “

The winner of the competition is Debashis Gupta. Congratulations!

Debashis please email your address to me and we will send you the prize.

Risk Assessment of Marketing Function

The global economy is facing turbulent times with US in recession, Europe in economic crises and emerging markets growth slowing down. Frequently organizations panic on hearing forecasts of looming recession. They cut down marketing budgets, innovation of products and capital investments. The reaction further adds to the woes, and accelerates the downward trend in sales. Risk managers normally do not focus on marketing department activities and generally are not called upon to share their views on marketing strategies. A look on these areas may prevent the company from going in red and thrive in chaotic times. Here are a few suggestions for risk managers.

1. Bench-mark Marketing Function

The complexities of business world are escalating marketing risks. For survival and growth organizations need resilient marketing and sales functions. They have to identify strategic inflection points in the market and adapt accordingly. In recession customers interest, values and budgets change. With new competition and changing regulations, organizations need to reinvent business models. Hence, as a first step risk managers  need to bench-mark the organization’s marketing function.

Philip Kotler and Johan A. Caslione in their book “Chaotics – The business of managing and marketing in the age of turbulence” have presented a table on marketing function attributes. Out of the 14 attributes, below are 5 critical ones distinguishing between poor, good  and great marketing functions.

Srl    Poor                                        Good                                              Great

1. Product driven                    Market driven                                    Market driving

2. Product offer                       Augmented product offer                 Customer solutions offer

3. Price driven                        Quality driven                                     Value driven

4. Reacting to competitors    Bench-marking competitors             Leapfrogging competitors

5. Function oriented               Process oriented                                Outcome oriented

McDonalds marketing strategies reflect these attributes. In India, McDonalds is opening a purely vegetarian restaurant near Vaishu Devi ( a renowned Hindu temple) and Golden Temple (Sikh’s foremost gurdwara). It is catering to the Indian sentiments; in most religions Indians do not eat non-vegetarian food in a place of worship. Near the temples, generally local vegetarian eating joints thrive and there are no global food chains. The huge number of devotees provide a large market.

A few years back, McDonalds customized its menu according to Indian tastes and introduced vegetarian burgers. The McAloo Tikki (a potato burger) contributes to 25% of the total sales.  It may shock the Americans, but no beef burgers are served in India.

2. Evaluate Cost-cutting Measures

The attitude frequently is to cut costs across board. For instance, if marketing budget is XXX dollars, the total budget will be reduced by 25% without assessing the details and profitable products. Here risk managers need to assess the soundness of decisions taken to reduce costs. Below are a few examples to look for:

a) Advertising : Is the total advertising budget reduced? This would be a wrong move. During recession, the core products that contribute to revenue need aggressive advertisement. The advertising budget spent non-core products and loss making products can be dropped. Moreover, explore cheaper advertising models – social media, internet etc. and reduce budgets on paper and television media.

b) Discounts : Another option adopted to increase sales is to discount all products by a certain percentage. This is a self-destructive strategy as discounts on core premium products would damage the revenue stream in the long-run. If customers require cheaper products, cut the frills in the premium products and introduce a bare minimum model. This will maintain the brand and revenue.

3. Assess Strategy and Systems

Risk managers must assess the marketing strategy and systems to ensure that the risks are systematically identified in a timely manner. Here are a few examples of the same:

a) Core products: Does the strategy focus on core products? Are there systems in place to show the winners and losers? If the systems are inadequate profitability, market spend and customer behavior cannot be captured accurately. Hence, the organization will be unable to adapt strategy to the changing marketing trends and customer behavior. Moreover, companies cannot  reduce costs without identifying inefficient spending.

b) New products : Has the organization delayed the launch of new products during recession? The customers require cheaper products during hard times. Hence, the strategy should be to delay expensive products but focus on products that cater to the new customer requirements and changes in behavior.

Closing thoughts

With economies slowing down, the marketing functions are facing many challenges. Customers are better informed through social media and internet, competitors copy products faster, and price of the product is a driving factor. Risk managers can contribute by conducting risk assessments of the marketing function and helping the teams in identifying the upside and downside risks to their strategies. This is a good place to add to  profitability.

References:

  1. Chaotics – The business of managing and marketing in the age of turbulence – Philip Kotler and Johan A. Caslione
  2. Beefy McDonald’s to Open Veg-Only Outlet in Katra – Economic Times

Culture and Communication Risks

The two things bringing a cultural revolution globally are – recession and social media. Both nations and organizations are struggling to adapt to the changes required in mindset and behavior. Recession has ensured that the fittest corporate citizens are those who can operate globally, work where the demand is, and compete at a global level with the cheapest resources. Social media has connected everybody and everyone is accessible on the same platform. A CEO  is just a tweet away from Gen Y fresh graduate. The layers of authority and distance are diminishing. The organizations and employees that adapt to the cultural change quickly will thrive in the next few years.

Therefore, the need of the hour is to become a global employee with a capability to understand cultures of at least a few of the countries with high Gross Domestic Product – US, France, UK, Japan, Germany from the developed countries and Brazil, China, India, Mexico, South Africa and Russia from the emerging markets. Multinationals are trading with these countries and/or have offices in these countries.This cannot be taken lightly. The graph below from the Economist Intelligence report “Competing Across Borders” will help you understand the impact of cross-cultural communication.

About one-third of the respondents stated that profits, revenue and market share improved significantly with better communication. To counter the cross border communication challenges, organizations are focusing on providing cultural, linguistic and conflict resolution training. However, there is no simple solution. Though training might help, it gives a current scenario. Psychologists Dov Cohen and Richard Nisbett, conducted experiments to assess the probability of entering into disputes depending on the cultural background. They realized that current behavior of a person is influenced by history of couple of centuries. Where the person is coming from matters. Typically, a warrior class, such as Sikhs and Gorkhas in India, are going to be more aggressive in organizations. As leaders and employees both bring their personal values while at work, the corporate culture changes on the basis on the position and number of people  of a community.

Though this experiment raises questions on whether any individual can truly become a global citizen, it is a critical requirement. Disputes are caused due to cultural and linguistic differences as shown in the adjoining graph. Insufficient clarity in communication can cause major disasters, especially when bounded by cultural protocol. Malcolm Gladwell in his book “Outliers – The Story of Success” gave example of Korean Air. The airiline, Korean Air, during 1988 to 1998, had a loss rate of 4.79 per million departures. In comparison, American carrier United Airlines, for the same period had a loss rate of o.27 per million departures. That is, Korean Air was having 17 times higher loss rate than the American airline. It had 8 airplane crashes in the period.

The reason attributed for most of plane crashes was “unclear communication” and not plane defects or pilot inexperience. The Korean culture has high power distance index and the flight officers were unable to plainly tell their captains that they were flying on the wrong route, were out of fuel or weather was bad. Can you believe it, due to the respect and deference flight officers showed to their captains and officers in air traffic control rooms, over a thousand passengers lost their lives? Instead of taking control of the plane they chose to show reverence!

Another amazing fact mentioned in the book is that more planes crash when the captain is the pilot, rather than when flight officers are flying. Simply because when flight officers are doing something wrong, the captains due to their position of authority, do not hesitate to call out the mistake. On the other hand, flight officers chose diplomatic responses which have a higher probability of misinterpretation as severity of the situation is not conveyed clearly. Korean Air recovered and became a safe airline, after they trained all captains and flight officers on speaking clearly and plainly in English while flying, among themselves and the air traffic control rooms.

Looking from another lens, employees are less likely to highlight risks to seniors in countries and organizations with authoritarian cultures. Juniors may hesitate to paint the full picture explicitly for senior managers to understand high risk situations, and crises would occur without proper risk mitigation. Risk managers and crises managers need to be taught the art of clearly communicating concerns and issues.

Closing thoughts

English has become a global language, but without taking the cultural context it doesn’t make sense to a reader from another country. For instance, take a look at the blogs of  Americans, British, Australians and Indians, all are writing English but very differently. Just by reading the blog post, one can identify the country of the blogger. Hence, with increasing complexity in business, the nuances of communication become more important. Communication failure can cause disastrous consequences. When I am flying, I would prefer that the flight officer says to the captain – “Buddy, we are flying on the wrong course.”

Reference:

  1. Competing Across Borders – Economist Intelligence Unit
  2. Outliers – The Story of Success – Malcolm Gladwell

Performance of Indian Boards

The board of directors have the responsibility for steering the organization in the right direction and guiding the CEO and senior management. However, worldwide they are lambasted for catering to the manifested interest of CEO and senior management at the expense of shareholder interest. The criticism is that boards’ failure to maintain independence results in  under-performance.

A prime example is the decision of Satyam board to acquire Matyas. The board approved a deal of USD 1.6 billion to acquire Maytas Infra for USD 300 million and Maytas Properties for USD 1.3 billion. Ramilanga Raju after admitting the Satyam fraud stated that deal was to fill Satyam with real assets instead of fictitious assets. The scandal came out as shareholders refused to approve the deal and Raju didn’t have a way to cover the fraud. The recent case of  Kingfisher Airlines debacle clearly shows that the board was not asking the right questions.

Mr. N. R. Narayan Murthy, founder of Infosys, in his book “A Better India, a Better World” succinctly describes the prevailing trends. He wrote – “A a result, the 1990s was the era of the stock-option-fattened, superman-superwoman CEOs who could do no wrong in the eyes of their admiration-heavy boards, and who were seen as demigods. Lax oversight by the boards made these CEOS more or less omnipotent.” He has lead corporate governance in India by walking the talk and his scathing comments are right on target. He has given a number of suggestions to improve corporate governance and board performance.

Let us see, whether Indian boards are up to the task. To analyse the performance of the boards, I have taken the best practices of the board from the report of Trinity Group and Mr. Narayan Murthy’s book. The statistics are from  India Board Governance report 2011 and the relevant laws are from the New Companies Bill 2011.

1. Constitution of the board

Corporate governance practices mention ideal board size of 8-12 members with around one-third to half the members being non-executive and independent directors.  Indian boards on an average had 9.6 directors of which 5.2 were independent directors in 2010 and 60% of the boards have separate roles for CEO and Chairpersons. On the whole, this sounds good, however, in light of the additional information given below, the perspective changes.

a)    In 2010 in India, board chairpersons were members of 9.5 external boards though majority of the memberships were of private companies. According to the survey “the maximum public board memberships held by an individual was 12, and the maximum private board memberships a whopping 37″.

b)   The CEOs & managing directors were on an average board members of 7 external boards. “The highest number of public company board memberships held by a CEO was 10, whereas it was 32 for private company boards.”

c) Non-executive directors, on an average held a total of 6.7 total board memberships, with 2.1 public and 4.6 private memberships.

d) 56% of the directors surveyed identified the limited talent pool as an impediment, with 38% perceiving it as a major hindrance. Yet, less than 10% used search firms or other 3rd party sources to locate suitable talent.


The lack of experienced and trained directors is the key reason for a few directors available in the talent pool holding multiple memberships. When most independent directors are selected from the social circle of the CEO or Chairperson, there are very few who would not toe the line stated by the CEO. With the multiple holdings, a conflict in one board may impact the relationship in another board. Hence, instead of independence, diplomacy and self-interest prevails.

Mr. Murthy candidly mentions that “board independence from management continues to be affected by directors who have limited accountability to shareholders and are ill-equipped in exercising management oversight.” He stated that in Infosys, directors are given training and a job charter to ensure that they fulfill there responsibilities appropriately.

2) Strategy review by the board

According to the best practices given in the Trinity report, “the board’s primary responsibilities include : (a) reaching agreement on a strategy and risk appetite with management, (b) choosing a CEO capable of  executing the strategy, (c) ensuring a high-quality leadership team is in place, (d) obtaining reasonable assurance of compliance with regulatory, legal, and ethical rules and guidelines and that appropriate and necessary risk control processes are in place, (e) ensuring all stakeholder interests are appropriately represented and considered, and (f) providing advice and support to management based on experience, expertise, and relationships.”

On the other hand, the Companies Bill mentions the board’s power as: “ (a) to make calls on shareholders in respect of money unpaid on their shares; (b) to authorise buy-back of securities under section 68; (c) to issue securities, including debentures, whether in or outside India; (d) to borrow monies; (e) to invest the funds of the company; (f) to grant loans or give guarantee or provide security in respect of loans; (g) to approve financial statement and the Board’s report; (h) to diversify the business of the company; (i) to approve amalgamation, merger or reconstruction; (j) to take over a company or acquire a controlling or substantial stake in another company; (k) any other matter which may be prescribed

The theoretical legal powers given are quite different from the actual working of an effective board. On an average in India in 2010, board members met 6.5 times during the year. The minimum number of meetings were four, that is a statutory requirement and maximum were 19 board meetings by a company. The boards met on an average three times during the year for strategic and business review.

Considering the number of meetings conducted by the board, with the legal responsibilities and practical requirements, it is not feasible for the boards to do a constructive strategic review of the business or provide regulatory oversight. Too big a mandate has been given, while the time spent on it is relatively small. It is not surprising that most boards are acting as rubber stamps to the senior management plans. It is a case of imbalance between power, responsibility and time commitment.

3. Focus on risks

After the Satyam scandal and financial crises, the board focus on risk management has increased. The boards ideally need to determine the risk appetite, review internal audit reports and external auditors reports, understand various strategic, financial and operational risks, and maintain compliance oversight.  In India, the Company Bill mandates an audit committee for listed companies, with majority being financially literate independent directors.

In 2010, in India, 69% of the board members respondents stated that boards are considering risks as top priority. However, 31% mentioned that boards are not involved in systematically addressing corporate risk management.

My view is that the focus on Indian boards is more on risk of misreporting financial statements rather than others. Risk management field as such is still in young stage in India, and board members are ill-geared or untrained on the various aspects.

4. Information availability

The decision-making of the board is subject to the information available with it. As per law, board members are ideally required to receive all relevant information about board resolutions and decisions, seven days before the meeting. However, board members responded that most of the documents are given prior to the meeting or just a couple of days in advance.

Moreover, “a vast majority of boards depend largely on management reports (90%) and informal management discussions (79%) for business information. Third party reports and stakeholder views are used as tools only by 23% of the companies.”

With such limited information, and high dependability on company sources, the directors may not be in a position to make informed decisions. The directors don’t even have sufficient time to study the presented information to make independent decisions and cross question the senior managers. Hence, this could be a key reason for poor performance.

5. Performance Review of CEO & senior management

The compensation committees recommend the CEO and other senior managers. In India, around 80% the respondent companies had a compensation or remuneration committee. The issue of CEO compensation isn’t as big as the western world, however, it is fast gaining prominence. Some high earning CEOs in the top 100 list are being evaluated on the basis of returns to investors.

The board as such has to evaluate  CEOs performance. In the west, the “star” CEOs are in the limelight and are paid high salaries in relationship long-term company performance. However, India scenario is different. Most of the critical positions in family organizations are held by family members and relatives. In such a scenario, the board or compensation committee are hardly in a position to evaluate the performance or recommend salary.

6. Performance review of board

As per law, the nomination committee reviews directors performance , and recommends removal. However, two-thirds of the independent directors stated the roles and responsibilities of non-executive directors are not defined clearly. Hence, without the clarity in role, the evaluations can hardly be constructive.

As such, the boards in India have the following three priorities: “ensuring overall corporate and statutory compliance (90%), monitoring business and operating performance (87%), and establishing and monitoring financial standards and internal controls (82%). Leadership development, succession planning, CSR and risk management continue to be low on the board priority list.”

The professionally run organization do claim for independent evaluation. For instance, Tata  and Infosys succession, the nomination committees were said to be doing independent evaluation. However, in both cases, questions were raised on the final selection. Though Mr. Murthy in his book mentioned that – “At Infosys, the chairman of the board sits with each board member, discusses his/her evaluation, and suggests remedies and course-corrections. The chairman’s performance review is handled by the lead independent director.

In my opinion, the practice of evaluating board performance only exists in some companies in India.

Closing thoughts

Unless the mindset changes to compassionate capitalism where business is done with integrity, decency and in a principled manner, boards will continue to be tutorial heads without much power and say. To ensure boards perform better, shareholders and investors need to become more active. The regulators need to ensure governance codes are followed in spirit and not just tick box mentality. A more elaborate role can be defined by regulators with mandatory requirement of time commitment and reporting requirements.

References:


Derailment of Leaders- Profiling Steve Jobs

The corporate world citizens operate on two myths – “We all are great leaders” and “We all have bad bosses”. We cling to these two fallacies with our dear life, most probably because if we let it go, corporate life may become unbearable. These two paradoxical statements make us feel better about ourselves as the delusional views cushion us from harsh realities.

The problem arises due to corporate world’s obsession with leadership. Interviewers question a 21-year-old fresher in the first interview about his/her leadership skills. After six months, s/he will give an opinion how the CEO doesn’t have adequate leadership skills. An employee will risk his/her career if s/he admits that they are good managers and do not have adequate leadership skills. This is despite the fact that most leadership surveys show that 50% of the managers are ineffective leaders.

On the humorous side it reminds me of Scott Adams definition of leadership – “Leadership is an intangible quality with no clear definition. That’s probably a good thing, because if people being led knew the definition, they would hunt down their leaders and kill them.”

On a serious note, I couldn’t help contemplating about Steve Jobs, considered the most successful CEO in our times. He is one of the few CEOs who was thrown out of the company he formed and came back to succeed beyond anyone’s expectations. On the positive side, people viewed him as a visionary, innovator and a driving force. Moreover, his negative traits were equally prominent. His teams said he suffered from “distorted reality”, bullied them no end and was extremely insulting. His professional career shows that in some ways he was an insufferable bad boss and an incredibly good leader. The complexities of his character make an interesting case study to assess leadership derailment.

I read his biography by Walter Isaacson and mapped his leadership skills to the traits mentioned in Michael James Benson’s research paper titled “A Walk on the Dark Side of Personality & Implications for Leadership (In)Effectiveness.” Briefly, it states that derailed leaders have same traits as successful leaders. However, they have additional traits and personality flaws that cause derailment. In Isaacson’s book, initially Jobs showed most of the traits that result in leadership derailment. In his second coming at Apple, he showed more maturity and balanced it out. A mellow version of his intense personality made him more successful.

It is important for risk managers to understand the derailment traits for leadership. Enron, WorldCom, Satyam are prime examples of leadership gone wrong. Prevalence of derailment traits and major personality flaws cause leaders to take unnecessary business risks, create dysfunctional work cultures and have low focus on corporate governance. As top management drives the risk culture in an organization, it is worthwhile for risk managers to assess their derailment characteristics.

In the following paragraphs, I am discussing five derailment traits and am exemplifying it with Steve Jobs life. Before you start reading it, remember all leaders have these traits. Leaders possessing these traits in low to moderate qualities continue to be successful. However, excessiveness of these traits causes derailment.

1.       Ego-centered

People close to Steve Jobs thought that he felt a strong sense of abandonment due to his adoption. This propelled him to consider himself special,  i.e. not required to follow norms of regular people. His ex-girlfriend Redse even thought that he had narcissistic personality disorder.

An amusing story about his employee badge showed his false sense of entitlement. On Apple’s formation, Scott assigned employee badge number #1 to Woznaik and #2 to Jobs. Steve demanded badge #1 and when he didn’t get it, he asked for  badge #0. He kept the badge, though Bank of America still processed his salary as employee number #2.

 His personality flaws showed in other small things. For example, he didn’t want a “reserved for CEO” parking slot, however parked his car in slots reserved for handicapped people.

 His ego-centrism drove Apple in murky waters. He wished to project the image that he didn’t work for money and took a salary of $1 per year as CEO. In 2000 when the board offered him $14 million stock options, he refused and asked for a plane. Subsequently, he demanded $20 million stock options. He received backdated stock options and although he didn’t make any monetary gains from it, Apple got some negative publicity as SEC investigated the case. Walter commented that – “On compensation issues in particular, the difficulty of defying his whims drove some good people to make some bad mistakes.”

 2.    Manipulation

 Everyone thought Steve Jobs was a master manipulator.  Sometimes, for him there was no difference between truth and lies. Bud Tribble one of his teammates said Steve doesn’t accept facts, which do not fit, into his picture. He said, “Steve has a reality distortion field. In his presence, reality is malleable.”  

 Another colleague Andy Hertzfeld said that even if one knew that Steve was manipulating, a person still was influenced. He stated- “The reality distortion field was a confounding mélange of a charismatic rhetorical style, indomitable will, and eagerness to bend any fact to fit the purpose at hand.”  

 Adding to the trouble, his teams complained that if their idea were a good one – “he would soon be telling people about it as though it was his own.”

 Apple employees though knew they had a difficult boss, still considered themselves lucky to be working for him. He inspired people to do what they thought was unachievable. Most probably because manipulators are great at cajoling, persuading and flattering people into complying with their wishes.

However, this did create a dysfunctional culture in Apple. Due to his oscillating behavior, his staff handled him like fragile glass. Most probably, Apple lost quite a few top performers because of this treatment given to them.

He definitely lost his job as a CEO because his manipulations caused turmoil in Apple in 1985. Apple board ousted him out and Sculley remained.

3.    Micromanaging

In some ways, Jobs can be categorized as a control freak. He chose to integrate hardware and software of his products to control customer experience. At one point of time, he banned download of applications to iPad and iPhone that defame people, were politically explosive or pornographic. He morally policed his customers.  According to him, he was providing his customers – “Freedom from programs that steal your private data. Freedom from programs that trash your battery. Freedom from porn.”

Throughout his career, he was at war with Bill Gates on open versus closed platforms. Gates promoted open systems while Jobs ardently opposed it. Though he professed to belong to hacker counterculture, he didn’t want people to be able to use Apple’s platforms without permission.

Even in designing and developing products, Jobs controlled every aspect of the decision-making. His teams while appreciating his capacity to go into the details, did resent lack of authority to some extent. He had the final say even on the look of the cord and sockets of the products. He ran the organization at 10,000 feet and zero feet.

The awesome bit is that with his ideas and approach he managed to change six industries and developed path-breaking products. In this, his customers were not complaining, his competitors were. His control philosophy made the technological world sit up and take notice. One has to marvel at it, and contemplate whether micro managing has benefits in some situations.

4.     Intimidating

Steve Jobs learnt his most effective intimidation trick from Robert Friedland in college. He unblinkingly stared intensely at others and them kept silent for a long time to unnerve opponents.

Moreover, if some project or product didn’t meet his “insanely great” standard, the product was shit and the guy was a bozo. His colleagues referred it to as “hero/shithead dichotomy”. He voiced his unedited opinions without the normal social graces that caused many of his teammates to breakdown emotionally. . His frequent unfiltered scathing comments were hurtful and created a fear factor. Although, known to be emotionally intelligent, he was unrepentant of mistreating others.

Though his behavior looked like my way of highway, he succeeded as he appreciated the people who confronted him. His teams could push back and if Steve found the person capable, he would respect the person. His Mac team gave an annual award to the employee who did the best job of standing up to him. “Jobs knew about it and liked it.”

However, in the second stint as CEO, his intimidating nature negatively affected independence of the board. For instance, he invited former SEC chairperson Arthur Levitt to join the board. But, when he read Levitt’s speech on independence of board, he withdrew the invitation on phone.

5.    Passive Aggressive

 Jobs was blatantly aggressive; hence, this trait didn’t fit his personality. However, his partner Steve Woznaik did show this trait to an excessive level. For instance, Woznaik was hesitant of participating in Apple in a leadership position. He said he was happy that – “I could stay at the bottom of the organization chart as an engineer.” He never attempted to be a manager or leader. He played the good guy image to the hilt. While he appeared satisfied for Jobs to take up the mantle of bad guy and fight the corporate battles.

Woznaik claimed in his biography that he did a job for Atari to remove chips and Steve cheated him of the bonus. He claimed  – “Ethics always mattered to me, and I still don’t understand why he would’ve gotten paid one thing and told me he’d gotten paid another. But, you know, people are different.” He further added – “I would rather let it pass. It’s not something I want to judge Steve by.”

 Steve Jobs on the other hand denied the allegation and said that he has always been fair to Woz. He said in his defense – “In mean, Woz stopped working in 1978. He never did an ounce of work after 1978. And yet he got exactly the same shares of Apple stock that I did.” It showed Woz avoided confronting Steve though didn’t mind maligning his reputation. Woz projected an image of childlike innocence. I suspect, without Steve Jobs driving force and personality Apple would have collapsed if Woz had become the torch-bearer.

Closing thoughts

Leadership is a complex phenomenon and the more I read about it, the more I think Scott Adams definition is accurate. There is a lot of truth in it. However, as risk managers we cannot take leadership derailment traits lightly. Excessive derailment traits create a dysfunctional organization culture. They are a harbinger of unprecedented risk taking activities. Uncontrolled behavior can put organizations in peril. Hence, risk managers need to devise ways to monitor it. They must ensure proper checks are incorporated in succession planning for early detection of derailment traits.

“One more thing”, what do you think it takes to become a Steve Jobs of risk management?

References:

1. New Explorations in the Field of Leadership Research: A Walk on the Dark Side of Personality & Implications for Leadership (In)Effectiveness – By Michael James Benson

2. Steve Jobs – Biography by Walter Isaacson

Risk Management Induction Training to Business Teams

I had joined a new company and was taking the induction training. I thought it would be a good idea to get fellow participants perspective.So I asked a young employee – “How did you find the risk management induction training?” He responded – “Was that training? It sounded more like a rulebook of corporate prison.” The training had bored me to death and I shared his opinion. I wondered whether risk management team took feedback seriously or were purposely designing trainings to turn off new employees.

Normally in India, a trainer reads out from the presentation the various dos and don’ts of the organization’s code of conduct, regulations impacting the organization and technicalities of business ethics. To enhance interest further some provide detailed information of GRC organization chart. The training comes to a dramatic end when in the last few slides, the trainer delivers the key message to the participants – We will fire you if you do not follow all this.

The newcomers already have butterflies in their stomachs. To add to their woes, we present a dry subject in a dull and boring manner. Then we expect them to imbibe the messages in their daily working life. Let’s face it, we are facing competition from Lady Gaga.  Gen Y is more likely to remember the lyrics of her song, than risk management training. To get their attention we need to reframe risk management training. There is no rulebook that says trainings must be without any rammatazz and unimaginative to the core.

Yeah, that's a HR Management book

I contacted Peter Cook, an unconventional and creative business author, speaker and consultant, to get his views. He is reinventing the art of human resource management. His recent book Punk Rock People Management is a winner. He innovatively connects human resource fundamentals with music. Unbelievable but true, you have to read one of his books to find out how he does it. His perceptive views on induction enormously impressed me. Here is my favorite paragraph from the book:

“Post-punk princesses Madonna and Lady Gaga unwittingly stumbled upon the problem of induction with their songs ‘Like a Virgin’ and ‘Bad Romance’ as did punk group The Boys with their minor hit ‘It’s my first time’. However good your hiring of people is,  failing to induct people properly can cost you in thelong run. Classical HR induction sessions emphasize all the statutory stuff, such as health and safety and getting your corporate identity badge (whilst losing your identity). But they generally fail to establish what is called a ‘psychological contract’ between the new recruit and the company, which leads to long-term performance and commitment. The costs of NOT doing this include rapid turnover, poor performance, corporate sabotage and mental sabbaticals (the lights are on but no-one’s at home) etc.”

Peter makes an excellent point about psychological connection. Risk management trainings fail to positively influence the participants. The lines below highlight the ridiculousness of expecting participants to be gung ho about the training.

“Imagine what would happen if this approach were adopted when you fell in love. You would have a ARRSE (Adviser – Romance Risk Strategy Executive) come along to show you some PowerPoint slides on the risks of falling in love,issuing you with badges to say you are officially in love, and so on. So, why does common sense go out the window when we enter the crazy world of work?”

 This prompted me to pick up three most applicable points for risk management induction training from Peter’s book and I requested him to share his views on the same.

1.    Understand the audience

The one-size fits all doesn’t work for risk management training. For instance, in Indian ITES sector, new employees join right after school. To them, terms like audit, fraud, ethics are practically incomprehensible. Their head will spin if we give them a download on various laws and regulations in the first training session.

The same applies in other industries also.The choice is ours – to be either amused or appalled at their naiveté.  The story below depicts the level of understanding of a fresh recruit.

An experienced purchase manager working in food and beverages industry was offended with a new junior. The junior had accepted a gift from a supplier in their first meeting. The purchase manager called the junior to his room and asked in Hindi –“Do you understand ‘AAchar’ (ethics)?“ The junior replied in English– “Of course sir, it means pickles (Achar).”

This is the risk managers’ starting point for training. Therefore, prepare a training calendar with various sessions over 6 months to bring them up to speed. Peter mentioned that there are 57 ways to train besides classroom training – workshops, e-learning, mentoring, storytelling,  etc. Identify the staff learning styles and develop the training accordingly.

2.    Make training fun

I know it is tempting to give a few thousand pages to read to the participants. That is what we, as risk managers had to do. But remember the training participants haven’t signed in for a risk management professional course. Don’t give them manuals in the name of e-learning. That’s only going to make them panic. Make it simple and fun. Peter succinctly put this point across in his book. He says create an environment where people are naturally engaged. For example, he wrote:

Pubs do NOT have mission statements that say:

 “We aim to encourage sociosexual networking and leverage mission critical knowledge, skills and wisdom through the use of addictive depressant substances in a relaxing lifestyle environment that encourages the suppression of societal norms of decency and so on”

If you read this statement while entering a pub, will you immediately fall in love with the pub or hesitate to enter? Same rule applies to induction training. Why not explain the statutory stuff without using the corporate and risk management jargon?

3.    Help participants succeed

The biggest obstacle in the successful implementation of risk management training, is the attitude of the risk managers. The managers sometimes focus more on the numbers covered so that they can tick off from their to-do list and report to compliance that training was conducted. The trainers are not accountable to make the business teams effectively manage risks.

Sometimes, when the classroom training is over the participants do not know whom to connect with if they have questions when they start working. In some e-learning courses the same problem is exists.

Peter gives some good advice here. He says – Make sure that new people understand on the first day exactly what they can do to succeed. Connect the new members with the people who can help them do their best”

Closing thoughts

Use induction training as a starting point to develop risk awareness and culture within the participants. Don’t make it a big ruse to cover numbers. If the training is good, the new employees will become unofficial ambassadors of risk management. By creating the right chemistry, risk managers will have long term allies in business teams. Make the start a memorable and happy one for the new employees, and they will keep coming back for more.