Indian Social Values – Root of Corruption

Page three newspapers are full of celebrities’ rave parties, fist fights, sex scandals, botox treatments, etceteras. The not so rich idealize these celebrities and mimic all, to be the in-crowd. With these social values, can Indian’s consider it cool to be good?

The west puts India on the pulpit for its values. From Beatles to Julia Roberts, western celebrities talk about Indian culture of prayers, the land of discovering one’s spirit and sense of being. When majority of the middle class Indians themselves are lost, the crown of leader of spiritual world appears  somewhat misplaced. Indians in the present world, from birth, get to understand that all human emotions come at a price. This may sound as a harsh statement, but is reality. Let us walk through the different phases of life of a middle class Indian to discover the spiritual compromises they make.

1. Indian Childhood

India post-independence from a land of leaders propagating good values  has turned into a land people indulging in  unscrupulous behavior in the name of social values. It starts with birth. From the 1960′s the desire to have a son grew among parents. Educated parents get female fetus aborted  since the son has more value in the marriage market. The sex ratio is 109.4 males to 100 females in 2011. According to reports nearly 50,000 female fetus are aborted every month.

The reason for abortions is financial. According to the Indian system, a girl’s father in arranged marriages pays dowry for getting a husband for his daughter. Secondly, in the conservative families daughters aren’t allowed to work. Hence, the cost of raising a daughter, educating her, is lost while a son earns back the money for parents from working and getting a dowry. Therefore, sons get a better treatment from parents from birth. From food, clothes, education and hobbies the girl is forced to sacrifice for the brother. Basically, from the day a child is conceived, Indian parents put a value on the child. There is a profit and loss motive in child upbringing.

With these values apparent in the household from childhood, is it surprising that Indians ethical values are confused? Can a child raised on the basis of returns s/he will bring to the parents on becoming an adult, consider emotions and principles above money? Are parents raising kids or cattle for sale?

2. Indian Youth

Indian parents tom-tom about their love for their children and their dedication to keep the children with them. They look down on their western counterparts, who let the kids leave home between the age of 16-20 years to live on their own. In India, 30 year old unmarried sons and daughters can also be found living with their parents. It arises from an attempt to control who the youngster marries, specially for sons, so that a big fat dowry can be earned.

In respect to daughters, it is a need to keep their image unsullied. A daughter having an affair is a no-no among conservative families. Good girls don’t have relationship with boys. While the boys can have relationships with girls, and any girl who has a sexual relationship with a boy is of loose moral character. It it surprising that with this culture, Indian youth does not have normal relationships with the opposite gender.

India is the 4th most unsafe place in the world. Eve teasing or sexual harassment is rampant and young Indian women endure comments from men even when walking to office at 9 a.m. According to a survey of developing nations, Indian men are the most sexually violent, with 24% having committed a sexual crime. Another survey states 65% men believe sometimes a women deserves to be beaten. With these results and mindset, can one ensure gender equality at work?

An Indian’s professional mentor/buddy in the first job is the person who teaches them to fudge the reimbursement bills of their salary. For instance, employees are entitled to medical reimbursements. The friendly mentor will share information of a medical store from where fraudulent medical bills can be obtained by giving a cut.

After being raised in this culture, can Indian youth have independent thinking, proper adult relationships and professional values? Most lip sync their parents’ desires for them, rather than discovering and understanding their own being. Abnormal behavior – living with one’s parents in adulthood, harassing opposite gender – is socially considered normal. Normal behavior of having adult relationships, independent living and maintaining professional ethics, may make the youth a social outcast. After being raised in this social climate, can Indian youth make India the next superpower?

3. Indian Marriage

The biggest trade in India, is of arranged marriages. Marriages aren’t made in heaven, they are negotiated for the best deal. The sons are put up for sale and the daughters’ fathers attempts to purchase the best available husband for her, according to their financial position.

If one sees it from an economic angle, the husband to provide for the wife lifelong, takes upfront payment from his wife’s father. Looking from another angle, the woman gets a man to have sex with her for life after being paid by her father. Prostitution is illegal in India, and prostitutes are looked down upon. But sale and purchase of husband and wife is a socially accepted norm.

In rural areas, the situation is worse. If a couple belonging to different castes falls in love, the male members of the girl’s family do honor killing, they kill the couple. It is a crime to fall in love, and humiliating for the parents. From all this one can conclude that Indian rational of honor, esteem and self-respect is quite contrary to human race.

Even divorce involves social stigma. In reality, 90% of urban husbands have had extra marital affairs. Most of the urban wives are educated but don’t leave their marriages even after being aware of the affair, as their standard of living will become lower. India has one of the lowest divorce rates with just one in a hundred marriages collapsing. There are just around 10,000 or so divorce cases filed each year. Despite the fact that there were 8391 dowry deaths in 2010 and 90,000 cases of torture and cruelty towards women by their husbands. This is when most women don’t report to police due to sense of social shame. Aren’t the numbers ironical. Abusing women is considered a social privilege of the Indian male. Moreover, educated women prefer to take abuse rather than stand on their own two feet and earn their living.

Closing Thoughts

Can Indian marriages teach valuing human emotions when they are nothing more than a financial transaction? After parent-child relationship, the second most precious relationship is of husband-wife. In India, both have monetary values attached to it. When critical relationships are not based on ethics, what is the probability of the society respecting professional ethics?

Indian ideas of honor, respect, ethics and principles are bunkum. A thief steals a women’s purse, he is a criminal. A  husband steals his wife’s dignity and her father’s retirement saving, he is respectable. It is a case of sacrificing rational thinking to camouflage social ills.

Last week, the government issued a “White paper on black money”. The paper describes ways and methods to curb corruption and reduce black money. However, with this social environment, the best efforts are likely to fail. Can an average Indian be considered as having a fully developed “Conscience”? Anywhere close to spiritual awakening? What do you think?

References:

1. Disappearing Daughters: Women pregnant with Girls pressured into abortion
2. Divorce Rate High Among Indian Techies
3. Dowry murders in India result in few convictions
4. Indian men most sexually violent, says survey of six developing nations
5. International Center for Research on Women

Diversity Management Risks in Global Organizations

Barack Obama in his autobiography “Dreams of My Father” reflects  “where do I belong?”. Being a child of parents of different races and religions, he spent a childhood searching his identity. Bill Clinton in his autobiography “My Life” discusses a white child’s perspective on segregation of schools in America in 1950s. Both men grew up without their real fathers presence; Obama’s lived in Kenya and Clinton’s lost his real father before birth in a car accident. Their step-fathers didn’t play an important role in building their characters, both attribute their mothers for raising and guiding them.  The personalities reflected in the books are different. Obama comes across as an intellectual and philosophical man, Clinton appears to be a people person and detail oriented. However, Americans and worldwide public had remarkably different viewpoints just because of the color of the skin.

Moreover, their religious faith did swing some votes in their favor. Barack Obama’s credibility is still questioned by opponents by stating that his grandfather was a Muslim, hence Obama cannot be following Christianity. Even in the world super power politics, race and religion play an important role. The more recent case is of Nicky Haley stating she has converted from Sikhism to Christianity. She is an Indian born in US, with the name Nimrata Rhandawa married to Michael Haley. That she felt the need to convert, and was questioned by a Time magazine reporter as to whether she will give a bigger tip to Sikh cab drivers, depicts the hypocrisy of choosing candidates based on performance, ideologies and meritocracy.

Closer home in India, religion still plays a major role in politics. Dynastic politics prevails and even the first family of Indian politics projects belief in Hinduism. It is ironical that the family is secular in religious belief, however, has to present themselves as Hindus for public consumption. As per historical records Indira Gandhi a Kashmiri Brahmin (Hindu) married Feroze Ghandi, a Zoroastrian. To prevail politically, the surname spelling was changed to Gandhi, making it sound similar to Mahatma Gandhi, though there was no family connection. Rumors prevail that Feroze Ghandi by birth was a Muslim. Their first son Rajiv Gandhi, married Antonia Edvige Albina Maino (Sonia Gandhi), an Italian Christian and the second son Sanjay Gandhi married Maneka Anand,a Sikh.  However, the next generation of Gandhi’s – Rahul, Priyanka and Varun - publicly follow Hinduism.

Can’t blame them, because in India religion and region bias are huge. South Indians will view North Indians suspiciously and vis-a-versa. Among South Indians, the Telugu and Tamils will fight, whereas in North India the Punjabis and Jats will battle for superiority. Worse, grouping also  occurs on bases of caste and sub-castes. In such a scenario, with globalization, can organizations really ensure unbiased behavior and decisions on race and religion? Is it possible to wade out prejudices, suspicions and intolerance for a few hours at work, and come home to indulge in the same?

The challenges for organizations are mind-boggling due to technological advancement. As in this wordpress blog where readers from 50 countries visit daily to read posts, in global organizations faith, philosophies, ideologies, race and religion of employees are quite different. Homogeneous behavior cannot be brought about by a code of conduct or compliance team. Meritocracy can win only when it is built into the culture of the organization, else the spirit of the organization will be in tatters due to the dichotomies in employees faiths and beliefs. Hence, let us take a look at diversity management risks in multinational organizations.

1. Regulations of various countries.

Labor laws relating to age, race, religion and gender differ among countries depending on the legal, political and cultural environments. Additionally, in large countries, for instance US or India, they differ state wise and some vary according to industry. Therefore, multinational organizations have to devise policies and procedures on diversity management according to the laws of the country in which head quarters is located, and international operations.  Compliance to various laws and regulations can be a challenging task and head office may not have the full picture.

2. Variance in local cultures

Local cultures impact diversity management initiatives of multinationals. For instance, in Saudi Arabia, women sit separately in a room and do not mix with the men in office. In India, the number of local languages tend to group people of a state together. Hence, the status of embedding diversity management initiatives in head office and regional offices may differ significantly. Cultural integration may become difficult due to behavioral attitudes. For instance, Americans are more outspoken and aggressive in nature, whereas Indians are diffident and respectful. Due to these aspects, global communication and integration plans have to be adopted to local environment.

3. Anti-discrimination protection

The effectiveness of anti-discrimination protection is dependent on enforcing laws and the judicial environment in the country. For example, in US a number of discrimination cases are filed by employees and huge penalties are levied on the organizations. However, in India, though similar laws exist, there is hardly an instance where a case is filed by an employee on the basis of discrimination, as there is minimal possibility of employee winning the case against a large organization. To ensure same level of adherence is maintained at head office and regional offices, diversity management officers need to play a critical role.

 4. Increase in workplace violence

Globally and in India, workplace violence is increasing. Employees report increasing number of cases of bullying, harassment, sexual harassment and physical threats in various surveys. Here again, a group or individual  belonging to a specific race or religion may get mobbed by the majority, depending on the political climate in the country. Hence, the challenge for multinationals again is that similar laws may not exist in other countries. For example, India still doesn’t have an act passed on sexual harassment in workplace, though the bill has been pending in the parliament for sometime. Therefore, awareness levels of these issues differs in various countries. Multinationals, to bring uniformity need to have extensive training in regional offices and subsidiaries.

5. Mergers and Acquisitions

With the ongoing trend of multinationals acquiring companies in different countries, addressing diversity issues becomes critical. Mergers fail, due to failure in culture alignment and not because of failure in merging financial numbers. Post merger, for cultural integration one of the first things to do is devise a strategy for diversity management and implement the same.

Closing Thoughts

An extremely complex subject that impacts organizations especially those with international operations, at three levels – customers, productivity and staffing. However, it is often ignored by the management and definitely by risk managers and auditors. Very few risk managers do a human resource risk assessment, hence these problems continue to brew within the organization, till the culture becomes toxic or legal cases are filed. Hence, it is a good move to develop global and local diversity management strategies and implement the same. Indian organizations can take a leaf out of US organizations, and start appointing diversity management officers.

References:

Workforce diversity initiatives by US Multinationals in Europe - Mary Lou Egan.. Marc Bendick, Jr.

Rational Versus Rationalized Risk Taking

Devdutt Pattanaik in his Economic Times article “Malady of Interpretation” narrated an interesting story from Mahabharata. Bhisma, leading the battle in Kurekshetra on behalf of Kauravas had the boon of death by wish. As he couldn’t be killed, Pandavas couldn’t win the battle. Then Krishna devised a ploy to trick Bhisma into lowering his bow. Pandavas knew Bhisma would not fight a woman, hence asked Shikandi, a transgender, to participate in the war. Shikandi was born a woman, hence Bhisma interpreted that he cannot shoot at a  woman, whereas Pandavas considered him a man. If Bhisma had rationalized that Shikandi was a man, Pandavas may not have won the battle.

Rational or Rationalized Risk Taking?

This is thought provoking; do we do rational risk taking or rationalize risk taking? Risk analysis is significantly subjective, and a whole lot depends on the judgment of the decision maker. The financial crises occurred as most financial institutions rationalized the risks of selling the CDOs as minimal. With hindsight, most question the decisions and fail to comprehend the rational for taking these risks.  Therefore, let us look at the situations that prompt us to rationalize risk taking.

1. Boss’s view

If the boss says so, most juniors will agree, even if the business decisions tantamount to jumping in a well. Depending on the organization culture and boss’s authoritative tendencies, juniors will rationalize risk taking decisions. Juniors show higher tendency to rationalize when they believe that their voice is not going to be heard, will be penalized for giving contradictory viewpoint or  rewarded for blindly agreeing to boss’s ideas.

2. Group think

When group think sets in, then tendency for rationalization increases tremendously. Group members agree for getting along and not rocking the boat. The attribute of looking at one’s own plans objectively and skeptically is completely missing among the group members. A voice shouting at the top of his/her lungs is also not going to be heard. On the other hand, anyone who gives a rational view may get attacked by the group members.

3. Self-interest

When we fall in love, we fail to see the negative attributes of our object of adoration. Our overwhelming pride in our ideas can make us believe our own hyperbole. There are many mountaineers who attempt to climb Mount Everest without adequate preparation and training, as they consider themselves unbeatable.  While passion and commitment is good, if a person is not open to debating their ideas, then it can become their waterloo.

Taking into account the extent to which social context, individual psychology and organization culture play a role in business decisions, it isn’t surprising that organizations are failing to manage risks. The devil is in the detail and management ideally should form decisions backed by data. But, quite often management takes decisions based arrogance, optimism and gut feel. Hence, rational thinking is compromised for rationalized thinking.

Therefore, other obstacle for rational risk taking is that it requires a whole lot of information. Usually, decisions are based on inadequate information and research. As Sun Pin says that to win a  war, the general should know strengths and weaknesses of his own army, the opponent’s army and the terrain. A general should draw the battle plan after taking all risks into account and get into battle only when victory is assured. However, in business this wisdom is ignored and business managers tend to rationalize while preparing corporate strategies.

Closing thoughts

The human psychology works on the premise that when we say “Mirror, mirror on the wall, who is the most beautiful of all?”, the mirror responds “You”. Dissenting and uncomplimentary views are hard to accept. The first reaction many a times is a desire to stuff something down the other person’s throat to stop their criticism and negative feedback. However, for rational risk taking the dissenting thoughts and critical feedback are worth gold. These prompt executives and risk managers to view strategies, business decisions and implementation plans dispassionately and objectively. Rather than deny the possibility of risks occurring by saying “this is not going to happen”, executives must ask – “how is this going to work?”.

One question for the readers – Can rational and rationalized risk taking co-exist?

References:

Devdutt Pattanaik in his Economic Times article – Malady of Interpretation

Recruitment in Dysfunctional Organizations

Six months back you landed your dream job, the pay was great with an incredible job profile and a company brand name to match. Now you are not sure what you have gotten yourself into. You are perpetually asking yourself – should you continue or quit? You are asked to compromise personal values on a daily basis for showing loyalty to your boss and company. The situation that you are in, is not out of the best practices of human resource management or ethical culture, you have joined a dysfunctional organization. Putting it another way, an organization with a deviant corporate culture.

Employees face incredible personal and professional risks on joining an organization with a deviant culture. On the face of it, initially, everything looks unbelievably good. As the layers are peeled off, the employees feel they are in a sinister environment and are swallowed in quicksand. The walls of silence maintained ensure that employees do not discuss these concerns openly and fear of retaliation forces them to comply. Employees deceive themselves into believing that these unethical activities they are doing are just for a short time, and the situation will improve in a short while. A cold hard look is required in such circumstances, to understand the symptoms and take a decision.

The paper “Organi-cultural Deviance: Socialization of Individuals into Deviant Culture”, describes the process of individual indoctrination into the culture. A new employee goes through five stages of socialization into the workplace according to Wanous research. These are:

a) confront the reality of the new job –newcomers adjust their expectations to the reality of the job;

b) achieve role clarity-newcomers learn and negotiate the expectations and requirements of their roles in the organization;

c) locate oneself in the organization-newcomers learn how their work contributes to the work of the organization;

d) assess success-newcomers assess the value of their contributions to the organization; and

e) during the stages of socialization, the individual learns the language of the organization.

The above mentioned process is adopted by employees in a regular organization in the probation period, that varies from 3-6 months in most companies. In a deviant organization culture, the employee starts feeling the social pressure to comply to unethical practices and lose individual identity in this period. The process of indoctrination describes how the individual “self” is socialized into a deviant organization culture. The stages are as follows:

1) Stage I - In normal course of action, an individual has various separate identities, that they maintain to lead a fulfilling life. For instance, the employee has a work identity, a social identity, a family identity etc. In a deviant organization, these identities are slowly stripped away, and the employee is completely dependent on the organization identity. The employee is lured by big rewards to compromise their individual identity for the organization.

Since, the employee is still in probationary period, the fear of job loss makes them succumb to group think. The organization or group attempts to brain wash the individual by giving justification of the behavior for altruistic purposes. For instance, they will ask to humiliate or harass another person or employee, to improve the harassed person’s behavior. The justification given will be that it is for the betterment of the victim, rather than accepting that they are indulging in socially unacceptable behavior. Further on, they are asked to indulge in degrading activity for the sake of fun. In the book “The Wolf of Wall Street” Jordon Belfort describes activities at Stratton. He mentioned that seniors in the company had free for all sex discussion in the morning meetings and to boost morale arranged depraved acts. For example, in one case, they cut hair of female employee with her agreement in the conference room. Women employees especially have a tough time as they are mostly treated as sex objects.

2) Stage II -  In this phase the employee becomes dependent on the organization and the psychological chains tighten. The idea initially sold to the individual is that the group has an altruistic purpose and is for the benefit of the society.  The individual is forced into thinking that the rules of the group must be obeyed at all personal costs and no dissenting views are permitted. Employees are rewarded amply for complete compliance and punished severely for disagreement and disobedience. The individual is encouraged to share vulnerabilities and weaknesses with the group, and these are used to exact compliance to group. Simultaneously, fear and threat are used if an individual wishes to leave the group. The group follows its own code of conduct and uses loaded language and signs to communicate.

In this situation, the individual is indirectly commanded to put his/her personal and family needs over the group or organization. An article of Vanity Fair titled “Lehman’s Desperate Housewives”  narrates the situation from Vicky Ward’s book -”The Devil’s Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers“ at Lehman before collapse. It says -

“Lehman Brothers C.E.O. Dick Fuld expected his top executives to get married, and stay married. For their wives, the firm was both fishbowl and shark tank, with unwritten rules about the clothes they wore, the charities they supported, and the hikes they took at the company’s Sun Valley retreats.

One of the senior executives wife described her child delivery with these words -

“I was in labor with our daughter and had to lie there without him … but I wouldn’t get mad at him—he had called the entire Hong Kong office in for a meeting. We knew that it would have been used against him. If you made a personal choice that hurt Lehman, it was over for you.”

Stage III – In the last stage, the indoctrination is complete. The individual’s motivation, judgments and perceptions are transformed as the person becomes a member. The individual derives his identity from the group or organization and opinions from outside the group are completely discarded. Any information that contradicts  the groups perception is considered harmful for group unity and the sender/ giver of the information is attacked. The individual has no freedom of action and blindly obeys instructions of the group. Unfortunately, the leaders and existing members of the group have so ingrained the thought pattern of socially and psychologically harmful behavior that they lose insight of right versus wrong.

For instance, as in the case of Enron or the more recent “News of the World” phone hacking scandal, seniors knew of the unethical and fraudulent activities being conducted in the organization. Some even know the details but will not take any concrete action to bring change.

Whether this culture sets in large organizations or small social groups, the psychological pattern is established for deviant behavior. The longer the person is a member of the group, the less probability exists of the person being able to see a true reflection of themselves. All inputs from group outsiders of logical, rational and socially acceptable behavior are disregarded and members adopt a posture of willful blindness. The members continue to compromise their morals for financial, physical and social security.

Closing Thoughts

Deviant cultures are set up by leaders in powerful positions with derailment attributes. However, once the culture is established in a social or corporate organization, it is hard to re-establish normal behavior patterns. People have a choice to either comply or be isolated. To avoid the social, physical and financial threats most compromise their morals and show unquestioning alliance to the more powerful people. Either an internal revolution by the members or  intervention from external parties can break the psychic trap established in such organizations. An individual’s best option is not to join such a group or organization, and if they have mistakenly joined it, leave at the earliest possible point. Else, the life course for unethical and criminal behavior is established without a return ticket.
References:

 1. Organi-cultural Deviance: Socialization of Individuals into Deviant Culture

2. Lehman’s Desperate Housewives – Vanity Fair

A Debate – Profitability Versus Human Life

Everybody uses everybody else for their own benefit. That is the justification we give for most of our negative actions. Some follow use and discard policy; others follow use, abuse and discard policy. The complexity arises as it hard to differentiate when it is right to use. Isn’t a wife being used by her family when she is doing house work, looking after the kids and sacrificing her pleasures? Isn’t a husband being used by the family when he is putting ten hours in office to earn a living so that his family has food on the table and leads a comfortable life? What about the hired help in-house, who works twelve hours for minimum wages just because they are poor and uneducated, isn’t that exploitation? Hence, can the public really blame corporate world for perusing profitability at the expense of human life.

1. Scenario – Non-profit Social Organization

A couple of days back in Bangalore, a young footballer collapsed on the practicing field in Banglaore. There was no medical aid or ambulance available on the field and the young player died. Karanataka State Footballer Association is getting the flak and offered Rs 100,000 to the grieving parents. Is the money sufficient compensation for death? If a million was offered, will the negligence of the association be more tolerable to parents? What is the right value of use or exploitation of human life?

2. Scenario – Corporate World

The old 1960′s Ford Pinto case is an example where organizations put dollar value to human life. The Pinto had a gas tank in the rear, and it burst into flames on collision. A number of car users lost their lives or were severely burnt during accidents, but the company continued to lobby for lower safety standards. The engineers knew about the defects, however, the senior management advised them to continue manufacturing. In a judicial hearing, Ford management justified their actions claiming that they had done a cost-benefit analysis for the same. The cost of removing defects was higher to the benefit of saving a human life, hence it didn’t make business sense to improve safety measures. In the analysis, the price of human life was US$ 200,000.

The case is relevant, as Tata Nano in India, has in a few occasions burst into flames without an accident. The car just becomes a fireball. Although Tata Motors management has claimed that the defect was removed, customers are still wary . Therefore, the question is – is it justified for organizations to risk the life of customers for profitability?

3. Scenario – Crime Scene

With increasing crime, the question becomes more complex. Let us take a hypothetical case. A man was hired by group A to conduct a crime on X, to ensure X does something for group A. The same man was hired by group B to conduct a different crime on X, to ensure X agrees to the demands of group B. Now the man double crossed group A and didn’t inform them he was working for group B. He double crossed group B and informed them that he will be successful even when he knew his plan isn’t working. He involved a number of friends and associates to help him with his plans. He double crossed his friends and didn’t inform them about the risks of the crime and how they are jeopardizing their life.

In nutshell, he used everyone to his own advantage for sake of monetary gain and safeguarding his own life. He assumed safety in numbers;   involvement of other people will bullet proof him against the negative repercussions of  group A, B and X. Now in this case, would you say, since all involved except X were undertaking unethical behavior, the use and exploitation of everyone else is justified? If we remove the legal aspect, how should this person be judged on moral aspects of his action? If one is risking another’s life, does loyalty to his own group has value?

Closing Thoughts

In all the above cases, we will say it is wrong thing to do even if we ignore legal aspects of each case. Human beings code of conduct and morality states that use of another for fulfilling duty or a greater cause is justified. However, use of another for personal benefit without compensating them appropriately for labor amounts to immoral behavior. There is a saying that even in the mob world, loyalty counts. There also, using your colleagues or clients which might harm them is not acceptable.  Human life has value and all human beings are expected to respect it. A code of conduct is followed as it keeps all human beings safe and secure. Breaking those always results in negative repercussions.

References:

1. Ford Pinto

Leadership Lessons From Cricketer Rahul Dravid

Rahul Dravid bid farewell this Friday to test cricket – his passion and his profession. In his retirement speech he eloquently described his 15 years career manifesto:

“My approach to cricket has been reasonably simple: it was about giving everything to the team, it was about playing with dignity and it was about upholding the spirit of the game. I hope I have done some of that. I have failed at times, but I have never stopped trying. It is why I leave with sadness but also with pride.”

In one of the interviews, Dravid mentioned he read autobiographies of great men to learn the lessons of life. Now with his 15+ years career he inspires many to follow in his footpaths. Business managers, especially Chief Risk Officers (CROs) takeaways from his life can be clubbed in three main attributes of his personality.

1. The Gentleman

Rahul Dravid is equally known for his batting and his gentlemanly conduct. He left his sporting legacy spotless, by putting his best foot forward not only on the batting crease but also in public domain. Fame and money didn’t affect him, and he continued to be humble and dignified.

Even his toughest opponents – the Australian team – honored him. He in December 2011, became the first non-Australian cricketer to give the annual lecture at the Bradman Oration. While giving his tribute to Sir Donald Bradman, he recalled Sir Don’s inspiring thoughts in the following words -

‘That the finest athletes had, along with skills, a few more treasured qualities : to conduct their life with dignity, with integrity, with courage, and modesty. As this he believed were totally compatible with pride, ambition, determination and competitiveness.”

Dravid further added - ”Maybe these words should be put up in cricket dressing rooms all over the world. ” Maybe organizations should incorporate these words in their mission statements and core values.

In the business world, some  believe that business ethics and competitiveness are mutually exclusive goals. A few CXOs think that any means can be used to achieve their ambition. While most have participated in sports and played the game by its rules, they don’t give a second thought on breaking business rules.

CROs have a double role to play. They must be role models for balancing ethical conduct and business growth. They also have to ensure that others don’t compromise ethics for monetary advantages and personal agendas.

2. The Wall

Dravid got the nickname “The Wall” from Reebok advertisements and it stayed with him. The nickname was so popular that one twitter @NigelBritto today posted this amusing tweet – “As is usual in India, they could name a street after #RahulDravid. But then, the Americans have already done it – Wall Street.”

During his career, he mostly held number 3 position in the batting order. He made the middle order impregnable and his consistent performance made bowlers miserable. When the top order collapsed, he showed grace under fire. Nothing deterred him, his concentration on the job at hand was so great. He protected his team.

In the corporate world, CROs basically hold the number 3 position and have to bat under crises when top order is collapsing.  They have to provide the organizations a circle of protection and a defense against all risks. CROs are responsible for risk identification and mitigation – strategic, operational and financial. Hence, they are “The Wall” for their companies.

3. Mr. Dependable

Dravid’s teammates nicknamed him “Mr. Dependable” as he put the team before personal glory. While he is a batsman, when the team needed a wicket keeper, he pitched in. He did the job even when he was publicly   criticized for lacking skills. He is also a great fielder and holds a few records on catching balls. He gave up captaincy when he felt he wasn’t the best man for the job. He retired to give new blood a chance to make it to the big league. In all his decisions, the team came first, and none of the decisions were based on egoism.

Amazing attributes for a person of his caliber. Indian team was fortunate to have such a team player. When he led, he thought of the team; when he followed, he worked with the team. Companies invest heavily to inculcate team spirit but a few fail due to the aggressively competitive organization culture.

Again, CROs have to wear various hats and be there for the business units to help and handhold them. Whether it is for managing financial risks, or risks of entering emerging markets or managing disaster scenarios, they are the person business teams must rely on. Business teams must trust the CROs to give the right advise. CROs must be the “Mr. Dependable” in the organization.

Closing Thoughts

Dravid is leaving a spectacular legacy and will always be counted among cricketing greats. His batting won him millions of fans and his unassuming behavior respect from everybody. He conquered all the lows of his career with quiet determination and persistence. There are very few public figures who inspire for both – skills and character. A big thank you to him for being a role model for an entire generation. There are numerous lessons for corporate citizens to learn from his life. Maybe now we need to wait for his autobiography.

References:

1. ESPN – Rahul Dravid’s Retirement Speech
2. Rahul Dravid’s annual lecture on Bradman’s Oration

Program Change Management Risks

Organizations invest huge amounts in running numerous programs to improve operations, culture and profitability of the company. For instance, programs cover technology implementation, building social networks, improving employee engagement and corporate social responsibility initiatives. Some programs give good return on investment while others dwindle without much success.  The success and failure of a program appreciably depends on effective change management.

Even for information technology programs, various survey reports show success-failure ratio as 50-50 percentage. Failure results in cost overruns and delay in project schedule besides low employee morale. A few reports indicate just around 20% of the programs are successful in the first effort in all respects. The differentiating factor, with technology and implementation capability being the same, is change management skills. Lack of focus on change management risks results in program failure.

Before discussing some key aspects of program change management risks, let us understand the reason for the same. Change causes insecurities to surface, hence sows the seeds of conflict and discord. On start of a program, people do not understand the reason for change. They are unable to assess what is at stake and what success looks like. Moreover, people respond differently to change. Idea of change gets supporting, skeptical and scornful reactions. If not handled carefully, different groups within the organization prepare battle plans to sabotage the program.

Hence, change management strategy is an essential component of program implementation. Given below are some of the risks on the same.

1.   Senior Management Involvement

For approval of the program, the program manager shakes hands with all the senior managers to get their buy-in.  Managers assume that the senior management commitment will continue after approval. However, this is rarely the case. With time, commitment will wane if senior managers do not understand the direction of the program and/ or start giving priority to other programs. Hence, program managers need to monthly/ fortnightly update the senior managers through review meetings and reports on the status and plans of the program.

Additionally, users and employees need to see senior managers demonstrate commitment to the program i.e. walk the talk. Program managers need to leverage opportunities to show senior management support for the program. Develop a leadership plan to ensure senior managers become champions of the program.

2.   User/ Employee Adoption

The program managers gear most of the programs activities towards adoption by the users. For example, in building a risk culture, adoption of risk assessment template is a milestone. The point is change agents view program activities in isolation for pre-go-live stage without considering the overall impact on the organization. Programs influence strategy, process, technology, and people. Without synchronizing the four aspects, even with user acceptance, the program will be unsuccessful in the long run.

Second aspect to consider is the handholding and support after the go live stage. After implementation of a program, the users may still face some challenges or new problems and risks may arise. For continued success of the program a team is required to support it, else it will fizzle out.

3.    Multiple Communication Channels

A program requires a good communication plan and failure in communication jeopardizes the program. Communication messages must be clear, straightforward and from the heart. The corporate jargon and meaningless mantras does not get buy in from senior management or users. For example, do not have a mission statement for an ethics program that sounds like this:

“The company’s mission is to be the most ethical organization in the world by adopting best practices, making it a great place to work and rewarding meritocracy”

Employees will roll their eyes on the above statement and consider it as management hyperbole. There is nothing actionable or measurable in the statement. Neither are the steps linked to ethics.

Another risk is failure of communication from senior management. Program managers assume that employees understand senior management commitment from strategy and other generic documents. However, adopters need to hear from senior management, their views and aspirations regularly.

Moreover, when programs run into problems, the initial reaction is to hide the bad news from the adopters. Clear concise communication on challenges being faced by program managers and support required, gets the program back on track. Communicate more often when program is running into trouble.

More importantly, change agents sometimes fail to listen to the adopters. Adopters’ feedback is critical for the success of the program. Understand their angry reactions, criticism and challenges. Develop plans to address them and not ignore them.

 4.    Training Plans

 Standard training material is the bane of most programs. Change agents believe that once the training is imparted, their job is done. Some pieces are overlooked in training plans and I have mentioned these before in a post. These are:

• People have different learning patterns.
• People are at different stages of learning – beginner, learner, manager, and expert.
• People do not remember the training for long unless they start using the information in practical work.
• Old habits are hard to break; hence, people revert to old patterns of working if not monitored.

Last but the not least, is the content of the training. For example, fraud awareness training is a double-edged sword. The users, who didn’t know a word about fraud, now have some idea on how frauds are conducted. The information can be misused. Moreover, an overload of information may create panic reactions in users. Hence, when to deliver training and what information to give are critical decisions for successful program implementation.

 5.     Reward & Recognition System

For a program to be successful, set up a clear system about reward and accountability for the adopters. Failure to establish a system will result in rewarding mediocrity rather than meritocracy. Further, without implementing a penalty criterion, there is no downside for wrongdoing. Hence, maintain a balance between reward and punishment.

For instance, in an ethics program, build a system of bonus points at time of appraisal for meeting business objectives in an ethical way. If a manager had the option of choosing an unethical means to achieve an objective faster but selected an ethical way though had to work harder, award him/her bonus points. On the other hand, award penalty points to a manager who chose unethical means.

6.    Dealing with Failure

Sometimes, despite best efforts the program team stares at the face of failure. People adopt inflexible approach and refuse to acknowledge the logical benefits of the program. They foresee their personal and political agendas negatively impacted, hence refuse to contribute to the shared purpose of the organization. The situation reminds me of an old joke.

A man bought a parrot as a pet. To his dismay, the parrot had a bad attitude and spoke foul language. The man tried to teach the parrot to behave but the parrot refused to change. One day in a fit of anger the man put the parrot in the freezer. He heard the parrot screaming and abusing for a couple of minutes, then there was silence. The man opened the door of the freezer, the parrot trotted out and said – “I beg your forgiveness for speaking rudely. I promise to behave properly.” The man was amazed at the transformation. Then the parrot said – “May I ask, what did the chicken do?”

To avert sudden failure periodically conduct organization surveys to understand the acceptability of the program and organization readiness for the next stage. Measure the behavior and sentiment change due to the program. Do not rush to the next stage without ensuring that adopters connect with the program in the existing stage.

 7.    Awareness of Retaliation

Situations can get out of hand when people start retaliating against the program manager and his/her team. Some programs are launched for appearances sake. For example, senior management may approve a program for business ethics, diversity or employee participation. However, when the change agents sincerely attempt to run the program to bring about a cultural change in the organization, they get mobbed by the employees. In this case, the junior employees start complaining that the change agents are pressurizing, bullying and forcing them to change. This impacts the heart of the program and the change agents spend most of the time defending their actions. The senior management doesn’t really want change, hence looks the other way or gives tacit approval to derail the program and mob the change agents.

In such cases, the change agents have to pay a high price, but the seeds of change are sown. People recognize that there is a better way of doing things, and gradually move towards light.

Closing Thoughts

 Change is difficult. We ourselves find it difficult to change, so getting others to change is an obstacle race. As Mahatma Gandhi said on leading the non-violent Indian independence movement – “First they ignore you, then they laugh at you, then they fight you and then you win.” Being a change agent is a test of stamina, perseverance, discipline and sacrifice. There are no low hanging fruits to pluck, no short-term rewards, no personal glory, however, in the end organization benefits.

 

Strategy to Execution – A Risky Path

Some companies fail and some succeed spectacularly in the same market conditions. The question for successful companies is – what did they do differently? On the other hand, failure is attributed to either poor strategy or pathetic operations.  A popular notion among managers is that if company is not achieving targets, then review the strategy, something must be wrong with it. If the strategy is found reliable, review the operations and focus on it to be successful.  Is the explanation for failure that simple?

In my view failures occur because complexities of the situation are either ignored or misunderstood. The third-fourth-fifth dimensions are normally missed and must be looked into. The overall strategy might be right, the execution flawless, and  the company may still be staring in the face of failure. According to me the path from strategy to execution is very risky. Below are my views on the same, do you agree with them?

1. The Human Dimension

Let me give you an example, that most employees are familiar with:

Objective of the company : Make the organization a “Great place to work”.

Strategy to achieve the objective : Focus on diversity, work-life balance and good leadership pipeline.

Execution plans :  Hire 25% women, promote 10% women to senior levels, issue policy of work life balance , introduce 360 degree feedback and balance score card system.

All the execution plans were implemented, however employees are still cribbing and consider the organization one of the worst places to work. So what went wrong?

Now let me give you a few situations that occurred in the organization :

a) A gorgeous looking woman was placed in a senior management position who was rumored to be having an affair with a CXO. Employees down the line didn’t like her personally as she did not have a reputation of high professional caliber or ethics.

b) A few employees in the 360 degree feedback, gave honest negative feedback about their bosses. In less than a quarter the bosses with help of human resource department terminated or demoted the employees.

c) Bosses allowed the employees to leave office premises by 6 pm. However, they asked employees to work at home and deliver reports the next morning at 9 am.

The missing component – the human dimension – was overlooked. The culture of the organization didn’t change with the strategies and plans. The messages that employees received were –  ”One gets promoted if one sucks up to the boss, merit doesn’t count, honesty has a huge downside and bosses will harass.  Nothing has changed.” The tone at the top remained the same and no one was seen walking the talk. Hence, though everything looked good on paper, and all execution deliverables were achieved, the execution team met the key performance indicators, the objective wasn’t accomplished. People make the difference, hence analyzing culture, messages and in some situations even the grapevine is helpful.

2. The Organization History

The often ignored impediment in failure of strategy is the organization history. History – good and bad - makes a difference in success and failure of strategy as it directly impacts commitment levels. If the organization has had bad incidents or history, a host of issues become undiscussable. These undiscussable issues make communication superficial, hide negatives in the wood work and portray a picture that management wants to hear. In a globally connected world, even a small incident can become a historical landmark. To bring clarity to my point, I am narrating an incident that I experienced.

I was working in an organization in which one of the core values was “respect for everyone’s time”. The offices were open plan, with no difference between a CEO desk and an admin desk. All meetings were conducted in various conference rooms and room bookings were done through an intranet application. The cultural guideline was – do not overstay in a room as it may be booked by another group/individual. There were no reserved conference rooms for senior managers.

One day a new employee with his group saw that the people in the conference room he had booked for a meeting continued in the room after their meeting time elapsed. He knocked on the room, and asked the team inside to leave. The other employees outside were horrified. After 5 minutes, when he saw no action, he again knocked. The team inside walked out and all employees were red-faced. The poor chap had just evicted the Global CEO and his executive team out from the conference room.

News traveled globally within a few hours of the incident. The mathematical geniuses developed statistical models on probability of the new employee being asked to leave. Others like me, indulged in simple betting. Within a week the CEO sent a global message appreciating the employee for adhering to the organization values. He said that he felt good that induction training was effective, HR was doing a good job in recruitment & selection, and employees were fearless in confronting seniors on core organization values. All employees were absolutely jubilant on losing their bets. The incident became part of organization history and employees were inspired by the leadership. Commitment to a strategy comes from the heart and not by the numbers given in a Powerpoint presentation. In some situations analyzing the past history of the organization and failure rate of strategies might be helpful.

3. Reliance on Performance Management Systems

Norman Marks in his post – “The inter-relationships of risk, objectives, strategy and performance“ rightly said that “performance management without considering risk is flying blind.” I agree with this statement. However, my question is – are organizations really measuring the right stuff ? If not, are organizations deluding themselves into believing that they are monitoring and as all performance indicators show green status, everything is great.

Let me narrate here my pet peeve on risk management performance indicators. Tell me, how many of us have filled a balance score card or prepared an annual plan stating the number of risk management reports issued during the year. Additionally, recall numerous times assurance has been given to senior management based on the reports issued and their findings.

According to me, these performance indicators for a risk management department make limited sense. Better indicators would be :

a) To calculate the amount of loss averted from timely risk mitigation. Or,

b) Counting the number of days organization risk was higher than the established risk appetite of the company.

However, only a few companies keep these performance parameters because these are difficult to calculate and require robust management systems. So we rely on parameters that are actually not telling us anything more than the fact that some work is being done. Therefore, my contention is that even if a the risk of not issuing 12 risk management reports (a performance measure) during the year would be available, it may be irrelevant risk identification. A good idea when doing management by objectives, is to check what the company is measuring.

4. The Organization Structure & Systems

The focus is not developing the strategy and operation plans, however the point that is missed is – whether the organization structure and systems are conducive towards accomplishing the envisaged operations efficiency.

The prime example of this is establishing backoffice operations in emerging markets or outsourcing processes. Most organizations initially off shored to save on costs. The cost-benefit analysis was done considering the explicit cost of labor and other costs in mind. However, the implicit cost of managing the operations remotely, variance in customer service quality, breakdown of services and increased risk of fraud were not considered. Quite frequently, the same process was outsourced without much re-engineering for outsourcing the process. This resulted in cumbersome and long processes, higher management time and more risks. In rare cases only the organization structure was aligned to outsourcing activities and managing the complex relationships.

In this case, the strategy was fine, effort was put in setting up back office operations properly. However, the interlinked impact on various functions and activities was ignored. Basically the problems arose due to structure and systems, as these were not considered at the strategy formation stage.

5. Strategic Risk Management

Finally, the concept of strategic risk management is gaining popularity, though it still has a long way to go. Problems sometimes arise in implementing a strategy, because at the time of formulation the strategic risks were not identified and assessed. Hence, the organization has a rosy picture of the strategy.

The additional challenge is when strategic risks are identified though not properly. Some hold the opinion that strategic risks are best identified by the top management or chief risk manager. The frontline operations teams do not have a role to play. My view is that while strategy may be developed at the top, the risks need to be captured at all levels and rolled up to the strategy development team.

To illustrate, let me share with you the venture of international fast food joints in India. KFC, McDonalds etc. made losses in the Indian market initially. The reason for entering the Indian market was clear – a huge educated middle class provided a good customer base. They replicated their operations model in India. However, they really didn’t understand Indian tastes. Indians preferred spicy food and didn’t appreciate the American bland taste. Secondly, Indians initially took these meals as snacks and not for lunch or dinner. Hence, were willing to spend much less than they would in an Indian restaurant.  It took the companies 3-4 years to understand the difference in customer tastes and expenditure patterns, and change the menu accordingly. Customer risk was local whereas the strategy was formed globally. Strategy failed due to lack of understanding of local market.

Hence, in my view strategic risk management is not a simple exercise undertaken at the top of the company pyramid. A robust enterprise risk management system aligning objectives, strategies and risks is definitely beneficial. If an organization is not meeting its key performance indicators, even when their are no obvious problems with operations, a through analysis of risks at all levels sheds light on quite a few issues.

6. Impact of Systemic Risks

Another aspect that is least understood in organizations is systemic risks. Organizations adopting enterprise risk management assume that since the key risk indicators are showing low risk, everything is running smoothly. However, as seen in the financial crises, the impact of systemic risks is huge. Underestimating it or ignoring it can nearly wipe out the organization.

Turner report highlighted the impact of systemic risks in the banking sector with the following lines:

“Five key features of this new model played a crucial role in increasing systemic risks, contributing to the credit boom in the upswing and exacerbating the self-reinforcing nature of the subsequent downswing:
(i) The growing size of the financial sector.
(ii) Increasing leverage – in many forms.
(iii) Changing forms of maturity transformation.
(iv) A misplaced reliance on sophisticated maths.
(v) Hard-wired procyclicality.”

Although, in the blame game the investment bankers are being labeled as culprits for playing in the CDO market, the interconnections between retail and investment banking  resulted in the crises. The retail bankers gave home loans to individuals with doubtful repayment capacity to leverage the boom in real estate market. Simple explanation is that the collapse of real estate market negatively impacted recovery of loans which resulted in making the CDOs worthless. The key lesson to learn here is that strategies can fail majorly if they are not protected against the impact of systemic risks.

7. Leadership Quality

The quality of leaders makes the largest difference to an organization’s success. Can one imagine GE’s tremendous success without Jack Welch? He accomplished a lot as a leader, though he portrays himself modestly in his book “Straight From The Gut” . He narrates -

“I came to the job without any external CEO skills. I had rarely dealt with anyone in Washington, even though the government was more into business than ever. I had little experience dealing with the media. My only press conference was scripted session with Reg on the day GE announced I would the the next chairman. I had only one or two brief outings before the Wall Street analysts who followed GE. And out 500,000-plus shareholders had no idea who Jack Welch was and whether he would be able to fill the shoes of the most admired businessman in America.”

Jim Collins in his book “Good to Great” analysed the impact on companies that had level 5 leaders. Organizations with level 5 leaders showed consistent performance and a far better share holder return than their industry counterparts. Hence, if either strategy or operations are failing, the quality of leadership should be looked into.

8. Assessment of  Strategy Formation Process

Last but not the least is a discussion on strategy itself. Two thoughts come into mind – how should a strategy be assessed for effectiveness and when should the strategy be modified or changed? The quality of strategy itself is in doubt sometimes.

The key reasons for adopting a wrong or misguided strategy relate to some of the points I had mentioned in my earlier posts on strategic risk management :

a) Very few organizations have a proper process for strategy formation. For most it is an end of the year data accumulation practice from different business units. An organization level strategy considering all interconnected aspects of business may not have been devised.

b) Board and CXOs generally do not negate a strategy given by the CEO or fellow colleague. The political repercussions of challenging a CEO/CXOs strategy can be huge, hence most keep their opposing opinions to themselves.

c) If the organization culture is not focused on creativity, ideas and learning, new strategies will not be presented for fear of being mocked or run over. Hence, contrary to popular perceptions the strategy pipeline is quite dry.

d) Moreover, the choices of strategy selection with CEO/CXO are limited. They receive ideas which people down the line have collectively agreed to. These might not be the best ideas as the popular ones generally do not shake people out of their comfort zones.

Understanding these circumstances for assessing the quality of strategy can be difficult. Senior management in such situations has to start from scratch to develop a strategy formation process. If the formation process is full of loopholes or ineffective, the probability of having a good strategy is low.

Closing Thoughts

In nutshell, getting the strategy and operations right is critical for organization success. However, these two components itself do not guarantee success, they are just the building blocks. Other management and organization parts need to be aligned properly to the objectives and strategy of the organization. A holistic picture is required to accomplish objectives. In case of failure in achieving objectives, a review of strategy and operations is definitely beneficial. However, aspects underlining these should be delved into deeply to do a proper root cause analysis. Looking beyond the obvious helps.

References:

1. Turner report – A regulatory response to global financial crises – Financial Serivices Authority, UK
2. Straight from the gut- Jack Welch with Johm A. Byrne
3. Good to Great – Jim Collins
4. Norman Marks Blog

The Business Enterprise Magazine published this post in February 2012 issue.

Achieving Excellence by Becoming a Learning Organization

When we wake up in the morning to read a business newspaper, the headline that grabs our attention is that a high-profile company has gone bankrupt. Companies with reputation of infallibility, just sink like titanic. Flawless legacies tarnish overnight. Being in fortune 500 list does not guarantee continuity in the next decade. Against this backdrop, the burning question is how do organizations mitigate the risk of failure, avert crippling blows and become impregnable fortresses of resilience and growth?

To complicate matters further, classic business models are losing relevance. The business environment and global dynamics are changing fast. It is obvious that resilient companies will sustain and grow, while others will die a sudden or slow death. Learning from the changing environment is the key for success. As Charles Darwin said – “It is not the biggest, the brightest or the best that will survive, but those that adapt the quickest.” 

Companies that learn to adapt quickly to the changing environment will succeed. Organizations with thousands of employees can’t wait for the CEO to lead, direct and react. The empowered frontline leaders make the difference in an organization’s success and failure. In learning companies, they become catalysts for change. Hence, the question is how an organization can achieve excellence by becoming a learning company.  Below are some of the advantages of becoming a learning organization. Read on and discuss with me your viewpoints.

1.       Build the corporate DNA

The Egyptian revolution taught one major business lesson – anyone can lead and be a change agent. For leading one doesn’t require a hierarchical structure supporting a leader, any formal authority or support of an organization. A person needs a good idea and strong influencing skills. That’s it.

Moreover, in the present organization structures the organizational boundaries are collapsing. There is no way to focus on an aspect in isolation, as everything is interlinked. For example, risk appetite calculation is not just a mathematical analysis, as it is highly dependent on the organization values and culture. Organization behavioral psychology influences risk culture.

It is apparent that organizations with hierarchical autocratic culture will lose the game to the socially networked organization. Social networks have made it easier for organizations to communicate vision, values and focus on culture. It allows multifunctional teams to work together and each employee can actively participate in the discussion.

Establishing the processes, systems and thinking pattern of learning organizations will facilitate organizations into building cultures that are more transparent. It helps companies break silo mentality, challenge groupthink and create an environment for employees to cope with change. The time has come for collective leadership.

 2.       Prepare plans in detail with failure scenarios

As Anon said – “Destiny is not a matter of chance; it is a matter of choice.” The age-old practice of senior management rolling out the strategic plan will soon become passé. Though presently, as I had earlier mentioned from the McKinsey report, just 6.5% of the organizations have a proper strategic planning process. Around 20% are just consolidating different business units’ numbers for the strategic plan. This doesn’t work in the long run.

To succeed one has to plan in detail with all possible failure scenarios. For instance, Bill Gates wrote “nightmare memos” describing various failure scenarios even when Microsoft was doing well. Paranoia is good.  When a company prepares for each of the assumptions of strategic planning going wrong, it devises alternative strategies in advance to quickly change track in emergency situations.

Learning organizations gather information on business opportunities and failure scenarios from all possible sources at local and central level. They have a better understanding of the local and global issues and this puts them in an advantageous position. Second aspect is with double loop reporting, the senior management promptly gets information about assumptions going wrong, failures and successes. This allows them to leverage opportunities, mitigate risks timely and change tracks where required.

3.       Change at strategic inflection points

With the rapidly changing environment, one of the bigger challenges is to differentiate between the noise and strategic inflection point. Nonconforming for the sake of being different doesn’t amount to leveraging strategic inflection points. As Andy Grove said in the book ‘Only the Paranoid Survive’ –

“A strategic inflection point is when the balance of forces shifts from the old structure, from the old ways of doing business and from the old ways of competing, to the new. Before the strategic inflection point, the industry simply was more like the old. After it, it is more like the new. It is a point where the curve has subtly but profoundly changed, never to change back again.”

The computer industry faced a strategic inflection point in 1980’s when from vertical industry it became a horizontal industry. However, quite a few big names failed to understand the changing face of the industry.

Thousands of individual events contribute to the transformation of an industry. The organizations that capture information of these individual events and get the bigger picture from putting the various pieces of jigsaw puzzle together have the upper hand. In learning organizations, employees are used to challenging the status quo and are wired to learn new stuff. They identify trends, changes and transforming events faster than the hierarchical organizations. Hence, organizations benefit by not reacting to the noise, but changing at strategic inflection points.

 4.       Innovate to implement & gain competitive advantage

Intellectual capital consists of organization, human and social capital. It gives organizations a competitive edge by encouraging a culture of innovation.  Organizations hit a home run, as innovation gives companies the first mover advantage and puts them ahead of the pack. As shown by Apple, intellectual capital and innovations add to the market value of the organization. Failure to innovate slowly erases the company from customers’ minds. An organization not only needs ideas, it needs a culture that transforms those ideas into products.

This underscores the importance of being a learning company. The rate at which an organization learns may become the only differentiating factor for giving an organization competitive advantage. Hence, knowledge management has become critical for success. Organizations need to capture explicit and tacit knowledge. Companies that have effective knowledge management systems and an environment for innovation are more flexible, adaptable and creative.

Learning companies have processes, systems and structures in place that allows them to leverage collective intelligence.  As individual employees’ knowledge on customers, suppliers and other relevant stakeholders is systematically captured, therefore value creation improves. As human and social capital is hard to imitate it becomes a valuable source of competitive advantage. Innovation in products and services adds to the bottom line.

 5.       Avoid psychic traps, rely on data

Success often results in C-suite wearing rose-tinted glasses and from their comfort zone tell happy stories for the future. These organizations might be operating real-time but may not be living in the real world. Psychic traps make it difficult for organizations to confront brutal facts, be straightforward and decipher the data.

Additionally, hierarchical structures with command and control environment reinforce the thinking – the boss is always right. If someone challenges the status quo, they get hushed up and told – this is the way things are done out here.  Moreover, when C-suite does mandate change, it results in failure since no one wishes to discuss the real problems and most nod their head in obedience. These change programs don’t get commitment, they get compliance, hence are mostly unsuccessful.

In learning organizations, business intelligence plays a vital role in decision-making. Management and employees rely on data, not individual hunches and intuitions. Secondly, companies adopt a two-pronged approach for information exchange and decision-making. Employees don’t expect C-suite to have all the answers. They take ownership for leading at local levels, gather requisite business intelligence and commit to change, as they are personally involved in organization success. Hence, the advantage is that no one can have distorted reality for a long enough duration to cause extensive damage.

 6.       Deliver consistent performance

Some organizations market value graph depicts a sea wave – goes high and low for some time then flatten out.  These organizations work on the mental model of quarterly earnings and making quick bucks. They try to capture the short-term gains at the expense of long-term benefits. As Sun Pin in ‘Art of War’ stated -

 “If you abandon your armor and heavy equipment to race forward day and night without encamping, covering  two days the normal distance at a time, marching forward a hundred kilometers to contend for the gain, the Three Army generals will be captured. The strong will be the first to arrive, while the exhausted will follow. With such tactics only one in ten will reach the battle site.”

Apple exemplifies the case of a long distance runner. After Steve Jobs return as CEO in 1997, Apple didn’t grow rapidly immediately. The company invested in research and development of new products. The market value started showing an upward trend after five years, and reached its pinnacle before Jobs death. The company worked on long-term plans and improved step-by-step.

Learning organizations as part of systems thinking focus on long-term goals versus short-term goals. They aim is on the whole not individual parts. These companies survive in turbulent conditions as they show different behaviors though the circumstances maybe the same. Consistency is the name of the game. They neither blindly rush to adapt to each change in business environment nor fail to make changes where required. They focus on showing consistent performance in earnings report and not spectacular successes and unimagined failures.

 7. Make learning fun

In the present business environment, John F. Kennedy’s statement holds true –“Learning and leadership are indispensable to each other”. Leaders must become master learners and create an environment of continuous learning within the organization.

In autocratic and bureaucratic organizations the two statements that predict death knell of an employee’s career is saying – “I don’t know” and “I made a mistake”.  The blame game is so intense on failure that employees are petrified to try out new things and follow procedures even if they don’t make any logical sense. Organizations cannot survive in culture of fear and defensiveness. More disasters occur when no one spoke up in time to question the plans and/or delivers the bad news.

On the other hand, learning organizations give people a platform to learn, unleash their passion and creativity. The shared values and visions allow them to discuss a number of bad ideas to arrive at a few good ones. Individuals feel responsible for fixing their own areas and don’t wait for top management to address problems. Learning becomes fun and inspiring. As Peter Senge said – “People talk about being part of something larger than themselves, of being connected, of being generative.”

Closing Thoughts

Becoming a learning organization is not an option any more; it is a mandatory requirement for success. At this business juncture, seeing the exponential change due to globalization, advanced technology and economic downturn, acting out from an old script isn’t going to help organizations. The organizations that are aiming for the biggest honey pot need to incorporate the core concepts of learning organizations within their culture.  Else, they might tank anytime.

References:

1. Leading Learning Organizations: Leading Learning Organizations : The Bold, The Powerful and The Invisible by Peter M Senge
2. Communities of Commitment :  The Heart of Learning Organizations by Peter M Senge and Fred Kofman 

1 Jan 2012 – A New Begining

I am feeling on top of the world. This blog in its first full year got 51,556 page views. More than doubled from last year (11,299 page views in six months). I have nearly twisted my arm from patting myself on the back for being such an incredibly brilliant writer. With great difficulty I have managed to reign in my egoistic enthusiasm and have decided to be a humble Level 5 leader.

Sincerely, my heartfelt gratitude to all my readers, who came again and again, to read, comment and share my blog posts. For keeping silent when I floundered, and giving me constructive feedback and encouragement to continue learning and growing. I owe it to you all  to share the lessons I learnt in blogging this year. Before I declare the top 10 posts of the year, there are two stories I wanted to share with you.

1. The Audience

Writers give one solid piece of advise – “write for your audience”. For new bloggers, this amounts to asking them to be James Bond when they haven’t read a spy novel.  Nevertheless, since I decided in blogging world the faint hearted can’t succeed, I devised a strategy. My blogging aim was to share my knowledge and experience with the younger risk managers to make a positive difference in their work. So I wrote on topics that I felt passionate about and felt risk managers approach should change.

Six months down the line in June 2011 I got a shock on reviewing audience statistics. To my utter amazement most of my subscribers are in the age group of 44-64 years.

I had missed my target group entirely. I realized most of my readers are more experienced than me. Phew, that discovery was very nerve wrecking. Gen Y seems to be reading entirely different topics. Since I already have over 300 Gen X and Boomers subscribers, I have changed my strategy and will continue to write topics for them. Lesson learnt was do better market research to match products with your own skill set. By the way, are any of my subscribers single men over 44 years of age?

Resolution for the year: Understand audience tastes better. Reading Only.

2. The Blogging Etiquette

Another advise given is be careful what you write on the blog, in the internet world all is visible. Ha, have you every heard of a risk management blog going viral. With my first few subscribers, I was hardly worried.

Till it suddenly dawned on me, my ex colleagues, bosses and clients were following my blog. None of them informed me, as they quietly used Risky Secretive Subscribers (RSS) feed. Have you ever imagined what you will feel when all your bosses, boy-friends and the not so friendly guys all are in one room. Here, they are not only in one room, they are invisible to each other and me.

Sob, sob, sob. I identified a couple of my posts where I had nicely put my foot in my delicate mouth. Wondered seriously, should I continue to chew the nails of my toes, or take my foot out and put my fingers inside my mouth.  Political correctness was never my strong point, but this. Me, the poor little baby.

Resolution for the year : Be politically correct. Seriously.

3. The Good Posts

As is the blogging tradition, I shall list down the top posts for the past year. Surprisingly, some of my 2010 are still going great guns. So, here are the top five from each year. Hope you enjoyed them.

2011

1. Key Performance Indicators for GRC Departments

2. Rs 300 crore CitiBank Fraud

3. Fraud Symptom 5 – Insufficient focus on Organization Culture and Processes

4. Enterprise Risk Management V/s Strategic Risk Management

5. Reflections on Definition of Corporate Governance in India

2010

1.  Impact of Organization Culture on Internal Controls

2.  Deviant Organization Culture

3.  Pre-employment Background Screening Verification Program

4.  Risk Management Strategy of Virgin Group

5.  Mother Teresa – An Inspiration for Social Responsibility

Resolution for the year: Write only good quality posts.

Wishing You A Very Happy New Year

Finally, once again a big thank you to all my readers. This song is my tribute to all of you. May our relationship grow and prosper in this year. And you enjoy the journey as much as I do.

Hope you are successful in achieving all your ethical dreams in 2012.

Best wishes,

Sonia