Managing Systemic Risks in Organizations

The gross turnover of top 100 multinationals is higher than the gross domestic product of a few countries. As it was obvious from the financial crises, organizations employing a few hundred thousand employees can rock the global financial stability. From then on, a lot of discussion is occurring around systemic risks. However, I wonder about the actual momentum in addressing systemic risks.

As per my understanding, an inaccurate perception has formed that governments have the major responsibility to address systemic risks and not the organizations. The picture below depicts the increasing level of risks for human civilization or society as a whole and the increasing level of risks within an organization. Though we do not see linear relationships, they are interconnected. While an organization is a subset of the civilization, their large sizes have also made it a significant component of creating systemic risks.

 

Systemic risks

 

Another fallacy is that organization’s need to track systemic risks at the global level alone. From the financial crises, it was obvious that the Retail Housing Loan departments of US Banks shook the real estate industry. Various CDOs of banks investment divisions were the cause of collapse of major banks. Hence, something as small as the functioning of a department, process or product can destabilize the industry and economy when incorrect practices are followed in multiple organizations.

Moreover, senior management of organizations that have implemented Enterprise Risk Management (ERM) believe that systemic risks are automatically addressed. None of the ERMs is going beyond strategic risks. The focus is mostly on operational and tactical risk coverage. Unless the risk management department has taken concrete measures to identify systemic risks, in all probability they are unmitigated.

Lastly, for most of the systemic risks, the organization by itself can only partly mitigate the risks. Except for taking insurance, they cannot develop and implement full-fledged solutions to treat the risks. Though the impact of systemic risks is huge, the lack of understanding, information and solutions, make organizations negligent about identifying and addressing these risks. Hence, the question is – what should organizations do to manage systemic risks?

1. Global Systemic Risk Monitoring Group

Within the risk management department there should be dedicated resources tracking systemic risks from process to country level and reporting to the global group. In the interconnected world, the risks in one country impact other countries. For instance, consider the attack on Malaysian airplane by rebels in Ukraine. A geo-political risk of one country has brought an organization of another country down. Hence, now the risks have to be viewed from a global perspective. To do this organizations must incorporate the group within the organization structure, deploy funds and resources, use technology to connect and track risks at a global level.

2.  Connecting With National Risk Boards

The 2014 World Bank Risk Report suggests formation of National Risk Boards (Same name, could they have got inspired by this blog :)). This will be a huge plus, since risk identification and mitigation will be done at a national level. For instance, if a large country like India were connected at district, state, and national level through risk boards, the level of risk management would improve significantly.

Moreover, this will facilitate in addressing inter-state risks and cross border risks. For example, cyber security threats mitigation requires coordination within the country and significant amount of international collaboration. The national risk boards of countries become the focal point for international cooperation and collaboration for risk mitigation. Developing relationships with the board members and participating in the initiatives will help organizations in dealing with systemic risks.

3.  Connecting With Industry Risk Boards

The systemic risk group needs to connect with the industry risk boards and regulators to capture the industry level risks. For instance, Back of England conducts a half-yearly survey to determine systemic risks in UK financial sector and the confidence of the organizations in dealing with it.

If organizations facilitate in formation and management of industry risk boards, they can cooperate with the competitors to mitigate industry level risks. Relationships with international industry boards would be a huge plus in acquiring knowledge and formulating plans.

4.  Assessing Preparation at National Level

The World Bank report states that investment in risk mitigation and prevention is low, and most of the expenditure is done during and after a disaster to recover and continue operations. Therefore, the challenge is that risk identification may not result in developing and implementing risk mitigation plans. For example, various cities in India regularly suffer from floods during monsoons. ALthough the government knows the problem and solutions, it has not done much to resolve the issue. There are ongoing battles between city, state, and national level for risk prioritization.

That is, the same risk may have different impact and loss level due to national level preparation. Organizations need to assess the level of preparation of government and local communities to determine the impact and develop risk mitigation plans accordingly.

5.  Assessing Impact at Social Level

Previously, organizations were insulated from the society to some extent. The social networks have changed the scenario, and any incident can become an explosive issue. Hence, impact has to be calculated at social level rather than at an incident level. For instance, recently a six-year-old girl in Bangalore was gang-raped in school by her teachers. Last weekend, parents in Bangalore organized marches to demonstrate their anger against the schools lackadaisical attitude towards children security. Police has lodged complaints against the school and politicians are talking about closing the school.

Presently, rape, women, and child security are sensitive topics in India. India is fourth unsafe country in the world for women. Hence, a single incident can close down an organization. Therefore, risk managers need to identify sensitive issues related to systemic risks and extrapolate the impact at city, state, country, and global level to determine impact of various risks.

Closing Thoughts

Systemic risks impact is sometimes more than losses of earthquakes, tsunamis and nuclear disasters, hence they cannot be ignored. Higher level of focus is required within organizations, industry, community, and nations to build processes, institutions, and infrastructure to identify and mitigate systemic risks. Timely investment in this area can save billions of dollars. Hence, risk managers need to put their thinking caps on, develop concept notes, and influence senior managers to deploy funds in managing systemic risks.

The Unreliable Expert Advisers

Let me start by asking you a question – How many times have you written the word “expert” in your resume. Were you, like me, obsessed about becoming a subject matter expert or a thought leader? Are you an ardent devotee of people who profess expertise and give expert opinion in the media?

1.  Experts Know Better

If the answer to the above questions is yes, then let me ask you another question. If a political scientist and an astrologer are giving predictions of the political scenario in India 20 years from now, whose judgment will you rely on?

Philip Tetlock studied 300 experts over a 20-year period and concluded that experts were just slightly better off than the novices were. The expert group consisted of economists, political scientists, academicians, journalists and Phd. Another study showed that a rat was able to predict the location of food in a cage better than Yale students were.

Started believing in astrologers yet?

2.  Experts Perform Better

The counter argument is Malcolm Gladwell’s study, that to become an expert 10,000 hours of practice is required while continuously enhancing the skills to become an expert. Against this backdrop, one would assume that expertise matters and experts would perform better.

Below is a question, choose one of the options.

 

A study conducted by Eric Schwitzgebel showed that old and rare ethics books in the library were missing at twice the rate of other subject’s old books. That meant ethics philosophers were more likely to steal books than other lecturers were. Their expert knowledge on ethics did not prevent them from doing something completely unethical when it was in their self-interest.

Hence, all the knowledge and teaching of ethics would go waste if it were not incorporated in the behavior and personal value system. Does it not raise the question in your mind as to what is the point of teaching ethics in the organization? Maybe it is worth conducting an organization survey to measure the results.

 3.   Risks Can Be Accurately Predicted

After the financial crises, the bamboozled regulators were grappling to figure out why the idyllic scenario collapsed. All the posturing and ping-pong battles by the self-proclaimed risk management experts could not explain how they were caught napping.

The reason is simple. Risk managers and business managers can only predict risks based on their experience and information. For instance, in David versus Goliath battle, Goliath was well prepared. He was strong; he had a shield and a headgear to protect him. However, he was not aware that a slingshot could kill him. Hence, he did not mitigate that risk.

The risk managers and business managers do not have complete information about the present and the future business environment. Business managers normally take decisions when 70% of the information is available. Complete information is not available and the future is unknown. Hence, the next big disaster is always waiting at the next blind turn.

4.  High Performers Take Lessor Risks

Another assumption is that under-performing managers who are at the risk of missing their targets take higher risks than high-performing managers do. A study conducted by Ping Hu on mutual fund managers showed that both low and high performing managers are likely to take higher risks. The high performing managers do not face any employment risks, are comfortable in their positions; hence, take more risks. The under-performing managers take risks to achieve their goals. Hence, risk taking of managers is a U-shaped curve and highly dependent on the employment risks of the manager.

Therefore, the question arises what is the benefit of all the training given to managers. It allows managers to do proper risk mitigation and enables them to take higher risks.

Closing Thoughts

The above-mentioned studies shatter the fallacies and assumptions of confidently relying of expertise. An expert’s opinion may not be worth the paper it is written. So what is the advantage of having trusted advisers within the company?

The key is not to rely on insiders only. Have a panel of outside experts to give impartial view. Moreover, the experts shouldn’t be attached to their own opinion or view. The higher the levels of constructive confrontation within the organization, the better are the chances of doing effective risk management. Additionally, incorporate risk management processes within the business processes, and integrate them in employee behavior, practices, and reward system.

References:

  1. Philip Tetlock’s book, “Expert Political Judgment: How Good Is It? How Can We Know?”
  2. Do Ethicists Steal More Books? – Eric Schwitzgebel, Department of Philosophy, University of California at Riverside
  3. Fund Flows, Performance, Managerial Career Concerns, and Risk Taking – Ping Hu Risk Analytics, Corporate Finance, Wells Fargo, Charlotte, North Carolina

 

 

 

 

The LGBT Sandwich

Lettuce, grated cheese, bread, and turkey make a delicious sandwich. Unfortunately, Supreme Court of India has ordered LGBTs to cold turkey their sexual activities; else, they will face criminal prosecution. The poor souls are sandwiched between the Delhi High Court order that liberated them four years back and the Supreme Court latest order banishing them into dark ages. Maybe banning judges from issuing judgments on the last day of service that impact nearly 10% of the nation’s population would benefit. Can India in this day and age declare 12 million Indians as potential criminals because of sexual preferences?

The politicians have jumped at the opportunity to make their vote banks stronger for the coming national elections in May 2014. Sonia Gandhi said Parliament would pass a law to decriminalize homosexuality. Great, why wasn’t it passed earlier? BJP and some more parties have declared it is a sin. Since BJP professes to stand for Hindutva, have they read the Hindu scriptures on this topic. Politicians and judges are playing with the personal lives of 12 million Indians as if they are cattle.

1.  Is it a Sin?

If God created humans, then why did he create LGBTs if they are supposedly immoral? Do we say a person is evil because he has one blue eye and one black eye? Are differently abled people born criminals? In the worst-case scenario, one can say LGBTs are sexually differently abled. No, I am not propagating this viewpoint. There is nothing wrong with LGBTs physically, morally or intellectually. They are as normal as heterosexuals are. Heterosexuals’ intolerant attitude towards homosexuals is wrong.

Heterosexuals must stop blaming the victim under the guise of religion. In ancient India LGBTs were part of the mainstream population and respected. For instance, in Mahabharata, Arjun dresses up as a woman for one year to disguise himself. Amba, whom Bhishma refused to marry, is reborn as Shikhandini. She exchanged her sex with a Yaksha who wanted to be a female, to punish Bhishma for rejecting her in the previous birth. Lord Shiva’s one form is of Ardhanarishvara – meaning the lord who is half woman. In one story, Lord Vishnu becomes Mohini, has sexual relationship with Lord Shiva and has children from him.

The Ottoman Empire funded Islam propagation in Middle East from the 13th century. It decriminalized homosexuality during Tanzimat period (1839-76). In Persia, homosexuality and homoerotic expressions were accepted in public places. Male houses of prostitution were legally recognized and paid taxes. (1501-1723)

Hence, how can it be possible when the same religions are being followed from middle ages, previously homosexuality was an acceptable act, and now in 21st century it becomes a criminal act?

Section 377 was imposed by the British Raj in India in 1857 to stop the British homosexuals fleeing to India. Now the western world has accepted homosexuality and Indian politicians are propagating repressive policy to meet their political ambitions. As usual, they have got it backwards.

2.  It is torture?

In my teens, I turned rather precocious. When my father and I went out, I checked out guys on the road.

When dad noticed my behaviour, he was horrified. Here is the conversation that followed:

Dad: What are you doing Sonia?

Irrepressible me: My eyes turn sore from studying, I am checking out eye candies to relax them.

Aghast dad: Your sister would never do such a thing.

Brazen me: Yeah, isn’t she a duh. What a waste of good looks!

Horrified dad: Your mom….

Unfazed me: If I had mom’s looks, I could get into so much trouble.

After a few weeks, dad found a practical solution to my problem. Whenever we went out, I was driving and he sat in the front seat, looking around. When I asked him why, he responded – “Health issues, heart problem, doctors told me to reduce stress.” Meow!

Every heterosexual child has a similar story to tell. As the child becomes an adolescent, parents try to gear their emotions, desires, and social behaviour according to the cultural norms of the society. The heterosexual adolescent runs to his/her parents for solace when facing the first heartbreak and rejection.

In contrast, see the nightmare an adolescent faces when s/he realizes that they are attracted to the same sex and not the customary opposite sex. Erik Erikson, the world-renowned psychologist developed the eight stages of psychological identity development model. According to him, between the age of 13-19 years, adolescents address the questions – “Who am I? What can I be?” through social relationships. This is the stage of developing one’s own identity and if a person is unable to do so, they live with role confusion during adult age. Between 20-39 years, an adult addresses the question – “Can I love?” through romantic relationships. During this stage, a person forms intimate relationships or if s/he is unable to answer the question, lives an isolated life.

An LGBT teenager learns to attach shame and guilt for their sexual desires. The teenagers realize that if they confide in their parents, they might reject them. Their friends will socially isolate and ridicule them, their teachers will rusticate them from school, and outsiders will exploit them. The intolerant society gives them a gag order for life. The children have no adult or peer to talk to and have to live through this nightmare all alone.

As an adult, LGBTs realize that they are capable of becoming celebrated artists, musicians, philosophers, scientists, corporate leaders and sports person as long as they are willing to live a lie. With their capabilities and talent, they can earn power, fame, and money. However, they don’t have the right to hold hands of a person they love. The heterosexuals have taken their right to live a happy and fulfilling life.

Heterosexuals don’t need to put homosexuals behind bars as criminals. They have already chained them for life and prescribed them extreme psychological torture. In desperation, they join social groups, religious orders and change countries to get social acceptance and a well-defined identity. Some fervently pray to God for mercy, some turn atheists. Others in anger wish to punish heterosexuals in the same way. They want to hurt the opposite gender for making them feel inadequate. The ultimate revengeful desire would be to make heterosexuals face social rejection and isolation, to show them the torturous lives homosexuals have to live.

Unfortunately, humans are geared towards blaming the victim. In rape cases, the woman is blamed – why did she go out, why was she walking alone of the road, why was she wearing a revealing dress? Humans tend to blame others for their misfortunes, because they wish to live in a predictable world and protect themselves from feeling personally threatened. The idea behind is to tell ourselves that if we take care of ourselves, things will work out reasonably well and our world will be safe. Another woman can’t accept the fact that she escaped being a rape victim by sheer luck and she has no control on the external threat. Similarly, heterosexuals can’t accept that they are so because of sheer luck, and they could easily be homosexuals. There is still no concrete evidence that nature or nurture turns a person into a homosexual.

As we say in case of women equality, that we need men to come forward and change the thinking of other men, women alone can’t fight for equality. We need to take a similar stance for LGBTs. Heterosexuals need to come forward and embrace the cause of LGBTs equality. All that LGBTs are looking for is social acceptance. Why not give it to them?

3.   Organizations role

A decade back, I was working in Intel. One day my boss asked me to check LGBT policies as she needed to find a solution to a small issue. Stunned, I asked – “Which policies?” I had never read an organization’s LGBT policies in my career. Amused at my cluelessness, she gave me the intranet site name.

I was impressed with the site. Intel as usual had dealt with a difficult topic humanely, sensitively, openly and constructively. The introduction of the site was written by one of the heads of chip design division, a lesbian lady. She narrated her story of coming out, the stigma and social rejection she faced in her life, and what heterosexuals need to do the make LGBTs feel part of the organization. There were other similar mind-blowing stories. Additionally, a lot of reading material, policies, and guidance notes were available on the site to educate the employees.

Think would a customer refuse to purchase an Intel laptop because a division headed by a lesbian developed the processing speed. Our response would be – “Who gives a f##k, we want fast machines”. Exactly, we shouldn’t be concerned!

Closing thoughts

Indian Government and politicians need to move out of the bedroom of consenting adults. The Indian police are unable to manage and solve rape cases, and now it wishes to deal with the whole LGBT population as criminals. Hitler and Stalin ordered the death of millions to cleanse the population. Is the stance of government to treat LGBTs as criminals any better? Intolerance and disrespect are the main reasons for anger, hatred, and violence in the world. Heterosexuals show intolerance and disrespect every day to LGBTs. Let us collectively weave them in the social fabric of our lives and culture.

2014 Business Predictions Based On Bollywood Movies

In the age of big data, data mining, social media, market studies and customer feedback, it may sound surreal to analyse business trends from Bollywood movies. Strange as it may seem, Bollywood movies provide a wealth of information on cultural change, latest fads, and customer tastes. Agree, the movies aren’t intellectually stimulating or sensible; most of them are over the top but let us not be scornful about the hyperbole and read the real picture. Tell me what you make out this analysis.

1.      Women Rule

The male bastion crumbled this year;  in most of the movies the actress portrayed a strong character, frequently superior than the actor. In Ramleela, the heroine was a gun wielding female don’s daughter capable of pulling the trigger on betrayal. In Yeh Jiwani Hai Diwani, the female character, a nerd, beat the male character in academics. In Ashiqui 2, the female protagonist, a singer outperforms the male protagonist. Leading ladies are taking centre stage, they are no longer willing to play second fiddle and be decorative while the hero steals the show.

Ramleela

In business parlance, do not ignore the female customer or the female employees. Indian women are making the buying decisions, therefore ensure that the advertising pitch appeals to them and the sales process is women centric.

Additionally, after the changes in sexual harassment act and the companies act, women are gearing for a stronger role in corporate world. The Companies Act requires at least one woman to be on the board, hence develop the top talent. The sexual harassment act has empowered women and cases are making headlines. Change the work culture to ensure equality, educate staff on sexual harassment, and form legal recourse systems. Insure senior staff from sexual harassment claims and do a background check to determine propensity for sexual harassment.

2.      Think Local

Top actors and actresses made a beeline for roles with stories in rural villages and small towns. A few years back they would have turned up their noses on a project that wasn’t with a foreign country backdrop. Most of the blockbuster’s set in small towns – Chennai Express, Ramleela, Gori Tere Pyaar Mein, Ranjhana, Phata Poster Nikla Hero, etc. – had tremendous box office success.

The Indian directors’ cultural understanding of customers is excellent. The trend shows Indian customers awe for foreign brands and products is reducing. The customers want products Indianized to their taste. The burger and pizza sales give ample evidence. Over 50% of the revenues of multinational fast food chains are coming from vegetarian products. For instance, McDonald’s highest grosser, Aloo (Potato) Tikki Burger recipe was made in India.

Customize products to cater to small town customers rather than the metros to get higher turnovers. In local markets, value for money concept works and not fancy brand names.

Astoundingly, employees working in metros are moving to small towns for better work-life balance. The craze for big cities, fast life is disappearing due to high cost of living, traffic and infrastructure problems, and superficial social relationships.

3.      Complete India Story

Northern India and Southern India directors and stories intersected this year. Within India, state borders are reducing in meaning. For instance, in Chennai Express the hero is from Delhi, the heroine is from Chennai. In Gori Teri Pyaar Mein, the male protagonist is from Bangalore and female protagonist is from Delhi. Bollywood is no longer targeting just North Indian customers; they are making headway in South India. A few Hindi movies were remakes of South Indian movies . Astonishingly, South Indian directors are making Hindi movies.

In the last decade, Indians are crossing inter-state borders frequently. Caste, region, and religion differences are diminishing. Business needs to rethink the marketing strategy. Products made for North Indian customers may do well in South India and vis-a-versa. Tastes are changing and acceptability levels for different products are improving. For instance, previously consumer durable major market was in North India. However, the latest survey shows the top states are– Punjab, Kerala, Haryana, Karnataka and Tamil Naidu.

4.      Focus on Gen-Y

Sweet and nice, stereotypical and rehash doesn’t sell with Gen-Y. Unique, controversial, adventurous, and nonconformist sails through. In Ranjhana, the female protagonist organizes the death of a childhood admirer to avenge the death of her adult lover. In Gori Tere Pyaar Mein, the heroine is a social activist, older than the hero, working in a remote village. In Lunchbox, the male character is a 50-year-old man falling in love with a married woman he has never seen. In Krissh 3, super heroes and villains, half human-half animal battle it out. Sporting legends biopic (Bhaag Mikka Bhaag)  and historical political drama (Madras Café) entered the arena. The conventional isn’t making its mark.

krissh 3

Indian Gen Y have information of international products on the tips of their fingers. Secondly, their tastes are similar across country. Previously, there was a vast difference in tastes of the younger generation in metros and smaller towns due to limited information. Now Google Translate has removed those barriers.

Hence, business sector needs to invest in research and innovation, an area they haven’t focused on earlier. The products must be of international quality, fresh and new, at local prices. The business that has the courage to differentiate, leave traditional thinking behind will get massive returns. Businesses centering on adventure sports, exclusive hobbies, social entrepreneurship, video games, and technology apps are expected to do well.

Moreover, organizations to attract and retain Gen Y need to transform the bureaucratic and hierarchical culture. Build a culture on openness, transparency, creativity, risk taking, and empowerment.

 5.      Foray Globally

The top grosser of the year – Dhoom 3 did good business in the international market. Now the Indian movies have rap music with Hindi lyrics, use latest technology (Krissh 3), and have glitzy action. Indian award shows have built Bollywood brand abroad. A few Indian actors and directors have gained international repute.

According to a McKinsey report, 30% of the revenues of top 100 companies in India is coming from international business. Indian companies are either taking over foreign companies or establishing their own in other countries. Hence, time has come to venture abroad keeping in mind the international tastes. Don’t sell the Indian product in its standard form. Customize it according to the international tastes by using their knowledge and technology.

Closing Thoughts

Risk managers’ check out the business strategy and plans for 2014. If the products pipeline, advertisements, sales processes, customer interactions, research and development, and talent management, isn’t considering the above-mentioned aspects, there might be some risks. Lastly, be adventurous and try out new approaches.

Wishing all my readers a very happy and prosperous new year.

News Broadcasters Contribution to National Intelligence

Six unknown people are shrieking while discussing the latest news in your living room. To make matters worse, they are cutting others mid-sentence, and rebuking and rebuffing each other with absolute disregard for conversation proprietaries. The other invitees are unfazed with the shrill level and plunge straight into the debate. After a tough day in office, you have had enough. You finally pick up the remote and flick to an international news channel where there is a more civilized discussion going on.

Watch this sample of Indian Hindi  news channels discussion. The 1000 tonnes of gold dream of a sadhu was supposed to reduce the national deficit and change the destiny of India. Unfortunately, I couldn’t find an English news channel video on this topic.

The news broadcasters sensationalize the most trivial news by making it debate issue. The motley crowd gathers for their 15-minute fame. That they are being screamed at and insulted on a national broadcast does not deter them. Research shows that monkeys never call simultaneously. Each waits at least for five seconds after the caller has finished before responding. News broadcasters by no leap of imagination can be called polite conversationalist. They turn each intellectual discourse into an arena for combat. The discerning audience switches channels. Hence, I felt the need to discuss a few points.

Can public sue news broadcasters for wasting time? For instance, the swami’s dream of 1000 tonnes gold story circulated for two weeks. It died a tragic death when archaeologists reported that after digging they found a little bit of iron and broken glass bangles. Was anyone expecting anything else? Now let us assume ten Indian news channels gave one-hour airtime to this story. Approximately, ten million viewers followed the update. Hence, ten million productive hours were wasted. It approximately comes to 3470 person-years of labor squandered. Imagine the national financial loss resulting due to nonsensical stories.

Can public be inoculated from imbibing stupidity? Words seduce and rape, inspire and degrade, unite and alienate; hence, their power is infinite. The ambiance of news broadcast grates on the nerves. The invited experts are clueless on the impression of their words on their audience. The most loud-mouthed and aggressive person’s ill-informed diatribe is heard.

Media’s role is to shape public opinion by educating and enlightening audiences. They can develop an exquisite and warm relationship with them. Media easily transcends racial, cultural, and geographical boundaries and has a central role in building the knowledge level of the country. With the present level of news broadcast, government should develop a measurement scale to determine the decrease in level of intelligence and knowledge of audiences by watching the news channels.

Can news channels dedicate a few hours to positive stories? The news channels extol the gory, grotesque, and inane to get TRP ratings. The nasty stories permeate audience thinking and they turn apathetic towards distress and pain of others. The problems appear all pervasive where a single individual’s effort will not make a difference.

Shouldn’t news channels deliver enchanting, inspiring, and empowering stories for two hours every day? Tell stories about courage, compassion, altruism, brilliance, and determination. Stories encapsulating the essence of humanity.

Closing Thoughts

It is not what you know; it is how you think that makes a difference in the world. As Gandhi ji said – “Carefully watch your thoughts, for they become your words. Manage and watch your words, for they will become your actions. Consider and judge your actions, for they have become your habits. Acknowledge and watch your habits, for they shall become your values. Understand and embrace your values, for they become your destiny.” News channels influence our thinking. They form the values of the nation. The irrelevant and frivolous news affects the destiny of the nation. Hence, audiences need to hold media moguls accountable to broadcast a higher standard of news. Shouldn’t this come under corproate social responsibility of media houses?

Role of Cheering Crowd in Unethical Activities

crowd

A circus joker does crazy acts with the crowd laughing and cheering him on. When a person breaks the social norms on the streets, the public considers him crazy. If he is sane and rational he will get back to normal socially acceptable behavior in no time. The response of the crowd gives feedback on the appropriateness of the act.

Similarly, when a person behaves unethically or inappropriately, the encouragement and support he receives from the crowd determines how far he will go. The crowd’s reaction decides the extent of the crime, however, the crowd is never held responsible, and the individual is.

Notice the current trend. Pop divas dance nude in videos. It is naked dance of vulgarity and obscenity, passed off as art. Obviously, singers don’t sound melodious with their clothes on! Audiences react in three ways. Some relish it and indulge their baser instincts. Most have become desensitized to it and stopped questioning it. Lastly, a few consider it vulgar and avoid it. If the last category diminishes, soon only the so-called unsophisticated will sing and dance clothed. So how does one affix responsibility of the crowd?

Let us consider another example. A man is standing on the top of a cliff, planning to jump into a river flowing 100 feet below. There is a group spurring him on, saying – “Bravo man, do it.” Two of his friends hold on two his sleeve and say – “Man, don’t do it, not worth the risk.” The man thinks his two friends were spoil sports, while others were actually his friends. He never thought that there might be people in the supporting group, wishing him dead or laughing at him. The man in the heightened state of excitement, with adrenaline flowing high leaps into the river and dies. Now will the legal system define this as murder?

It applies in the business scenario too. CEOs get top billings for churning out high growth numbers. The media praises them sky-high without delving deeply into the methods used to achieve the numbers. The employees, investors and public drive the CEOs to take bigger and bigger risks, bend more rules, be more inhuman. The CEOs see the crowds rooting for another and want the same accolade. Cheating, breaking the law, doing unethical activities seem a small price to pay to get public honour and acknowledgement. . No one stops him, tells him that he is doing something wrong; he only sees ardent admiration. Then the bubble bursts, the CEO is caught and the public vanishes overnight. The employees, media, public, and investors escape with no responsibility for motivating a person to behave unethically. The CEO spends time in prison. Should the legal system prosecute the crowd?

The power of the crowd is incredible. The support of the crowd decides the course of history, good and bad, be it Indian independence struggle or the holocaust.  The decision of the crowd is based on culture and values of the society or organization. The crowd without good cultural and ethical values will probably support wrong things. As Confucius says: –

“Guide them with policies and align them with punishments and the people will evade them and have no shame. Guide them with virtue (de) and align them with culture and the people will have a sense of shame and fulfill their roles.”

From industrial age, organizations focus on the western concept of putting processes and procedures in place. The mechanism for compliance is reward and punishment systems. Just a few organizations have invested in building a good organization culture on ethical values. It holds true for families. Parents manipulate a child’s behavior through reward and punishment, without teaching core values. Without the education to build the moral compass within the organization and in the society, people cannot be expected to support the right causes and actions. Hence, one can opine that the crowd is blameless because they know no better.

This argument can be further propagated by the current state of social values. Every person is striving to be recognized, by whatever means possible. Paris Hilton gets more coverage in media than all sages in India. The problem is that people cannot recognize true merit in others and are obsessed about others acknowledging their merit. It is a situation of ‘garbage in, garbage out’ in human thoughts. Hence, education becomes the key to change the voice of the crowd.

Closing Thoughts

Replace obedience as a virtue with critical thinking in raising children, establishing cultural values in society and organizations. Obedience hampers the ability to differentiate between right and wrong. It develops traits to go along with the crowd rather than stand apart and hold ground. Critical thinking must become a mandatory course in schools, colleges, and organizations. Focus on it, and the crowd will start making better decisions in all aspects of life.

Propagating The Case For Moral Education In India

Image Source: www.wallibs.com

Getting education for good conduct is rare these days. In ancient times, the Indian gurus  taught Ramayana, a story of victory of good over evil. Confucius Analects and Socrates discussions are mostly about good behavior, moral conduct, and principles.

Even the Indian festivals focused on building the right culture. For example, the on-going festival Navratri is for worshipping Goddess Durga, representing feminine power.  Devotees dance in the dandiya night, conduct various pujas and fasts, or understand the deep philosophy behind the concept. The three approaches differ on the same principle as reading pulp-fiction for fun, cramming up a textbook, or reading and reflecting on literature. It is just the third aspect that builds character and critical thinking; the other two are vain efforts without lasting effort.

However, 90% of the crowd focuses on the first two. The challenge lies in shifting the attention of the crowd from superficial and superfluous to serious. Unless solemnity supersedes frivolity, no one will venture for intellectual or philosophical thinking. For instance, previously people labelled geeks as weird, now they have a cool quotient. The tipping point reached when a core mass made a huge social impact through technology.  Somehow, education on moral conduct and principles needs to go viral.

In ancient times, the teachers taught moral conduct in one-to-one or a small group setting. It was the responsibility of the teacher to impart knowledge. They could assess each student’s character – strengths and weaknesses. Now with classroom and web-based training, it is the responsibility of the student to learn. Training moral conduct becomes difficult in such a setting, as the student does not receive any personal feedback on behavior.

Parents focus has changed also. A child spends most of the time in studying technical subjects, playing sports or participating in activities. The assumption is moral awareness and conduct will automatically develop without any specific attention.  Another opinion is that all humans know parenting when they have a child. The rate of depression, abuse, and crime among children clearly show that parenting skills do not come automatically. Therefore, do not assume that all parents will be able to impart moral education to their children.

The plants that are regularly watered in a garden grow; the others die. For moral behavior to flourish there has to be dedicated training.

The right time of moral training is to start at a young age; children mold easily. However, this doesn’t mean older people cannot be trained. When educated adults can be influenced to conduct a crime, join terrorist organizations, then adults can also be educated to behave morally. With the right kind of influencing and training, hardened criminals can also change. Quality of water gushing from a fountain depends on the underground supply of water. Similarly, the quality of human conduct depends on the unconscious emotions and thoughts of a person. Education and cultural osmosis changes the unconscious motivations.

Therefore, the challenge is to refocus thinking and approach to life. In the darkness of night, we realize the importance of light. However, when our life is filled with darkness, some humans move further into darkness, some struggle to bring light back into life. The ones who have had strong moral education are less likely to move into the dark life of revenge, vendetta, and bitterness. They are more likely to get their balance back in their life.

The age-old art of storytelling and Socrates methods can be applied on a mass scale using technology. The initial followers and change makers selection is critical. An artisan can’t carve rotten wood. As a sculptor makes the base ready before sculpting, the moral base of the change makers requires preparation. Then only they can act as effective influencers.

However, one size fits all approach shouldn’t be taken. Trees grow to different heights and bloom in different seasons. Human beings capacity of moral reasoning differs and requires different level of effort to understand the concepts. Hence, training should be provided after assessing the caliber of the person.

Closing Thoughts

Moral education makes a big difference in pursuit of happiness in life. Simply put, if we are moral, we harm less people, don’t participate in unethical activities, and are geared to act in a fair and just manner. This behavior itself ensures that a person makes few enemies, and has good relationships with most people. Sound relationships lay the foundation of a happy life. It is not money, but quality of relationships that leave a deep impact on peace and happiness of an individual. For a lush green lawn, a gardener waters and tends the whole garden regularly. For a fruitful life, don’t ignore moral education.

Wishing all my readers a Very Happy Dussshera.

Humility – The Gandhian Way

gandhi king

Gone are the days of Gandhian simplicity and unpretentiousness. The rush for materialism and economic progress has robbed Indians of their humility. Arrogance and egoism has taken centre stage.

Now, household help count is a status symbol while Gandhi preached self-service. He weaved the clothes he wore, and currently wearing high-end fashion brands is a social necessity. Whether in personal life, interviews, or jobs, we present a flawless image as drilled by the personal branding consultants. Admitting to weaknesses is a no-no. Our leaders are picture perfect till their names become media headlines for some scandal. Where are we heading with this behavior?

Mahatama Gandhi’s two autobiographies “The Story of My Experiments with Truth” and “Satyagraha in South Africa” reveal the humility of the great man.

1.  Humility in Personal Life

“The Story of My Experiments with Truth” sounds more of a confession of wrong doings and mistakes from childhood to adult life. Gandhi ji admitted to smoking cigarettes, eating meat, acting like a sex-starved teenager with his wife and visiting brothels a couple of times. He basically did what all youngsters do in the name of adventure, rebellion and growing up. However, very few leaders take the trouble of writing them down to share it with their followers,  to enable the followers to learn from the leaders mistakes.

Nowadays, doing so at the peak of the political career is considered suicidal. Our society needs a reality check. It needs to accept that failures are a part of life, no one is perfect, not even our greatest leader. Alas, others look akin to a clown, a circus joker, a pathetic beggar, a disreputable character, a corrupt greedy man, a ruthless psychopath, a loose woman, a calculating witch, but prey why do we miss seeing all these in self.

2.  Obsession With Titles

A title is the ultimate hallmark of supremacy, be it Lord, King, CEO, President. If you have an exalted designation on your visiting card, all character flaws, deficiencies and short comings are wiped clean. People must bow down in front of you and you get the right to treat them inhumanely with disrespect. Contrast this with Gandhi ji’s attitude towards the title of Mahatma bestowed on him. He mocked and ridiculed it. In the introduction of the book  “The Story of My Experiments with Truth” he wrote -

“My experiments in the political field are now known, not only in India, but to a certain extent to the ‘civilized’ world. For me, they have not much value; and the title of Mahatma that they have won for me has, therefore, even less. Often the title has deeply pained me; and there is not a moment I can recall when it may be said to have tickled me.”

About his second visit to Kashi Vishanath Temple he indulged in some good-natured self-depreciating humor –

“Since then I have twice been to Kashi Vishvanath, but that has been after I had already been afflicted with the title of Mahatma, and experiences such as I have detailed above had become impossible. People eager to have my darshan would not permit me to have a darshan of the temple. The woes of Mahatmas are known to Mahatmas alone. Otherwise the dirt and the noise were the same as before.”

Ask the question “Who am I?” If the response is a designation or a degree, then there is confusion in identity.

3.  Grandiosity of Leaders

Everyone desires to be a leader as it makes them look grand in eyes of others. Aspiring leaders avoid contemplating whether they actually inspire their followers, work on improving the world and add value to the society. The aim is to get the perks and privileges of leaders without the responsibilities. Even the spiritual leaders, swamis and yogis, the embodiment of austerity and simple living, are sitting on golden thrones. During investigations or after death, shocked followers see the display of hoarded cash and jewellery.

The servant-leadership followed by Gandhi ji showed his true leadership mettle. In the book – Satyagraha in South Africa – he described himself as servant of the public. He wrote -

“A public meeting of the Indians was called in Durban. Some friends had warned me beforehand that I would be attacked at this meeting and that I should therefore not attend it at all or at least take steps for defending myself. But neither of the two courses was open to me. If a servant when called by his master fails to respond through fear, he forfeits his title to the name of servant. Nor does he deserve the name if he is afraid of the master’s punishment. Service of the public for service’s sake is like walking on the sword’s edge. If a servant is ready enough for praise he may not flee in the face of blame. I therefore presented myself at the meeting at the appointed time.”

Further on, he expounded servant leadership in the following words -

It has been my constant experience that much can be done if the servant actually serves and does not dictate to the people. If the servant puts in body-labour himself, others will follow in his wake. And such was my experience on the present occasion. My co-workers and I never hesitated to do sweeping, scavenging and similar work, with the result that others also took it up enthusiastically. In the absence of such sensible procedure it is no good issuing orders to others. All would assume leadership and dictate to others and there would be nothing done in the end. But where the leader himself becomes a servant, there are no rival claimants for leadership.”

These are fabulous examples of role,  accountability, and responsibility of leaders. Just a handful of leaders can be so humble and fill these shoes. Autobiographies of great leaders show that leadership is a long hazardous journey requiring great deal of personal sacrifice, hard work, and vision. It is incorrect to assume business titles automatically bestow leadership traits. Queen Marie Antoinette’s immature and inconsiderate statement – “If they don’t have bread, let them eat cake” – didn’t get her dedicated followers, it is Napoleon who is respected for leadership qualities. . Earn the honor of being a leader. Ask yourself – Why should others follow you?

Closing thoughts

Wishing all my readers, a very Happy Gandhi Jayanti.  As it is a holiday in India, let me end this on a humorous note.

A donkey twisted his leg, so the owner put him in a red Ferrari to take him to the vet. On the way, the owner stopped at a car wash. The car cleaners said – “Wow, what a body, such a dazzling color.” The donkey joyously brayed. The cleaners remarked – “Sounds fabulous”. After returning to the  farm, while walking on the mud path, the donkey was extremely disappointed and thought – “Why is no one appreciating me, as the car cleaners did?”

Impact of Power Styles on Organization Risks

Power, we all want it. If we don’t have it, we associate with the powerful in the hope some of it rubs down to us. Being in the upper echelons of corporate world or the political corridors of the country’s parliamentary houses ensures that you are exempt from the rules applicable to the common person.

However, the way a person gets power and uses it reflects the person’s character, and its influence on others. In the corporate world, the power styles used by senior managers directly influence the risk levels of the organization. Unsurprisingly,  power and politics are undiscussable topics in the corporate world; hence, when risk managers do risk assessments, they ignore the two.

I personally recommend risk managers to understand the individual power styles of the senior managers and overall organization power style. To appreciate the connection between power and risk, let us first look at the power styles and their impact on the organization.

Power Sttyles

Depending on the situation, a leader needs to use various power styles. However, if a leader uses coercive style even when it is not required, then something is wrong. Leaders frequently use power styles of reward and punishment for fulfilling illegitimate requirements. Hence, the probability of followers being involved in unethical activities requiring compromise of personal values is higher. On the other hand, the expert style ensures that followers make informed judgments as the leader attempts to enhance their ethical values and knowledge level. The reward is not in the form of a bribe and is implicit; the leader is dedicated to improving the organization.

Another aspect that requires understanding is the need for creating perception of power. When a leader is undertaking illegitimate activities (watch any Hindi movie to see the underworld Don) he needs to create a strong perception of power by using threat and punishment. Else, his coercive tactics will be ineffective, as people will not cooperate. Therefore, he makes some sacrificial goats to demonstrate that he is above the law and normal rules don’t apply to him. Another tactic is to break the social norms, and not behave rationally and predictably. Both these methods focus on creating fear to ensure compliance. Without the perception of power and fear, the leader becomes vulnerable to revolt from the common person. The only way for him to retain his power is by increasing the number of sacrificial goats, threats, and punishments.

1.   Impact on Legal and Reputation Risks

A coercive leader is usually riding a tiger. The organization risks continue multiplying as more and more people become aware of the unethical practices. An elastic can be stretched up to a limit. Eventually, the concocted environment cocoon will burst and all hell will break loose. The leader cannot trust anyone after a point. Hence, his fear increases in direct proportion to his vulnerability. The leader takes more and more risks to protect his personal fiefdom. The organizations reputation risks and legal risks increase proportionately.

2.   Impact on Human Resource Risks

Overtime, the leader’s charisma wears off. As the layers peel off, disillusion sets in. Employees realize that the leader doesn’t behave with integrity and honesty. Even the loyalists recognize that whenever it suits the leader’s personal agenda, they can face the bullet without any fault of their own. This creates disquiet among employees, and employee disengagement increases. The human resource risks increase manifold with disengaged employees.

3.   Impact on Operational and Financial Risks

The disengagement starts effecting productivity and performance as everyone grasps that meritocracy has no links with rewards. This in turn impacts the bottom line as leader fails to deliver on targets. Failure to show profitability and results makes the leader’s position precarious. The leader starts feeling pressure from the top. As he is unable to improve productivity, he attempts to manipulate results and financial statements. In nutshell, leader’s power style influences operational risks and financial risks of the organization.

Closing Thoughts

No one can deny that success in life depends quite significantly on a person’s power and influence. The general opinion is that means to the end do not matter when we strive for power. On the contrary, how we get power and maintain power, is crucial for longevity in the powerful position. For a coercive leader, the end is tragic, as the hunter becomes the hunted. Moreover, if a leader gets power by paying bribes or giving rewards, his power ends when he stops doing so. His loyalists disappear with speed. Abusing power is no longer safe in the present world, as it increases the personal risks of the leader and the organization risks. Therefore, risk managers need to ensure for continued prosperity of the organization, that leaders get power by the rights means and use it for the right purposes.

Cultural Complexities and Conflicts

Two weeks back I had given my laptop for repair. The computer guy first said that he would repair it in a day for Rs 1500. Then he called up and said it will take two days. Then he called up and said it will take Rs 2500. I asked him to return the laptop without repairing and ended up paying Rs 350 as service charges as he had identified the problem. Last week I asked a person to recharge my TV subscription and I am still waiting for the same. Why am I ranting on the blog?

Reason is these things happen in India. Based on these experiences the foreigners visiting India formulate an opinion on India. Secondly, the foreigners either formulate opinions on Indians from media reports or base it on their experiences of Indians living abroad. Media thrives on negative information and hardly report on positive aspects. Indians living abroad are just a small slice of the country and they do not completely represent the culture at home.

Some westerners visit India to understand it better as it is a growing economic power. However, whenever I have read their views, I feel they have a superficial picture and do not really understand the cultural complexities of India. They attempt to dissect each part independently and try to fix the jigsaw puzzle. However, Indian culture is akin to a seven-layered cake. The multitudes of flavours need to be tasted as a whole.

In India, there is a saying. To understand the water flowing in Ganga check the origin from Gangotri. To understand the culture of the country and the behaviour of the people, one needs to see the history of at least 100 years. I know in this age we believe world is changing so fast that people change quickly. However, I was reading Gandhi ji’s autobiographies and was surprised that most of the causes of conflict and misunderstandings between western people and Indians remain the same. For example, I understand what is being said by a westerner but sometimes I don’t get the logic behind the behaviour. From an Indian context, it just doesn’t make sense.

1)     The Western Civilization

The difference lies in the approach to life. The western civilization conquered the world in past centuries with the primary motive of getting richer. Though they entered as traders in countries, they soon became rulers. Establishing supremacy by war, brute force, aggression and breaking the spirit of locals were considered good tactics. The morality of their decisions and the suffering caused to human race wasn’t an aspect that got importance. The enemy had to be destroyed by whatever means possible.

So even today, the western corporates mostly have an aggressive organization culture with profit motive. Money is still the primary driver for most activities. The star performers are aggressive men who achieve their positions by cutthroat completion in the dog eat dog world. Ethical competition was until the last few decades an alien concept. Deception, cunning, and breaking the rules are valued traits for winning the game. There are few women at the top, as feminine traits were never respected. They are considered too soft.

2)     The Indian Civilization

In contrast, the Indian civilization since ancient times valued simplicity and the focus was on progress of the soul. In young age, a person was required to set up family, have a career and earn sufficient amount to keep the family in comfort. In old age, an Indian gave up all attachments and desires to focus on purifying the soul. Hence, during their lifetime Indians were required to develop virtues of truthfulness, simplicity, humility, patience, perseverance, frugality, and  other worldliness.

Cunning, aggression and deception were looked down. As Gandhi said – “a thing secured by a particular weapon can be retained only by that weapon” hence enemies weren’t destroyed but converted to friends wherever possible. That is why Indians used non-violence in the struggle for independence. Even when wars were fought, rules were to be followed and the person breaking the rules was considered unprincipled and cowardly. Breaching trust was shameful, contrary to the western opinion where the person whose trust is broken is considered a fool for trusting.

In respect of leadership also, since centuries India has propagated servant leadership and not that of arrogance and supremacy.

3)     The Global Organization

With globalization, one can see these two divergent approaches to life in close quarters interacting daily. I have heard many of my western colleagues comment about a mild-mannered Indian – “X is not aggressive enough, will he get the job done?” Whereas the Indian colleagues say – “What is wrong with this person, why do we need to fight? We can cooperate and get the work done peacefully.”  Team workers are always more valued than star performers. Cooperation is encouraged than competitive behaviour.

Each group doesn’t get the motives and thought process behind the other group’s behaviour. Westerners can’t figure out how Indians succeed in business with all these traits and attributes. They predict failure, and see success in the long run. Quite a few Indians considered unemployable by western standards (unassertive, weak, too humble, or polite) have successful careers in India.

While both groups now attempt to understand the behaviour of other, it is quite impossible to change it in a short time. A person brings to an organization the culture s/he has been raised in. The personal values and attributes can’t disappear on joining and neither can they be left at home during office hours. Respecting the person’s culture and giving space is the best approach.

Closing thoughts

The oriental nations – India and China – are the biggest emerging markets. The western world can’t ignore it and neither can they change it. Hence, they have to understand it and learn to survive in the oriental culture. It is among the biggest opportunities today to bring peace and prosperity in the world. In my view, to reduce the cultural risks and related conflicts more Indians should educate the western population about their historical and social culture. This will give deeper understanding and remove prejudices. The 21st century is bringing change; it is up to us on how we manage it.