World Economic Forum @ Davos 2010 & VMD Syndrome

World Economic Forum @ Davos 2010 and VMD Syndrome

The annual meeting of World Economic Forum at Davos just concluded with the world leaders looking back on the global meltdown of last year with a sigh of relief, sense of (false?) achievement and prospects for growth down the line.

My flagship blog “Value Management Deficiency Syndrome”, dated March 5, 2009, dealt with global financial meltdown, tracing reasons thereof and leading to erosion of value systems in the world and deficiency in management of values. Almost a year later, I am delighted that the World Economic Forum at Davos 2010 has highlighted the need for a set of values which could apply to global financial institutions. In support of this, I am falling back on a published media report and I quote:

Quote:

“…reported survey, based on 130,000 Facebook members from ten G20 economies, also found that only a quarter of people believe that large, multi-national companies have a "values-driven" approach to their sectors. The proportion rose to 40pc for small and medium-sized businesses. Half of respondents - in France, Germany, India, Indonesia, Israel, Mexico, Saudi Arabia, South Africa, Turkey and the US - believed that universal values exist.

Klaus Schwab, founder and executive chairman of the WEF, said the report underlined the need for a set of values which must be applied to global economic institutions. "Our present system fails to meet its obligations to as many as 3bn people in the world. Our civic, business and political cultures must be transformed if we are to close this gap."

When asked to identify which values were most important for the global political and economic system, almost 40pc chose honesty, integrity and transparency, 24pc chose others' rights, dignity and views, 20pc chose the impact of actions on the well-being of others, and 17pc chose the preservation of the environment.

Almost two-thirds of respondents felt that people do not apply the same values in their professional lives as they do in their private lives. When asked whether businesses should be primarily responsible to their shareholders, their employees, their clients and customers, or all three equally, almost half of the respondents chose "all three equally".

Unquote

I am glad that this realization has dawned at highest global economic body as rightly reflected by the respondents of the survey. It is sad that I was neither present at Davos 2010 nor a respondent in the survey. I have spoken exactly about the accountability and responsibility of the promotors or owners of business towards all the stakeholders including financial institutions, employees and customers. I had taken reference of Mr. Ramling Raju of Satyam Computers Ltd in March 5, 2009 blog, which I reviewed in retrospects again on January 22, 2010 after take over and revival by Mahindra Group.

Global Bandwidth of Values:

Now it is for World Economic Forum to initiate the process to translate the findings of the survey into practice. They must institute, if not already done, an expert group to bring about uniformity in basic minimum set of values which should govern the relationships between different stakeholders. A clear line must be drawn where goodness ends and criminality creeps into corporate governance. But in the complex world of business & politics this is not possible due to divergent value systems of different nations of different shades & hues ranging from tax havens and capitalists to dictators and from oil Sheikhs to communists. So in order to bring some semblence of common values globally acceptable, there must be a bandwidth of values within which a business enterprise can operate without endangering the global financial and trading systems.

Corporate Governance:

Sarbanes Oxley Act 2002 (SOX) was introduced by President George Bush to address the corporate governance, accountability and responsibility. It was touted as most comprehensive reform in corporate governance post world war. And yet it was only in this period, and inspite of SOX, that the present global financial crisis was manufactured by US corporates. In fact SOX compliance became another money spinner for consultants. This simply goes to bring home the point that legislation alone can not reduce frauds.

With globalization, the value systems of the promoters of business over ride all the legislations around the world and find the path of maximum benefits with least costs. So if governments wish to do something about frauds, they should work towards minimising the excessive benefits of bypassing laws & regulations and maximising the costs of doing so. From the hindsight we can say that nations have paid trillions of dollars in terms of financial bailouts and stimulous packages as costs of frauds perpetrated by corporate world. The costs simply shifted in multiples from fraudsters to the governments!

Point of No Failure:

One year later there is no convergence amongst governments in the developed nations on approaches to bring about checks and controls. US is encouraging banks to grow bigger beyond what I call “Point of No Failure”. Large banks like Citi Bank was too big and was bailed out. So they can continue to take undue risks without any costs to them. On the other hand European bankers want to be very cautious and have not hesitated in pulling down the shutters. With such poles apart approaches how can the financial world becomer safer?

Compliance with Value Systems:

This divergence brings out the need to leave the value system to the enterprenuers and promotors but within globally acceptable “band width”. The promotors should state their value systems chosen out of a set of approved principles, ethics and practices. This value system should be approved, modified or rejected by the stakeholders viz customers, employees and the financial institutions. Once ratified by all the stakeholders, the board must submit the same to the government authorities like Registrar of the Companies, or regulators like Securities & Exchange Board of India (SEBI), or other local bodies.

Every organization then must comply with its own stated value systems and submit compliance reports to the stake holders every year in AGM for ratification. As Mahindra Satyam has done, there should be a chief compliance officer in charge of monitoring the ethics & value system of the organization with full accountability. To help achieve this objective, a company must elaborately identify the operating factors, out of the globally acceptable set of values, which need to be monitored within the permissible margins for variation ( the bandwidth) with lower & upper limits.

That is the only way forward to arrest the decay in the global value system. There will always be deficiencies in values in any organization which must be identified, corrected and managed. Value Management Deficiency Syndrome is a default option and if we don’t work to stop the organizational decay, it is bound to happen with no efforts by itself.

Value Deficit Tax:

We have value added tax, fringe benefit tax, minimum alternative tax and security transaction tax and endless plethora of taxes. What about a Value Deficit Tax? A tax to be levied for non compliance with approved & stated value systems? Like GST (goods & services tax) there could be Value Defict Tax which can take care of all sorts of negative practices indulged in by a company.

The Executive Chairman of World Economic Forum must be focussing on evolving set of values (or global band width of values) which must be applied to global financial institutions as well as business enterprises. A global Value Deficit Tax would make all sit up and do something about it. Davos 2011 then sould be an inetersting event to watch out!

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative,

Pune

February 5, 2010

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Decriminalization of Politics in India- Sonia’s Call

Decriminalization of Politics in India- Sonia’s Call

It was heartening to listen to Sonia Gandhi, Congress President and UPA Chairperson, when she called on all political parties to evolve a consensus to decriminalize politics and eliminate the influence of money and muscle power. She was addressing the diamond jubilee celebrations of election commission of India attended by all the political parties. Sushma Swaraj of BJP supported the idea. Understandably, not many parties have reacted to this proposal. The Prime Minister Dr. Man Mohan Singh expressed concerns about lack of interest amongst educated middle class who are indifferent to the process of elections or joining politics.

Both these issues are interlinked. In fact it is only due to the influence of money & muscle power that the educated middle class does not come forward to contest elections or even cast votes. Also the criminalization is so much deep rooted in Indian polity that a sensible person would rather not cast his vote than choose amongst bunch of criminals to vote for least acceptable goonda. A goonda of yesterday is whitewashed through judicial process and presented again as if public memory is short. All the political parties are responsible for such a state of affairs which has been degenerating for last 60 years every day.

So who bells the cat? Or why not set the cat amongst the pigeons? All parties by now would have conveniently, and by silent consensus, forgotten what was said in the speech of Sonia Gandhi. Nobody would say, “Yes, let us do it”. So, is it only for the sake of sounding right that the speech was written and read out? Or is the Congress party committed to make it happen? Is it on their agenda? Is any one ready to “walk the talk”?

Congress and BJP (in its old avatar) have been oldest of the political parties and have the political weight to change the system in the country. Except the communists, all other parties are born out of their lineage. So if Congress or BJP decide to own the above agenda others will fall in line helplessly. Congress has given the call and if Sonia Gandhi can walk the talk, she will have carved out a place for herself in the history of modern India of 21^st Century and created profound impact on the nation’s future.

Indian polity has been reflecting an inclusive democracy. Inclusive of the criminals, corrupt leaders, self serving politicians, corrupt ex-bureaucrats, uneducated politicians, and wives & children of all these lots if they can not find a place for themselves. But as the Prime Minister expressed, to rephrase it but not twist, it is exclusive of the educated middle class which is fed up and defeated by all these lots.

My guess is that any political party which “walks the talk” on the lines stated by Sonia Gandhi, will benefit immensely by garnering the votes of this alienated middle class which is huge vote bank comprising all the castes and religions. Is it necessary for Congress to wait for a consensus? Did the Punjab & Haryana High Court judge K. Kannan wait for the consensus to evolve amongst the members of the judiciary or for diktat of the Supreme Court to declare his assets? No, he had the conviction and so he went ahead challenging the whole established system around him forcing all to fall in line within a week. Even Supreme Court found it difficult to keep CJI out of it. So here is the lesson for the political parties.

Even any other large political party, like BJP or even communists, can steal the thunder under Sonia and declare their intentions not to give tickets to these undesirable elements in any elections from gram panchayats to parliament. They would be on the moral high ground. Others would meekly follow the leader setting a revolutionary change in Indian democratic system.

Another issue raised by Sonia Gandhi is about money power in politics. While it is wishful thinking that money power can be eliminated, the least can be done is to enhance the limits of expenditure to practical levels and transparency on declaration of assets by candidates. The system needs to be refined with follow up action on defaulters. Unless we are serious about tackling corruption, the talk of reducing role of money power would be mere waste of time. The stakes of business through political positions are so high that any limits or restrictions are likely to be thrown to winds. Our laws are made with provisions for escape routes even if the enforcement is strict. Any follow up actions also could be stretched to a decade in absence of fast track mechanism to deal with corruption in high places.

If political reforms are on anybody’s plate, some food for thought may be inviting enough. Present cabinet of UPA government is full of members of Rajya Sabha. Rajya Sabha should be reserved for non-political achievers with good records from different walks of life. Also it is supposed to be the house of “elders” or “wise” people. It is simply ridiculous to have young members of politicians’ families in mid thirties, with no or little experience of public life or governance, being nominated to Rajya Sabha, or for that matter a sportsman being nominated after retiring from the field in mid thirties. How about having 60 years as an age limit for retirement from Lok Sabha and also as minimum age for entry into Rajya Sabha? That way we will have wiser Rajya Sabha and more vibrant Lok Sabha. Asking for impossible?

However, since Sonia Gandhi meant what she said, Congress would do well to be the early bird to walk the talk and write a new chapter without waiting for consensus. But to me, a member of the defeated middle class, this all sounds like mere rhetoric and empty talk. Of course, unless some one pick up the gauntlet that is!

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative,

Pune

January 29, 2010

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Google, Mahindra Satyam and VMD Syndrome

Google, Mahindra Satyam and VMD Syndrome

On March 5, 2009, I wrote my first blog “Value Management Deficiency Syndrome” triggered by the Satyam fiasco, Madoff and the likes. Global meltdown exposed more of their ilk. I had identified Satyam Computers Ltd as a classical case of “Value Management Deficiency Syndrome” with goal divergence of the promoter as individual and as promoter of the company resulting in value system of individual crushing the value system of the company. Rest is history.

As I stated in my first blog “A value system is evolved & sustained over a period in a collaborative fashion with all these stakeholders. Identification and continuous monitoring of deficiencies in management of “Value System” through benchmarking and quantitative & qualitative analytical models as part of the internal process of management led by the CEO would yield rich dividends in the long run. Annual or periodic reviews of value system would ensure consistency, compliance and communication down the line about how important the value system is to the stakeholders. Value System would always come under pressure from demands of different stakeholders. That is where comes the trade off in values vis-a-vis goals and signals beginning of the downslide.” I had sent a copy of my blog to Shri Kiran Karnik, Chairman of Satyam’s new board appointed by the government of India.

Then came Mahindra Group to take over Satyam and in less than a year, Mahindra Satyam, the new entity, has left behind the mess and is on growth track. Mr.Anand Mahindra, Chairman of Mahindra Satyam gave an interview to Business World on how they have gone about to restore the confidence of the stake holders and strict actions taken to lift the value system of the organization to match with that of Mahindra Group. It is interesting to read his interview and I have referred to a few lines from the same for analysis. He says he separated the company’s business model & strengths and ethics or value system. Business strengths of Satyam were quite complimentary to Mahindra’s IT business & would add to horizontal spread. They identified erosion of value system as the reason for the fiasco of Satyam.

Focus on Ethics & Values:

After take over, the CEO of Mahindra Satyam communicated the new ethics & values to all the employees, concentrated on enforcing the do’s and don’ts, and even sacked employees found to be taking gifts or joining dinners with customers. It was a strong signal to employees to stick to the new value system. They also rewrote the corporate governance guidelines. Interestingly, they have a Chief Compliance Officer (CCO), who may be a retired judge, reporting to Chairman. The employees are required to report inconsistencies and complaints about ethics in a mailbox. However, this mailbox should not be treated like a suggestion box which remains empty.

Capturing Deficiencies:

I had banked upon a practice perfected by Toyota in 1980s called “Things Gone Wrong” (TGW) and introduced same in my organization with modifications to suit our needs in 1998-99 to capture the anomalies, variations and deficiencies in processes and various functions. The feedback was captured on white boards in shop floors & departments and entered into a master register to arrest the organizational decay. We succeeded in capturing more than a thousand points of feedback (called TGWs) in one year on which we acted for reversal of the trend. This helped us to improve the quality systems and concern for values in dealing with various functions and vendors. It also improved interdepartmental cooperation due common value system understood by all. The mailbox initiative by Mahindra Satyam can definitely help to manage the deficiencies in the values inherited from Mr.B. Ramaling Raju. However, it should be institutionalized.

Measuring to Manage Values:

Mahindra Satyam should create a permanent system, for measuring deficiencies in managing the value system by focusing on key parameters, as stated above, which reflect values dear to them. These parameters can be integrated even in performance evaluation model of employees at different levels. That will bring in a sense of priority for trade off while dealing with different situations as simple as joining a customer for dinner.

Mahindra Satyam went to their customers to restore their confidence and have won many customers and their stock has gone on the bourses. Their emphasis has been on “walk the talk” with customers. As Mr. Mahindra says he is not celebrating yet. But well begun is half done. Their approach is right and their success story would definitely find a place in the case studies on turn around in top business schools not just for turn around of the top-line & bottom-line but for turnaround of the value system.

Moral High Ground:

Talking about erosion of value systems, an important development on the positive side of VMD Syndrome is Google’s operations in China. Google has threatened China of pull out of their market due to breach of cyber securities of human rights activists. Is Google reacting sharply only due to breach of security and genuine concern for human rights or is there any other reason for pulling out of China which is largest market for internet advertising? Their taking a moral high ground in support of human rights is laudable as it speaks for their concern for their value system. But Chinese have all along been known for scant respect for such things when it comes to business and politics both. It was so when Google entered China market, has been etched in our memories with Tiananmen Square and it is not a new development. Chinese government has offered to discuss and find a way out. World would definitely appreciate if Google puts their concern for human right above their business interests. However, let Google be very sure of this posturing as they would have to walk this talk in other global markets also. There are number of dictatorships and even democracies which have cyber censors and human rights violations. They may not be big markets for Google. But once they take a moral high ground they can not come down on any other pretext in other markets also.

Round II of Mini Global Melt Down?

One year after the global meltdown, which I attributed to erosion of value systems, Indian banking system is yet to learn lessons. While some reforms have been introduced by SEBI for market regulation, there is a strange situation wherein public money is finding way to most unsecured speculative markets. With high interest rates there are no takers for high cost loans from industry which prefers raising funds overseas at lower cost. The banks therefore diverted their surplus of a more than rupees one lakh crores (US $ 200 billion) to mutual funds for a decent return. This fueled the markets creating a bubble. RBI was forced to nudge the banks to withdraw money from mutual funds and the banks obliged. The contradiction is that we hear about possibility of raising interest rates to control inflation due to excess of liquidity.

RBI knows its job better. But the guidelines to banks must secure public money amid temptations of artificial quick gains at the cost of small investors in mutual funds in the markets. Because when large investors like banks pull out as they all did together last week, the genuine investors lost money. The games of big sharks cost the banking systems in the western world their very existence last year. Nevertheless, billions of dollars are still being distributed by banks in US & Europe as bonuses to employees. Survivors of the melt down are again at it. There are enough bubbles waiting to explode from China to Dubai to Ukraine for Round II of global meltdown. Therefore bringing the systems to manage the deficiencies in the values and save the markets, economies & common man should be the focus for the banking & financial systems.

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative,

Pune

January 22, 2010

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Y2KXII- A Challenge to Indian Banking Industry

Y2KXII- A Challenge to Indian Banking Industry

Does it sound like famous Y2K problem? Well it does and has the repercussions larger than Y2K problem a decade ago. Y2K was a damp squib but this one promises to give the public sector banks a marathon run for their money literally. This one is man made problem relating to manpower at top levels in Indian Public Sector banks. At recent Conference of Indian Banks, Chairman & Managing Director of Union Bank of India has made a startling revelation that 58% of the top level executives of the public sector banks would be retiring in Y2KXII or Year 2012. Obviously this has been known for long enough and a committee appointed by government of India headed by Mr. A.K.Khandelwal, former Chairman of Bank of India, is looking into human resources problems of the banks.

Business Process Reengineering:

Human resource development, particularly at higher levels, is a daunting task and takes sustained efforts of years. The challenge ahead for the industry therefore is to spot the talent from within and encourage evolution of leadership from middle levels. It is not about replacing on one-to-one and level-by-level basis. It is about recasting the model of delivery of services to external clients as well as within the organization. It is about business process re-engineering in real sense where the end results expected are clearly well defined in terms of reduced available manpower for more efficient performance of the overall system. It is also about providing adequate avenues for internal growth and standing up to global competition.

Lack of Customer Orientation in Retail Banking:

The Indian banking system has gone through the crisis due to collapse of global financial systems last year almost unscathed. Claims for this relative success are being made from moral high grounds of being conservative with better control. However, in my view, we are trying to brush under the carpet our lack of entrepreneurship, leadership as well as abilities to play truly global role of any significance in banking circles. State Bank of India is the largest bank with global ranking of 64. But just visit any overseas branch of not only SBI but any other Indian public sector bank and we would notice a distinct difference in front line operations overseas and within India. Even if we have changed work styles in overseas operations to fall in line with local competition, we have isolated domestic operations from full benefits of technology.

I recall an incidence of overseas remittance from US to a public sector bank in Pune. Remittance for settlement of repayment of education loan took more than a month to trace and connect at branch level. Since the loan was fully repaid, I asked for a letter of no dues closing the loan. I was told it is not required! After insistence I managed to get a hand written letter from the branch manager. Even under core banking, the front line operations are much below the expectations of customers and there is a yawning gap in performance of public sector and private sector banks in retail banking. Public sector banks need to be sensitized to the needs of the customers.

Paradigm Change in Business Model:

The effect of retirement 58% executives of top levels would have definite impact on operational decision making processes as well as risk taking and strategic decisions in the banks. It is obviously an opportunity to change the model of business across the board in the public sector banks. Since the scale of operations involved is massive and definitely difficult to comprehend, the best way to go about managing the change is to identify the elements of transactions and processes to standardize on most cost effective solutions with least involvement of top managerial interventions. This calls for routine operational decision making to be built into systems with delegation of powers, safeguards, early warning systems and accountability. This should help lesser skilled managers to take decisions fitting into overall policies set at top levels without raising the levels of decision makers. The strategic decision making has to be left to the senior leaders at top levels.

Cut the Flab:

There should be total focus on evolving new model for entire public sector banking system taking advantage of this situation. In normal circumstances, it is difficult to cut down the flab in organizations and make them nimble. Here is the opportunity to prepare for overhaul to face the challenges of stiff competition and technological transformation. Specifically following issues need to be focused upon:

1. Major Structural Innovations: The public sector banks have too many layers in management structure. Since more than half the number of top level executives are set to retire in two years, it is feasible to delayer the organization within a bank & across the banks for uniformity of solutions to common problems.

2. De-layering: The retiring top executives should put their experience together to work out how the de-layering can be done. Some levels should be merged to make a cadre, with only monetary benefits being the differentiating factor based on performance or seniority. The retiring executives should stand by to guide till they retire and let younger generation take charge with immediate effect.

3. Delegation with Accountability: Evolve norms for pushing accountability to lower levels instead of routine delegation to higher levels. This will empower lower level executives to take higher responsibilities. Obviously, there will be a pressure to improve salaries which has to be done selectively and only commensurate with higher responsibilities.

4. Public Private Migration Platform: There has to be a system of public private migration platform within the banking system. Public sector executives can easily quit and join private sector banks but reverse is virtually not possible due to difference in salary structures. Let us not forget that this sudden vacuum in public sector banks opens up lots of opportunities for private sector employees to move up the ladder into publics sector banks. This should be made feasible at least at two stages, middle management level and senior management level, for select areas on short term contract basis for 3-5 years. This will help public sector banks to get talents from private sector for injecting fresh ideas without hassles of matching pay scales etc. Since such recruitments can be on contract basis, without normal benefits like pension, gratuity etc., it should be possible to meet expectations of willing candidates. This will also not upset the salary structure for regular permanent employees. Such contract staff can go back to private sector banks after their contract may be even on lien basis, if a frame work is worked out for such movements.

5. Prioritize: The areas of operations for implementation of drastic changes have to be identified in terms of criticality, importance and priority.

6. Contract Recruitment: It may be necessary to look out for top management positions on contract basis from private sector banks and financial institutions to bring in global experience for pushing the agenda of reforms.

7. Change Management: It is extremely important to take the unions and associations of officers into confidence on the need for drastic changes. A sustained internal communication and workshops about change management within the banks would be of utmost importance for successful implementation of new ideas.

The ministry of finance, RBI, and the banks need to look for an out of box solution to tap this unusual opportunity for ushering long overdue reforms in the banking sector with a paradigm change.

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative,

Pune

January 15, 2010

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Racial Profiling- Blow to Democratic Pedestals?

Racial Profiling- Blow to Democratic Pedestals?

US government has introduced very strict norms for full body scans at airports. US $ one billion is being invested to upgrade airports with the scanning facilities. US administration is accused of targeting visitors from 14 select countries from where they suspect jihadi terrorists are getting support. They have been accused of racial profiling of visitors from select countries as it is creating unnecessary hassles for citizens of these countries. Obviously a few rotten eggs spoil all good eggs also. Just because jihadis are from Islamic countries it does not mean that anyone & every one of them is a terror suspect.

There have been considerable protests from all over about intrusive full body scans or alternate full body pat down checks on suspects. But that is the price to be paid for the act of the on board failed bomber. If the bomber had succeeded, the loss of human lives would have been far more outrageous. However, this has resulted in a cry against assault on personal freedom & liberty and democratic norms.

But then what does a country facing threat from terrorists do? Is that a knee jerk action of the US government making travel more cumbersome? Removing shoes, belts, lap tops, liquids & fluids and now body scan all are permanent remnants of past failures of potential terrorists. They will not be eased and will remain as most unpleasant part of travel.

It is interesting to note that invariably the terrorists have used either extremely simple ways to circumvent the security apparatus or very technologically sophisticated approaches as in 9/11 for getting across their message. But just because shoes were thrown at George W. Bush they have not been banned. In spite of best of security, there were gate crashers at White house dinner hosted by President Obama for Prime Minister Dr. Man Mohan Singh. Obvious alternative is more effective intelligence and global sharing of information on terror activities.

Flawed Model for War Against Terror:

While the whole world knows by now the real epicenters of terror, the sad part is that the countries identified as epicenters are the partners in fight against terrorism and are being equipped with weapons and materials along with development aid. The very model of war front against terror is faulty. Who is the enemy and who is the partner? Enemy within friends or friends within the enemies? It is very complex web indeed. It is rather a self defeating war! Whenever, US pulls out of the Af-Pak region, they will not be sure if they are winners or vanquished. Unless this complexity is broken & simplified with lines drawn clearly, the strategy can not be effective for winning the war on terror. Until then, the world has to live with full body scans, and undesirable, uncomfortable & possibly undemocratic practices of breach of personal freedom. That is a small price to pay for national and international security.

Alternatively, the select group of 14 countries being targeted must come forward to address the issues of root cause of terrorism and come to negotiating tables to sort out the larger issues. When at war, it is fair for any country to resort to unusual practices like profiling of potential targets albeit with discretion. If a country wants to be out of that list better they do something about it and tighten measures to check direct or indirect support to terrorists.

Autocracies v/s Democracies:

If we look at larger picture of terrorism or confrontation emanating out of Islamic countries against the western countries in general and USA in specific, we will find that it is by & large the issue of autocracies v/s democracies. It is not just about economic haves and have-nots because there are stinking rich autocracies and also extremely poor democracies. The global challenge is to reconcile the differences between these two streams of thoughts and practices. Pakistan is a cat on the wall with mixed records of autocracy and democracy and the internal strife is also due to this divide. The future of terrorism is inextricably linked to the path Pakistan chooses to bring about stability and growth. If Pakistan can sustain democracy with growth & prosperity for its people, the region would find peaceful coexistence of all races. Autocracy will lead to further anarchy and disparity among people even of same religion, because the power mongers would further segment people to corner economic power. They must abandon the narrow path and join the expressway for growth & prosperity for its people.

Australia & Racial Bias:

Racialism is rearing its head prominently in Australia with attacks against Indian students. These are not usual mugging or robbing incidents which are common in large cities as well as poor countries of Africa. These are very well planned attacks on clearly targeted Indian community. These are very much racial in nature as other students or foreigners are not subject to such attacks. Denials of Australian government representatives, every time an attack takes place, do not hold water because of clearly established pattern. In last few years racial bias of Australians has been visible in sports as well as education arena. Even illegal branding of an Indian Muslim as a terrorist smacked of racial bias.

Indian government should work on diplomatic front to diffuse the situation. Due to continued attacks there has been a considerable drop of almost 50% in number of Indian applicants to Australian Universities. Australian education industry is around dollar fifteen billion and they should know it better on which side of bread lies butter. They must reassure Indian students of prompt actions and justice by punishing the guilty.

Treat Root Cause & Not Symptoms:

It is not enough to address the symptoms of racial problems. The root causes of racial bias may be relating to terrorism, economic disparity, denial of job opportunities or any other such inequalities. They have to be addressed by the nations involved. Democracies are inclusive of all races and the countries swearing by democracies have to know how to stand up to the expectations of people. But the autocracies, which are not necessarily tolerant of other races, religions, or freedom of speech, are not likely to be inclusive societies and therefore there is a possibility of such a backlash. Democracies must resist temptations of autocratic behaviour as that would be a retrograde step.

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative,

Pune

January 08, 2010

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Twittercracy and Digital Divide in India

Twittercracy and Digital Divide in India

The controversial tweets of Shashi Tharoor, Minister of State for External Affairs, have thrown up important issues. One is that “all have to be on the same page” as said by S.M.Krishna , the Union Minster of external Affairs and the second is that we are getting into habit of knee jerk actions to be reversed sooner than later. Even before the controversy on two months cooling period on multiple entry visas was over, came the clarification that it will be reviewed in six months (due to pressures from US & UK).

Perhaps Shashi Tharoor won the points there. But it simply shows that our politicians are out of depth on effects of globalization. The international travel has become like taking a local train in Mumbai literally. Just see this in the backdrop of fact that Rebecca Mark, CEO of Enron, traveled 36 times to India in a period of 18 months during 92-94 period when globalization was just round the corner. How can one have two months cooling-the-heels when situation demands you to be where the action is? Stringent checks, with no influences, while issuing visa and intelligence inputs is the need of the hour. Failure of our system can not be corrected by shutting off all the serious visitors. Tourism, medical tourism, social visits are all contributing directly or indirectly to the business of the country and therefore we should bear this in mind.

There is no doubt that certain policies at highest levels have to be discussed within the four walls depending on the sensitivity of the issues involved. There can be differences of views which can be aired and discussed but the circle of friends on social networks can not be the decision makers. Nevertheless, the most important issue highlighted by tweets of Shashi Tharoor is that the new media of social networking has made its impact on political scene in India even if with negative effect to start with. The power of social networking, when unleashed, can have far reaching impact on the global society.

E-Governance:

It is important to create awareness amongst the older generation of politicians about power of new electronic media tools evolving and changing the world rapidly. One can not wish away and ignore the powerful channels of mass communication available today. We can not be living in isolation for ever about use of technology for the benefit of better informed & quick decision making process.

Our governance is still by & large driven by sixty years old manual systems. Computers are still being used in government offices only as glorified typewriters just because no one is manufacturing typewriters today. Senior officers in the government department do not use computers hands on. The younger generation of government officers and ministers are computer savvy. In fact I was impressed to see Mr.Rajiv Pratap Rudy personally using computer hands on in his office, when he was minister in NDA government.

We are still far away from making use of the technology for the benefit of masses. It is unfortunate that a country which is known globally for the skills of information technology is not leveraging the same for e-governance. It is a matter of maximum five years and the banking system of the country would have a significant share of mobile banking. Our masses have shown that they can absorb new technology as is evident from spread of mobile phones to the poorest. It is a matter of satisfaction that today Pune traffic police are using BlackBerry devices.

The modernization of our political system as well as governance is overdue. We have not yet benefited from advantages of globalization for capturing and disseminating information, building databases and reaching out to the people. We still believe in appointing commissions on public issues and keep their reports on shelves for posterity. Why the reports can not be on government websites? We still have bills in parliament kept on shelves for years (Lok Pal Bill, Women’s reservation Bill etc) and no one ready to tell people why there is no movement on vital issues of national importance. Is this what we call inclusive growth?

Switch off for 5-years:

Our politicians rest assured in the cozy comfort of thoughts that they need not communicate with their constituency for next five years. They do not have database of their voters and do not feel obliged to bounce any ideas off their voters on programmes and policies. What Shashi Tharoor is perhaps doing is keeping in touch with his data base of people who matter. Forgetting the controversies his twitters generated, he has shown the way to keep in touch with the people. Our politicians used SMSes for one way communications on mass scale during recent assembly elections in Maharashtra. Some of them were also seen on You Tube. But now that they are elected, they just couldn’t care less. They do not feel the need to communicate even their achievements, however small or big, during the five years or seek views on important policy issues.

Importance of Social Networking:

I am Indian citizen living in India. I happened to send a copy of my blog on international issues to the office of US President, Barack Obama and since then I have been on his mailing list. He sent mail, among other issues, on his health care reforms bill and I quote from the same: “You can help by putting these core principles of reform in the hands of your friends, your family, and the rest of your social network.

Thank you,

Barack Obama”

His recognition of “the rest of your social network” is noteworthy. That is where we are missing the point. I am neither a voter for US elections nor connected anyway to the president’s office and still I get the communication on important issues. Why can’t we get any communications ever from our system of governance at city, district, state or country level from any functionary? If that is too sophisticated and cumbersome, we do not get even adequate information on the government or political parties’ websites also. Websites are generally outdated and have minimal information of no use. See my blog “Mass Communication, Internet and Our Political Parties” of May 7, 2009.

Who’s who on the Twitter:

It is worth noting that Barack Obama, 10,Downing Street, Bill & Melinda Gates, Al Gore, John McCain all have official twitters. If we want to empower people with true democracy, electronic media can play significant role to bridge the communication gap. We have to use the internet technology which delivers at lowest cost. 140 characters of a tweet can do wonders, if used effectively, with no cost at all. Twittercracy has arrived.

I wish all my readers a Very Happy & Prosperous New Year.

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative,

Pune

January 1, 2010

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The Last Post of Corruption in India

The Last Post of Corruption in India

The Indian Army, Navy & Air Force have had a relatively clean public image for long time. Even today the services officers and jawans are held in high esteem and respected for their valuable contribution to the service of the nation. While one would tend to look at a police officer or constable with sort of under the surface contempt for possibility of being corrupt, the same ire does not come to mind when one sees a defence officer or a jawan. In fact they do inspire people for their valor, sacrifice, discipline and ability to take on any adverse situation like floods, earth quakes, or other natural calamities. Even after 60 plus years of radio, the Jay Mala program of All India Radio still inspires millions of civilians as well as defence personnel.

Since the corruption in India is all pervasive, it is difficult to imagine that defence departments will be any exceptions. Nevertheless, the cases of level of corruption and scandals of misappropriation of funds coming to surface have been at much lower levels than their civilian counterparts. The cases which would be on top of mind like Bofors and the HDW submarines would be few and far between. Also they have political linkages if not patronage and therefore have to be seen more as civilian deals than defence. We have had some relatively clean ministers of defence also. So, for any scandals, it is overall political system which has to be responsible and accountable.

But what have come as a shock are the cases of high level corruption in army involving kind of a civilian transaction, not involving defence equipments or materials, but land valued at Rs. 290 Crores in Darjeeling. The extent of interests of the officers is not yet established or published. This in fact is pea nuts compared to the new bench mark of Rs. 4000 crores set by Madhu Koda, former Chief Minister of Jharkhand. The public is used to such figures in civilian domain. What separates the army and Madhu Koda is that the officers of army are appointed employees where as Madhu Koda was elected representative of people. Madhu Koda is supposed to have set highest standard of morality in public life.

The Army enquiry has reportedly recommended termination of services of Lt.General Avadhesh Prakash, Military Secretary at Army HQ and court marshal proceedings against Lt.General P.K. Rath who was being considered for post of Dy.Chief of Army Staff. Others under scanner are Lt.General Ramesh Halgali and Major General P. Sen. Chief of Army Staff General Deepak Kapoor has to take decisions on these issues now. Mr.A.K. Anthony, the Defence Minister, has had consultations with Gen. Kapoor on this issue and hope that due actions would be taken in the best interests of the nation.

There may be many similar situations involving land deals or land grabs in the civilian domain. Even a village sarpanch can be found to have grabbed land and so it is the land mafia which supports or gets into political system. It may be difficult to find large land deals of politicians without favours or frauds. So the political establishment has little to show the army any good examples to follow.

Army establishment would do well to set a good example for the politicians and the bureaucrats to follow. Let them not try to don spotless white pajama-kurtas which have come to symbolize as new garb of corruption. Let the uniforms not lower the guard on the doors of morality. The uniforms put a great responsibility and onus, of protecting not only the nation but also the national values, on the persons donning the same. The police officers in uniform have tarnished their image beyond white wash due to subservience to their political masters. It is so not only in the matter of financial frauds but all the levels and facets of morality. I have not kept any count but almost every month we read about DGP, IG or similar level of officers involved in some or the other scandal or headlines for wrong reasons. Even the bureaucrats also are let off lightly in similar situations.

Fortunately for the armed forces, the interface with politicians is not at all the levels but only at select top levels with the result that they can operate within their own discipline with greater commitment. They have advantages of having a system which is relatively isolated and has better discipline and respect for authority.

It is time for the armed forces to strengthen their value system as well as punishment system so that they can stand tall with courage & conviction expected out of them by the masses without casting a single vote in their favour. Let them manage deficiencies in their value system better than their counterparts. Let them be sure that if & when there is a call for duty, a billion votes are with them. Business enterprises have a lot to learn about strategic management from the armed forces. I wonder why political establishment can not take a lesson or two from them to stop erosion in national ethos and values. It is for this reason that all eyes are on General Kapoor for his decisions to uphold high standards and values.

As the year 2009 draws to a close, it will be remembered for considerable erosion in our value systems as reflected by Satyam Computers, Liberhans Commission Report, Madhu Koda, Singur, Swiss Bank accounts, CVC’s list of 123 officers on watch list, CRPF Scam, Pradhan Committee report on handling of 26/11, Chief Justice Dinakaran of Karnataka, and Haryana DGP S.P.S.Rathod among others. Are we ready to learn from these experiences to welcome 2010?

I wish all my readers a Merry Christmas and a Happy 2010.

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative,

Pune.

December 25, 2009

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