Category: Politics


The “Republic of India” in Europe

December 30th, 2015 — 9:20am

Amit’s note: After a four year absence, I am back writing. As a Professor of Leadership and Strategy at IMD, I will off and on produce articles for publication that IMD calls “Tomorrow’s Challenge.” Often, these articles are shortened for publication by the media outlets that publish them. I will, on a case-by-case basis, post either the original version or the published version. For example, a shorter version of the following post appeared in 10 media outlets (that I know of) from Finland to Hong Kong during October and November 2015. I will, of course also occasionally post opinions that don’t fit the criteria for Tomorrow’s Challenge. Let me know what you think.

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The EU is wrestling with seemingly insoluble human and financial crises. Pundits routinely draw (unfavorable) parallels to the US to illustrate needed changes. A mechanism to move resources to areas where needed. A central bank with powers to set monetary policy and regulate all major financial institutions. Greater political integration. They note that with a debt of $72 billion that it cannot pay because of a decimated economy, Puerto Rico faces a crisis similar to Greece’s. Yet, financial markets have not panicked, assuming America’s fiscal, monetary, political and judicial mechanisms will enable a soft landing for this US Territory.

This technocratic prescription, though valid, doesn’t address the EU’s real problem: The EU is similar not to today’s US, but to the US of 1776 – 1789. After winning independence, the US states functioned as “these United States” only in name. Each focused only on its own needs and foreswore responsibility for the immense war debt. After 13 years of chaos, the Second Continental Congress adopted the US constitution and installed George Washington as the first President. The EU is in its “thirteen years” now, in need of its own reform. However, despite the present crises, the situation still isn’t bad enough to force fundamental change.

Progress before the situation gets “bad enough” will require learning from India. This will be challenging; no European I know thinks an emerging economy where corruption is rife can teach the EU much. They are wrong. The EU’s challenge isn’t creating a “US of Europe,” but a “Republic of India” in Europe:

• The EU must unify very diverse peoples. In 1947, India integrated over 600 independent and semi-independent kingdoms and the erstwhile British India, and over a few years, consolidated them into language-based states. (There are 29 today.)
• The EU has 24 official languages, and so does India (including English). Westerners are dismissive when I claim to speak two Indian languages. But the people who speak these languages – as different as English and Polish –live as far apart as London and Warsaw. Half of India can’t even recognize the other half’s alphabets. So, educated people use English to communicate.
• Like Europeans, Indians swear by the cultures and food of their states. Only a tiny minority eats regularly what Westerners call “Indian cuisine.”
• Europe is less religiously diverse than India. India has more Christians than all but five EU countries, and more Muslims than all but two countries worldwide. The Hindus are also diverse; for example, the rituals of the two areas whose languages I speak differ considerably.
• As in the EU, people in India (still) harbor false beliefs that people in some states are industrious while those in others are not.

The EU’s efforts at managing diversity have been a near complete failure. Its politicians haven’t made a clear and consistent case why diverse peoples should come together. The absence of an emotion-laden “I am loyal to the EU because …” rationale for unity has produced today’s “What’s in it for me?” ruptures along national and linguistic lines, and the alienation of European Muslims.

EU politicians don’t understand a basic truth we teach in Leadership and Change Management courses: when people rally around a shared vision, driving change becomes easier. Why does the EU exist? Surely not to prevent a German initiated World War III? That rationale became irrelevant decades ago. Politicians – like Jean-Claude Juncker – who ardently champion the EU, offer technocratic rationales, not ones that ordinary people can feel in their guts.

In contrast, India’s efforts at forging a common identity – the concept of “India” had not existed in the prior 4,500 years – have been a substantial success. Indian politicians got a lot wrong, but this they got right. They adopted a national anthem that lauded, by name, every part of the country. They adopted a flag with colors associated with the three major religions. They made political decisions that made no logical or economic sense, but helped manage diversity. They drummed the message of “Unity in Diversity” into every child’s head.

And despite India’s periodic, ugly, politics-driven religious killings, they championed religious diversity. Four of India’s 12 presidents were Muslims, as were 4 of India’s 42 Chief Justices, many senior bureaucrats and ministers, and the senior-most leaders of its armed forces. Forbes lists Indian Muslim billionaires, and India worships the many Muslims in its movies, cricket team, and the arts. EU leaders should ponder why so many British Muslims have joined ISIS while few (if any) Indian Muslims have, even though Britain’s Muslim population is 1.6% of India’s.

I first made my case for “The Republic of India in Europe” in 1989 at a dinner with the executives of a Flemish-Belgian multinational. Europeans must learn, I said, that sometimes a major investment must be made in a particular region not because it makes sense, but because “it’s their turn.” An executive whom I respected retorted, “I don’t care, as long as it isn’t in any French area!” The others laughed.

In the early 1990s, as a professor at INSEAD, the “European Institute of Business Administration,” I observed French companies recruiting only French students, German companies only Germans, British companies only British and so on. On a visit in 2005, I heard former colleagues ruefully note that the situation hadn’t improved very much. Hopefully, for Europe’s sake, it is a lot better now.

I had hoped that the EU policy that required teaching children two non-native languages would help Europeans appreciate their diversity. On the plus side, a 2012 European Commission report noted that 73% of young students were learning English, while German and French were common as second languages. However, the time individual countries devote to languages varies sharply. The UK lacks a specific time commitment and unsurprisingly, while living recently in a well-off London neighborhood, I only heard children speak English. Spain devotes only 5% time at primary levels and 10% in secondary levels. Again unsurprisingly, during my recent visit to five Spanish cities, I met very few young people who admitted to speaking English. A waiter who spoke good English bemoaned the quality of his daughter’s English education.

People can drive change themselves, but they must want to – and it takes much longer. In India of the 1970s, my fellow students and I ridiculed the efforts of a language institute, modeled on the Académie Française, that coined long-winded Hindi equivalents of simple English: “railway signal” became “lahu-puth-gameni-awat-jawat-soochak-danda.” Though today’s BJP government is trying to reintroduce similar silly ideas, DJs and program hosts on Indian TV and radio tend to speak smooth amalgamations of the local language with English (e.g., “Hinglish” combines Hindi and English). So, even illiterate people learn – and use! – English words, facilitating interactions. Unity in diversity, writ small.

Virtually every European leader is running away from the richness of European culture. Instead of unifying people, they are perversely pushing them apart. Wolfgang Schäuble mused that Greece should temporarily leave the Euro zone. David Cameron promised a referendum on EU membership unless the EU acceded to British demands. Greece is flirting with Russia. Viktor Orban wants the EU refugee/migrant policy to ensure that Europe remains Christian. This depressing list is unending. Disunity in diversity, writ large.

(It’s worth noting that today’s EU refugees are a fraction of the roughly 10 million Muslim refugees that India hosted during the 1971 bloodbath that birthed Bangladesh. That India, unlike the EU, was dirt-poor.)

The EU will stop lurching from crisis to crisis only if its leaders ensure it stands for something that makes people proud. They must set an extraordinary, but human, vision for the EU no European country can fulfill on its own. They must learn to give something up first, in order to get something in return. They have to champion policies and ideas that might have limited value for their own countrymen – and indeed, may be to their detriment in the short run – but are essential for the EU’s longer term success.

David Cameron, Angela Merkel, and Francoise Holland have not shown they are up to the challenge. What are they willing to give up? What policies will they promote that aren’t in their own countries’ best interests? However, I know in my gut that some other Europeans are. After all, ordinary Europeans created Médecins Sans Frontières, and instead of staying in the comfort of their rich homelands, at great risk to themselves, they regularly take light and hope to the darkest corners of the world. Surely others can see the value in ensuring the EU embraces European diversity?

Comment » | Politics

‘Will no one rid me of this troublesome priest?’

January 12th, 2011 — 2:48pm

On January 10th, I was driving to a business school to lead a symposium on leadership in a networked world. On the radio, I heard the debate about whether the vitriol common in American politics today triggered the carnage in Tucson, Arizona on January 8th. (A man had attacked a centrist US Congresswoman; she is recovering from a serious bullet wound to her head, while six others are dead and twelve more are wounded.)

Some people – typically those on the political left – decried the language used by those on the right. Their Exhibit A was a map Sarah Palin, their bête-noir, put up before the recent US mid-term elections: it had a marksman’s crosshairs drawn on 20 congressional districts (including Ms. Giffords’) held by the Democrats. Others – typically those on the political right – accused the left of politicizing a tragedy. The killer didn’t belong to any right wing group, and quite possibly was psychotic. Words and images like Ms. Palin’s map were merely rhetorical political devices, not incitements to violence; linking these to a psychotic’s actions was wrong.

I considered focusing the symposium on the link between words and action. Ultimately, I chose not to; this issue was key to leadership, but not necessarily to the concept of a networked world. What would I have said if I had made a different decision? Without a doubt, I would have begun with the words in the title to this post.

Henry II, King of England and a part of today’s France, supposedly uttered them from a sickbed. (Other records suggest that he said, “What miserable drones and traitors have I nourished and brought up in my household, who let their lord be treated with such shameful contempt by a low-born cleric?”) The priest in question was Thomas Beckett, his one-time closest friend and confidant, who as Archbishop of Canterbury, had successfully blocked a key law Henry championed. Four of Henry’s knights acted on his words. In one version of what happened next, they went to Canterbury to kill Beckett and succeeded. In another version, they went to arrest Beckett, but backed off and went to bed when he resisted. The next day, they again tried to drag Beckett out of the cathedral. Somehow Beckett got hit on his head. This accident triggered bloodshed: the knights then drew their swords and slew him.

Henry might simply have been delirious – or merely frustrated – when he spoke. In doing so, whether he intended it or not, he set in motion Beckett’s assassination. The four knights were not mentally ill; they acted deliberately to please their lord. They might not have intended to commit murder, but even in the passion-of-the-moment version of the events, by-standers became “collateral damage.” In either version, I doubt they would have acted against “God’s personal representative in England” had they not felt that their lord was implicitly urging them to do so.

Far from issues of life and death, the essential lesson of this story for any business manager is simple: Words of those in positions of authority always have consequences, even if they aren’t immediately palpable. This lesson is valid for positive words as well, and most annoyingly, for words – positive and negative – that aren’t spoken when they could have been.

Why? Because most people try to fit into their chosen group. Because they value praise from their superiors. Because they try to find meaning for the humdrum of their daily work. Because they routinely look to their superiors’ words for cues about what they should do. Because they analyze whom a new boss speaks to first; if he/she talks to them, they conclude they have been anointed, but if he/she talks to someone they consider incompetent, they conclude the boss has “been captured by the wrong people.”  Because they read much into whom their boss has lunch with, ignoring the fact that the lunchtime companion may merely be an old friend. Much of this scrutiny is way over the top, but there is no escaping from the fact that it happens every day in every organization, including informal ones.

So, if you aspire to positions of authority or leadership, teach yourself to be very careful about the words you use. Conversely, if you don’t accept – or don’t want to live by – this lesson, don’t seek positions of authority or leadership. You certainly shouldn’t be given such a position, for you will have the potential to do enormous damage.

Finally, it is worth noting that both the right and the left in today’s debate are wrong. The right is disclaiming a link for which there is tons of evidence. The left is applying the link way beyond what is reasonable: The issue is not vitriol per se, but its source. Identical words spoken by two people will have divergent impact, if one is an average citizen and the other, someone with a substantial following. The words the latter uses in difficult and/or emotionally charged situations can give us insight into whether he/she has the capacity for greatness or whether he/she merely is a power hungry mortal. Unfortunately, instead of using such situations as guides, we convince ourselves that, everyone, without restriction, who is on “our side” is capable of greatness, while everyone, without restriction, who is on “their side” is a power hungry mortal.

My best wishes for this New Year. May it rise beyond the horrific sights from Tucson.

Comment » | Leadership, Politics

“Don’t be evil” meets “Do no harm”

March 1st, 2010 — 3:33pm

Last week, an Italian court gave three Google executives six months’ suspended sentences. Their case dealt with a video uploaded on YouTube in Italy, giving the court (and the prosecutors) jurisdiction. The video, which showed a group of teenage boys bullying another with autism, quickly became an Internet sensation. A couple of weeks later, Google received a complaint and removed the video within three hours. By then over half a million people had viewed it. The Google executives were deemed guilty of violating privacy laws.

In the real world, most issues worth reflecting on – like this one – have no simple answers. This one asks us to weigh the relative benefits of privacy and free speech. I don’t know all the possible arguments people made about this case, but I’ll address a few that I heard repeatedly.

The first ignores the specific details of the case and suggests it was a cynical ploy by the billionaire Italian Prime Minister Silvio Berlusconi to clip the power of the Internet since it was threatening his vast “old media” empire. I don’t know much about the Italian judicial system, but if one has a reasonable understanding of realpolitik and of Mr. Berlusconi’s repeated cavalier disregard of a variety of laws, this view is hard to dismiss as a ridiculous conspiracy theory. If true, the court’s decision could have a very negative impact around the world.

It isn’t unheard of for ruthless executives to take unethical, albeit legal, positions to further their ends. The big deal here is that this decision was handed down in a Western democracy on an issue with very high stakes. Undoubtedly, many ruthless people are currently assessing how they could win similar rulings in their bailliwicks. The Ahmadinejads and Mugabes of the world are preparing arguments along the lines of “But this is acceptable in the West.” So, the decision has made the world much more fraught with risk for decent people.

The second viewpoint has attracted most commentators. In essence, it compares the Internet to traditional communications – like telephones and the post office. Telephone companies aren’t subject to criminal charges when their equipment and services are used to plan crimes, no matter how nefarious. So, why should companies like Google?

I am not a lawyer, but for me, this argument doesn’t have legs. Progress in laws generally always lags progress in technology. In The Spider’s Strategy, I argued that our legal systems haven’t caught up with the fact that sense-and-respond capabilities are erasing the traditional boundaries of companies and taking us into uncharted territories. So, inadequate laws shouldn’t be a defense here.

Besides, Google’s defense was that it took down the video within 3 hours of being informed about it. The real question is: should it have acted proactively? After all, when I go to my local post office, I am routinely, proactively asked to confirm that the letter or package I am shipping has nothing dangerous in it. Legally, the post office doesn’t have to ask me (at least not that I know of!), but it is commonsensical for them to do so, if for no other reason than to protect its own people. I am sure that if I give them cause for concern, someone will take some proactive action and at least screen my package. Indeed, increasingly, the post office is trying to screen all packages.

But Google responds that every second, twenty hours of video are loaded on its systems around the world. They just don’t have the ability to screen everything. This argument also seems specious. Google doesn’t have to screen everything. However, can’t – doesn’t – it have filters to screen on an exceptional basis? If a tag or a comment says “school yard bully” couldn’t that particular video be checked out? Let’s assume that this filter would itself get swamped by volumes. How about using an additional decision point? “If a video hits 100,000 views or if a video is shooting up the popularity index very rapidly, check its appropriateness.” Saying “We want the right to search every book in the world and make money out of giving people access to these” seems incompatible with “We can’t possibly be expected to scan every video – or even a fraction of the videos – currently on our system.”

The third viewpoint focuses on biases rooted in the divergent histories of people around the world. Americans favor the freedom of information over all else because its national birth was in part driven by the oppression of a government using information inappropriately. That’s why it is the First Amendement to the US Constitution (part of the Bill of Rights which enshrines the first ten amendments); the Consitution was adopted on September 17, 1787 and the Bill of Rights was adopted on December 15, 1791. In contrast, there is no explicit “right to privacy” in the US Constitution or its amendments; this right was imputed to exist (on the basis of several of the other Bill of Rights amendments) as late as 1965 by a much disputed ruling of the US Supreme Court.

In contrast, Europe has suffered severely as a result of a lack of a fundamental right to privacy. Throughout history, dictators and totalitarian regimes have terrorized their people by collecting huge amounts of secret information and using these to justify punishments, torture and killings. And so, it is no surprise that Article 8 of the European Convention on Human Rights says, “Everyone has the right to respect for his private and family life, his home and his correspondence.”

Supporters of the “information first” logic point out that today’s totalitarian states block access to information, particularly that acquired through the Internet. So, Google rightfully stood by its corporate motto and “did no evil:” It shouldn’t have – and didn’t – act preemptively to block the video, but took action when it was appropriate. Supporters of the “privacy first” logic, (which, incidentally, the Italian court adopted) argue that Google had a fiduciary responsibility to protect the autistic child’s right to privacy. Above all, Google should have “done no harm.”

In the years to come, we will face the two facets of this third viewpoint over and again. Sense-and-respond capabilities will not only benefit businesses and society, but will also raise this issue in ways that we can’t even imagine. (For example, listen to “Different Strokes.” This “On the Media” program from National Public Radio discusses technology that tracks where someone goes on the Internet on the basis of his/her typing pattern.)

My own bias is towards privacy; I think it will increasingly become hard to live as an individual unless privacy safeguards are strengthened. And the day when this becomes a real issue for everyone is not far off; it will happen, as I’d indicated to a pharmaceuticals industry audience in May 2002, because of genetic-profile based medicine. Even “open information” stalwarts in the US will have to think about whether they want companies and governments to have unfettered access to their own specific genetic structures. That is why I did not howl in protest when I read about the Italian court’s decision – but as I indicated in my discussion of the first viewpoint, I am not one hundred percent convinced that it was the right decision.

1 comment » | Business Environment, Corporate Culture, Online Business Models, Politics

What Took You So Long, Mr. Whitacre?

December 9th, 2009 — 2:40pm

Edward Whitacre, the Chairman of the Board of GM, has been very active during the last few days. On December 1, he – formally GM’s Board – fired CEO Fritz Henderson. An Associated Press article in The New York Times reported on opinions expressed by two – unnamed – people who were close to Mr. Henderson. It noted that “…the board upset that the automaker’s turnaround wasn’t moving more swiftly and Henderson frustrated with second-guessing …” The same people also suggested that “[Henderson has] was frustrated from the beginning by the board and government push for faster change and other questions about his decisions.” Mr. Whitacre has taken on the task of interim CEO while the Board searches for a replacement. In all likelihood, he/she will be from outside the industry.

Three days after making this decision, Mr. Whitacre appointed a new management team. He reached down into the senior middle management cadre and appointed Mark Reuss, a recent GM for Australia and a newly appointed VP for Engineering, GM for North America. He expanded the responsibilities of three women executives and sidelined Robert Lutz, the Vice Chairman who ran product development and who had hinted publicly that he would be replacing Mr. Henderson. In a public statement about these decisions, Mr. Whitacre noted that GM’s top heavy management was stifling good mid-tier managers, and he wanted to “… give people more responsibility and authority deeper in the organization, and hold them accountable.”

Of course I cheered! In this blog, last December (“What’s Good for General Motors is Good for America”) I wrote, “… this company cannot be trusted to reform itself …” and listed five conditions that the US government should ask for in return for bailing out GM. These included: “Mr. Wagoner and his top lieutenants must resign in an orderly fashion …;” “ … over the next five years GM … must be reduced in size, so they are no longer ‘too big to fail.’ This will require mandatory spin-offs of relatively independent businesses …;” and “…no one in the top spots in any of the restructured companies should come from the senior-most ranks of these companies …”

Then, in January (“Marie Antoinette’s Soulmate”), I tore into Mr. Lutz: “If anyone has any doubts about why GM is really flirting with bankruptcy, Mr. Lutz comments (during an NPR interview) should have clarified the issue. The Vice Chairman of a company which went with a begging bowl to Congress acted as if he was Marie ‘Let them eat cake’ Antoinette’s soul mate. CEO Rick Wagoner and GM’s Board should have repudiated his statements by publicly firing him …” I also opined that a pre-arranged bankruptcy would not solve GM’s core problem. During the negotiations, I said, “No one will be focusing on changing the culture that allow people like Mr. Lutz to be top dogs. And without changing culture – encouraging collaboration, being open to others’ ideas, being willing to take considered risk, managing learning every day, etc. – these companies will stumble from one disaster to another. Changing culture takes great effort, committed leadership and time. All three will be in short supply during the negotiations …” I added, “I would like to see … an orderly departure of people like Rick Wagoner and Bob Lutz, and a shifting of power to less jaded executives running smaller companies created by splitting up the behemoths.”

Then in April (“The King is Dead! Long Live the King”), I challenged the criticism made of the firing of Rick Wagoner: “Imagine, for a moment, that a President of the US (… ‘POTUS’) was at the end of an eight year tenure and he … had not been able to turn around the economy. Would you call him a failure? Sure you would! Mr. Wagoner has been CEO for 8 years; prior to that he was GM’s CFO, President of North American Operations, and COO. A comparable track record in US national politics would have been Secretary of Treasury, (a hands on) Vice President and then POTUS. In effect, Mr. Wagoner had many more then 8 years to fix GM. Under the circumstances, the fact that he might have ‘made progress,’ is simply not good enough!” I ended that post with, “The King is dead. I hope the new King – or kings, as I have argued earlier – come from middle ranks or better yet, from outside the industry.”

So, Mr. Whitacre has made many of the executive changes I wanted. Hopefully, the new blood will transform GM’s ossified culture and structure and take the strategic steps I suggested. As long as Mr. Henderson was the CEO, there was no hope of this happening. His concern that the Board was pushing too hard indicates that he, like Mr. Wagoner, would have found eight years too short for reforming GM.

Now there is hope that at least some of the money the US government used to bail out GM will be returned.

Comment » | Company Performance, Corporate Culture, Leadership, Organizational structure, Politics

The Roadblock to India’s “Tryst with Destiny,” Part 2 of 2

May 18th, 2009 — 5:36pm

I held off on completing this post – a direct follow-on to my last one – until the Indian elections ended. The 700 million strong electorate returned to power the current Prime Minister, Dr. Manmohan Singh, with a stronger plurality of votes than anyone has obtained in a long time. This means India should have a stable, reformist government for the next few years, led by a technocrat with integrity.

One reform that won’t be on Dr. Singh’s radar is the dismantling of the “Iron Triangle.” It won’t be because it is important, but in the face of many, many other issues, not urgent. Yet, it is this Iron Triangle which keeps more people like Dr. Singh from wielding power and driving change that will benefit the country at large.

The “pervasive mindset effect” of the Iron Triangle initiates this problem. I had just completed my eight standard (grade) when my father called me back from the playground. Did I want to be an engineer or a doctor? I chose the former to avoid dissecting cockroaches (an 8th grade requirement). My friends, all good students, had similar conversations. Only one smart kid among the 220 boys in my class opted out of the sciences; today he is a well known Indian author and journalist. Years later, at the premier Birla Institute of Technology and Science, a computer took on my father’s role: it directed students with high Grade Point Averages to engineering or science, those with moderate GPAs into management; and those with low GPAs into English or economics.

Mahatma Gandhi decision to involve college students in India’s freedom struggle reinforces the problem. Unlike the “Young Republicans” or “Young Democrats” chapters on US campuses, Indian National Congress-affiliated students took to the streets, demonstrated, and went to prison. After independence, every political party set up student chapters and extended their battles into campuses. Students who aspired to be scientists, doctors and engineers typically did not join; they had too much work. But those who cared little for an education did so. They organized strikes that shut down the universities regularly. Because strikes showed a person’s ability to organize people, these people were welcomed by the political parties.

The rigidity of the educational system exacerbates the problem. For example, the famed Indian Institutes of Technology do not admit anyone older than 25 for their bachelor’s programs. The premier Indian Institutes of Management do not (they used to in my youth), but their heavy focus on academic qualifications assures that most entrants lack significant real world experience. Few mid-career Indian professionals can emulate US General David Patraeus, who took a leave of absence to do a Ph.D. at Harvard’s Kennedy School of Government; his thesis on successful fighting of insurgencies (seemingly!) helped turn the tide in Iraq. Multitudes of such ridiculous restrictions create a system which pigeon-holes people in professions which do not interest them and for which they have little aptitude or passion.

The consequences of this Iron Triangle are the range of problems other observers blame for holding India back. The best of the best in my generation left the country; the best of the best in today’s generation by and large, eschew the difficult and essential task of nation-building. In the US, some successful executives move – at least for a few years – into senior government positions; though this practice is not without its problems, these pale into insignificance when compared opportunities lost because of the lack of such movements in India. Sure, half a dozen people have made such jumps and have helped the country, but they are exceptions, not the rule.

A reformist government would reform higher education in order to demolish the Iron Triangle. Reducing rigidity will be simplest, though it will require vision. For example, the curriculum at IIT Madras trains students more rigorously in engineering than MIT or CalTech do, but gives them little chance to learn about life – or ironically, how society affects technology. Will someone replace a few science and engineering courses with music, art and poetry?

Changing the science-focused mindset will be harder and require even greater vision. In the 1970s, it made sense for my father to limit my choices. Today India needs to make the Liberal Arts an area of study that will attract the best and the brightest. (Good news: IIT-M has recently begun an Arts program.) It must create Schools of Law on the model of the IITs, IIMs and the premier private universities (like BITS).

De-politicizing the universities will be hardest, but essential. The government might have to figure out how to ban political activity (as opposed to studying political science) on campuses. This recommendation is greatly at odds with my liberal view of life, but how else can India stop the least deserving from becoming the most powerful?

The good news is that Indians are stepping up to the plate. Infosys Co-Chairman Nadan Nilekani recently publicly asked the new government to reform education. Two successful business people – ABN AMRO Bank CEO Meera Sanyal and an IIM-Ahmedabad graduate and entrepreneur Sarath Babu – were candidates in the recent election. All three’s views of what needs changing may differ sharply from mine, but that’s immaterial. What is material is that people to whom education mattered are turning their attention to the body politic. If you don’t think their efforts are important, simply consider this: how long would India’s recent rapid growth as a business powerhouse last if an ill-educated politician successfully managed to eliminate English from its premier universities?

3 comments » | Business Environment, Politics

The Roadblock to India’s “Tryst with Destiny,” Part 1 of 2

May 8th, 2009 — 2:02pm

Last week, I was at the Judge Business School of Cambridge University. This year, Cambridge is celebrating its 800th anniversary. It is astounding that an institution not tightly bound by religion has thrived this long, much of that time as a leading center of human thought. There is hope for humanity yet!

I took the time to chat with Navi Radjou, a former colleague at Forrester, and the first Executive Director of the Center for India and Global Business. Recently created in part with a grant from the Indian Government, the Center pays homage to Jawahar Lal Nehru, an architect of Indian freedom and its first Prime Minister; Nehru had studied at Cambridge in his youth. On a recent trip to India on behalf of the Center, Navi met business people, politicians, film makers and ordinary people. He described fascinating examples of business and social innovation, some of which truly have the power to change the flow of life even in other parts of the world. I will not steal the Center’s thunder and describe any of these here; suffice it to say that this Fall, PBS will be airing a series of documentaries on some of these innovations (created by filmmaker Khursheed Khurody) and the Center will do some supporting work on the series.

With all the good happening there, it might seem churlish to some for me to keep the promise I made in my last post and bring up India’s Achilles Heel. But the country must address this and soon. So, I will go on.

India’s Achilles Heel is not the limits to the numbers of engineering students it can train; while the world focuses on the Indian Institutes of Technology, most engineers trained by its many of the regional engineering colleges (e.g., Delhi College of Engineering) are highly skilled. It is not lack of basic essential infrastructure, which, without doubt, is way behind world class. It is not grinding poverty, accentuated by the still pervasive effects of caste, though that is terrible to behold. (Incidentally, caste is not just a Hindu problem; sadly, Catholics, Protestants, and Muslims – as well as adherents of several other religions – also espouse their caste status in issues of importance, like marriage.) It is not religious or caste battles; these, though ugly when they happen, are not as common as the Western press makes them out to be. It is not even the fact that some 20% of the current Members of Parliament have criminal records or outstanding criminal charges against them; this fact has received widespread coverage in the West now that 700+ million Indians are voting.

I could go on with this list of issues, which have all been raised by various observers of India, some friendly to the country, and some not. In reality, all these issues – and others like them – are derivatives of the core problem, which no one I know of has described. It is a self-reinforcing Iron Triangle made up of (1) a pervasive mindset that believes that smart people should – and must – study engineering or medicine; (2) a still rigid academic system that does not give most people second chances; and (3) Mahatma Gandhi’s greatest error: the politicizing of universities.

Demolishing this Iron Triangle is India’s biggest challenge; if it does so successfully, it will flourish and achieve what Prime Minister Nehru called its “tryst with destiny.” If does not, it will probably still be successful, but is likely to plateau at a level far below its potential.

In my next post, I will describe each of the legs of the Iron Triangle and how they interact. I will also offer some thoughts about what India could do.

1 comment » | Business Environment, Politics

The King is Dead! Long Live the King!

April 1st, 2009 — 9:51am

Night before last, I was watching AC 360, the Anderson Cooper news show on CNN. Anderson asked David Gergen, the former advisor to four presidents and current member of CNN’s team of political analysts, and two others, about the summary dismissal of Rick Wagoner. Mr. Gergen was generally supportive of the government’s position, but was critical of the fact that the government had forced Mr. Wagoner out, given that he had made progress in transforming GM.

Well, readers of this blog probably anticipate my reaction well: Firing Mr. Wagoner was not only necessary, but essential. So, let me take on the David Gergen’s argument. Imagine, for a moment, that a President of the US (whom I’ll henceforth refer to by the customary acronym POTUS) was at the end of an eight year tenure and he (think of Mr. Obama for now) had not been able to turn around the economy. Would you call him a failure? Sure you would!

Mr. Wagoner has been CEO for 8 years; prior to that he was GM’s CFO, President of North American Operations, and COO. A comparable track record in US national politics would have been Secretary of Treasury, (a hands on) Vice President and then POTUS. In effect, Mr. Wagoner had many more then 8 years to fix GM. Under the circumstances, the fact that he might have “made progress,” is simply not good enough! He has not delivered on the most important issues – GM’s culture, organization and strategy – and indeed, according to published reports chose to bypass these fearing that they would keep him from improving GM’s cost structure.

One of the other guests on the CNN program, an economist who supported the firing, pointed out that GM and Chrysler are so large that they account for almost 2% of America’s GDP. Consider this data point from a different perspective. We want our POTUS to turn around 100% of the GDP (while battling non-economic problems like wars, natural disasters,) and — by recent public criticism — do it in his first 100 days. Yet, we are OK with a very highly paid executive not being able to turn around a company in eight years that is only about 1% of the GDP?

Focusing an 8+ year role at the top on labor costs is leadership? Not in my books. Labor accounts for only about 8% of the cost of a car and on a global basis, as economist and journalist Ben Stein has pointed, even this cost is not wildly uncompetitive. But wait, he hired Bob “Mary Antoinette’s Soulmate” Lutz as Vice Chairman for Product Development and they turned out a few good cars, did they not? A few cars among how many? And what did GM do on core new technology? Oh yes, it caterwauled about unreachable mileage standards. Surely they were producing cars for Europe, where generally the laws are tougher and an End of Vehicle Life law already exists demanding near total recyclability?

No, the issues Mr. Wagoner chose to bypass – GM’s culture, organization and strategy – are the ones which could have saved the company. Had he broken down the Not Invented Here silos that existed within geographic and brand specific fiefdoms, he would have transferred innovations faster. Heck Saturn’s “no haggling” policy could have transformed the industry, instead of remaining a niche strategy. But that would have meant engaging with GM’s vast network of dealers in a new way. Think this does not matter? Then consider this: a couple of months back Hyundai came up with a brilliant idea to stimulate sales by addressing the fear consumers have about the economy. About the same time, I articulated a similar strategy in a radio interview I did that aired in the Boston market. How long did it take GM to do something similar? Until earlier this week!

The King is dead. I hope the new King – or kings, as I have argued earlier – come from middle ranks or better yet, from outside the industry. Ford’s Alan Mulally, after all, has been making faster progress and has so far, not had to reach for the begging bowl.

Comment » | Business Environment, Company Performance, Corporate Culture, Financial crisis, Leadership, Organizational structure, Politics

The Lessons of Camelot

March 19th, 2009 — 3:43pm

I have been trying desperately hard to stay away from politics. But the global financial crisis has made this impossible: virtually every business issue is singed, if not actually charred, by the blaze of the crisis. So, with the deepest of regrets …

Imagine President Obama, announcing at his press conference today that the US Special Forces had arrested Osama Bin Ladin. I would bet good money that the first question he’d get would be, “That’s great, but what about the AIG bonuses? Haven’t Americans been duped enough?”

Near the end Alan Jay Lerner’s musical Camelot, Guinevere and Lancelot offer to surrender and return to England to face justice. Arthur spurns them; his people no longer wanted justice, he says, they wanted revenge. Right now, the American people want revenge. They don’t want to be told about the contractual law, they want someone on Wall Street to feel real pain, just as they are feeling it. Bernie Madoff would have been a great fall guy, but he refused the part written so perfectly for him and pled guilty quickly. The people at AIG Financial Products Division, seen to be holding the country to ransom and getting away with it, have therefore become the focal point of public rage. They are making GM’s now departing Vice Chairman Robert Lutz (see my post “Marie Antoinette’s Soulmate”) look like a paragon of virtue. Which is why no one rebuked Republican Senator Grassley for calling on them to commit hara-kiri.

If President Obama does not display absolute, visceral rage – merely feeling angry won’t count – he seriously risks losing the people. Don’t believe me? Remember the effect on Michael Dukakis’s presidential campaign of his calm response to the question about what he would do if his wife and daughters were raped and murdered? His calmness, combined with his opponent’s blatantly racist campaign, doomed him. Today, similar conditions are present and the stakes are higher.

If Mr. Obama loses the people, the economy will slide into depression. This crisis in our networked world, as I have argued in earlier posts, was aggravated by a failure to manage as if the network matters. Ergo, resolving it will require tackling the ailings of the entire network, not just one of its nodes. Mr. Obama’s multi-sector bailouts and his plan to totally restructure multiple key sectors is exactly what is needed. But if the American people focus on only one node (AIG) of the network, he has no chance of succeeding. The good news is that as a master politician, he publicly repudiated Mr. Geithner’s position that the bonuses are a fait accompli. Now, he should take this repudiation to the next level and get some Hollywood types to teach him how to act furious on camera.

Substantively, Mr. Obama should outsource the work the AIG group does. These people are smart, but unlike Albert Einstein, they are not unique: The very products they used to peddle required them to work with equally smart people in other institutions. They are not unique! So, it is possible to fire them and simultaneously (this is key) introduce an outsourcing firm to take their place. The replacement firm could be one of the companies that participated in this market, but which currently have no (or minimal) such open contracts. If on top of this, the outsource firm were from a lower cost economy, so much the better: Wall Street can’t complain of being subject to the “market discipline” that they urge on others – and the American people would love the irony. (Incidentally, Wall Street already outsources a lot of work to India, albeit very quietly.)

Additionally, Mr. Obama should publicly and forcefully ask the organizations that provide the credentials job – CFAs, CPAs, NASD Series 7, JD, etc. – essential for a Wall Street to decertify (under morality clauses) those at AIG who brought disrepute to their profession. He should explain to Americans that this will deprive these people of their livelihoods in the world of high finance. Not quite Bernie Madoff’s fate, but definitely the equivalent of banishing Mordred from Camelot. Of course, if these people not only repaid this year’s bonus, but also contributed their entire last year’s bonus to charities that are working to help those who lost their jobs and homes, they might, just might, be able to retain their credentials.

I often tell executives that instead of battling a culture, they should focus on skillfully using the elements of the culture that can help them achieve their key goals. That’s what Mr. Obama must do now. In the final analysis, Arthur lost Camelot, as my teenager astutely told me the other day, because his knights saw peace as boring. He could not hold on to their passions and lost their support.

Mr. Obama must take steps that the Puritans of New England, the gun slingers of the Wild West, the Rhett Butlers and Scarlett O’Haras of the South and the flower people (yes, there are still many of them) of the two coasts appreciate. Stated differently, he must apply the lessons of why Camelot failed. Only then will he be able to fulfill his dream of taking the country back to Camelot for a sustained period of time.

Comment » | Business Environment, Financial crisis, Leadership, Politics

Oh What a Tangled Web do Politics Weave …

February 28th, 2009 — 2:55pm

A few days ago, I read a newspaper article on Secretary Clinton’s Asian trip. In China, she urged the Chinese to buy American debt, arguing that if they did not, China itself would be badly hurt: The recession-bound US economy would not be able to absorb Chinese exports. I found Ms. Clinton’s argument refreshing from one perspective: she eschewed the typical diplomatic mumbo-jumbo, admitting the US was in deep trouble. How the Chinese will react is an open question, particularly given President Obama’s budget. They may see merit in Secretary Clinton’s logic or may consider it as an invitation to throw good money after bad.

If American debt is a good investment, so are real estate and companies. National Public Radio recently ran two stories about organized groups of ordinary, albeit wealthy, Chinese who are visiting the US to buy real estate. So, that raises the question: how will the broader American political establishment react? For long, instinctive xenophobia has greeted investments from outside Western Europe. In the 1980s, the Japanese were demonized. More recently, the Chinese and Arabs were. Even Indians – who, like the Japanese, don’t pose obvious political problems for America – are attacked; a trivial example: The Taj Group’s purchase of Boston’s Ritz Carleton Hotel produced in the Boston media opinions that made me cringe. Never mind that Taj’s CEO is an American and its luxury hotels are among the best in the world!

Every economy should protect itself from harm. At the Darden School, I silenced Ayn Rand capitalists in a managerial economics class by pointing out that objective data showed that semi-open countries with mixed economies outperformed the US. Shouldn’t the US follow suit? Indeed, today, the semi-open, mixed Indian economy has (so far) escaped the worst ravages of this recession. So my concern is not with anyone questioning the worth of a foreign investment. I just want such questioning should to be based on objective criteria, not irrationality. Today, all of us should take on to ourselves the responsibility of injecting such objectivity into discussions we participate in.

The biggest challenge to our doing so is that we just don’t know enough about how the rest of the world thinks. Fareed Zakaria’s book, The Post-American World, (which I mentioned in my first post) can help. Mr. Zakaria brilliantly describes why America no longer dominates a unipolar world. While it still leads on virtually every important metric economic, technical and social metric, the rest of the world has risen. So, today world has other poles anchored on China, EU, India, Japan, Korea, Brazil and Russia. Americans should embrace and celebrate this, because it creates tremendous opportunities and indeed makes the world safer. This argument is well supported by multi-faceted – economic, political, social, technological and cultural – data and anecdote and is therefore very compelling. Unfortunately, Mr. Zakaria does not go far enough. He needed several more chapters addressing how each of the new “poles” see the important issues of the world. Where can the various poles agree? Where do they differ sharply? What principles, if adopted, could help the poles collectively resolve our huge challenges?

So, if you are a Chinese politician, bureaucrat or business person, what do you think of Secretary Clinton’s challenge? Why? This inquiring mind wants to know.

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Marie Antoinette’s Soul Mate

January 20th, 2009 — 6:41pm

I’m back! I hadn’t meant to be away for five weeks, but life intervened. In my defense, I didn’t notice anyone actually breaking my door down asking about my whereabouts …

I am wondering if you heard the recent Robert Siegel interview of GM Vice Chairman Bob Lutz on NPR’s All Things Considered a few days ago. If not, it is definitely worth listening to (http://www.npr.org/templates/story/story.php?storyId=99253055), for it gives a unique insight into the travails of the US auto industry.

Mr. Lutz showed great restraint; he waxed eloquent about the stupidity of the average consumer, without actually using the word. GM produces great cars, he said, but only a handful of experts really know this. It will take time for the experts’ opinion to filter down to the great unwashed masses and GM had no choice but to wait this out. Asked about the effect of the government bailout on the workings of his company, he said, “I’ve never quite been in this situation before of getting a massive pay cut, no bonus, no longer allowed to stay in decent hotels, no corporate airplane. I have to stand in line at the Northwest counter. I’ve never quite experienced this before. I’ll let you know a year from now what it’s like.”

If anyone has any doubts about why GM is really flirting with bankruptcy, Mr. Lutz comments should have clarified the issue. The Vice Chairman of a company which went with a begging bowl to Congress acted as if he was Marie “Let them eat cake” Antoinette’s soul mate. CEO Rick Wagoner and GM’s Board should have repudiated his statements by publicly firing him, but in my heart of hearts, I knew that my life would long be over before any good sense emanated from those quarters. But hope is what keeps the world spinning, does it not?

So, did Mr. Lutz change my mind about the auto industry bailout? No! If anything, his words are proof that the bailout is needed to preserve the company until more drastic steps can be taken.

An argument – also made by a handful of others – is that without the bailout, the industry’s second and third tier companies will be irreparably weakened. This will harm the broader industry’s stronger companies, for they rely on many of these companies too. Ideologues don’t understand this is the unfortunate logic of networks: As I’ve written elsewhere, it is hard to succeed if your network is failing.

The more important, and thus far unmade, argument is: bankruptcies will not reform these companies. In the best case scenario, they would file for pre-packaged bankruptcies (in which creditors back the financial restructuring plan) without scaring customers (even though buying a consumer durable is a riskier bet than buying a ticket from a bankrupt airline). Who will manage GM through this process? People like Mr. Lutz will represent the companies. Across the table from them will be their creditors. What will the negotiations focus on? The executives will argue they can fix the problems – if everyone else makes large concessions. The creditors – rightfully – will be trying to get back their money as quickly as they can. No one will be focusing on changing the culture that allow people like Mr. Lutz to be top dogs. And without changing culture – encouraging collaboration, being open to others’ ideas, being willing to take considered risk, managing learning every day, etc. – these companies will stumble from one disaster to another. Changing culture takes great effort, committed leadership and time. All three will be in short supply during the negotiations and during the tightly choreographed marches towards tough milestones that will follow.

I hope the Obama administration’s Auto Czar, backed by the bills that Congress must pass (to provide additional funding) by March, will be able to force change. As I wrote in an earlier post, I would like to see appointees to the Boards, an orderly departure of people like Rick Wagoner and Bob Lutz, and a shifting of power to less jaded executives running smaller companies created by splitting up the behemoths. The ideologues will probably not let this happen, but extraordinary times call for extraordinary steps. Nevertheless, I’ll even take smaller steps along the lines I have proposed while hoping for more. Hope, as I said, is what keeps the world spinning, does it not?

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