The Turn of the Screw


“Change is hard because people overestimate the value of what they have—and underestimate the value of what they may gain by giving that up.”

by James Belasco and Ralph Stayer in Flight of the Buffalo,1994

Turn of the screw

China seems to be more and more in the news of late. Well I suppose with its clout as the second largest economic powerhouse in the world, that is hardly unusual. A couple of months back, the country unilaterally devalued its currency Yuan by about five percent to combat declining exports and economic slowdown. More recently the Chinese communist party at its annual conclave announced the end of the controversial ‘One child’ policy, allowing couples to have two children for the first time in thirty-five years. In an environment of economic slowdown, this underlines a heightened fear of loss of competitiveness to countries with better demography.

China degrowth

The Turn of the Screw…….

As Oil prices drop from above one hundred dollars to around forty dollars per barrel, the oil producing nation states in the Middle East led by Saudi Arabia seem to be stumbling, with fiscal deficit rapidly rising to unsustainable 20% of GDP levels. As these countries frantically dip into their reserves to balance the deficit, they fervently hope for oil prices to start climbing up again.

Oil and Gas

The Turn of the Screw……..

I suppose majority of the world believes, just as China and the Middle East hope for, that the economic and oil prices downturn are temporary and the ‘screw would turn back’. China would continue its rise, oil prices would climb back and all would be well with the world again.

My thoughts go back to that prescient article “Marketing Myopia” written by Professor Theodore Levitt of Harvard Business School more than half a century back. The central argument in that was “the history of every dead and dying ‘growth’ shows a self-deceiving cycle of bountiful expansion and undetected decay.” Professor Levitt goes on to say that with the ‘turn of the screw’ in terms of the environment, market and technology, there is always a small timeframe ‘window’ allowing an optimal match between these and an entity’s intrinsic competences. As the screw turns, that fit between such competences and the environment, market and technology starts getting lost. What is needed then is to rediscover and reinvent oneself in terms of ‘What business we are in?’ While Professor Levitt essentially wrote the article from an organisational and industry perspective, I see his concept much more universal and having relevance to nations and Global trends.

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So how do I see the future trending?

For decades, manufacturing from the developed world has been migrating to China, attracted by low costs and productivity. But rising costs in China and development of sophisticated automation are tipping the scales back. Realizing the need to automate to remain competitive, China is implementing advanced robotics. It is constructing the first “Zero human labour” factory in Guangdong which would use a thousand robots to do the work of two thousand humans! But does this not run contrary to the effort to increase the Chinese work force by allowing a two child policy? And what happens to the Chinese manufacturing competitiveness as and when the US and Europe also employ similar robotics to manufacture? Allowing same costs but less the shipping time and transportation costs. Clearly, manufacturing is headed back to the consuming countries themselves. Once again a manifestation of the turn of the screw.

And what about the Middle East and its oil lifeline? For decades now, this region has been enjoying windfall profits from Oil and Gas and resorting to heavy subsidization of its citizenry. Says Meghan L. O’Sullivan, director of the Geopolitics of Energy project at Harvard Business school, “The expensive social contract existing between the Rulers and citizens in the gulf states will get more difficult, and eventually impossible to sustain if oil prices don’t recover”. (A few years back, during the days of the Arab Spring, I had deliberated on this ‘Social Contract’ aspect in my post, “Childhood’s End?”). The question that brooks an answer is when will the oil prices recover? More and more experts in the Energy sector are of the view that with improved energy efficiencies brought in by new technologies and the fracking industry waiting on the sidelines, there is no way oil prices can go up to earlier levels. This coupled with clean energy technologies like the Solar and Wind advancing exponentially means that the fossil fuel industry is headed the way of the dinosaurs. Yet another manifestation of the turn of the screw!

One might wonder that with such inevitable turn of the screw, what is the kind of leadership that would succeed in the world. As I think of this, I realise that such leadership needs to have the ability to envision and embrace a future unencumbered by the present- be it the technology, the geopolitics or the economics. A future which addresses core concerns rather than transitory symptoms. And a leadership which comes to live into such a future as it empowers others to deal with the socio-economic and other changes needed to realise that envisioned future. A future that was not going to happen anyways……….

In learning………….. Shakti Ghosal

Reference: Marketing Myopia by Theodore Levitt, HBR July-Aug 1960.

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Leadership’s Essence.


“All of the great leaders have had one characteristic in common: it was the willingness to confront unequivocally the major anxiety of their people in their time. This, and not much else, is the essence of leadership.” — John Kenneth Galbraith, American economist, public servant & diplomat, 20th Century.

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The outcome of the biggest democratic exercise the world has ever seen – the Indian Elections of 2014, is now known. After thirty years of coalition politics, the election has thrown up a decisive mandate this time with the main opposition party, BJP taking over. Come evening, the news channels continue to vie with each other as they analyse the underlying reasons which led to the 800 million eligible voters in the land vote the way they did.

The sense I get from the screen images and media language is of two contrasting approaches which found articulation in the campaigns.

Of the Ruling party, the Indian National Congress’ ad nauseam declaration of improving the lot of the dispossessed, the oppressed, the poverty stricken. Seeking the support of large swathes of people conditioned to portray and be portrayed as victims. People taken for granted as ‘vote blocks’ with the trigger in the hands of the political master.

Of the Opposition party BJP’s this time around targeting the emerging young, the first time voter, totally unencumbered of any baggage from the past. A very different kind of voter who is impatient, aspirational and keen to play a part in his / her own destiny. People who like to be engaged regarding their own development and creating new possibilities.

So what is it that has allowed the BJP gain such an impressive mandate and victory? As I think of this, I get the sense that the intrinsic thinking of people seems to have shifted. From a subsidy,’hand me down’ expectation to an aspirational mindset. From a passive, ‘I am a victim’ outlook to an active ‘I would take control of my destiny’ conviction. So how did BJP and its leader Narendra Modi harness this shift? I see two leadership aspects come into play.

Narendra Modi

First, the magic of a created future. A Future that excites both the Leader and the people. A future that beckons to all to come to live into. A future that is consistent with the leader and his past track record. A future that appears plausible to realise one’s dreams.

Second, that inner commitment to something bigger than oneself. A commitment that shapes the Leader’s thoughts and actions beyond any direct personal concern or payoff. A commitment that creates that certain ‘something’ in people around to which they themselves start to feel committed.

Could it be that Mr. Narendra Modi, the man who spearheaded the BJP campaign, was able to envision a future that wasn’t going to happen anyway? Could it be Mr. Modi emanated that aura of a higher commitment from which the aspiring masses could get the sense that their lives are indeed about something bigger than themselves?

In learning…….. Shakti Ghosal

Indian Elections and the Law of Integrity


Over the last one month, the screen images continue to focus on that greatest show of Democracy on Earth, the on-going national elections in India. Close to a billion voters being wooed by a fractious, cacophonous political lot.
Indian elections
I notice contrasting articulations.

On one hand, I see political parties investing a lot of energy and resources to disseminate what they stand for. Their manifestoes drip with great intentions that they are committed to fulfill if voted to power. Candidates vie with each other for that once in five years photo opportunity to stand shoulder to shoulder clutching their copy of this ‘intention bible’.But when a politician is confronted with non-fulfilment of earlier electoral promises, he is quick to ascribe causes. Of how the opposition was non-supportive in the parliament. Of how resources and funds were not made available. Of how, inspite of all such great challenges, he continues to remain totally committed to usher in development, both economic and social.

On the other hand, I see the man on the street expressing his disenchantment with the political class, even the political process. Of his ire at the lack of fulfillment of election manifestoes in the past. Of his perception that election promises are meant to garner votes and quickly abandoned thereafter. Of his perspective that politicians exist only to feather their own nests in terms of aggrandizing power, influence and money, giving scarcely a thought to the welfare of the citizenry. Of his fervent hope that at least this time around, the politicians coming to power might be motivated to focus on development, both economic and social.

I muse about this lack of alignment between the politician and citizenry even though both speak of the same goal viz. development, economic and social. Do I sense a loss of faith in the workability of our political system? What is at the core of this failure?

My thoughts shift to the Integrity model which I had read about recently. Authors Werner Erhard, Michael Jensen and Steve Zaffron present this model to demonstrate how Integrity, as defined by them, is intrinsic to the workability in any situation.
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As per the authors, Integrity is all about our word being whole and complete, both to ourselves and to others. What is the meaning of word being whole and complete, one may ask. It means “Honouring our word” which is keeping our word and in case we are not able to do so, be willing to be held responsible for clearing any mess caused by that. The Law of Integrity states that as integrity (honouring the word) declines, workability declines, and as workability declines, the opportunity for performance declines.’

As I look at the Integrity model in the context of the Indian elections, I wonder about the contradictions the political process throws up. Could it be that the contradiction we see of espousing integrity but not honouring the word is a trait that exists in each one of us? So,what is it then that stops us seeing this contradiction? As I think of this, the following thoughts fleet through my mind.

Do we see Integrity as some kind of a virtue to aspire for rather than an underlying condition for performance? When we see integrity thus, we rarely think twice before sacrificing it to ‘succeed’.
• Do we suffer from self deception when it comes to our own out-of-integrity behaviour as we are quick to put the blame somewhere else but fail to see how our own failure to perform is linked to this violation of the law of integrity?
• What is it that stops us from admitting that we will not be keeping our word? Is it from a fear that we would be responsible for ‘cleaning the mess’ and thus look bad in front of others?
• Do we realise that having given our word, any attempt to subsequently link that to a likely benefit for us makes us look untrustworthy?

As I think of the divergence between words and deeds that has rendered our political system (which also includes us!) untrustworthy and undermined its workability, I am left wondering at the kind of political language that may be used by both politicians and citizenry alike. A language that would align the commitments. A language that would ensure that owning upto our commitment failures and taking responsibility of the clean-up becomes the norm…….

In learning………….. Shakti Ghosal

Acknowledgement: ‘Integrity: A positive model’ by Werner Erhard, Michael Jensen and Steve Zaffron, Harvard Business School Working Paper No. 10-061, Revised May, 2013

The ‘Being Human’ Organisation of the twenty-first century


‘It is amazing how much you can accomplish when it doesn’t matter who gets the credit.’ Unknown

The other day, a news item on Johnson & Johnson caught my attention. About the company accepting charges of bribery to promote its antipsychotic drug Risperdal to children and people with developmental disabilities and agreeing to pay USD 2.2 billion in criminal and civil fines. My thoughts go out to another disparate case closer home where a reputed business group stands charged of selling fake machinery parts as genuine, endangering people’s lives while making huge profits.

What is it that makes an organisation declare values to which it does not adhere to? What is it that makes multinational corporations like Johnson & Johnson spend millions to create a brand equity of “love and care” while bribing to ‘push’ a controversial drug onto people who need love and care the most?

I muse about my own self. As I think of who I am and what I do at work, I notice significant dichotomies. As an individual working in the corporate world for three decades, I see that I have conditioned myself to believe that the value systems which apply to me at the individual level no longer remain valid as soon as I wear my organisational hat. Be it in aspects of transparency, business ethics, environmental concerns and several other areas. Somehow, I have developed the underlying belief that these fall lower in priority than the core business objectives of top line and bottom line growth. I must confess that I have rarely questioned why it should be so.

What is it that has conditioned me so? I think of how organizations evolved in the last century. Of how they have remained focused on achieving growth and profit objectives alone. Of how Organisations have ‘learned’ ways to pass on the costs of their activities for others to pay. Of how this behaviour resulted in the 2008 global financial crisis when companies created bad debt and exported that all over the world.

As I wear the organisational hat, I can see the intrinsic conflicts that I face.

• Do I achieve success by maximising Shareholder wealth or do I take the path of social responsibility?
• Do I increase profits or do I take responsibility for an environment crying out for help?
• Do I indulge in rampant business expansion or do I ensure avoidance of exploitation?

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In the 2003 award wining documentary film, ‘ The Corporation’, University of British Columbia professor and author Joel Bakan asks, ‘If a corporation is a person, what type of a person is it?’ The documentary goes on to show that most organisations comprise of network of conversations that are inconsistent, dissonant and cluttered. The conversations exhibit the qualities and attributes that, if the organisation were to be a person, it would be termed a psychopath. The induced organisational behaviour from such a conversational clutter ranges from “callous disregard for people’s feelings, incapability to maintain human relationships, deceiving for profit, inability to feel guilt and complete disregard for the safety of others.”

Clearly the world seems to be reaching an inflexion point. Jay Deragon, in a recent blog post titled ‘Being Human’ says, “It seems odd to think that business leaders are just now recognizing that their business results have a direct correlation to the organizations ability to think, act, speak and feel in human terms. Yet instead of measuring the organization’s human abilities, leaders still focus on measuring, thinking and chasing outcomes in financial terms.”

Consciousness has arisen that for sustainability there needs to be an alignment and acceptance of the core human values at the organisational level too. To me that is a wonderful shift and a significant evolutionary development.

So with such consciousness what could be the way forward?

creativity-training-eye

Authors Steve Zaffron and Dave Logan in their path breaking book, ‘The Three Laws of Performance’ point to a direction as they suggest the need for organisations to transform themselves into being “Self-led”. This ‘Self’ arises from all people and stakeholders participating in the organisation’s network of conversations. So how do we do that? By first shifting away from the belief that “we need to involve only those who need to be involved”. As I look inwards, I realize that this belief arises from my apprehension of a ‘loss of control’. But as I choose to allow external stakeholders into my network of conversations, I am able to shift them into a space where they feel they can contribute. A shift away from ‘we don’t trust you’ and towards ‘let’s all of us get involved in the success vision of our business’.

Can we see the need for us to contextualize our ‘organisation hat’ wearing persona in the society within which we are embedded and exist? Methinks every one of us needs to become an active player in this great initiative. For in this resides the opportunity to find the balance we seek in the world today.

In Learning………… Shakti Ghosal

Acknowledgements:

1)The Corporation– a documentary film written by Joel Bakan, and directed by Mark Achbar and Jennifer Abbott, 2003 : http://www.thecorporation.com

2)Being Human creates higher returns– a blog by Jay Deragon:
http://www.relationship-economy.com/2013/10/being-human-creates-higher- returns/

3)The Three Laws of Performance- Rewriting the Future of your Organisation and your life by Steve Zaffron and Dave Logan, Aug.2011: http://www.threelawsofperformance.com/

Winchester and the follies of Leadership


A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.

– Lao Tzu , Chinese philosopher, 6th century BC

 Winchester_Model_1873_Short_Rifle_1495

The quiz master asks, “Where did the famous Winchester rifles originate from?”

“Winchester of course!” I quip back.

The Quizmaster gives me a quizzical look.

 ***

 As I land at London Heathrow and take the coach to Winchester, I recall the above incident. Traveling through the beautiful English countryside of Hampshire, I reach the town.

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The coach stops in the city centre with the statue of King Alfred the Great visible in the distance. Winchester’s claim to fame began during the Roman times and indeed became a Roman province with defensive walls all around. But it was during the Anglo- Saxon times that it reached its zenith and the cross shaped Saxon street plan as laid out by King Alfred can be seen even today.

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I was there to meet up with Stanley, the owner of a Management Consulting company. As I stepped into his office, Stan introduced me to Nick, his protégé and the current CEO of the firm. We got down to discussing a joint venture proposal in the UK for which I had sought the services of Stanley’s company. But the discussions never could take off. Every time I would seek advice and Nick would start off on possible options, I found Stan interrupting him.

“That surely could be one of the ways to proceed,” he would say, “but it might work better if you….” and then he would veer off into a rambling story off how it had worked for him many years back in a different context. As Nick, after a while, tried to get back to what he had been saying, he would be interrupted almost immediately by Stan who would again take the discussion into yet another of his personal success stories.

As the outsider, I seemed to be stranded in the middle. As the discussions flowed more around than with me, I quickly realised that we were not going anywhere with our main agenda.

As I walked away from failed negotiations on the JV, scarcely noticing the old medieval city walls, I pondered. Why do Business leaders like Stan have this intrinsic need to win, even against their own? Is it a deep down insecurity about one’s insufficiency to handle a world and environment that has changed? Could such insufficiency be making Stan avoid the right focus and seek refuge and comfort of past glories? Does Stan realise that such frequent “peeping over the shoulder” approach, though well meaning, could in fact be fast reducing Nick’s commitment to the organisation?

 ***

 And so I come back to the question of where the Winchester rifles come from.

Well, the rifles had their origin across the Atlantic when, just before the American civil war, a certain Oliver Winchester had the vision to buy out a bankrupt gun company in New Haven, Connecticut. The repeater rifle he redesigned was a huge success with the Union army and, after the war, the company became renamed as “The Winchester Repeating Arms Company.” So path breaking and visionary was the design that it earned the nickname of “The Gun that won the West.” For almost a century thereafter, the Winchester name remained synonymous with vision and success. It was in the 1960s that the company chose to forget what had made it successful in the first place, refused to embrace technology changes and in fact did faulty redesigning of its firearms. It was downhill thereafter till the company was split up and sold off in 1980.

As I muse over the Rise and Fall of Winchester Guns, I see its parallel in the mindset of Business leaders like Stan. As they build a company through vision and change, somewhere along that long and arduous road, such leaders choose to get stuck to their own perceived ‘success recipe’. This attachment veers them away from all that which made them successful in the past. An attachment which leads to a refusal to acknowledge a changing future and the possibilities it brings. A refusal which pushes business away, as it did my proposal.

In Learning…………………….                                                Shakti Ghosal

Where do we go from here?


Wonder if we look, inside our hearts, exactly what
We’d find
Or Maybe we could take a lot of pain away
Yeah
Or maybe we could heal the world today
Yeah
Or maybe, you know, something, I don’t, if you do then

Tell me    
Where do we go from here
Where do we go from here
Where do we go from here

                                                   Chris Rene, American Singer

A few weeks back I had watched the limited coverage of the national convention of the Chinese Communist Party. Rows and rows of party leaders listening and taking notes as a new leader Mr. Xi Jinping took over China’s leadership. With China’s flagging growth, Mr. Jinping is widely expected to provide his vision of the Chinese economic and living standards growth going forward.

The current UPA Government in India seems to be on its last legs and is frantically trying to reverse the ominous dip in GDP growth rates through desperate reform measures. While the jury is still out on the short-term impact of these “big ticket” reforms, it is obvious that no coalition or party can come back to power without a proven record of economic and consumption growth.

This story repeats in country after country in the developing world. Per capita growth, higher standards of living, endless availability of goods and services seems to be the universal mantra. The flickering images on the LCD panels, the endless sitcoms on myriad channels instigate us to go for that I phone 5. Or a fine dining experience. Or hanker for that newly launched car or luxury home. Our ability to consume, to pander to whims and fancies is seen as our success and growth.

But what happens when the two and a half billion folks from China and India come onto the field and want to play ball? What happens when the Chinese and Indians turn around to ask, “Hey you guys in the west, you followed your own American dream for more than a century. Now it’s our turn.”

Thomas Friedman did allude to this in his best seller ‘The World is Flat” but  said it in the context of Globalisation and a world view of a level playing field allowing everyone  an equal opportunity. Methinks however that the far more critical issue is the emerging stress on sustainability. The strain on our planet to continue to produce in pace with the exponentially rising consumption. To put it bluntly, mankind is well on course to strip this planet dry. Do see my earlier post We need a second planet by 2030” in which consequences of mindless growth and consumption have been discussed.

So where do we go from here?

We need a shift in perspective and mindset. The twentieth century dream of conspicuous consumption cannot remain a role model any longer. This needs to be revisited, reviewed, redefined. We need to be able to answer the following.

“What really is personal prosperity, what constitutes our success?”

“Does success necessarily have to come from ownership and self-aggrandizement?”

“Could our hunger for access to better products and services be satiated, not necessarily by owning, but by sharing?”

This of course is easier said than done. We remain conditioned to acquire and own for our psychological security and comfort. This harks back to days of yore when scarcity and competing for scarce resources was the norm. This mindset continues even though access and availability is on a different plane. In our mind, Owning signifies upward mobility and prestige, of having arrived in a brave new world of capitalism. While Sharing is looked down upon as the vestige of a failed experiment called socialism.

Clearly a tectonic shift in perspective is called for. In a different context in “Age of Discontinuity and the Chinese Shi”, I had brought up the aspect of the Shi mindset which eschews the heaviness of resource ownership. Could this be a perspective that may be needed today?

I think of this and wonder who could play a catalysing role. Political leaders? Opinion makers? Media? What could be the trigger for them to buy-in and play such a role?

The good news is that technology and engineering acumen exists to achieve the above shift. Through better public transportation, better residential spaces with higher density, superior services delivery and energy efficiency, better use of public spaces, better reuse of stuff which we tend to throw away etc.The other great opportunity is of more and more “have not” folks gaining access to products and services which till now have been out of their reach.

Could this be the moment when the best tenets of Capitalism and Socialism coalesce and synergise to open up the path to sustainability?

In Learning………                                        Shakti Ghosal

 Acknowledgement: The World is flat A brief history of the twenty-first century: Thomas Friedman, 2005.

The Oxymoron of our times


From the heart of all matter
Comes the anguished cry
Wake, wake, great Siva,
Our body grows weary
Of its law-fixed path,
Give us new form
Sing our destruction,
That we gain new life…

                                                                                             Rabindranath Tagore

               (Translated from the Bengali original)

The media remains flush with dire tidings. About persisitent US unemployment. About the Euro zone crisis. About faltering growths in the BRIC economies. On screen debates and coffee table discussions waft around how to get back to the old ways of Capitalism fuelled growth.

We remain witness to cycles. The boom and bust. The shortening of product and business cycles. The rapid changes of technology and society. As I muse, I visualise the ebb and flow of human endeavour. Of our  knowledge and  creativity. Of our  follies and emotions. I see the movement, at once intuitive and playful, of the flowing curves and trends. I see economic and social aspirations as energy, unfolding and folding within itself. I see oscillations between  active and dormant states. I start to see Creation and Destruction….

I think of Creative Destruction, a concept by Joseph Schumpeter that has often resonated with me. Schumpeter saw human advance as a “perennial gale of creative destruction”. He likened it to the Darwinian natural selection to secure the “survival of the fittest”. What Schumpeter envisioned was the economy and society constantly regenerating from within by shedding old and failing businesses and social structures as it reallocates resources to newer, more productive ones.

I do see the path that Creative Destruction has taken in times gone by. As steam powered factories and looms closed down to give way to those with electric power. As did the horse drawn carriage give way to the automobile on the roads. And more recently, how the digital revolution squeezed out the traditional photography and music industries.

A machine perennially ON, creating that which is ‘new’ as it destroys what is ‘old.’ Like Lord Siva’s Rudra Tandava ( Dance of destruction) in Hindu mythology. Like the proverbial phoenix, rising from the ashes of that which no longer serves. And as it rises, it creates new Capital, new Thought, new Man. I see unstoppable movement. To stop would mean stopping change, evolution, progress. To stop would mean the inevitable decline.

But as I muse, I start seeing how Creative Destruction is failing today, just as it succeeded in centuries gone past.

As the old “debris” is destroyed, the ground needs to be cleared for the new to arise in a sweeping upward motion. This of course presupposes that both creation and destruction take place within the same society, winners and losers standing close and people gaining in other ways as they lose in some.

The grandeur of those great American auto towns in Detroit and the tens of thousands who worked in and around have surely gone with the wind, not to return. But as these jobs got destroyed in that area, many other value added and differentiated opportunities did arise, if not within the state, at least within the US itself. So Creative Destruction did work…….but this was last century.

Cut forward to our era of Globalisation and we see the Information and Technology outsourcing leading to near elimination of that industry in many parts of the world. Jobs destroyed in fact get created somewhere half way round the world, never to return. And with this we have been witness to the near destruction of the very communities from which they emanated

Whole countries and regions are becoming long term losers through destruction versus others becoming winners through creation. In this globalised age, the integrity of the oxymoron ‘Creative Destruction’ is being torn apart, way beyond what Schumpeter could have visualised.

And so I come back to the aspect of how the current global crisis looks through the lens of Creative Destruction. Are governments the world over in fact doing all the wrong things through politics? As they bail out top-heavy banks. As they subsidise inefficient businesses. As they prevent natural job losses. By doing these, has the world willy nilly shortchanged creation itself? And sowed the seeds of Capitalism’s own destruction?

In learning…..

Acknowledgement: Prophet of Innovation: Joseph Schumpeter and Creative Destruction    by Thomas K. McCraw, 2007.