Cleaning the Aegean Stables ourself

The just gone decade did not see any major concept in management coming up, which in itself is a great achievement. One is tired of many fads including Knowledge Management, Change Management, Balance Score Card, TQM etc.

The decade also saw the systemic failure of the Management theory that is practised today with the events that led to the Global Financial Crisis, and the subsequent recession/depression.

Though many attribute this to the greed of the top management in the Financial sector, or more specifically their remuneration that rewarded high risk investments producing near term returns, at the expense of long term institution building, I beg to differ. This was not the sole reason. Nor was the reason the failure of the regulators. For far too long our Financial Sector companies have got away with murder with fancy accounting and window dressing. Using the 'unrealized profit' method to boost the profit figures year after year is an old trick. This shall continue to happen till such time the 'independent' auditors continue to earn from the company itself. We have not learned our lessons from Enron and Arthur Anderson or Satyam Computers and PWC. Every company should be made to pay a % of its revenue to a common pool that shall be used to pay the fees of the Auditors, with the choice of the auditor being left to the regulator in charge of the pool. And we need a wider set of Audit firms. Now the business is cartelized by the Big 4- PWC, E&Y, Deloitte and KPMG. Steps should be taken to encourage the growth of tier 2 audit firms so that there is more competition. Also, the Audit firms should be asked to remain doing auditing and not venture out to other Financial Services activities like valuation, feasibility studies etc. There is a clear conflict of interest here which clouds the objectivity of the audit firms. Caesers wife should be above suspicion.

We need to take a serious look at how the Balance Sheet and Financial Reports are prepared in our Companies. The exisiting balance sheet is a relic of the industrial era, where the capital employed went directly to finance acquisition of assets, to fund expenses or to pay the wages. The tangibles could then be shown in the balance sheet. 70% of the capital deployed could be backed by assets in the Balance Sheet with wages constituting only 16%.

This has to change in the services sector dominant modern world. Bulk of the capital deployed goes towards recruting, training and maintaining high profile, high skilled employees. The asset creation is more intangible in nature, as intellectual assets. Today, following the traditional method of valuing the company, most of the services sector companies wont have any assets to back their investments. We need to have a provision for ascertaining the value of intellectual capital in the company which should APPRECIATE every year as agains the depreciation of the assets in a conventional company.

It is high time we, professional managers, cleaned the Aegean Stables ourself !

P.S: The above are some of the random thoughts based on the learnings from the past decade. Your thoughts are welcome.

Shathamanam........................

"SHATHAMANAM BHAVATHU SHATHAYA PURUSHA SHATENDRIA

AYUSHYEVENDRIYE PRATHIDISHTATHI"





"DHANYAM DHANAM PASHU PUTRA LABHAM

SHATASAMVATSARAM DHEERGHAMAYUHU"

Namaste - 2010!!!!

Yaa Kundendu tushaara haaradhavalaa, Yaa shubhravastraavritha

Yaa veenavara dandamanditakara, Yaa shwetha padmaasana

Yaa brahmaachyutha shankara prabhritibhir Devaisadaa Vanditha

Saa Maam Paatu Saraswatee Bhagavatee Nihshesha jaadyaapahaa

Thank you 2009, Welcome 2010

Subramanyam wants more articles at a higher order thinking level.

I shall try my best. But I am a simple man, with simple thoughts and deeds. This is the 298th post of the year 2009, which is not bad. It bettered the 2008 mark by 3 posts.

Readers should know how tough it is to post blogs day in and day out. Either one doesnt have an interesting subject, or one is plain tired and there were days when I just didnt want to post. There were 3-4 times during the year when I just wanted to stop blogging, but have carried on neverthless.

Let the new year put in my head wonderful new thoughts that I may share with you.

Let us push aside the old, usher in the new.

Thank you 2009, but good bye

And, Welcome 2010!

Review of the decade gone by and the Blue Moon

I remember the new year eve a decade ago. A sense of excitement and hope as the new millenium arrived (Since BC 1 was followed by AD 1, the millenium should have ended on 31.12.2000 and not on 31.12.1999. Let us not quibble on a technicality and let bygones be bygones).

Many predictions were made. Some superfluous, some realistic. But the first decade of the new millineum has been quite lacklustre in more ways than one. It has been a pedestrian 10 years, with nothing dramatic happening worldwide in a positive way.

The 9/11 attack and the US repsonse to it set the world back a few years. In fact there has been bigger attacks elsewhere in the world that resulted in more casuality. But, US took umbrage that they could be targetted by terrorists and went out of the way to wreak havoc in many parts of the world. A classic case of overkill. Terrorism is here to stay. People have fought guerilla war fare and used terrorism throughtout the history of mankind. The new age terrorist is an evolution of the similar from the past. This is not to justify them, but to stress the futility of over reaction on the part of the State, as is the case now.

The post 9/11 recession and the bigger recession post Global Financial Crisis has had a profound impact on the world order. The so called super powers and the developed countries are looking shaky economically and even politically, and we might have laid the foundation for a new world order dominated by the BRIC countries. Couple of decades later, we might look back on this decade as the time when the change really started to happen. This could also be the decade in which the hegemony of the US and US $ began its count down to its logical fall, which could be good for a world suffering from two decades of US dominance, leading to a unipolar world.

The major change the last decade has brought in is the increased usage of the internet. Though internet started becoming popular in 1990s, people realised the benefit of it only in the last decade. I, personally, am thankful for this as I was to re orient my career based on this, which led to the creation of knowledge economy..

But many technical predictions made in 1999 did not become true. We were talking of 10 GHz computers then, but we are struggling to touch 4 GHz. The computers have become faster, but not THAT faster. The decade saw the demise of desktops and the arrival of laptops in a big way. Microsoft continues to dish out trash softwares, and we continue to use them. XP when it was launched was a disaster, though it recovered later. Vista should qualify as one of the worst products made in the decade. We were talking of the demise of Microsoft at the beginning of the century with it being replaced by Open Source Software - mainly Linux. But Microsoft has emerged stronger with the OSS losing steam.

The beginning of the decade also saw much being made of convergence technology - convergence of telephony, tv and internet. Though some developments have happened on the convergence of telephony and internet, they have not been able to integrate TV into this. Again looks like this is not going to happen. Wireless networks have become the norm rather than the exception and will continue to dominate our workspace in the future too.

The decade saw the slow death of print media, with TV dominating the space vacated by it. This trend is likely to continue. The decade has been the worst for Automobiles with most of the companies facing crisis, one way or other. Driverless cars, flying cars, vertical take off cars - all still remain dreams. The GPRS is the only real new worthwhile innovation in this sector. Nothing much is envisaged in the near future too.

As the most undistinguished decade passes by, let us hope that the second decade of the millenium brings more benefits to the people than the first one.

Enjoy the New Year Eve! To add to the beauty, it is a Full Moon Day as well. Also, it happens to be the second full moon of the month, something that happens only once every 2 1/2 years. A second full moon happening on New Year Eve???? Well, you have to wait till 2028 for that. So enjoy the once in the blue moon (as the second full moon in the month is called) phenomena. Don't forget to look up on the New Year Eve!!! Having a full moon when the year is born augurs well astrologically too. Let us hope for the best.

We, the people

"Sir,Indian Democratic system has not changed with the changing times.Even some one tries to change(honarable ex-Prime Minister Sri.Ataljee)our parliment will not allow to do so.That is India, MERA BHARAT MAHAN.regardsS.SubramanyamIGNOU-Alumni"

This was the comment posted by Subrmanyam to my last post.

Indian democracy has indeed changed with times. The politicians are a reflection of the people of the country. The society has changed a lot during the past quarter of a century. The joint family has broken to nuclear families, whose first inclination is on self preservance as they dont have the support offered by the joint family in the event of any difficulties. Added to this, both the parents are working to make a good living, and they have limited the children to at best one or maximum two. The family doesnt have time for anything other than their day to day activities. They do not get involved in civic problems nor to they have active participation in nation building. They feel their role is limited to paying taxes, even that they do grudgingly. The motto of life is to get ahead in any way, damn its impact on the society. Hence, garbages are thrown out, plastic is used indiscriminiately, bribes are paid to get things moving, waste is prevalent and the kid is pushed to his limit so that he undercuts his classmates and comes ahead in the rat race. Is it any wonder that a kid, who was brought up in this environment, and who is of votable age now, gives a damn about the society and the country. The schools and colleges that should have developed the civic duty in the kid are doubly bad. The child sees in them the pinnacle of everything that is wrong with the society - Teachers who are underpaid but who have got the job by paying capitation fee, Teachers who depend on private tuitions to get the money back, the school management that squeezes the money at every opportunity, poor quality of teaching, obsolete methodology, and education limited to text bookish knowledge. When I studied, we had strong students union that used to raise protests whenever the society errs. At times, they exceeded their limits, but they served a purpose in kindling our interest in national issues. We had elections in the schools and colleges, giving us a dose of the democratic set up. It too helped. Finally, the NCC, NSS, Scouts & Guides were very active in the schools and colleges (the first too). We developed a vegetable farm in the school, did kar seva during Gandhi Jayanthi day, collected money from the motoring public on Flag Day the collections going to the Jawans and we raised money in the event of a national calamity. Today, all these things are passe. I see kids going around with ticket books for School Carnivals!!!! Do I have to say more?

Our society is made up of this generation and their self serving parents. I do a regulary quiz at my MBA class, asking my students (mostly in the age group of 23 - 45) to name all the Prime Ministers and Presidents of India. And 99.99% of them can't nor do they care. This is just an example of the malaise.

People get the Government they deserve. This is an old saying. The apathetic people of today, who are confined to criticising sitting in their arm chairs, without doing their duty of going out and vote, getting involved in the societial issues, deserve the kind of MPs, MLA's, Presidents, Governors that we are seeing today.

Subramanyam erred in one thing. Our democratic system has changed, it has changed for the worse. But this is a transition period and it will take a turn for the better in the coming decades. For that people of this great country has to awake and arise, stand up and be counted.

Do we need spendthrift President and Governors?

The President Pratibha Patil landed in my home state Kerala yesterday to attend a single official function. Well that is part of her duty as a president, even though the function is something as obscure as the Kerala Woman Lawyers Association meeting or something silly like that. What is galling is that her entourage had 49 (forty nine) people, including her husband (who is a scamster and murder accused), children, grand children and god knows who else. Why the hell should the tax payers, you and me, pay for this extravagance? Is it any wonder that we are taxed to the neck by the government?

Do a democracy like us really need the British legacy left overs of ornamental posts like Presidents and Governors occupying palatial and expensive real estate spending thousands of crores of people's money?