What are the learnings for the country from the Satyam crisis? Can the Indian economy handle such crises in the future?.
A few weeks ago I was doing an appraisal of my career thus far, with an academic with a difference. He was not only a teacher but also my friend, philosopher and guide who had the admirable quality of not mincing his words. It always amazed me as tohow clients would pay him to get abused by him! However, he was not abusing me (this time at least).
“You have done reasonably well for yourself. You are an entrepreneur with a lot of freedom. You have written a book, you teach and have some good clients,” he said. Before I could start preening, he quickly brought me down to earth. “Yet there is a gap in your achievements,” he said, “you are not on the board of any companies other than your own.” I nodded in agreement. He was right, although he did not say that he was always right like the grandmother in the Asian Paints commercial! Yet, when I saw the fate of the directors of Satyam, I heaved an enormous sigh of relief that I was not on any company’s board. Let me quickly reassure you, dear reader, that this is not about my non-achievements as much as it is about what learnings we can get out of this financial carnage which is still unfolding in front of our very eyes!
Each day a new speculation or news item rocks us. As my favourite writer would say one’s imagination boggles at the scale and the deviousness of the operations! Yet, it is perhaps worthwhile to remember what the RBI Governor D. Subba Rao had to say to the employees of the bank: “Don’t waste this crisis. Learn from it.” And while my tryst with banking ended a small matter of 28 years ago I still believe that one should listen to good advice and that is really what I shall attempt to list here, the learnings for us as professionals, brands and businesses from this enormous crisis.
A brand is more than meets the eye
It is often said that appearances can be deceptive and indeed; they often are. My first impression of Ramalinga Raju was formed more than a decade ago. I was the Executive Director of a large advertising agency and he listened to my presentation on corporate branding patiently and politely. As my favourite author would say “he could not say boo to a goose”. And yet if he has done the things that he has done then appearances are truly deceptive. Then last year I went to Satyam’s Leadership Centre at Hyderabad to deliver the keynote address at the graduation ceremony of one of their batches and was completely impressed by the facilities, the people and the training imparted to managers. This leads me to the first learning. A brand can profess to be anything and even get away with it on occasion. But the key will have to be its basic DNA and the very reason for its being not merely the cosmetic things that one notices on the outside or what is projected. What is the essence of the Satyam brand? Were the people guiding its destiny aware of it?
Passion or conflict of interest?
If you look at successful companies they are passionate. Passionate about what they do, to the extent of boring their audience and the media! Apple and Steve Jobs are passionate about technology and what it can deliver and now when Jobs is ill, shareholders and analysts are getting the shivers. Amazon is passionate about customercentricity and it shows. Toyota is passionate about quality and profits also, it seems, if the current change in management is any indication. But this, to my mind, is one of Satyam’s main problems. Was it passionate about software services or was it more concerned about land and real estate? Of course, many of us are familiar with C. K. Prahalad’s theory of core competence. What was Satyam’s core competence and were the owners being tugged in different directions by conflicting interests? This leads me to a question that is easy to ask and difficult to answer … “How passionate are you about your brand and business?” Think about it.
Tough to build, easy to lose
I spent a lot of time on the Marina beach building sand castles. In those days there were no other places of entertainment. It was a slow process but extremely rewarding till some clown would come running to take a catch and knock it over. Needless to say, he would drop the ball! While it seems quite apparent to everyone that Satyam has dropped the ball, the bigger learning is that the entrepreneurs have quickly thrown away the efforts of over two decades in a mere fortnight. Brands take time and effort to build. In a sense a brand is like crystal, it is carefully crafted and shined painstakingly over the years by the owner and yet some insensitive person could send it crashing down. Sadly in this case it is the owner who is to blame for the current catastrophe. So what is the learning? A brand is an asset. It has the capability to be at least long-term if not timeless if properly managed. Who is managing your brand? Who is its champion? Is it being delegated to people who do not care or value it? Or is it under the custody of someone who is competent?
Talk is cheaper, action is key
While the troubled organisation has multiple challenges perhaps the biggest one concerns its employees facing uncertain futures. Technology companies are perhaps more dependent for their very survival on their teams and Satyam’s entire focus has to be on keeping the teams intact if such a task is possible. Clearly, there is a need for the company to talk constantly to its employees. Yet, I remember what one of the employees said: “We want action, not feel-good mails.” In a sense this reminds me of what retail does. They do not believe in the Intranet, or have fancy posters plastered over the walls but rely on the store manager who is the friend, philosopher and guide of every employee in the store. That is what Satyam needs.
Several empowered team leaders in development centres must take control of the problem — reassure, hold hands, lead and see this crisis through. In that rests the future revival of Satyam and hopefully they get a CEO soon though a new Board has already been reconstituted. Perhaps it might be worthwhile for Satyam’s team to follow the advice given to cricket teams that tour Australia: “Do not read the papers or watch TV”, and maybe we could add one additional instruction for Satyam’s employees: “Do not surf the Net, particularly job sites!” Yes, action-oriented leadership is the key to tide over the crisis.
New company, old thinking
In the Seventies and Eighties India had its fair share of companies which had a single-point agenda and that was the “maximisation of the promoter’s personal wealth.” Of course, promoters included the families of the promoter. So brothers-in-law and sisters-in-law held board positions, ancillaries were supplied by family members. They were fiefdoms. Then in the Eighties a new generation of companies was formed with no legacies of the past. They spoke about meritocracy and professional management. Some of them, such as Infosys, spoke and worked towards “maximisation of shareholder wealth.” Others, like Satyam, were only making the right noises despite it being run on shareholder money. The 3-per cent owner of stock was running the company to maximise the wealth of his immediate family jeopardising the interests of 97-per cent owners! Clearly a throwback to the deplorable past. So the question to be asked to other companies is: “How committed are you and your company to the maximisation of the shareholder? Are you really concerned about the poor retail investor or are you betraying his confidence? Now more than ever is the time for companies to ask basic questions, however searching they may be, and try to find honest answers lest it become too late.
I am reconciled to having the ambition of directorship remaining unfulfilled in my life. But I do know that several of my friends and acquaintances hold these positions that were coveted earlier. Please revisit these positions and if you must continue, I think it makes sense to review your compensations as clearly you cannot fly in and out of board meetings and need to do your homework which will certainly make a demand on your time. Yes, a crisis is all fine to talk about, read and even learn from, but I do hope the world and the Indian economy is spared any more in the near future at least. I am not sure we can handle any more!
(Ramanujam Sridhar is CEO, brand-comm, and the author of One Land, One Billion Minds.)
8 months ago