"Candle in the wind"

There has been lots of debate in the media and in private conversations about the recent threefold increase in salary of the Members of Parliament. Most of the reactions were negative and supported by some variations of the following arguments. There are millions of poor people in India and therefore the leaders of these poor people need not be paid so much. Or the politicians are corrupt and make pot full of money; so why pay them more salary.

Even if we add the various perks that the MPs enjoy (excluding the value of housing) the cost to country of an MP compared to the cost to company of senior executives in private sector is still low. A trillion dollar economy growing at the rate of more than 8% per year, can afford to pay its senior management who takes decisions relating to billions of dollars so much. Same is true for the bureaucracy too. In fact, if we pay decent salaries we remove some of the disincentive for good, qualified and capable people to be willing to take up this challenge.

The other discouraging factor that acts as a disincentive is the cost of standing for an election. It is quite a large investment. If one is not personally rich or cannot raise black capital, it is practically impossible for him or her to stand for election. We should think about ways in which funding support can be made available for capable people to afford this cost. May be the state can reimburse the election expenditure up to certain limits for candidates who manage to get certain percentage of votes. May be we can allow companies or industry association to setup funds in a transparent manner to support such candidates.

Today a large majority of the MPs come from very rich background because only they can afford the cost. If we find ways to encourage more honest people to take up this line of profession by paying them decent salaries and helping them to afford the cost of election we may be able to get a larger percentage of such people in the mix. (I am not that naive to think that this magic solution will lead to a legislature full of angels. I am only hoping that we could find ways and means to get some more voices of reason and some more minds with commitment to the cause, to walk into the den of thieves, to build some checks and balances and to enable better decision making at the highest level)

We also need to establish processes and tools to bring about better transparency in expenditure, more directed welfare measures and citizen initiatives to expose incidences of corruption and fraud. The initiative by Janaagraha a Bangalore based NGO, along with Raghu who was a senior civil servant for about quarter of a century in setting up a portal aptly named “I Paid A Bribe” is an excellent example of citizen initiative that offers busy people to participate in a quick and easy way and to play a meaningful role. The vision of this initiative as explained by the team is as follows.

“IpaidABribe.com is Janaagraha’s unique initiative to tackle corruption by harnessing the collective energy of citizens. You can report on the nature, number, pattern, types, location, frequency and values of actual corrupt acts on this website. Your reports will, perhaps for the first time, provide a snapshot of bribes occurring across your city. We will use them to argue for improving governance systems and procedures, tightening law enforcement and regulation and thereby reduce the scope for corruption in obtaining services from the government.

We invite you to register any recent or old bribes you have paid. Please tell us if you resisted a demand for a bribe, or did not have to pay a bribe, because of a new procedure or an honest official who helped you. We do not ask for your name or phone details, so feel free to report on the formats provided”.

I believe that if each of us who make sanctimonious remarks about the level of corruption and fraud around us (especially after a glass of single malt) can spend few moments to support such initiatives we can experience some improvement in our society.

I believe that every right implies a responsibility; every opportunity, an obligation; every possession, a duty. ~John D. Rockefeller, Jr.

“Lead us not to temptation”

“Marshmallow Experiment” is an amazing study conducted by Walter Mischel, a professor of psychology at Stanford University in the late sixties. This study attempted to evaluate the ability of four year old children to delay their gratification. The children were called to a room and were offered a piece of marshmallow. They were told that they could eat it immediately or if they were willing to wait till the researcher came back in a few minutes, they could have two pieces.

Some kids ate the marshmallows immediately, some waited for few seconds and few of them could wait more than 15 minutes for the researcher to return so that they could claim their prize for delaying their gratification. Walter was trying to study the mental process of this delayed gratification. After a few years, he attempted to track the performance of these children to see if there was any correlation between ability to delay gratification and their subsequent performance. The results were exceedingly surprising. He observed a very high degree of correlation between self control and performance parameters, including SAT scores. This and the related studies have shown that performance was more dependent on self control than IQ.

It does not mean that self control is an inborn trait and cannot be learned and improved upon. There were children in the original sample, who had shown poor self control as children but grew up to have high degree of self control. (Look up this excellent article which discusses this issue in detail)

Let us take this learning to an adult, rather corporate context. Most of our jobs places two kinds of demands on us. These can be described as maintenance roles and developmental roles. Maintenance roles are usually clearly defined, they need immediate attention, the results are immediately visible and no doubt they are urgent. Developmental roles less defined, results are uncertain, results take long time to materialize and often not urgent.

Some of us let ourselves to be caught up with these urgent matters day in and day out. We practically have no time even to breathe. We have hundreds of reasons why we cannot take up any developmental activities now; whether it is reading up on related subjects, taking up a process re-engineering exercise, experimenting with a new technology tool or even finding some time to build relationships.

On the other hand, some of us will find, rather cheat, some time from our busy schedule to take up some assignments or experiments which may not be in the radar of priorities. An idea has caught our attention and we are willing to chug away at it; finding few free moments from our busy schedules. We are not sure what will come out of it. But we know we are searching for a possible tool, working on an idea that in the long run could make a difference.

If we look around we will see that most of the time people who have build something substantial, made a difference and provided visionary leadership are those who had the determination to see beyond what is urgent and willing to search for and toil for ways to make a difference. This also is nothing but a matter of self control. That may be why “Lead us not to temptation” is a key element in the Lord’s Prayer.

“There is an eagle in me that wants to soar, and there is a hippopotamus in me that wants to wallow in the mud” -- Carl Sandburg, American Writer, Editor, and Poet

Conquering that fear

It was bright and sunny. The sea was calm but slightly wavy with a nice light breeze. The single seater laser (dinghy class) sail boat which I was sailing was cruising along smoothly . The open sea and the calming breeze always had a mesmerising charm and made me feel one with nature. Suddenly the wind started picking up speed. My boat too responded like a stallion that has been spurred. With the adrenaline rush I felt that I was on the top of the world. Nothing seemed to matter other than the feeling of speed, power and control as the boat raced forward skipping up and down the waves.

I was practically horizontal with my torso jutting out of the boat with the sheet (the line that controls the sail) in one hand and tiller (that controls the rudder) in the other hand. Suddenly the wind shifted. I was taken unawares and the boat turned turtle. This happens occasionally when we sail a little boat; nothing to worry about. There is a simple way to turn it around; a matter of technique than strength.

I had already jumped into the water and was hovering around the boat enjoying the waves. Then I tried to turn the boat over. Suddenly I had a severe catch in my shoulder muscle. I could not move my right hand. I realised that I was in trouble. Tried some work around; but, nothing would help. I just could not move my right hand and it was hurting badly. I hung on to the boat and decided to wait it out. The wind was getting harder blowing away from the land and I was drifting into the sea farther and farther.

This happened, when I was based in Jakarta for couple of years. . I always loved the sea and sailing was my passion. When I realised that there was a sailing club not so far away (about 150 km) from home. I was excited. I immediately signed up and used to visit the club at least twice a month. I would for the weekend and sail about four to five hours both the days. I enjoyed the experience thoroughly.

Now as I was drifting deep into the sea with one hand almost paralysed, the realisation dawned on to me that I could be in deep trouble. Minutes were ticking away. There were no boats to be seen anywhere near. . As it was lunch time all the other sailors were back on shore for their lunch or siesta. I started to feel scared; scared at the prospect that I may not return alive. A watery grave appeared a distinct possibility. There was nothing that I could do except pray for divine intervention.

Faces of that little girl who follows me calling me dada, her mother, my mother, my friends; all started fleeting in front of my eyes. Each minute felt like an hour. I felt the energy draining out of my body. I hung on there with a faith that there is somebody who looks after me and without his wish nothing will happen.

I closed my eyes and tried to relax. It was almost an hour since my boat had capsized. Then suddenly I heard the roar of a motor boat. I thought that I might be dreaming. I opened my eyes and looked around, and there it was; the rescue boat looking for me. Oh! What a relief.

They reached near me. I was too tired even to climb into the boat. They had to drag me in. I lay in the boat thanking my luck and the supreme intervention. When I reached the shore I had to be practically carried out to the hammock. Liz told me as she was relaxing at the shore she had a uneasy feeling that something was wrong. So she looked far and could see no mast. She told the rescue team that I may be in trouble. They told her that as I was a good sailor so there was no need to worry. They felt that I might have gone around a small island nearby and that is why the mast could not be seen. But she insisted that they take a look; and that saved my life.

I had a cool drink and lay down for an hour. Then I decided that I had to go out for one more trip immediately. I knew if I don’t do that then, the last memory in my mind would be the scary experience and I could permanently give up my confidence to be out in the sea.

I got up and walked to the boat. My wife and friends thought I was mad and enjoined me that I desist from this. But I got into the boat, went back to the same spot where I was drifting helplessly for an hour.

Then I returned. . I knew I had conquered one fear. The lesson stayed back in my mind. One way to overcome the fear is to try the experience once again (so long as it is repeatable).

Courage is not the absence of fear, but rather the judgement that something else is more important than fear. Ambrose Redmoon

A leap of faith

Karna is a character from Mahabharata. He was the son of Kunti, the eldest brother of Pandavas. (As he was born before Kunti was married, he was abandoned as a child and only few people knew of his true parenthood) He was a better archer and warrior than Arjuna, the hero of the Pandava clan. But unfortunately he had a curse on him. On account of this curse, he would lose his faculties and forget his skills when he desperately needs them in a matter of life and death. If we explain this curse in common terms, we can say that though Karna was better skilled, when it came to performance under stress, he was not as good as Arjun..

In real life we come across people who suffer from this Karna complex. When faced with an emergency they freeze over; forget what they are supposed to do and can’t remember what they have learned. They break-down under stress.

In some professions like flying and fire fighting where risk is physical, the importance of performance under stress is well-appreciated and there are various training programs to strengthen this skill. But in many of the normal managerial decisions where the risk is not physical, not immediate and difficult to map to the decisions taken, the importance of this factor is often not properly acknowledged. In these roles we look for experience, intelligence, skills and knowledge; but often fail to recognize the skill for of decision making under stress.

This can be disastrous; especially because most often the risk faced in the managerial roles is psychological and not physical and we don’t realize how such stress can affect the quality of our decisions. Even when we recognize the effect of stress on our health, we ignore how poor decisions that are detrimental to the organisations may be taken on account of that.

Our schools don’t train us on this (in fact these days, we mollycoddle our children so much and we try hard to remove any element of stress they face that they could grow-up expecting fairy godmother to make their life easy), our selection processes do not measure the candidate’s ability to perform under stress and our induction programs and organisational trainings do not teach this either. The priority is given only to skill, knowledge and experience.

Most people will buckle under stress at certain level and behave irrationally or take irrational decisions. The threshold will vary from person to person. At higher levels of responsibility we need people with a higher threshold level. We need to recognize this factor as a critical element in leadership development. This is important because whether in a fire-line or company venue, making quality leadership decisions under conditions of stress and ambiguous authority is not a natural capacity. [1] Natural human reaction in times of risk is ‘fight or flight’. Training and practice can help us to override this natural reaction after due consideration of alternatives, probabilities and resources.

But training cannot guarantee how we will react. It is also a question of how we are made up. That is why we have to be careful in our selection process for assignments that have high element of stress, to ensure that the candidate is tested for this trait.

Very often the organisations do not give due importance to this when they promote people to positions of power and make their selection primarily based on skill, experience or even seniority. The worst case is when elevate a brilliant mind with a very low threshold for stress. When they are faced with stress they get scared and they don’t want to admit it. They get irrational and they don’t realise it. As they are quite bright and articulate they will use these skills to rationalise, argue and even bulldoze with a set of specious arguments , make up all kinds of theories and put forward a collection of highly improbable eventualities; all to run away from taking a decision and owning it up.

They do not want to take any risk, will not take timely decision, set up umpteen committees, surround them with a variety of consultants with high pedigree and take everybody for a merry go around. Their subordinates will be intimidated and colleagues will get frustrated. Eventually the team turns out to be a collection of technicians and clerks with no imagination or creativity.

Organisations will have to be conscious of this critical skill. It has to form a part of our recruitment, part of training and part of performance evaluation. Especially when we select people for leadership positions we need to find ways to judge the threshold stress level at which they will start losing their rationality.


Two roads diverged in a wood, and I... I took the one less traveled by, and that has made all the difference."~ Robert Frost


Reference: [1] Developing Leaders for Decision Making Under Stress: Wildland firefighters in the South Canyon Fire and Its Aftermath.
MICHAEL USEEM, Wharton School, University of Pennsylvania; JAMES COOK, U.S. Forest Service and National Interagency Fire Center ; LARRY SUTTON, U.S. Bureau of Land Management and National Interagency Fire Center

“Monkey and Me”

I was surprised when I read in National Geographic.Com that “A comparison of Clint's genetic blueprints with that of the human genome shows that our closest living relatives share 96 percent of our DNA. The number of genetic differences between humans and chimps is ten times smaller than that between mice and rats.”

With such few percentage point differences, see what we have managed to achieve in comparison with our simian cousins! We have built cities, cars and aeroplanes and have walked on moon while our cousins are still hanging from trees. Truly remarkable.

Then recently I came across a book written by Mr.Richard Conniff titled “The ape in the corner office”. This book provides a nice exposition on the similarity between the behaviour of apes and human beings. The focus of this book is more on the human behaviour in corporate setting.

The strategies we use to establish our ‘alpha’ status, grovelling and flattery we employ to get our way, the fights we have and how we makeup, how we use language to groom our colleagues and our bosses; all appear to be the same what our ancestors have been employing for millions of years. Just that the scientific progress helped us to have better and diverse tools for innovative implementation of these strategies!!.

Look at the way the Chimpanzees establish their pecking order and the alpha status. It is not just based on brute force. It is derived from a combination of the leadership skill, courage to take decision, strength of the network and also cunning and political manoeuvring; just like human organisations. The relative proportion of each element may vary. When the proportion skews more towards cunning there is a higher chance for group disintegration.

Many scientists have pointed in spite of all the scientific progress, the source of our base emotions and insecurities have not changed for millions of years. Now it has dawned on me that it is not just with respect to genes that we are 96% apes, many of us in our behaviour and inner desires resemble our ancestors more than we think we do!

Therefore, when we learn to look deep and understand the base emotions and inner drives that provoke us to act in certain fashion we may be able to have a better control on ourselves. This understanding could also help us in our relationships as it might give us a perspective on how the other person could react or why the other person reacted in certain manner.

“We are just an advanced breed of monkeys on a minor planet of a very average star. But we can understand the Universe. That makes us something very special.” Stephen Hawking

Competitive Advantage - A case for blogs and wikis

Mat Ridley in his seminal article “Humans: Why They Triumphed” has put forward an interesting argument that the dramatic progress of Homo sapiens in the recent past is not primarily on account of the increasing size of brain or dramatic increase in human intelligence. But, it has been achieved by the collective intelligence of the society arising out of continuous exchange of ideas. We have managed to build on what others have built. Sir Isaac Newton also expressed this view when he said “If I have seen further, it is only by standing on the shoulders of giants”

The progress in commutation and in communication has enlarged opportunities for people of different culture and experience to contact each other and to exchange their ideas. This has further accelerated the rate of progress. As Mr Ridley expressed brilliantly “The process of cumulative innovation that has doubled life span, cut child mortality by three-quarters and multiplied per capita income nine fold - world-wide - in little more than a century, is driven by ideas having sex”

Books, Radio, TV and even internet (web 1.0) while helping to distribute thoughts and ideas across very long distance, enabled mostly one way interaction; sort of broadcast. Email brought about fast and cheap two way communication and it exploded opportunities for human collaboration.

The recent innovation in Information technology (web 2.0 also supported by progress in mobile technologies) has brought about dramatic changes in communication by making it “two-way” enabling seamless collaboration.

Very often these tools for two-way collaboration like face book, twitter, wiki and blogs are seen by many as either as geeky or as non-serious pastime, juvenile indulgence or even waste of time. Therefore many companies and organisations prohibit access to such tools as they see these as risky distractions.

As these tools are seen as such distractions, the senior management is not giving due attention to how these concepts can alter the way we work and alter the way we collaborate. With so little interest (or so high ignorance), we are unable to harness the power of these tools.

The study by American Sociologist Mark S. Granovetter on the Strength of weak ties is quite relevant in this context. According to this study, for most people their network friends with whom they enjoy strong relationship is quite small, limited and almost culturally and intellectually incestuous in nature. Therefore it is the weak ties between groups enable us to collaborate with a more divergent set of people.

It is in this area that collaboration tools like blogs, wikis and social networks offer powerful, intuitive and convenient means. It can help us to build larger network of strong ties and build and maintain a larger network of weak ties. Wikis help in collaborative developments, Face book kind of tools helps to keep the links with a large number of friends.

Many organisations have woken up to these challenges and have established innovative ways of harnessing the power of this collaboration. The book published by Andrew McAfee, Principle Research Scientist at MIT’s Center for digital business titled Enterprise 2.0, the new collaborative tools for your organisations provides excellent insights to why and how on these tools and it is worth reading. I have drawn on the insights from this book to write this post.

At present this is relatively a new concept and not widely adopted. Therefore, those who can exploit this early will be able to build significant competitive advantage. Once this idea gets commoditized and becomes the norm for most of the players, the extent of competitive differentiation possible with this may come down.

‘If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.’ — George Bernard Shaw

Of being “True and Fair”

When an audit firm undertakes audit of financial performance of a company, the seasoned partner attempts to make a judgement on how well the financial statement represents the financial health of the company and the financial integrity of the management. Some years ago he made this judgement not based on compliance to a set of rules and standards but also on a variety of factors which, based on his experience, helped him to make a true and fair judgement.

There have been many instances of compromises to the spirit of the audit and many unscrupulous managers and auditors connived to hide information and to defraud the shareholders and or the government. This kind of degeneration forced the profession to come up with more and more standards and rules. The pendulum swung the other way with auditors focussing primarily on compliance to rules. The management learned the trick of demonstrating technical compliance and auditors were happy to play along.

The perils attached to this are now getting evident and there is a serious discussion among the accounting professionals that there is a need to find a balance. A sensible balance of using both rules and principles to judge whether the statements are indeed ‘true and fair’ with focus shifting more to principles.

Similar swings have also been witnessed in a variety of areas which require checks and balances. We moved to rule based regulation and we are now swinging back to principle based regulation. As the UK Financial Services Authority has portrayed “Principle based regulation – focussing on the outcomes that matters”.

Even the perception regarding the role of company board is undergoing a change. Its primary role is not only to protect the interests of the absent shareholders, but also to act as a guide and a sounding board for setting the strategic direction of the company.

Such shifts in disciplining methods are not just in the governance models of corporate and regulators. We see it in educational institutions and even family lives. In earlier era the parenting role included strict discipline of rules, timetables and targets; there was friendship and authority. The schools also followed almost regimental structures. Then there has been shift where the role of the teacher and even that of the parents have become primarily advisory in nature. This shift is quite predominant in western cultures. The safeguards that were built to restrict parental abuse and cruel treatment by teachers are now being misused. We see similar ideas being propounded in India too.

The society in now paying the price and there is a great deal of concern on the falling standards of education and falling standards of discipline and value system. I found the thought expressed by Michael R LeGualt in his book ‘Think” relevant in this context. “It seems clear that in setting out to be mainly the child’s friend or self esteem coach a parent is surrendering his or her most important role in shaping child’s values and character-that of mentor, guide and authority”

Such pendulum swings remind us of the need for strengthening the values right from the childhood and the need for a balanced approach instead of carrying any solution or idea to its ridiculous extent. This will be possible only if we have regulators and legislatures who have the vision to build clean institutions and the courage to stand up for what they believe is right. This is often available only in ‘limited edition’. When we see such leadership, it is our role to support them.

“Character is doing the right thing when nobody's looking. There are too many people who think that the only thing that's right is to get by, and the only thing that's wrong is to get caught.” ~J.C. Watts

Octopus Paul and his run of luck

Octopus Paul has added an additional element of excitement to the football mania that the world cup has unleashed. Even though I am not such an enthusiast of football, I still ask how Paul’s prediction has fared. It has added another topic of conversation, another exciting piece of trivia.

Do I believe that there is something divine or mystical about Paul? No, I don’t. Is there anything special about Paul? Yes he is one lucky fellow who has managed to get four out of six predictions in the Euro cup 2008. In this world cup the eight out of eight correct he has managed had a probability of success of 1/ 256. Now we have parrot Mani and the Indian Louse and many more in this game.

Not as lucky as the guy who gets a first price in lottery with few million contestants or even the boy who tops in IIT entrance exams with a million aspirants.

If he was a human being, there would have been books written by him and or on him about his theories on how to predict successful football teams.

He would be a bigger hit if he could repeat his luck in capital market. In fact we often see some lucky players who have run up such lucky streaks for some time and many of them have surely written their books.

This is true of most of what happens in our life. The number of variables that affect most of the outcomes, (whether it is in picking a stock, or in diagnosing an ailment or in choosing a job option) in long term or short term is way too large and complex for anyone to master.

What we can do when we specialise in a field, or work on a project is to get a better idea of the factors that may have a very high probability and or high impact on the outcome and then proceed.

Ceteris Paribas (everything else being equal), the success of one person from a pool of equally capable individual, is just plain luck. So when we improve our skill and knowledge, we improve the probability for a favourable outcome; almost like loading a dice.

On the reverse, when we lose in spite of the excellent preparation we have made or the skills we posses, it could be just being plain unlucky.

The religious minded will ascribe this as the wish of god or fate.

I am not questioning the existence of god, but reminding that even god would want us to be prepared and to exercise our choice (“It is for me to choose”) and not put the blame on him!

We can’t do anything about the genes we are born with or the environment we are born into. But, we can try to improve the probability of successful outcomes by enhancing our expertise, network and resources.

“Luck Favours the Prepared” Louis Pasteur

Sleeping with the enemy

Human beings are social animals. We have friends and we have enemies. They are nothing but two sides of the same coin; often changing from one form to another based on context or on situation.

What drives our enmity to somebody? The two key factors that influence this are Desire and Pride. Desire on one extreme could be the greed for more and more and on the other extreme it could be the need for self preservation, protection of what we hold precious or demanding what is due. Similarly, pride on one extreme could be the bloated ego or on the other extreme could be defending our dignity.

When we have a conflict with another person about something we desire, or when he hurts our pride in some fashion he becomes our enemy.

The degree of conflict or the stakes associated in this conflict will also determine the intensity of our hostility. If we are fighting for a large material benefit or preservation of our dignity and honour we may even fight harder.

Enmity is also contextual and situational. When Sachin and Jayasurya are playing for India and Sri Lanka they are competing and they are enemies during the game. But when they are playing for Mumbai Indians they are friends. May be in private life they would be friends. Similarly, if I am working with one Mutual Fund, I will be fighting and in competition with other Mutual Funds; maybe I will even try a few tricks to make my competition look not good enough. But when all the mutual funds are fighting with the insurance industry or we are lobbying with the regulator, we are all friends. Mukesh and Anil Ambani may have been fighting with each other to further the interest of their companies and also their personal pride.

That is why sometime the enemy of our enemy becomes our friend. Remember the famous quote from Mr Bush, the past president of America. “You are either my friend or my enemy”.

It is also person dependent. Some people are more tolerant about desire and conflicts associated with it; some people are more accommodating about hurt to their ego so long as there is a material benefit.

When we deal with people, whether in business or in friendship, we need to develop a skill to assess how they would react if and when there is a conflict with respect to either their desire or their pride. We need to also be sensitive to how the reaction would differ as per the situation, the people present or the stakes involved.

If the other person is very greedy, he may use any means to get what he wants or on the other hand we may be able to buy him at a price. If the other person is very proud and hot-headed, it may not be a good idea to needle his pride.

We have to also factor in how powerful, the person with whom we have a conflict is. The more powerful we are, in relation with the other person, we have a better handle. But we need to keep in mind, that the power is determined by not just what he possess or what his position is; but, also by what he perceives that he has to lose. That is why one suicide bomber, can inflict more damage than a battalion of regular soldiers.

“In a war, just or unjust, in the end nobody wins”

“Vanity my favourite sin”

Nuremberg trials are a series of military tribunals held by the allied forces who won the Second World War. These trials were held to prosecute members of political and military leadership of the Nazi Germany for their crime against humanity. In most of these cases, they were being prosecuted for what they did, for their obedience to their superior’s commands as expected from a disciplined officer of any organisation, more so of the armed forces. Therefore, a certain set of principals had been evolved to determine what constitutes war crime. These principals called the ‘Nuremberg Principles’ had been created by the International Law Commission of the United Nations.

It is now accepted at a philosophical level, that when we act as per the directions of the superiors, we also have the moral responsibility to assess the fairness of the actions and express our dissent when those actions are against the larger interest of the society.

The issues associated with ‘blind following of the order from the superior officer’ are not just a concern in military actions. We face it in our day-to-day life as an officer of the government or even of commercial entities. It is practically difficult for many of us to act on a moral choice to “blow the whistle” as the potential retribution of such action could have an adverse impact in our personal life.

In many cases, the individuals who have questioned the actions of their superiors have been harassed and had to suffer significant damage to their life and career. This include dismissal from job, coming in the way of he getting alternate employment, tarnishing his image so on and so forth.

Society has been trying to evolve legal structures to protect and encourage citizens to ‘blow the whistle’ when they come across un-ethical or fraudulent actions and to give them the right to demand information that could elicit truth.

The listing agreement between the stock exchanges and the companies has a provision (though still non -mandatory) that all listed companies should have a published ‘whistle blower policy’ for employees to report instances of unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy.

The “Right to Information Act” tries to provide a strong tool in the hands of the citizen to demand access to information regarding the actions of the government.

This legal enablement has helped to bring about more transparency in administration and corporate governance. One of the main criticisms against these provisions is that many a time these are misused to further private agenda, inter-personal conflicts or even to clog the pipes of the administrative machinery.

In spite of all these, India is still rated high on corruption both in private and government sector. The tag line of an article written by Mohan Murti (former Europe Director, CII, and lives in Cologne, Germany) in Business Line titled “Is the nation in a coma?” reads “Europeans believe that Indian leaders are too blinded by new wealth and deceit to comprehend that the day will come when the have-nots will hit the streets”

Corruption is not just with respect to monetary returns for favours dispensed or deviation from law; it is also applicable to the actions of commission and omission by the so called clean and honest people, that pander to their needs of ego satisfaction, self glorification and just plain megalomania. As John Milton played by Al Pacino in the award winning movie quips “Vanity definitely my favourite Sin”. And un-ethical actions that satisfy this vanity is equally despicable as the actions that layers the pocket.

While continuous evolvement of the legal framework can help the cleansing process, each us has a responsibility; the responsibility to act ethically and to question ethical violations (especially the ones which are technically and may be even legally correct) that hinders the path to building a cleaner society that respects decency and fair play more than the smell of greenbacks and self edification.

“Nearly all men can stand adversity, but if you want to test a man's character, give him power”. Abraham Lincoln

You don’t get rich if the government prints more money

This is the season when the board examination results (for class 10 and 12) are declared. Many schools with 100% pass rate, thousands of students with more than 90% marks and there is excitement all around. It feels nice to join the celebrations. I also read that a child who got 98% in class 10 could not get admission for the course she wanted in the college she preferred.

But then I can’t help having some contrarian thoughts. Normally, when an examination paper is set there is a sort of algorithm that is used. 50 to 60% questions check the basic level of learning of the topics, 20 to 25% check a little deeper understanding and the remaining evaluate the ability to apply the learning in practical applications and/or the ability to interpret.

When students prepare for the exams, those who just want to pass can afford cursory studies and those who want to do well will have to work harder. The results will more or less be able to differentiate quality and hard work.

Then everybody will not get good marks. But does it really matter? What matters for the admission to next level are, either marks in the board exams or scores in the qualifying entrance examination. If it is the former, then it is not the absolute marks but the relative marks that will determine. If lots of people get 99% cut off marks for admission to the next level may be 97% and if only few get 99% then the cut off could be 80% and so on.

If the admission is on the basis of entrance examination, what is critical is the depth of understanding. Here preparation for a difficult board examination may really help in the preparation for the entrance examination.

Today in India we are seeing competition among the various academic boards (CBSE, ICSE, State Boards and so on) in giving more marks to more students more than strengthening the learning process; sort of academic inflation.

If I use an example from economics, the country cannot make every citizen richer by printing money and distributing. It has to strengthen health, education and infrastructure, it has to provide guaranteed titles to property, it has to ensure rule of law, and it has to empower people to build on this.

If there are lots of aspirants who don’t get admission on account of poor marks, the solution cannot be found by giving everybody more marks. The solution is to have more colleges. Dilution of standards and liberal valuation just provides temporary elation and is almost like a peg of good whisky!

True education is what remains after one has forgotten everything he learned in school.
- Albert Einstein

Question of Existence

We humans are part of a giant living system. We are unique, independent, and self contained; but we are also part of the whole and have no existence in isolation. Take a handful of mud from the top soil of a river bank. Is it live? Ask a farmer. He will tell you that it is bustling with life. From micro-organism that we can’t see to insects, to worms! Does it have a collective property? Yes it has. It is fertile. As a combination of those millions of creatures that goes about its routine it becomes a fertile block. Devoid of these teeming life forms, this same mud would be dead.

Look at our human body. Ask a doctor! He will tell you that our various body parts are swamped with multitude of micro-organisms and without them there, we would not survive. If by some magic we manage to get rid of them, we can no longer sustain.

Sometimes some of the organisms mutate and grow too fast or virulent that it destroys the balance. Then the nature has its own way to contain and curtail and bring the balance back.

Our mother earth too, with multitudes of creatures, collectively makes a living system. Though often we see ourselves, fallaciously, as masters of this planet, we are nothing but one of the component that sustains her (or that is sustained by her). In the recent past, we humans have been multiplying too fast and turning virulent to the detriment of our environment, threatening its balance and our own survival.

We humans are endowed with intelligence to understand and we are also way up the chain of enlightenment that we can observe and realise the consequences of our actions.

We have two choices. Learn to discipline this run away plundering or let nature come at us with a heavy hand.

Let us look at our life from a different perspective. All through the past few thousand centuries some men, to some extent attempted and managed to be in synch with the nature and understand, appreciate and connect with the big picture of cosmos. From this connection they shared their insights as Bible, Vedas, Upanishads, Khuran, etc; the windows to this cosmic force and a tool for our spiritual linkage. We have seen, that in spite of rational thinking and scientific progress these truths still remain and sustain, though the rationalist may point out the conflicts and disconnects.

With a large majority of human beings being restricted by this rationalist way of thinking, the link that human beings have with the ‘cosmic truth’ appears to be getting weaker and weaker and the progress in our spiritual maturing appears to have been arrested.

From both perspectives, it appears that unless we realise our irresponsible exploitation of our ‘mother ship’ earth and unless we try to re-synch with the cosmic forces, the nature will soon hit “ctl, alt, del”.

“It is not that science and religion are in conflict; it is just that science is too young to understand” Unknown

“Beg to differ”

Some of my friends are pilots. One of them once explained to me an interesting point of view. According to him, planes are primarily designed to fly and not to land as most of the time it is up in the air and flying. Therefore, landing can be seen as a managed crash. That is why more accidents have happened during landings and take-off than during cruise.

In a similar fashion, most large organisations particularly bureaucracies, are designed to maintain status quo. One of the primary considerations of such design is to have policies, procedures, rules and conventions that are not adventurous and try to prevent misuse and misappropriations. Such excessively straight-jacketed organisations limit opportunities for human innovation and initiative. Adding on to this is the status quo bias (1) which is inherent in most human beings, and this encourages these organisations to resist change intensely.

For these reasons, transformation that is a game changer becomes a difficult challenge to pull through. However, occasionally when we get a leader (or a team) who wants to make things happen and who has the courage to manoeuvre around the hurdles that is an inherent characteristic of bureaucracies (whether public or private sector), then we witness transformations in its true sense.

Whenever such a combination of stars comes together, we should work in overdrive and try to achieve a level which is irrevocable. If we manage to reach this level, we can be reasonably confident that the transformation will be long lasting if not permanent. This is because even to screw -up something there has to be people with courage and initiative.

One of the conflicts that we often face, especially in social/ public leadership, is the choice we are forced to make between the leaders who deliver and the leaders who are good an honest. This is because the probability of the good and honest leader being a courageous leader who delivers is often not so high. The good often get caught within the technicalities and interpretation and focus only on doing things right and not doing the right things.

I am sure all of us will have number examples on this to share. One of the incidents narrated by Capt Gopinath in his biography stands as an excellent example and is entertaining by being so ludicrous.

When he first acquired fixed wing aircrafts for Air Deccan, he and his senior colleagues went with their family to take possession of the aircraft. Their first port of call in India was Mumbai. He was proceeding from Mumbai to Bengaluru next day morning. His aircraft was allowed to park in a far end of the airport and none of the passengers and pilots were allowed to come in to terminal as the customs formalities of clearing the aircraft was to take place in Bengaluru. The aircraft had no fully functional toilets and all the passengers including women and children and the pilots had to go behind the bushes in the airport to answer to the call of nature. This was in spite pleading to allow ladies to use at least the toilets in the terminal.

So much for doing things right. On the other hand the greedy and selfish leaders may put their might behind honourable causes (if you present the right incentive to them) at least because it offers them good public relations. The information available in public domain about what happened in case of IPL is an interesting case in point.

So the second best choice for the society is to have a few of such elements playing some key roles. If we also have a process in place to contain and discipline such innovations we may be better off than merely having leaders who just try to maintain status quo.

Is this the challenge of democracy?

"The status quo is the only solution that cannot be vetoed," Clark Kerr

(1) Read up some more on Status Quo Bias

View more presentations from Russell James.

“What an idea Sirjee”

We often face situations in which we have to give advice to others; it could to our friends, relatives, colleagues or professional associates. Sometimes it is free advice because we want to help or sometimes it is a part of our professional duty.

We undertake this role with varying degrees of involvement. The stronger our bond with the other person and/or stronger our concern and interest (sometimes private agenda) in the matter under consideration, the higher would be our involvement.

However, the one thing we often forget is that, when we give advice our role is just that; to give advice and present a strong supporting rationale behind our advice. Then we should to leave it to the other person to take his call.

But what often happens is that once we give our advice, we develop certain expectations. Expectation about acknowledgment of our contribution, expectation about the credit for our advice or expectation about the pleasure of seeing the advice being given heed to. We want to hear them exclaiming “what an idea sirjee” like the idea cellular advertisement. If none of these happens we feel disappointed. We may also get upset and irritated. In some extremes, the irritation starts showing in the way we deal with that person. Very often we would refuse to give any further advice.

In such situations, we often end up being the loser in the whole transaction, because it has made us unhappy. A better idea will be to treat this process as a learning exercise. The other person has presented us with a problem and we got an opportunity to study it without being affected by it, see it in a different perspective and make a valid contribution. Take it as a case study and see how it adds value to us.

If the other person follows our advice, we get a chance to test our hypothesis or theory or strategy. If he doesn't, and follows another course, then also we get a chance to learn. If it turns out well, we learn a new way of approaching the problem. If not, we may get a chance to do an autopsy and learn what not to do. Itcould also teach us something about why the other person did not accept our advice. May be he got a better advice. May be when all factors were considered he had to take a different course of action. May be our advice was not good enough. May be we could not give enough confidence to the other person. May be he is not so bright, may be he has some other agenda!

We looked at how to give advice. Now, let us also take a look at how to take advice. There are times when we get advice from another person. Sometimes we may actually pay somebody to get an advice.

Even here we may fall in the trap of proving our point or feeling satisfied by comparing with other person to see how smart we are. Here again it is better to take the opportunity to listen and learn.

We should present our problem/ concern/ issue to the other person whom we have requested for an advice. Then we should let him, rather make him speak. There is no point in trying to prove to the other person our smartness or biasing his thoughts. Listen. I know a person who call experts to his office after paying them a fee and then spend the whole time propounding his ideas. There no point in being insecure or insensitive.

We should also be able to look at the advice given to us with an open mind, and evaluate it in its own merit. At this point we should avoid being clouded by our biases, fears and preferences. Only then can we take the full benefit of the advice. The higher we go up in our career or more power is associated with our position higher the risk of falling into this trap.

I don’t deny some advice is not worth pursuing. Finally it is our call any way.


“Advice is seldom welcome, and those who need it the most, like it the least.” Lord Chesterfield

To be or not to be –IV: Challenges of Regulation

I remember the two bullies who studied with me in high school. They intimidated poor souls like me quite often; had no shame in forcefully taking nice goodies from our lunch boxes, flick our chocolates, force us to let them copy from our assignments and what not. Absolute rascals; but they were good athletes. They bought honour to the school in every district and state championships and so they were darlings of the faculty. Every once in a while they got caught for their transgressions; will get few raps on the knuckles, may be few days of suspension and then they were back in action. I am sure many of you would have had similar experiences.

I remembered these bullies when I was reading comments by Hank Paulson (US treasury secretary July 2006- Jan 2009) in 2006. “If you look at the recent history, there is a disturbance in the capital market every four to eight years; savings and loan crisis in the late ‘80s and early ‘90s, the bond market blow up of 1994 and the crisis that began in Asia in 1997 and continued with Russia’s default on its debt in 1998. I was convinced that we were due for another disruption” (Referred in his book “On the brink”). He was proved right within few months.

The same book also refers to a remark by John Mack CEO of Morgan Stanley in 2008 on the cause of the melt down. “Greed, leverage and lax investor standards; we took conditions for granted and we as an industry lost discipline”

This is not just the cause of 2008 melt down; it is the cause of many melt downs. Such behaviour appears to be normal in this line of business. Take a look the civil case filed by Securities and Exchange Commission (SEC) against Goldman Sachs in April 2010 charging ‘fraudulent misconduct’. This is not just an isolated incident as we can see from the following.

“NASD fines Citi, Merrill, Morgan Stanley $250,000 each” The America's Intelligence Wire July 19, 2004” (i)


“On June 6, 2007, the NASD announced more than $15 million in fines and restitution against Citigroup Global Markets, Inc., to settle charges related to misleading documents and inadequate disclosure in retirement seminars and meetings for BellSouth Corp. employees in North Carolina and South Carolina.” (ii)


“Merrill Lynch & Company said yesterday that it would pay $100 million in penalties to New York and other states and change the way it pays stock analysts to end an investigation that its chairman said had damaged the firm's reputation. “ (iii)

Citigroup Inc. agreed to pay a $70 million fine for practices in its Baltimore consumer finance unit, including raising the cost of loans to poor and credit-starved customers by requiring them to have unnecessary cosigners” (iv)

“Morgan Stanley, the second-largest U.S. securities firm by market value, was fined $10 million by the Securities and Exchange Commission because it failed to guard against insider trading for at least eight years. The fine was the biggest ever for a violation of surveillance rule” (v)

These are just a few samples. Do a Google search with the word ‘fine’ along with the name of any of the large investment banker; you will be surprised at the frequency of serious transgressions which are not just fines on technical violation but fines on substantive charges. We will wonder aloud “Will we ever learn?”

Compounding such practices is the frequent roll out of complex financial products which are often too complex for the investors to understand. Hank Paulson’s (who has been the CEO of Goldman Sachs before taking over as the Treasury Secretary) reference on the proliferation of product innovation is quite blunt on this. “In theory this was all to the good. But there was a dark side. The market became opaque as structured products grew increasingly complex and difficult to understand even for sophisticated investors”

This is why we need innovative regulation to match with the innovations in market place. In his blog post on regulating the new financial sector, Prof. Willam Buiter has given a very interesting suggestion “the same rigour used by US FDA for pharma and medical products should be insisted for introduction of financial products to broader market does not look out of place in the context of the recent history”.

We also need to think innovation in the checks and balances that we build in the system. Quoting Paulson again; “The regulatory structure, organised around traditional business lines had not begun to keep up with the evolution of the markets”.... it had led to counterproductive competition among regulators, wasteful duplication in some areas and gaping holes in others”

We in India have few important lessons to learn from all these.


To prevent run-away innovation that is rash and irresponsible, we need to put in place the right regulatory establishment to avoid the same kind of mistakes that has been laid bare in front of us. If we expect responsible behaviour and self regulation collectively from the guys running financial markets we are asking too much. We have not seen such industry wide responsible behaviour anywhere in the world.

Regulation does not mean micro-management of day-to-day functioning. Regulator’s role is to set the rules of the game and keep a watch whether the players are playing as per the rules. He also has to keep a look at the impact of changing structure of the game and modify the rules. If I give an example, the rules of T20 is not exactly the same as in the case of test cricket though both are cricket. To make this possible the regulators will have to be able to attract people who have the right experience, the right domain knowledge and most importantly the right attitude who can establish appropriate processes and use the modern technology tools and match or better industry strengths. This is the challenge of governance.

One of the major suggestions on regulation we often hear is to curtail all innovations; I don’t agree with this. We have enormous potential for modernising the markets with innovative products. If we say that we will be insulated from the turmoil on account of lack of market sophistication, we are not being very bright. It is like saying that I never fell because I never rode. A sophisticated market is a prerequisite for growth. In this journey we will make mistakes; and these mistakes will trigger better controls and that is the democratic process of growth. To go into hibernation is not the solution. Look at our favourite sport, cricket; from leisurely five day test matches we have progressed to one day internationals and now to 20 over matches keeping pace with our life. Notwithstanding, the controversy of IPL, the innovations have only improved the game on multiple dimensions.

“ We should and can have a structure that is designed for the world we live in, one that is more flexible, one that can better adapt to change, one that will allow us to more effectively deal with the inevitable market disruptions and one that will better protect investors and consumers.” Hank Paulson


(i) http://www.accessmylibrary.com/coms2/summary_0286-22046900_ITM
(ii) http://en.wikipedia.org/wiki/Citigroup
(iii) May 2002, New York times http://www.nytimes.com/2002/05/22/business/100-million-fine-for-merrill-lynch.html
(iv) Washington Post, 2004
(v) Bloomberg 2006

Scaling up: The Art of the Impossible - Part II

In Part I of this post, I had set the context for understanding uncertainty and its impact. Part II looks specifically at uncertainty and scale-up.

Generally we give a lot of attention to business uncertainty, but seldom do we give sufficient attention to operational uncertainty that is faced by the team members on their day work. Managing such operational uncertainty therefore is a very critical factor when we attempt to scale up any operation or any business.

Normally the core team that set up any operation or business successfully will consist of highly motivated, highly skilled, high performance individuals who are comfortable in decision making under uncertainty. Once the operations are on steam and ready to scale up we need to work with a different set of people. We cannot afford to have the same calibre people when the operation is scaled-up. It is not just a question of financial affordability; such people will not survive long in a regular operational environment. They are normally impatient lot and in constant search for new dreams.

Therefore we have to have processes to get work with ordinary, risk averse, simple people who want to be led. As Lee Iacocca pointed out “if you are a brilliant person you may be able to do the work of 30 people; but if you are a brilliant leader who can get work out of 1000 ordinary people and then you achieve much more”

One of the major weaknesses of normal people is their inability or discomfort to take decision under uncertainty. They need clear algorithm on how to address each eventuality. In the absence of such clear standard operating procedures (SOP), many people avoid taking decisions or become inefficient in taking decisions. In this case they are almost like computer software that hangs in the absence of sub routines to handle all cases. As in the case of elegant computer programs, the SOPs should have dependable error handling, clear exception reporting and escalation rules in place for un-programmed cases. Otherwise system hangs or misbehaves. Only then we can scale –up with “Intel people” like Google scale up with “Intel boxes”

We have to accept the reality that the vast majority of people need clear delineation of tasks to help them achieve maximum productivity. As Chris Argyris observes in the article ‘Empowerment: The Emperor’s New Clothes’ published in Harvard Business Review “Both research and practice indicate that the best results of reengineering occur when the jobs are rigorously specified and not when individuals are left to define them”

The first thing we need to do in our endeavour to reduce uncertainty is to map organizational goals to group deliverables and break down group deliverables preferably up to the individual level. Once the deliverables are broken down, then we should try to develop standard operating procedure or business rules for as many cases as possible. This has to be a continuous process and there should be process in place to continuously identify cases where SOPs or business rules are developed.

One of the risks when we have processes that depend on SOPs heavily is that the people get to be process oriented instead of result oriented. This is one of the major weaknesses of bureaucracy. It is here that we need to teach human beings to also use his human intelligence and not to behave like computer programs. We should clearly teach each person and team to appreciate what the SOPs are trying to achieve as results. We should empower the process owners to innovate and improvise on the SOPs when there are exceptions. Here again we should try to provide boundary conditions within which they have to flexibility. This will reduce uncertainty even with flexibility.

On the other hand we should also work towards helping people to learn the art of being comfortable under uncertainty because human beings who can make sensible judgement under uncertainty are key assets in any team. Although genetic trait influences this skill quite a lot, this is still a skill that can be strengthened by training and support.

We should also have a way to identify and encourage people who are adept at this skill. Most importantly we should ensure that people who rise up to leadership are the people who can handle uncertainty and also who can reduce uncertainty for their team. It is here that many organisations fail. They get impressed by people who have delivered excellent results based on their skill and knowledge in situations or functions where ambient uncertainty is low. Then we promote them to levels where they have to mange uncertainty which are outside their domain of expertise. This happens very often with respect to technical people. Then these poor souls (smart engineers, doctors, lawyers, accountants) like fish out of water fail and the whole team suffers.

When we develop our scale-up strategies this is one dimension we forget and we focus on everything else like process, technology, people, finance and so on. We have to include operational uncertainty management as a key dimension with which we qualify our scale-up strategies. Else the best of strategies will fail on account of minds that freeze under uncertain outcomes.

Beyond all this theory lie commitment, conviction and faith that is beautifully described in alchemist “If you believe in something the whole world will conspire to make it happen for you”.

“Nothing great has ever been achieved except by those who dared believe that something inside them was superior to circumstances.” Bruce Barton

Scaling up;The Art of the Impossible - Part I

There is one thing certain in our life; and that is uncertainty. Uncertainty about of life, our future, our family; everything in our life is uncertain. Most people are not comfortable to deal with uncertainty. But we have learned to accept such uncertainties on which we have absolutely no control, with certain amount of equanimity. Sometimes some of us try to reduce uncertainty about our future by visiting an astrologer, palm reader, so on and so forth. Linda Goodman and her ilk have made fortunes for themselves by exploiting this fear of uncertainty.

When it comes to areas where we have some control, like education, career, wealth etc, we are more uncomfortable with uncertainty. One of the primary reasons why we go to colleges and acquire degrees is to reduce uncertainty in our life. When we take up employment in a company instead of starting our own, we are trying to reduce uncertainty because the company has taken many of the key decisions with respect to the line of business, technology, product, process etc and we form a part of the team in implementing the strategies that have already been decided. Even in this case there may be still high level uncertainty as we go up in the ladder and/ or if we have direct business responsibility. When we take up a career in government we are still reducing uncertainty, as normally there is very limited systemic compulsion for results (as against process compliance) in many of the bureaucratic positions. (But there are many bureaucrats who try to do justice to their inner compulsion to make a difference)

I once did an experiment with a large group of my colleagues as a part of our internal training program. I gave three problems to all the participants and asked them to choose one problem they would take up to solve. The first problem was long, it had quite a lot of brute force computation to do; but the algorithm was sort of clear. The second problem was a logical puzzle. In this case the end result was quite measurable; it was evident that there would be an algorithm to solve, though the algorithm was not clear. The third problem had no clear algorithm or no one right answer. Most of the people chose problem 1, and only few chose problem 3. This kind of result will be common among most of the people.

There is one thing certain about uncertainty; that the success of any idea or project or company or organization is highly dependent on how we manage uncertainty for ourselves and for our teams.

To be continued ....

Certainty is the mother of quiet and repose, and uncertainty the cause of variance and contentions. Edward Coke

It is for me to choose

“It was my fate”, “It was destined to happen” are comments we often hear when something unexpected happens. Such comments suggest that we are a part of a giant puppet show in which things happen as per a supreme design and we have no control on what happens. Usually, such thoughts console us when things go wrong; because the failure was not on account of our shortcoming, not on account of our irresponsible behaviour, not on account of the evil deeds of some, but because it was ‘so destined’.

On the other hand, most of our formal social systems like the legal system, the education system and the performance evaluation system are administered on the basis that we have the complete capability and freedom to choose our (re)actions and behaviour. If we break the law, we can’t escape the penalty claiming that it was destined. This is sort of a paradox; the mental balance propped by our faith in fate and will of a supreme force and the social balance supported by a structure that assumes rational choice by every human being. In our day-to-day life we often vacillate between these two extremes.

I decided to think through a bit and take a view that could guide the way I interpret events and act upon them. I agree with the brilliant one line summary by Jawaharlal Nehru; “Life is like a game of cards. The hand you are dealt is determinism; the way you play it is freewill.”

We live in a totally inter-connected world. What we do out of our freewill could set off a series of chain reactions like what happens on the snooker board. Sometimes we get the shot right and the outcome is as predicted. Very often the chain reactions we trigger bring about a new order on the board which we never imagined; as expressed by the butterfly effect, based on chaos theory, made popular by the paper by Philip Merilees titled “Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?”

Some crazy kid decides to take his car for a spin. It was his free will. I happened to be in his way and got hit; it was my destiny. I survive with two artificial limbs; it is my destiny. I now have two choices. I can try to live on and find happiness in spite of my broken leg or can spent the life cursing the crazy kid and live a life of regret despair. Here I need to exercise my freewill.

This framework of freewill helps me to appreciate the fact that even though I have the freewill to choose, the options available to me are outcomes of a large number of factors on which I have no control and sometime the choice that we take makes it possible to predict how things turnout. It also teaches me that the freewill to choose does not guarantee any outcome; but I am still responsible for the choice.

How I exercise my freewill is also dependent on my mental makeup and strength. If I let myself to grow up without taking responsibility of my action then I may not be able to exercise freewill to the extent that is needed in any occasion. From this point of view freewill needs to be nurtured consciously and worked upon.

We can build up this skill as we build on our muscles. There could be limit on our ability to build on various skills; which could be on account of our DNA structure. But as we have to exercise regularly to develop a healthy body, we have to work on to strengthen how we react to what happens around us.

One of the true marks of achievement in life is the way we master this art of exercising our choice.

“The annoying thing about believing in free will and individual responsibility is the difficulty of finding somebody to blame our problems on." P. J. O'Rourke

Regulation of Innovation and Innovative Regulation

“In 1898, delegates from across the globe gathered in New York City for the world’s first international urban planning conference. One topic dominated the discussion. It was not housing, land use, economic development, or infrastructure. The delegates were driven to desperation by horse manure. The situation seemed dire. In 1894, the Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure.” (From Horse Power to Horsepower -Eric Morris)

Domestication of horse has been one of the key contributors of human progress; as it provided logistics support for business, leisure, pleasure and even conquests. We are good at building on and exploiting anything that would maximise our private benefits that sooner than later the negative externalities start taking a toll to the society at large; what the economists call the tragedy of the commons.

This happened in case of Horse Power too. With exponential growth in horse drawn logistics, by the end of 19th century accidents, pollution, and health hazards associated with horse was scary and appeared un-controllable.

Then came internal combustion engines that were much less polluting (even the methane produced by horse manure is eight times more potent than CO2 from automobiles as a greenhouse gas) less accident prone, much faster and more powerful. But by the end of 20th century this saviour has grown to a monster that is ready to savour its creator as it has proliferated to almost unsustainable levels.

The same is true for most of the human innovations. In financial services the time taken for an innovation of graduate to a Frankenstein has been quite low.

For examples derivatives have been developed as a tool for hedging risk. It has grown to be an instrument not infrequently used to structure products with the sole intention of profiting from the unsuspecting investors. Credit Default Swaps and Securitisation of debt instruments contributed enormously to the maturing of debt markets and helped better resource allocation. But this was also taken to its ridiculous extent that in most cases there was nobody who really cared or owned up responsibility to assess the true cost and risks associated with the underlying assets. The recent indictment of Goldman Sachs is an example of such unfair practices.

Does it mean that we need to curtail innovations? The answer is no. It is these innovations that ensured that the Malthusian theory has turned out to be an imaginary fear and the standard of living of a significant majority of human beings across the globe is hundreds of times better than the best the select few enjoyed even a few decades ago.

But as the time goes, products of these innovations reach such gargantuan proportions with very high impact on the well being of the society especially in a ‘flat world’ as described by Thomas Friedman. With large segment of wealth under the control of few large entities who are ‘too big to fail’, the difficulty of reining their run-way exploitation of their innovations gets to be even more difficult.

Addressing these is one of the key challenges for any government. Towards this goal, firstly we need to support strong regulations and stronger regulators who do not fall prey to their megalomaniacal instincts and try to micro-manage or centrally control; but who have the intellectual capability to analyse issues to identify key levers for action, recognize practices that exploit the common investors and curtail them, have courage to take strong and often unpopular decisions, can make the institutions who screw-up to pay-up and has moral strength not to be influenced by money, power or influence and at the same time is capable to encourage and get out of the way of innovations that are game changers. The stand taken by SEBI recently with respect to Unit Linked Insurance Policies (ULIP) which is a mutual fund masquerading as insurance is an excellent case in point on the constructive role the regulator can play.

Secondly we need to enable, encourage and empower disruptive technologies, processes and products that solve problems that are critical to survival of humanity. Especially since the existing interest groups who have heavily invested in the old system will work overtime to prevent success of these innovations. For example the oil industry will be happy to ensure that till the last drop of oil is left, human beings are addicted to it and are willing to pay more and more for the less and less that is drilled or excavated out. We experienced similar resistance from custodians and registrars when we were setting up a depository for Indian Capital Market.

The governments have a major role to play here too. They have to support, encourage, fund and place enabling provisions so that innovations are allowed to take root and reach a critical mass. Only then these disruptive technologies, products and processes can manage to break the status-quo and establish better, cleaner, more efficient solutions to problems that appear to make human race a run way experiment that is ready to destroy the mother earth as we know today.

That is why the two principal challenges for the day are Regulation of Innovation and Innovative Regulation

"It has yet to be proven that intelligence has any survival value." — Arthur C. Clarke

To be or Not to be – Part III - Tharoor’s Dilemma

After eleven months in the office, Shahi Tharoor has stepped down from the post of Minister of State for External Affairs. Everybody knows the reason. It was not his ability to perform that cost him the post. He, instead of being an asset in the parliament for the ruling party, became a liability on account of the way he has conducted himself on a few occasions.

I don’t believe that he was corrupt, I don’t know whether his ‘transgression’ compared to the standards of some of the politicians are anything extraordinary, I don’t know whether compared to the loot of public finance that many in the ruling class perpetrate, Tharoor benefitted in any financial sense; though the there are questions on the nature of sweat that paid for certain equity.

For a seasoned diplomat with decades of experience in international diplomacy his failure is that he forgot an age old dictum; “Caesar’s wife has to be above suspicion”. Natural question is whether all our “Caesars' wives are above suspicion”

There is one big difference here. Tharoor was trying to muscle into a club, banking on a different skill set and preaching a different value system. On the basis of these credentials he had managed to take an express elevator to the position of power and influence in Indian politics. It has caused jealousy pangs among many who had been waiting in the wings for years, it has caused concerns among some established veterans about the changes propounded by people like him, it has caused worries that the apple cart is tilting. It was natural that the empire would strike back.

When he embarked on such a challenge he should have been a bit more careful; especially when he was yet to establish a strong support base who would have stood up for him. He should have shown more discretion and tried to avoid anything that could be misconstrued as pushing private agendas.

Now he has two choices. Work on building the support base and fight on the position of strength. Or join the club on their terms. This is standard operating procedure for any new entrant at the top. Or he can decide to retire and take up less risky hobbies like sky diving...

“Serious sport has nothing to do with fair play. It is bound up with hatred, jealousy, boastfulness, disregard of all rules and sadistic pleasure in witnessing violence. In other words, it is war minus the shooting". George Orwell.

Politics could be more demanding than any serious sport.