Riding a Tiger

“It was like riding a tiger; not knowing how to get off without being eaten” This is how Raju, former chief of Satyam, described his cover up of the poor quarterly performance he started few years ago that grew to a multi-billion dollar accounting scam that finally engulfed him and his company.

I don’t claim to be privy to what happened nor do I know the complete details of the scam. But I don’t think that he is the only one who is into managing the books in some fashion to achieve or over achieve the targets. I am sure most of us would agree with me. May be he took it to the extreme; or maybe he just got caught?

See what happens when the year-end approaches. The extra effort and extra push to generate more sales is of course a great idea and desirable. But it doesn’t end there. Each industry has its own bag of tricks. Arm twist the distributer to take an extra consignment which he may not be able to sell in the coming quarter. An accommodating purchase manager could be asked to book an order which he can cancel in the next month. A conditional loan conformation from the client. Create a fictitious company to book an order that will one day be written off. This is not just a private sector phenomenon. Ask the tax-collector what tricks he has to reach the target. Anything goes for the sake of ‘numbers’; especially when the numbers lead to fat bonusus and or promotions. One of the primary reasons for the 2008 meltdown in financial markets was also this mad scramble.

The degree of accommodation may vary. Some will do a bit of arm twisting. Some will shift the next quarter sale to this quarter. (A short fall in the first quarter is understandable!) The degree of dishonesty varies from coercion to manipulation to absolute fraud. This is not just the handiwork of the sales manager. This is the culture we are inculcating and encouraging. This culture of deceit then becomes a part of the organisational DNA.Sometimes somebody gets carried away and goes all the way and occasionally a Raju gets caught. Just hard luck!

May be we should take the spirit of the “General Anti-Avoidance Rules” in taxation where admissibility of an item of expenditure is supposed to be based on whether it is a truly value adding transaction or a transaction just for the sake of tax avoidance. In the same fashion the top management could insist that only a true sale or true collection that brings revenue for the period under consideration is booked as the income. That could be the first step towards recognizing and encouraging honesty.

The problem is not just about managing the book for achieving target. It is about the culture of honesty in our business dealing or even governance. As Laurie Calhoun noted in his article The Problem of “Dirty Hands” and Corrupt Leadership “In thinking about this issue, it is important to distinguish self-serving opportunists from those who suffer corruption through their sincere efforts to govern well. Self-serving opportunists often rationalize their dubious measures to themselves through self-deceptive references to ‘the good of the whole,’ claiming that group loyalty demands moral sacrifice or that ‘the end justifies the means.’”

But we live in Kaliyuga when it is all about managing “The art and ethics of lying” (Read on Part 1 and Part 2)

The truth is never dangerous. Except when told. PHILIP MOELLER

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Some People All the Time.. Humour

Major Desai retired from the army and returned to his hometown. Many people wondered with the kind of network he claimed to have and the heroism in the wars that he boasted about why he did not go further up at least to be a brigadier. As per him he had got bored of being in the army and hence he decided to quit and be back where he belonged. Of course there are few skeptics who raise their eyebrows on this claim. Maybe they are just jealous of his charm and popularity; especially with the Municipal commissioner and the local Sub Inspector who are his drinking buddies.

In the second month after he returned home, his neighbor came and asked him whether he had any way to find out the results of the soldier selection in Indian Army, Neighbor’s son had appeared for the selection. Major Desai remembered that one of his old buddies Havildar Sharma from the army may be able to find out about the results. Havildar Sharma helped him and gave him list of all the five young lads who qualified from Major Desai’s home town. Major promptly informed all the five families and they were all impressed by the ‘connects’ Major Desai had. Now for the whole town Desai became Major Saab.

In the next selection season many parents approached Major Saab in advance to seek help for their lads. He offered to help on two conditions. He will first evaluate these lads as he would not like to recommend nincompoops to the Army. He should be given Rs 1 lac in advance for each lad who passes his evaluation. The money was not for him; but to make some in the selection committee happy! But he promised that he would return the money of those who do not get selected.

He interviewed about 30 lads and agreed to recommend for 10. When the selection team came to town he was there at the ground where physical examination was being held. He walked up to Captain who was the team leader shook hands and introduced himself. They had few army jokes to share. Major Saab of course knew by name many a colonels and brigadier’s who were his ‘batch mates’. Capt was impressed. The lads from his town saw Major Saab pointing his hands in their direction and were convinced that he had put in a word to the captain. Actually, Major Saab was describing the story about the temple that was behind the ground in the same direction as the prospective soldiers were standing. After these pleasantries Major Saab returned home.

When the selection process was completed, Havildar Sharma informed Major Saab in advance, before the results were announced, about the outcome. Seven lads from his town were selected. Out of these, five were from the lot who paid him. He met the parents of the other two and told them that they would not be selected unless some action is taken immediately. He asked for Rs 2 lac for each with the promise that he would return the money if they were not selected. Of course they were selected Five out of the original 10 who had paid him were also selected. Major Saab was a gentleman. He returned 1 lac to all the five who did not get selected. He made sure that every other person in the town knew about what he did for the lads of the town. Municipal commissioner arranged a felicitation ceremony in his honor.

Major Saab is not an exception.We come across some in all walks of life. When the stakes are high very often Major Saabs appear to manage a lead. Most of us have a small Major Saab hiding in us too, though we feel ashamed to let him loose. But then it is for us to choose! 


Shame is like everything else; live with it for long enough and it becomes part of the furniture. SALMAN RUSHDIE,

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Outcome or Process, Choose One

IT enabled Governance (ITeG) is gaining acceptance and momentum. The Electronic Service Delivery Bill now under consideration of the government is expected to give further thrust to e-enablement. With Aadhaar (unique id) getting better traction, Aadhaar integration in the service delivery also is providing stimulus in ITeG initiatives.

The complexity and challenges relating to the e-enablement vary across departments. On one end of the spectrum, the processes are quite mature and well defined, and computerization is primarily a means for improvement in productivity. On the other end of the spectrum, what is required is not just automation of existing processes, but a total transformation solution which involves significant process re-engineering, re-alignment of the role of various stakeholders which may also result in some stake holders role getting redundant or less important, innovative use of technology, phased implementation, continuous monitoring and many mid-course corrections.

In both cases Information Technology is a critical component; but often it is forgotten that IT is a means to an end and not and end in itself. I do not intend to discuss the other dimensions of ITeG in this post (take a look at ‘An amateur’s guide to e-Governance”). This note is about how the IT component is managed by government departments. Most government departments have limited in house skill to undertake these activities and therefore they outsource these to private sector service providers. Most of the IT service providers who take up these jobs of the System Integrators often do not have a total solution orientation or they are not capable to offer one. So they end up being suppliers to staff.

The predominant skill set for them is writing software for the specification given by the solution architects because our domestic software industry is often drunk with the $ from being technicians and cybercoolies and not architects and engineers. The user requirement study is "Tell me what exactly you want me to automate, I will program it" and not "Tell me what your dream is, we will work together on how technology can make it happen". So their approach is that of manpower provider than a solution provider. They don’t share the risk of a failed system (the limitation of liability clause adequately takes care of this) nor do the government comfortable to share the reward in the form of outcome based payments.

Often service providers influence how the RFP is made which ends up being an enquiry for supply of bodies than outcomes. So RFP gives more importance to the CV of the team instead of making them responsible for the outcome. Subsequently these contracts make the client to pay for rectifying the bugs in the programs and also make him spent for much more hardware than needed. Augmenting this problem is the purchase decision based on the lowest price quoted by the vendors. No proper matrices for measuring the outcome are defined and the department attempts to micromanage the CV, the attendance, hardware specification and so on. Then either the shoddy service providers takes the contract or the selected vendor develops shoddy solutions. That is the reason many ITeG don’t live up to the expectations.

When people are told exactly what and how to do something, they stop thinking for themselves-and they can't learn and grow. ~ unknown

Death by Power Point

Couple of weeks back I attended a conference. As the key note speaker we had an expert from one of the top notch institutions in the world, who had recently relocated from London. As the topic was close to my heart, I parked myself in the front seat. The speaker had a distinct western accent as he had been out of the country for a long time.

As expected from any expert speaker today, he had a power point presentation to support his talk. The slides started moving one by one. Extremely colorful, quite complex diagrams with wide variety of shapes and colours linked and interlinked using arrows and lines flowing in and out and very densely packed text. Quite visually impressive!

Even front row, I found it difficult to read most of the text. The message that was expected to be understood from the various cubes, pyramids and animations were too complex for me to follow; especially when I attempted to follow the speech. The speaker expected me to quickly assimilate each slide in milliseconds and then connect it to the pearls of wisdom that came from his mouth.

The audio and the visuals were impressive; but, failed to communicate to the audience. This is a phenomenon that has become quite common these days. Power Point presentation is a killer utility that Computer revolution has contributed to the modern day manager. With more and more functionalities and features Power Point has become more important to corporate executives than even food and water. (The only other killer functionality that can beat this is the is ‘copy paste’ function)

A good Power Point presentation can be a powerful tool to make penetrating communications; especially in presentations. It can help the presenter as cue card to help in keeping a structured story line, it can pictorially present some difficult concepts, it can help the audience to quickly refer to the broader context of what is being presented so on and so forth

But overuse of the funky features is making this to a tool that kills effective communication. Power Point helps in building excellent visual presentations and diagrammatic representations.

The diagrams pie charts we use as a part of a written document can afford to be a bit complex and dense (though I would not recommend overdose of it). This is because the reader has the flexibility to read the text, look at the model, ruminate and go back to the text and the model again if he feels the need. In this case he sets the pace. Even when we provide an electronic copy of the presentation and the receiver can view it at his pace, we can afford to have some element of complexity.

But if we are using our PPT as a complement to our oral presentation we cannot afford such complex and dense slide show. If our presentation is to a small audience who are very much clued on to the topic we are presenting (say our department colleagues, our board, our client) we can get away with some of these gimmicks.

But if we are making a presentation to a larger audience then these colorful animations dampens the effectiveness of the presentation. Very often when we make presentations and the speeches to a large audience, the level to which most of the people are clued into the topic will be to a much lesser extent. In such circumstances, if we make our PPT and speech complex and heavy, it will fail to communicate though it may appear erudite. The complex slide deck will then become a distraction. Human beings cannot listen, read and assimilate complex messages in real time as his working memory have limited capacity and has limited duration, especially when it comes to new and novel information. The visuals could act as an intuitive complement; but, if it is anything more, it can be very frustrating and ineffective. What is worse is the presenter referring to the slides all the time taking away one of the most important component of oral presentation; the eye contact.

The new breed “MBA” varieties (I can vouch for that. I am one too) who are computer savvy (A very critical skill these days) get carried away by everything the computer can do without assessing how useful and how relevant they are in the context. The slide deck for them becomes a tool to intimidate, a means to prove how smart they are and not an aid to communicate and to relate. But in reality they become crutches to the speaker and not an aid to the audience. Should we consider banning power point presentation? Absolutely not; if we do that there will be many more (like consultants) to join Dodo as an extinct species.(don’t deny me my daily bread)

"If your words or images are not on point, making them dance in color won't make them relevant." - Edward Tufte Professor Emeritus, Yale University

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Don’t do me a favor; Grant me the right to demand

Depository’s act of India provided for one of the highest level of service level commitments to the account holder. It required that the depository should indemnify any losses to the investors resulting out of negligence from its part or from the part of its agents namely depository participants. Thus it gave the account holders the right to demand safety of their investment. At the time of enactment of this act, when about 25% of all settlement in the stock market used to have problems associated with paper and there were innumerable instances of investors losing their investment on account of frauds relating to share certificate, this stringent service level requirement appeared utopian and impossible to sustain.

This put enormous pressure on the new depository that was set up, registrars who were hitherto not used to respecting investor’s right and the brokers and bankers who were used to service on good effort basis. This Damocles Sword ensured that systems, processes, checks, balances and audit trail are built and maintained to meet this service level. In the last 15 years since first depository was established, the market intermediaries managed to live up to this service level with practically insignificant instances of breaches which necessitated the service providers to pay up.

What did the magic was the right given by the act of parliament to demand a certain service level without being felt as if we are being offered a favour. In the recent past the government has extended this principle in a number of areas; right to information, right to food, right to education and right to electronic service delivery.

All these are attempts to empower the citizen. Right to Information which was the first of such initiatives has been there for some time. The results have been very encouraging. As more people get to be aware of this right and learn to exercise it, the pressure for performance will build up. It was heartening to see that even children are learning to use this powerful tool. I was impressed by the Class 8 student Kavana Kumar from Karnataka who used this tool to get the garbage dump next her school cleaned by the municipality. These may be anecdotal evidence as of now. But these have potential to grow to stronger tools. Similarly when we give the citizen the right to demand and not stand in supplication for what is due for him we are triggering a paradigm shift.

Instead of being armchair critics who bemoan the degeneration of the society and the level of corruption with little compunction in using the same means to push our own agenda, we need to learn how to use these tools to make a difference. We should also encourage and support enactment of more such laws placing rights into hands of the citizen/consumer, to bring in more service orientation; especially from the people in positions of power both in private and in public sector. Then may be we will learn the meaning of "service with a smile" if not a grimace:-)


Safeguarding the rights of others is the most noble and beautiful end of a human being.” Kahil Gibran

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Caveat Emptor ?

The bank was taken aback by the order of the IT secretary of Tamilnadu as the adjudicator under the Information Technology Act, when he directed the bank to pay Rs 12.85 lacs as the compensation to an Abu Dhabi based NRI for the loss suffered by him in a “Phishing Fraud” . (1)

“Phishing” is a security risk that many computer users are getting to be familiar. In this case the account holder received an email that appeared genuine, which asked him to provide the use rid and password for his internet banking account to avoid his account getting closed. He parted with these details and he lost about Rs 7,00,000 from his account.

The bank took a view that the loss is on account of the carelessness of the account holder and refused any compensation as they had advised all account holders not to part with their userid and password to anybody. How could he be so irresponsible and give away his password and then claim that the bank should compensate him? But the adjudicator did not agree to this point of view.

This is an interesting dilemma for all entities like banks and depositories that provide online service to their clients. Where does their liability end for the loss suffered by their clients? Under what circumstances will they continue to be liable even if the loss was the outcome of a failure by the account holder?

Similar issues have been there with respect to offline transactions too. For example the loss suffered by credit card holders on account of misuse of their card details or loss of money from the bank account by fraudulent instructions.

One of the accepted doctrines in legal theory is that the entity that is best equipped to manage the risk should be liable to the loss arising out of such risk. This doctrine has been followed not just in online transaction. It has been used in fixing liability in terms of workplace accidents, accidents in amusement park and and so on.

For many this may look very unfair. Shouldn’t the responsibility of the service provider end when it has put in place risk containment measures and warned the users about the potential risks? Why should it bear the brunt of a fraud when ingenious souls manage to find a way around the protective walls?

There are studies comparing the incidents of banking frauds between the countries that placed the primary responsibility on the service provider and on the customer. These studies showed that when the legal structure supported the above doctrine the extent of fraud was much less. The service providers continuously upgraded their risk containment systems as they could not hide behind “fine prints” in the forms that they make their clients sign and the disclaimers that they publish. They cannot limit their risk with firewalls and dematerialized zones in their data centers. They have no option but innovative in saving their clients from their own foolishness. They are forced to look for patterns, trends, exceptions, track locations from where the transaction originate, raise alert when exceptions occur and so on. But if still a client is faced with a loss, he is compensated unless they can prove the customer connivance or involvement. We can’t just declare “Caveat Emptor”.

Risk mangment therefore becomes a managerial decision, may be more than technical solutions. (Read on Digital Security – Business, People and Economics for some more thoughts on this)

Ref: (1) https://indialawnews.org/tag/human-rights/

"Customers don't expect you to be perfect. They do expect you to fix things when they go wrong." Donald Porter, British Airways

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Matter of Right

Government of India had put out a draft bill on Electronic Service Delivery (ESD) for public comments. The key features of this scheme are

i) Every department of the government should mandatorily make its service to citizen available through electronic mode.

ii) This ESD should be made operational within five years of enactment of this bill. Extension for another three years will be allowed if there are valid reasons for this delay.

iii) Within six months of enactnment of this bill, every department should publish the list of services which will come within the ESD commitment.

iv) As in the case of the Right to Information Act (RTI), the proposed ESD act provides for Commissions at center and state level to ensure that the expectation under the act is delivered and failure is met with punitive action.

This right for ESD proposed to be guaranteed under an act of the parliament can be seen as maturing of various e-Governance initiatives that the government has been taking in a variety of fields for more than a decade. India is considered to be a powerhouse in the field of ICT and we practically run the back-office operations for the whole world. With this, this should be an easy target. But is it?

World e-Government ranking undertaken by United Nations gives India a rank of 119 out of 192 countries it surveyed in 2010. As my friend Neel pointed out, “How come even after more than a decade of e-Gov initiatives at the highest level, we still want six months for all departments to publish the list of services they can make available electronically and we need five to eight years for this to be fructify?” Reasons are many; but the following appear to be the most fundamental of them.

i) Many of the e-Gov initiatives are computerization of existing operations of the departments, heavily accented to MIS reports for internal consumption and upword reporting.

ii) Processes were not fine-tuned with a citizen focus. Committed service levels or actual performance levels were seldom benchmarked or published

iii) Solution implementation was more activity based than outcome based. Often vendors saw their role as software developers or as hardware suppliers and not as service providers.

iv) More attention was given to the automation of front end without getting the back-end streamlined and automated. In many instances sufficient consideration was not given to building electronic repository of the records and masters or ensuring high data quality which are the foundation blocks for electronic service delivery.

This problem is not unique to government computerization efforts. In many private sector companies also the computerization took this route. To begin with computer was a perk and status symbol for the boss. Then it became a department initiative. It was much later an integrated corporate wide strategy got evolved in progressive companies.

Similarly, in government initially it started as a privilege for the big bosses. Then it became a department initiative left to the interest of the head of the department. Integrated service delivery is still a dream. (read on "India gets a CIO- Part II")

Now when we attempt to make electronic service delivery a matter of right we have to give more attention to the lacuna highlighted above else we will not be able to live up to our promise or the expectation of our citizens and the commissioners will end up inundated with grievances.

Picard: Come back! Make a difference!
Kirk: I take it the odds are against us and the situation’s grim.
Picard: You could say that.
Kirk: If Spock were here, he’d say that we are irrational, illlogical human beings for going on a mission like this... Sounds like fun!

-Star Trek: Generations
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