The Delhi Metro-Symphony Orchestra

“The typical symphony orchestra consists of four proportionate groups of similar musical instruments called the woodwinds, brass, percussion, and strings. The orchestra, depending on the size, contains almost all of the standard instruments in each group. Apart from the core orchestral complement, various other instruments also may be called for...."

So what is common between Delhi Metro and Symphony Orchestra?

When Delhi Metro was inaugurated in 2002, I was impressed that our country also has infrastructure that represents modernity and we seem to have realized the importance of mass transport systems to support our urban development. (This realization seems to be far and wide. In the last few decades only two such systems have come up; one in Kolkata and one in Delhi though there are many more cities that desperately need something like this.)

Why this island of excellence and what ensures its continuity?

Is it just because of the visionary leadership of Sreedharan that gave the organization courage to dream big, the patience to translate the dream to actionable tasks with clear specifications, ensured that proposals were evaluated on merit and not on the “educational efforts of the suppliers”, established clear service level expectations and mercilessly insisted on commitment to delivery, the Metro still stand tall in its quality of service?

I had serious doubts on whether the above qualities in project execution would ensure that this quality will be sustained in its operations day after day. My scepticism was rooted on what I have observed in most of the public structures and institutions in our country.  The trend of poor upkeep and maintenance exacerbated by the pathetic civic sense of our society starts showing soon. The civic sense that instills no shame in throwing things out of the windows of the muti-storied apartments and air conditioned cars, that considers it natural to relieve oneself on public roads, that doesn’t evoke compunction when littering public places and spit at every corner of staircase unless (or in spite of) photograph of a god is stuck there.

Further, I also was very sceptical about quality of customer service and I have seldom seen a government agency that understood the meaning of customer service.

Since the inauguration of Metro a number of years have gone by. The metro has expanded considerably and is in the process of expanding more. The stations are still spotlessly clean, the coaches look brand new and I can see practically no graffiti. The experience of a customer is still a matter of delight.

The visionary leadership is still there and it has managed to inculcate certain practices that has now been ingrained in its people and processes and is more infectious than common cold. The organization still passionately focuses on a lot of small things. Like ensuring that the cleaning staff leaves no dust unturned and the surveillance system does not let go of irresponsible behavior in its premises. Such an all pervading commitment to quality suddenly appears to instill a sense of shame and responsibility to the denizens who use the metro. The service he gets is so good that he has no reason to spit in disgust:-)

It looks like a symphony orchestra with hundreds of people each contributing in big and small way. In a symphony there are so many instruments that make almost indistinguishable sounds a layman would wonder what difference they make. But all of them together bring about a heavenly halo.

This attention to small details is what we often lack in many organizations (particularly government organisations) and that leads to gradual degeneration. When I see a station with not even one cigarette butt or a candy cover I almost feel ashamed to throw one myself; but even if I see a few litter scattered around then it becomes less of a worry for me.

This logic gets extended to in all fields. When we have hardly any customer complaints pending and suddenly one complaints pop up we care. But if we have 10,000 pending grievances, 100 more makes no difference.

When the policy maker tries to set up solutions with without thinking through, then we only try to show that there is something working and just don’t care how the customer feels.

Public services cannot be set up like the “Tabala Solo” a maestro like ustad Zakkir Hussain. It is like a symphony orchestra with lots of small bells and whistles all integrated together.

This is what Singapore did in getting the city to be clean and this is what Metro has done and has the persistence to continue with.

When we learn to worship this “god of small things” more and more, we will see islands of excellence growing and joining together to cover the sub-continent - India.

Amateur’s tips on e-Governance

Use of computing technology in public service, what is called e-Governance, is catching up in India. Some of these projects are means to improve the efficiency of internal processes of the department and some of them try to improve service delivery to the public at large.

Many fail and some are astounding successes. The challenge gets compounded in projects that involve integration of multiple agencies and or service delivery to the public. NSDL got opportunity to be a part of three such projects. Dematerialization of securities by SEBI looks obvious now, the Tax Information Network by Income Tax Department is at the halfway mark and the third and latest, the New Pension Scheme by PFRDA is still in the early stages. Let me share some learning that we picked up along the way while playing meaningful roles in these projects. (All these are my personal views and not official views of NSDL)

1. IT is only part of the story

Information technology (IT) is the key engine in e-governance; but keep in mind that it is just a means and not an end in itself.

For example the internet based railway reservation is a brilliant option for passengers. Imagine that the railways make it the only way to sell tickets. It can save enormous cost of the administrative infrastructure required for citizen interface. But with the usage profile we have in our country for this service, we cannot even think about it for the time being. At the same time the automation for the guy behind the counter still provides enormous efficiency gains in the reservation process and helps to reduce corruption.

If the solutions are architectured with a technology focus and not service focus, it gets to be the killer and is one of the main reasons for failure of many e-governance projects.

If I give a thumb rule, IT is only a 40% contributor in e-Governance.

2. BPR is not a Magic Wand

Business Process Re-engineering (BPR) is a critical ingredient to ensure best results. But when a large number of organizations and disparate user segments are involved, it is important to phase the re-engineering. Identify the most important changes (as few as possible) that are critical to efficiency gain or that will be act as a foundation to the transformational process and implement them first.

This is especially critical, as educating and enabling a large user community is a challenge that can be managed better by keeping the changes as limited as possible.

For example in implementation of Tax Information Network (TIN) one of the major changes was the requirement of filing TDS returns electronically. To begin with, the department kept the process of depositing tax and preparation of TDS return almost the same. In fact the free utility for preparation of electronic return has a frontend which looked like a physical form in which the tax deductors were typing in the data as always and at the end of it they had to just save the return to a CD and hand over to a front office. (For the more IT savvy there were other options too).

Change management is best managed if you can help take few decisive steps and not a leap of faith into the darkness.

An implosion to break the rotten structure, and not an explosion that destroys the whole neighborhood.

3. Be Patient

Once you have set the ball in motion, let the process settle down. Give it time for the message to percolate down. Give it time for the first movers to experiment, the followers to observe and the cynics to run out of steam.

Remember, unless it is a matter of life and death (or a celebrity citing) you won’t see a crowd thronging to the embrace the change on the first day or even the first year.

We saw this when we set up the depository. The day after the inauguration we saw supplements in all major newspapers hailing the birth of a new institution. Within days and weeks we started to get telephone calls asking the number of accounts opened. We had no ‘thousands of accounts’ to show off. From the same tongues that praised, we heard obituaries. We were flooded with advice on why we should change the model completely. Three years on and lots of education and persuasion and cooperation from many, it took root and today it looks so obvious.

Depository was big thing for Indian capital market. But for most investors who traded occasionally there was no need to queue up to open an account. They were not even sure how it will affect the market. Similarly New Pension Scheme is a great idea. But there is no need to run to the distributor to open an account. It may be important but not urgent.

Often patience is not the virtue of many policy makers who want to show magic before their next transfer and holding their urges in check is a challenge in itself.

4. But you have to tweak

When I say be patient, it doesn’t mean do nothing. Look for irritants to be removed, look for tweaks that will improve user convenience; but, don’t keep on changing the whole model.

What you need are tweaks that enable and not splashes that confuses; the spirit of continuous improvement.

5. Be ready to hold hands

In many initiatives although the expected changes are dramatic, historic and touches large number of citizens, the impact of this for the individual may not be so large or not so clear.

Therefore there is need to have concerted effort to interpret and explain how the new system affects various segments to help them in the process of transition.

6. Sometimes you need to push

In some projects there will be need for a regulatory nudge to break the impasse or to act as a catalyst. But you should not get carried away by this tool and move in with a bulldozer. Remember what the ‘family planning initiatives’ of Sanjay Gandhi achieved.

That is what SEBI did when it used a bit of compulsion to move the market from physical to electronic. At first it got the infrastructure in place, got some minimum action by pushing the institutional segment in a small way and then pushed the active players and then the whole market. It still provided for an exception for the so called ‘small investors’ to take the steam out of those who use the ‘small investor’ as front to push their private agendas

7. Cookie-cutter is for cookies

When we design the solution, we need to keep in mind the nuances of the various segments of users. Don’t just come out with standard cookie cutter solutions

8. Learn to judge cribs

Let assume that the new system affects 100 people; 80 positively and 20 negatively. From the 80 who benefitted hardly few will come to say thanks. But of the 20 majority will shout.

So on the first look, majority of the feedback will be cribs. You need to look deeper at the agend behind the screams and judge whether it is the wail of the majority or the tricks of few.

You also need lots of self confidence to act on this.

9. Government users are special species

Among the users the most difficult will be the government users. They are more used to status quo than change, more used to getting their way than giving way.

So you need active support and intervention from within. You need the snake to pull out its own venom!

10. Benchmark and measure

One of the essentials of success is to have a process for measurement of the key drivers of performance.

You need to get these parameters accepted and established as the true measures of success and put a in a mechanism for continuous tracking and publishing. Or else there will be enough detractors who will play with anecdotal evidences to belittle the progress.

11. Persistence is the Key

The ultimate tool for success is persistence; keeping track of the irritants, looking out for opportunities for marginal improvements. It may not be exhilarating, it may not be brave, it may even be dull, and it may make you look like a hero; but unless you are willing to take this path, especially in the early days, transformational projects don’t take root.

Like the little stream of water that happily moves out of the way of the rock in front, but has the persistence to eat away the rock speck by speck.

12. Tell me who owns the project

Although I placed this as the last item in the list, this is the most important pre-requisite for any project to be a success. Unfortunately it is very often absent in public projects. Most of the team members join as actors playing their part for their own agendas and not committed to the project. Almost like the like junior artists who move from one movie to another. Such projects definitely will fail.

The role played by Sreedharan in the Delhi Metro Project, Bhave in case of NSDL, Narayana Moorthi in case of Infosys are examples for how ownership and commitment can make all the difference.

Should we call this list the "Dirty Dozen" (as very often these get neglected) or "Mighty Dozen" (as these make all the difference) of eGovernance?

Grounds for optimism

On Election Day I had written in my blog how I am feeling optimistic about the increased participation of the common man in political process; particularly the educated middle class who had gradually moved away from taking any interest in this. Later when we saw the polling percentage even this year to be not any better, many of my friends came back and questioned me on the grounds of my optimism.

So what did I see?

Did I believe that seeing the King Khans and the Queens, the third page celebrities, showing their black dotted (middle) finger the common man has decided to emulate them in mass?
Did I believe that suddenly the political parties have decided to change the profile of its candidates to have less of goons and more of leaders?

Did I believe that the educated middle class suddenly decided to be less selfish and make a difference in exercising their electoral choice?

I am too old to believe in fairy tales.

Then what do I believe? What is the ground for my optimism?

I notice that the there appears to be little more active interest among the alienated segment of the society in politics and governance.

There are a few more people, who otherwise kept away, willing to jump into the fray.

The better communication tools of emails, sms and blogs are making the process of dialogue a little more easy and a lot less time consuming.

This is enabling some more of public participation.

As Amartya Sen noted “Balloting can be seen only one of the ways- albeit a very important way – to make public discussions effective, when the opportunity to vote is combined with the opportunity to speak and listen, without fear. The reach – and effectiveness – of voting depend critically on the opportunity for open public discussion.”

My grounds for optimism is based on the increasing level of meaningful public debate and participation and how the technology plays a role in improving this process and in bringing in more transparency and more efficiency.

I am hopeful this will answer the prayer of Tagore “ Into that heaven of freedom , my father, let me country awake”

This is also an appeal to my fellows who are still remaining to be just onlookers to join and strengthen the voice of reason. Unless we are willing to participate in giving our views more voice, unless we demand and not resign to fate, unless we build up systems that bring better transparency we have no right to complain.

As Mahatma Gandhi said “We must become the change we want to seen in this world”

Feeling Optimistic on Election Day

India is a democracy. Every adult whether rich or poor, educated or not, has equal right to vote. This was a revolutionary departure from the earlier system of voting rights that was prevalent in many democracies; system in which right to vote was only for the privileged class ie; the educated or taxpaying or whites or men. In fact India’s adoption of universal adult suffrage soon after independence with a illiteracy level of 85% was, as Ramachandra Guha noted, an act of faith which many people around the world believed was an act of madness.

Even today almost 30% of our population live below poverty line and are illiterate. The economic backwardness and lack of education and exposure to the world around often make this segment easily swayable with jingoism, case loyalties and fake promises. (I don’t suggest that the wealth always leads to education and this to matured thinking. But there is definitely decent correlation between education and matured thinking)

This has become a vicious cycle. It gives perverse incentives to the political leaders to keep the poor where they are and to continue with divisive strategies fanning internal insecurities, religious fanaticism and limiting parochialism.

The Samajawady Party’s election manifesto promising to discourage use of computers and English is a typical example. I really don’t think those leaders are against either computers or English. They are just trying to be smart in appealing to a mass of people whom they think will be swayed by this.

When politics became a numbers game that can be manipulated by caste, money, muscle and populism a large segment of middle class started moving away from active participation.
Many were disgusted with the lopsided priorities. Many were upset with the choice of leaders who are there for the wrong reasons. Some floating population was too lazy or too pained to get their name included in the voters list. Many were just selfish and happy to keep their agenda family focused with limited social focus.

They felt alienated with very limited opportunities for their voices to be heard. They were too busy with their private life. They gradually moved away. A large part of this segment stopped even casting their vote. This added to the cycle of social degeneration.

But in this election I see a welcome shift. We see quite a lot of involvement from the crowd that often kept away. Some like Meera Sanayal and Shashi Tharoor are standing for election. Many more are being active participants. People like Nandan Nilekany today keep apart a significant time for the betterment of society.

The technology is playing a big role. The SMS, Blogs, face book and a wide variety of easy tools for communication for sharing of ideas and quick dissemination of differing views are helping to bring, to the ring, those who normally keep away. Their voices are being heard. In their busy schedule they are able to play a more active role with limited commitment of time.

I certainly believe that this is a trend and a welcome trend. These new tools and this better visibility will make a difference and play a larger role in political process.

There is still much that can be achieved to improve the quality of governance using technology and better processes. And these are strengths we as a country have in decent quantity. We have seen what better technology and processes can do in cleansing the system and enhancing participation.

What NSE and NSDL achieved in capital market, to make Indian capital market infrastructure from being the worst in the world to one of the best in the world, is this.

What CBDT managed with TIN and other initiatives in technology upgrade and business process re-engineering, which helped direct tax collection to overtake indirect tax, is this.

What railways manage in rail reservation is this. There are many more examples of such success stories.

There are still scope for many more such areas. Starting from strengthening the voter registration process (it is a lot better than what it used to be) to bringing transparency in government spending and corresponding outcome can and will bring about efficiency and reduce corruption.

We can hope the new government that come will see this as a priority area.

Checks & Balances - Who checks and Who balances

Integrity in reporting of accurate matrices for measurement of risk and return of traded instruments and checks and balance that ensure this reporting are critical requirements for any decent financial market. But when we follow the events that have been unfolding the world over, it appears that there is still some way to go.

The most critical issue with respect to the Satyam saga in India has also been this. The company had good people, a respected client base, history of high quality delivery and a profitable and growing business. But the owners milked the company for their personal greed and misreported the financial status. The behavior of the venerable audit firm Price Waterhouse as the company auditor has raised questions about how independent were these independent outside auditors.

This is not a one-off incident. Neither is it something peculiar to India or doings of some small time firms. Enron, WorldCom, and Xerox are recent history.

Arthur Anderson was accused of improper audits in financial scandals in a number of cases in USA and had to go in for settlement in many of them. Enron was the icing on the cake, which took the audit firm along with it to extinction.

SEC took action against KPMG with respect to violation of anti fraud provisions with its audit of Xerox. E&Y was also accused by SEC of violating independence rules.

This problem was not just with respect to collusion by independent auditors in perpetuating financial frauds. It has been pointed out that one of the root causes of the collapse of world financial markets in the recent past has been the failure of credit rating agencies in reflecting the true nature of risks associated with many structured products that have been rated by them.
Why do we see such irresponsible behavior from a large cross section of professionals and professional organizations? When we go a little deep into the reasons behind this, we see that the one of the main reasons has been the failure of the checks and balances in avoiding conflicts of interest.

There are two serious contributors to this conflict of interest with respect to the independent auditors. One is the extent of multi-disciplinary non-audit related services these firms offered to their clients like legal, consulting services etc. Realizing the conflicts associated with such practices we have seen a number of regulatory restrictions on such multi-disciplinary offers.

The other issue is that the audit firm is selected and their remuneration is fixed by the company management. Robert Prentice, professor of business law at the McCombs School of Business after exploring literature in psychology, decision theory, behavioral finance, and behavioral economics has suggested that auditors works are significantly affected by ‘self serving bias’. Based on behavioral experiments, Professors Bazerman, Loewenstein and Moore suggests that because of the subjective nature of accounting, and the close financial and personal ties of auditors and corporate managers, even the most honest and meticulous of auditors can unintentionally distort the numbers in ways that mask a company’s true financial status. They have also referred to a study of 139 auditors employed at large U.S. accounting firms in which half of the participants were asked to assume that they were auditors hired by the company while the other half were asked to assume they were hired by another company that conducts business with the audited company. With respect to five given ambiguous auditing vignettes, auditors who were hypothetically hired by the audited company were on the average 30% more likely to find the financial reports complied with GAAP

Same is the case with incentive structure in the credit rating agency. The agency is paid by the entity who is getting its instruments rated and not by the investor who uses this rating for their investments. The criticality of these ratings are quite high because the regulators of capital market, banking , pension funds and mutual funds use these ratings to specify the asset quality mixture that brokers / banks / pension funds were allowed to hold. As Frank Partnoy a professor at the university of San Diego school of law observed “rather than selling opinions to investors, the credit rating agencies were selling licenses to borrowers”.


While stronger regulatory oversight can address these issues, more efforts are needed to develop models where the incentive structures would ensure better checks and balances.
Models suggested by Professor Joshua Ronen of New York University and Peter K M chan of US SEC are thought provoking in this direction.

The basic structure of Prof Ronen’s Financial Statement Insurance (FSI) may be described as follows :

‘Instead of appointing and paying auditors, companies would purchase financial statement insurance that provides coverage to investors against losses suffered as result of misrepresentation in financial reports. The insurance coverage that the companies are able to obtain is publicized, along with the premiums paid for the coverage. The insurance carriers then appoint and pay the auditors who attest to the accuracy of the financial statements of the prospective insurance clients. Those announcing higher limits of coverage and smaller premiums will distinguish themselves in the eyes of the investors as the companies with higher quality financial statements. In contrast, those with smaller or no coverage or higher premiums will reveal themselves as those with lower quality financial statements. Every company will be eager to get higher coverage and pay smaller premiums lest it be identified as the latter. A sort of Gresham's law in reverse would be set in operation, resulting in a fight to quality’.

The model suggested by Peter MK Chan is as follows:

‘The interests of auditors with those who have the greatest interest in accurate financial reporting and the investing public should align, making use of advances in Internet technology. The companies should be required to make available over the net significant amount of raw financial data on a real-time basis. Using these raw data the investor-hired auditors should be able to perform meaningful audits or reviews of corporate financial data. Regulations should also be directed toward ameliorating any negative effects associated with such increased access, including regulations designed to reduce litigation risks. The market will take care of the rest’.

I am not trying to analyze the pros and cons to the above proposals nor do I suggest that one of the above be adopted. The simple point I am making is that we should modify the regulatory framework to ensure that the checks and balances are built with no/ minimum conflicts of interest. And today is a good time to debate, indentify and implement such reforms, as we are in a world which has been rudely awaked to the risks of these conflicts of interest. Strike when the iron is hot.

The above is not just a case of public policy. It is also a lesson for any entity who is actively involved in defining or refining business processes in any organization.

To be or not to be (Part 2) – Of Good being Bad

In the first part of this article I discussed about how any system of governance will always have a mixture of ‘good’ and ‘bad’ use of the system. I have used the word good use and bad use in a figurative way. Good use is when the system is used for the larger good of the humanity and bad use naturally its opposite.

The relative proportion of good and bad in the society is determined primarily by the value system of the majority. The natural tendency of this mix is to gradually degenerate with the proportion of bad getting more and more; the bad drives out the good.

This is similar to the income distribution and its shift in a society. In a society however evenly distributed the wealth is to begin with, eventually the mix becomes skewed with smaller percentage of the society controlling larger part of wealth.

The question is not whether it will degenerate. But how long it will take! Some social shocks and scams may cause periodic correction of this degeneration and eventually the society/ civilization degenerates to its cyclical low. May be the cycle will start all over again.

One of the key contributors of this degeneration is the inaction by the good. As the proverb says; “the best thing that the bad can expect is the good to do nothing”

The greatest tragedy is that the people who want to use the system for their private agenda (let is refer to them loosely as the bad people) have some of the good traits that help them prosper and the people who want to use the system for the larger benefits of the society (let us refer to them as the good people) have some of the worst traits that weaken them. Let us take a deeper look at these qualities.

Co-operation

The bad people are generally too happy to co-operate with anybody so long as that co-operation brings them power or wealth or both.

The good people generally carry a chip of honesty on their shoulder that they seldom co-operate even with people with similar value system. They believe that their goodness is one step higher and they are ready dump and run if the other guy doesn’t play along exactly as he feels is right. In fact they almost make such renunciation a virtue.

Courage

The bad normally has the courage and with impunity cooks the account books /investigation/ assessment or any administrative process for their gain.

The good is often scared to take bold decision and hides behind rules and technicality. The obstructive bureaucracy is often a result of such cowardliness and not just self serving actions of the bad.

Power of Interpretation

The bad will interpret laws and technicality so long it meets its end or favors an ally.

The good often tries to interpret with limited appreciation of what it stands for; by the time they finish splitting the hair it fails to be achieve any good.

Sacrifice

The bad is capable of sacrifice for what it stands for. Sacrifice its principals, society, environment and much more.

Good will hold onto technical correctness, its pride and prejudice even at the cost of its ultimate benefit to the society

Loyalty

The bad often demands and commits substantial loyalty to its partners so long as such loyalty is rewarding. They are willing invest in this loyalty for quite some time.

The good often has little commitment to his partners if it feels that their goodness is not of the same type. They are willing to abandon and run and not pull together.

Risk taking

The bad is willing to take its risk, because they see potential reward in taking risk.

The good is often too risk averse. The potential reward for sticking the neck out could be some brickbats. With no upside benefit for self and downside uncertain and costly, the good normally avoid getting involved.


Now we ask the question “How good is good”. There is a saving in our tongue which translates to “the good often bears the fruits of the bad”

I do agree there are many ‘good’ who are as good as the ‘bad’ and it is through them that we have gained anything.

What we need to do to avoid/delay of decay of our society is to develop a willingness to learn the ‘good’ from the ‘bad’, stick together and support each other for what we stand and not be a utopian island of fruitless good.

Willingness to co-operate, to take risks, to take a position, to believe in the intention of the fellow good, not to be cowed down by oppositions and mild differences in styles and not to run away to our comfort zones is what is needed today.

Call of Duty – Different Tunes

I wrote an article in my blog titled ‘Call of duty. It discussed the need and relevance of political participation of more mature, educated and young people with values. After reading this post, I got a variety of responses. I felt that couple of these comments and my thoughts on these are worth sharing. And hence this.

“I have no time in my busy schedule”

Availability of time depends on what priority you ascribe to an activity in relation to all the other demands on you time.

If you think it is your responsibility to make a difference to your country, try to assign a small amount of time. One hour in a day? In a week? In a month??

You can write a meaningful article, a blog, tell a friend, forward a few emails and most importantly cast your vote. All these can make a difference

Can we be a bit less selfish when we give our time? Today we give our time only where we have to highest ROI to self/ family. But not willing to make our contribution which individually make little difference but can collectively make all the difference.

“I am not talented, capable or skilled to stand for an election and win.”

Participating in politics does not essentially mean standing for election.

Just like you participate in clubs like rotary/ lions or participate in religious activity you can participate in political process too.

You can act as a research supporter for your elected representatives or help in a variety of ways in the campaign of a person you support. At the minimum forward a few SMS endorsing your support.

You can act as a whistle blower and help publish the wrongdoing of the government or an officer.
You don’t have to be a part of a political party. But you can be a part of the political process.
May be you can put together a group that influences the local party decision of whom they are fielding.

May be you can put your money and power individually or collectively to get a good candidate elected. With the way the votes are split these days, the number needed to win may not be so big.

At the least by ensuring that each of your friends cast his/ her vote.