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Friday, September 16, 2011

The importance of sugarcoating

"The man who calls a spade a spade should be made to use one, that is all he's fit for"
This quote sums it all about how much directness is discouraged in the workplace and even elsewhere. For all the lip service we pay to speaking our mind, the fact remains that packaging the message in verbal containers is must. Right from the early years where parents give a sugar coated bitter medicine pill to children, this approach should be instilled in us early on. The fable about pretending cold rather than telling the lion that his breath stinks, should also drive home the point. Why else would a marketer tell you to take home(instead of buy) his product? There are other examples which I complied across the various electives studied here, which I recount below
  • Carrying out BPR in the guise of ERP:- Post the scorched earth strategy of 'neutron Jack', BPR become a four letter word for employees. So now, the excuse of ERP software introduction is taken to carry out business re-engineering. Training etc is all given, but the fact is that BPR may be the main motive to implement an ERP, instead it being the other way around
  • PSU divestment to solve HR issues:- The same Govt which is too timid to solve HR issues of its premier companies like Nevyeli Lignite, Air India etc, has no compunctions divesting its stake(admittedly over the vociferous opposition of the Left/labour unions) so that the private sector partner/buyer can wield the hatchet and solve those problems. 
  • MBA speak:- A visiting faculty Mr Sunil Shah has a well developed sense of humour and ability to poke fun at the MBA jargon, by regaling us with examples of MBA jargon. For instance, code of conduct is nothing but modern day version of 'dharma'. Beyond such a trivial example, the fact remains that the jargon often helps obscure the actual work done. For example, fooling the customer that XYZ celebrity actually uses the product they recomend, is given the jargon 'framing' etc. 
  • Deal Sweeteners:- In finance deals(M&As, LBOs, financing), deal sweeteners like stock warrants, convertible features, consulting contracts, sweetheart deals etc are routinely thrown in to make an otherwise bad deal somewhat palatable, atleast appearances wise.
  • Most of HR/OB:- In these subjects, the essential lesson is to preserve appearances by bundling praise and criticism in equal measures etc.  
  • “Placebic”  information:-Psychologists studies show that By  simply  using  the  word  “because”  in  a sentence, someone was able  to persuade people  to believe  that  the  justification was
    true and meaningful. We appear to like reasons, however banal they may be.

Thursday, September 8, 2011

In the real world, nobody prepares decision trees and writes WAC reports

The title is a gem mentioned by visiting Prof Sunil Shah(PGP 1979, IIMA), who takes the elective on 'Family Business Dynamics'. As a consultant in the field with an amazing sense of humour, Mr Shah is maybe a heir to the renowned Prof Ravichandran when it comes to one liners/insights, albeit without that biting humour. Anyways, in the context of family business, he mentioned that like how an ounce of loyalty is worth a pound of wisdom, entrepreneurs would rely on their trusted ones for decision making, and that this leads to later problems.

This got me thinking that when we leave these red walls for brighter corporate pastures, we may have mastered the art of analysis, presentations and team dynamics. But in the corporate jungle of outside, these are quickly subordinated to that weird animal 'organizational dynamics'-scoffed at by most graduates as 'soft','fraud' etc. This post gives a flavour of stuff not taught at campus, but which is equally or more important. I know some others have written books on what is not taught at BSchool, so please excuse the overlap if any(since I did not read those books).
  • Aspirations:-'Professional' management doctrine propounded by Bschools/regulators/corporate governance 'experts' seems to imagine that the promoter will give his heart and soul to the company, and then fade away post listing to give more power to the independent directors/professional management/minority shareholders. That will obviously not happen, but the whole corporate governance edifice in India seems to envisage a consultative process, which just happens on paper. Unless we realize and accept that promoters/founder directors are humans with their own aspirations and goals, any strategy based on changing that is bound to fail. For example, the noble intent of having independent directors has merely given jobs to plaint names/drinking buddies.
  • Power linked to purse strings:- He who pays the piper calls the tunes. This is universally true, but more so in status conscious societies in India where the budget size/office furnishings would mean a lot to the manager than even compensation. Hence, decisions involving shifting of power hierarchies(like every major decision would involve) should factor in this aspect. This is more so for family business.
  • Non financial factors:- Right from dealing with labour, environmental issues, ethical concerns etc, the manager must factor in other things, which case discussions rarely bring out. I've noticed that barring marketing/strategy cases, other disciplines(particularly finance) rarely bring out non financial aspects during the case discussion/analysis/presentations. But one should think of what is the new non financial elephant in the room. For instance, the 2011 India exposed several of these like fair land acquisition, IPCC carbon debate, political-business-media ugly underbelly etc.
  • Path dependency: Much as one knows the virtues of zero base budgeting and all, the past will affect the future in more ways that one, and deviating from it will need solid reasons and support. 
  • Old Guard:- Their years with the company often exceeds the age/total experience of the consultant/new joinee, and therefore they would legitimately feel that the newcomer knows nothing. While a new CEO can finesse them by giving them ceremonial appointments like Chairman, the old guard issue can often sink the first 100 days and beyond of new entrants.
  • Stock v/s flow:-Projections are much easier on a flow basis(totally ignore previous year's impact on this year). But often, stock variables are more apt as any marketing major would tell you, especially for durables. Similarly, this ties into the path dependency argument covered above.
  • Short on execution less on policy:-I've often noticed my classmates and others construct beautiful policy documents/suggestions which gloss over the implementation issues. They are often ignorant of the reports which came before them(often with same points) which are now gathering dust. And as the C&AG reports/Lokpal crisis would bring out, India needs better implementation of its existing policies/laws, not necessarily a new policy in itself.
  • Sensitivity Analysis/Downside:-Being an eternal optimist is must in business, and even as a banker/consultant. But one should don the cynical act/be professionally skeptical to factor in the downside risk and value it accordingly. Otherwise, this will be a weak link in the chain for opponents to pick on and argue for shelving the whole idea.
  • Acceptable v/s Right recommendations:-  The consultant's classic dilema is whether to do the right thing(suggest unpopular changes and have himself replaced) or whether to be politically correct by supporting their employer's unsaid views. While the public stance of consulting firms is that they add value by doing the right thing, there is no doubt that significant sugar coating/modification happens  to make the report more 'acceptable'