The Malaxmi Group- An Empowered Team in Action amidst a Global Pandemic

This caselet was first published by STEP on May 14, 2020; Co-Author: Pramodita Sharma, University of Vermont, USA; https://www.stepresearch.org/the-malaxmi-group-an-empowered-team-in-action-amidst-a-global-pandemic/

Headquartered in Hyderabad, a city of 6.8 million and a major technology centre of India, the Malaxmi Group is diversified Group that comprised of several small and medium enterprises (SMEs) in infrastructure, agriculture, irrigation and water management, and construction, with operations spread across India. Since its inception in 2006, founder Harish Chandra Prasad, a mechanical engineer and computer scientist, aspired to build a professional organization and hired his team very carefully to ensure a good fit with his vision of a focus on quality products and services, and values of building a sustainable business on strong ethical foundations. Rapid growth followed. By the end of 2019, the Group’s revenues exceeded $10 million with 300 plus employees. However, there was some catching up to do in terms of internal systems and strengthening relationships internally as well as externally.

Corona Virus in India

By first week of May, India had lost over 1,700 citizens to the virus and another 53,000 had tested positive. The country’s mortality rate of 1.0 per million population and proportion (4.2%) of positive amongst those tested were much lower than in many other countries. Nevertheless, in an attempt to contain the spread of this infectious virus in a populous nation of 1.3 billion with poor health infrastructure, on March 24th the Indian government imposed a complete lock down of the country without giving even one day notice. SMEs feared the devastating effect of the lockdown on them and the economy. Even Malaxmi Group had to stop all works spread across 16 project locations, severely affecting their operations.

Crisis Management at the Malaxmi Group

Malaxmi had invested in a strong team of professionals. They felt that their Group can emerge stronger in the post-covid era, if they utilise the lockdown time to revisit every assumption of the current business practices, set strong systems and processes for the future and pivot the organisation to meet the uncertainties of the future. While providing thought leadership and holding weekly meetings with the top management team, the founder empowered his CEO, Pavan Kumar Bang, to spearhead the exercise. Few proactive measures pre-lockdown and actions post lockdown include:

Vigilance and AgilityWhen stories of the Corona virus epidemic in Wuhan, China reached India in January 2020, Pavan and his team followed it closely as some of their spare part vendors were based in this region. Immediate efforts were made to look for alternative suppliers within India. By the time the borders were closed, and international travel restricted, an alternate supply chain had been established.

Work from Home ProtocolsAnticipating the work from home advisory, Malaxmi decided to implement work from home one week before the Government directives. This helped the team to be equipped with laptops, internet connections and other hardware. When many others were still absorbing the shock of the new work from home reality, a 9:00 am to 7:00 pm ‘work from home’ routine has already been established for the Group and they hit the lockdown running.

Aligning Team Members and StrategyEmployees were encouraged to make a list of routine work-related activities and at least three new activities that were not a part of their routine responsibilities that each of them would take up during the lockdown period. Teams of employees were assigned specific tasks with an overarching aim to rigorously assess, ideate, innovate and consequently update the current systems and processes to help the Group beat the competition and stay ahead in the game. In addition, taking steps to build long-term trust-based relationships with key internal and external stakeholders was stressed upon. Some of the initiatives taken by the Group to achieve these include:

Process Evaluation and improvements:

• A comprehensive list of drawings, do’s and don’ts, mistakes committed and their root cause analysis, and good practices followed at project sites and all projects worked on was prepared, along with pictures. They were catalogued and stored with a semi-automated retrieval system for future reference and learning.
• Every assumption and convention of the businesses was questioned. WHY-WHAT-HOW matrices were prepared for several products and processes.
• Project proposal templates were revamped and standardized for potential customers.
• Financial statements were analysed closely to identify areas of improvement. Long overdue credits and debits were either written-off or cleared. 

Automation and Software upgradation:

• Realising that there will be uncertainty in availability of skilled workers, technologies to semi-automate several activities in construction and project execution such as plastering, tile laying and painting were identified and evaluated. Ten percent of the capital budget for the next year was allocated for procuring such tools and equipment.
• Enterprise Resource Planning software that had been bought 5-6 months earlier, but the implementation was patchy due to lack of time, training and commitment, was now being implemented meticulously.

Vendor relationships:

• Regular calls were made to all vendors, adjusting payment schedules to support those who were in dire need and delayed payments for the better endowed after discussing with them.
• Vendors were requested to conduct e-training for technical team members on issues like site level quality assessment of products, correct installation methods and do’s and don’ts while handling their respective products.
• Pictorial do’s and don’ts manuals were prepared for working with vendors and customers.

Employee training and skill enhancements:

• Senior and skilled technicians were encouraged to make videos on improving quality, increasing speed of execution and standard operating procedures for future training purposes.
• It was decided to reskill and employ existing team members in other departments. Internal job postings were done, interviews conducted, and transfers done. For example, new Quality assurance and Safety department were created with internal transfers and additional training.
• Online training programs were identified for each employee to help them be better prepared for future challenges.
• Employees were encouraged to challenge underlying assumptions and practices embedded in the Group to identify more efficient, environment friendly and sustainable solutions.

Family Governance:

• On his part, Harish started to adapt to working in a paperless virtual environment.
• He undertook peer discussions and consultations with family business experts and lawyers during this period to understand the best ways to govern the family business, steps to be taken for longevity of the enterprise and plan for succession of ownership and wealth transfer.
• He actively started to engage in treasury management and functioning of the family office too.

Key Insights

• Thoughtful visionary leaders can form organizational systems and structures to bring calm and efficiency in the storm of a global pandemic.
• Empowered teams with clear guidance and accountability can find multi-dimensional opportunities to strengthen organizational processes, systems and relationships, in a crisis.
• Paradoxically an obligatory moment of pause is an opportunity for intense activity on important yet ignored projects in the everyday rush of a growing family enterprise.

Sources: http://malaxmi.in/  | http://chiraharit.com/ | First authors’ interview with the CEO

Pandemic Prescription: Resolve, Resources and Resetting of Beliefs

This article was first published in GARP Risk Intelligence on April 17, 2020. Co-author: V.P. Jyotsna

https://www.garp.org/#!/risk-intelligence/operational/people/a1Z1W000005C9jjUAC

What India’s Xennials, and their history, bring to the battles ahead

A recent GARP Risk Intelligence article, A View from South Asia: This Time Is Different, looked back from the pandemic crisis to how India’s Xennial generation experienced the evolution in technology, economy, business, sports, movies and fashion, and bore witness to terrorism, war and politics over four to five decades. In this article, we would like to consider the difference that this generation can make in the fight against COVID-19 and the need to reset some of our beliefs.

The Dichotomy: The Xennials bridged the gap between the Baby Boom-Gen X and Generation Y and Z cohorts, and from analog to the tech-savvy Millennials. We grew up believing that the Industrial Revolution was the greatest thing to have happened to society; and that globalization, free trade and free movement of goods, services and people was the present and the future. Now, increasingly, there is evidence that that’s what might damage the planet irrevocably, with severe consequences for the human species.

The work done by previous generations and taken forward by ours has helped unravel the puzzle of genes: The Human Genome Project and artificial intelligence have made tremendous progress in understanding human biology. Yet, this pandemic has brought the world to its knees. And it is hitting home the message that a microscopic protein sac containing one strand of RNA can destroy a whole species – that nothing that we thought mattered all this while really matters.

Changes in lifestyles, income levels and awareness introduced us to a sea change in cultures and values as to varying health conditions that we were not prepared for. Luckily (or unluckily) for us, advancements in the use of technology in healthcare research, pharma and genetics helped us cope to some extent in maintaining the physical health. And we continued to ignore the warnings.

Unbalancing Nature: A November 2019 National Geographic article was prophetic in describing how deforestation was causing bats to have “no other option than to fly elsewhere in search of food, carrying with them a deadly disease.” The article warned: “Whether such diseases stay confined to forest fringes or if they gain their own foothold in people, unleashing a potential pandemic, depends on their transmission.”

Within a couple of months of that publication, the world was gripped by the novel coronavirus. The steps required to contain the virus, like lockdowns and social distancing, are testing our mental and spiritual health, and we, as a conscious species, need to adapt quickly to a new order. So maybe the Xennials, who are in the prime of their productive lives, can now take charge and put to good use all the technology and administrative abilities developed, all the ways to approach data analysis and the math that we have learned, and we may yet be able to come out triumphant. But certainly, by then, we would have lost a lot.

This period should be used to develop the moral and ethical compass to keep pace with the progress of humankind. To do away with the arrogance that we can improve on nature. To evolve as a conscious species. And to reset the definitions of heroism.

Heroism: We are fond of role models and heroes. The image and words of a Spanish biological researcher on WhatsApp stuck with us: “You give footballers one million euros a month and biological researchers 1,800 euros. You are looking for a treatment now. Go to Cristiano Ronaldo or Messi and they will find you a cure”. Have we not created an imbalance in the way we idolize some and neglect the others?

Another WhatsApp forward doing the rounds showed doctors in white coats and referred to them as “Gods.” What immediately came to our minds were assaults and acts of violence against doctors that are not only on the rise, but also a significant challenge for healthcare providers. When we were younger, Indians grew up being told that there were two noble professions: teaching and treating people. In their late 30s and 40s, none of our doctor friends want their kids to be doctors. There is no work-life balance, burnout is very high, payoff is not commensurate with the stresses and challenges, and the satisfaction of serving people is at times difficult with corporatization of healthcare to a great extent.

Yet, with a pandemic now threatening to impact every person on the planet, we must pause to think if we chose our heroes wisely, and did we hold them accountable? When we complained that the facilities provided at our public hospitals was not up to standards, did we stop to think how that happened? Did we hold our politicians and public servants responsible?

If nothing else, let this pandemic teach us to choose our heroes wisely. Like wars and terrorism taught us to regard “army (wo)men” as heroes. People have started to realize that the army keeps our borders safe. We sleep peacefully because they stay awake for us in harsh climates and conditions.

While the stars of entertainment had been ruling our minds and lives all these years, we forgot who really deserves our respect and attention. It is time we recognize the people working behind stethoscopes, microscopes and hazmat suits as real, sustainable heroes, and not go back to abusing them once the storm of this pandemic subsides. And not just doctors, but every single nurse, ancillary healthcare worker, public officials who monitored the epidemic, philanthropists, and anyone who did anything to keep the system running to battle this unseen monster.

We Can: For the first time in history, an infectious disease, smallpox, was declared eradicated in 1980. Rinderpest was eradicated in 2001. Polio is near eradication. The Xennials have grown up believing that wars against deadly diseases can be won. They can with a never-give-up attitude, each of us doing the best that we can do in the circumstances, by not being a “covidiot,” and extending complete support to those on the frontlines.

Family businesses: Time to stand up

This article was first published in Business Standard on March 31, 2020. Co-author: Nandil Bhatia; https://www.business-standard.com/article/opinion/family-businesses-time-to-stand-up-120033101878_1.html

Taking care of people and communities in times of crisis can offer a brand or company many long-term benefits

The likely impact of the spread of coronavirus in a densely populated country like India has sent the country into an unprecedented state of lockdown. The economy was in the doldrums even before the virus struck. As things stand, the financial markets have been hit hard: The BSE Sensex has fallen close to 38 per cent from its peak of 41,952 points on January 14 to 26,055 points on March 24 eroding billions of dollars in investor wealth. Most "casual” workers, who form a third of India’s workforce, are forced to sit at home with no income. Domestic demand of most products and services, except essential items, has crashed. Self-employed people, who comprise half of India’s workforce, suddenly find their shops shut. Many of these small business owners will find it difficult to tide over the next few months when the demand will likely pick up.

It is in such times that business leaders must come to the forefront and lead the fight against the anticipated social and economic challenges. Business families in the country have always contributed and willingly given back to the society -- through their companies or in their personal capacity, long before the provisions related to the mandatory CSR spending under the Companies Act, 2013, came into force.

Some of India’s most prominent business houses have already announced relief plans. Tata Sons and Tata Trusts have committed Rs1,500 crore; Anand Mahindra, chairman of Mahindra Group, recently announced he would explore how his firm could turn some of Mahindra’s factories into facilities where ventilators could be manufactured to help take care of critically ill Covid-19 patients. Mahindra also offered to turn some of the resorts under the Mahindra Holidays brand into quarantine facilities in case the country falls short of space, given its inadequate public health system. Anil Agarwal of the Vedanta Group has set up a Rs 100 crore fund to assist communities and individuals most severely affected by the coronavirus-led slowdown and promised not to fire any temporary staff going forward. Agarwal also mentioned that there would be individual one-time insurance for Vedanta employees in case they or their family members get infected.

India's largest bicycle maker Hero Cycles has set up a Rs 100 crore contingency fund to tackle the virus. The group has said it was reaching out to different state governments to offer all possible help.

Reliance Industries has set up medical facilities dedicated to supporting the government in the treatment and isolation of Covid-19 patients. Continuation of pay for temporary workers, sanctioning meals for daily-wage laborers affected by the stoppage of work and ensuring support in providing essentials (such as grocery and hygiene products) through its retail chains are some of the other actions undertaken by the business house to mitigate the disruption faced by people. Many other business houses have also announced monetary contributions or offered help in other ways.

In the early days of the pandemic the Godrej Group and other FMCG players like Hindustan Unilever and Patanjali had said they were reducing the prices of soaps and hygiene products. They are also ramping up production of such items to fulfil the growing demand for such items.

However, for a country of the size of India which is facing a threat that most likely expose the weaknesses of its public health care systems, measures by a handful is not going to be enough. The government has also attempted to motivate the private sector to help out in this situation of despair. The recent order from the Ministry of Corporate Affairs allowing companies to attribute funds utilised to combat coronavirus as part of the mandatory CSR spending under the Companies Act 2013.

Beyond CSR, research has shown that taking care of people and communities in times of crisis can give a brand/company long-term benefits like employee loyalty, improved relationships with value-chain stakeholders such as suppliers.

Given the scale of impact this pandemic is going to have on India and globally, it is essential to acknowledge that all hands on deck is the need of the hour. Family firms are one of the major stakeholders in the Indian economy and their actions could make the ride less painful for many.

A View from South Asia: This Time Is Different

This article was first published in the GARP, Risk Intelligence on March 27, 2020; The author would like to thank Priyansh Hetamsaria for his inputs. The views expressed are personal.

https://www.garp.org/#!/risk-intelligence/operational/people/a1Z1W000005C1cAUAS

India’s pivotal ‘Xennial’ generation has lived through a lot, but nothing like the pandemic.

Countries around the world are struggling to keep up with the pandemic coronavirus. Global stock markets are on a downward spiral due to fears of recession, massive drops in demand, disruptions in supply chains and job losses amidst the rush towards virtual lockdowns. While companies have been asking employees to work from home, there are many sectors where such work arrangements are not possible – banking, tourism, retail shopping, agriculture, transportation and many more. The alternative could be to close the business.

In industries such as airlines, tourism, hospitality and restaurants, retailing, entertainment including theme parks like Universal Studios and Disney, luxury goods, fashion and autos – business has nosedived. Billions of dollars of investor wealth have evaporated. The cost to the global economy could be $2.7 trillion, equivalent to the entire GDP of the U.K., and that is just one early estimate. As of now, there is no end or bottom in sight.

The outbreak started in Wuhan, China, in the late 2019 and turned into an epidemic when the COVID-19 virus spread across China. On March 11, the World Health Organization declared it a pandemic. The number of cases worldwide has climbed into hundreds of thousands, touching virtually every country, and can be tracked online. Even the most developed countries are struggling to fight the disease with existing medical facilities.

These are clearly unprecedented times. As I write this article from India, in the city of Hyderabad, we are in virtual lockdown, working from home, and scared. Interstate borders have been closed, all public and private transportation facilities have been suspended, all commercial establishments shall remain closed except those in essential services like medicines and groceries. Even government officials and bank employees are working on rotation with minimal staff.

As of March 25, the lockdown is nationwide.

I belong to the Xennial generation, a cohort born between 1977 and 1985 that doesn’t quite fit in the Generation X or Millennial category. We did not go to war. We did not struggle for independence. We have seen many things in our 40 or so years. But nothing like this.

War and terrorism: Xennials like me have been locked up at home during the curfew imposed when Indira Gandhi was assassinated, and the Bombay bombings of 1993. We were glued to our televisions watching the Mumbai attacks in 2008, the September 11, 2001 attacks on the World Trade Center, and the Paris attacks of November 2015. We have lived through the Kargil war, the Gulf War, the killing of Osama bin Laden and the Uri surgical strikes. We have seen the Berlin Wall come down and the cold war end, the dissolution of the Soviet Union, the formation of the European Union and Brexit.

Technology: We are the generation that saw storage evolve from 1.44mb floppy disks to CDs to DVDs to Blu-rays to Pen Drives to Cloud; televisions make their way into our households and now into our palms; telephones evolve from bulky devices to sleek iPhones, even with facial recognition. We who sat in anticipation for the weekly popular music programs Binanca geet mala on radio, and the Chitrahar on the government broadcast channel Doordarshan, were in awe at the Sony Walkman. I owned a Sony Discman with pride before it became outdated by iPods. And now, iTunes and gaana.com rule.

Economy and reforms: Reform by stealth in India – by way of telecommunications, information technology and biotechnology – began when this generation was coming into the world. Dr. Manmohan Singh unleashed full-fledged economic reforms in 1991, seen on our television sets, without us completely realizing the impact when we were between the ages of 6 and 14. But there was palpable excitement in our middle-class business family. We saw the dot-com bubble burst, the birth of National Stock Exchange of India, the Harshad Mehta and Ketan Parekh scams, the subprime crisis and demonetization.

Business: We followed the rags-to-riches story of Dhirubhai Ambani of Reliance Industries being taken forward by his son Mukesh Ambani, and the riches-to-rags decline of his younger son Anil Ambani. We saw the rise – and recent downfall – of Yes Bank. We felt pride at the Golden Peacock award for corporate governance that Satyam Computer Services won in 2008, and the shock of the collapse of governance just a few months later. And there was the rise of Apple, Facebook and Amazon.

Sports: We grew up watching sporting heroes Sachin Tendulkar, the greatest cricketer of all time; the tennis great Roger Federer; and Cristiano Ronaldo in football. The cricket 20 overs format and the Indian Premier League were born and gained prominence during our youth.

Movies and fashion: The rise of the Khans, the superstar acting trio of Shahrukh, Amir and Salman; the movies Dilwale dulhaniya le jayenge, Qayamat se Qayamat tak and Maine pyaar kiya, which broke all box office records, tugged at our heartstrings, and the trio captured our hearts. Sushmita Sen and Aishwarya Rai took India and Indian beauty to the global stage by winning the Miss Universe and Miss World crowns in the same year (1994), and became successes as Bollywood actresses.

Yes, we have seen a lot. But not this. COVID-19 has left us with a feeling of helplessness. What does tomorrow hold? For how long will we need to maintain social distance from family, friends and colleagues? Until when will our supplies last? How do we entertain our young kids? And for how long? Will we have a job tomorrow? That person who came to deliver the newspaper, did he infect the newspaper? I just coughed – have I contracted the virus?

There are many questions. No answers. All we can do is try and stay safe and have hope.

Explained: How to be in the 'top league' of business education in India

This article was first published in Business Standard on December 12, 2019; https://www.business-standard.com/article/education/explained-how-to-be-in-the-top-league-of-business-education-in-india-119120301339_1.html

Rigour versus relevance is a debate that the B-schools need to engage in

Industrial revolution and rise of large corporations necessitated shareholders to employ agents who worked towards maximization of shareholders’ wealth. Business Schools globally played an important role in imparting education to students that would make them ready to manage and eventually lead these corporations. Technical knowledge was much valued and management education naturally was skewed towards imparting them.

The advancements in technology has made it easy for people to obtain hard skills as and when required. Similarly, many of the jobs now performed by MBA graduates will get performed by machines in the future. Some of the top global leaders have openly expressed that management education needs to undergo changes to bridge the gap between what is required in the real life versus what is taught in B-schools.

Speaking on education, at the World Economic Forum (2018), Jack Ma, the founder of Alibaba, emphasised on the need to move away from knowledge-based teaching to teaching the softer skills like “values, believing, independent thinking, teamwork, care for others...”. Similarly, Nitin Nohria, the dean of the Harvard Business School, admitted, “anyone can teach you how to read a P&L or value a derivative; those kinds of things have become commoditized. The bigger challenge is to teach America’s future business leaders how to be curious, humane, and moral; how to think outside the box about problems like funding the research for a new blockbuster drug. And how to be strong enough to stand up to Wall Street when it demands the opposite”.

In India too, the India skills report 2019 stated that only 36% of the MBA students in the country were employable. Further, hundreds of B-Schools across India are shutting down every year due to lack of offers from recruiters. While a few top schools like the ISB and IIMs are continuously re-evaluating the curriculum, marking themselves with the market demands and innovating teaching pedagogy, the trends are clearly shifting globally, and all B-Schools need to recalibrate their efforts to remain relevant.

Nassim Nicholas Taleb famously said, “In academia, there is no difference between academia & the real world. In the real world, there is”. How does a B-school bridge this difference? For one, Engage with stakeholders to add real time value to the community. Curriculum and faculty should be geared towards integrating theoretical knowledge to practice. Maximizing shareholders’ perspective is now passé with companies aspiring to move towards a more wholistic measure of performance like the Triple Bottom Line approach that looks at people and community (social responsibility), planet (environmental sustainability) and profit (the bottom line). B-Schools need to accordingly reset curriculum, faculty and mindset.

Research is an important component of all business schools. And rightly so. However, rigor versus relevance is a debate that the B-Schools need to engage in. Warren Bennis, a professor of management at the University of Southern California says that “Business schools have forgotten that they are a professional school.” Not all good researchers are good teachers and not all good teachers are good researchers. Add to this a component of practical experience and industry engagement. A healthy balance is required in a fast-changing world.

Letter versus Spirit- Ethics class doesn’t make one ethical. Knowing risk management tools didn’t prevent a Lehman brothers from collapsing. But knowing the consequences of not acting ethically or knowing what is at stake if a wholistic assessment of risk is not done, will act as a deterrent for people to take shortcuts. The school must understand, communicate and practice the basic values that it stands for and inculcate it in its students too. Strong personal and organizational values aid people to keep pace with changing times with integrity and in an ethical manner.

In order to be globally relevant, B-Schools in India must truly globalize. Efforts to attract sizeable proportion of international students, impart international experience, design globally relevant curriculum, promote cultural diversity and bring global faculty need to be made. Companies and marketplaces are global in nature after all.

Hard versus Soft Skills- Traditionally, management education has paid emphasis on hard skills and quite neglected soft skills. With technology getting more and more adept at providing on-the-go technical knowledge and soft skills proving to be vital to succeed, increased focus on enhancing skills like negotiation, human behaviour, leadership and structured thinking are needed. It is also important to allow students time to think and reflect so that it becomes a habit and incidences of breakdown and mental health issues can be avoided in the future.

Entrepreneurial- The schools themselves need to have entrepreneurial traits of curiosity and innovation. Executive education, new courses, flexible programs, online programs and specialized programs need to be launched to keep pace with market requirements.

In recent times, failure of many global giants due to flawed risk assessment, governance lapses, and judgement errors have raised questions about the effectiveness of the management education as the leaders of many of these corporations were educated at the top B-Schools in the world. Elite institutions in the US like Harvard, Stanford and MIT have reported a drop in the number of applications in the recent years. The Indian B-Schools can learn from these experiences and take proactive measures to be top of the league. Yet, let’s not ape the West. The West is looking to Us. Let’s tell them what we stand for. The East is the biggest market for global companies. Let’s make leaders in India, for the world. The leaders who understand these markets better than those educated in the US or Europe.

Views expressed are personal.

Passing the baton... smoothly

This article was first published by Business Standard on November 07, 2019. Co-author: S.Subramanian; https://www.business-standard.com/article/opinion/passing-the-baton-smoothly-119110700037_1.html

In an ideal world, a poorly performing business leader (Chairman, CEO) will be replaced by the board. In reality, this seldom happens. It could be due to interpersonal skills, family ties, difficulty in finding a replacement or the board is a “nodder’s club”. Hence, in many companies, performance or governance may not dictate the leader’s tenure and many of the leaders tend to stay at the helm of affairs for too long. As Marshall Goldsmith, renowned leadership coach, puts it, “If you are not forced to hand off the baton before you want to, you may be tempted to hold it and keep running.”

Even if the incumbent leader’s track record is stellar, too long a tenure as the leader may make it difficult for the successor to find her feet. Ratan Tata had to face board-level storms in Tata group companies after he took over the mantle from JRD Tata, who led the Tata group for half a century.

Anu Aga faced serious problems in Thermax when she became the Chairperson of the company after the untimely death of her husband Rohinton Aga. Krish Gopalakrishnan and Sibulal and later Vishal Sikka also faced issues in leading Infosys after N. R. Narayana Murthy stepped down as the Chairman in 2011, after having led it for three decades.

These three examples are unrelated in industry, location (head-office) and size. The long tenure of their leaders and the turbulent ride for the successor is a common thread though. While there are multiple reasons for the troubles faced by these companies after the new leadership took over, one of the main reasons seems to be the long and successful tenure of the predecessors.

Leadership style and culture: Edgar Schein in his celebrated work on leadership and culture observes that organizational culture and leadership are intertwined. When a leader occupies the top position for a long time, she shapes the culture of the organization to suit her style. The influence of leadership style is very strong with family-owned firms when the leader is also the controlling owner and the distinction between the leader and the company is fuzzy. Over a period of time, the organization culture becomes too dependent on the leader’s style to the extent that it loses its flexibility to adapt to a different style.

If the leader quits when the organization is in trouble, then the new leader gets an opportunity to shake up the organizational culture. However, when the long-serving leader quits when the organization is doing well, the new leader would find it difficult to make the organization adapt to her style. The persisting culture in the organization resists the change in leadership style, thereby creating a problem for the new leader. In the case of Tata group, JRD Tata had laissez-faire style of leadership that allowed the CEOs of the group companies to run the respective firms as their personal fiefdom. When Ratan Tata took over, he tried to adopt a different style and that did not go well with incumbent CEOs and resulted in legendary board room battles.

Similarly, at Thermax, Rohinton Aga had a style of leadership which resulted in an informal culture in the organization. However, that proved to be a hurdle for Anu Aga in reviving the fortunes of Thermax. She wrote in the in-house quarterly magazine Fireside (April-June 2000), "Our culture - once our strength - has in many ways contributed to our woes. We have also misinterpreted the culture to suit our convenience. In the name of 'Thermax' culture, we have chosen to opt out of unpleasant and unpopular decisions relating to business activities and people. We have justified this paralysis by arguing that Thermax is a people-oriented company”. She took drastic steps to change the culture and revived the fortunes of the company. 

We all know the turmoil that Infosys went through after the retirement of Mr Narayana Murthy. The bridge between values of “compassionate capitalism” practised by Murthy and “entrenched in capitalism” Vishal Sikka was too long and not easy to traverse.

Smooth and timely passage of the Baton: In today's highly competitive environment, firms cannot afford such painful transitions. Research has shown that leaders with long tenures are inclined to maintain status quo while the newly appointed leaders would like to make more strategic changes to either make an impact or to accelerate growth. Now, an organization cannot always be in a “stable” mode. They will miss out on opportunities. At the same time, an organization cannot perpetually be in “change” mode. It will tire the people and the organization.

A healthy balance, as in everything else, is needed even for leadership tenure. In the Dabur group, the tenure of the Chairman is around 10-12 years, long enough for the individual to make his mark, short enough to ensure that the firm/group does not depend too much on the individual and entrenchment is avoided. Similar is the case with Murugappa Group.

Optimal tenure of a leader may be different in different industries, different organization structures and ownerships, leaders’ own attitude towards change, firm’s financial position and economic environment and easy availability of potential successors. Beyond her “peak”, a leader may be able to maintain “status quo”, but may not be able to remain “relevant” with changes in technology, emerging markets, changing regulations, environment and mindsets. Therefore, it is imperative for the long-term success of the firm that the leadership succession happens in a planned manner, as far as possible, and at the right time.

Blockchain applications: Bringing in the next wave of new technology jobs

This article was first published in Business Today on November 6, 2019. Co-Author: Sanjay Fuloria; https://www.businesstoday.in/opinion/columns/blockchain-applications-next-wave-of-new-technology-jobs-forget-analytics/story/388743.html

Blockchain applications are suitable across industries due to their security, immutability and decentralised properties. This means the next wave of new technology jobs would come from blockchain.

Blockchain is hot news these days. There was a time, in the not so distant past, when working-age people were going after analytics courses. People's inboxes were flooded by emails from sundry institutes and organisations offering analytics courses, degrees and diplomas.

Everybody wanted to get into analytics. While the availability of data is huge and the requirement to analyse and make sense of it is still there, analytics doesn't seem to be so popular now. Blockchain seems to be the next analytics.

As per Yli-Huumo etal, the idea of Blockchain started in 2008 (Yli-Huumo, Ko, Choi etal, 2016). Blockchain is defined, as the name suggests, as a chain of blocks of information. This is stored in a database. Merriam Webster defines blockchain as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way."

Blockchain is also defined as "a digital ledger of economic transactions that is fully public, continually updated by countless users, and considered by many impossible to corrupt." (Carlozo, 2017). The use of cryptography makes the blockchain transactions trustworthy and secure (Holbl, Kompara etal). All cryptocurrencies including bitcoin have the blockchain technology at its base.

The above properties of blockchain make it applicable across industries. As usual, banking was the first industry to make use of blockchain technology. The banking industry has always been the first mover when it comes to the latest technology. Barclays and UBS are trying the blockchain technology to speed up settlement and their other back-office functions.

This could lead to an annual saving of $ 20 billion in costs. Middlemen could be eliminated just like that. Payment collection and automation of digital invoices are other applications in the banking industry. Crowdz is a B2B startup that is blockchain-based.

Barclays bank has invested in Crowdz in May 2019. JPM Coin is being launched by JP Morgan to enable transactions between one institute and the other. JPM Coin is based on blockchain technology.

Blockchain technology is slated to revolutionise messaging. It is going to be used to build an improved and secure communication infrastructure. The security expectations would be uniform across platforms. Currently, different platforms have different protocols which might compromise security.

SuchApp is working at creating a "5G ecosphere" using blockchain. Commercial transactions would also be possible on SuchApp. Then there is BlockMesh. This will work outside the range of cellular towers. It will work on the concept of peer to peer networking.

Telegram Open Network (TON) is being developed by the popular social networking app Telegram. They are planning to get into censor less browsing, payments and file storage. Other chat platforms like Kik are also raising money via Initial Coin Offering (ICO).

Kik is into in-app currency. There are other nuances which some companies utilise to make themselves unique. There's an app called Echo that uses a different protocol named Interplanetary File System (IPFS) which leads to quicker messaging. Echo is unique because other apps require the interacting parties to access the blockchain directly whereas Echo bypasses this by using the IPFS client.

Ride-sharing services have started using blockchain technology in a big way. Although we hear a lot about ride-sharing, according to a U.S. report, only 1% of the Vehicle Miles Travelled (VMT) (standard terminology in the ride-sharing industry) are accounted for by the ridesharing services.

There is a huge opportunity in rural markets. Blockchain technology can help by removing intermediaries between the driver and the rider. Driver vetting is another advantage of blockchain technology. Smart contracts make the rules and regulations transparent. These can be viewed by any stakeholder of the platform.

Any variations would be accomplished by enforcing smart contracts. The drivers' traffic record could be added to the blockchain to be used later for feedback and corrective measures. An Israeli company is working on a community-owned transportation platform that utilises any unused capacity for the benefit of the rider.

They are using the blockchain technology to device a ''fair share" reward system for all the stakeholders. There's another example of Arcade City that uses blockchain technology for all transactions. They permit drivers to set their own rates, build their own clientele of riders, and provide other services like delivery.

Education Industry has a lot of potential for the use of blockchain technology. Academic credentials could be added to the blockchain. This would make the verification process easy. Any fraudulent claims could be nipped in the bud.

There is a U.S. based startup, Learning Machine, that has created a toolset called Blockcerts that can be used to prepare, provide, view, and verify blockchain-based certificates. Student records can be shared and secured using blockchain. There are a lot of education apps and services available nowadays. Identity management for these services is a major problem. There are blockchain-based platforms available that help users carry their identity around the internet.

Internet of Things (IoT) could use blockchain technology for its advantage. A new concept christened as Autonomous Decentralised Peer-to-Peer Telemetry (ADEPT) uses a technology similar to blockchain to let devices (things) to communicate with each other directly without the presence of any mediator.

Data security is a major challenge with IoT as multiple devices get connected in real-time. If the data gets leaked or it is in some way not secure, it could be detrimental for all the concerned parties. The security aspect of blockchain could be utilised to its full potential when dealing with IoT.

Real Estate industry is another where blockchain technology could play a pivotal role. There are software as a service (SaaS) platforms where property information could be put in and documents could be recorded.

Blockchain applications are suitable across industries due to their security, immutability and decentralised properties. This means the next wave of new technology jobs would come from blockchain. Get ready to be swarmed by promotions from organisations/institutions offering blockchain courses. Working knowledge of blockchain could be the next great differentiator.

Social Media Analytics and Its Place in Management Education

This article was first published in GARP, Risk Intelligence on August 30, 2019. Co-author: Sanjay Fuloria; https://www.garp.org/#!/risk-intelligence/technology/data/a1Z1W000003mAbvUAE

Business schools can teach the power of the technology and stress its ethical application

There is a surfeit of social media data available for anyone who cares to generate insights and use it for legitimate (or illegitimate) purposes. However, to capture the data in the best possible manner and to get the desired outcome, one must know what to look for and where.

Space, time, content and network are the four key dimensions of data collected or information disseminated through social media. But how does one capture and analyze these? Are the management graduates and post-graduates of today equipped to make the most of this data? The point we will try to make is that social media analytics can be used for making positive impact on business outcomes and hence must be introduced in B-schools as an elective.

Calculating the impact of company marketing campaigns is one such use. In order to do this, questions about the brand could be asked on any of the social media platforms such as Twitter. These questions could generate a lot of discussion about the brand. Then, the company that has launched the product can measure sentiments through the discussions. Twitter metrics like engagement rate, potential impressions, geographical locations, tweet frequency, hashtag usage, top tweets, and followers' activities can be measured. All this would give a fair idea about the success or failure of the marketing campaign.

Social media analytics can help organizations learn from their competitors. By analyzing the social media activity of competitors, organizations can understand what new product launches are happening, how the customers are reacting, what are the good/bad product features, the kinds of complaints customers have, etc. This analysis could lead to prevention of similar mistakes by the company that is analyzing the data.

The use of social media in trading and investing is well documented. In financial markets, information and the speed of information is the key. Short-run movements in the Dow Jones average can be quite accurately predicted through the sentiments expressed in tweets, thereby giving an edge to traders able to make such predictions.

Soft and Hard Skills

On the jobs front, analysis of social media sites like LinkedIn could help users comprehend the types of jobs that are aplenty. They could also help indicate supply and demand for various skills in the jobs market. This kind of social media analytics could be most useful to MBA students who are about to get into a full-time career.

A quick search on the internet for most sought-after soft skills that companies are looking for in 2019 are creativity, persuasion, collaboration, adaptability, and time management. The most in-demand hard skills are cloud computing, artificial intelligence, analytical reasoning, and user interface design.

Another important aspect of business that could be strengthened by the right use of social media analytics is problem resolution. If a customer complains about a product or service on social media, the company should try to resolve the issue in a timely manner, in real time if practically possible. If the social media analytics reveals a sizeable number of complaints about the same service or the same feature, then the company can take stronger action to rectify the problem: changing/correcting the feature, replacing the person handling the issue, or maybe even re-launching the product/service with improved performance.

Management Initiative

In all this, the management professionals in any organization would play a key role, as they are the decision-makers. If they understand how to use social media analytics, then the job for any organization would become easier.

Any analytics starts with defining objectives clearly, asking the right questions, collecting the right data, analyzing the data and, finally, gathering insights from the analysis. The two most important links in the analytics value chain are clear objectives and asking the right questions. If these two aspects can be somehow hard-wired into the brains of management professionals, right from their MBA days, the outcomes would be better.

MBA curriculums have many analytical subjects these days. Introducing social media analytics into the curriculum would be an added advantage. The topics to be covered should include open-source programming languages like R or Python.

However, it needs to be realized that there are two sides to every coin. Social media analytics can also be used to influence outcomes illegitimately. Cambridge Analytica, a London-based election consulting firm, was in the news for analyzing data from an estimated 50 million Facebook profiles for insights that were used to influence election results in the U.S. and other countries. Online materials favoring candidates were delivered to individuals based on their psychographic profiles. This was a wrong and sinister use of social media analytics that compromised personal information and wrongly influenced election outcomes. Hence, the study of social media analytics must have an ethics component as well.

Who Will Act on Income Inequality?

Because of its far-reaching consequences, governments must be involved

This article was first published in GARP, Risk Intelligence on June 28, 2019. Co-author: Sai Nitya Bodavala; https://www.garp.org/#!/risk-intelligence/all/all/a1Z1W00000551qTUAQ

In his victory speech on May 23, 2019, India's newly re-elected prime minister, Narendra Modi, said that “from now on, India will only have two castes: the poor and those that want to remove poverty.”

Historically, the Indian government focused policymaking on alleviating the social inequality cemented by caste differences. The primary focus was bridging the gap between the upper and lower castes through financial and educational parity, like reservations in educational institutions and government jobs. Of late, however, there has been a shift to targeting policies to inequalities presented by income.

India began to face issues of heightened inequality post-1991, when economic reforms and liberalization were initiated, ending the license-quota regime, following a balance of payments crisis. Pre-reform, the public sector ensured that resources were diverted to those geographic areas that required them, and thereby leveled the playing field. After the private sector entered the playing field, however, things changed. The private sector focused on cutting costs and profit-making. Businesses moved to more developed areas where access to resources was easier and cheaper. This led to regional income inequality.

During its last tenure, the National Democratic Alliance (NDA) government, led by Modi, targeted income inequality with a bill that aims to introduce a 10% reservation in jobs and educational institutions for those belonging to the “economically backward” sections of the general category. Economically backward is defined as families receiving less than Rs. 800,000 of income per annum and possessing fewer than five acres of land, in addition to other measures based on residence.

In the recently held elections, the Congress party's manifesto also incorporated an element that aimed to do the same. It proposed the Nyuntam Aay Yojana (NYAY) scheme, according to which 50 million of the poorest families in India would receive Rs. 72,000 a year. It was assumed that each family has at least five members, meaning that 250 million people would benefit – if the Congress party had come to power and implemented scheme.

UBI and Wealth Taxes

India is not alone in moving toward policies that aim to reduce income inequality. Andrew Yang, a candidate for the Democratic presidential nomination in the United States, has based his campaign on the idea of Universal Basic Income, which guarantees to each adult a certain amount of money per month. Yang proposes to pay for UBI through a value added tax (VAT) and the revenue from the envisaged increase in productivity from receiving an unconditional cash transfer.

Billionaire philanthropist Eli Broad, writing in the New York Times, said, “Our country must do something bigger and more radical [than steps such as raising the minimum wage and building affordable housing], starting with the most unfair area of federal policy: our tax code. It's time to start talking seriously about a wealth tax . . .

“Don't get me wrong: I am not advocating an end to the capitalist system that's yielded some of the greatest gains in prosperity and innovation in human history. I simply believe it's time for those of us with great wealth to commit to reducing income inequality, starting with the demand to be taxed at a higher rate than everyone else.”

If governments are attempting to curb income inequality, it is only right to explore why.

The Bigger Picture

The Gini coefficient is used to measure income inequality. On the scale of 0 to 100, 0 is perfect income equality, with everyone receiving an equal amount. At 100, there is perfect inequality, with one person receiveng all income.

Studies have found that low levels of income inequality may actually be beneficial for the economy.

Income inequality denies educational and culturally stimulating opportunities for children from low-income households. This deprivation keeps them from obtaining relevant skills that the job market requires, making them less employable. They end up being paid low wages.

The wealthy, meanwhile, produce with the intention of earning profits. If the masses cannot afford to buy what is produced, the wealthy suffer losses, leading to their inability to reinvest, and making the economy worse off. Income inequality at a level below 27 on the scale allows for entrepreneurs to invest more into their businesses, thereby allowing for greater economic growth. On the other hand, a high level of inequality has a snowball effect, with negative repercussions for all.

A 2015 study by the Organisation for Economic and Cooperation and Development (OECD) found that between 1990 and 2010, the rising income and wealth inequality in the U.S. “knocked about five percentage points off cumulative GDP per capita over that period.” It is thereby a misconception that income inequality is an issue only of those in the low-income bracket. It affects the economy as a whole.

Crime

A paper by Nobel Prize-winning economist Gary Becker, “Crime and Punishment: An Economic Approach,” posited that wherever there exists a large gap between the poor and the rich, there is bound to be higher crime. OECD's 2013 How's Life report also noted that “socio-economic inequality seems to play a central role in the occurrence of criminal victimization as disadvantaged people are more likely to perpetrate and to be victims of crimes.”

Those in the lower-income bracket become vulnerable in that they are unable to access the resources that are abundantly available to those with money. This vulnerability manifests in two ways: they may either take to crime in order to meet their needs, or become victims of criminal activity because they do not have the means to protect themselves.

According to Martin Daly, professor emeritus of psychology and neuroscience at McMaster University, inequality predicts homicide rates “better than any other variable.”

Health

In countries where the burden of paying for health care rests with individuals, an unforeseen expense can spell disaster for a low-income household. This could lead to compromises being made on the safety assured by an established medical practice that is expensive, in favor of one that is cheaper.

Aside from the issue of affordability, a 2017 World Health Organization and OECD report shows that in countries where the income gap between the 10th and the 90th percentile of the populace is very wide have higher rates of infant mortality.

Mental health also suffers as a consequence of inequality. It was found that with an increase of 0.2 of a country's Gini coefficient, there were eight more incidences of schizophrenia per 100,000 people.

Caste

According to the 2018 World Inequality Report by the World Inequality Lab at the Paris School of Economics, the top 10% in India control 55% of India's total wealth. In light of this undeniable problem, we may not, however, conclude that caste can no longer be a basis for identifying inequality. Caste has been and continues to be a basis for discrimination and ill-treatment in India. The ill-effects of negative discrimination based on caste and those of income inequality are similar. The effects include being denied social mobility, occupational mobility and access to basic resources.

The intrinsic link between income inequality and the caste hierarchy can be seen in the table.

	Scheduled Caste	Scheduled Tribe	Other Backward Castes	Forward Caste (Brahmin)	Forward Caste (Non-Brahmin)	Muslim	Average
Annual Consumption of households in Rupees	89,356	75,216	104,099	167,013	164,633	105,538	113,222

Source: The Economic Times

It is evident that those who belong to the backward classes spend (consumption as a proxy for income here) far less than those belonging to the forward caste categories, as well as the average. It is also interesting to note that religious minorities such as Muslims also earn less than the average.

There exists a simplistic notion that taxing the rich and handing money to the poor is an effective solution for income inequality. It is erroneous. Income inequality is a result of problems and prejudices that are far more deeply rooted, such as the torment inflicted by the caste system. Both must be tackled simultaneously, since continued discrimination based on caste will only impede progress made on the income equality front. 

Lack of Reliable Data

Most studies in India, such as those of the National Sample Survey Office (NSSO), focus on consumption or wealth rather than on income. Official estimates of inequality present a picture that doesn't seem alarming, while other surveys, like those of the India Human Development Survey (IHDS), present a high number.

To add to the confusion, People's Research on India's Economy (PRICE) found that the number may be lower than what the IHDS suggested. The different methods by which studies gather data on income are bound to suggest varying figures for inequality. Some studies rely on tax filings, some on survey data and others on national statistics. The paucity of accurate data implies that the policies implemented may not yield optimal results.

Conclusion

Income inequality is today's reality. Considering how important parity is for the development of the country, the issue must be continuously addressed in order to be mitigated.

In the past, the Indian government has dealt with income inequality by providing employment opportunities and direct benefits, while private players have managed to contribute to the shrinking of this chasm through corporate social responsibility (CSR) activities. The evidence suggests however, that the government schemes could be better implemented and thought out.

The NDA government showed intent to overcome this issue in their previous tenure, and Modi's speech has inspired confidence that they intend to carry out their promises in the next five years. All that is left now is for them to act decisively and show lasting results, because although the private sector has a role to play, the ultimate responsibility of dealing with income inequality must lie with the government.