Interview with Dr. Bala V BalachandranThe interview was conducted Dr. Nagendra V Chowdary, Consulting Editor, EffectiveExe...
Interview with                          Dr. Bala V Balachandran        It was clear to me that in many companies both in t...
 Firstly, congratulations for being       important themes. 1. Global              are your reflections on the way thean...
you understand the instrument?” I          Corporate Affairs is moving slowly,        markets, but the risks of the multi-...
argument?                                   Venture Capitalist in the Dot Com        will still be a formidable market on ...
leadership and honesty, integrity and      A year after the global economic          over, you will see those who madetr...
is the driving force behind those          pricing and service levels. Greater         Should boards view the currentdec...
Bhagwad Gita and Asian scriptureswhich are valuable sources ofdirection and wisdom) in revampingand designing their course...
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Interview With Dr. Bala V Balachandran


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Interview with Dr Bala Balachandran, Founder, Great Lakes Institute of Management

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Interview With Dr. Bala V Balachandran

  1. 1. Interview with Dr. Bala V BalachandranThe interview was conducted Dr. Nagendra V Chowdary, Consulting Editor, EffectiveExecutive and Dean, IBSCDC, Hyderabad.This interview was originally published in Effective Executive, IUP, Dec 2009.Copyright © Dec 2009, IBSCDCNo part of this publication may be copied, reproduced or distributed, stored in aretrieval system, used in a spreadsheet, or transmitted in any form or medium –electronic, mechanical, photocopying, recording, or otherwise – without the permissionof IBSCDC.
  2. 2. Interview with Dr. Bala V Balachandran It was clear to me that in many companies both in the US and in India, the top line was a VANITY, the middle line was a CALAMITY and therefore the bottom line has no SANITY. It is clear that the only REALITY is cash flow. –Dr. Bala V BalachandranD r . B a la V B a la c h a n d r a n b e g a n h is s u p p o r t s y s t e m s . H e h a s b e e n a c t u a lly t e a c h in g c a r e e r in 1 9 6 0 w h ile a g r a d u a t e in v o lv e d in s e t t in g u p M a n a g e m e n t s t u d e n t a t A n n a m a la i U n iv e r s it y , In d ia . In s t it u t e s in In d ia a n d w a s in v o lv e d in In 1 9 6 7 h e m o v e d t o t h e U n iv e r s it y o f t h e M B A P r o g r a m s a t M D I, G u r g a o n in D a y t o n a n d in 1 9 7 1 , t o C a r n e g ie - M e llo n e a r ly 1 9 9 0 s a n d IS B a t H y d e r a b a d a t U n iv e r s it y , P it t s b u r g h , w h e r e h e t a u g h t t h e t u r n o f t h is c e n t u r y a n d G r e a t L a k e s m a n a g e m e n t c o u r s e s w h ile w o r k in g o n In s t it u t e o f M a n a g e m e n t a t C h e n n a i in h is d o c t o r a t e . In 1 9 7 3 h e jo in e d t h e 2 0 0 4 . G r e a t L a k e s In s t it u t e o f K e llo g g G r a d u a t e S c h o o l o f M a n a g e m e n t is h is d r e a m p r o je c t o f M a n a g e m e n t f a c u lt y . F r o m 1 9 7 9 - 8 3 h e p u t t in g C h e n n a i o n t h e In t e r n a t io n a l c h a ir e d t h e D e p a r t m e n t o f A c c o u n t in g M a n a g e m e n t E d u c a t io n M a p . H e is t h e a n d In f o r m a t io n S y s t e m s ; h e w a s f o u n d e r a n d H o n o r a r y D e a n o f t h is a p p o in t e d D is t in g u is h e d P r o f e s s o r o f In t e r n a t io n a l C la s s In s t it u t e . H e w a s A c c o u n t in g a n d In f o r m a t io n S y s t e m s a w a r d e d t h e ‘P a d m a s h r i’ in 2 0 0 1 b y t h e a n d D e c is io n S c ie n c e s in 1 9 8 4 . H e w a s G o v e r n m e n t o f In d ia in r e c o g n it io n o f a ls o d ir e c t o r o f t h e A c c o u n t in g h is c o n t r ib u t io n t o t h e e d u c a t io n in In d ia . R e s e a r c h C e n t e r . B a la c h a n d r a n ’s H e a ls o h a s t h e r a r e h o n o r ( f o r a n In d ia n t e a c h in g in t e r e s t s in c lu d e m a n a g e r ia l in A m e r ic a ) o f h a v in g a n e n d o w e d c h a ir C o n t e m p o r a r y A c c o u n t in g R e s e a r c h , a c c o u n t in g , a u d it in g , m a n a g e m e n t p r o f e s s o r s h ip in h is n a m e . S e v e r a l a n d t h e J o u r n a l o f A c c o u n t in g , A u d it in g in f o r m a t io n s y s t e m s , a n d m a t h e m a t ic a l c o lle a g u e s f r o m K e llo g g h a v e le d a a n d F in a n c e . H is r e s e a r c h d e a ls w it h p r o g r a m m in g . H e is o n e o f t h e t h r e e c a m p a ig n t o r a is e $ 1 m n f o r a n p e r f o r m a n c e e v a lu a t io n , c o s t K e llo g g f a c u lt y m e m b e r s w h o s t a r t e d e n d o w e d p r o f e s s o r s h ip a t K e llo g g m a n a g e m e n t , a u d it p la n n in g , a llo c a t io n t h e In f o r m a t io n R e s o u r c e M a n a g e m e n t S c h o o l o f M a n a g e m e n t in P r o f . B a la V m o d e ls , a n d f o r e c a s t in g . H is r e c e n t P r o g r a m ( IR M ) a t N o r t h w e s t e r n in B a la c h a n d r a n ’s n a m e in r e c o g n it io n o f w o r k in c lu d e s a u d it o r s ’ le g a l lia b ilit y 1 9 7 4 . H e h a s a u t h o re d m o re t h a n 5 5 h is in v a lu a b le a n d t ir e le s s s e r v ic e t o t h e a n d g a m e t h e o r e t ic c o s t a llo c a t io n r e s e a r c h a r t ic le s a n d is c u r r e n t ly w r it in g In s t it u t e o v e r t h e la s t t h r e e d e c a d e s . m o d e ls w it h t r a n s f e r p r ic in g . H is w o r k a m a n a g e r ia l a c c o u n t in g t e x t b o o k w it h h a s e a r n e d n u m e r o u s s c h o la s t ic h o n o r s , e m p h a s is o n c o s t m a n a g e m e n t in a n a w a r d s , a n d f e llo w s h ip s , a n d h e s e r v e s a u t o m a t e d m a n u f a c t u r in g e n v ir o n m e n t . a s a c o n s u lt a n t t o s e n io r m a n a g e m e n t H e is d e p a r t m e n t e d it o r in a c c o u n t in g in in d u s t r y , a s w e ll a s t o t h e U S A ir f o r M a n a g e m e n t S c ie n c e , a s s o c ia t e F o r c e , in t h e a r e a s o f a c c o u n t in g , e d it o r f o r T h e A c c o u n t in g R e v ie w a n d f o r e c a s t in g , a n d s t r a t e g ic d e c is io n is o n t h e e d it o r ia l b o a r d s o f I N T E R V I EW 2
  3. 3.  Firstly, congratulations for being important themes. 1. Global are your reflections on the way thean illustrious and distinguished Mindset, Indian Roots, 2. Highest world changed since then?professor and for having taken ‘Great Quality at Affordable cost or US Top The US financial crisis was expectedLakes’ to great heights in such a short Schools Quality but Indian Prices as early as 2006 because oftime? What was the trigger for you to and 3. Meritocracy Transparency and instruments like subprime lendinghave conceptualized Great Lakes Innovative Curriculum with a 12 and under regulated environment,model of management education? months model. In other words, a irrational exuberence as AlanMy tryst with Institution building for Super Convex combination of IIM A, Greenspan stated and many otherhigher management education goes B or C and ISB. The result is Great things. It was clear to me that inback to the days of 1973 when the Lakes leveraging my relationships, many companies both in the US andfirst six faculty of IIM Bangalore, were networks and experience. We in India, the top line was a VANITY,hired at my home in Chicago with N announced in July 2003 and the first the middle line was a CALAMITYS Ramasamy at the helm of affairs. class started in April 29, 2004 with and therefore the bottom line has noLooking back, I realize that the seed 124 students. Again the trigger is SANITY. It is clear that the onlyfor Great Lakes was sown right then. I location and timing which I did, in REALITY is cash flow. Thehad a plan, but no resources or more spite of my quintuple bypass surgery mathematicians use complicatedimportantly – no experience. The in 2002. models to create financialopportunity came with MDI,  During your very distinguished instruments and “Sophisticated”Gurgaon, where I worked with the and illustrious career you would derivatives which are not easilyUNDP grant of US$700,000 and the have witnessed several economic comprehensible and morerest as they say, is history. crises and for many you would have importantly do not stand the test ofThe MDI experience at Gurgaon laid been consulted. How do you describe time in a fiercely competitive, highlythe foundation and watered the the global economy’s mood right dependant and dynamic commercialseedling between 1991 and 1997 now? environment and to add to that thesewhere I gained significant exposure to Beaten by the impact and intensity of innovative instruments have beatenthe creation and launch of the PGPM the economic crisis that was felt in all fundamentals of finance andprogram. This also allowed me to September 2008 and beyond, there economics, created illusory revenuesexplore the nitty-gritties of was awe and shock though there and booked profits so that the topcollaboration with a foreign were many forewarning signs of brass have been making heftyuniversity as the PGPM at MDI massive collapses and lapses that bonuses without understandingGurgaon was set up with a generous probably started in 2003 with the what is going on and overruled thosegrant from UNDP to Kellogg. Soon on subprime mess and obscene bonuses who doubted these in the ranks sincethe heels of the MDI, came ISB. My based on illusory profits and money and profits were instint as the Chairman of Curriculum revenues mainly based on greed by abundance. The basic premise of thisand Faculty and as the founding many individuals unchecked and subprime mess was the futurefaculty of the ISB at Hyderabad poorly regulated. However during income capable of being earned basedduring 1998 and 2004, was replete this late months may be from July on the potential of the individualwith more learnings and insights into 2009, signs of recovery as we see in couple with excessive greed. Rightthe various components of the PGPM the stock markets both in US and in from the final consumer to the bankerprogram concept, delivery and liaison India and some other indicators like to the insurance company that haswith industry and academia. Thus, the relative ease in credit and in guaranteed the loan, everyone hasthe time was ripe, I had not only a banks, as well as CAPEX investments been motivated by the easy moneyplan, but also reasonable resources in many corners signs of recovery are that the model was capable ofand substantial wisdom and with the seen in spite of growing yielding. Real estate prices soaredhelp of Dean Donald Jacobs and Dean unemployment rates in US and in from $250,000 to 650,000 in 6 years.Jain at Kellogg, Great Lakes Institute of spite of As expected, the bubble burst inManagement was conceived at pumping funds in the stimulus 2007-08 and the prices normalizedChennai with the help and packages. I will describe it as slight themselves. This is when my friendencouragement from my friends all recovery with cautious optimism; the then Governor of RBI Dr. YVover the world during 2003. We  Having served on the boards of Reddy asked me “Bala: are we laggingidentified some differentiating points several MNCs and also Federal behind the US in 2007. How can Iwhile exploring the strengths of the Reserve, what did the recent US regulate the new economy and relatedother institutions I built and felt 3 financial crisis mean to you and what instruments?” I asked him, “Venu, doI N T E R V I EW 3
  4. 4. you understand the instrument?” I Corporate Affairs is moving slowly, markets, but the risks of the multi-have to add here that he is a very because the Business Standard book way transaction traffic was not clearlysmart person like his predecessor that was recently published on the understood by all participants. TheShri Rangarajan. He said no. The subject has some of our punch lines only question every one had was,answer therefore was quite clear: “If and thus we need to revise our book ‘can I pass my risk to another and notyou don’t understand what it is, how to reflect other findings and is face the axe?’ credit markets werewill you regulate?” In a way, I am expected to be finished by May 2010. abundant with irrational rationales;quite glad that we are 10 years behind US Financial Crisis: Causes and capital markets had too many marketthe US – just watch out for some Consequences makers in a fake way; currencyfireworks in one to two years. Things  What were the prime reasons for markets were at different extremeswill be crystal clear why we NEED to US Financial crisis that has engulfed and risks; commodity markets werebe behind such scams and global economy forcing everyone to appearing to be customized marketsShannanigans by at least 10 years! liken this crisis as worse than Great because of the differences in theHaving said All these; the real Depression? packages; The main thing is there isquestion is “Did the assets in the US I am not going into the actual details no one person/authority who isgo away or were they overvalued of the crises. Some of the main responsible for the combined actionsassets? In my view they fall in the reasons were: of the 4C’s and each one had theirlatter category – fundamentally asses 1. Greed, not only on the part of own tunnel vision and the greed wasbut with the addition of a ‘t’, investment bankers and brokers but all pervasive. The crux is that in suchovervalued and celebrated as assets! also the main street, who, knowing highly interdependent scenarios, toThe regulatory framework has now fully well that they don’t have net function independently can kill all.kicked in, albeit a bit delayed, but is cash flows or disposable income,   Who do you think shouldplaying its part in ensuring that the falsified the accounts to reflect squarely be blamed for getting theperpetrators of fraud and scam are inflated cash flows (could be deemed world into such a catastrophic mess –behind bars and a very critical fraud). the Wall Street firms with theirexamination of the entire mess is 2. Too many middle men who made insatiable desire for “derived”underway which would probably money at every stage with a booked returns, or the regulators or thelead to corrective action, and a slew of revenue but not a cash inflow. governments? What was it about thelegislative procedures will soon be 3. Too many financial instruments regulatory framework thatunder way leading to prevention of probably created by Mathematicians contributed to the crisis?such large scale frauds in the future. of PhD type without understanding Everyone has to be collectivelyI always say, “If your shadow is much the full impact of such insturments. blamed. If there is no one to watchbigger then your body, then the sun is 4. Too many officials who had you and there is money on thesetting”. Now if your ego is larger incentives where they viewed ground to be taken, even though it isthan your logo, then Sun is setting for incentives as greed and took the not yours, why not take it? Where areyou and to your company. In the long bonus without a real profit but a the virtues of integrity, honesty andrun, I go, u go, why e go. Thus, in reported profit. transparency and responsibility – weour Baghwad Gita lies the answer. 5. Too many lobbyists who had an rarely see them in business these“Karmanya Wadhi Kaarasthey Maa agenda and an axe to grind. days. Right from the actualPaaleshu Kadhaachana” do your duty 6. Regulators who were complacent. perpetrators to the end-user and evenand don’t expect a return. Your duty 7. Fundamentals of finance out the innocent bystanders who do notitself is the reward. When you create shadowed by half-baked raise an objection, but with theirwealth for others you will get wealth. freakanomics; silence have allowed the atrocities toThe goal is to ensure that others   It is generally believed that continue are also equally to blame.become rich with giving and not with globalization is all about the interplay  A large section of people believewealth or greed. Yes, incentives are between 4Cs – Credit markets, that the crisis was allowed to becomeOK, but incentives turned to greed is Capital markets, Currency markets bigger because of policy makers’ (bothnot OK. Yes, profitability is OK, but and Commodity markets. Was the at the companies and theprofiteering is not OK. imbalance created between these four government) indecision. And the full How is your book on Satyam saga markets in some way responsible for blown crisis is just a price forshaping up? the financial crisis? indecisive governments andMy book with some Great Lakes Not only was there an imbalance indifferent companies, the argumentStudents and the Ministry of among these four C’s and their goes. Do you see any merit in this I N T E R V I EW 4
  5. 5. argument? Venture Capitalist in the Dot Com will still be a formidable market on allIt is not just the government and Word before it became a Dot, invested dimensions but not a dominatingpolicy maker. Who are they? they are since the super Venture Capitalist is market. Thus whoever takes thisyou and I or my brother-in-law or putting the money. He must be right opportunity in these four with somesister-in-law who was educated in a and now let us go like a sheep. India, cooperation within the Block of 4 willSystem of 220 Million. The people had its handful fighting fires at home create a new capitalism challengingalso went along with it, exploited and and hence the inaction helped them the US capitalism. I believe it might beleveraged the situation to their and that is why our economy was not a welcome respite to the worldadvantage. Now that the bottom has very affected. economy – in that it need be forced tofallen out, it is always easier to pass  What can be the lessons learnt periodic upheavals mirroring oneon the blame to the bigger authorities from this crisis – for governments large country’s economy alone – i.e.,and completely wash one’s hands and businesses – especially from the the US.form the responsibility. The point of view of public policy,  Do you think the crisis is behindindecision of the policy maker or the globalization, financial coordination us or are we to witness even worse?government who had a short time and information sharing? And also The crisis is almost behind us;horizon and may definitely be true, from the viewpoint of developing excepting for the Credit Card Crisis orbut one must remember that after all countries – especially for the the 3 C’s. If a high school or higherpeople don’t ‘cast’ their votes; but vote emerging and BRIC economies – and secondary school student of 12 yearsfor their castes, caste in a generic developed countries? can have 4 credit cards each with ameaning encompasses your friends Let us look at the history. A 200 plus cap of $800 without any collateral, inand relatives; million people of the US over 70 the US alone, and if all the risks are While the Wall Street thought its years after agricultural revolution, compounded, you do the math – it’sfirms to be “too big to fail”, for the industrial revolution created so many another catastrophe waiting tomain street “too big to fail” meant a great educational institutions and happen, if the regulatory frameworkfinancial institution cannot be systems, including World Bank, IMF doesn’t open itself up to thisallowed to fail. Do you agree with and even United Nations where there possibility and proactively counter it.those who say that Lehman had to fail was dominance compared to many But, it is yet to be and I am quitein order for Congress to have the others in the total world and the hopeful that it can be thwarted.political will to pass any kind of British Domination was taken over by  How has Wall Street changedrescue package? the US capitalism. Three things during the past year, and what willWell, the Titanic was considered happened in the last 50 years: these changes mean for the stockunsinkable. So also, Lehman Bros. First Deng Xiaoping went to Lee Kuan markets and the investors?Lehman Bros were allowed to fail Yew and created Shujow park, There are certain circuit breakerssince the policy maker was in the Shanghai, Shendgen etc., creating a which have been put in and it isother camp called ‘competition’. A huge economic prosperity lasting hoped that the stock-markets will notselect few relish the thought of about 17 years before 1991. reflect a complete depression state. Itwatching your competitor drown Second, the economic freedom of is also hoped that these measures willwithout giving him a helping hand. India created by the then PM Shri P V introduce a level of stability andThe truth is ugly, and life is not fair! Narasimha Rao, the current PM Dr. prevent drastic highs and lows in the What did the US Financial Crisis ManMohan Singh and the present indices. But the stock market beingmean to global economy and the Home Minsiter PChidambaram. what it is, is largely affected bybusiness? How do you think the Then came Gorbachev, who felt the sentiments and perceptions of peoplegovernments and the businesses have need for prosperity and eliminated and stock values of companies canresponded? the Berlin Wall and made possible the plummet or sky rocket based on theIf you compare China and India, German Unification and Demise of market sentiments and reactions toChina believed that they don’t know the Soviet Union and with little help news about the company, economy oradvanced finance and financial from Brazil etc. even politics. All this considered, Iinvestments and trusted their Together these four countries form the must also add that these circuitadvisors who are from the US firms. BRIC economy and have made about breakers are for known orThus, the thinking here is that if the 50% and more of the world economy anticipatory problems. There areUS is doing something, it has to be co-creating wealth for themselves. very imaginative culprits who canright and let us also follow suit and Thus the model in the next decade outsmart any system. The only wayinvest. This is something like the will be in these people and the US to prevent these is through moralI N T E R V I EW 5
  6. 6. leadership and honesty, integrity and  A year after the global economic over, you will see those who madetransparency. system collapsed, many companies quick decisions and exploited the A lot has been said in the past 12 are finally finding ways to increase mess to their advantage will succeed.months about financial sector profits under the new conditions. The moment one sheep is growingreforms. In his speech (September 14, However in a recent McKinsey and enjoying other sheep will follow.2009), President Obama called it, “the survey (September 2009) almost as It is now time to think about “moneymost ambitious overhaul of financial many expect profits to continue value of time” and opportunity costsregulatory system since the Great falling and executives also indicate and not “the time value of money”Depression.” What new financial that their broader financial hopes and discounted cash flows alone.regulations have been put in place, remain fragile. Many expect This is for the short term. As for thewhat has been accomplished so far government involvement in long term, I personally believe that theand what remains to be done as far as economies and industries over the log science of economics holdsfinancial reforms go? term. Should that be the only way undisputed sway over the ups andThe past year has seen a huge focus out? downs of economic progression.on increased regulatory reforms and I think the pre 2007 profits are profits What goes up must come back downinclusion of several mechanisms of the past. As I said earlier, the assets and I don’t think there is any point insuch as bonus cap, obscenely high are still there. The balance sheet was hoping that the depression won’tsalaries and forewarning systems etc. intact except the assets are overvalued happen again. The only addition thatBut please note that many can and the liabilities are undervalued. we see nowadays is that theseoutsmart the same. Heavy, stringent The income statement therefore has economic crests and troughs areand non-lenient punishments no sanity. Those who had strong happening in quicker successionincluding public humiliation could cash flows will win and will be than they used to earlier. Also, theserve as deterrents. Only ethical profitable. The government will try to troughs are rather like heavy falls (onevalues and value based education can get involved via the stringent could debate whether this is actuallyeffect a significant change which transparency and corporate brought on by unscrupulousshould start from the home when the governance norms that are in bad commercial practices) from whichkid is only 3 years old and not in a need of repair and overhaul, but the recovery also takes more time thanbusiness school. I can get an A Plus government is not brilliant either. earlier. The best advice under theGrade in an ethics Course and I can Even though the position of CFO at circumstances would be to expectalso be a perfect crook. But that’s not General Motors has a one million this to happen and secure one’sthe objective. A cultural upheaval is dollar ticket scaled by government, finances through secure and realisticnecessary for these reforms to work in they have not been able to find a taker instruments and wait out thetandem with individual cleansing so for the past 2 months. Now there are a depression.that as a whole the loopholes in any large number of persons whose salary Government and Business: The Newsystem are not manipulated to the is proposed to be cut. I think a and Defining Momentsadvantage of a select few. reasonable compromise between  Governments have responded It’s hard to talk about reform willing parties needs to evolve. You vigorously with their bailoutwithout talking about the reformers. don’t correct a mistake by another packages and that meant in one senseCould you help us evaluate the mistake. private losses being funded by publicpolicies of Treasury Secretary Tim  A powerful tension is at work money. Henrique Abreu cited aGeithner and Federal Reserve today in global economic sentiment. lesson of the late Milton FriedmanChairman Ben Bernanke? Is there The financial markets, pundits, and that “it is a different thing spendinganything that the regulators could policy makers think the global your money on someone else (Warrenhave done differently? economy is out of the woods, but Buffet) or spending someone else’sBoth Tim Geithner and Prof. Benanke executives aren’t so sure. What money on someone else (governmentwho is a colleague of the Nobel should be done in the short term and intervention). What is the efficacy oflaureate Paul Krugman are strong in the long term to restore the government bail outs, especially forminded and passionate with some confidence and not get sucked up in the scale of bailouts doled out?compassion. Also to be amazingly such hubris? It is clear no one wants to put goodable yet humble is a rare combination. The economy has reached its bottom money over bad money.I think they can do it and have strong and now on the upward curve. Is it U Governments sometimes tend to dovalues and commitment. If they shaped or V shaped? There are that as there may be a political Agendacannot do it, God help the world. debates and by the time the debate is and the need to be reelected to power I N T E R V I EW 6
  7. 7. is the driving force behind those pricing and service levels. Greater  Should boards view the currentdecisions. From an economic stand competition means stronger crisis as an opportunity to review thepoint, you don’t want to be emotional productivity growth, which in turn way they function. During toughand be only rational. In the battle means a faster-growing economy and times – and they haven’t been thisbetween politics and economics more wealth to share. Yet tough for generations –directors arefinally good economics will win since governments everywhere struggle to supposed to ask difficult questionsthere is nothing called as good get regulation right. Unfortunately, about their companies. Yet they rarelypolitics! regulation often has a negative effect. ask hard questions about themselves, American taxpayers have become What can governments do to get it such as, “Are we the right people,shareholders in AIG, GM, and so right? asking the right questions, providingforth. What’s the exit strategy? In each country, there are individuals the right sort of leadership,American taxpayers have no say and who are brilliant, extremely well- challenging management in the mostneed to follow what the government educated, possess a decent amount of productive ways?” A healthy self-they elected states and bids them do. wealth and have spearheaded quality assessment can go a long way towardThe exit strategy comes every four initiatives and public service and improving a company’s performance.years in the Presidential and have a superb reputation. For What kind of reassessment do youCongressional elections. The two example, MS Swaminathan on suggest for the boards and theirparties have different views of right Agricultural and Green Revolution, directors?and wrong. Let the taxpayer decide. Kurien on white Revolution and Milk The boards by and large are good inThis is like investing in stocks. There Production, Sam Pitroda on Telecom good companies and nowadays manyare bad solutions and worse Revolution and many others with board members are asking the rightsolutions. There is no good solution. known competence of that country questions at the right time. With a selfChoose. including Dr. Raghuram Rajan of evaluation among board members  Regulatory reform will mean University of Chicago. I am so glad and with significant competent andhigher capital requirements for that Dr.Manmohan Singh, Dr. Montek independent board members afinancial institutions. Won’t that limit Singh Ahluwalia, Dr. Abdul Kalam, company can achieve more. The keyGDP growth? and other leaders have identified is not the question or even theDefinitely yes. But what is the such people and invited them as answer. But the timing of thealternative? Few unscrupulous advisors as their competence, vision, execution with a sense of urgency.individuals make a huge short term passion and devotion are Otherwise it will be too late and thegain and other innocents who outstanding. India does not need big conditions that existed at the time ofskimped and saved money for the deal consultants and I am confident the question and discussion may nochildren’s education or marriage are that the educated government does more be relevant.taken for a ride. Thus optimization is indeed know what is right and also  What are the major global trendsimpossible and thus satisfying is how to go about doing it. So also in that businesses should be thinkingoptimal. Where the economy as a the US or any country for that matter. about? Do you envision newwhole is in shambles, the The question is execution. approaches to management and newgovernment alone is in a position to Sometimes they don’t go through ways of interacting?induce fiscal stimulus and if it is at with it for political reasons or As always a huge upheaval andthe cost of the GDP then so be it. sometimes the system has been so renaissance in the way management Instead of attempting to regulate messed up over the past like with educated is delivered and in the wayusing a patchwork of agencies, is it corruption etc., that we are unable to that companies practice managementtime for Bretton Woods II, i.e., should execute the plans properly. However is imminent. Already, we have hadthere be a new and powerful in the last 10 years at least in India questions regarding the perpetratorsoverarching body (as suggested by regardless of the party, progress has of the various scams – that they areUK Prime Minister, Gordon Brown) been made in a significant measure leading ivy leaguers and by extensioncontrolling, monitoring and and inclusive growth (even if out of the question also arose as to theregulating the international capital fear of Naxals) is in existence. In next quality of the management educationflows? The aim of economic 10 years the growth will be relatively imparted by these prestigiousregulation should be the same in all better and one can hope many things institutions. I wish to add that severalsectors: to facilitate fair competition can be executed through a schools in the west are taking hugeamong players or, where natural substantially less corrupt and steps towards inclusion of Vedicmonopolies exist, to ensure fair maligned system. literature (such as the lessons ofI N T E R V I EW 7
  8. 8. Bhagwad Gita and Asian scriptureswhich are valuable sources ofdirection and wisdom) in revampingand designing their courses of ethics.This is a step in the right directionwhich aims to impart value-basededucation and in creating managerswho are also attuned to being morallyresponsible leaders of tomorrow. What specific three measures doyou suggest to ensure that such crisesdo not recur? To what extent shouldthe government intervene in businessto check immoral behavior ofexecutives and / or entrepreneurs?Integrity and honesty, ability withhumility and passion withcompassion. As for governmentintervention, we need to rememberthat the government is an entity that isalso composed of people. Anenterprise is only as good as itspeople. Hence, while intervention isdefinitely recommended along broadlines, it cannot make a significantcontribution if the people involved(both on behalf of the government andthe enterprise) are not up to the task. The interview was conducted by Dr. Nagendra V Chowdary, Consulting Editor, Effective Executive Dean, IBS CDC, Reference # 03M-2009-12-05-06 I N T E R V I EW 8