Who failed infosys, Corporate Governance or Management Quality?

Who failed Infosys, is it Corporate
Governance or Management Quality?

Who failed whom?
I published in October 2015 a four
series analysis of Volkswagen fiascoi
,
including Who failed Volkswagen,
Corporate Governance or
Management Quality? Then a year
later Cyrus Mistry was sacked as
Chairman of Tata Sons. Within
another year Vishal Sikka of Infosys
resigns blaming interference from
Narayana Murthy, followed by sacking
of Chairman Seshasayee.
In this context after the Volkswagen
debacle one has to look at when
Hermes EOS, the stewardship division
of Hermes Investment Management,
called for an overhaul of the
management and corporate
governance culture at Volkswagen.
Volkswagen got the Best Corporate
Governance for Automative for the
year 2014 in Europe as adjudged by
Ethical Boardroom.
In case of Tatas, Mistry, sacked as
Chairman of Tata Sons in October, had
always insisted that governance
reform was a must, and repeatedly
pointed to his efforts to define roles
played by each Tata entity—the
trusts, the holding company and the
operating firms—in the running of the
group.
Whereas Infosys Board headed by
Seshasayee issued a 6-page report
condemning Narayana Murthy for the
exit of CEO Vishal Sikka. Narayana
Murthy was said to have been aghast
on three counts: One, the departure
of chief financial officer Rajiv Bansal,
two, the $200 million buyout of
Panaya, and three, severance
packages.
So who failed Volkswagen, Tatas and
Infosys?
No one, it's the Corporate
Governance, as Hermes EOS, Ratan
Tata and Narayan Murthy aver.
Owning up of fault lines is not the
privilege given to any, passing the
buck, yes. Corporate Governance
IBCM© Research Page 2 of 27

comes pretty handy. Volkswagen had
done itself badly with a cheat
software at an enormous cost, yes,
$15 billion + sacking of employees +
losing face + sentencing of executives
+ prosecuting Matthias Muller too.
Matthias Muller was quickly brought in
with a 5 top priorities set.
VW Priority #1: The Volkswagen CEO
Matthias Muller explained that his top
priority is to support the customers affected
by the diesel issue.
VW Priority #2: Muller’s second priority is
to systematically drive forward and
complete the investigation into what
happened. “We must uncover the truth and
learn from it”, he said.
VW Priority #3: Muller’s third priority is to
introduce new structures in the Volkswagen
Group. “The key point is that Group
management will be decentralised to a
greater extent in the future”, he said, with
more independence for the brands and
regions.
VW Priority #4: As his fourth priority,
Muller is driving forward a realignment of
the Group’s culture and management
behaviour. He noted that the pursuit of
perfection, the employees’ commitment and
social responsibility in the Volkswagen Group
must be retained.
VW Priority #5: The Volkswagen CEO
announced that the fifth priority will be to
transform the Group’s Strategy 2018 into a
Strategy 2025. “Many people outside of
Volkswagen, but also some of us, did not
understand that our Strategy 2018 is about
much more than production numbers. A lot
of things were subordinated to the desire to
be “Faster, Higher, Larger”, especially
return on sales.”
Volkswagen Annual Report of 2016
“The transformation we are facing
can be described in one single
sentence: we don't need to reinvent
the wheel, but we do need to reinvent
everything else. In the last fiscal year,
we laid the foundations for the most
extensive transformation in the
history of Volkswagen.”
“If our plan succeeds, our company
has a very good future. It means
Volkswagen will still be one of the
world's largest car manufacturers in
2025. It means we will be No. 1 in e-

mobility. It means we will set
standards in new mobility services.
And, at least as important as
everything else, it means we will be a
role model in environmental
protection, safety, and integrity. That
is our vision. And we will do
everything in our power to achieve it.
Together.”
Volkswagen: Does target 2025 sum up
what Matthias Muller set to do after
the fiasco? Has what failed in 2015
been rectified in 2016? Has what
Hermes EOS, the stewardship division
of Hermes Investment Management,
calling for an overhaul of the
management and corporate
governance culture at Volkswagen,
been attended to?
Tata Sons: On his first day in office,
Tata Sons Ltd’s new chairman
Natarajan Chandrasekaran outlined
three strategic priorities for the
group:
Priority #1: bring the group closer
together and leverage its collective
strength;
Priority #2: reinforce a leader’s
mindset in operating companies; and
Priority #3: bring greater rigour to
capital allocation and deliver superior
returns to shareholders.
Later in July 2017, the new Tata Sons
chairman, who took over the reins of
India’s most diversified conglomerate
on February 21, believes that stronger
balance sheets and less dependence
on Tata Sons will help fund managers
take individual credit callsii
.
Was sacking Cyrus Mistry an act of
corporate Governance-deficit or
Corporate Governance excess? What
did Cyrus Mistry commit, a fraud or a
subtle infringement on Ratan Tata's
influence?
Who failed whom? Matthias Muller
failed VW or Chandra the Tatas,
looking at their statement of priorities
set after the deluge and priorities
followed subsequently? If you
miscarry, it's Corporate Governance
goodbye!

Infosys imbroglio!
The latest to come in to the call of
Corporate Governance-deficit is
Infosys. As soon as Nandan Nilekani
took over the reins of Infosys he set
his priority, to assure all the
stakeholders, i. to take the company
forward and ii. Identifying a new CEO.
Infosys has surely taken great care in
influencing Corporate with its
Corporate Governance policies since
its inception. The priorities set above
by Nilekani are unassuming?
Narayana Murthy responded after
Nilekani took over thus: Having worked
with Nandan for long, I know that he is a
stickler for good corporate governance.Now,
we can all sleep better knowing that, under
his leadership, the corporate governance
standard practised by Infosys will be on par
with the global best standard.
What is the global best standard?
Which company practices that
standard? Is Infosys capable of
appointing a CEO outside the
Infoscions, in future? Why was Vishal
Sikka gotten rid off? Who rocked the
age-old value system of Infosys,
Seshasayee or Vishal Sikka?
What is the value system of Infosys? Is
it not Value-System part of
metaphysics? How do they measure
metaphysics?
I would like to start with the letter
written by ex-infosys employees to
the Boardiii
!!
Dear Infosys Board Members
We, a group of ex-Infoscions want to express our
deep disappointment and anguish at the manner in
which the Board has responded to Mr. Murthy in the
form of a letter last week to stock exchanges. We
have worked closely with Mr. Murthy for many many
years, representing a 1000 years of collective
experience at Infosys - and believe the only thing he
is and has always been concerned with is the good of
Infosys. Everything he has stated is to help Infosys be
a beacon among Indian companies as far as
performance and being a role model company in
corporate governance. Longevity of the organisation,
has been his ambition and driving force, founded on
the cornerstone of a strong value system.
Infosys is an extraordinary company by any
standards. It was founded by a set of middle-class
people who put in lots of hard work, made huge
personal sacrifices (some of us have seen those
sacrifices at close quarters) and put their heart and
soul into it. They built the company on the core
values of integrity and transparency, fairness in
every transaction, respect for all stakeholders,
operating with highest levels of corporate
governance, excellence in execution and above all,

leading by example. Due to these core values, Infosys
was able to attract some of the best talent in the
industry and thereby become a successful globally-
respected organisation. These values were never
compromised and acted as a guiding light when
difficult situations needed to be dealt with from
time to time.
Dissent was not just tolerated, but even encouraged,
as long as it remained within the boundary of the
transaction under discussion, and did not become
personal. "Disagree, but not be Disagreeable" was the
overarching motto of any inter-personal dealing. No
one, not even the founders or other key management
personnel were allowed to transgress the boundaries
of Infosys values. And it is these values we all
imbibed as we grew up in such a unique
environment. "How" was more important than
"what", and "who" was incidental.
The founders left voluntarily in 2014 after appointing
a professional CEO and Board. The founder directors
who were at the helm in 2014 left together in
October 2014 to provide a free hand to the CEO and
the Board to run the company. They left the company
when the company had a market cap of $35 bn and a
cash position of $5 bn. This is not a mean
achievement by any yardstick. To hold that against
him today by labelling him as just another
shareholder is akin to undermining the roots of the
trees one is sitting under.
As we all know, the founders and specifically Mr.
Murthy have raised a few very pertinent questions
about Corporate Governance concerning certain
transactions by the company, such as the Panaya
acquisition, concerns regarding severance packages,
and other issues. We understand that the current
Board made various attempts to reach out to
founders and specifically Mr. Murthy about some
M&A deals, as well as the severance and other
issues. We also understand that there were steps
taken including engaging reputed global law firms to
investigate any irregularities. We understand that
the law firm has completed their due diligence and
given a clean chit to all the concerned employees.
However, since no details have been shared with
retail investors (which includes some ex-Infoscions)
about the findings, as well as about how the law
firm came to the conclusion that there were no
irregularities, it is difficult for us to be convinced
either way (whether there were irregularities or not).
The message we seem to be getting is: "Trust us; we
have done thorough due diligence and a global law
firm has done the necessary due diligence and so
believe us". However, we are used to data and
disclosures speaking for themselves - that is the
culture Mr. Murthy had built and made us all believe
is essential - "In God we trust; everyone else brings
data to the table" used to be our adage in everything
we did, and there were no exceptions!
Given this background, all the issues raised by Mr.
Murthy deserve a data-oriented response from the
Board with fact based explanations. As a person with
not very insignificant shareholding and with a
significant emotional investment, he has every right
to seek answers and ask for higher levels of
disclosure to ensure Infosys continues to have the
highest standards of corporate governance, just as it
had been for nearly 25 years since Infosys went
public in 1993. In this context, we believe the tone
and tenor of the Board's letter is totally
contemptuous to Mr. Murthy...
We, ex-Infoscions (many of us are shareholders as
well), are as disturbed as Mr. Murthy by these
specific insufficient disclosures and seek clear
answers from the Board so that we are able to trust
the Board. We are no longer employees of Infosys,
but we feel extremely proud of the organisation and
will always remain a part of Infosys that we helped
build in our own small ways, under the exceptional

leadership of Mr. NRN Murthy
Mr. Murthy had asked several questions which are still
unanswered by the Board. The former CEO Mr. Vishal
Sikka has resigned citing distractions and noise.
However, we believe this could also have been due to
the Board not providing detailed facts and
explanations in a timely manner which probably led
to such 'distractions and noise'. For the Board to
accuse Mr. Murthy as the primary or even the only
reason for the distraction and noise is highly unfair
and unacceptable. The Board needs to explain in
depth, backed by facts and data, the issues raised by
Mr Murthy, and come clean to all stakeholders.
In summary we, ex-Infoscions, who still take lot of
pride in Infosys and its values, would like the Board
to address the issues raised by Mr. Murthy with facts
and immediately withdraw the statement released
to the stock exchanges which unfairly and
unjustifiably blames Mr. Murthy for the current
crisis.
Under normal circumstances we would not have
written such a letter, but these are extraordinary
circumstances warranting our candid feedback to the
Board.
Hope you will consider that what we have stated
herein is in the overall interests of the company and
to ensure the longevity of this esteemed
organisation.
Thanks and regards
Ex- Infoscions
Corporate Governance
Infosys is clearly set on Corporate
Governance from the beginning
whereas Volkswagen and Tata Sons
were reactive to the forced
circumstances. From Volkswagen
Annual Report 2016 there is no clear
indication that cheat software
scenario would not be repeated. In
case of Tata Sons, Chandra taking
over forcibly from Cyrus Mistry is
towards towing the line of Tata Trust,
whomsoever runs it, be it Ratan Tata
or one of his appointees.
While there is no assurance as to
Corporate Governance in VW and
Tatas what I look at Infosys is whether
there is such an assurance. What
exactly Sikka did that was not to the
liking of Narayana Murthy who
sounded the bugle?
Mind you, it was Cyrus Mistry who
blew the whistle and set himself, as
the Chairman of Tata Sons, to bring in
the Corporate Governance but got

himself cut off. Whereas Matthias
Muller did the same thing that
Chandra was entrusted to do, not to
rock the boat any further, in the
name of Corporate Governance. This
is inevitable when Management
Quality is at a discount.
Management Quality
Corporate Governance is relative to
Management Quality. For a non-
existing Policy for Corporate
Governance, there cannot be a result
being found out. Policies are the
protons of an organisation atom and
Corporate Governance its electron.
Corporate Governance spins around
the nucleus of the Policy combined
with the organisation neutron -
Society.
The moment there is a fault line
appears to the public, the word
Corporate Governance crops up.
Management Quality is a created
Policy statement whereas Corporate
Governance is Action Process.
One thing that instantly comes to my
mind is UNCAC – United Nations
Convention Against Corruption – a
brilliant document that can be
adopted by Corporate as the
benchmark for Policies. Several
countries have ratified UNCAC India
inclusive. But is yet to create a body
or bodies to implement UNCAC under
Article 6. Despite UNCAC being a
document of excellence, it is said to
be in a state of insentience.
Illustratively, Volkswagen has listed
existence of several International
Conventions but had failed to adopt
any of them for its own.
Narayana Murthy is said to be upset
on three counts - One, the departure
of chief financial officer Rajiv Bansal,
two, the $200 million buyout of
Panaya, and three, severance
packages.
When you find a student is at fault,
find who the teacher is and beat him
says a Chinese proverb. In all three
counts, find fault with the
Management Quality, as to its

existence or non-existence. In case of
Volkswagen it was non-existence. In
case of Tata Sons again non-existence.
In case of Infosys it's lack of a process
and disclosure.
Now, has Volkswagen corrected itself
to create such policies that were non-
existent afresh? Is there a policy to
ensure a cheat software fraud would
never happen again? Has Hermes EOS
suggestion for Corporate Governance
culture in Volkswagen been
established?
To quote from an OECD paperiv
:
Governance is not compliance and
ethics, Joseph Murphy says, and
disputes OECD's conclusion that large
multinational companies generally
have adequate internal compliance
controls. He continues in the same
breath: One need only look at the
record at Siemens (whose code of
conduct was described as the ―read,
laughed and filed code), or the long,
legalistic (and ineffective) code that
existed at Enron to see the great
danger in such sweeping conclusions.
Volkswagen and Tata Sons compliance
standards need to be checked. What
about Infosys?
Due Diligence from foreign firms?
In the letter to the Board of Infosys,
the ex-employees refer to Panaya
case that there were steps taken
including engaging reputed global law
firms to investigate any irregularities.
In a KPMG-EIU Survey the dilemma of
378 global senior executives indicates
Many firms are grappling with the problem
of deciding exactly what and how to
measure, and appropriate benchmarks
are scarce. - page 16; deciding how to
measure is more difficult than
deciding what to measure. [EIU

Report page 29]. [KPMG EIU
corporate-sustainability-v2.pdf]
In case of Infosys Panaya acquisition
was a concern to Narayana Murthy.
Due diligence report by a global law
firm is said to have addressed
irregularities of Panaya acquisition,
although not fully disclosed.
Due diligence reports normally takes
into account Financial and Legal
requirements. The case in point here
is to refer HP – Autonomy M&A where
HP had to write off $8.8 billion in Q4
of 2012 on acquisition of Autonomy in
2011. For such a sum one of the big
firms must have done the Due
Diligence of the said M&A.
Another important point to note is
the acquisition happened during the
stewardship of former CEO Leo
Apotheker, an ex-SAP CEO who was
ousted from HP after a brief and
tumultuous run.
Not that HP was renowned for their
value system than SAP. In fact in my
analysis of UNGC 10 Principles, SAP
comes at the top of the crème de la
crème of Corporate Leaders. The
point I am making is that CEOs are
totally concerned of profits, as one
sees in Volkswagen as well as Tata
Sons after their corporate governance
fiasco, in one hand. At the other you
find global firms find it difficult to do
the Due Diligence of Value System of a
company, reflecting what KPMG-EIU
Survey on sustainability reveals, by
not able to figure out 'how to
measure'?
In case of Infosys Due Diligence of
Value System of Panaya was not done.
Unlike Volkswagen or HP or as now it
turns out to be Tatas, Infosys was
ingrained in value system from the
word go. On Infosys, Ethical Motive
surpassed profit motive, rather
sustainability of profits were ensured
by sustainability of values.
That was broken, the values created
by Narayana Murthy. He was
mentioning of Vishal Sikka as a
competent CTO but not an effective

CEO. If one were to go by HP –
Autonomy Governance deficit, Vishal
happened to be from SAP too.
However, Value system created by
Narayana Murthy is just a hearsay!
Why? Let me explain below.
In God we Trust
Infosys dictum, "In God we trust;
everyone else brings data to the table" is
what Society too demands. VW, Tata
Sons and Infosys are doing what they
want to do without bringing the Data
to the table of stakeholders, the
society sitting at the top. Narayana
Murthy created the dictum within
Infosys and Nandan Nilekani practiced
it. Both are on the spot to extend the
dictum to the hands of the Society.
Nandan's priority is said to be finding
a new CEO. Bringing the data to the
Society's table should precede the said
priority.
Who failed Infosys, then?
The dictum of bringing the data to
the table in Infosys was not followed,
for had it been followed Vishal Sikka
would not have resigned. Corporate
Governance is a tricky area so long it
remains undefined and unmeasured.
In which case it's an easy way to
enforce at the whims and fancies of
any single person. In case of Infosys, it
was Narayana Murthy and in case of
Tata Sons Ratan Tata. Matthias Muller
had no choice as it was a fraud that
took him to the fore, not that he was
unaware of the fraud having been
with the same group earlier to taking
over VW. But VW, Tata Sons and
Infosys have no choice than to bring
the data to the society's table should
they want the public to trust these
companies.
Lack of such data on qualitative
elements of management is the
triggering point to create such data to
the society's table, what Infosys was
doing within its own four walls.
Creative process ends as a substance
and remains in the domain of
Management Quality. Who failed
Infosys can be buttonholed?

How to bring the qualitative
data on to Society's table?
I give below an extract of my IPR
IBCM – Inactivity Based Cost
Management1
, that would help
companies to achieve the said
objective.
Activity has a cost incidence whereas
Inactivity a cost consequence. By five
principles, cost consequence shall be
identified and measured as and when
it occurs. Governance-deficit handled
by Corporate is ex-post-facto
exercise, as is evident from
Volkswagen, Tata Sons and now
Infosys material events. IBCM is pro-
active never allowing such a
qualitative element as corporate
governance interrupting company's
growth. Who failed Infosys, Corporate
Governance or Management Quality? is
a pro-active effort each company
needs to put in that IBCM serves the
purpose.
1 COPYRIGHT IBCM - Inactivity Based Cost
Management - Copyright REGN. NO. L-27490/2006
DATED December 1, 2006 Govt. of India, Copyrights
Office, by the Author, Jayaraman Rajah Iyer
The Five Principles to IBCM:
1. Principle 1: ‘what gets measured,
gets managed’ - Therefore, it is
imperative to measure Cost
Consequence as on today. Governance
is a dynamic function, it cannot be
postponed.
2. Principle 2: How to measure? 90% of
corporate material events remain
unmeasured. Go by the dictum:
Measure what is measurable, make
measurable what is not so – Galileo
3. Principle 3: Corporate Atomic
Structure: Corporate and Government
defy the law of gravity. Universal Law
of Nature is applied for Corporate to
function in a scientific manner. This is
the crux of change for organisations
should they want to make sustainable
profits.
4. Principle 4: Return on Intangible –
pole Shift theory of Management: The
denominator should change IBCM
avers, in aligning Profit Motive to
Ethical Motive, from quantitative to
qualitative measurement of
Governance.
5. Principle 5: Emergent Property
Phenomenon: You don’t add
something more to get something

more, IBCM quotes – it’s a simple
health check-up for corporate
managers, making them walk the talk
with a pedometer attached.
Principle #1: What gets
measured, gets managed.
In the Subject – Object distinction of
Qualitative and Quantitative Elements
of Management I find hardly 10-15% is
Quantitative, the rest Qualitative.
Corporate Governance is a Qualitative
analysis.
Volkswagen, Tatas, Infosys failed to
manage as they failed to measure
Governance.
The Qualitative Elements consist of
85% of Management Operating System.
They need to be managed well
warranting such elements being
measured accurately.
What gets measured, gets
managed, is a policy statement of
Innovation. Corporate policy ensures
there's not a single element that
remains unmeasured. External
validity of Internal dignity arises
from measuring Intangible within.
What data is brought by Infosys to
the Society's table?
• Have VW, Tata Sons and now
Infosys assure internal dignity
vis-a-vis ensure external validity,
on Corporate Governance?
• What is continuity? What value
system would continue, Ratan
Tata or Narayana Murthy would
be happy? What value system
Matthias Muller would consider
different from the one he took
over? Or how important Ratan
Tata or Narayana Murthy views
on continuity?
• Does it matter a Narayan Murthy
or a Ratan Tata retired
employees, approve of Current
Value System? How different
they are from the past?
Improvement or deterioration?
• How to measure sustainability of
value system that foxed 378
executives across the globe, as
KPMG-EIU survey shows?

• To start with let Corporate bring
the dictum what gets measured,
gets managed as a policy
initiative. Identify areas that are
not measured. Is Corporate
Governance measured? If so,
how? If not, why not? If not now,
when? If not you, then who?
• Were there deliberations before
selection of Leo Apotheker in
HP, Martin Winterkorn in VW,
Cyrus Mistry in Tata Sons and
Vishal Sikka and Seshasayee as
Chairman in Infosys, specifically
of Corporate Governance. “You
can’t connect the dots, looking
forward, you can only connect
them looking backwards. So, you
have to trust that the dots will
somehow connect in your future.
– Steve Jobs”
• Would Matthias Muller,
Chandrasekhar, Nandan Nilekani
connect the dots in future,
somehow or for sure?
Principle #2: How to
measure?
Ex-employee of Infosys, Infoscions
refer in their letter, And it is these
values we all imbibed as we grew up
in such a unique environment. "How"
was more important than "what", and
"who" was incidental.
Infoscions have got it right, partly.
However, should they extend how to
measure the value system they will
realise who is involved in it. Who is
the accountability factor. Who is the
denominator. Without Who there's no
action, for that matter no inaction
either. Who is not incidental but the
main and the only energy force
corporate needs to measure.
Vishal Sikka was forced to resign,
Cyrus Mistry was forced to get out,
Matthias Muller just got in after
Martin Winterkorn resigned days after
VW admitted it had installed defeat
devices in 11 million vehicles.
11 million vehicles may be a big

shocking figure one may say but pick
up any company heading towards NPA
their Corporate Governance record
would outwit the defeat devices for
ages.
In all the three quoted incidents,
buck stops at the CEO level. How to
measure therefore would be
meaningful if only Corporate
Governance culture extends to every
person within a company. The
hierarchical one-man call centre is
passé. Lack of such a culture spreads
across the company, as Barclays Libor
scandal proved to be.
In all the three companies the
employees are passive observers
albeit a letter from a group of ex-
employees. This trend would continue
in the first two but Infosys imbroglio
has just happened. What steps Infosys
take becomes crucial as to how they
bring the abstractions into reality,
how they acknowledge value where
value is due, and how they
deconstruct what is valueless.
This routine of changing the CEOs in
VW, Tata Sons and Infosys is an
inadequate measurement of
managerial capability. The huge,
really huge potential of energies and
skills need harnessing and direction.
Failure looms over the three giants in
their inability to measure Corporate
Governance? Who has failed is very
crucial? Who has been sacked and why
is more important?
Principle #2 How to Measure
therefore is a mark of higher learning
for the Corporate?
Principle #3: Corporate
Atomic Structure –
Organisational Design
Organisational design needs urgent
study. Corporate has been created on
transaction based operations mainly
of quantitative elements of
management. Dependence on Balance
Sheet as the only investor and market
reference is indeed anathema to
investors and stakeholders. IBCM

brings in the most effective
organisation design enabling
Qualitative elements of management,
given access to measuring activities
and simultaneously inactivities.
Corporate has neglected to align with
Nature. Universal Law of Nature
provides the interrelationship
between physics and metaphysics.
Immanuel Kant [1724- 1804] raised
the question whether a science of
metaphysics with a logical structure
like that of the well-established
mathematical and natural sciences is
possible.
IBCM has set out to do exactly what
Kant had wondered.
Understanding Corporate Governance
and then replacing Cyrus Mistry or
Vishal Sikka or Leo Apotheker would
be more meaningful. Narayana
Murthy's justification of blaming
Seshasayee or Vishal Sikka an ex-post-
facto analytics, is no different from
Balance Sheet analysis – a dead and
inert Object.
IBCM has created a
two-process theory of
management –
Creative Process and
Action Process.
Management Quality
would represent the
Qualitative elements
of Management created as a
substance of Quality. Corporate
Governance is unique to the quality of
substance created for specific
Governance requirements and would
be in the domain of Action Process.
Installing defeat devices in 11 million
vehicles is an Action Process,
specifically preventing such an action
is a Creative Process. Fault lines in
Action Process trigger Creative
Process to plug the loopholes found.
Creative Process however stands on its
own bringing out Policies, mandatory
as well as non-mandatory.

Corporate Atomic Structure:
Human energy is the only energy
force to create and act upon the
created substance. It abides by the
Universal Law of Nature.
Corporate has ignored this aspect
completely. Atomic Structure is made
up of Protons, Neutrons and Electrons.
• Every atom is made from three
kinds of elementary particles:
Protons, which have a positive
electrical charge; Electrons,
which have negative electrical
charge; and Neutrons, which
have no charge.
• Protons and Neutrons are packed
into the nucleus, while electrons
spin around outside.
• The number of protons in an
atom is always balanced by an
equal number of electrons.
• Neutrons don't influence an
atom's identity but they do add
to its mass.
Corporate Atomic Structure is
identical to Nature's.
Policies are the protons, forming a
nucleus with the Society, from the
time of incorporation, abiding by the
laws and regulatory authorities.
Society functions in the same manner
as Neutron. It does not influence the
identity of Corporate but would like
to be served with the company's data
on its table, quantitative as well as
qualitative. A few of them mandatory
and many of them non-mandatory.
Practices are the electrons of the
organisation atomic structure. It spins
around the nucleus, protons and
neutrons, the Board and the Society.
The Board sets the policies and the

CEO puts into practice. Corporate
Atomic Structure makes it uniform for
all.
Principle 4: Return on
Intangible
What's the energy force of the
Subject entrusted with the work? The
main work both in the creative
Process and Action Process is
converting mass into energy.
It's the Universal Law of Nature.
For the universe to exist as it does
require that hydrogen be converted
to helium in a precise but
comparatively stately manner -
specifically, in a way that converts
seven one-thousandths of its mass to
energy. Lower that value very slightly
- from 0.007 per cent to 0.006 per
cent, say - and no transformation can
take place: the universe would
consist of hydrogen and nothing else.
Raise the value very slightly - to
0.008 per cent – and bonding would
be so wildly prolific that the
hydrogen would long since have been
exhausted. In either case, with the
slightest tweaking of the numbers the
universe as we know and need, it
would not be here. [Martin Rees]
007 factor – Corporate
Corporate is ditto of the Universal
Law of Nature. Creative Process ends
in a substance, such as an IPR,
Policies, Strategies etc. The process
has 6 stages:
1. Quiescence
2. Conceptualisation
3. Communication
4. Formation
5. Formulation, and
6. Substance
All man-made Substance are created
in the same manner as of Nature.
These 6 stages are identical to all
man-made and Natural substance.
Action Process is unique to the
substance it is associated with and
have the same 6 stages, excepting the
first one. The first stage is insentient.
Creative Process begins in subtlest of
the subtle stage, whereas Action

Process starts gross and ends in task
accomplishment.
The stages are observable. Entrusted
to a team of five individuals, 1 from
Ethical Responsibility Force and 4
from Fiscal responsibility group, the
tasks assigned are carried out. The
team is yoked together but act
independently.
The growth is always linear. 6 stages
start with the value of 0, stage of
Quiescence or non-existent in case of
Creative Process or Insentient in case
of Action Process. The linear growth
for each process entails a value
addition of 1 for each stage. The
maximum points is 5.
Return on Intangible
Intangible is the denominator,
representing the pulsating energy of
an individual. Action or Inaction is the
Numerator a value of 1 or 0. Return
on Intangible therefore is:
(Action or Inaction)/1 turning out a
binary value of 1 or 0.
Action taken gets a ranking of 1 and
Inaction 0. Maximum score being 5 for
a team of 5 it would be 25.
Process Blocks
A Company can have process blocks
of 200 or more with each having set of
KPIs for performance entrusted to any
number of teams.
Return on Intangible for each process
block is arrived at. Maximum is 5. In
the event of the results obtained is
less than 5, there will be two data
coming in. One, Action for Rating
Company's performance and two, an
Index of Inactivity. Index of Inactivity
is created by Process Area as well as
by Resource Area. There's only one
resource area that is the Subject.
Company's rating is arrived at by
adding each person's performance.
Process blocks are structured by
CREAM Analytics.
CREAM Analytics
C – Corporate Governance,
R – Risk Management
E - Earnings – P&L and Balance Sheet
A – Accounting Quality, and
M – Management Quality.

Matthias Muller, Chandrasekhar and
Nandan Nilekani have their work cut
out with CREAM Analytics Data for the
Society's table.
CAGR
CAGR [Compound Annual Growth
Rate] be converted to CDGR [D for
daily], CARR [Compound Annual
Reduction Rate] to CDRR [D for daily]
enabling Return on Intangible derived
by process area and by resource area,
preparing a Daily CREAM Report.
Setting Daily targets with vision 2022
in sight, a Daily rating ensures a
comfort level of task accomplishments
vis-a-vis target 2022.
In each & by each the 007 factor is
optimising energy @5 level, which is
Universal Standard, not just global
standard.

Principle #5: Emergent Property
Phenomenal
Emergent Property means, you don’t
add something more to get something
more - Nobel laureate Murray
Gellmann
The fifth and the last principle is the
emergent property phenomenon of a
Company. The phenomenon is how the
corporate atomic structure makes the
entire organisation with only two
processes to identify the different
microscopic states of a system, for
the better? The emergence of a single
unifying process builds something
large using small, simple pieces of
process blocks to a robust phenomenal
corporate structure. This is arising
from the motion of pulsating energy,
each player in the organisation hits a
six, every time. That’s self-
governance, a phenomenal leap
forward in management performance
of individuals. Their performance is
measured by Return on Intangible as
well as by preparing an Index of
Inactivity for each person, as to the
non-performance.
How Society and Policies form a
nucleus and Practices [CEO ~Team]
spins around it? How Object is
inanimate and the Subject is the one
makes it move? It’s moving an Object
from one space to the other. n-
dimensional problems are converted
to n-problems of one dimension,
which is Return on Intangible. Self-
governance pitches one person with
the other for excellence, for each
person’s task is measured. Profit
motive aligns with ethical motive.
Knock off the highest and the lowest
paid factor, the person with ethical
motive walks 10 feet as tall as the
other.

2-D Organisation Structure
not sustainable
Organisation structure has developed
over the years primarily in a 2-
dimensional shape of debit and credit,
be it Corporate or Government. For a
small trader, a petty-cash-book was
sufficient to start with. As and when
his firm expanded he added a column
in a spreadsheet. Each column added
a limb to the existing organisation
structure. It’s a convenient way of
preparing a trial balance of expenses
and income. Tallying a trial balance
was easy but found tallying a Balance
Sheet becoming complex.
2-D framework is convenient for
Corporate to promote Profit motive,
only. Ethical Motive is the internal
validity of external dignity, of
Society. They need to be measured
and validated. Profit Motive
overwhelms internal scrutiny. There is
no place for ethical motive being
measured in a 2-D debit-credit
organisation structure.
3-D Organisation Structure
RoI – Return on Intangible
In the Subject-Object distinction of
Quantitative and Qualitative elements
of Corporate Management Intangible
is the Subject, that brings in the 3-D
Framework for the Organisation
Structure.
The Subject is the only element with
pulsating energy, the Object is
inanimate but contains non-pulsating
energy. Even a stone has the electron
operative right through. It is the
Subject who turns it to a san pieta or
Shiva.
2-D framework ignores the Subject
the pulsating energy that converts
mass into energy. The only thing an
organisation does is to convert an
Object i.e. mass into energy. Tangible
Object is an IPR, Strategy Plan, Code
of Conduct, Rules book, SEBI-RBI
guidelines, Operating System manuals,
Projects, machines, buildings etc.
that are the mass that is used by the
Subject bringing pure energy to the
organisation.

Corporate & Government are the
only ones who defy the laws of
Nature. They continue with a 2-D
Organisation Structure not providing a
space for the Subject, the only
pulsating energy within an
organisation. Return on Investment is
an Object – Object phenomenon
whereas Return on Intangible is
Subject – Object element of
management. We don’t compare BCCI
and MCC for cricket matches, we go
deep into individual performance. It's
not VW, Tata Sons or Infosys
considered as an insentient object
but the people performance is
measured and highlighted in each.
Matthias Muller, Chandrasekaran,
Nandan Nilekani are not the only
individuals playing for their side.
When Return on Intangible is applied
to every person within a company the
entity becomes animate. Subject as
the only denominator dominates to
bring out the energy created.
Measuring Ethical Motive is crucial to
bring the abstractions into reality,
acknowledge value where value is
due, and deconstruct what is
valueless. Efficiencies truly bring in
profits whereas sustainability of
profits is possible only by
sustainability of value system, as
Volkswagen has found out losing $15
billion.
2-D Framework has enabled
Volkswagen to suppress for a long-
time the manipulations, at a high
cost. 2-D Organisation Structure is
not sustainable at all.
With a 3-D Organisation Corporate
Atomic Structure, Corporate can
truly challenge the Nature for a
creditable performance of
Governance, a 007 factor. With 2-D
Organisation structure corporate and
governments cannot achieve the set
targets. Organisations would simply be
rotating people. Time for a 3-D
Organisation Structure is now. Return
on Intangible shall replace Return on
Investment as the one and the only
measure of Corporate Performance.

Conclusion:
Who failed Infosys, Corporate
Creative process begins in quiescence,
time corporate spends a few seconds
to contemplate.
Infosys is an extraordinary company
by any standards, so say the
Infoscions. The letter they wrote to
the Board of Directors of Infosys
proves their high, very high EQ. The
combination of IQ and EQ results in
Sustainability of Value System,
Sustainability of Efficiency and
Sustainability of Profits.
Be More, an Infosys policy, iterates
zero distance – to the end user,
nurturing audacious innovation in the
enterprise. The end user now is
oneself, after the recent imbroglio.
The policy page states: It starts with
design thinking; That’s not an easy
brief, but Zero Distance provides the
framework to create this mindset, and
the leadership support to enable that
ownership.
Seshasayee leaving may be in a bad
state but one shall look at the Code
for Independent Directors, topping the
list is to uphold ethical standards of
integrity and probity. One shall look
at the 17 principles of COSO
Framework topping the list on Control
Environment is: Demonstrates
commitment to integrity and ethical
values. Likewise we saw Hermes EOS,
the stewardship division of Hermes
Investment Management, called for an
overhaul of the management and
corporate governance culture at
Volkswagen. How does Corporate
satisfy these codes? Not like Siemens'
code of conduct described as the
―read, laughed and filed code.
Infosys needs to achieve self-
governance in each and every process
block governed by a set team of 5
members, from the lowest to the
Board level. I didn't mind Seshasayee
leaving the Board but Vishal Sikka
leaving is an ex-post-facto analysis of
Cost Consequence. It was an
experiment to induct a non-Infoscion
to become an Infoscion that failed to
mature.

So who failed Infosys, Corporate
My take is on Management Quality,
what's yours? Come over we shall
discuss. You may disagree, but don't
be disagreeable?
Jayaraman Rajah Iyer

About the Author – Jayaraman Rajah
Iyer
Jayaraman Rajah
Iyer, Chartered
Accountant (ICAI,
New Delhi,1966)
has a unique
insight into major
changes in
accounting, culled from experience with
firms across the globe. He interned at
Hindustan Lever (1966) and held key
positions at API and Mafatlals. As Forestry
Operations Accountant at Wimco (1972) he
introduced 'Likely Ultimate Cost', a unique
system of wood cost accounting. In 1977, he
was General Manager of ITI Nigeria, Lagos. In
1979 Sir William Castell, now Chairman of
the Wellcome Trust, selected him to join
The Wellcome Foundation, UK specifically to
set right the dysfunctional accounting at
Wellcome, Nigeria, as The Finance Director.
During the 1990s he was engaged in
corporate consulting. He has been visiting
faculty at SPJIMR, SIES School of
Management where he taught Balanced
Scorecard and Strategic Cost Management
based on the Proprietary IBCM (copyright ©
Jayaraman Iyer Inactivity Based Cost
Management, 2006). He has been a crusader
against corruption and business malpractice
all through his life.
He avers IBCM – Inactivity Based Cost
Management is a profound theory of
integrating Physics and Metaphysics, an
integration of e=mc2
and Intangible as THE
constant factor in measuring human Action
as well as Inaction simultaneously. It
facilitates what is crucial to bring
abstractions into reality, acknowledge value
where value is due, and deconstruct what is
valueless. It’s a rare and a classic
management instrument, that converts n-
dimensional problems to n-problems of one-
dimension.
Corporate shall measure Governance and
Governance-deficit simultaneously.
Contact:
Jayaraman Rajah Iyer
+919487390439
eMail: jayar@ibcm.in
https://in.linkedin.com/in/jayaraman-iyer-
6027b71

i Who failed Volkswagen, is it Corporate Governance or Management Quality?
https://www.slideshare.net/jayaraman.18/who-failed-volkswagen-is-it-corporate-governance-or-
management-quality
ii Tata Sons chairman Chandrasekaran wants group companies to become top stock picks for fund
managers http://economictimes.indiatimes.com/news/company/corporate-trends/tata-sons-
chandrasekaran-wants-group-companies-to-become-top-stock-picks-for-fund-
managers/articleshow/59448097.cms
iii Read more at: http://economictimes.indiatimes.com/articleshow/60211744.cms?
utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
iv Mr. Joseph E. Murphy (Corporate Compliance and Ethics Professional): Review of the OECD antibribery
instruments: compilation of responses to consultation paper: 31 March 2008

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