In search of "Common Sense"

Feb 15, 2009

Leadership character and quality will make or mar Satyam’s chances of regaining lost glory

Satyam is experiencing an unprecedented crisis. The uncertainty surrounding what future holds for each of the stakeholders – Associate, Investor, Customer and Society (AICS in SatyamWay lingo!), is causing lot of anxiety. Initial days saw lot of knee jerk reactions and panic actions taken by some of the stakeholders like cancelling / postponing of long term contracts, electronic media going on in a hyperactive mode Etc.

Now that some definitive actions have been taken due to active involvement of the government in appointing the board of directors, auditors, investment bankers, CEO Etc with surprising but refreshing alacrity, begins the real test of character of leaders who are going to chart the road ahead. There is lot of interest amongst the various suitors who would like to have the various assets that Satyamites have built over a period of time. There is enough reason to believe that sufficient efforts will be put to make Satyam viable again.

But, whether it will reach the glorious heights again depends on how the leadership at Satyam responds to this crisis situation.

The crisis at Satyam needs two types of responses.

The first is along the lines normally suggested i.e. communicate, be candid, have a plan, be ready to modify the plan as needed etc etc. This response is like routine text-book hygiene steps in any run-of-the mill crisis arising from events outside the control of people in the organization. The leadership team not knowing these basics is not worth its salt.

The second is related to the root cause of current crisis. This crisis has been precipitated by gigantic fraud (If it wasn't a gigantic fraud, it would have been a colossal farce) committed by a set of people most unexpected to do kind of things that have been done. This has resulted in a crisis of confidence and the new team appointed by the government would be wondering, who among the old crew they can trust.

Our Satyamway says "Every Satyamite is a leader". It is a time where each one of us has to introspect whether we would be able to step forward and play the role.

"Caesar's wife must be above suspicion"

The current set of designated leaders need to bear in their mind that, whether they like it or not, their proximity and close working with the self-confessed fraudsters rubs lack of credibility onto them. The implicit trust that they have hitherto enjoyed amongst the stakeholder community has been reset to zero. This is demonstrated by the government by summarily sacking the independent directors. Although, they might not have any inkling of the fraud and they are world renowned professionals in their own right. It is due to operational complexity reasons that the current set of designated leaders are allowed to continue in their roles. This arrangement will logically last till the new owner of the organization brings its own dispensation.

Many of the designated leaders are at their place because they truly deserve to be there and their position is based purely on merit, diligent hard work and track record. But some of them are there at their designated station by being there at the right place, at the right time, i.e. by chance and not necessarily by their merit. Some find themselves in their situation by ingenious / devious design of their own or by leaders who wanted a coterie around them.

Irrespective of the reason why they are designated leaders, each leader needs to be conscious that her / his actions now will decide whether they would be considered worthy of trust now onwards.

I guess there is a need for a great catharsis for Satyam to regain TRUST of different stakeholders. We do not have eternity to reach there. There is a small window of opportunity within which a lot needs to happen else Satyam will be relegated to tier 3 or 4 and not considered fit ever to compete with likes of IBM, Accenture, EDS, Infosys, Wipro, TCS, Cognizant etc, if not actually dismantled and pieces sold to different buyers.

There is a need to take a very high moral ground to recoup the lost image with respect to corporate governance and moral standing, quickly.

There is an interesting post on HBR Editor's Blog - Rebuilding Trust. The author says, while there's no single way to create trust, humanist psychologists agree that the best way to generate it is to show competence, integrity, respect, and consistency. Certainly it's no coincidence that these are the qualities of timeless leadership. The TRUE leaders would conscientiously act demonstrating their competence, integrity, respect and consistency with a fresh vigor because they really care to win-over the trust of their stakeholders again. Whereas, the pseudo leaders, who are there by chance and devious design, will not be able to sense the changed scenario. They will continue acting as if it is business as usual. They will continue to be surrounded by their favored coteries, continue to play their petty corporate games and shun honest communication with team members at large. Some of the pseudo leaders would go into shell not knowing what to do and what to communicate.

I have TRUST in the wisdom that inspired the slogan "Every Satyamite is a Leader". I see following SIMPLE link to visibly stand by this commitment in these trying times.

Every Satyamite will be a leader

When

Every (designated) "Leader" in Satyam becomes* a Satyamite.

* become = try to be in the shoes of, empathize with, understand the situation in which a troubled Satyamite might be finding herself / himself in.

A basic decency, compassionate and logical treatment is a fundamental right for any Satyamite. Once the leaders get into this mindset, it will be easy to get ideas and thoughts to build trust afresh. The Choice needs to be exercised actively.

Sunlight Is The Best Disinfectant

The serious fraud has placed Satyam is such a precarious position that it has had to mortgage its buildings and other assets to borrow funds to cover the short term expense requirement. The maximum cash required is to meet the salary expenses. Satyam has historically has had a very high "Associate Cost to Revenue" ratio (62% compared to industry norm of 50-55 %). It is also a fact that the top strata of leadership at Satyam has been customarily paid much more than their compatriots in the industry. (Ref List of highest-paid executives compiled by Business India magazine). The entry level salaries offered to ELTPs and Management Trainees are, on the contrary, amongst lowest in the industry. This can be seen from the fact that there is difference of multiple of 100 between the salaries of the entry level management trainees (Indian Rupee 350,000) and the highest paid individual (Indian Rupee 35,000,000 or USD 700,000).

The loss of revenue from customer attrition is going to put pressure leading to a thought of layoffs. As things stand today, there is a visible campaign to reassure the associates that there are no immediate plans for large scale lay-offs, but there is no plan articulated how this will be handled and what kind of sacrifices will be expected from whom.

Infosys has come out in media very explicitly how they would be handling recession and slowdown in the economy. In a recent interview, Mr. NR Narayana Murthy, Chief Mentor of Infosys, explained how they are going to ensure that instead of lay-offs, it would be tightening of belts by the leadership in terms of pay cuts. Infosys will do in such a manner that leaders will lead by example and younger people can adopt it. Infosys leadership has always set a bench mark by personal sense of probity.

It would be clear to anyone who understands systems thinking or holistic thinking that an organization is like a living organism. The different units / divisions are like parts of the body. The system exists, thrives and survives not as a collection of parts but rather because of interactions between the parts. Each part is essential and important for proper functioning of the system.

In times of crisis, like scarcity of nutrition, it necessitates that the body survive with whatever limited nutrition is available and become lean and trim. This does not mean that it should cut-off limbs or throw away some parts which appear to be extra (e.g. a human body has two kidneys but can do with just one of them). It means that it dips into its reserves and burns excess fat. It would not be difficult to identify what fat means in our context.

At Satyam, sometimes, there has been lack of sagacity on these lines. Even before this scandal broke out, the talk was in the air of how the leaders are being forced to take "tough decisions" due to recession and slowdown in economy. Unlike at Infosys, these tough decisions involved mindlessly putting control on costs and displacing associates and even forcing them to resign to avoid notion of lay-offs.

It is a fond hope that the designated leaders draw their lessons from visibly available examples to follow. And since the financial crisis at Satyam is more pronounced, it would be interesting to see if even a single leader comes forward and publicly declare to work for a nominal salary of $ 1 till the company returns to profitability and stability!!!. In fact, people will fall off their stools, if any of the designated leaders offers pumping in cash earned by selling shares obtained via stock-options over last few months. The fun of entrepreneurship in the current opportunity can only be enjoyed by risk taking and putting money where one's mouth is.

It would be great if more transparency is practiced as regards the financial condition of the company. It would not harm if high level projected cash balances, cash flow are shared online so that associates get confidence in the words being shared through in-house communication mailers. The stinginess at Satyam in investing in state-of-the art web 2.0 infrastructure is going to be a major weak point in these trying times. A mature and user friendly blog, wiki, enterprise search and expertise location platform would have been ideal for ensuring that peer-to-peer communication happens smoothly and communities are formed around common professional as well as personal interests.

I wonder if our internal team would be able to take it up on a war footing!!

"I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel." - Maya Angelou

"Remember, people will judge you by your actions, not your intentions. You may have a heart of gold -- but so does a hard-boiled egg."

As the organization comes out of the daze, there is going to be a frenzy of activities. We can already see the sign of times in the flurry of internal mails from support units which are spamming our mailboxes.

In our zeal of going ahead and diving into ACTION, there are many things that might be wrongly done. We are in a situation where we absolutely cannot afford the luxury of missteps. The things that can be wrongly done can be divided into two categories

  1. Things that should be done but are unfortunately NOT done
  2. Things that should NOT be done but are nevertheless done.

The first category of mistakes means missing out on vital actions because they appear to involve tough choices, which managers and associates tend to postpone or plainly ignore. The impact is directly felt in terms not meeting the commitments and expectations of our stakeholders. The result is that the stakeholders consider us "UNRELIABLE".

The second category of mistakes means that a lot of time, energy and resources are wasted without having any impact on the betterment of the stakeholders. This category is very insidious as it gives the initial comfort of being busy but ultimately does not help in delivering the results. The impact is that the stakeholders look at the song and dance being executed ostensibly in their name without any salutary effect and hence consider us "INEFFECTIVE".

The beauty of above categorization is that it covers ALL the possible things that can go wrong and there is NO overlap. It can be very SIMPLE provided we set up the right kind of metrics / measures. (Our first language is metrics, right!!)
It need not be gibberish but something simple and sensible which any ELTP should be able to understand without much clarification and should invoke right behavior which is good for the whole organization not just some vague part / unit. The current metrics framework has been built on a fundamental flaw. The basic assumptions here is that the parts of the system of Satyam are independent and their interactions need be handled through 'business judgment' whenever a conflict is thrown up through 'Reviews and Escalations" as well as "Testing and Validations". If the organization is considered as a single whole system and the interactions of the parts are taken into consideration then the metrics would be very simple and quite different the ones currently in vogue.

Here is the wish - May god give our designated leaders wisdom to distinguish between the above two and courage to draw a strict line to prevent any such missteps!!! Looking forward to a reliable and effective Satyam under their able and inspiring stewardship!

All make believe leadership; comforting song and dance without the above essential elements will break associates' hearts. They would slowly start losing interest and faith in future of Satyam, and begin looking out for opportunities outside as economy picks up in months from now and jobs become aplenty.

I ain't sayin' you treated me unkind
You coulda done better but I don't mind
You just kinda wasted my precious time
But don't think twice, it's all right
-

Bob Dylan

3 comments:

  1. Sir,
    I get into pat with your blog from HBR; I found it really nice and valuable.
    Contemporary writing & very excellent smooth English, I just love it.
    Every great comments in your writings focused a unique and Unspeakable truth of synergic emotional intelligence, and ethical value.

    But somehow I found ""...too many Satyam….to little “satya”."" (Truth)
    Not in your inscription, but the whole alarm of Satyam, if by any opening Any Satyamite raise himself/ herself to be leader, then it truly a Subject of argument how can an insider knowing without anything wish to become a leader.

    May be I crash chop, because of my losses in this matter, but it is also true
    Ethical business in IT in a big question mark, after this topic.

    TAPOBRATA DEY.
    INDIA.
    mittapo@yahoo.com

    ReplyDelete
  2. Hi Deepak,

    what struck me the most are these lines of yours

    "In times of crisis, like scarcity of nutrition, it necessitates that the body survive with whatever limited nutrition is available and become lean and trim. This does not mean that it should cut-off limbs or throw away some parts which appear to be extra (e.g. a human body has two kidneys but can do with just one of them). It means that it dips into its reserves and burns excess fat. It would not be difficult to identify what fat means in our context."

    Our leaders need to build THE REAL confidence in the associates instead of just giving mail assurances about any layoff's, thats when they would gain full support and the company would be able to sustain its most valuabe asset, its people.
    As quoted in your post
    "Remember, people will judge you by your actions, not your intentions. You may have a heart of gold -- but so does a hard-boiled egg." Its hightime that our leaders come out of the "WILL-DO" syndrome to something known as "DONE". Satyam will not be saved by its employees, customers, shareholders but by the RIGHT ACTIONS of our leaders at this moment.

    Regards,
    Hasham.

    ReplyDelete
  3. Hi Deepak... it is well written blog..!! Hope your ideas and thoughts are implemented..!

    - Shashvat

    ReplyDelete