Corporate Social Responsibility for India Inc

What does CSR mean for a developing economy? In other words, is the level and manner of CSR initiative by a Company influenced by the level of development in the economy. The recent survey by the ASSOCHAM Research Bureau substantiates the belief that yes, the level of development does influence the kind of CSR initiatives pursued. CSR or Corporate Social Responsibility connotes a more philanthrophic flavour. According to the survey, the major theme areas pursued by the India Inc., during the first quarter of 2010-11 are Community Welfare, Education, Environment, Health Care and Rural Development. Community welfare would mean being responsible and accountable for the development of the immediate community in which the Corporation is functioning through facilitating education, healthcare and projects that help in eradicating unemployment. It also often takes the form of Philanthropy that is providing monetary assistance to the NGO's active in the areas or co-ordinating with them to work towards development of the community.

The most actively engaged sectors are FMCG, Chemical and IT/ ITES. And amongst the 28 States and 7 union territories, Maharashtra followed by a distant Gujarat and Delhi/ National Capital Region received maximum attention for CSR initiatives.

The three interesting aspects clearly highlighted by the survey are that: 1. When it comes to the kind of CSR intiatives, Community Welfare is the most preferred form of Socially Responsible engagement with the society. 2. The most actively engaged sectors are the ones that are most influenced by the environment in which they operate such as FMCG, Chemicals and IT/ ITES. These sectors need constant interaction with their immediate environment for procurement, material and human resources. In the case of Chemicals sector particularly, the affluents and wastes discharged have received immense local criticism. In case of FMCG, such as Coca Cola, excessive use of locally available natural resouces such as ground water, led to the depletion of water table which pushed the giant Corporation to the footsteps of Court. And finally, Maharashtra, the most industrialized, receives the most prolific CSR intervention.

With these observations, one is left wondering if CSR is still in its nascent stages in resource scarce, energy hungry, burgeoning India. Is it a seed that will take its time to bloom or will the first mover who visualizes its strength, capture the heartshare of Philanthropic India to gain mindspace.

Punishment to punish or to reform

What is the role of law, criminal law more particularly. There are many theories that try to answer it. The punitive theory or the retributive theory of justice; the deterrent or preventive theory and the reformative or corrective theory all come out with different rationales for punishment or the lack of it. The recent re-arrest of the octageunarian Montana's notorious killer Frank Dryman raises some difficult questions. In a cold and snowy day in 1951 Dryman hitch hiked from Shelby by cafe owner Clarence Pellet and suddenly pulled out a gun and threw Clarence from out of his own car. Coldbloddedly he shot Pellet six times in the back. He avoided the hangman's noose, a relic of frontier justice. Decades later, the accussed a reformed human now was caught and sent back to gallows on charge of breaking the law by running away while on parole. Traced down in a Bollywood style by the The problem raises the dilemma if Frank should be punished for breaking the court's order and not completing his prison sentence then.

Criminal Jurists have different theories justifying each of their standpoints and each of them convincing enough their viewpoint.

Life for life, eye for eye, tooth for tooth and foot for foot is the essence of retributive theory of justice.The theory suggests that punishment if appropriate is a morally acceptable response to crime. It brings that psychological solace of revenge to the aggrieved party, its near ones and society. Also referred to as the punitive model of justice, it seeks to punish rather then focus on the reform of the accused.

The restorative theory instead of focussing on the abstract principles of law, justice and ethics; focusses on the needs of both the parties - the accused and the victim. It endeavours to encourage offenders to repair the harm done by them by apologizing, returning stolen money or for example doing community service'. It involves fostering a dialogue between the accused and victim and reaching a consensus wherein the ends of justice are met in a practical manner. Though this might be a good manner of resolving petty crimes such as theft or breaking traffic rules, as is increasingly been done in the developed countries; restorative model can not be acceptable for resolving henious crimes such as murder, rape or genocide which are a crime against society. The restorative theory is based on the principle of corrective theory. This is because the whole purpose of punishment is to reform the individual. Individuals turn to crime due to inadequacies in society and once they are provided the right set of environment and an opportunity to integrate into the society, they tend to reform and become better human beings. Reform, Rehabilitate, Re-educate and reintegration are the four R's of the restorative theory.

Accroding to the deterrent theory, the punishment is permissible so far as it deters further performance of a greater criminal act. The underlying principle is to set the punishment as an example such that it deters the accused and other like-minded individuals from committing a similar or more heinous crime. When such a punishment is set as a precedent, it sets an example for the society to abide by the law.

Frank not only cold-blodeedly killed the person who gave him a hitch, but also evaded from the eyes of law for four long decades before he was traced by victim's grand-son. In such a reckless case, the issue becomes not just one of punishing the individual who committed a cold-blodded murder; but also of meeting the ends of justice by appropriately punishing him for committing contempt of justice. Letting a person go free on humanitarian grounds of his being an octagenarian would be justified only if Frank sincerely repent for his wrong deeds. Any thoughts on the sensitive issue that touches us all as members of the society?

BP learns the hard way the economics of CSR

Corporate Social Responsibility is not just about being a socially responsible citizen. It has tangible market implications too. The recent oil spill disaster one of its worst in the history, has pulled down BP's shares more then 40% on widespread concerns amongst investors that it may not be able to survive the disaster. Recent decision by BP to award its shareholders with liberal bonus notwithstanding no strong reief measures going to the effected residents in the Gulf, caused great concern. The Congress in the US was pulled up for action and the Obama Government was put to the litmus test with the ensuing disaster. BP on its front , which is one of the biggest players in the industry, now faces a struggle for survival and its future hinges on legilative and regulatory decisions going forward. The tremors of aftereffects can be felt across the entire oil industry. There is a six month moratorium on deep water offshore drilling followed by a call for more stringent safety regulations. Other possible implications may include search for alternative sources of energy and more legislative intervention on environmental aspects at a global level. The call for CSR resonantes not only with ethics but revenues too.

Sony: A Future Unseen?

With losses over $450 million for the current financial year and CEO salary cheque of $ 4.5 million plus 500,000 stock options, is the Sony shine losing its sheen? Compare this with a total payment of 957 million to its 23 Directors by the competitor Panasonic for 2010 and the comparison seems one of giant versus dwarf! Important concerns have raised on Sony's ethical stand and Corporate Governance compliances. Sony is also apparently losing the market share to its investors. In this gloomy scenario, the Sony investors are compelled to ask what is the silver lining in this dark cloud. Loses for the current year notwithstanding, Sony is expected to earn a profit of 160 billion yen for the coming year. Sony presently makes Bravia TVs, Valo PCs and PS game consols. Its future success greatly depends on the success of is 3D TV and Motion controlled gaming consoles. Sony still has a good brand equity and is synonymous with quality in the minds of its customers. The future for Sony now depends on its strategy. According to industry experts, Sony's ability to transform its present vertical structure into horizontal business as successfully accomplished by Apple; by leveraging from its strong brand power will determine the directions of the wind.  

Executive Compensation: How much is too much?

One of the biggest dilemmas of Corporate Governance has been the Executive Packages. With Top Management and CEOs of Multinational receiving multi-million packages even when companies are in doldrums, the debate seems to hold an everlasting tenor. Sony CEO Howard Stringer's $ 4.5 Million plus package has renewed the global debate on Executive Compensation. The CEO received close to 410 million yen in fixed and performance related pay and options worth 500,000 shares(to be exercisable only in case the Sony shares rise). The announcement of whopping package comes at a time when Sony lost almost $ 450 million in last financial year and over $ 12 billion were washed off its market cap in the last three months.


Worldwide, CG Codes and Listing Requirements have tried to keep a check on the reckless payments to Executives especially in times when the global economy is down and the company is burdened with mounting losses.

Compensation Committee or Remuneration Committee was thought to be the panacea of the ill called unjustified Executive Remuneration. First recommended by the Cadbury Commission in 1992, the Committee was expected to rationally and fairly decide the compensation of executives, its constituent components and the manner of distribution. The Committee endeavors not just rewarding the well performing executives, but also recruiting, developing, retaining and mentoring the top talent. A well pronounced recommendation, the concept of Compensation Committee was quickly endorsed by other exchanges across the world. The Canadian guidelines embraced the initiative in 1994.

In India though there is no mandatory requirement of Independent Committees for deciding Executive Remuneration, however, the need for same was emphasized by the Government Committee on Corporate Excellence that released its report in 2000. The proposed Companies Bill, 2009 incorporates the recommendation made in 2000 report and earlier in SEBI(Kumar Mangalam Birla Committee) report to statutorily have committees for listed companies and other categories of companies to be specified in the Bill.

Inclusion of a majority of independent directors was an important step in ensuring independence and transparency in the working of the Committee. In the US, the New York Stock Exchange mandatorily required the listed companies to have a compensation committee consisting of Independent Directors. The NASDAQ listing requirements likewise mandated for independent directors led compensation committees or the independent directors on board fulfilling the requirements of independence.

Back in Japan, according to the latest CG listing requirements, Japanese companies have to reveal the pay to its executives in case it exceeds Yen 100,000,000 or $ 1.1 million. Sony's revelation of its CEO pay comes in the wake of this mandatory requirement. According to a nationwide survey by PWC, only 1.4% of Directors and 8.3% CEOs at listed companies in Japan are paid more then 100 M yen annually. So, that simply put implies that numbers receiving close to million dollar packages but less then the magic number of $ 1.1 million may raise the total figures much higher.

High Executive pay has often been justified on account of Managerial talent and paucity of such talent specially at the top levels. Reasons cited by the External Director for paying Howard more then $ 4.5 million plus stocks go even a step further. He suggested that the CEO needs to be paid keeping in consideration the Global pay levels; companies total revenue of over seven trillion yen(notwithstanding losses 40.8 billion yen), the number of employees at Sony and last but not the least the degree of complexity of business at Sony.

The reasons seem plausible specially when they come from great intellectual minds, but the ever encompassing question is how much if ever is too much and what should be done to cap this corporate greed for exorbitant pays, fat bonuses, stock options and endless perks.

Drowning Dollars in Adventorous Waters

Under the International Conventions, maritime search and rescue operations are a no cost agreement. This is based on the basic premise of Human Rights that human life is most important and invaluable. But the US teenager Abby Sunderland's US$ 94,500 worth of rescue operations in the uncharted Indian Ocean island by Australia has sparked off worldwide debates if a teenager's adventorous sports is worth the tax payers hard earned money.

International Convention for the Safety of Life at Sea, an International Maritime Safety Treaty(SOLAS), first adopted in 1914  is the most prominent of international treaties relating to safety of merchant hips. The first version of the treaty was passed in 1914 passed in response to the sinking of Titanic. It prescribed the number of lifeboats and other emergency equipments along with other safety procedures including continuous radio watches. The treaty underwent periodic amendments in 1929, 1948, 1960 and 1974. However by the time the amendments came into force, it was always late since the accepting minimum number of threshold countries with requisite tonnage limits required to give notice to the IMO, took painfully long. Consequently the 1974 version with all previous amendments included was adopted. The important breakthrough in the 1974 procedure was the simplified procedure for amending the treaty including the 'tacit acceptance' procedure wherein there is a default incorporation of amendments unless and until there is an objection filed by certain threshold of countries meeting the tonnage or number criteria. Prior to this a minimum of two-thirds of member countries were required to accep the amendments for incorporation.

Australia rightfully saved the teenager's life. But the all encompassing question is: Was it morally acceptable and ethically correct on the part of the 16 year old to chart out all alone and were her parents justified in letting their child who is yet to attain the legally adult age, sail on her own in those difficult waters. The trip was not even insured, which means that Australia's benevolent act is at best one of charity. In times of emergency one can not spark the adventure versus taxpayer's money debate; but when the storm subsides and we can sit back and think calmly, is it not time to define a legal indictment and punishment to discourage the amateur in future from taking up such risky sports.

Broadband: Broadening networks to bridge the divide

Broadband is the way to the future. With over 113 million subscribers and the numbers still galloping, China is the largest broadband market in the world.Even the technology driven, home to Silicon Valley, the United States of America, trails behind China with 87 million users. China had only 93.5 million users last year and with in a period of four quarters she added another 20 million users to her subscriber base making her the largest and fastest growing market in the world. Not only this, China, India, Vietnam and Phillippines are the world's High growth potential broadband markets, making Asia the biggest user of Broadband in the world. Last year alone, out of the total new connections,over 53% of the new broadband lines were added in the Asia-Pacific region and the mainland China contributed to over 90% of these total new connections. With India's emerging competitiveness in the IT industry, does this mean a growing area of opportunity for the Indian IT leaders. Should India climb the pyramid to provide more value-added services and focus on developing more technological capabilities. India's ability to tap this emerging market would be greatly determined by the policy-makers successfully meeting the legal and regulatory hiccups enabling the same.

Broadband and related services are here to stay in the Asia-Pacific region. With vast majority of populations still living in rural hinterlands and poor infrastructure, internet remains the best possible way to connect the people. Institutional and regulatory hiccups thwart the growth of this high potential market with difficult barriers to build data centres, lay cables and get licenses, according to analysts at Accenture. Present IT infrastructure too needs upgradation with new applications in mobiles and smartphones, internet enabled TVs and online gaming platforms like Xbox 360 slowing the network and acting like Bandwidth hogs.

Internet is undoubtedly a great connecting factor and with Information as power in the 21st century, connecting the rural areas through stronger bandwidths could well be Asia and particularly ChIndia's panacea to connect its lost crowd in the rural areas. This might as well be the key to 'sustainable growth'. In India, ITC's 'e-Choupal' initiative is one such interesting case study wherein the ITC connected the rural farmers through the power of Internet technology.

The Federal Compromise

The Federal Compromise

As the new Flemish Alliance of Bart De Wever comes to power in Brussels, every one is asking the same question- is the Belge Compromise finally coming to an end?


The Belgian Compromise bought together two radically different societies together... the thrifty centre-right Dutch-speaking north and the welfare-addicted French-speaking socialist south.

Bart, the future leader in his agenda does not outrightly knell the death of Belgium. In his promises, what he proposes is kind of federation with two separate sovereign states Wallonia and Flanders that would have a common face on foreign policy and defence front. And the call for increased sovereginity is not special to Belgium alone. All around the globe,uncomfortable compromises putting together people with different and difficult backgrounds have often asked for greater decentralization of powers, increased sovereignity and more federalism. The only Nation State where its members seem to be comfortably happy is the United States which is one of the closest forms of federalism in the present times. On a regional level, European Union that bought together knitted together uneasily fitting with a difficult history 27 Nation States together in the shades of the common denominator Euro was successful because it promised to leverage from the competencies of different economies and bring together a common political outlook on broader policy matters, without compromising on individual sovereignity. Of course to clarify on the outset, it is just a Union and has nothing to do with the concept of being a Nation State. But it draws from a theme. Is it an age for smaller Nation States to come together leveraging from each others economies to grow financially stout. Is it an age of increased decentralisation of powers and greater federalism for larger countries like India and China. Do smaller constituencies with different regional interests and ethnic backgrounds demand more personalised attention. Does this mean in the future world would mean coming together collectively at a global level and simultaneously more effective governance at a regional level. From Belgium to India to the African states to the United States this is an opportune time to reconsider Governments, form of federalism and the manner in which her subjects are governed. And with it a related thought if IT can help re-define this new wave of governing by the Government.

The Missing Credit in Credit Ratings

EU Economic and Monetary Affairs Commissioner Olli Rehn's recent remarks casting aspersions on rating agencies has re-opened the 'credibility' debate. It has been argued for long that the ratings from these agencies seem influenced and at times incredulous. The dilemma came out clearly in the recent global economic meltdown where some of the world's biggest economies and banks that were hitherto given stable ratings by these agencies, came falling down like a pack of cards. The Commissioner's remarks however come in the context of downgrading the Greek government bond ratings four notches to Ba1 from A3.From the investor perspective it means that the Greek bonds have been downgraded to the non-investment grade. It is worthwhile to note that there is very little competition in this sector and there is a major concentration of top few players. Secondly, there often is a concern of conflict of interest of the rating agencies. These two factors raise concerns about transparency and accountability of these agencies. Perhaps a worthwhile solution will be to increase competition in the sector through reforms in the Competition Law and providing incentives to encourage new players in the industry. A thread from the Sarbanes Oxley might help knit the stitches in this fatih-torn fabric of rating agencies. Investigations in the colossal Enron disaster revealed that the Accounting and Consulting Firms were the same for the erring Corporations and thus, Conflict of Interest barred the Firms from providing free and fair opinion on the Corporation while auditing. The Act barred the Accounting firm acting as the Consulting firm and vice-versa. Similar regulations might plug the loopholes in the Credit Rating agencies in the present scenario.

India's Emerging Diamond n Automobile Industry

Volvo-Eicher Vehicles'(VEV) decision to invest Rs 288 crore at its present facility in Pithampur, Madhya Pardesh augurs as more then an FDI investment. The investment would position India as the global manufacturing hub for Volvo's new medium-duty engine platform. The plant would be integrated with Swedish automaker's global supply chain and would be the country's largest commercial vehicle engine manufacturer and is expected to meet the global requirements for European and Asian markets(except Japan).

India would be second country after Japan to have such a manufacturing hub. This could well be the beginning of India being looked upon as a 'global manufacturing hub'. Does that mean that the relational comparative advantage in terms of competitive costs is shifting to India from her neighbouring China, fondly referred to as the world's factory.

According to the model, for a country to sustain competitive advantage in a particular industry, it must develop a dynamic advantage that is through is through broadening and extending the basis of its competitive advantage by innovation and upgrading. This dynamic set up is more influential then the initial resources that a Nation State is naturally endowed with, in determining its Sustainable Competitive Advantage.

The four factors in the Porter's Diamond model contemplating Nation's sources of Competitive advantage are: 1. Factor Conditions 2. Related and Supporting Industries 3. Demand Conditions and 4. Strategy, structure and rivalry.

In the light of Porter's Diamond model, an analysis of the Volvo-Eicher's investment decision would be insightful to know if India is inching a step closer to developing as the hub for global manufacturing in the Automobiles industry.

1. Factor Conditions: Factor conditions refers to the presence of factors that are important for the growth of a particular industry. The y could be 1. Home grown resources or 2. Highly specialized resources. It may be the presence or the lack of factor conditions that can contribute to the model. Japanese specialization in zero defect manufacturing and miniaturization is attributed to her lack of sufficient natural resources.
2. Related and Supporting Industries: A value chain involves many steps in the stage of production. A highly complicated product like automobile would requires thousands of parts as raw materials. The presence of relating and supporting industries provides incentive for growth of related industries. The reasons are not far to seek. Logistical and time efficiencies, increased co-ordination amongst related industries spur the growth of “cluster” industries. Clusters contribution to growth of sustainable competitive advantage for nations has been an important subject of study for Policy makers and Strategists. The Silicon Valley in USA or India's Silicon Valley 'Bangalore' and Silicon Glen in UK are great case studies of techno clusters of the IT industry. There is already an existing set up Pithampur and the investment is to increase production from the plant and integrate into the global supply chain giving it Economies of scale.
3. Demand Conditions: Supply is to meet the demand. That is the simple law of Economics and no rocket science to fathom. India is the second largest growing market for automobiles. This as explicitly articulated is one of the important reasons for VEV's investment.
4. Strategy, structure and rivalry: Competition is the best way to make an industry Competitive!! Rewind the clock of time to twenty-five years and Maruti Suzuki the only manufacturer of cars in India with efficient technology. It fed the nation endlessly with its Maruti 800 cc cars. There was time when cars was synonymous with Maruti 800 in India. Shift the focus to Japan. Intense domestic competition in the Japanese automobile industry due to the presence of 9 national major competitors Honda, Toyota, Suzuki, Isuzu, Nissan, Mazda, Mitsubishi, Subaru and Dastan, The competition in the Japanese markets was so strong that it acted as an impetus for world class innovation and efficiency and the Japanese cars became synonymous with the 'latest world class technology'.
   Likewise, India with an ever increasing demand, developing industry and increased FDI investment that is poised to bring not just financial investment but also technological breakthroughs as in the present VEV case, India could well be on her way to develop a sustainable advantage in the industry. The Government, as has been the Chinese case, can play an important catalyst role to encourage companies to higher levels of competitive performance. This can be through monetary and fiscal policy, incentives for FDI, tax breakthroughs, focus on creation of clusters, SEZs and strong anti-trust laws to encourage competition. 

Think about them to make them think about us....

Ever imagined if you entered adolescence with a ten pound gun strap digging deep into your bony shoulders while you shift it restlessly from one side to another staring blankly on an endless barren road hauntingly searching for your next target. Afghanistan, Palestine, vast stretches of Africa and all of Somalia are observers to those formative years that lost their innocence long before they witnessed it.


Convention of the Rights of the Child prohibits soldiers younger then 15. The preamble to the Convention recognizes that every human and in the context of the Convention every child has an inherent Right to Life without distinction of any kind such as race, colour, sex, language, religion, political or other opinion, national or social origin, birth or status. The Geneva Declaration of 1924 of the Rights of the Child further recognizes that the child by the reason of their physical and mental immaturity need special safeguards and care, including appropriate legal protection, before as well as after birth. Well articulated conventions with high sound moral ideals, but what is law without implementation. As Conventions are scripted in gold on the annals of history with elaborate niceties, nameless statistics like bubbles are formed in the desolate lands of war ravaged countries adding fuel to the divide that we call the Clash between Civilizations. Something must be done to prevent this from happening or is this the legacy we want to leave for out future generations. We need to heal, we need to bridge the divide and this bridging must begin with those young impressionable minds for they are the like the molten wax that can be moulded into any shape we want. We need to think for them for making them think about us when we grow old into second childhood like children in their hands.

BP Pressure: Shareholders v Stakeholders or Shareholders one of the Stakeholders?

Shareholders are the only concern of the business. They are the only stakeholders that a Corporation is accountable to. Or perhaps Shareholders are the only stakeholders. That was way back in early 1950’s when Milton Friedman’s philosophy ruled the hearts in Corporate Boardrooms. With awakened social movements, stronger omnipresent Transnational and globally NGOs asking Governments to call for increased transnational participation in good governance the call for caring for other stakeholders emerged. But who are these other Stakeholders. An interesting open-ended question that continues to get debated in the academic and business circles. Some of the stakeholders that unanimously are considered to be the stakeholders are the shareholders for sure, and then come the consumers, the society, the employees et al. It is now unquestioningly universally acknowledged that shareholders are but one of the many stakeholders. But the question is far from settled. There is more to this stakeholder debate. The voice gets only louder and brawnier in crisis times. An important question that deserves answer is who are the most important stakeholders? The shareholders who provide the initial impetus to kick start the company or occasionally fill its coffers during IPO’s or in a crisis like the one that has hit the Gulf of Mexico recently, the society that has been adversely effected by the negative fallouts of company’s reckless pursuit for riches. BP one of the world’s richest oil companies sitting on neatly piled up US$ 7 Billion worth of cash with a capacity to borrow another 15 billion and an estimated revenue of $34 Billion for the current financial year is a forefront partaker to this debate. What should be BP’s primary concern- offering dividends to its shareholders for the huge profits that came in the financial year or the forlorn fisherman, residents living on the effected Gulf cost who lost their source of earning, the pristine unsullied environs they would wake up to every morning or the tour agencies who filled the dreamy-eyed tourists with a dream holiday on the eloquent environs of the Gulf of Mexico or the inconsolable tourists who long premeditated to holiday on the picturesque beaches.


Are there any legal remedies in a scenario like this in case a moral obligation with increasing stakeholder pressure is cast on the Government to prevent the Corporation from paying dividend to its shareholders. A legislation can be passed by the Government to this effect thwarting BPs attempts to pay dividends and ordering it prioritize payment of compensation to the aggrieved. In the present circumstances what seems like a more plausible scenario is resorting to a Court of Law. Courts have the power to issue Injuctions. Injunction is the power to stop the part from doing a certain act, in the present it being the payment of Dividends and instead asking for paying compensation. Broadly there are four important factors to be taken into consideration while ordering interim injunction. First balance of convenience is in the favour of the aggrieved party; Second the likely outcome would be in the favour of the aggrieved on the basis of prima facie; and in case of failure to issue interim injunction, an irretrievable damage would be caused to the aggrieved which can not be made good by monetary compensation later. A permanent injunction is issued on appreciation of the fact and law which requires a complete trial. The onus probandi that is burden of proof is on the claimant seeking relief. In the present case to elaborate one of the claims of the Department can be that payment of Dividend in the present scenario would be tantamount to a “fraudulent conveyance” to prevent money from rightfully flowing to the claimants.

The BP debate builds up pressure to this Shareholder-Stakeholder debate and the outcome would set a new benchmark for the evolving CSR debate.

ChIndia- A race of policy making

As China and India emerge to be the two fastest growing economies in the world, the comparison between the two neighbours inevitably increases. In all tangible measures, China is leading the race. A look at the statistics seems revealing. China's GDP in 1978 when the liberalization began was less then half then that of India's and today some thirty years after its liberalization China's GDP is more then double then that of India's. China's GDP per person today is US$ 6,000 which is expected to climb to US$ 15,000 by 2020. China's fast growth could well be its anathema. It is seen worldwide that the GDP tends to plateau as has been the case of developed economies, once it reaches the level of around 15,000. There is another problem waiting to strike China. China banks heavily on its manufacturing sector. With its one child policy, though China was successfully able to counter the menance of population, but it may lead to the problem of an old generation in the coming decades. By 2050, China would have almost the same number of old as in the developed world, with a dwindling population of the young. India on the other hand is growing at more then 2% and will have the youngest population in the working age in the coming decades. This along with Rule of Law is counted upon India's potential strengths that will help her quench the race from her gallopping neighbour. But for the race to be won India's needs to take affirmative initiatives on the policy making front. Good governance and effective implementation can make all the difference in this story. India has a strong industry with great talent. Tata and Infosys are globally recognized brands. India has the potential to come out with more such brands. But for this to happen, we need to make our work force employable. Being young does not help. Youth can be dangerous. It needs a sense of direction. A written constitution claiming democracy and equality its people is not enough. What we need is leveraging that Rule of Law and that workforce by making employable.

Food for hunger...

The world's population today stands at 6.5 billion with the number expected to touch a whopping 9 billion by 2050. And most of this population growth is happening in the developing and underdeveloped world. This burgeoning population is leading to a fight for resources, raw materials, food and land. The question is is this kind of growth sustainable? What are the measures undertaken to control the population. And as the population grows unabated, what are the measures taken to meet the requirements of the growing population. On the food front for instance over 800 million around the world are mal nourished and one in five of them is a child. Annually fifteen million children under the age of five die because of hunger. And mass hunger, poverty and scarcity haunts the resource abundant continents of Asia & Africa. Presently there is about 1.5 million hectares of land around the world under cultivation. With increased industrialization, land under cultivation is decreasing. This is only expected to raise the problem. So there have to be solutions on alternate fronts. One of the solutions to the food scarcity is the use of scientific and technological advancements to meet the increasing requirements. The green revolution in Asia in 70's and 80's increased the food production upto three times and saved the world's most populated continent from food crises. Under traditional means of production the food production is 30-40 percent less. For instance in the wheat yield is about two tonnes per hectare in Russia compared to almost four time that is about 8 tonnes per hectare in France. Thus, leveraging scientific and technological advancements to usher in an era of second green revolution would be a good idea. Africa with its vast lands of fertile soil and natural resources, can world's future to its food requirements and industrial inputs. But these have to leveraged through technology to maximise returns. Thus, there is a case for association between the technologically advanced and resource abundant developing world.

Women's Reservation: Progressive or Regressive

Its interesting to observe the difference. The Ruling UPA alliance hails ensuring a fifty percent reservation for women in the panchayats(in villages) as its biggest achievement(http://in.news.yahoo.com/48/20100518/814/tnl-in-rae-bareli-sonia-targets-maya-on.html). In the more developed part of the world 'reservations' are seen as negative impetus for human development. Did Darwin not talk about the 'survival of the fittest'. Reservations for the weaker sections in India started about sixty years ago and every ten years the target is extended for the next ten years. And to top it now we have the women's reservation. Is it a genuine intention on the part of the legislature to take the country to the higher pedestal of progress or does the 'British Raj' legacy of 'Divide and Rule' still lingers on in the minds of our opportunistic legislatures. Living from one election to another, oner day to the next, one agenda to another is that all that is the aim of politicians, seen by MK Gandhi as the true servants of people. Reservation, the appeasement politics by another name, may benefit the myopic policy-makers agenda in one election; but is it not like the termite that eats the wood and thrives on it. The sad state of affairs brings to my mind the effervescant question who's country is it anyway? Increased polarisation with every passing elections, opportunism; brain drain which some infact see as better then brain in the drain; for how long can it all continue? Can we forever afford to live with this 'chalta hai'('everything works!') attitude?

Is this the Rule in Law?

Whar confronted India on the dark December 1984 remains to this day one of the biggest questions on the Rule of Law. With the latest judgment by the court awarding a mere punishment of only two years and charging them under section 304A as death due to negligence, one of worst corporate crimes in the history of modern idea has been equalled to the stature of a truck accident. Is democracy a farce, an illusion to satisfy the intellect of those pursuing the higher ideals of liberty, equality and fraternity? The world's largest democracy promotes itself as the epitome of Rule of Law. In the international arena we encourage international investors, FDI to come and invest in the country on the promise that there is a Rule of Law, Good Governance which is where lies India's advantage over China. And then comes another blow on the head with the Nuclear Liability Bill limiting the liability of MNCs to a pittance virtually in case of a nuclear disaster. The Bill re-raises many unanswered questions that were once raised way back in 1984 in the Bhopal iso-cyanide gas tragedy. What is that Rule of Law worth that can not ensure and protect the rights of its own citizens. This takes one back to the fundamental question: what is that development worth, that India shinning like for the common man on the street who's eyes get annoyed by the glare of the shinning sun for he does not even earn enough to cover his bare feet. Is this the Right to Life and Liberty embellished under Article 21 of the world's lengthiest constitution. Is this right to Life and Liberty so poetically articulated and interpreted by the Highest Court in India through the fine pen of Justice Bhagwati and his bench including the famous Justice Iyer Krishna: Right to life does not mean a mere animal existence. It means the right to live one's life completely, to develop as a human being.

Dragon's story scrippted in Gold as Elephant sleeps!

The Dark Continent sits glittering on over 99% of world's gold reserves. Tanzania with the third largest reserves after South Africa and Ghana, rightly enjoys her position as the enviable cynosure of Chinese policy-makers. With economic aid worth Dollar two billion flowing quietly since 1960s from the land of the Mandarin, one wonders if India with her ever mesmerized eyes focused on the glamorous west has missed the opportunity. Just an Ocean way Tanzania, as the Indian Ocean divides the two countries, Tanzania can perhaps be a good way to gain access to the African markets. India with her burgeoning population and accelerated growth rate notwithstanding the economic meltdown needs to re-define its strategy of accessing the International markets. The Chinese policy makers with their foresighted vision could comprehend way back in 1960's the importance to lighten up the corridors to this dark land. Tens and thousands of Chinese Engineers and millions of dollars flew in as investment from China to Tanzania, as Chinese help built the 1860 km long Tanzania-Zambia railway, colloquially called the Freedom Railway in 1970's. An accessible trap into Africa's most rugged terrain helped Chinese tap the emerging African markets for raw materials and an unmet consumer appetite for goods and services available at affordable rates. The Chinese also sent over thousands of medical experts to Tanzania to provide medical services in the under-developed economy. And the camaraderie only seems to have strengthened over time. The Chinese Engineering Company with joint funding from the Chinese & Tanzanian Government built the new national Tanzanian stadium, wherein the two countries jointly hosted the Beijing Olympic relay Torch in April 2008.

Opportunities galore in this Emerging underdeveloped market. Mining, Agriculture, Pharmaceuticals, Infrastructure Development and Telecommunications are some of the most promising emerging industries in the region. China with over 40 years of investment of time, foreign aid and infrastructure into the region already seems to have captured the first mover advantage in terms of capturing the mindshare and heart share of the Tanzanians. But the train is not missed as yet. There are competencies to be leveraged from. Indian IT & Telecommunications players for instance having proven their mettle in one of the largest mobile phone & IT markets in the world, can transport the efficiencies to the African market. Airtel, India's largest mobile phone operator's vision to make a move into the African markets with the MTN deal was a step in the right direction. Zantel one of the first mobile phone companies in Tanzania to offer mobile banking provides an example of how mobiles could be an increased source of revenue for the Telecommunications company by looking at mobiles as not just a means of communication but also as an instrument to facilitate trade. Zantel's success emerges from its vision to forsee the fast emerging market of telecommunications growing at the rate of 20% and combine it with a low banking access of only 9% in Tanzania. Thus, m-banking model became a successful way of tapping the informal economy. Such innovative ways to reach those at the Bottom of the Pyramid in the blessed and cursed in size, widely dispersed population of Tanzania are interesting case studies.

With Tanzania emerging as the most favoured destination for Chinese economic aid, there is definitely more to this development then meets the eye. Africa and Tanzania neatly sit on those elusive resources, metals and a fast emerging market to be tapped that could well define the country to emerge as the winner with a sustainable access to these important resources, the key to development of trade and industry. It has always been and it will always be that for nations to be Competitive, the one with the best manpower resources, R&D, scientific and technological advances and sustainable access to resources will have the most sustainable competitive advantage. India on her part must draw lessons from her dragon neighbour and ride on the train to this rough terrain before she catches on the sneeze of lazing elephants.

New Mining Law in Tanzania & implications for Good Governance

Strategically well connected to the African sub-continent with Indian Ocean on its east coast, Tanzania is well connected by land and water transport. Amongst its promising sectors, Mining Industry holds the greatest promise. Tanzania is Africa's third largest producer of Gold after South Africa and Ghana. The Gold mining industry grew at more then five percent in 2009 with gold exports worth $ 1.076 billion compared to $ 932.4 billion a year earlier. With tremors in the Euro zone and shaky Dollars, pessimistic investors pare back on riskier assets in favour of gold. Thus, investing in the rich and abundantly endowed Tanzania is the key to sustained growth. Seeing the importance of its burgeoning Gold reserves, the Tanzanian Government new mining law recently. The law has drawn mixed response from the industry. The law seeks to enforce the socially responsible image of investing in the mining industry. Traditionally, the mining companies have been seen resource hungry with no commitment to the needs of the local population. The new law envisions to change this. The new Act will cover gemstones like Diamond, Tanzanite, Emerland, Ruby, Sapphire, Turquoise and Ruby. With important changes like mandatory requirement to be listed on the Dar-es-Salaam stock exchange, higher Government stake in the Joint Ventures and increased royalty payment of four percent from the existing three percent to the Government; the new law seeks to strengthen the Corporate Governance regime in the mining industry. Tighter compliances and stricter regulation if followed in word,letter and spirit would only help boost the image of the mining companies. This is important as trading in these companies in developed markets are more profitable then trading in metals itself. And with an ethical image for your company, trading on the stock exchange of the more developed Dow Jones and FTSE only gets easier and more profitable.

A gory story scrippted in Oil

From Valdez oil disaster to the Gulf of Mexico... the story of human destruction is written with the gory ink of oil. An intriguing question that stares us in the face with these mamooth disasters is 'Is CSR working'? Is it Corporates Shedding Responsibility!! BP's nail in the coffin with its post on the website asking readers to suggest if there is a way to cork the spill shows that plugging the continuing disaster is beyond the contemplation of existing technologies and the world's best Engineers available at BP. It almost sounds like the Obama campaign, hoping to come out with a solution- Change we are and change we can! Or perhaps someone reminded BP of the story of the cleaning boy at NASA research centre who after millions being spent on making a pen whose ink would not dry up in the space, innocently questioned why spend millions, why dont you take a pencil to the space?

Blue Ocean Strategy

Every company endeavours towards one elusive goal and the goal is to conquer the market; to have greater profits and to last. Different players employ different strategies. Some fight on competition, whereas others endeavour to create a niche by differentiating from their competitiors. Kim & Mauborgnes' 2005 unprecedented work Blue Ocean Strategy emphatically questioned this conventional mind set of the Industry to approach competition and creating a niche. Kim & Mauborgne argue seldom does one look for untapped market, an unmet need and for those that successfully value innovate emerge as leaders, the market control that is sustainable with its niche market and can be sustained in the newly found uncontested space, till imitation gives way to crowding of the space.

Red Ocean Strategy focuses on competing in existing market, beating the competition, exploiting an existing demand, making the value cost trade off and aligning the whole system of a company's activities with its strategic choice of quality differentiation or low cost.

The Blue Ocean Strategy on the other hand emphasizes on creating uncontested market space, making competition irrelevant, creating and capturing new demand, breaking the value cost trade off and aligning the whole system of a company's activities with its strategic choice of quality differentiation and low cost.

Kim & Mauborgnes' 2005 Four Action framework, Red Ocean focuses on Eliminate and Reduce, Blue Ocean emphasizes Raise and Create.

In the Cost Structure Reduction, we need to see what costs a lot without adding a lot of value and hence, need to eliminate the same. We also need to look for places wherein we can reduce emphasis.

In terms of Buyer Value, there are avenues which may not cost much, however emphasizing and focusing on the same we can raise the perceived value in the eyes of the customer considerably.
For Creation, look for areas which are not presently focused upon in the industry at the moment; however, addition and/ or creation of the same, the customer would appreciate the same. Is there something unique, different, hitherto unthought of, not focused on before, however, addition, creation of the same, would be seen in a greatly positive light by the customer.

So the idea basically is innovate, Value Innovation. Value Innovation is the simultaneous pursuit of differentiation and low cost. We need to look at the whole picture holistically, referred to as the Ladder of Inference, in its entireity. Then we need to evaluate the Value Factors, we need to critically evaluate the present factors and look over the Halo effect. One needs to see what is it that we are assuming to exist, that which possibly does not exist. Value Innovation is the difference between Perceived benefit and cost. If the cost of adding a particular attribute is less then the value perceived by the customer; in other words value perceived is more then the cost spent in adding that particular attribute, then it is Value Innovation. The conventional Six Paths Framework, talks about reconstructing market boundaries, by focussing on Alternatives, Strategic Groups, Chain of Buyers including Strategic Network, Chain of Buyers including strategic network, Complimentary products and services, Functional or Emotional appeal to buyers and Time.

Structuralist view or environmental determinism works on the premises that a firm is competing within the given industry and the resources and environment for the industry are given. The dynamism or the constantly evolving nature of the surrounding environment is not taken into consideration. The proponents of Blue Ocean argue that the dynamism of the industry and the surrounding environment creates the need to value innovate and create blue ocean. The Blue Ocean views looks at the reconstructionist view by challenging the premises that the boundaries of the market are given and that the frontiers can not be redrawn. There is an extra demand out there which is untapped. The all enigmatic question is how to find that untapped market and create a demand. In other words, how to redraw the market boundaries that are taken as given in the minds of the managers atleast. When viewed from the Blue Ocean Lens, there is a tectonic shift in our approach to the market- from supply we look at the demand side; from competition, we look at Value Innovation, from a zero sum game, we look for ways of Harmonic Progression. The idea then is to innovate, to redraw, to re-create; hence the Blue Ocean approach is the reconstructionist approach.

In this world, where even the spiritualists say that nothing is permanent except change, Blue Ocean Strategy is one step closer to looking at this ever evolving world from the lens of reality. As old songs become classic, new hip hop music becomes a rage; as old fashions fade on the canvas of memory, new styles emerge; then in the ever evolving money chasing market dynamics; how can the analogy of a constant fight to look for hitherto untapped frontiers seem misplcaed. The key then is to create Blue Oceans. And sustainable competitive advantage is not a static, it is a Business strategy on the move.

A Dharma called CSR

One of the employees with Fairtrade Foundation recalls his decision of opting out of Barclays and instead choosing to work with Fair Trade. On being selected to work for the Barclays, he asked and so what are we supposed to do. To this, the Recruitment Manager replied, well, you have to sell credit cards to prospects who you would never be able to pay back. Cool! Said everyone in the room. But the protaganist of our story differed!! Rejecting the tempting offer, he murmured I definitely did not pursue an MBA from a top School to do this. Well how many of us have that protaganist in us? And for those few amongst us who have it, fewer still have the guts to do it. Fairtrade, Ethical Business, Social Responsiveness, Corporate Governance and the icing on the cake Sustainability! Interesting buzz words.... or an endemic necessity. It is essentially for our own good we need to question the way things are done, the manner in which the Corporations run, the Corporate Governance or the absence of it, is too big a question to ignored. The question essentially boils down to our survival and the survival of generations to come. Briefly put, the issue is one of Sustainability. It is not just about present, profit and progress... it is about a sustainable progress making progressive headway into the future.
Let the question begin with us. How we as individuals can contribute towards this march to Sustainability. The answer begins with a simple thougthfulness, a realization. We take our society, our environs, our work, our lives and the luxuries as given. We want to acquire more and more and more. There is nothing wrong about this desire to seek more. After all Dharma, Artha, Kama and Moksha are the four tenets of human aspiration in Sanatan Dharma. Literarly translated, Dharma refers to peforming one's duty; Artha refers to accumulation of wealth, Kama to fulfill the physical human desires and Moksha is attainment of Salvation.

Sanatan Dharma or sometimes we refer to it as Hinduism does not mean religion. Sanatan means that what is eternal, never ending. Dharma is often misconstrued to be Religion, but Dharma is not religion and interestingly enough Dharma is religion! However, it is Religion in the connotation to follow religiously that is what is my duty, my responsibility in other words my karma. Karma is the work that one is spiritually ordained to do. Though literally translated Karma means work in English but Karma is not just work. When we work, we do it with a certain thought. For instance if one works on an article with a desire to attain high readership, then there is a desire attached to the work one is pursuing. This desire is to be known, to attain a stature within the legal community. However, if the same action is performed with a desire for the good of the society with no expectations in return it is Nishkaam Karma .. the Karma as referred to in the aforemetioned four tenets. This Karma is then the Dharma.
Since we are all ordained to fulfill our respective responsibilities, each one of us has our own respective Dharma. As a Cardiologist, someone is ordained to treat his patients well and get them back to health. As a Lawyer, another individual's Dharma is to handle his clients well. Likewise a given individual will have different Dharma's at different points in life depending on what role is she playing. As a child, her Dharma would be to look after her parents when they need her. As an employee, her Dharma is to work well for the company and steer it towards an Ethical path. As a customer, the Dharma then is to use products that are ethical, that are good for her and her as a family. As a shareholder, her Dharma is to invest in Companies that invest ethically, that contribute to growth of the economy. Dharma then is the constant companion in each one of our lives and we have to understand in the different facets we have, different roles that we play what is our Dharma? In this ecosytem we are stakeholders, with varying shades of roles to be played in different plays. Somewhere we play the most central role, someplace sidelines, sometimes faded to the background, sometimes more, sometimes less, but we all play a role and the idea is to play the role well. This then is the Dharma.

Artha referred to as the second objective of Human life in Sanatana Dharma refers to 'money or material prosperity'. But this is not material prosperity as is commonly understood, for material prosperity does not mean a march towards materialism. Ever wondered why the richest people are not the happiest or why the most prosperous nations are not the happiest nations. Why there is no significant co-relation between wealth and happiness. The reason is that the material prosperity that we seek to attain may make us rich, but does not really make us prosperous. We are all running in the rat race to be rich to prosper, by all means fair or foul. Mostly, if not always, we do not see how our investments make money, whether we are investing in ethical companies; what work are we doing to make money … are we being robots run on power to generate endless papers called currency... are we just promoting the system... or adding a soul to the system. Is the organization we work with contributing to the growth of the society. Are we as stakeholders to our environment giving back to our society or are we only endlessly taking from it. Little acts of kindness, like a conscious decision to invest in ethical shares, work for an ethical company, taking a little share of our fortune to contribute to the growth of the society and acting ambitiously but not greedily to amass a fortune is Artha. Islam has the beautiful concept of Zakat in this direction to make one's money, one's Artha. Zakat is one of the five basic responsibilities every Muslim is ordained to perform. Zakat simply put means, that every Muslim must give two percent of his earnings in charity to the less privileged. He is encouraged to contribute more, but the minimum two percent is mandatory.

Kama is the third pillar which means fulfilling one's physical desires. In Santan Dharma, one is encouraged to enter into the Marital Bliss, referred to as the Ghrihasthaahrama to fulfill ones physical desires. Marriage is much more then that. But this is one of the important functions of Marital Bliss. Osho's critically acclaimed writing 'From Sex to Superconsciousness' provides interesting insight on the topic. Thus, it is perfectly Divine to fulfill one's physical Desires and then tread on the path to Moksha. If one's desire are fulfilled in a spiritual manner with a social sanctity, then it is easier to control one's wrong desires.

And finally the attainment of the Moksha is that one ultimate goal that is the quinteessential essence of spirituality. If one performs one's Dharma, Artha and Kama well, then the path to Moksha or salvation becomes much easier. The essence of Spirituality is not about reading scripture one after another, watching one religious channel after another to increase its TRPs(atleast this has become the trend in India of late!) or a race to engage in discussions that about the differences in religions and societies; the essence is to be spiritual, to be a good human, to fulfill one's responsibilities well, to be thoughtful, critical thinkers that we humans are ordained to be and to be a constructive stakeholder in the Sustainable development of the society.
Corporate Governace and Corporate Social Responsibilty is in essence then the modern day equivalent of Spirituality.

In search of a business for business....

Is doing business the only business of the business? From Milton Friedman to The Future of Industrial Man(Peter Drucker, 1942), the concept of responsibility and conscious of nations has come a long way. Why do corporations have to be socially conscious. Is it a mere legal compliance or a philanthropic attitude of Companies is well taken by its stakeholders?  
David Packard, co-founder of Hewlett-Packard remark perhaps seems to answer this beautifully, “I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company's existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately- they make a contribution to society, a phrase which sounds trite but is fundamental.”
And Hewlett-Packard is not a not for profit Organization. It makes profit like any other company. It is after all in the business of making money. But it is in the business of making something more then money and that is 'contribution to the society'. The important question is does this responsive behaviour has any value for the company.
Organizations do not work in vaccum. They work in a dynamic environment wherein the various elements of the environment inter-play and interact. A pro-active and responsive behaviour by corporations is not just a good PR exercise, it can also be a great value-creator. The concept then is to visualize Corporate Responsibility as social in essence and strategic in content. Examples galore of Companies that have successfully implemented this strategy and leveraged from it. Working on its mantra of triple bottom line: profits, people and presence, Cicso has successfully managed to meet the shortfall of talented IT professionals by collaborating with local schools and universities and providing industry-relevant education.

The concept of Triple Bottom Line refers to the three important elements and value creation for them: The People, The Planet and The Profits.

From Adam Smith to Milton Friedman, it was largely believed the only people that a corporation was answerable to was its shareholders; but with the changing times, increased public awareness and business impact increasingly felt on the everyday functioning of society, the presence of Corporations was no longer confined to boardroom decisions or shareholder meetings, 'people' other then shareholders too seemed to become important. These people other then shareholders involved the employees, the suppliers, the local community, the consumers. The vast ambit of this people was collectively referred to as the stakeholders. Stakeholders are people who simply put effect and are in turn influenced by the presence and functioning of the Organization. Thus, the organization must be seen to benefit them or atleast not harm them through its presence.

The Second P... that is the Planet... refers to the Environmental Impact that the activities of an Organization has on the Environment. Thus, with this second P in the Triple Bottom Line, emerged the concept of Eco Labelling and Fair Trade Companies.

The Third P is the Profit.. with Milton's eternal mantra, that profit is the only business of the business, the importance of a profitability of a business can not be overemphasized.

Thus, today for an Organization to exist it must not only exist in harmony with its Balance Sheet, it has an even larger and more accountable role to play.... the profitabilty of an Organization must resonate in terms of contribution to its stakeholders and environment as well. Simply, we need organic organizations that are soulful in spirit and humane in approach.

All religions talk about being good. All of humanity is laid on the foundation of being good and fair. Yet, there is so much of unfairness and so little fairness in us all. What accounts for this element of unfairness reflected in the present day materialism.

Whether religion is Divine or religions evolved as checks and measures to balance the human conscious as humanity developed is a question of law, ethics, society, sociology and the philosophers to contemplate. What is of greater significance and what is more important is the realization that all the religions have some basic common tenents on which their foundation lay. For those who do not believe in religion, they still have some basic principles which may be referred to as principles of humanity. And for those existing at an even more meta-physical level it is spirituality. The essence is the basic fundamental tenents spoken by different sages at different times, with the cardinal message remaining quintessentially the same. As borders become meaningless, multinationals ride high on the wave of globalization, leveraging from geographical competencies embedded in clusters across the world, as the brain drains on the modern day equivalent of Pushpak Vimans the Boeings and the Airplanes, as the inquistive mind questions the dogmatic religion and seeks solace in spirituality, the enigmatic question that rises like a wave is there an emerging wave of new age spirituality. The truth is one, the sages say it by different names. The moving mind thinks and having thought contemplates. In the shadows of Corporate Governance, as I see the buds of Corporate Social Responsibilty blossom, my heart cherishes the emergence of a new wave of spirituality.