Wednesday 14 July 2021

By V K Talithaya

"The global landscape is changing. Digital is creating world-changing innovations, but also disrupting industry and how people work. At the same time, economic nationalism is rising around the world, largely resulting from parts of society not benefiting from years of increased globalization. Sustainability has also evolved. Business must now lead and not depend on government to be a beacon for sustainability. We must think about what types of jobs and opportunities they are creating for society."
                          -  Jeffrey R. Immelt, Chairman & CEO, GE
President Donald Trump has done it! He has decided to walk away from the Paris Climate Change Agreement (the United Nations Framework Convention on Climate Change - UNFCCC). President Trump believes that his concern is Pittsburgh and not Paris. He is the President of the United States and not of the world. But is he? Can the US President stay aloof from the world? No matter how much the President of the United States wants to shrink from the world, the world seems to be unstoppable from engulfing him. North Korea, Syria, Afghanistan, IS - the global concerns of the President are not something he can coolly walk away from.
The President may be too eager to abdicate from global leadership. But the US can and needs to still retain some aspects of global leadership. That onerous responsibility lies on the shoulders the managers of US industries. They have a chance to keep US leadership in the global economy. If their commitment to sustainability, limiting greenhouse gas, waste reduction etc. mean anything at all, they have a duty to ask themselves whether they want to limit themselves to government policies (including taking advantage of them) or to their stated policies.

"We believe in building a responsible cloud. For Microsoft, this means moving beyond datacenters that are already 100 per cent carbon neutral to also having those datacenters rely on a larger percentage of wind, solar, and hydro power electricity over time".  

Governments make policies which enable environmental protection. But those who have to act to make it happen are the industries, the farmers, the service providers and so on. Therefore, no matter what the government says, whether the government owns the Paris Accord or disowns it, we as industries operating in the global market have the responsibility of contributing to mitigating global warming. It is to these little drops of contribution by US industries that the world will be looking forward to, in the face of a government which has disowned its duty to the future of humanity. It is the managers of America's GMs and Fords, GEs and DuPonts, Microsofts and Googles who really have to make it happen. This commitment goes far beyond the legal and justiciable - it is a moral commitment.
"Proucing environmentally conscious products is ethically responsible and something that consumers and governments are beginning to demand. Corporations are becoming increasingly aware of the importance of environmental issues to consumers, additionally they have become aware of the importance of environmental issue to their shareholders as disregarding these issues may expose the company to risk."  
A look at GM's environment policy reveals the corporation's intent to restore and preserve the environment, reduce waste, educate the public on conservation, develop less polluting technologies, work with the government to develop environmental laws, and to also continually assess and improve the environmental impact of their processes and products. Elon Musk's deep concern about climate change is well known. He and Bob Iger, Disney's CEO, walked away from the Presidential Councils in protest against the President's decision to dump the Paris accord. Others like Jeffery Immelt, CEO of GE clearly articulated their views that the Paris Accord matters for the future generations. Happily twelve states, including California and New York and 125 cities have proclaimed, "We Are Still In" - that they are committed to the Paris Accord. Google and Facebook have joined these cities in pledging their support to the Accord. It is hoped that many more US industries will lend their support.  All these provide the hope to a beleaguered world that the US industries will be on the side of the future. Their managers have great responsibility, indeed. The world is awaiting with bated breath.      
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By V K Talithaya

Scarcity is the anchor on which the subject of Economics is based. If what people want is scarce that will fetch a price. What price it will fetch will depend on how much scarce it is compared to how much of it people want. In the language of economists price is the function of supply and demand. Looking at it from the point of view of business, it is scarcity which creates value. The scarcer the product the greater is the value. The caveat is that it is a product that people need.

What happens when you produce a product which people need, and because you have limited capacity to produce, it fetches a good price? Obviously lured by the price, others will join the bandwagon to produce it, eventually making its scarcity nearly zero, and its price also near zero. The question that arises is how can there be scarcity of a product which you produce, if everyone in the world can join the bandwagon to produce it as it fetches a price due to its scarcity? What is the secret of producing what everyone can produce and still give a sense of scarcity even if others join as producers?

This question invites us to the world of marketing, the world of brands. That is, every product which
(a)   you innovated,
(b)   around which you created features or sentiments of features
(c)    which customers like and
(d)   other producers cannot imitate, for the present,
is a brand. 

Every product is potentially a commodity. At what stage the producer differentiates it from other producers’ products depends on his innovative capabilities, market savvy approach and hard research and product quality. The next stage is branding. Brand is differentiation in product, creating an aura around the product or the organization, creating strong loyalty amongst customers etc. Branding is what creates the barrier for others from entering the specific market and maintaining and/or improving the scarcity condition. But the brands can wear out. People’s loyalty to brand is not etched in stone. It is perpetual war for loyalty.
How marketers face this challenge is to take the relationship between the product and customers to next level – the level of emotions. Saatchi & Saatchi (see their website) call these relationships Lovemarks. “Lovemarks thinking is the unique way we look at the relationships people have with products, services and entities. Lovemarks are the future beyond brands because they inspire Loyalty Beyond Reason”. Excel Expert Help

The tangible ingredients of the product such as quality, utility, delivery etc. are important; with Lovemarks they are overshadowed by the new intangibles. “At the core of every Lovemark is Respect. No Respect? It’s not a Lovemark. It’s as simple as that”. These are laudable mission, indeed. But, how do we create Lovemarks. This has been very neatly distilled into some principles by Morgen Witzel, in his interesting book Tata – The Evolution of a Corporate Brand. Witzel’s is the story of how a one-hundred-fort-years emotional relationship is built by one of India’s largest multinational conglomerate, the salt to automobile and hospitality to software group, Tata. Witzel says, “A corporate brand is not what you say it is. It is what you are. If you want your brand to have the values of virtue and trustworthiness, then be virtuous and trustworthy and demonstrate it in your actions. If you want your brand to signify quality and value for money, then make and sell quality products that give value for money, then make and sell quality products that give value for money. Be what you want your brand to be. That…is the final and enduring lesson that every business can take from the Tata experience.” Lovemarks need not be a woolly idea like loyalty beyond reason; it can be real and definite if the organization can walk the talk.. Excel Expert for Hire

Why Self-Destruct to Re-Imagine
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Tuesday 13 July 2021

By V K Talithaya
The economist/sociologist, Albert Hirschman, in his famous book, Voice, Exit and Loyalty, discussed how people working in public or government organisations respond to unethical actions or decisions, (a) by raising their Voice against such decisions or actions, (b) by withdrawing themselves from such organisations or situations, Exit, or (c) acquiescing with such decisions or actions, no matter whether they agree with them or not, Loyalty. Though Hirschman propounded these ideas in the context of ethics in public administration, they are equally relevant to business organisations particularly in the context of ethical transgressions by large and reputed organisations and the raging debate on the rights and protection of whistle-blowers in business organisations. Voice is important in public organisations because it upholds our democratic values. It is the channel for dissent. Dissent is the very epitome of pluralism. What about dissent in business organisations? Voice stresses the need for organisational transparency. Transparency is in public interest or stakeholder interest. Yet, transparency is often compromised in the name of confidentiality. Confidentiality in whose interest? When managers become too powerful, and owners become too diffused and anonymous, dissent loses its Voice. What little Voice is heard is feeble, from those who play distant supervisory role as shareholders. Voice, therefore, is rare in business organisations. From Enron and JP Morgan in the US to Satyam in India, from Tesco in the UK to Toshiba and Olympus in Japan, it is the sad saga of acquiescence. The VW case of cheating the detection of greenhouse gas in thousands of cars could not occur without connivance of a large number of managers at all levels. The total absence of Voice of managers at all levels on this blatant attempt to cheat the law is disturbing.  What we see is not Voice, but a submissive Loyalty. In business organisations one sees no heroes like Attorney General Elliot Richardson and Deputy Attorney General William D Ruckelshaus who refused to obey what they thought was the illegal orders of their boss, President Richard Nixon to fire the Special Prosecutor, Archibald Cox during the famous Watergate scandal (known as the Saturday massacre). When managers know of misdemeanours taking place in the organisation, their silence is a betrayal of the shareholders and other stakeholders in the organisation. Legislative protection to whistle-blowers has not done much difference in exposing misconduct in business organisations. 

The alternative to Voice are Loyalty and Exit. Loyalty is not simply being passively silent; it is acquiescence with the misdeeds of the mighty and powerful in the organisation. Unfortunately, Loyalty is not an exception in organisations, but the rule. Rare is the CEO who does not love to be surrounded by senior managers loyal to him. Loyalty to the CEO or to one's superiors is more important than to the organisation. That is the subtle difference FBI Director, James Comey made when he answered to President Donald Trump's demand of loyalty, "Honest loyalty". Loyalty to one's oath, Loyalty to one's call of duty and principles is what Comey might have meant by "Honest loyalty". Loyalty of executives and managers need to be to the stakeholders. In fact, John Kenneth Galbraith in his book, The Affluent Society, wondered if senior managers in business organisations are paid very fat salaries to ensure their Loyalty. The question that begs is again, Loyalty to whom?
Exit as a response to organisational misdemeanours is opted much more often in business organisations than in public bodies. It is a very effective option in business organisations because there is always the fear of the manager joining a competitor. There is also the possibilities of the manager spilling the beans after his Exit. The response of business organisations to Exit in modern times is hefty hush money. It is not only retiring senior employees who are given liberal separation packages, the golden parachute, but also those who opt to separate on their own, but who know a couple of things too many to be allowed to part without being sweetened. Organisations are learning to fortify themselves against departing whistle-blowers more by silencing them rather than by changing their own behaviour. Today reputation is very important to organisations. The hush money, therefore, is in proportion to the organisational concern for its reputation and the potential to damage it by the exiting employee.
Lack of realism to provide an appropriate forum for freely expressing genuine views shut the Voice in the organisation. Expectation of personal Loyalty rather than "honest Loyalty" encourages sycophancy. The intolerable situation created by both leads to Exit. But honest Loyalty to the organisation will nudge the employee to stick around without cooperating with the wrong-doers. Eventually, when staying within becomes unbearable he may raise the Voice. From that point of view Loyalty is preferable to Exit..
From the organisation's perspective providing sufficient space for genuine Voice, encouragement to organisational Loyalty will be the right policy in the long term. If these two are in place Exit will not be threatening driving the organisation to pay hush money. Exit in this case will be mainly for personal reasons or for reasons of conscience, that is genuine disagreements.

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