Are There No Good Companies?

Nityanand Jayraman has a piece in Scroll.in which is a damning indictment of Hindustan Unilever’s role in contaminating a thermometer factory site in Kodaikanal with mercury.

The sordid story carries the usual villainy of an evil corporation that puts its commercial interests above the safety of its workers, the community around it and the environment. While this was a while ago, things haven’t changed much. Even today, we see this movie playing out, in company after company, around the world.

Unilever dumped broken thermometers at the site and let the mercury leach into the ground. It did not train its workers adequately in safety procedures. And when confronted with the clean up after the government shut down the factory, it argued for laxer standards and denied wrongdoing. Pretty standard fare for such cases.

What makes the story uglier though, is that this thermometer factory in Kodaikanal was moved from Watertown in New York state in 1980, after the US started cracking down on environmentally hazardous factories. The standards that the US was pushing for made it economically unviable to operate. However, environmental regulations in developing countries like India are either weak or weakly enforced. So Unilever moved the factory and its accompanying hazardous contamination to India.

This is called regulatory arbitrage. It takes a special kind of villainy for a company to do this.

The factory operated from 1980 to 2001, when the Tamil Nadu government shut it down and asked Hindustan Unilever (HUL) to clean up the site. HUL has done some work but is negotiating on the extent of the clean up required, which is what led to this video. The video, by the way, is brilliant – an example of how art can be put to work by activism. Without the video, the reach of this message would be a hundredth of what it is now.

Hindustan Unilever was my first job out of business school. Hindustan Lever or HLL as it was known in those days was the top Consumer Packaged Goods job for business grads in those days. I was proud to be working for them. They had the absolute best management training program in the industry. For 18 months we got the kind of cross-functional training that was the envy of every management graduate. As part of it, we had to spend 4 months in a village in rural Uttar Pradesh and work on a rural development project. HLL had a Rural Development Program that truly helped the villagers in a very backward area of the country. I thought I was working for a company that was not just a well managed company, but also a company that wanted to give back.

Soon the scales fell from my eyes. It wasn’t really managed very well. I was a junior manager and had very little visibility into top management decisions. But even from my vantage point I could see that the company treated its distributors very poorly. Dumping or channel stuffing was so common that the trade often had months of stock – ruining their economics and the stock of tea they carried (I was in Lipton). The top management knew this was happening but couldn’t bring themselves to stop the practice.

At the time, this was befuddling to me. Doesn’t someone at the top have the courage to tell headquarters that we have to reduce stock levels in the channel even if it means a bad quarter? But I was young, and naive. Now, of course, I have a better understanding of these matters. Managers are poor agents for shareholders. Shareholders themselves are poor long-term stewards of public companies. They can sell and get out at any time. But while they hold stock in the company, nobody wants a miss on a quarter.

You can look at management making self-serving short-term decisions that hurt the company in the long-term (while quoting Keynes “…in the long term we are all dead” with a smirk on their faces) and shake your head and say “Such is human nature.” But when they knowingly poison the ground and kill unborn children, it makes your bile rise to your throat.

I worked at HLL from 1989 to 1994. The thermometer factory was in full production at the time. The top executives that interviewed me and confirmed me from a management trainee to a manager – the Chairman of the company and several high-ranking executives – probably knew that mercury was going into the ground in Kodaikanal. It makes me sick, just thinking about it. If you want to be charitable to them, you might choose to think that they didn’t know. They just never went near it, never reviewed its operations, afraid of what they might find. Still, they are guilty of neglect and willful ignorance.

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Today’s Unilever is a very different place. Ironically, the company seems to have bet its future on its Sustainable Living Plan. Many of its brands are positioned primarily on what they do for the planet. The screenshot above is from Unilever’s company website. The blurb under CEO Paul Polman’s picture talks solely about Unilever’s Sustainable Living Plan.

All this is quite creditworthy and I hope they are successful. But they must pay for their past sins. I hope Hindustan Unilever cleans up the site and compensates the victims. It would be the right thing to do and it would be good business too. You can’t be betting the company’s future on Sustainable Living while fighting a PR battle about dumping toxic waste in a third world country.

But what I know will not happen is that no former executive will be held responsible. That just never happens. Pay a fine. Take a temporary hit to earnings. And move on. That’s not real deterrence. But that’s the best we can expect. Whether you are leaching mercury into the ground water or bringing down the world’s financial edifice, you can feel safe that the company you work for has your back.

BRAKING NEWS: The Anti-Tonsuring Law

BRAKING NEWS
Interviews that bring you to a screeching halt

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Last week in a forced tonsuring incident in Bangalore two school boys’ heads were forcibly shaved by the school staff. Bangalore police has made an arrest. The government has responded by promising a bill in Parliament that will make forcible tonsuring illegal.

Braking News met PK Dhut, Minister of State for Cultural and Religious Affairs.

Braking News: Good morning, PK.

PK Dhut: Please don’t call me PK. I don’t want to be associated with that Aamir Khan movie. You may call me Purna Kesha, which means One with a Full Head of Hair. I come from a long line of hairful ancestors.

BN: Ummm…that’s hard to pronounce. May I call you Dhut ji?

PK: Yes, that will be fine. Obviously, you didn’t study Sanskrit in school. You must have studied German or French or some useless foreign language instead.

BN: Dhut ji, the government has proposed an anti-tonsuring law which will make forcible tonsuring illegal. Why?

PK: We respect people of all hair conditions, bald and hairful. However, lately, some misguided people have been forcibly tonsuring people. These people are converted to baldness against their will. We cannot allow such forcible conversions.

BN: But aren’t there already laws on the books which prevent the use of force? Why do we need a special one for forcible tonsuring?

PK: You see people are very sensitive about their hair. It requires a special law.

BN: Really? Well, let’s take an example. Right now, you are picking your nose.

PK: No, I’m not.

BN: Well you were…till a moment ago. Let’s say I was strong and you were weak and that I found the sight of you picking your nose in front of me so disgusting that I forcibly stopped you from picking your nose. It would be torture for you, wouldn’t it?

PK: Maybe. But I don’t pick my nose.

BN: In this case, do we need a law against forcible prevention of nose picking?

PK: Forcible tonsuring is happening across the country. It is a matter of national importance. Don’t compare it to an itchy nose.

BN: OK…moving on. Dhut ji, don’t you think the anti-tonsuring law is unfair?

PK: Why?

BN: Well it makes it illegal to convert from hairful to bald, but not bald to hairful.

PK: No worries on that count. When the bill is brought to Parliament, it will ban both forcible tonsuring and forcible hair transplants.

BN: But nobody has ever heard of a forcible hair transplant. This law really just targets forcible tonsuring doesn’t it?

PK: Not at all. We respect all people, regardless of their hair condition.

BN: Dhut ji, how will the authorities determine whether the tonsuring was forcible or not?

PK: Oh that is simple. If the tonsuring victim says that so and so person forcibly tonsured him, that person will be arrested.

BN: But what if the tonsuring victim just shaved his head himself and is lying? What if he has been forced to lie?

PK: Well…there’s no law against forcible lying.

BN: Then do we need a law against forcible lying?

PK: No, no. Of course not.

Taming the Shrew

The march to quash freedom of expression in India continues. All India Bakchod, a comedy group in Mumbai, is now under attack from MNS, a Shiv Sena style, right wing Hindutva party. The reason is that in a roast of Arjun Kapoor and Ranveer Singh, both Bollywood actors, the language used was, in their view, inappropriate. [link]

Ameya Khopkar, president, Maharashtra Navnirman Chitrapat Sena, the film wing of the MNS said to The Hindu “We will not let any film featuring the actors present at the AIB comedy show to be released in Mumbai, until they apologise for their actions.

“What kind of message are we giving to the world outside? What if small children, who follow Ranveer and Arjun, watch this show? Will they not be spoiled after watching such shows?”

While AIB may seem to be under attack, the threat is not against AIB, which is small and can continue to flourish on YouTube. The threat is against Bollywood, the shrew of Mumbai, that is largely liberal and annoyingly espouses liberal views in its movies.
This is just the beginning. Not just Bollywood, every writer, actor, artist and musician in India is watching these events closely. They’ve seen what happened to theatres that screened PK. They’ve seen how Perumal Murugan was forced to abandon writing altogether. How AIB, a small comedy group in a tiny comedy industry in India, is being harrassed. And they are all afraid. “That could be me, if I’m not careful,” they are thinking. And “careful” does not create art.

The modus operandi of the Indian right wing is clear. The government need take no action at all. There are enough Hindutva goons in every state of the country who will gladly, for a few hundred rupees, go break up a theatre or rough up some people. All the government has to do is stand aside and let the goons have their fun. The media faithfully broadcasts it. No arrests are ever made. Everyone gets the message – “Be careful. Or you’ll be next.” The shrew is tamed.

There are people, good thoughtful people, who think that freedom of expression in India is over permissive, or that it is not uniformly applied to all religions. So reining in these Bollywood types, who dare to make fun of our godmen (PK), is a good thing.
But, you see, it is not. Today it is about godmen. Tomorrow it will be the length of your daughter’s skirt. Today it is PK. Tomorrow it could be Delhi Belly. Who is making the decision on what is appropriate and what is not? MNS? Do you trust their judgement?

There are other good, thoughtful people who make this into a development vs freedom debate. They argue that the BJP is all about economic development. And freedom of expression is a much less important thing. So let them curtail it if they want, as long as the country prospers economically.

Why is this an either/or choice? I don’t see how freedom of speech and expression get in the way of economic development. This is a false choice. Do not accept it.

People, wake up and smell the coffee. Your freedoms are slowly, but surely, being fenced in. Wake up, before they are taken away and we become an Iran.

A Secularist New Year Resolution

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Ever since the BJP came to power, they’ve been crawling out of the woodwork – RSS ideologues, Hindutva radicals, and random school teachers. They want to remind you in speeches that India is Hindu; that Hinduism is great and any book or movie that says otherwise should be banned; and that their version of Hinduism (no short skirts! no public kissing!!) is the one that everyone must follow. It’s pervasive, relentless and, to the dismay of those of us who disagree, it is slowly moving from being intolerable to being irritating, but “chalta hai.”

There seem to be two aspects of what is happening. Let’s call one – What is Being Said. The other – Real Changes.

What is Being Said is getting crazier and crazier. Should we clamp down on inflammatory speech? Nitin Pai, a public policy commentator with Acorn, makes a good case that protecting freedom of expression is better and easier than restricting inflammatory speech. Why? Because you can’t ensure that nobody is ever offended.

It might be better, but I’m not sure it’s easier. Rioting in India is difficult to control because of the 24 X 7 news cameras and because the rioters tend to be unemployed youth for whom rioting is a source of income. The odds are stacked against the police.

In any case, there are laws on the books that supposedly curb hate speech. So perhaps there’s not much to be done here except murmur to yourself “Sticks and stones will break my bones but words can never hurt me.”

The problem is that things don’t end with What is Being Said. It drives Real Changes. Books are being pulped (Wendy Doniger’s The Hindus, Sekhar Bandopadhyay’s Plassey to Partition). Textbooks are being changed (Dinanath Batra has rewritten the Gujarat state school textbooks  where science and history are liberally mixed with mythology). And there are serious extra-judicial bans being placed on all kinds of ‘unacceptable’ behavior. Small, but Real Changes.

What is Being Said is not independent from Real Changes. When What is Being Said goes unchecked it supplies oxygen to Real Changes. It emboldens all the closet Hindutva sympathisers to come out in support of What is Being Said. Which gives the mistaken impression that there is broad-based public support for What is Being Said. And the next thing you know, a book or a movie is banned. Or it becomes OK to harass anybody who kisses in public. Suddenly, Real Change has happened.

Bit by bit, these ideologues and goons are chipping away at the edifice of our beautifully diverse, secular India. And it all begins with letting What is Being Said go unchallenged. While politicians and pundits rant about What is Being Said on TV (and that is important) the secularists among us are not doing our bit in the forums where opinion is formed – among friends and family.

We secularists tend to not engage with the Hindutva-flavored friends of ours on social media. It’s OK, we say. I can’t change the way they think so why engage in a meaningless debate. But that’s misguided. You can change the way people think. Most people don’t put too much thought into these issues. They tend to go with the flow – wherever they think the majority of their family, friends and people who they respect are going. We need to let them hear what we think about What is Being Said.

If the discourse on Hindutva in your homes and chai shops, on Facebook and Twitter, remains one-sided, then be prepared to lose what you love. Years from now you’ll look back and regret that when Real Changes were turning the clock back on secular India, you could have been more engaged and made a difference, but you didn’t.

Are you OK with that? I’m not. Ain’t gonna happen. No sir, not on my Newsfeed. I will engage. And that is my new year’s resolution.

Aadhaar Under Attack for Specious Reasons

A parliamentary committee is about to reject the National Identification Authority of India Bill of 2010. Here is an article from The Hindu about it. Here is my post from a few months ago on the UID project.

The success of Aadhaar is important for India. Very important. It is a foundational pillar for nation-building (as in Aadhaar) . And it is really, really disheartening to see it being attacked and brought down.

The reasons for the opposition to the bill in the Parliamentary Committee per The Hindu article are,

Sources in the Committee say the Bill has been rejected in its current form on the grounds of the project’s high cost, as well as concerns regarding national security, privacy and duplication of the National Population Register’s (NPR) activities. One major sticking point was reportedly the Aadhaar project’s ambition to enrol every “resident” of the country, rather than every “citizen.”

A common misperception is that Aadhaar is linked to an entitlement program. It is easy to understand why there is this misperception. Today any entitlement program – PDS (ration card) or a passport – has the identification and entitlement program tied together. Sometimes, one entitlement program might use the identification from another entitlement program (a ration card can be used for many purposes other than getting rations at a Fair Price Shop), but there is no stand-alone identification program.

Aadhaar is a stand-alone identification program. It does not come with an entitlement program. It simply links a number/name/father’s name/address with biometric identifiers [Update: It is actually number/name/date of birth/address]. Every entitlement program comes with a set of qualifiers (PDS for BPL, passport for citizens…).

What qualifies someone for a government entitlement program can vary quite a bit. Aadhar cannot and should not duplicate a verification system for all these qualifiers. But once someone is qualified say by the PDS to receive a ration card, if the UID number is linked to the ration card, every time the beneficiary wants to get subsidized rice from a PDS shop, biometric identification is fast and infallible.

With that background let’s examine each of the reasons for opposing the bill.

Inclusion of “residents” as opposed to “citizens”

The people who raise this as a problem must be under the impression that the UID number by itself confers some benefit. But it doesn’t. Let’s say the Secretary in charge of PDS thinks that only citizens should get the benefit of subsidized rice and an illegal immigrant from Bangladesh should not. Perhaps he thinks that by giving a UID number to the Bangladeshi immigrant we are enabling him to “take advantage” of the PDS.

We are not. Whatever verification procedures are used by the PDS today to distinguish between an illegal immigrant and a real citizen should stay in place. The UID could be an additional layer of verification (you do have to show some government ID to get the UID) but it cannot and should not replace what PDS has in place. However, once the beneficiary’s qualifications have been verified by PDS, his UID is linked to his eligibility for subsidized rice. He uses biometric identification to get his rice.

The same logic applies to getting a passport or anything that is a benefit for citizens but not for residents.

But then you might ask, why not just have Aadhaar cover citizens and not residents. Here are two good reasons why:

– Residents may not have entitlements. But remember this is not just about entitlements from the government. There are KYC requirements for opening a bank account where UID can help. And non-citizen residents can also open accounts.
– To distinguish between a citizen and a resident is not an easy process. It is best done by other departments, like the Home Ministry. It would greatly slow down Aadhaar if they had to do it.

Issues related to privacy of those who have been assigned a UID number

Aadhaar has been designed to give answer’s to questions like “Is this man whose thumb is on the scanner, Ram Mohan?” It replies in yes or no. It does not answer questions like what is the name and address of a man whose UID number is 12345…

This is as good as it gets from a privacy standpoint. Now that doesn’t mean that it will be foolproof. Nothing is. After all there is a database somewhere where names and addresses and UID numbers are stored. But isn’t that true about any database anywhere in the world? If you want to live in the modern world and one day become a first world country you are going to have your biometric identification somewhere.

Home Minister P. Chidambaram has also raised issues about security weaknesses in Aadhaar. “The possibility of creating fake identity profiles is real” he writes. I can’t see how that would happen given that the biometric data has to belong to a real person and it can’t be someone who is already in the database.

Perhaps he means that non-citizens can get a UID number and that shouldn’t be allowed. As I have argued above, it is not UIDAI’s responsibility to qualify people for citizenship. The Home Ministry should continue using the methods they use today like police verification for passports.

The problem in tackling objections related to privacy or security is that the person who is in charge of security or privacy has to just think of scenarios where your system will break. An honest discussion about the probability of the event and it’s downside risk is never really possible if the people objecting have an agenda. And you can be sure that most people who are opposing Aadhaar have an agenda.

Duplication of work being done for National Population Register

I haven’t paid it much attention, but my guess is that the National Population Register is a program for identification plus it also classifies people into citizens and non-citizens. Why can’t the National Population Register use Aadhaar as its ID infrastructure? Or if it provides better ID infrastructure let’s do a “dare to compare” and pick the better one.

Aadhaar is not just a superior technical solution. It’s implementation is designed to be scalable at low cost. Which is why they have been making such rapid progress. It helps that Nandan Nilekani ran a multi billion dollar company tech company before he volunteered to do this. He knows how to do this. And he has just a single point agenda – he is in a position to do some good for the country and he is taking that chance. Try doing something like this with a politician at the helm.

The massive expenditure that the project entails

If you have a big country, it takes a lot of money. I have seen some estimates that the cost of enrolling the whole country the investment is just over $3B. Compare that with the cost of subsidies on food, fertilizer and petroleum at over $29B per annum. Some say that the leakages in just the PDS system are 85% out of a total budget of $12B. You do the math. And that is just the savings in one entitlement program.

The truth is that these questions about Aadhaar are not being posed by people who want India to have an identification system that brings us into the 21st century. I don’t know what their agendas are. But I do know that if 85% of PDS subsidies are leaked through corruption, the numbers are large enough that there will be powerful forces ranged against anything like Aadhaar that threatens the destroy the gravy train. I also know that a program with a $7B budget is big enough that people will want a piece of the action. And if they can’t get it, the next best thing is to bring the whole thing down.

If I can’t get mine, nobody can. India be damned.

End of an Era at Infosys

Yesterday, N R Narayana Murthy retired from Infosys. In a touching farewell in Bangalore, friends and colleagues, present and past, bade him goodbye. There were breaking voices amongst the speakers and moist eyes in the audience. It was a great send-off for a great leader.

To Indians, everywhere, Narayana Murthy, means something special. For those of us in business, he didn’t just build Infosys into the global powerhouse that it is today. On the way, he set the standards in so many ways for the rest of corporate India – corporate governance, ethics and values, quality – he showed Indian industry what it meant to be world-class.

To ordinary Indians he is their inspiration. He makes them believe in themselves. That ordinary people with nothing except talent and ambition can make it big in modern India. And on the way, they don’t have to compromise on their values.

To me Mr. Murthy epitomizes what being a leader is about. I won’t even attempt to capture that in a few sentences because I can’t do it justice. But here’s a personal story that is pure Mr. Murthy.

One day in midtown Manhattan, I was walking with Mr. Murthy to a meeting. It was probably 1997 or thereabouts. Infosys was under $50 million in revenues and we were an inconsequential speck in the IT industry.

In midtown, we were surrounded by these skyscrapers adorned with the names of Fortune 500 companies. Suddenly, he stops, looks up at one such skyscraper and says “Basab, one day we’ll have our name on one of these buildings”.

That’s the way he is. Somewhere between ambitious and wild dreamer. The first step to being a great company is to aspire to be a great company. He knew that then. We know that today.

We will miss him being at the helm. Au revoir, Mr. Murthy!

Can You Write a Full Sentence of More Than 140 Characters Anymore?

In the IT Services industry you have to be able to write code. And English. In fact, not being able to write code may be alright. But without English you just can’t function.

And yet, it is surprising how little attention is paid to written communication skills. The BPO industry trained thousands of people in spoken English, often accompanied with accent training. But English writing skills get little attention.

Why are English writing skills so important?

Internal business communication in an IT Services company is entirely in English. The offshore model means that business matters that could have been transacted in a meeting or over the phone, necessarily end up on email. If an email, or design document is not well written, a whole day might go by before a clarification or correction can be made. Big waste of productivity!

Second, Indian offshore service providers work with clients who are used to dealing with consultants who typically have excellent writing skills. In western markets particularly, writing with clarity and even flair, is a mark of a good education. That’s what you get compared with.

Over time, most clients on the IT side of the house have adjusted their mental models and no longer automatically connect good writing skills with IT skills. But as we start going in front of business, the same problems will start surfacing again with a new set of clients.

Nominally, Indians in the IT Services industry were educated in English medium schools. I would guess that over 90% of the industry took their XII board exams in English medium. But when it comes to writing English, unfortunately, that doesn’t mean much.

Indian high school education is all geared towards college entrance exams. Entrance exams for engineering colleges don’t test on English. The Physics, Chemistry and Math exams are entirely (?) multiple choice. As a result, nobody cares about English at school. Correction – nobody cares about any language, period.

And then came the mobile revolution. The kids coming out of college now write emails, the way they text. Short, unintelligible sentences full of typos. Not surprising since for them words texted far exceed words written in full sentences in email or any other form of writing.

Go to the comments section of any Indian publication online. You’ll see what I mean. I can’t understand half of what’s written there.

This is actually now a crisis. I believe that with the new generation, writing full sentences is just not cool any more. Every idea must be conveyed in 140 characters or less. Much of it will be SMS English. There will be typos galore, because, you know what, I am too busy to review what I just wrote. If you can’t understand what I’ve written that’s your problem.

As always, the industry will have to come up with its own solutions. We can never rely on the Indian education system to meet our needs. But unlike technical knowledge, it is really difficult to start writing well if you have ignored it in school and college.