Interview With Dr. Bala V Balachandran
- 1. Interview with Dr. Bala V Balachandran The interview was conducted Dr. Nagendra V Chowdary, Consulting Editor, Effective Executive and Dean, IBSCDC, Hyderabad. This interview was originally published in Effective Executive, IUP, Dec 2009. Copyright © Dec 2009, IBSCDC No part of this publication may be copied, reproduced or distributed, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or medium – electronic, mechanical, photocopying, recording, or otherwise – without the permission of IBSCDC.
- 2. Interview with Dr. Bala V Balachandran It was clear to me that in many companies both in the US and in India, the top line was a VANITY, the middle line was a CALAMITY and therefore the bottom line has no SANITY. It is clear that the only REALITY is cash flow. –Dr. Bala V Balachandran D r . B a la V B a la c h a n d r a n b e g a n h is s u p p o r t s y s t e m s . H e h a s b e e n a c t u a lly t e a c h in g c a r e e r in 1 9 6 0 w h ile a g r a d u a t e in v o lv e d in s e t t in g u p M a n a g e m e n t s t u d e n t a t A n n a m a la i U n iv e r s it y , In d ia . In s t it u t e s in In d ia a n d w a s in v o lv e d in In 1 9 6 7 h e m o v e d t o t h e U n iv e r s it y o f t h e M B A P r o g r a m s a t M D I, G u r g a o n in D a y t o n a n d in 1 9 7 1 , t o C a r n e g ie - M e llo n e a r ly 1 9 9 0 s a n d IS B a t H y d e r a b a d a t U n iv e r s it y , P it t s b u r g h , w h e r e h e t a u g h t t h e t u r n o f t h is c e n t u r y a n d G r e a t L a k e s m a n a g e m e n t c o u r s e s w h ile w o r k in g o n In s t it u t e o f M a n a g e m e n t a t C h e n n a i in h is d o c t o r a t e . In 1 9 7 3 h e jo in e d t h e 2 0 0 4 . G r e a t L a k e s In s t it u t e o f K e llo g g G r a d u a t e S c h o o l o f M a n a g e m e n t is h is d r e a m p r o je c t o f M a n a g e m e n t f a c u lt y . F r o m 1 9 7 9 - 8 3 h e p u t t in g C h e n n a i o n t h e In t e r n a t io n a l c h a ir e d t h e D e p a r t m e n t o f A c c o u n t in g M a n a g e m e n t E d u c a t io n M a p . H e is t h e a n d In f o r m a t io n S y s t e m s ; h e w a s f o u n d e r a n d H o n o r a r y D e a n o f t h is a p p o in t e d D is t in g u is h e d P r o f e s s o r o f In t e r n a t io n a l C la s s In s t it u t e . H e w a s A c c o u n t in g a n d In f o r m a t io n S y s t e m s a w a r d e d t h e ‘P a d m a s h r i’ in 2 0 0 1 b y t h e a n d D e c is io n S c ie n c e s in 1 9 8 4 . H e w a s G o v e r n m e n t o f In d ia in r e c o g n it io n o f a ls o d ir e c t o r o f t h e A c c o u n t in g h is c o n t r ib u t io n t o t h e e d u c a t io n in In d ia . R e s e a r c h C e n t e r . B a la c h a n d r a n ’s H e a ls o h a s t h e r a r e h o n o r ( f o r a n In d ia n t e a c h in g in t e r e s t s in c lu d e m a n a g e r ia l in A m e r ic a ) o f h a v in g a n e n d o w e d c h a ir C o n t e m p o r a r y A c c o u n t in g R e s e a r c h , a c c o u n t in g , a u d it in g , m a n a g e m e n t p r o f e s s o r s h ip in h is n a m e . S e v e r a l a n d t h e J o u r n a l o f A c c o u n t in g , A u d it in g in f o r m a t io n s y s t e m s , a n d m a t h e m a t ic a l c o lle a g u e s f r o m K e llo g g h a v e le d a a n d F in a n c e . H is r e s e a r c h d e a ls w it h p r o g r a m m in g . H e is o n e o f t h e t h r e e c a m p a ig n t o r a is e $ 1 m n f o r a n p e r f o r m a n c e e v a lu a t io n , c o s t K e llo g g f a c u lt y m e m b e r s w h o s t a r t e d e n d o w e d p r o f e s s o r s h ip a t K e llo g g m a n a g e m e n t , a u d it p la n n in g , a llo c a t io n t h e In f o r m a t io n R e s o u r c e M a n a g e m e n t S c h o o l o f M a n a g e m e n t in P r o f . B a la V m o d e ls , a n d f o r e c a s t in g . H is r e c e n t P r o g r a m ( IR M ) a t N o r t h w e s t e r n in B a la c h a n d r a n ’s n a m e in r e c o g n it io n o f w o r k in c lu d e s a u d it o r s ’ le g a l lia b ilit y 1 9 7 4 . H e h a s a u t h o re d m o re t h a n 5 5 h is in v a lu a b le a n d t ir e le s s s e r v ic e t o t h e a n d g a m e t h e o r e t ic c o s t a llo c a t io n r e s e a r c h a r t ic le s a n d is c u r r e n t ly w r it in g In s t it u t e o v e r t h e la s t t h r e e d e c a d e s . m o d e ls w it h t r a n s f e r p r ic in g . H is w o r k a m a n a g e r ia l a c c o u n t in g t e x t b o o k w it h h a s e a r n e d n u m e r o u s s c h o la s t ic h o n o r s , e m p h a s is o n c o s t m a n a g e m e n t in a n a w a r d s , a n d f e llo w s h ip s , a n d h e s e r v e s a u t o m a t e d m a n u f a c t u r in g e n v ir o n m e n t . a s a c o n s u lt a n t t o s e n io r m a n a g e m e n t H e is d e p a r t m e n t e d it o r in a c c o u n t in g in in d u s t r y , a s w e ll a s t o t h e U S A ir f o r M a n a g e m e n t S c ie n c e , a s s o c ia t e F o r c e , in t h e a r e a s o f a c c o u n t in g , e d it o r f o r T h e A c c o u n t in g R e v ie w a n d f o r e c a s t in g , a n d s t r a t e g ic d e c is io n is o n t h e e d it o r ia l b o a r d s o f I N T E R V I EW 2
- 3. Firstly, congratulations for being important themes. 1. Global are your reflections on the way the an illustrious and distinguished Mindset, Indian Roots, 2. Highest world changed since then? professor and for having taken ‘Great Quality at Affordable cost or US Top The US financial crisis was expected Lakes’ to great heights in such a short Schools Quality but Indian Prices as early as 2006 because of time? What was the trigger for you to and 3. Meritocracy Transparency and instruments like subprime lending have conceptualized Great Lakes Innovative Curriculum with a 12 and under regulated environment, model of management education? months model. In other words, a irrational exuberence as Alan My tryst with Institution building for Super Convex combination of IIM A, Greenspan stated and many other higher management education goes B or C and ISB. The result is Great things. It was clear to me that in back to the days of 1973 when the Lakes leveraging my relationships, many companies both in the US and first six faculty of IIM Bangalore, were networks and experience. We in India, the top line was a VANITY, hired at my home in Chicago with N announced in July 2003 and the first the middle line was a CALAMITY S Ramasamy at the helm of affairs. class started in April 29, 2004 with and therefore the bottom line has no Looking back, I realize that the seed 124 students. Again the trigger is SANITY. It is clear that the only for Great Lakes was sown right then. I location and timing which I did, in REALITY is cash flow. The had a plan, but no resources or more spite of my quintuple bypass surgery mathematicians use complicated importantly – no experience. The in 2002. models to create financial opportunity came with MDI, During your very distinguished instruments and “Sophisticated” Gurgaon, where I worked with the and illustrious career you would derivatives which are not easily UNDP grant of US$700,000 and the have witnessed several economic comprehensible and more rest as they say, is history. crises and for many you would have importantly do not stand the test of The MDI experience at Gurgaon laid been consulted. How do you describe time in a fiercely competitive, highly the foundation and watered the the global economy’s mood right dependant and dynamic commercial seedling between 1991 and 1997 now? environment and to add to that these where I gained significant exposure to Beaten by the impact and intensity of innovative instruments have beaten the creation and launch of the PGPM the economic crisis that was felt in all fundamentals of finance and program. This also allowed me to September 2008 and beyond, there economics, created illusory revenues explore the nitty-gritties of was awe and shock though there and booked profits so that the top collaboration with a foreign were many forewarning signs of brass have been making hefty university as the PGPM at MDI massive collapses and lapses that bonuses without understanding Gurgaon was set up with a generous probably started in 2003 with the what is going on and overruled those grant from UNDP to Kellogg. Soon on subprime mess and obscene bonuses who doubted these in the ranks since the heels of the MDI, came ISB. My based on illusory profits and money and profits were in stint as the Chairman of Curriculum revenues mainly based on greed by abundance. The basic premise of this and Faculty and as the founding many individuals unchecked and subprime mess was the future faculty of the ISB at Hyderabad poorly regulated. However during income capable of being earned based during 1998 and 2004, was replete this late months may be from July on the potential of the individual with more learnings and insights into 2009, signs of recovery as we see in couple with excessive greed. Right the various components of the PGPM the stock markets both in US and in from the final consumer to the banker program concept, delivery and liaison India and some other indicators like to the insurance company that has with industry and academia. Thus, the relative ease in credit and in guaranteed the loan, everyone has the time was ripe, I had not only a banks, as well as CAPEX investments been motivated by the easy money plan, but also reasonable resources in many corners signs of recovery are that the model was capable of and substantial wisdom and with the seen in spite of growing yielding. Real estate prices soared help of Dean Donald Jacobs and Dean unemployment rates in US and in from $250,000 to 650,000 in 6 years. Jain at Kellogg, Great Lakes Institute of spite of As expected, the bubble burst in Management was conceived at pumping funds in the stimulus 2007-08 and the prices normalized Chennai with the help and packages. I will describe it as slight themselves. This is when my friend encouragement from my friends all recovery with cautious optimism; the then Governor of RBI Dr. YV over the world during 2003. We Having served on the boards of Reddy asked me “Bala: are we lagging identified some differentiating points several MNCs and also Federal behind the US in 2007. How can I while exploring the strengths of the Reserve, what did the recent US regulate the new economy and related other institutions I built and felt 3 financial crisis mean to you and what instruments?” I asked him, “Venu, do I N T E R V I EW 3
- 4. you understand the instrument?” I Corporate Affairs is moving slowly, markets, but the risks of the multi- have to add here that he is a very because the Business Standard book way transaction traffic was not clearly smart person like his predecessor that was recently published on the understood by all participants. The Shri Rangarajan. He said no. The subject has some of our punch lines only question every one had was, answer therefore was quite clear: “If and thus we need to revise our book ‘can I pass my risk to another and not you don’t understand what it is, how to reflect other findings and is face the axe?’ credit markets were will you regulate?” In a way, I am expected to be finished by May 2010. abundant with irrational rationales; quite glad that we are 10 years behind US Financial Crisis: Causes and capital markets had too many market the US – just watch out for some Consequences makers in a fake way; currency fireworks in one to two years. Things What were the prime reasons for markets were at different extremes will be crystal clear why we NEED to US Financial crisis that has engulfed and risks; commodity markets were be behind such scams and global economy forcing everyone to appearing to be customized markets Shannanigans by at least 10 years! liken this crisis as worse than Great because of the differences in the Having said All these; the real Depression? packages; The main thing is there is question is “Did the assets in the US I am not going into the actual details no one person/authority who is go away or were they overvalued of the crises. Some of the main responsible for the combined actions assets? In my view they fall in the reasons were: of the 4C’s and each one had their latter category – fundamentally asses 1. Greed, not only on the part of own tunnel vision and the greed was but with the addition of a ‘t’, investment bankers and brokers but all pervasive. The crux is that in such overvalued and celebrated as assets! also the main street, who, knowing highly interdependent scenarios, to The regulatory framework has now fully well that they don’t have net function independently can kill all. kicked in, albeit a bit delayed, but is cash flows or disposable income, Who do you think should playing its part in ensuring that the falsified the accounts to reflect squarely be blamed for getting the perpetrators of fraud and scam are inflated cash flows (could be deemed world into such a catastrophic mess – behind bars and a very critical fraud). the Wall Street firms with their examination of the entire mess is 2. Too many middle men who made insatiable desire for “derived” underway which would probably money at every stage with a booked returns, or the regulators or the lead to corrective action, and a slew of revenue but not a cash inflow. governments? What was it about the legislative procedures will soon be 3. Too many financial instruments regulatory framework that under way leading to prevention of probably created by Mathematicians contributed to the crisis? such large scale frauds in the future. of PhD type without understanding Everyone has to be collectively I always say, “If your shadow is much the full impact of such insturments. blamed. If there is no one to watch bigger then your body, then the sun is 4. Too many officials who had you and there is money on the setting”. Now if your ego is larger incentives where they viewed ground to be taken, even though it is than your logo, then Sun is setting for incentives as greed and took the not yours, why not take it? Where are you and to your company. In the long bonus without a real profit but a the virtues of integrity, honesty and run, I go, u go, why e go. Thus, in reported profit. transparency and responsibility – we our Baghwad Gita lies the answer. 5. Too many lobbyists who had an rarely see them in business these “Karmanya Wadhi Kaarasthey Maa agenda and an axe to grind. days. Right from the actual Paaleshu Kadhaachana” do your duty 6. Regulators who were complacent. perpetrators to the end-user and even and don’t expect a return. Your duty 7. Fundamentals of finance out the innocent bystanders who do not itself is the reward. When you create shadowed by half-baked raise an objection, but with their wealth for others you will get wealth. freakanomics; silence have allowed the atrocities to The goal is to ensure that others It is generally believed that continue are also equally to blame. become rich with giving and not with globalization is all about the interplay A large section of people believe wealth or greed. Yes, incentives are between 4Cs – Credit markets, that the crisis was allowed to become OK, but incentives turned to greed is Capital markets, Currency markets bigger because of policy makers’ (both not OK. Yes, profitability is OK, but and Commodity markets. Was the at the companies and the profiteering is not OK. imbalance created between these four government) indecision. And the full How is your book on Satyam saga markets in some way responsible for blown crisis is just a price for shaping up? the financial crisis? indecisive governments and My book with some Great Lakes Not only was there an imbalance indifferent companies, the argument Students and the Ministry of among these four C’s and their goes. Do you see any merit in this I N T E R V I EW 4
- 5. argument? Venture Capitalist in the Dot Com will still be a formidable market on all It is not just the government and Word before it became a Dot, invested dimensions but not a dominating policy maker. Who are they? they are since the super Venture Capitalist is market. Thus whoever takes this you and I or my brother-in-law or putting the money. He must be right opportunity in these four with some sister-in-law who was educated in a and now let us go like a sheep. India, cooperation within the Block of 4 will System of 220 Million. The people had its handful fighting fires at home create a new capitalism challenging also went along with it, exploited and and hence the inaction helped them the US capitalism. I believe it might be leveraged the situation to their and that is why our economy was not a welcome respite to the world advantage. Now that the bottom has very affected. economy – in that it need be forced to fallen out, it is always easier to pass What can be the lessons learnt periodic upheavals mirroring one on the blame to the bigger authorities from this crisis – for governments large country’s economy alone – i.e., and completely wash one’s hands and businesses – especially from the the US. form the responsibility. The point of view of public policy, Do you think the crisis is behind indecision of the policy maker or the globalization, financial coordination us or are we to witness even worse? government who had a short time and information sharing? And also The crisis is almost behind us; horizon and may definitely be true, from the viewpoint of developing excepting for the Credit Card Crisis or but one must remember that after all countries – especially for the the 3 C’s. If a high school or higher people don’t ‘cast’ their votes; but vote emerging and BRIC economies – and secondary school student of 12 years for their castes, caste in a generic developed countries? can have 4 credit cards each with a meaning encompasses your friends Let us look at the history. A 200 plus cap of $800 without any collateral, in and relatives; million people of the US over 70 the US alone, and if all the risks are While the Wall Street thought its years after agricultural revolution, compounded, you do the math – it’s firms to be “too big to fail”, for the industrial revolution created so many another catastrophe waiting to main street “too big to fail” meant a great educational institutions and happen, if the regulatory framework financial institution cannot be systems, including World Bank, IMF doesn’t open itself up to this allowed to fail. Do you agree with and even United Nations where there possibility and proactively counter it. those who say that Lehman had to fail was dominance compared to many But, it is yet to be and I am quite in order for Congress to have the others in the total world and the hopeful that it can be thwarted. political will to pass any kind of British Domination was taken over by How has Wall Street changed rescue package? the US capitalism. Three things during the past year, and what will Well, the Titanic was considered happened in the last 50 years: these changes mean for the stock unsinkable. So also, Lehman Bros. First Deng Xiaoping went to Lee Kuan markets and the investors? Lehman Bros were allowed to fail Yew and created Shujow park, There are certain circuit breakers since the policy maker was in the Shanghai, Shendgen etc., creating a which have been put in and it is other camp called ‘competition’. A huge economic prosperity lasting hoped that the stock-markets will not select few relish the thought of about 17 years before 1991. reflect a complete depression state. It watching your competitor drown Second, the economic freedom of is also hoped that these measures will without giving him a helping hand. India created by the then PM Shri P V introduce a level of stability and The truth is ugly, and life is not fair! Narasimha Rao, the current PM Dr. prevent drastic highs and lows in the What did the US Financial Crisis ManMohan Singh and the present indices. But the stock market being mean to global economy and the Home Minsiter PChidambaram. what it is, is largely affected by business? How do you think the Then came Gorbachev, who felt the sentiments and perceptions of people governments and the businesses have need for prosperity and eliminated and stock values of companies can responded? the Berlin Wall and made possible the plummet or sky rocket based on the If you compare China and India, German Unification and Demise of market sentiments and reactions to China believed that they don’t know the Soviet Union and with little help news about the company, economy or advanced finance and financial from Brazil etc. even politics. All this considered, I investments and trusted their Together these four countries form the must also add that these circuit advisors who are from the US firms. BRIC economy and have made about breakers are for known or Thus, the thinking here is that if the 50% and more of the world economy anticipatory problems. There are US is doing something, it has to be co-creating wealth for themselves. very imaginative culprits who can right and let us also follow suit and Thus the model in the next decade outsmart any system. The only way invest. This is something like the will be in these people and the US to prevent these is through moral I N T E R V I EW 5
- 6. leadership and honesty, integrity and A year after the global economic over, you will see those who made transparency. system collapsed, many companies quick decisions and exploited the A lot has been said in the past 12 are finally finding ways to increase mess to their advantage will succeed. months about financial sector profits under the new conditions. The moment one sheep is growing reforms. In his speech (September 14, However in a recent McKinsey and enjoying other sheep will follow. 2009), President Obama called it, “the survey (September 2009) almost as It is now time to think about “money most ambitious overhaul of financial many expect profits to continue value of time” and opportunity costs regulatory system since the Great falling and executives also indicate and not “the time value of money” Depression.” What new financial that their broader financial hopes and discounted cash flows alone. regulations have been put in place, remain fragile. Many expect This is for the short term. As for the what has been accomplished so far government involvement in long term, I personally believe that the and what remains to be done as far as economies and industries over the log science of economics holds financial reforms go? term. Should that be the only way undisputed sway over the ups and The past year has seen a huge focus out? downs of economic progression. on increased regulatory reforms and I think the pre 2007 profits are profits What goes up must come back down inclusion of several mechanisms of the past. As I said earlier, the assets and I don’t think there is any point in such as bonus cap, obscenely high are still there. The balance sheet was hoping that the depression won’t salaries and forewarning systems etc. intact except the assets are overvalued happen again. The only addition that But please note that many can and the liabilities are undervalued. we see nowadays is that these outsmart the same. Heavy, stringent The income statement therefore has economic crests and troughs are and non-lenient punishments no sanity. Those who had strong happening in quicker succession including public humiliation could cash flows will win and will be than they used to earlier. Also, the serve as deterrents. Only ethical profitable. The government will try to troughs are rather like heavy falls (one values and value based education can get involved via the stringent could debate whether this is actually effect a significant change which transparency and corporate brought on by unscrupulous should start from the home when the governance norms that are in bad commercial practices) from which kid is only 3 years old and not in a need of repair and overhaul, but the recovery also takes more time than business school. I can get an A Plus government is not brilliant either. earlier. The best advice under the Grade in an ethics Course and I can Even though the position of CFO at circumstances would be to expect also be a perfect crook. But that’s not General Motors has a one million this to happen and secure one’s the objective. A cultural upheaval is dollar ticket scaled by government, finances through secure and realistic necessary for these reforms to work in they have not been able to find a taker instruments and wait out the tandem with individual cleansing so for the past 2 months. Now there are a depression. that as a whole the loopholes in any large number of persons whose salary Government and Business: The New system are not manipulated to the is proposed to be cut. I think a and Defining Moments advantage of a select few. reasonable compromise between Governments have responded It’s hard to talk about reform willing parties needs to evolve. You vigorously with their bailout without talking about the reformers. don’t correct a mistake by another packages and that meant in one sense Could you help us evaluate the mistake. private losses being funded by public policies of Treasury Secretary Tim A powerful tension is at work money. Henrique Abreu cited a Geithner and Federal Reserve today in global economic sentiment. lesson of the late Milton Friedman Chairman Ben Bernanke? Is there The financial markets, pundits, and that “it is a different thing spending anything that the regulators could policy makers think the global your money on someone else (Warren have done differently? economy is out of the woods, but Buffet) or spending someone else’s Both Tim Geithner and Prof. Benanke executives aren’t so sure. What money on someone else (government who is a colleague of the Nobel should be done in the short term and intervention). What is the efficacy of laureate Paul Krugman are strong in the long term to restore the government bail outs, especially for minded and passionate with some confidence and not get sucked up in the scale of bailouts doled out? compassion. Also to be amazingly such hubris? It is clear no one wants to put good able yet humble is a rare combination. The economy has reached its bottom money over bad money. I think they can do it and have strong and now on the upward curve. Is it U Governments sometimes tend to do values and commitment. If they shaped or V shaped? There are that as there may be a political Agenda cannot do it, God help the world. debates and by the time the debate is and the need to be reelected to power I N T E R V I EW 6
- 7. is the driving force behind those pricing and service levels. Greater Should boards view the current decisions. From an economic stand competition means stronger crisis as an opportunity to review the point, you don’t want to be emotional productivity growth, which in turn way they function. During tough and be only rational. In the battle means a faster-growing economy and times – and they haven’t been this between politics and economics more wealth to share. Yet tough for generations –directors are finally good economics will win since governments everywhere struggle to supposed to ask difficult questions there is nothing called as good get regulation right. Unfortunately, about their companies. Yet they rarely politics! regulation often has a negative effect. ask hard questions about themselves, American taxpayers have become What can governments do to get it such as, “Are we the right people, shareholders in AIG, GM, and so right? asking the right questions, providing forth. What’s the exit strategy? In each country, there are individuals the right sort of leadership, American taxpayers have no say and who are brilliant, extremely well- challenging management in the most need to follow what the government educated, possess a decent amount of productive ways?” A healthy self- they elected states and bids them do. wealth and have spearheaded quality assessment can go a long way toward The exit strategy comes every four initiatives and public service and improving a company’s performance. years in the Presidential and have a superb reputation. For What kind of reassessment do you Congressional elections. The two example, MS Swaminathan on suggest for the boards and their parties have different views of right Agricultural and Green Revolution, directors? and wrong. Let the taxpayer decide. Kurien on white Revolution and Milk The boards by and large are good in This is like investing in stocks. There Production, Sam Pitroda on Telecom good companies and nowadays many are bad solutions and worse Revolution and many others with board members are asking the right solutions. There is no good solution. known competence of that country questions at the right time. With a self Choose. including Dr. Raghuram Rajan of evaluation among board members Regulatory reform will mean University of Chicago. I am so glad and with significant competent and higher capital requirements for that Dr.Manmohan Singh, Dr. Montek independent board members a financial institutions. Won’t that limit Singh Ahluwalia, Dr. Abdul Kalam, company can achieve more. The key GDP growth? and other leaders have identified is not the question or even the Definitely yes. But what is the such people and invited them as answer. But the timing of the alternative? Few unscrupulous advisors as their competence, vision, execution with a sense of urgency. individuals make a huge short term passion and devotion are Otherwise it will be too late and the gain and other innocents who outstanding. India does not need big conditions that existed at the time of skimped and saved money for the deal consultants and I am confident the question and discussion may no children’s education or marriage are that the educated government does more be relevant. taken for a ride. Thus optimization is indeed know what is right and also What are the major global trends impossible and thus satisfying is how to go about doing it. So also in that businesses should be thinking optimal. Where the economy as a the US or any country for that matter. about? Do you envision new whole is in shambles, the The question is execution. approaches to management and new government alone is in a position to Sometimes they don’t go through ways of interacting? induce fiscal stimulus and if it is at with it for political reasons or As always a huge upheaval and the cost of the GDP then so be it. sometimes the system has been so renaissance in the way management Instead of attempting to regulate messed up over the past like with educated is delivered and in the way using a patchwork of agencies, is it corruption etc., that we are unable to that companies practice management time for Bretton Woods II, i.e., should execute the plans properly. However is imminent. Already, we have had there be a new and powerful in the last 10 years at least in India questions regarding the perpetrators overarching body (as suggested by regardless of the party, progress has of the various scams – that they are UK Prime Minister, Gordon Brown) been made in a significant measure leading ivy leaguers and by extension controlling, monitoring and and inclusive growth (even if out of the question also arose as to the regulating the international capital fear of Naxals) is in existence. In next quality of the management education flows? The aim of economic 10 years the growth will be relatively imparted by these prestigious regulation should be the same in all better and one can hope many things institutions. I wish to add that several sectors: to facilitate fair competition can be executed through a schools in the west are taking huge among players or, where natural substantially less corrupt and steps towards inclusion of Vedic monopolies exist, to ensure fair maligned system. literature (such as the lessons of I N T E R V I EW 7
- 8. Bhagwad Gita and Asian scriptures which are valuable sources of direction and wisdom) in revamping and designing their courses of ethics. This is a step in the right direction which aims to impart value-based education and in creating managers who are also attuned to being morally responsible leaders of tomorrow. What specific three measures do you suggest to ensure that such crises do not recur? To what extent should the government intervene in business to check immoral behavior of executives and / or entrepreneurs? Integrity and honesty, ability with humility and passion with compassion. As for government intervention, we need to remember that the government is an entity that is also composed of people. An enterprise is only as good as its people. Hence, while intervention is definitely recommended along broad lines, it cannot make a significant contribution if the people involved (both on behalf of the government and the enterprise) are not up to the task. The interview was conducted by Dr. Nagendra V Chowdary, Consulting Editor, Effective Executive Dean, IBS CDC,www.ibscdc.org Reference # 03M-2009-12-05-06 I N T E R V I EW 8