Saturday 20 March 2010

What is the real price of corporate social responsibility?

In recent years, a great deal has been said about CSR. Many have welcomed it; the right has damned it, blaming the fall of capitalism on naive do-gooders who allow themselves to be distracted from the holy duty of business: earning profits for shareholders.

Question: Has anyone cared to find out how much time and money businesses spend on doing good? How many businesses can be listed that may have lost out on profits because the managers were too busy saving the world? Did businesses wholeheartedly dedicated to enriching shareholders do a better job at enriching shareholders than the politically correct but economically illiterate stakeholder lovers?

We’ve heard the illuminating case studies of wonderful companies that went down the drain because the CEO turned saint. How about some data now? 

My guess: The hot air battle is so tempting, nobody’s gone out to find the numbers.

But consider this: Many successful professionals generously contribute time and money to good causes. They do not seem to suffer professionally because of that. In fact, they get publicity and contacts. Can that not hold for a collection of professionals, i.e., a business?

Anyway, I am a bit tired at the brilliant right railing against anything that contradicts Economics 101 (“I don’t care what it is; if it’s not in the textbook, it can’t exist; if it somehow does, it won’t or shouldn’t.”) blissfully forgetting the difference between models, simplifications and approximations (which all sciences are) and sacrosanct Gospel truth (which no science, thank god, is). 

Thursday 18 March 2010

The world goes global; the MBA stays in the USA

Every second paragraph in business periodicals has the world ‘globalisation’ in it.

But how many case studies in MBA courses deal with any but the US markets? Or with non-US companies? Do management texts look at any reader but Americans? Where is that leaving freshly-minted MBAs, including Americans? What will it take for business education to realise it’s 2010?

PS: Another strange thing is that whenever anything outside the West comes up, the professor has to say, "Now, we are not to make judgments here." 

What they mean is: "You Third World guys are children. Excitable. Emotional. Illogical. Otherwise how can your opinions about your countries are so different from ours. You must be wrong because we are always right. So lets not waste time. Shut up."

Anyway, I cannot understand the virtue of not bringing up a topic and not being judgmental. Are we preparing for a general knowledge quiz? 

MIT Bhopal Afghanistan

MIT’s lecture notes on buisness law states that the “India seeks to extradite Union Carbide CEO; Justice Dept refused –> They felt the Govt. of India picked the CEO as a symbolic punishment –> There was no real formal inquiry into the accident.”

On what inquiry did America bomb Afghanistan to the Stone Age?

Tuesday 2 March 2010

Far away, in a strange land

Yesterday, I was listening to Dinesh D'Souza (DD) debating whether Socialism is still Relevant. DD is all free market, of course, and probably got there by growing up in’ soft socialist India’.

Among other things, socialism kills freedom of press. How? Well, in India (the debate was in 1990 or thereabouts), the government owned the TV channels and was the major advertiser in press, besides being the monopoly supplier of newsprint (all of which was imported from Canada). Naturally, it showed only ministers on TV. Predictably, the press, though theoretically free, toed the government line.

Or so DD says.

Is he right? I don’t know. I haven’t got any data except my own experience. My memory says that both the Anand Bazaar and The Telegraph, the two newspapers we took, lost no opportunity of criticising either state or central governments. They had plenty of private sector advertisers to rely on.

And there were quite a few news programmes critical of the government on TV.

But my memory doesn’t matter. What mattered was DD’s audience’s gullibility.

Did anyone ask how the Congress had lost power in Delhi in 1989 if it decided what the public knew. Or how there were Congress governments in states in spite of the party being out of power in the centre. Did anyone go home and check? Did anyone ask an Indian acquaintance or write to the embassy? Did anyone know anything about the case DD was holding up as proof (actually, ridiculing) of the evil of socialism?

I don’t imagine anyone bothered. DD said it was so. He had grown up in India. Surely he was right. Had he not been, Indians couldn’t have been so poor.

We have 7 billion caricatures around, and ideologies and propagandists use us as to prove anything.

Monday 1 March 2010

Baby steps towards saving the planet

I have quite a few nieces and nephews, and I want them all to grow up. Also, I don’t want to die too soon. So I want the world to live as much as the next chap does.

But I don’t know how I can help. Carry your own bottle? Switch off fans and lights? Eat happy chickens? Then take one plane ride and undo all the good work?

Killed by short-term thinking

Marketing’s pet peeve is that finance's short-term thinking is ruining companies. Creating value takes time. Quarterly targets are penny wise and pound foolish.

Perhaps. 

But can we have some examples? Which are those great companies that finance managers have ruined?

It’s sometimes pointed out that while Japanese car companies are headed by engineers, American CEOs are typically ex-CFOs, and the results are for all to see.

But were American car companies making great cars when the Japanese took over? Did they have fantastic plans? Were they seriously pursuing exports?

I’m not for a moment supporting finance’s short-sightedness. However, I do suspect for finance men to drive a company to self-destruction its engineers (and their equivalent in service companies) and marketing guys have to abdicate their responsibility first.  

Why do shareholders want immediate profits?

Why is the world in dumps? Because World Street pushed it there. Why did Wall Street push so hard? Because shareholders were greedy for immediate and massive profits.

The money boys knew it couldn’t be done, but the stupid shareholders wouldn’t have listened. (Did anyone except the lunatic left, who are against pretty mush everything, try warning them?) Besides, each money boy had his bonus and self esteem to protect.

So the money boys cooked up some nonsense numbers which their kindergarten teacher wouldn’t have believed, but the shareholders did, and it all came falling down, and the West became socialist 20 years after Papa Bush, Ronald the Great and Thatcher the Firm had star warred the Marx boys into outer space.

In short, shareholders are to blame for everything.

Alright, but who are those stupid, greedy shareholders? You and me? That is, my Western versions? But why did they want to get rich fast? Don’t they have jobs and businesses of their own, and know better than not to kill goose laying golden eggs? Were they mad?

Or are those shareholders money boys, doing whatever they want safe in the knowledge that they can always blame anything on the lay shareholder, who, though numerous, are powerless?

Capitalism is one thing; oligarchy something quite different. 

Chinese sabres

Every time some Chinese official blows hot or wags his finger at Obama, the Western press go all red about Chinese rattling their sabres. Am I missing something here? Sabres are for rattling, aren’t they? Otherwise why have them in the first place? If the Chinese cut off a few heads, we’d like them even less, won’t we?