Trade in the ghosts of 1962
“Fifty years have passed since the short but ill-fated war between India and China. The anniversary has already prompted several military men, diplomats and politicians to share their views.”
WITH the growing power and influence that India and China exercise on the world stage, business people in both nations must take the lead in visualising a new relationship. Fifty years have passed since the short but ill-fated war between India and China. The anniversary has already prompted several military men, diplomats and politicians to share their views. This is only natural, as they were indeed the principal actors in that tense drama in the high Himalaya. However, a view from a perch less privileged with insider knowledge, and more distant from the action, may also yield some insights. It is with that objective that I offer these thoughts, viewed from the standpoint of a management professional who has been involved with business and industry for over four decades.
Victory and defeat, success and failure, advance and retreat are all part of the rhythm of life. Business people know this all too well since they deal with risk every day, and feel the results through the ebb and flow of their fortunes. Risks in business are manifold. Less than one in 20 of new product launches, for example, turn out successful. Even smaller is the probability of hitting on a "blockbuster" product. The best of recruitment methods, interview panels and psychological techniques cannot guarantee that those selected as employees will not fall by the wayside later. Yet, risk cannot be evaded as it constitutes the very lifeblood of enterprise. What is important is to learn how to manage it. A truly capable business manager would demonstrate poise in adversity, an ability to study and learn from reverses, and the avoidance of hubris in times of triumph.
But can learning from business reverses - so different in magnitude from the national humiliation and tragedy of the Sino-Indian war - apply to the 1962 case? Indeed, yes, for the difference lies in scale and not in kind. Death through an industrial accident is no less a tragedy than through combat in distant mountains. The displacement of refugees through war and their loss of livelihoods are no more wrenching than jobs lost through factory closures and bankruptcies. How to experience and learn from defeat may, therefore, hold common lessons.
Learning from a setback is easier said than done. Confronting mistakes is painful, unpleasant and challenges one's self-confidence. So, critiques of poor performance often lapse into easy self-justifications and excuses, however well disguised these may be as astute analyses. To get to the heart of the matter requires openness and a willingness to undergo painful introspection, backed by a determination to get at the "truth," so that future generations might learn from our mistakes. Have we truly done this with 1962? That our official archives are not openly accessible provides a dusty and discouraging answer.
Successful entrepreneurs and wellmanaged companies manage a setback through analysing both its content and process. In the "content" phase, they distinguish between two distinct sorts of human errors. What we may call "Type I mistakes" occur when the disastrous event is caused by a lack of knowledge or knowhow, or through lapses of motivation, e.g. carelessness, shortcuts, poor application, etc. The second type of mistake - the Type II error - is caused not by shortages of knowledge or motivation, but by lapses in business judgement. Good businessmen distinguish between the two types of mistake even though their consequences may be similar.
Those who commit the first type of error are certainly taken to task. But, in well-run organisations, their immediate supervisors are punished more severely. For theirs was the responsibility to equip the people in their charge with the skills and the attitude to do the job well. However, the approach to Type II mistakes is quite different. A company that punishes bona fide errors of judgement will never build a cadre of entrepreneurial managers. Still, an infinite tolerance for well-intentioned but disastrous decisions can drive the best enterprise to the wall. A good company approaches this dilemma through careful career planning, gradually building the risk-taking ability of its people, whilst limiting the damage at any one time. Yet, it is the "process" stage of this analysis that is crucially important. The sequence of examining one's errors and learning lessons happens in well-run companies through a highly cathartic method of individual and group reflection, sometimes moderated by experts, on what went right and what went wrong. It is a painful experience as it exposes others and one's own follies, omissions and attitudes. This cleansing process helps the participants understand and accept what went wrong, and to energise them to rectify the errors. Even more importantly, it stimulates a creative search for new directions and new vistas. Often, breakthroughs happen as a result.
The literature of business is replete with cases where enterprises that have gone through this cycle have radically changed their business model and their strategies, attaining great success. But so have countries. Take Germany after 1945. A shattered nation resolved to rebuild itself whilst simultaneously shunning militarism and revenge.