The mercurial should not trump the methodical

Having read the book by Atsuo Inoue about the genius of Masayoshi Son, I noticed that R N Bhaskar has written a second book about Gautam Adani. In the case of Son, the book title, Aiming High, now appears like an Icarus chase.

The media and commentators are smitten by start-ups. Notwithstanding the fact that success criteria for start-ups are hazy — there is a tearing hurry to identify genius. We just read about the sheer genius of founder SBF (Sam Bankman-fried) of FTX crypto exchange. Starting in 2019, SBF positioned himself as a public intellectual, and marketed himself to venture capitalists as a genius eccentric. And they all fell for it!

Success can, and should, be discerned only after several years. The venture should have performed profitably for a reasonable period, should have been judged by public markets, weathered storms, and developed the discipline and genes to evolve into a SHE —a sustainable, honest enterprise—infosys, Biocon, Bharti Airtel, Marico, for example, during the last few decades.

With abundance of cheap money, certain tendencies have emerged: Short-circuiting the natural laws of enterprise evolution, premature celebration of start-ups, and haste in tapping public markets. It is pathetic to see so many initial public offerings (IPOS) floundering at half their issue price. Read S Ramadorai’ s book, The TCS Story & Beyond, where he has described the disciplined journey of TCS from start-up to IPO.

Mercurial founders get disproportionate public exposure. Overseas, Elon Musk, Elizabeth Holmes, and Mark Zuckerberg; in India, Byju’s, Paytm, and Bharatpe. Some are mercurial founders while some are whimsical companies that like firing employees gracelessly, or sponsoring high profile events even while registering massive losses.

On the flip side, there are the long-living companies that work, day in and day out, pay taxes, earn profits, declare dividends, build a market reputation, and painstakingly build companies valued at billions of dollars. They are thought to be less interesting, which, luckily, works to their benefit because nothing pulls down leaders with extra-gravitational speed than front cover exposure in the media.

The mercurial and the methodical have remote parallels in the Indian trinity. Brahma and Saraswati represent knowledge and innovation. Shiva and Parvati represent power. Vishnu and Lakshmi represent wealth. In any enterprise, innovation, power, and wealth are all essential. In mythology, Shiva and Vishnu get more stories than Brahma; they also have more temples. But when it comes to enterprise, media and commentaries devote disproportionate attention to Brahma (start-ups).

While the mercurial may disrupt, the methodical deliver profits and results. Management leaders blend mercurial Brahma and angry Shiva with methodical Vishnu to build great institutions.

There is a growing need to rethink the role of independent directors, the media, and regulators. It is difficult for an observer to sense the likelihood of a potential failure, yet some observers do need to do so. Who will maintain balance and order in this ecosystem of creation, power, and wealth?

With Theranos, it was whistleblower, Tyler Schultz, and a journalist, John Carreyrou of The Wall Street Journal (WSJ). He wrote a book (Film: The Dropout). In the case of the “magical” German fintech company, Wirecard, a shareholder association raised initial doubts. The Financial Times cottoned on to the emerging fraud (Film: Skandal! Bringing Down Wirecard). In the case of Purdue Pharma of opioid fame, The New Yorker journalist,

P R Keefe, wrote extensively. (Film: Dopesick). The misadventure of the” world’s safest airline” (Boeing) in the infamous 737 Max episode was chronicled by Andy Pasztor of WSJ (Film: Downfall). In the Renault-nissan case of Carlos Ghosn, there was an internal whistleblower, followed by a detailed reportage by Nick Kostov and Sean Mclain of WSJ (Film: The Fugitive).

There seems to be a pattern —healthy scepticism reveals unbelievable or suspicious developments; then board, regulator, or media investigate and perhaps conviction follows; finally, a book and a film appear. In India, investigative business journalism could be sharper, so also the regulatory and conviction processes. Sucheta Dalal’s unearthing of stock market scams is a welcome exception.

There is an expectation of a greater effectiveness of independent directors. The importance of healthy doubt among directors was discussed last month. Indeed, healthy scepticism is a life-enhancing virtue for all, not just independent directors.

I am reminded of the acronym C.R.I.P that directors can apply to the top leadership behaviour: C is for credibility— is the person believable; R is for reliability —does the person deliver; I is for intimacy —does one feel comfortable with the person; finally, P is for perception—is the leader too self-focused? Some CEOS clearly fail the C.R.I.P test.

While most CEOS and founders regard themselves as genius, at best, only a minuscule are so. Most represent the Dunning-kruger effect, which states that we have an exaggerated opinion about ourselves. For example, Napoleon won the battle of Borodino, but none of his orders were carried out and during the battle, he did not know what was going on. But Napoleon believed that successful action was per his will.

That is where independent directors, apart from media and regulators, can play a steadying role.