Consulting Parlour

They say the ‘pen is mightier than the sword’. The power of words is so intense it can cut through systems, strategies, operations and perception of masses. That’s the force of verbal expression. When words are expressed with clarity, vision and profound perceptions they evolve into management thoughts and principles. People with this gift then become what we have phrased ‘Management Gurus’. Internationally there are renowned personalities known for their management concepts and practices. The likes of such ‘management celebrities’ are Tom Peters, Edward DeBono, Philip Kotler, Peter Senge, Bob Watermann, Stephen Covey and many more. Micro-scoping on India, we too have prominent ‘Management Gurus’, from legends to contemporary trend setters. But before we delve into our journey on their works, a noticeable fact is that these business thinkers have studied, travelled, worked, operated, managed and made their presence felt in many parts of the globe.

(1) C.K. Prahalad
If you wish to refer to one of the greatest Indian business thinkers, C.K.
Prahalad should be on the top of your list. He needs no introduction;
every management student in India and internationally knows the name C.K.
Prahalad. He is known not only for his prolific works also for his
management perceptions and strategies.
CK Prahalad is a professor, researcher, speaker, author and prominent
consultant. Business Week has called him “a brilliant teacher at the
University of Michigan” and also described him as “maybe the most
influential thinker on business strategy today.”
In addition to serving as the Harvey C. Freuhauf Professor of Business
Administration at the University Of Michigan Business School, Prahalad
specializes in corporate strategy and the role of top management in large,
diversified, multinational corporations.
In 1994 he co-authored the bestseller, Competing for the Future, with Gary
Hamel. Translated into 14 languages, it was named the Best Selling
Business Book of the Year in 1994. Prahalad is particularly well known for
the work he has conducted with fellow strategy expert Gary Hamel. This
includes the articles The Core Competence of the Corporation (Harvard
Business Review, May-June, 1990), Competing in the New Economy: Managing
Out of Bounds (Strategic Management Journal, Vol. 17, No. 3, March, 1996)
as well as the bestselling book Competing for the Future: Breakthrough
Strategies for Seizing Control of Your Industry and Creating the Markets
of Tomorrow (1994).
He has won numerous awards. The most recent include the McKinsey Prize
three times, the SMR-PWC award, and the ANBAR Electronic Citation of
Excellence.
A prominent world-class guru, Professor Prahalad has consulted with the
world's foremost companies, such as Ahlstrom, AT&T, Cargill, Citicorp,
Eastman Chemical, Kodak, Oracle, Philips, Quantum, Revlon, Steelcase, and
Unilever. In addition, he serves on the Board of Directors of NCR
Corporation, Hindustan Lever Limited and the World Resources Institute and
services on the Board of Directors of NCR Corporation, Hindustan Lever
Limited and the World Resources Institute.
His latest book, ‘The Fortune at the Bottom of the Pyramid: Eradicating
Poverty Through Profits’, proves that the future will develop from serving
the poor, because the innovations that are developed are superior-- top
quality, low price, high volume and world-scale. Only the best innovations
will work for both sides of the equation, those in poverty and those in
the “developed” countries.
Books by C.K. Prahalad
The fortune at the bottom of the Pyramid (August 25, 2004)
Competing for the future (Co-authored with Gary Hamel)
The Future of Competition: Co-Creating Unique Value with Customers (2004
- co-authored with Venkat Ramaswamy)
In search of excellence
Multinational Mission: Balancing Local Demands and Global Vision (1987)
C.K. Prahalad is also the author of numerous award-winning articles.
Harvard Business Review awarded the McKinsey Prize to him three times for
the following articles:-
"The End of Corporate Imperialism", co-authored with Kenneth Lieberthal
(1998)
"The Core Competence of the Corporation", co-authored with Gary Hamel
(1990)
"Strategic Intent", also co-authored with Gary Hamel (1989)
"The New Frontier of Experience Innovation" published in Sloan
Management Review won the SMR-PWC award for the best paper published in
2003
"Weak Signals vs. Strong Paradigms", published in the Journal of
Marketing Research (1995) was awarded the 1997 ANBAR Electronic Citation
of Excellence
"The Dominant Logic: A New Linkage between Diversity and Performance"
(1986), co-authored with Richard Bettis, was selected the Best Article
published in the Strategic Management Journal for the period 1980-88
"The Role of Core Competencies in the Corporation" (1993) received the
1994 Maurice Holland Award as the Best Paper published in Research
Technology Management in 1993
"A Strategy for Growth: The Role of Core Competence in the Corporation"
won the European Foundation for Management Award in 1993
(2) Gita Piramal
More often than not, a journalist’s viewpoint is considered to be
critical, biased and dynamic. But a journalist with a PhD in business
history is a potentially intense combination. This profile describes, Gita
Piramal an author who has written for many years on the corporate sector
for leading Indian and international publications such as the Financial
Times and the Economic Times, and is a consulting editor of the World
Executive’s Digest. She also has been involved in the making of television
programmes on Indian business for the BBC and Plus Channel. In 1986, she
co-authored India’s Industrialists, and in 1991 contributed to Business
and Politics in India—A historical perspective, published by the Indian
Institute of Management, Ahmedabad. She divides her time between London
and Mumbai.
Through her works, she describes the Indian corporate sector with Indian
historical and political references as the foundation. How earlier systems
have an influence on contemporary operations and radical changes or
‘Business Mantras’ required to keep abreast in this dynamic environment.
Gita Piramal is one of India’s foremost business writers. She is now the
managing editor of The Smart Manager, India’s first world-class management
magazine.
Books by Gita Piramal
World Class in India: A Casebook of Companies in
Transformation(4/15/2002)
Business Legends(4/1/1999)
Managing Radical Change(co-authored with Sumantra Ghoshal).
Business Mantras
Business Maharajas
(3) Sumantra Ghoushal
If you attempt to visualize a mentor, an author and a consultant in one
being you are sure to find one personality, Sumantra Ghoushal. Born in
India, educated in the US and currently living in Europe, he is a teacher,
author and consultant in the field of international management. He is also
founding dean of the Indian School of Business in Hyderabad, a new venture
jointly sponsored by Northwestern University and the London Business
School.
He has published eight books, over forty-five articles and several
award-winning case studies. The book “Managing across Borders: The
Transnational Solution”, co-authored with Christopher A. Bartlett, has
been listed as one of the fifty most influential management books and they
have become one of the world's most respected business thinkers.
His most recent work focuses on the need to develop strategy which
encompasses people. He has been critical of the current fad for knowledge
management.
Books by Sumantra Ghoushal
A Bias for Action: How Effective Managers Harness Their Willpower,
Achieve Results, and Stop Wasting Timepublished on 7/1/2004
World Class in India: A Casebook of Companies in Transformationpublished
on 4/15/2002
Managing Across Borders : The Transnational Solution (1988)*
Transnational Management (1990)*
Organization Theory and the Multinational Corporation (1993)*
The Individualized Corporation (1997)*
World Class in India: A Casebook of Companies in Transformation
Managing Radical Change(co-authored with Gita Piramal)
* (co-authored with Christopher A. Bartlett)
(4) Ram Charan
If you want to know how to strip down a concept to its core meaning and
then put it into action, you should consider the works of Ram Charan. He
is a highly acclaimed business advisor, speaker, and author. Ram has
coached some of the world's most successful CEOs. For 35 years, he has
worked behind the scenes at companies like GE, KLM, Bank of America,
DuPont, Novartis, EMC, Home Depot and Verizon.
Ram is a favourite among executive educators. He won the Bell Ringer (best
teacher) award at GE's famous Crotonville Institute. He won similar awards
at Wharton and Northwestern. He was among Business Week's top ten
resources for in-house executive development programs.
Apart from authoring fine books, he also tailors his books for specific
client companies such as Gateway, Ford, and EDS. His articles have been
published in Harvard Business Review, Fortune, Time, Information Week,
Leader to Leader, Director's Monthly, Directorship, The Corporate Board
and USA Today. Ram is a director of Austin Industries and The Six Sigma
Academy. He was elected a Fellow of the National Academy of Human
Resources. He serves as a co-host for the Fortune Forum on Corporate
Governance and also serves on the National Association of Corporate
Directors' Blue Ribbon Commission on Corporate Governance.
He is known for his practical, real world perspective. His expertise
entails areas of business like: Profitable Growth, Business Acumen,
Leadership, Execution: Discipline of Getting Things Done, Tools for
Changing a Social System, Global Matrix Organization, Innovation,
Corporate Governance, Succession & Leadership Pipeline, Building Top
Management Teams.
Books by Ram Charan
Confronting Reality (October 2004)
Execution: The Discipline of Getting Things Done. Execution reached
number one on the Wall Street Journal list, and has been on the New York
Time's best seller list for more than fifty weeks.
What the CEO Wants You to Know
Boards at Work
Every Business Is a Growth Business and Profitable Growth.
Profitable growth is everyone’s business
(5) Arindham Chaudhuri
Speaking of contemporary business thinkers, another fine entrepreneur,
educator, author and enterprising personality is Arindham Chaudhuri
Professor Chaudhuri is the Dean, Centre for Economic Research & Advanced
Studies at IIPM (The Indian Institute of Planning & Management, New
Delhi). In the year 1996 he founded Planman Consulting which is now one of
the fastest growing Indian Management Consulting Firms. After being
associated with the production and marketing of two Bengali movies, in the
year 2001 he formally launched Planman Life: A fully dedicated production
and communications venture.
His latest book ‘Count Your Chickens Before They Hatch’ for which he got
an unprecedented seven figure record advance has created a new benchmark
in India by selling more than 80,000 copies in just 8 months! It has been
in all national best seller lists from the first week of inception, till
date.
As a management consultant he specializes in the areas of Strategic
Vision, Leadership, Social Sector Consulting, Comparative Management
Techniques and Global Opportunities & Threat Analysis.
His contribution to the field of management studies in India can be found
in the iconoclastic “Theory ‘ i ’ Management” which he has developed for
India Inc. “Theory ‘i’ Management” is about India centric management
ideas. For the last few years he has been conducting workshops on
Leadership and Strategic Vision exclusively for CEOs, MDs, Directors and
Presidents from the corporate sector. From the Managing Director of Hero
Motors to the President of Tata Chemicals, from the Executive President of
A.V. Birla Group to the CEO of Ernst & Young… have all taken leadership
training workshops from him. As a celebrated speaker he is regularly
invited to speak at various annual conferences and national conventions.
He also happens to be highest paid speaker in the country.
An economist by passion and education, during Bill Clinton’s historic
visit to India he launched his Great Indian Dream -: India can beat
America, a series of seminars for every Indian. Held in all the metros of
India, these seminars had thousands of people pouring in from all walks of
life. In these seminar’s he not only highlights the inherent strengths of
the Indian culture but also talks about an alternative resource
mobilization and allocation package for an Indian turnaround. To
facilitate social activities based on this he has started the Great Indian
Dream Foundation in memory of his brother Aurobindo Chaudhuri.
He was recently rated as one of the 50 leading thinkers in South Asia by
Wilton Park (an organisation supported by the European Commission and
British foreign office).
Further, he was awarded the Academic Gold Medal while completing the Post
Graduate Diploma in Planning and Management from IIPM. Prof. Chaudhuri was
awarded “Management Guru 2000 Award” by Chennai based Om Venkatesa Society
which annually honours management experts.
Books by Arindham Chaudhuri
Count your chickens before they hatch
The Great Indian Dream
(6) Promod Batra
Have you ever been in a situation when your need a trigger to propel those
business thoughts? The answer lies in a think tank that provides distilled
wisdom of finest minds, ‘Management Thoughts’. This book was written by
Promod Batra, which was a new concept in 1991 and the first of its kind in
the world. It is a collection of simple management thoughts, supplemented
with full page illustrations by Mickey Patel, a cartoonist of repute. It
has sold over 2,00,000 copies in India and abroad a record by itself.
Promod Batra got his professional training with General Mills Inc.,
Minneapolis , Minnesota, and the Soyabean Council of America. On return to
India he joined Escorts Limited in 1963, and retired as Chief General
Manager in 1996. His tenure with the Escorts Group included his assignment
as Chief Administrator at Escorts Heart Institute & Research Centre for
six years. He is now devoting full time to writing, publishing and selling
books on Management of Self, Family Employees and Customers, and
conducting Attitudinal Seminars based on his books
A co-author with Promod Batra is Vijay Batra, the first non-Japanese to
join Kankaku Securities as a lifetime employee. In 1994, he was promoted
to Vice President of the New York branch. During his tenure with Kankaku
Securities, he was directly involved with various Japanese and American
companies. From 1997 to 1998, he returned to India for a one year period
to study the Indian situation with the objective to create seminar and
training programmes suitable for Indian professionals. Vijay Batra has
succeeded in creating a relationship with PHP, a think tank affiliated
with Matsushita Electric Industry. The relationship with PHP will allow
Think Inc. to introduce fundamentals of Japanese management to Indian
professionals.
Books by Promod Batra
Management Thoughts
Born to be Happy
Born to Win
Cows Don’t Give Milk
The Family
Management Articles
Management Ides in Action
Management Think Tank
Management Wisdom
Pearls of Wisdom for Managers
Pearls of Wisdom for Happy Living
Selling is a Noble Profession
Simple ways to manage stress
When the customer has a problem
Simple ways to make your boss succeed
Management Thought Starters (co-authored with Vijay Batra)
Profitable Passion discovers the spy (co-authored with Vijay Batra)
(7) Shiv Khera
In this dog-eat-dog business world, if you are not self motivated, self
confident and unique, you WILL be trampled over. At such times look into
the works of the distinguished management guru and motivator, Shiv Khera.
His gospel:- "Winners don’t do different things, they do things
differently”
Shiv Khera is the founder of Qualified Learning Systems Inc. An educator,
business consultant, a much sought after speaker and a successful
entrepreneur. He has taken his dynamic personal message around the world.
Shiv has been recognized as a "Louis Marchesi Fellow" by the Round Table
Foundation. His client list includes the who’s who of the corporate world.
He has authored three bestsellers, amongst other books. His first book
“You Can Win”, which came out in 1998, has sold over a million copies
worldwide. His second book “Living With Honour” hit the stands in August
2003, becoming an instant bestseller. Then within a span of six months in
February 2004, his third book “Freedom Is Not Free” was released, also to
become a bestseller.
His first two books are on an individualistic level, where he defines the
winning edge as achieving excellence rather than perfection, as excellence
paves the way for progress. He also conveys that it is better to be
honourable than to be honoured. His work offers direction for living with
pride in a cluttered environment. His latest book concentrates on society.
Here he firmly believes that a progressive society is the basis for
individual progress of its people.
Transforming his years of experience as a motivator into a practical tool,
he has developed a core program/workshop known as the Blueprint for
Success (BPS). This program motivates people to recognize their true
potential and gain success - personally and professionally.
Books by Shiv Khera
You Can Win (1998)
Living With Honour (August 2003)
Freedom Is Not Free (February 2004)
Attitude Determines Altitude
Attitude – the key to success
Discipline your way to freedom
Ethics of Values
Winner’s Edge
Winning Strategies
Apart from the prominent business thinkers mentioned above, India also
presents other management thinkers who have a substantial influence on
business minds and operations. To name a few:-
(8) Venkatram Ramaswamy
Co-opting Customer Competence (co-authored with C.K. Prahalad)
(9) Vijay Vishwanath
The Art of Developing Leaders at Kraft
(10) Partha Bose
Alexander the Great’s Art of Strategy
(11) Rita Bhimani
Corporate Peacock
Face Up!
(12) Jeetendra Jain
Sack the CEO!
(13) Ashwath Damodaran
Corporate Finance
Damodaran on Valuation
Investment Valuation
The phrase “Management Guru’ describes a person who is intellectual,
experienced, ingenious and a person who develops business perspectives
that provide beneficial outlooks and practices. With reference to the
adage ‘An idea is only a thought until it is materialised’, the most
successful Business Thinkers are those who have ensured the successful
implementation of their thoughts.
In the past, the benefit of such resourceful business practices was
limited to only those people who were privileged to have communication
links with knowledgeable business tycoons. But currently in India, the
exposure has broadened. Perspectives and practices of Indian business
personalities are now made available to almost anyone in the form of
workshops and seminars. So with an open mind, think ‘WOW’, act now and pay
attention and participate with our Management Personalities who are
willing to impart their knowledge.

Accenture Study Yields Top 50 ‘Business Intellectuals’ Ranking of Top Thinkers and Writers on Management Topics
Who are our best-known, highest-profile business intellectuals?
Accenture’s Institute for Strategic Change has compiled an intriguing ranking of the top 50 living business gurus, most of whom are business school academics, consultants, journalists or business executives. “For the purposes of this study, we define business intellectuals as influential thinkers and writers on business management topics,” said Tom Davenport, an Accenture partner and director of the Institute, which conducts original research focused on providing insight and ideas into strategic business issues. The list was compiled as part of a broader study on the circulation of new ideas in business. A team of Institute researchers headed by Davenport conducted the study, which took seven months to complete. “The list is sure to cause some discussion around the water coolers of the business world,” said Davenport. “Yet it does give an objective, quantitative ranking of those individuals in the business arena whose ideas, writings, and teachings are forefront in the public consciousness.”
Topping the list is Michael E. Porter, who has been called the world’s most influential business school academic. The Harvard Business School professor and strategy expert is the author of Competitive Strategy: Techniques for Analyzing Industries and Competitors, which is required reading for every Harvard MBA student. Finishing tied for second are Tom Peters and Robert Reich. Peters is the management consultant who 20 years ago wrote In Search of Excellence, the bestseller on what it takes to compete and win in the world of business. Reich is the former Secretary of Labor in the Clinton administration, a social and economic policy professor at Brandeis University, author of several books, including The Future of Success, and Democratic candidate for governor of Massachusetts. Completing the top 10 are: Peter Drucker, a business philosopher and consultant for 60 years who is widely recognized as the father of modern management; Peter Senge, MIT professor and author of The Fifth Discipline: The Art and Practice of the Learning Organization; Gary Becker, winner of the 1992 Nobel Prize in Economics for his work on human capital, and an Economics and Sociology professor at the University of Chicago; Gary Hamel, Chairman of the boutique consulting firm Strategos, and author of Leading the Revolution; Alvin Toffler, author of Future Shock and The Third Wave; Hal Varian, dean of the School of Information Management & Systems at the University of California at Berkeley, and author of Information Rules: A Strategic Guide to the Network Economy; Daniel Goleman, journalist and author of the best seller Emotional Intelligence. The list uses the same criteria followed by Richard A. Posner in his book Public Intellectuals:
1. Michael E. Porter
2. Tom Peters
3. Robert Reich
4. Peter Drucker
5. Peter Senge
6. Gary S. Becker
7. Gary Hamel
8. Alvin Toffler
9. Hal Varian
10. Daniel Goleman
11. Rosabeth Moss Kanter
12. Ronald Coase
13. Lester Thurow
14. Charles Handy
15. Henry Mintzberg
16. Michael Hammer
17. Stephen Covey18. Warren Bennis19. Bill Gates
20. Jeffrey Pfeffer
21. Philip Kotler
22. Robert C. Merton
23. C. K. Prahalad
24. Thomas H. Davenport
25. Don Tapscott
26. John Seely Brown
27. George Gilder
28. Kevin Kelly
29. Chris Argyris
30. Robert Kaplan
31. Esther Dyson
32. Edward De Bono
33. Jack Welch
34. John Kotter
35. Ken Blanchard
36. Edward Tufte
37. Kenichi Ohmae
38. Alfred Chandler
39. James MacGregor Burns
40. Sumantra Ghoshal
41. Edgar Schein
42. Myron S. Scholes
43. James March
44. Richard Branson
45. Anthony Robbins
46. Clay(ton) Christensen
47. Michael Dell
48. John Naisbitt
49. David Teece
50. Don Peppers

Bishop William Lawrence University Professor Michael E. Porter is the Bishop William Lawrence University Professor, based at Harvard Business School. A University professorship is the highest professional recognition that can be awarded to a Harvard faculty member. In 2001, Harvard Business School and Harvard University jointly created the Institute for Strategy and competitiveness, to further Professor Porter’s work. Professor Porter, the author of 17 books and over 125 articles, is a leading authority on competitive strategy and the competitiveness and economic development of nations, states, and regions. He received a B.S.E. with high honors in aerospace and mechanical engineering from Princeton University in 1969, where he was elected to Phi Beta Kappa and Tau Beta Pi. He received an M.B.A. with high distinction in 1971 from the Harvard Business School, where he was a George F. Baker Scholar, and a Ph.D. in Business Economics from Harvard University in 1973. TeachingProfessor Porter's ideas on strategy have now become the foundation for the required strategy course at the Harvard Business School, and his work is taught in virtually every business school in the world. Professor Porter’s primary course for Harvard graduate students is a University-wide course, Microeconomics of Competitiveness, which is taught not only at Harvard but at 56 other universities around the world using video content and instructor support developed at Harvard. Professor Porter also created and chairs Harvard's program for newly appointed CEOs of billion dollar corporations. Professor Porter speaks widely on competitive strategy, competitiveness, and related subjects to business and government leaders throughout the world.

Research on Strategy
Professor Porter’s core field is strategy, and this remains a primary focus of his research. His book, Competitive Strategy: Techniques for Analyzing Industries and Competitors, was his first book-length publication on strategy. The book is in its 63rd printing and has been translated into 19 languages. His second major strategy book, Competitive Advantage: Creating and Sustaining Superior Performance, was published in 1985 and is in its 38th printing. His book On Competition (1998) includes a series of articles on strategy and competition, including his Harvard Business Review article 'What is Strategy?'
(1996). 'Strategy and the Internet' was published in 2001.Professor Porter’s next major book on strategy will be completed in 2006. Competitiveness of Nations and Regions Professor Porter's 1990 book The Competitive Advantage of Nations was motivated by his appointment by President Ronald Reagan in 1983 to the President's Commission on Industrial Competitiveness. This book kicked off his second major body of work, which addresses competitiveness and economic development. The book presents a new theory of how nations, states, and regions compete, and their sources of economic prosperity. It was followed by an extensive body of publications on the influence of locations on competition, with a special focus on the role of clusters. These ideas have guided economic policy throughout the world.
National Competitiveness.
Building on The Competitive Advantage of Nations, Professor Porter has published books about national competitiveness on New Zealand, Canada, Sweden, and Switzerland. Most recently, his book Can Japan Compete? (2000) challenges long-held views about the sources of Japan's economic miracle and offers a new path for that nation's future. It was selected as one of the top non fiction books of 2000 by The Economist.
Professor Porter co-chairs the Global Competitiveness Report, an annual ranking of the competitiveness and growth prospects of more than 100 countries released by the World Economic forum. Clusters. Professor Porter’s ideas on clusters, first introduced in 1990, have given rise to a large body of research on cluster-based economic development and hundreds of public-private cluster initiatives throughout the world. Professor Porter’s research on clusters is summarized in “Clusters and Competition: New Agendas for Companies, Governments, and Institutions” in On Competition (1998) and other publications listed in his curriculum vitae.
Regional Competitiveness.
Professor Porter has extended his work on competitiveness to sub-national regions. He led the Clusters of Innovation project (2001-2002) which studied five major U.S. regions, developing new theory, new sources of data, and new methodologies for fostering innovation and prosperity in regional economies. Growing out of this research, the Harvard Cluster Mapping Project was developed and provides rich data on the economic geography of U.S. regions and clusters from 1990 to 2003. The Cluster Mapping Project has over 8,000 registered users. His article ‘The Economic Performance of Regions’ (2003) summarizes some of the important findings from this data.
Innovation.
Professor Porter is co-author (with Scott Stern) of a body of work on the sources of innovation in national economies, including The New Challenge to America's Prosperity: Findings from the Innovation Index (1999), 'The Determinants of National Innovative Capacity' (2000), and 'Measuring the 'Ideas' Production Function: Evidence from International Patent Output' (2000).
Inner Cities.Professor Porter has conducted extensive research on economic development in America's distressed inner city areas, beginning with the Harvard Business Review article 'The Competitive Advantage of the Inner City'. In 1994, he founded The Initiative for a Competitive Inner City (ICIC), a non-profit, private-sector organization to catalyze inner-city business development across the country. Professor Porter is Chairman of the ICIC, a national organization with a staff of more than 40 professionals. The ICIC has conducted extensive research and practiced extensively in this field, and a bibliography of work is available on the organization’s website.
Rural Development.
In 2004, Professor Porter published a study commissioned by the Economic Development Administration on rural development, Competitiveness in Rural U.S. Regions: Learning and Research Agenda. This study marks a new streamof work on economic development in sparsely populated rural regions which have weak economic performance relative to urban areas.
Environment.
Professor Porter has examined the relationship between competitiveness and the natural environment. His Scientific American essay 'America's Green Strategy', showed that economic competitiveness and environmental improvement could and should be complementary. This essay triggered a body of literature and new policy thinking, including publications by Professor Porter: ‘Green and Competitive’ (1995), 'Toward a New Conception of the Environment-Competitiveness Relationship' (1995), and 'National Environmental
Performance Measurement and Determinants' (2002). The so-called “Porter Hypothesis” has been much studied in subsequent literature.
Philanthropy and Corporate Responsibility.
Professor Porter has devoted growing attention to philanthropy and especially the role of corporations in society. His Harvard Business Review article with Mark Kramer, 'Philanthropy's New Agenda: Creating Value' (1999), offers a new framework for developing strategy in foundations and other philanthropic organizations. He co-founded the Center for Effective Philanthropy, an organization dedicated to creating concepts and measurement tools to improve foundation performance. Professor Porter’s Harvard Business Review article, 'The Competitive Advantage of Corporate Philanthropy' (2002), addresses how corporations can create more social benefit by integrating their philanthropy with their business context. A forthcoming article tackles the strategic underpinnings of corporate social responsibility.
Health Care.
Recently, Professor Porter has devoted considerable attention to competition in the health care system and addressing the problems of the U.S. and foreign health care systems. His article with Elizabeth Teisberg, ‘Redefining Competition in Health Care’ (2004), has stimulated national dialog. Based on two years of additional research, his joint book with Professor Teisberg, Redefining Health Care (Harvard Business School Press) will be published in May 2006.
Advisor to Business and Government
Professor Porter has served as a strategy advisor to numerous leading U.S. and international companies, among them DuPont, Entel (Chile), Edward Jones, Navistar, Procter & Gamble, Royal Dutch Shell, Scotts Miracle-Gro Company, Sysco, and Taiwan Semiconductor Manufacturing Company. Professor Porter also serves as a senior strategy advisor to the Boston Red Sox, a major league baseball team. Professor Porter currently serves on the boards of directors of two public companies, Parametric Technology Corporation and Thermo Electron Corporation. He has also advised community organizations on strategy, including the Institute of Contemporary Art, WGBH public television, and others. Professor Porter is also a counselor to government. He plays an active role in U.S. economic policy with the Executive Branch, Congress, and international organizations. He chairs the selection committee for the annual Corporate Stewardship Award given by the U.S. Secretary of Commerce. Professor Porter is a member of the Executive Committee of the Council on Competitiveness, a private-sector organization made up of chief executive officers of major corporations, unions, and universities, and has provided intellectual leadership for a number of the Council's major programs. Professor Porter has also advised national leaders in numerous countries. He has personally led major studies of economic strategy for the governments of such countries as Canada, Kazakhstan, India, New Zealand, Portugal, Thailand and most recently Libya. He has advised national leaders on economic policy in dozens of countries including Armenia, Ecuador, Nicaragua, Peru, Singapore, Taiwan, and the United Kingdom, and his ideas have inspired national competitiveness initiatives in Ireland, Finland, Norway and elsewhere. His thinking about economic development for groups of neighboring countries has led to a long-term initiative within Central America, including the formation of the Latin American Center for Competitiveness and Sustainable Development (CLACDS), a permanent institution based in Costa Rica. Professor Porter has also assisted many state and local governments in enhancing competitiveness. His work has inspired competitiveness initiatives in regions such as the Basque Country, Catalonia, Scotland, and Northern Ireland. In his home state of Massachusetts, Professor Porter's work led to a new economic strategy, beginning with the report The Competitive Advantage of Massachusetts (1991). This effort resulted in new legislation, numerous state initiatives, and the creation of Governor William F. Weld's Council on Economic Growth and Technology, which Professor Porter chaired. Professor Porter has also served as an advisor to the state of Connecticut since the mid-1990s in creating a new economic plan. In addition, Professor Porter has advised Governors and private-sector leaders on economic policy in states and regions such as Mississippi, New Jersey, South Carolina, and Columbus, Ohio.
Honors and Recognition
The awards and honors won by Professor Porter include Harvard's David A. Wells Prize in Economics for his research in industrial organization. He received the Graham and Dodd Award of the Financial Analysts Federation in 1980. His book Competitive Advantage won the George R. Terry Book Award of the Academy of Management in 1985 as the outstanding contribution to management thought. He was elected a Fellow of the Academy of Management in 1988 and the Royal Swedish Academy of Engineering Sciences in 1991. In 1991, he received the Charles Coolidge Parlin Award for outstanding contribution to the field of marketing and strategy given by the AmericanMarketing Association. Professor Porter was honored by the Massachusetts State Legislature for his work on Massachusetts competitiveness in 1991. In 1993, Professor Porter was named the Richard D. Irwin Outstanding Educator in Business Policy and Strategy by the Academy of Management. He was the 1997 recipient of the Adam Smith Award of the National Association of Business Economists, given in recognition of his exceptional contributions to the business economics profession. A Fellow of the International Academy of Management since 1985, he received that group's first-ever Distinguished Award for Contribution to the Field of Management in 1998. In 2001, the annual Porter Prize, akin to the Deming Prize, was established in Japan in his name to recognize that nation's leading companies in terms of strategy. The Academy of Management recognized Professor Porter with its highest award, for scholarly contributions to management in 2003. In 2005, Professor Porter was honored by the South Carolina legislature for his efforts in assisting and promoting economic development and competitiveness in that state. In 2005, Professor Porter became an Honorary Fellow of the Royal Society of Edinburgh and was awarded the John Kenneth Galbraith Medal (presented by the American Agricultural Economics Association. He was also honored as the recipient of the 2005 Distinguished Contributor to Case Research and Teaching by the American Case Research Association. Professor Porter has received five McKinsey Awards for the best Harvard Business Review article of the year, including an unprecedented three first-place awards.Professor Porter has been awarded honorary doctorates by the Stockholm School of Economics; Erasmus University, the Netherlands; HEC (Hautes Ecoles Commerciales), France; Universidada Tecnica Lisboa, Portugal; Adolfo Ibanez University, Chile; INCAE, Central America; Johnson and Wales University; and Mt. Ida College. Professor Porter has also been awarded national honors including the Creu de St. Jordi (Cross of St. George) from Catalonia (Spain) and the Jose Dolores Estrada Order of Merit, the highest civilian honor awarded by the Government of Nicaragua.
Personal History
Professor Porter was born in Ann Arbor, Michigan, and has lived and traveled throughout the world as the son of a career Army officer. He was an all-state high school football and baseball player. At Princeton, he played intercollegiate golf and was named to the 1968 NCAA Golf All-American Team. After graduating from college, Professor Porter served through the rank of captain in the U.S. Army Reserve. He maintains a long-time interest in the esthetics and business of music and art, having worked on the problems of strategy with arts organizations and aspiring musicians. Professor Porter serves as a trustee of the Buckingham, Browne & Nichols School (Cambridge, Massachusetts). Professor Porter and his two daughters reside in Brookline, Massachusetts.

Well for some people Iron Maiden and other metal bands meant as noisy affair in an affluent area. They keep on criticising as to these mentally disordered people do not see any meaning through life.
Oops, I just want to tell those logger heads if they at all understand songs and its lyrics better they should face their brains not mouth.
I substantiate….watch it out
WASTED YEARS
From the coast of gold, across the seven seas
I am travelling on, far and wide
But now it seems, I am a stranger to myself
And all the things I sometimes do, it isn’t me but someone else
I close my eyes, and think of home
Another city goes by in the night
Ain’t it funny how it is, you never miss it till it’s gone away
And my heart is lying there and will be till my dying day
So understand
Don’t waste your time always searching for those wasted years
Face up…make your stand
And realise you are living in the golden years
Too much time on my hands, I got you on mind
Can’t ease the pain, so easily
When you can’t find the words to say it’s hard to make it through another day
And it just makes me want to cry and throw my hands
Up to the sky
So understand
Don’t waste your time always searching for those wasted years
Face up…make your stand
And realise you are living in the golden years

VIRUS

There is an evil virus that is threatening mankind
Not state of the art, a serious state of the mind
The muggers, the backstabbers, the two faced elite
A menace to society, a social disease
Rape of the mind is a social disorder
The cynics, the apathy one-upmanship order
Watching beginnings of social decay
Gloating or sneering at life’s disarray
Eating away at your own self esteem
Pouncing of every word that you are saying
Superficially smiling a shake of the hand
As soon as the back is turned treachery is planned
When every good thing’s laid to waste
By all the jealousy and hate
By all the acid wit and rapier lies
And every time think you are safe
And when you go to turn away
You know they are sharpening their paper knives
All in your mind
All in your head
Try to relate it
Try to escape it
Without a conscience they destroy
And that’s a thing they enjoy
They are a sickness that’s in all our minds
They want to sink the ship and leave
The way they laugh at you and me
You know it happens all the time
The rats in the cellar you know who you are…..Or do you?

I sincerly believe you will agree with me that these guys are some kind of social consultants.
Ciao

We come across zest of many executives be in finance or operations or any other domain who have exceeded their potential and produced world class strategies.

In my current stint at Middle East I came across an Indian Beard Man. Yup a man having slight beard, Chartered Accountant by profession leading the finance domain of one of big corporate houses in Oman. Looking at job profile and going by the exact wordings of his designation one would presume him as the head of finance. No my estimation was wrong, he is heading the company ahead of anybody else; be it engineering/management graduate from pioneer institutes. And it exists in a company where marketing remains the top most priority.

Well honestly the company principle of handling matters is unique. It’s like playing Davis Cup at Wimbledon stadium. You got one center court that’s the Head Office, various courts for profit centers (basically retail marketing). For court other than the center court we have “non playing captains” or the division heads who are overshadowed by their own past. They chase a bunch of unrest, money starving, for whom things have gone wrong suddenly, particular breed /community of people for so called unruly profits in a highly monopolized market. As far as the center court is concerned you can see only one man-yeah the legendary “Beard Man”. He is non-playing captain, among players, among benches-you name anything.

The beard man moves in leaps and bounds in last decade, jumping from one height to another, soaring past targets. Compensation manifold to numerous extents. He earned many facets in this journey- be it foes, disciples (these are all Gandhi’s talking monkey who smiles as soon as the beard man signals bonus like malnourish umpire signaling wicket and he earned highly biased match referees (owners) too!

All this does not perturb the beard man, after a smooth year of politics a fat cheque goes into kitty leaving behind the change for disciples. The non-playing captains cry foul, complaint against beard man to the match referee. Referee takes a sigh, move his head back. No egalite, only jeu for beard man.

His post retirement benefits stands at couple of million dollars. The regular earnings also a million dollar per annum. The beard man is adding more and more fat cheques to the piling stone of “moneyment.”

The Company structure came as a bonaza for the beard man. Company boasts domain where engineers are forced to sale products and non-engineers sitting in the dark room churning away so called IT revolution of Oman without peeking at mights of others. Like a ship of fools run aground to fly the paper doves during night!

The sordid saga of beard man is still going strong- simple ethics and principle. Don’t look at the bush at all; you don’t have to clarify for the birds inside the bushes!

Lets take the routine cycle of beard man-

Highest paid CFO Beard Man

Salary 2-3 million USD 1 million USD
Post retirement benefits 2 million USD 1 million USD

We found a difference of 2-3 million USD, then how can I say he is the highest paid while he is miles away from competitor.
Ok- let us put it this way

Difference with highest paid CFO 3 Million
Less:
Compensating factors for working
Hours 0.5 Million
Non involvement in strategy 1.0 Million
Even advisory level!
Free lance politicizing 0.5 Million
Effective working hours
50% time beard man do not work 1.0 Million
Commission from employee strategy 0.5 Million

That leaves us with a galloping difference of 0.5 Million USD. The undoubted king among CFO!

His employee strategy is unique and has seen many historical changes over the years. His brilliancy in cutting employee salary, putting new circulars to cut expenses is simply outstanding.

Perhaps it’s sanguine to blame beard man for his witty. You might argue that anybody in that position would have done the same thing. After all what is the harm in crying for a few million dollars, but the point remains same. Cry, cry louder but do not hurt anyone to move up in ladder. You are bound to succumb, only incident is a matter of time.

The draw a bottom line for Beard Man will be a very complex and difficult task. What you will call him; a genius employee crusader or an asshole sitting on pot of gold trying to make a hole in pot.

Answer is mute???

You can sing a song meanwhile- “monkey sitting on a pile of stones asking almighty for a yellow submarine to destroy all the oceans”

Serious Note- if anybody on earth does have prudent thinking as an ordinary human being kill these soft beasts before they over power you. It’s happening in many places leaving a trail of betrayal, disloyalty, and hatred among millions of employees. Yet employee, sundries never found a solution as to how to push these highly undesirable characters out of mainstream. An apathetic owner, greedy disciples making situation more miserable.
I wish someday management will take serious note and take stern against people like beard man; of course it has to come before doom’s day. Till that point of time lets wish for those who dedicated themselves into mainstream irrespective of returns and rewards. My sincere salute to them.

The rapid changes in internal audit methodologies including the function itself completely off track the middle east in different circuit. What I perceive the major bottlenecks could be are-

Audit Practice- the current audit practice though differs from the horrible practices followed in earlier regime, yet a long way to go to substantiate the hard-core definition of internal auditing. The paradigm shift in internal audit connotation towards management consulting really put the internal auditors on rocking knowledge boat where you are open to some sharp teethed management sharks desperately waiting when the engine is going to be stopped.
The current audit practices lack clarity on:
Audit integrated consulting- its often said if you can not hire the high ranked management consulting firms then most of the times internal audit plays formidable role of identifying management consulting innovations and best practices to large extent. Faultfinding and neat picking connotation are gone by, one has to embrace the new age. Notable improvement areas will be credit rating system, supply chain management, customer relationship management to name a few.
Surprise checks- this is considered as one of the subsidiary tool of famous tool examination. Often it results in lucrative outcomes. But frequent exercises of the tool make it a redundant and superfluous activity. Currently for surprise checks exercises the cost of control completely outclass the expected benefits. Its needless to state that when cost of control is on higher side then it is required to be modified or amended.
Internal control - An internal control activity is analysed from different angles like cross check, review, authorisation/approval and pre defined limits set for a control. If worth of USD 10 purchase has to go with a bunch of commercial procedures then benefits of a practice will never accrue to the company. Before putting a practice in place the volume needs to be looked into. Small process activities are addressed through entity wide controls eg. Small amendment in item code request form is even authorised by unit heads. One can expect the entity level involvement and its cost! Largely documenting controls on the lines of SARBOX reveals at least 60% deficiency. From the top everything looks rosy, online controls are in bits and pieces-not integrated to large extent, paper generation is highly excessive, e-authorisation is a distant possibility. Further we are fortunate that some solid individual supervision from sharp unit heads have mitigated the shortcomings to large extent.
Standard Operating Procedures- or often referred as SOP, this is one of the most accurate way of describing the activities of any division whether its profit centre, cost centre or support function. I do agree that preparing a SOP and more equitably up keeping it requires lot of resources and manpower. Nevertheless a definite needs to enhance activity management at a macro and micro level.

Transformations and subsequent change management- its better to have one bird in hand rather having two birds in bush. Fair enough, but somebody has to identify two birds in bush first so as to make a legitimate comparison and sit back happily! Identifying the best practices and cross-fertilise into mainstream should always remain in an open end and encouraging.
Transparency and lifting the veil out of opaque integrated system- It is clearly visible that many of the datas, records, information’s are not available to internal audit department. The systems department who got all this doesn’t understand the functional reality of the business process. A more cohesive and one-way approach will result in identifying better practices.
Documentation- If Sarbanes Oxley throws GBs of documentation yet it defined a model to concrete on a foolproof internal control system. We mean documentation as hard copy and garbage’s of pile paper. Cabbage and garbage do not differ if not understood in English way!
The power of consulting- Frankly speaking the Herculean effort required for implementing a CRM or any other business management fad model is mind boggling and catastrophic. It includes some intangible brainstorming, acumen of entrepreneurs, needless to say involvement of some multi-functional brainy characters. Sitting at micro level a middle agent like me it sound too much of optimism before proving the fads. But I strongly sense strategy engine once in while should be given to patriarch of management gurus or the biggest innovator of practices i.e. the management consultants for routine checking. It will enable us at least to know where do we stand?
Absence of management consulting units in the region, outsourcing of education system testify that internal audit practice have to go long way in attaining knowledge wisdom.

Quite a hard time since 9-10 months. Lost contacts, updation, life become stagnant.

Things have stopped at 12 o clock. Need re charge the batteries.

No stopping, hence I won’t spit past difficulties.

The show must go on.

Cheers

History
Management consulting grew with the rise of management as a unique field of study. The first management consulting firm was Arthur D. Little, founded in the late 1890s by the MIT professor of the same name. Though Arthur D. Little later became a general management consultancy, originally specialized in technical research. The first pure management and strategy consulting company was McKinsey & Company, still considered a leader in the field. McKinsey was founded in Chicago during 1926 by James O. McKinsey, but the modern McKinsey was shaped by Marvin Bower, who believed that management consultancies should adhere to the same high professional standards as lawyers and doctors. Andrew T. Kearney, an original McKinsey partner broke off and started A.T. Kearney in 1937.
After World War II, a number of new management consulting firms formed, most notably Boston Consulting Group, founded in 1963, which brought a vigorous analytical approach to the study of management and strategy. Work done at McKinsey, BCG, and Harvard Business School during the 1960s and 70s developed the tools and approaches that would define the new field of strategic management, setting the groundwork for many consulting firms to follow. Also significant was the development of consulting arms by both accounting firms (such as Arthur Andersen) and global IT services companies (such as IBM).
Current State of the Industry
Management consulting has grown rapidly, with growth rates of the industry exceeding 20% in the 1980s and 1990s. As a business service, consulting remains highly cyclical and linked to overall economic conditions. The consulting industry shrank during the 2001-2003 period, but had been experiencing slowly increasing growth since. In 2004, revenues were up 3% over the previous year, yielding a market size of just under $125 billion
Currently, there are three main types of consulting firms. First, there are large, diversified organizations, such as IBM's Global Services and Deloitte Consulting offer a range of services, including IT consulting, in addition to a management consulting practice. Second are the large management and strategic consulting specialists, like the venerable McKinsey, that offer purely management consulting, but are not specialized in any one industry. Finally, there are boutique firms, often quite small, that have extremely focused areas of consulting expertise, such as Canback Dangel in corporate analytics or First Manhattan in banking.
Approaches
Management consulting has become the primary source for innovation in the practice of management, forming a bridge between academia, firms, and thought leaders in other fields. As a result, management consulting firms use a variety of tools and techniques to approach business problems. See strategic management for more information.

Criticism
Management consultants are often criticized for overuse of buzzwords, reliance on management fads and a failure to develop executable plans that can be followed through. A number of highly critical books about management consulting argue that the mismatch between management consulting advice and the ability of business executives to actually create the change suggested results in substantial damages to existing businesses, see, for example Dangerous Company by James O'Shea.
Not surprisingly, management consulting is also the butt of many business-related jokes, such as: "Question: What’s the difference between a management consultant and a used-car salesman. Answer: A used car salesman knows when he is lying."
Leading Firms
The Vault Guide to Top Consulting Firms lists the following as the top five management consulting companies:
McKinsey and Company
Boston Consulting Group
LAWADM Consulting Group
Bain and Company
Booz Allen Hamilton
Monitor Group

Books about Management Consulting
Managing the Professional Services Firm, by David Maister
Guerrilla Marketing for Consulting, Jay Conrad Levinson and Michael W. McLaughlin
Flawless Consulting, by Peter Block
The Professional Services Firm Bible, by John Baschab
Managing Transitions, By William Bridges

Ummmm......
Dont know how to rant now. End was not perfect like a typical hindi movie where people starts jumping with holding each other's hands. No communcation...no plesantary... it seems for couple of days things have stopped at the dead end.
If certain people thinks that i will cut my life and pieces for the shake of idio synchrocity then its nothing but fallacy of meganomalism. Are we not transparent enough to switch street lights on "the road to hell".
Anyway... wonderful time with the firm i worked. Loves from different corner from various people yet sanguinity lies in the point that we are still hypocrats. I wonder whether hypocrasy should be part of consulting curriculum.
But the show must go on for everybody....
I wish we should nt be afraid to shoot the strangers...

Adios......
Going back in memory lane resumes some escatic and random musings over the years. Some wonderful time in Bangalore....excellent academic opportunities.
Yet life should go on... one more new light in UK. I just cant get over the management consulting blues.
Will pen u more from Manchester....
Till that time very very best wishes
Ciao

I encountered the flattening of the world quite by accident. It was in late February of last year, and I was visiting the Indian high-tech capital, Bangalore,
I Was working on a documentary for the Discovery Times channel about outsourcing. In short order, I interviewed Indian entrepreneurs who wanted to prepare my taxes from Bangalore, read my X-rays from Bangalore, trace my lost luggage from Bangalore and write my new software from Bangalore. The longer I was there, the more upset I became -- upset at the realization that while I had been off covering the 9/11 wars, globalization had entered a whole new phase, and I had missed it. I guess the eureka moment came on a visit to the campus of Infosys Technologies, one of the crown jewels of the Indian outsourcing and software industry. Nandan Nilekani, the Infosys C.E.O., was showing me his global video-conference room, pointing with pride to a wall-size flat-screen TV, which he said was the biggest in Asia. Infosys, he explained, could hold a virtual meeting of the key players from its entire global supply chain for any project at any time on that supersize screen. So its American designers could be on the screen speaking with their Indian software writers and their Asian manufacturers all at once. That's what globalization is all about today, Nilekani said. Above the screen there were eight clocks that pretty well summed up the Infosys workday: 24/7/365. The clocks were labeled U.S. West, U.S. East, G.M.T., India, Singapore, Hong Kong, Japan, Australia.
''Outsourcing is just one dimension of a much more fundamental thing happening today in the world,'' Nilekani explained. ''What happened over the last years is that there was a massive investment in technology, especially in the bubble era, when hundreds of millions of dollars were invested in putting broadband connectivity around the world, undersea cables, all those things.'' At the same time, he added, computers became cheaper and dispersed all over the world, and there was an explosion of e-mail software, search engines like Google and proprietary software that can chop up any piece of work and send one part to Boston, one part to Bangalore and one part to Beijing, making it easy for anyone to do remote development. When all of these things suddenly came together around 2000, Nilekani said, they ''created a platform where intellectual work, intellectual capital, could be delivered from anywhere. It could be disaggregated, delivered, distributed, produced and put back together again -- and this gave a whole new degree of freedom to the way we do work, especially work of an intellectual nature. And what you are seeing in Bangalore today is really the culmination of all these things coming together.''
At one point, summing up the implications of all this, Nilekani uttered a phrase that rang in my ear. He said to me, ''Tom, the playing field is being leveled.'' He meant that countries like India were now able to compete equally for global knowledge work as never before -- and that America had better get ready for this. As I left the Infosys campus that evening and bounced along the potholed road back to Bangalore, I kept chewing on that phrase: ''The playing field is being leveled.''
''What Nandan is saying,'' I thought, ''is that the playing field is being flattened. Flattened? Flattened? My God, he's telling me the world is flat!''
Here I was in Bangalore -- more than 500 years after Columbus sailed over the horizon, looking for a shorter route to India using the rudimentary navigational technologies of his day, and returned safely to prove definitively that the world was round -- and one of India's smartest engineers, trained at his country's top technical institute and backed by the most modern technologies of his day, was telling me that the world was flat, as flat as that screen on which he can host a meeting of his whole global supply chain. Even more interesting, he was citing this development as a new milestone in human progress and a great opportunity for India and the world -- the fact that we had made our world flat!
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This has been building for a long time. Globalization 1.0 (1492 to 1800) shrank the world from a size large to a size medium, and the dynamic force in that era was countries globalizing for resources and imperial conquest. Globalization 2.0 (1800 to 2000) shrank the world from a size medium to a size small, and it was spearheaded by companies globalizing for markets and labor. Globalization 3.0 (which started around 2000) is shrinking the world from a size small to a size tiny and flattening the playing field at the same time. And while the dynamic force in Globalization 1.0 was countries globalizing and the dynamic force in Globalization 2.0 was companies globalizing, the dynamic force in Globalization 3.0 -- the thing that gives it its unique character -- is individuals and small groups globalizing. Individuals must, and can, now ask: where do I fit into the global competition and opportunities of the day, and how can I, on my own, collaborate with others globally? But Globalization 3.0 not only differs from the previous eras in how it is shrinking and flattening the world and in how it is empowering individuals. It is also different in that Globalization 1.0 and 2.0 were driven primarily by European and American companies and countries. But going forward, this will be less and less true. Globalization 3.0 is not only going to be driven more by individuals but also by a much more diverse -- non-Western, nonwhite -- group of individuals. In Globalization 3.0, you are going to see every color of the human rainbow take part.
We are now in the process of connecting all the knowledge pools in the world together. We've tasted some of the downsides of that in the way that Osama bin Laden has connected terrorist knowledge pools together through his Qaeda network, not to mention the work of teenage hackers spinning off more and more lethal computer viruses that affect us all. But the upside is that by connecting all these knowledge pools we are on the cusp of an incredible new era of innovation, an era that will be driven from left field and right field, from West and East and from North and South. Only 30 years ago, if you had a choice of being born a B student in Boston or a genius in Bangalore or Beijing, you probably would have chosen Boston, because a genius in Beijing or Bangalore could not really take advantage of his or her talent. They could not plug and play globally. Not anymore. Not when the world is flat, and anyone with smarts, access to Google and a cheap wireless laptop can join the innovation fray.
When the world is flat, you can innovate without having to emigrate. This is going to get interesting. We are about to see creative destruction on steroids.
How did the world get flattened, and how did it happen so fast?
It was a result of 10 events and forces that all came together during the 1990's and converged right around the year 2000. Let me go through them briefly. The first event was 11/9. That's right -- not 9/11, but 11/9. Nov. 9, 1989, is the day the Berlin Wall came down, which was critically important because it allowed us to think of the world as a single space. ''The Berlin Wall was not only a symbol of keeping people inside Germany; it was a way of preventing a kind of global view of our future,'' the Nobel Prize-winning economist Amartya Sen said. And the wall went down just as the windows went up -- the breakthrough Microsoft Windows 3.0 operating system, which helped to flatten the playing field even more by creating a global computer interface, shipped six months after the wall fell.
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The second key date was 8/9. Aug. 9, 1995, is the day Netscape went public, which did two important things. First, it brought the Internet alive by giving us the browser to display images and data stored on Web sites. Second, the Netscape stock offering triggered the dot-com boom, which triggered the dot-com bubble, which triggered the massive overinvestment of billions of dollars in fiber-optic telecommunications cable. That overinvestment, by companies like Global Crossing, resulted in the willy-nilly creation of a global undersea-underground fiber network, which in turn drove down the cost of transmitting voices, data and images to practically zero, which in turn accidentally made Boston, Bangalore and Beijing next-door neighbors overnight. In sum, what the Netscape revolution did was bring people-to-people connectivity to a whole new level. Suddenly more people could connect with more other people from more different places in more different ways than ever before.
No country accidentally benefited more from the Netscape moment than India. ''India had no resources and no infrastructure,'' said Dinakar Singh, one of the most respected hedge-fund managers on Wall Street, whose parents earned doctoral degrees in biochemistry from the University of Delhi before emigrating to America. ''It produced people with quality and by quantity. But many of them rotted on the docks of India like vegetables. Only a relative few could get on ships and get out. Not anymore, because we built this ocean crosser, called fiber-optic cable. For decades you had to leave India to be a professional. Now you can plug into the world from India. You don't have to go to Yale and go to work for Goldman Sachs.'' India could never have afforded to pay for the bandwidth to connect brainy India with high-tech America, so American shareholders paid for it. Yes, crazy overinvestment can be good. The overinvestment in railroads turned out to be a great boon for the American economy. ''But the railroad overinvestment was confined to your own country and so, too, were the benefits,'' Singh said. In the case of the digital railroads, ''it was the foreigners who benefited.'' India got a free ride.
The first time this became apparent was when thousands of Indian engineers were enlisted to fix the Y2K -- the year 2000 -- computer bugs for companies from all over the world. (Y2K should be a national holiday in India. Call it ''Indian Interdependence Day,'' says Michael Mandelbaum, a foreign-policy analyst at Johns Hopkins.) The fact that the Y2K work could be outsourced to Indians was made possible by the first two flatteners, along with a third, which I call ''workflow.'' Workflow is shorthand for all the software applications, standards and electronic transmission pipes, like middleware, that connected all those computers and fiber-optic cable. To put it another way, if the Netscape moment connected people to people like never before, what the workflow revolution did was connect applications to applications so that people all over the world could work together in manipulating and shaping words, data and images on computers like never before.
Indeed, this breakthrough in people-to-people and application-to-application connectivity produced, in short order, six more flatteners -- six new ways in which individuals and companies could collaborate on work and share knowledge. One was ''outsourcing.'' When my software applications could connect seamlessly with all of your applications, it meant that all kinds of work -- from accounting to software-writing -- could be digitized, disaggregated and shifted to any place in the world where it could be done better and cheaper. The second was ''offshoring.'' I send my whole factory from Canton, Ohio, to Canton, China. The third was ''open-sourcing.'' I write the next operating system, Linux, using engineers collaborating together online and working for free. The fourth was ''insourcing.'' I let a company like UPS come inside my company and take over my whole logistics operation -- everything from filling my orders online to delivering my goods to repairing them for customers when they break. (People have no idea what UPS really does today. You'd be amazed!). The fifth was ''supply-chaining.'' This is Wal-Mart's specialty. I create a global supply chain down to the last atom of efficiency so that if I sell an item in Arkansas, another is immediately made in China. (If Wal-Mart were a country, it would be China's eighth-largest trading partner.) The last new form of collaboration I call ''informing'' -- this is Google, Yahoo and MSN Search, which now allow anyone to collaborate with, and mine, unlimited data all by themselves.
So the first three flatteners created the new platform for collaboration, and the next six are the new forms of collaboration that flattened the world even more. The 10th flattener I call ''the steroids,'' and these are wireless access and voice over Internet protocol (VoIP). What the steroids do is turbocharge all these new forms of collaboration, so you can now do any one of them, from anywhere, with any device.
The world got flat when all 10 of these flatteners converged around the year 2000. This created a global, Web-enabled playing field that allows for multiple forms of collaboration on research and work in real time, without regard to geography, distance or, in the near future, even language. ''It is the creation of this platform, with these unique attributes, that is the truly important sustainable breakthrough that made what you call the flattening of the world possible,'' said Craig Mundie, the chief technical officer of Microsoft.
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Carly Fiorina, the former Hewlett-Packard C.E.O., who in 2004 began to declare in her public speeches that the dot-com boom and bust were just ''the end of the beginning.'' The last 25 years in technology, Fiorina said, have just been ''the warm-up act.'' Now we are going into the main event, she said, ''and by the main event, I mean an era in which technology will truly transform every aspect of business, of government, of society, of life.''
As if this flattening wasn't enough, another convergence coincidentally occurred during the 1990's that was equally important. Some three billion people who were out of the game walked, and often ran, onto the playing field. I am talking about the people of China, India, Russia, Eastern Europe, Latin America and Central Asia. Their economies and political systems all opened up during the course of the 1990's so that their people were increasingly free to join the free market. And when did these three billion people converge with the new playing field and the new business processes? Right when it was being flattened, right when millions of them could compete and collaborate more equally, more horizontally and with cheaper and more readily available tools. Indeed, thanks to the flattening of the world, many of these new entrants didn't even have to leave home to participate. Thanks to the 10 flatteners, the playing field came to them!
It is this convergence -- of new players, on a new playing field, developing new processes for horizontal collaboration -- that I believe is the most important force shaping global economics and politics in the early 21st century. Sure, not all three billion can collaborate and compete. In fact, for most people the world is not yet flat at all. But even if we're talking about only 10 percent, that's 300 million people -- about twice the size of the American work force. And be advised: the Indians and Chinese are not racing us to the bottom. They are racing us to the top. What China's leaders really want is that the next generation of underwear and airplane wings not just be ''made in China'' but also be ''designed in China.'' And that is where things are heading. So in 30 years we will have gone from ''sold in China'' to ''made in China'' to ''designed in China'' to ''dreamed up in China'' -- or from China as collaborator with the worldwide manufacturers on nothing to China as a low-cost, high-quality, hyperefficient collaborator with worldwide manufacturers on everything. Ditto India. Said Craig Barrett, the C.E.O. of Intel, ''You don't bring three billion people into the world economy overnight without huge consequences, especially from three societies'' -- like India, China and Russia -- ''with rich educational heritages.''
That is why there is nothing that guarantees that Americans or Western Europeans will continue leading the way. These new players are stepping onto the playing field legacy free, meaning that many of them were so far behind that they can leap right into the new technologies without having to worry about all the sunken costs of old systems. It means that they can move very fast to adopt new, state-of-the-art technologies, which is why there are already more cellphones in use in China today than there are people in America.
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If you want to appreciate the sort of challenge we are facing, let me share with you two conversations. One was with some of the Microsoft officials who were involved in setting up Microsoft's research center in Beijing, Microsoft Research Asia, which opened in 1998 -- after Microsoft sent teams to Chinese universities to administer I.Q. tests in order to recruit the best brains from China's 1.3 billion people. Out of the 2,000 top Chinese engineering and science students tested, Microsoft hired 20. They have a saying at Microsoft about their Asia center, which captures the intensity of competition it takes to win a job there and explains why it is already the most productive research team at Microsoft: ''Remember, in China, when you are one in a million, there are 1,300 other people just like you.''
The other is a conversation I had with Rajesh Rao, a young Indian entrepreneur who started an electronic-game company from Bangalore, which today owns the rights to Charlie Chaplin's image for mobile computer games. ''We can't relax,'' Rao said. ''I think in the case of the United States that is what happened a bit. Please look at me: I am from India. We have been at a very different level before in terms of technology and business. But once we saw we had an infrastructure that made the world a small place, we promptly tried to make the best use of it. We saw there were so many things we could do. We went ahead, and today what we are seeing is a result of that. There is no time to rest. That is gone. There are dozens of people who are doing the same thing you are doing, and they are trying to do it better. It is like water in a tray: you shake it, and it will find the path of least resistance. That is what is going to happen to so many jobs -- they will go to that corner of the world where there is the least resistance and the most opportunity. If there is a skilled person in Timbuktu, he will get work if he knows how to access the rest of the world, which is quite easy today. You can make a Web site and have an e-mail address and you are up and running. And if you are able to demonstrate your work, using the same infrastructure, and if people are comfortable giving work to you and if you are diligent and clean in your transactions, then you are in business.''
Instead of complaining about outsourcing, Rao said, Americans and Western Europeans would ''be better off thinking about how you can raise your bar and raise yourselves into doing something better. Americans have consistently led in innovation over the last century. Americans whining -- we have never seen that before.''
The long-term opportunities and challenges that the flattening of the world puts before the United States are profound. Therefore, our ability to get by doing things the way we've been doing them -- which is to say not always enriching our secret sauce -- will not suffice any more. ''For a country as wealthy we are, it is amazing how little we are doing to enhance our natural competitiveness,'' says Dinakar Singh, the Indian-American hedge-fund manager. ''We are in a world that has a system that now allows convergence among many billions of people, and we had better step back and figure out what it means. It would be a nice coincidence if all the things that were true before were still true now, but there are quite a few things you actually need to do differently. You need to have a much more thoughtful national discussion.''
The main challenge to America today is from those practicing extreme capitalism, namely China, India and South Korea. The main objective in this era is building strong individuals.
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Meeting the challenges of flatism requires as comprehensive, energetic and focused a response as did meeting the challenge of Communism. It requires a president who can summon the nation to work harder, get smarter, attract more young women and men to science and engineering and build the broadband infrastructure, portable pensions and health care that will help every American become more employable in an age in which no one can guarantee you lifetime employment.
We have been slow to rise to the challenge of flatism, in contrast to Communism, maybe because flatism doesn't involve ICBM missiles aimed at our cities. Indeed, the hot line, which used to connect the Kremlin with the White House, has been replaced by the help line, which connects everyone in America to call centers in Bangalore.
When it comes to responding to the challenges of the flat world, there is no help line we can call. We have to dig into ourselves. We in America have all the basic economic and educational tools to do that. But we have not been improving those tools as much as we should. That is why we are in what Shirley Ann Jackson, the 2004 president of the American Association for the Advancement of Science and president of Rensselaer Polytechnic Institute, calls a ''quiet crisis'' -- one that is slowly eating away at America's scientific and engineering base.
''If left unchecked,'' said Jackson, the first African-American woman to earn a Ph.D. in physics from M.I.T., ''this could challenge our pre-eminence and capacity to innovate.'' And it is our ability to constantly innovate new products, services and companies that has been the source of America's horn of plenty and steadily widening middle class for the last two centuries. This quiet crisis is a product of three gaps now plaguing American society. The first is an ''ambition gap.'' Compared with the young, energetic Indians and Chinese, too many Americans have gotten too lazy. As David Rothkopf, a former official in the Clinton Commerce Department, puts it, ''The real entitlement we need to get rid of is our sense of entitlement.'' Second, we have a serious numbers gap building. We are not producing enough engineers and scientists. We used to make up for that by importing them from India and China, but in a flat world, where people can now stay home and compete with us, and in a post-9/11 world, where we are insanely keeping out many of the first-round intellectual draft choices in the world for exaggerated security reasons, we can no longer cover the gap. That's a key reason companies are looking abroad. The numbers are not here. And finally we are developing an education gap. Here is the dirty little secret that no C.E.O. wants to tell you: they are not just outsourcing to save on salary. They are doing it because they can often get better-skilled and more productive people than their American workers.
These are some of the reasons that Bill Gates, the Microsoft chairman, warned the governors' conference in a Feb. 26 speech that American high-school education is ''obsolete.'' As Gates put it: ''When I compare our high schools to what I see when I'm traveling abroad, I am terrified for our work force of tomorrow. In math and science, our fourth graders are among the top students in the world. By eighth grade, they're in the middle of the pack. By 12th grade, U.S. students are scoring near the bottom of all industrialized nations. . . . The percentage of a population with a college degree is important, but so are sheer numbers. In 2001, India graduated almost a million more students from college than the United States did. China graduates twice as many students with bachelor's degrees as the U.S., and they have six times as many graduates majoring in engineering. In the international competition to have the biggest and best supply of knowledge workers, America is falling behind.''
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We need to get going immediately. It takes 15 years to train a good engineer, because, ladies and gentlemen, this really is rocket science. So parents, throw away the Game Boy, turn off the television and get your kids to work. There is no sugar-coating this: in a flat world, every individual is going to have to run a little faster if he or she wants to advance his or her standard of living. When I was growing up, my parents used to say to me, ''Tom, finish your dinner -- people in China are starving.'' But after sailing to the edges of the flat world for a year, I am now telling my own daughters, ''Girls, finish your homework -- people in China and India are starving for your jobs.''
Thomas L. Friedman is the author of ''The World Is Flat: A Brief History of the Twenty-First Century,'' to be published this week by Farrar, Straus & Giroux and from which this article is adapted. His column appears on the Op-Ed page of The Times, and his television documentary ''Does Europe Hate Us?'' was shown on the Discovery Channel on April 7 at 8 p.m.
Forwarded by- Mr. Srikanth Balakrishnan, Bangalore based proffessional involved in transaction taxation advisory services

These include the following:
Explicit knowledge
Tacit knowledge
Declarative knowledge
Procedural knowledge
Along the way we will touch on the meaning of the root term, knowledge, as well as a couple of related terms, specifically, implicit knowledge and strategic knowledge.
You might well ask, "Why bother?" After all, doesn’t everyone know what these terms mean? Don’t we all agree on what they mean? The answer, of course, is "No." There are different meanings at play. We will examine some of these and attempt to reconcile and integrate them.
Again, you might ask, "Why bother?" After all, what difference does it make? Well, if claims are being made that knowledge can be managed and if the term knowledge management is to have any credence, we must be clear about what we mean by the knowledge in knowledge management. For this reason, once the basic terms have been defined and related to one another, we will examine some of their implications for practice.
Knowledge
In general, we seem to mean three things by our use of the word "knowledge." First, we use it to refer to a state of knowing, by which we also mean to be acquainted or familiar with, to be aware of, to recognize or apprehend facts, methods, principles, techniques and so on. This common usage corresponds to what is often referred to as "know about." Second, we use the word "knowledge" to refer to what Peter Senge calls "the capacity for action," an understanding or grasp of facts, methods, principles and techniques sufficient to apply them in the course of making things happen. This corresponds to "know how." Third, we use the term "knowledge" to refer to codified, captured and accumulated facts, methods, principles, techniques and so on. When we use the term this way, we are referring to a body of knowledge that has been articulated and captured in the form of books, papers, formulas, procedure manuals, computer code and so on.
In Working Knowledge, Tom Davenport and Laurence Prusak (1998) draw distinctions among data, information and knowledge. Data and information fit within the third category above, that is, the notion of a body of knowledge that exists apart from people. Their view of knowledge is that it is "broader, deeper, and richer than data or information." They offer this "working definition" of knowledge:
"Knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organizations, it often becomes embedded not only in documents or repositories but also in organizational routines, processes, practices, and norms."(p.5)
Thus it would appear that although Messrs. Davenport and Prusak distinguish among data, information and knowledge, their working definition of knowledge incorporates information, accommodates the notion that knowledge is a state of being and, at the same time, accommodates the view that knowledge exists apart from the knowers. It also accommodates the notion of knowledge as the capacity for action.
From all this it does seem safe to conclude that there are two basic kinds of knowledge: (1) the kind that is reflected in a person’s internal state as well as in that same person’s capacity for action and (2) the kind that has been articulated and frequently recorded. This brings us to the concepts of explicit, implicit and tacit knowledge.
Explicit, Implicit and Tacit Knowledge
Explicit Knowledge
Explicit knowledge, as the first word in the term implies, is knowledge that has been articulated and, more often than not, captured in the form of text, tables, diagrams, product specifications and so on. In a well-known and frequently cited 1991 Harvard Business Review article titled "The Knowledge Creating Company," Ikujiro Nonaka refers to explicit knowledge as "formal and systematic" and offers product specifications, scientific formulas and computer programs as examples. An example of explicit knowledge with which we are all familiar is the formula for finding the area of a rectangle (i.e., length times width). Other examples of explicit knowledge include documented best practices, the formalized standards by which an insurance claim is adjudicated and the official expectations for performance set forth in written work objectives.
Tacit Knowledge
Tacit knowledge is knowledge that cannot be articulated. As Michael Polanyi (1997), the chemist-turned-philosopher who coined the term put it, "We know more than we can tell." Polanyi used the example of being able to recognize a person’s face but being only vaguely able to describe how that is done. This is an instance of pattern recognition. What we recognize is the whole or the gestalt and decomposing it into its constituent elements so as to be able to articulate them fails to capture its essence. Reading the reaction on a customer’s face or entering text at a high rate of speed using a word processor offer other instances of situations in which we are able to perform well but unable to articulate exactly what we know or how we put it into practice. In such cases, the knowing is in the doing, a point to which we will return shortly.
Implicit Knowledge
Knowledge that can be articulated but hasn’t is implicit knowledge. Its existence is implied by or inferred from observable behavior or performance. This is the kind of knowledge that can often be teased out of a competent performer by a task analyst, knowledge engineer or other person skilled in identifying the kind of knowledge that can be articulated but hasn’t. In analyzing the task in which underwriters at an insurance company processed applications, for instance, it quickly became clear that the range of outcomes for the underwriters’ work took three basic forms: (1) they could approve the policy application, (2) they could deny it or (3) they could counter offer. Yet, not one of the underwriters articulated these as boundaries on their work at the outset of the analysis. Once these outcomes were identified, it was a comparatively simple matter to identify the criteria used to determine the response to a given application. In so doing, implicit knowledge became explicit knowledge.
Declarative, Procedural and Strategic Knowledge
The explicit, implicit, tacit categories of knowledge are not the only ones in use. Cognitive psychologists sort knowledge into two categories: declarative and procedural. Some add strategic as a third category.


Declarative Knowledge
Declarative knowledge has much in common with explicit knowledge in that declarative knowledge consists of descriptions of facts and things or of methods and procedures. The person most closely associated with the distinction between declarative and procedural knowledge is John Anderson of Carnegie-Mellon University. He has been writing about these two notions for almost 25 years (Anderson, 1976; 1993; 1995). Being able to state the cut off date for accepting applications is an example of declarative knowledge. It is also an instance of explicit knowledge. For most practical purposes, declarative knowledge and explicit knowledge may be treated as synonyms. This is because all declarative knowledge is explicit knowledge, that is, it is knowledge that can be and has been articulated.
Procedural Knowledge
This is an area where important differences of opinion exist.
One view of procedural knowledge is that it is knowledge that manifests itself in the doing of something. As such it is reflected in motor or manual skills and in cognitive or mental skills. We think, we reason, we decide, we dance, we play the piano, we ride bicycles, we read customers’ faces and moods (and our bosses’ as well), yet we cannot reduce to mere words that which we obviously know or know how to do. Attempts to do so are often recognized as little more than after-the-fact rationalizations. This knowing-is-in-the-doing view of procedural knowledge is basically the view of John Anderson, the Carnegie-Mellon professor mentioned earlier.
Another view of procedural knowledge is that it is knowledge about how to do something. This view of procedural knowledge accepts a description of the steps of a task or procedure as procedural knowledge. The obvious shortcoming of this view is that it is no different from declarative knowledge except that tasks or methods are being described instead of facts or things.
Pending the resolution of this disparity, we are left to resolve this for ourselves. On my part, I have chosen to acknowledge that some people refer to descriptions of tasks, methods and procedures as declarative knowledge and others refer to them as procedural knowledge. For my own purposes, however, I choose to classify all descriptions of knowledge as declarative and reserve procedural for application to situations in which the knowing may be said to be in the doing. Indeed, as the diagram in Figure 2 shows, declarative knowledge ties to "describing" and procedural knowledge ties to "doing." Thus, for my purposes, I am able to comfortably view all procedural knowledge as tacit just as all declarative knowledge is explicit.
Some reading this will immediately say, "Whoa there. If all procedural knowledge is tacit, that means we can’t articulate it. In turn, that means we can’t make it explicit, that is, we can’t articulate and capture it in the form of books, tables, diagrams and so on." That is exactly what I mean. When we describe a task, step by step, or when we draw a flowchart representing a process, these are representations. Describing what we do or how we do it yields declarative knowledge. A description of an act is not the act just as the map is not the territory.
Strategic Knowledge
Strategic knowledge is a term used by some to refer to what might be termed know-when and know-why. Although it seems reasonable to conceive of these as aspects of doing, it is difficult to envision them as being separate from that doing. In other words, we can separate out strategic knowledge only in the describing, not the doing. Consequently, strategic knowledge is probably best thought of as a subset of declarative knowledge instead of its own category. For this reason, strategic knowledge does not appear in any of the diagrams in this paper.
On to More Practical Matters
So what? Why are these concepts important? What are we to do with them? How can we put them to practical use? A few thoughts follow.
First off, it is important to recognize that the acquisition of declarative and procedural knowledge occurs in very different ways. Second, although tacit knowledge cannot be reduced entirely to words, it is quite possible to acquire tacit knowledge through means other than verbal descriptions. Third, if "knowledge management" is to have any meaning and any credence at all, we must say what we mean by knowledge – in all its variations and permutations – and we must do so in ways that are as free of conflict and overlap as we can make them. Otherwise, we run the distinct risk of appearing to not know what we are talking about.
Nonaka addresses the important issues of knowledge transfer and knowledge creation in his 1991 article. He cites four such transfers or creations:
Tacit to tacit. Acquiring someone else’s tacit knowledge through observation, imitation and practice. The example Nonaka uses is that of a product developer, Ikuro Tanaka, who apprentices herself to a hotel chef famous for the quality of his bread. She learns how to make bread his way, including an unusual kneading technique.
Explicit to explicit. Combining discrete pieces of explicit knowledge to form new explicit knowledge, for example, compiling data and preparing a report that analyzes and synthesizes these data. The report constitutes new explicit knowledge.
Tacit to explicit. Nonaka cites here the product developer’s subsequent conversion of her acquired tacit knowledge into specifications for a bread-making machine. However, as defined by Polanyi, who coined the term, tacit knowledge cannot be articulated. Thus, although Nonaka’s product developer was clearly able to devise a set of product specifications based on what she learned while apprenticed to the chef in question, it seems doubtful that she actually articulated the chef’s tacit knowledge or her own. It seems more likely that she articulated some rules or principles or descriptions of procedures, that is, she created some declarative knowledge that subsequently proved useful in the design and development of the bread-making machine.
Explicit to tacit. Internalizing explicit knowledge. Here, Nonaka indicates that the product development team acquired new tacit knowledge; specifically, they came to understand in an intuitive way, that products like the home bread-making machine can provide quality, that is, they can produce bread as good as that made by a professional baker. That Nonaka (or anyone else) knows of this suggests that whatever knowledge was acquired has been made explicit and that means it might have been implicit knowledge at one point but was never truly tacit knowledge because that cannot be articulated.
On my part, I will focus on three aspects of knowledge capture, sharing and transfer:
The process of capturing explicit knowledge, that is, of making implicit knowledge explicit.
The development of procedural knowledge (in the sense that the knowing is in the doing).
The transfer of tacit knowledge from one person to another without resorting to verbalization.
In all three cases, we will be talking about the systematic or facilitated acquisition of knowledge, not simply learning from experience.
Making Implicit Knowledge Explicit
This is a process of articulation, of making implicit knowledge explicit. Sometimes we are able to do this on our own and sometimes it requires the assistance of someone like a performance analyst or a knowledge engineer. When a performance analyst documents the work of insurance claims examiners in the form of adjudication algorithms, those algorithms represent implicit knowledge that has been made explicit.
Developing Procedural Knowledge
We are talking here of skill development, specifically, the acquisition of explicit, declarative knowledge as the basis for skill development. Often this works as follows:
We are presented with a description of a way to perform a task.
We practice it, perhaps haltingly at first but our proficiency improves with continued practice and it benefits from feedback.
Finally, we reach the point at which our ability to perform the task is automatic, we no longer have to think about it.
Over time, we might even forget the original task descriptions that enabled our early attempts to perform the task.
Transferring Tacit Knowledge
The key here is to remember that tacit knowledge cannot be articulated but it can be communicated or transferred. Remember Polanyi’s example of being able to pick a face out of a crowd? Although we might not be able to adequately articulate how we do that, or even to describe facial characteristics in such a way that someone unfamiliar with the face in question could pick it out of similar looking faces, we can develop the ability to recognize that face by presenting pictures and developing the ability to recognize that face from several different angles.
Conclusion
Knowledge management seeks to manage knowledge. Knowledge itself is a very slippery concept with many different variations and definitions. The nature of knowledge and what it means to know something are epistemological questions that have perplexed philosophers for centuries and no resolution looms on the horizon. Are we therefore to throw up our hands and turn away? Or do we simply acknowledge that we are in an ambiguous area and do the best we can? We must each make these choices in as informed a way as we can manage. There are no unequivocally correct answers, only theories and opinions. In the last analysis, we must decide for ourselves. Consequently, we owe it to ourselves to do two things:
Become as knowledgeable as we can about the choices and issues facing us, including the nature of knowledge and knowing and what it means when we use terms like "knowledge management."
Muster up as much clear thinking as we can because shoddy, muddy thinking will do us no good at all, whether in relation to knowledge management or any other area of endeavor.
This article represents an effort on my part to share some of what I think I know about knowledge, knowing, different categories of knowledge and how they relate to one another. I wrote it because I believe it is important for an aspiring area of professional practice such as knowledge management to develop a professional language that is as precise and stable as we can make. If we fail to do this, we are faced with the prospect of conversations dominated not by substantive issues but by repeated requests for definitions of the terms being used. If knowledge management is to become an area of professional practice, there must some traces of a standard language and I hope this article is a step in that direction.
In closing, and to turn what I’ve said on itself, this article is itself explicit and declarative in nature. Some readers might conclude that I possess some implicit knowledge and that would be consistent with what I’ve written. There is, however, not one whit of tacit knowledge contained in this paper; there can’t be because tacit knowledge can’t be articulated. Nor is there any procedural knowledge in this article, unless you are of the mind that descriptions of methods or procedures count as procedural knowledge. I don’t but you might. Nor is there any strategic knowledge in this paper; indeed, I take that construct with a large grain of salt. But, then, who’s to say? You might know better than I.

My dictionary provides two definitions of "consultant."
"A person who consults with another or others."
"An expert who is called on for professional or technical advice or opinions."
These definitions prompt two more questions:
What is meant by "consult"?
What is meant by "an expert"?
To consult means to "seek advice from," as in seek advice from an accountant or an attorney. Thus, it would seem that clients are also consultants in that they are the ones who are usually seen as seeking advice. That does not help us much with our search for the identity of a consultant, so let us move on to "expert."
An expert, or so my Webster’s informs me, is someone who is "very skillful; having much training and knowledge in a special field." We all know that there might or might not be a connection between our training and our knowledge and skills. From this, it follows that a consultant, if he or she is indeed an expert, must be an effective learner, that is, capable of acquiring knowledge and skill from experience, whether or not that experience involves training.
Expert, experience, experiential, and experiment -- these words all have a common Latin root -- expirer, meaning to try, to test, to prove. A consultant, then, is above all else empirical, that is, willing to try things to see what happens.
If you listen closely, sooner or later you will hear this definition of a consultant:
A consultant is someone who comes in, borrows your watch, and tells you what time it is, keeps the watch, and charges you an exorbitant fee.
Many view that definition as a put-down of consultants. I do not. Here's why.
A consultant is usually outside the client organization, hence the "someone who comes in" portion of the preceding definition. Consultants learn about their clients from observing them and it is what they learn about their clients that they eventually share with their clients. This accounts for the portion of the definition pertaining to "borrows your watch" and "tells you what time it is." Consultants also retain what they learn, thus "keeps the watch."
And what about "charges you an exorbitant fee"? Well, for me, that portion of the definition refers to the fact that people who can't see what's right in front of them typically downplay the value of those who succeed in getting them to see those matters. It is as though they are saying, "I should have seen that all along, so I resent having to pay your fee for pointing it out to me."
A consultant, then, is someone who helps others profit or learn from their own experience. A really good consultant also helps clients see the value of their experience and so the fees are rarely seen as "exorbitant."

1991, among amidst cheers, applaud, huge tapping on table the most historical budget got passed in the highest setting body of Indian paradoxical culture; the parliament. A beaming Finance Minister declared from dias with a thunder “time has come to drink coke, to wear Burlington, to chew Avon, to brunch Pizza. Behold, the dhotiwala marwaris should watch their malpractices, you have looted enough, time to go to Ganges and wash your sin.”

The common Indian rise from rugs started fantasizing the Park Avenue, Salwar Clad wife in Midis, churning away pizza in a lavishing mall. Enough of pakodas and dosas. India is going global; with a size of 1 billion we are going to embark imperial socialism.

Indian beauties in hoardings replaced by foreign nude clad ladies. Our girls happily singing around malls, movie surroundings, guys with flashy bikes, specks. Owo….breathtaking site. Older generation got amused, some embarrassed and some flattened. Country has rolled its dice; Pink Floyd’s dark side of the moon is no more revolving, static from oblivion and straight falling into feldspar of carpets like golden dew drop.

My personal incident in a high profile city called Bangalore-

14th May, 2005- Was busy in something, came out late from office. The cafeteria was closed by that time. Suddenly like a flashback I thought why to worry? Let’s take ride on rising economy. Picked the cell like chauvinist of liberalization, dialed like a King who just got reins from UNITED STATES. Ordered a North Pole delicacy called Pizza, some pasta salad and Uncle Sam’s water supply management a.k.a “coke”. After 45 minutes a face appears on room door. With much hesitant American smile the face echoed a voice good evening!! I watched the time, 11.45 P.M. I was wondering whether I am in different time zone. The next line was Sir your bill, 361 Indian bucks. (This is one of many incidents)

Obvious question, south Indian meal costs roughly 20 rupees. Does it mean our economy has shoots up by 18 times?? I don’t have an answer either. I am not good in economics, yet searching the much inhabitant answer of economic rise.

What we see in this country is that economic liberalization, which began in the mid 1980s, took a major leap in the 1990s. And it continues apace till today, with new rulings being introduced continuously. The first generation of economic reforms gave way to a second generation in the year 2000. There is not a sphere of the Indian economy that has been left untouched by foreign capital. Now, even the water we drink and the air we breathe is being privatized with profits siphoned away by the transnational corporations and their India accomplices.
It is estimated that every year $65 billion, or rupees three lakh crores, are drained out of the country. This amounts to a gigantic 20% of the country’s national income being drained out each and every year. Is it possible for any country, least of all an underdeveloped country like India, to develop with such a huge drain on its resources? This loot takes place from: (i) returns on accumulated FDI in the country, (i) Returns on FIIs and GDRs, (iii) Interest on foreign debt and NRI deposits, (iv) losses through foreign trade, (v) Brain drain, (vi) yearly flow of illegal money abroad, etc.
The main aim of earlier colonial rule in India was to extract its wealth in the interests of the British rulers. The British are now only replaced by the imperialists in general, and more particularly the US imperialists. Earlier the British ran the government directly; now much the same is being done by proxy. Besides, over the passed few years, the US has sought to enmesh the country in a series of military and diplomatic ties, thereby tightening its noose around the Indian administration.
Now if we go on these issues who are die hard betonies of liberalization we might ended up with spoon inside mouth. I wish there won’t be carnival debates.
Here is one of the pragmatic supporters of economic liberalization “India has struggled financially since independence, experiencing slow economic growth and economic setbacks due to climatic extremes or political disturbances. The country has been gradually transforming its economic base from agrarian to industrial and commercial. Under British rule in the 19th century, India's cottage industries and thriving trade were virtually destroyed to make way for European manufactured goods.”
I believe Burlington, Daks, Louis Philippe are all Indian brands who are set to dethrone the colonial brands!!
As Mckinsey has conducted a survey regarding the retail market in India and it estimates the volume could go up to staggering 300 US billion dollars. Mute question is how much profit is earned out of that? How many players will be in the market?
Let’s have a look at the objective statement by RBI-
India is no longer an economy of scarcity and shortages: food stocks and foreign exchange reserves are plentiful; shortages and rationing of essential goods and materials are memories of the past. In the macroeconomic and financial spheres, inflation has been contained, external debt indicators have improved, exchange rate is flexible and the country is free of financial repression. The trade account is open and India has become much more integrated with the world economy. All this has been reflected in a relatively high rate of economic growth over the decade and a significant reduction in poverty in the country. The economy has also become more resilient to shocks, both domestic and external: the twin shocks of the drought and increasing oil prices in the past year have been absorbed with relative ease.
Now this increased freedom of choice for the ordinary consumer and freedom for many having to kowtow to peons to petty clerks. People in authority seldom appreciate what this freedom from indignity and humiliation means to honest citizens. And yet, despite all these real and substantial achievements, I sense that twelve years on, the reform process has left many people with a sense of unease. I use the word unease advisably; I do not sense dissatisfaction or disenchantment.
There is unease, no doubt what so ever!!
· that microeconomic reform is accompanied by macroeconomic deterioration at least in its fiscal aspect,
· that even in regard to microeconomic reform, there is a long unfinished agenda,
· that some of the reform measures have misfired or not taken hold; and perhaps the most common among economists,
· That there is not yet a decisive impact on growth and employment generation. Personally, I would add :
· that there is no decisive impact on corruption,
· that we have frittered away our rich inheritance in higher education, and
· That we have not enlisted the support of the civil society in the service of reform.
The point about macroeconomic deterioration, at least in the fiscal sphere, is both valid and vital. There are apologists who argue that budget deficits have not had their anticipated effect. Inflation has not risen, interest rates have not gone up, and there is no foreign exchange crisis and no sign of crowding out of private investment. But there has been ruinous, continuing and increasing “crowding out”, so to say, of useful public expenditure on health, education, irrigation, agricultural research, and economic infrastructure. If budget deficits have not crowded out private investment despite hardly any increase in the rate of saving, surely the conclusion is inescapable and worrying that private investment is not buoyant.
Macroeconomic mismanagement, whether internal or external, does repress growth sooner or later. Micro reform and macro health work well together. One of the smartest things done in 1991 was that decontrol of industry and liberalization of foreign trade was accompanied by substantial devaluation. This is not often mentioned now. But it was that macroeconomic adjustment which gave industry time to adjust to more competition and made the capacity then legalized actually usable by opening better opportunities for export. The initial spurt in growth after 1991 is largely attributed to this macroeconomic reform rather than to microeconomic reforms which take time to produce growth. Without macroeconomic health, the efficiency gains of microeconomic reform cannot be large and cannot endure.

No one is not sanguine that a decisive impact on fiscal deficits will be made in the near or the medium-term future. So far, reduction in interest rates and privatization are the only routes taken to show token improvements in the financial position of the Government. Both have severe limitations. Without substantial cuts in subsidies and administration and some even in defense, there cannot be reduction in public expenditure. There are limits to better collection of taxes. Reductions in customs duties and in direct taxes do slow down the growth in revenues at least in the short and the medium term. The industrially advanced countries dealt with this problem by a superb confidence trick. They introduced a very substantial and comprehensive Value Added Tax (VAT) which is nothing but a large and proportional income-tax without practically any exemption limit. It’s questionable even the VAT, if and when introduced in India, will be rather modest and shot through with exemptions and will, therefore, invite evasion and avoidance. Without a sea-change in the political climate, the fiscal situation will remain worrisome.
On the other hand, no one share the unease of many persons about the unfinished agenda of microeconomic reform. Part of this agenda is not all that necessary in judgment and considers some suggested reforms unrealistic in a democracy. In a sense, the agenda for reform like the agenda for individual perfection will always be unfinished. We should now stop talking of an agenda of reform as if it is a laundry list. Reform rings a bell for five or ten years. After that, it is likely to ring hollow. That does not mean that we give up the fight on each individual front. By all means let us concentrate on individual tasks. But there is danger not just of creating boredom but even resentment by perfectionist sermons akin to Ten Commandments. What we need now is concentration on individual sectors rather than on some comprehensive conceptual agenda.
The democratic world is always untidy; and while untidiness must always be fought, some of it must be endured. There is much talk these days about plural societies, multicultural or multiracial societies. But all democratic societies are plural by definition as indeed they are secular by definition - even if they are not multiracial or multicultural. They are plural because they respect and recognize the rights of each individual and group. They have several objectives and several conflicting but legitimate interests to reconcile. Any peaceful reconciliation of divergent objectives and interests inevitably involves compromises.
One of the greatest disappointments with the reform process is that it has not made much impression on corruption. Reform is widely advertised as an answer to corruption. To some extent this has happened. But we know now that corruption is a much tougher nut to crack and requires action beyond economics. Much more can be done, e.g., by harnessing new technology. This has been done in respect of railway reservations. It can also be done for land records both rural and urban. But a major feasible attack can only come from a detailed and painstaking review of all laws, regulations, administrative procedures and the like to eliminate much accumulated irrelevance and discretion. A review of all regulatory authorities particularly at the State level is also necessary. Even at the Centre, where decontrol has been followed by new regulatory authorities, there is still much confusion about what is intended and who can and cannot do what. Regulation, like control, also implies some discretion. All this creates fertile ground for corruption. That is why regulatory authorities also need continuous watch and vigilance.
Our achievements may be considerable but what is crux is we shouldn’t be unrealistic. If people’s income has manifolded at the same time their savings has been dented up to a large extent. Reforms are necessary as freedom and justice but in basic sectors like infrastructures, manufacturing, containing corruption rather than fancied about pizzas, Warner Bros., Cable TV so on.
Hopefully we are gonna achieve that, till that time let’s pay another pizza bill!!
Inspired by –The Macroeconomic Reforms by I.G.Patel
RBI Objective Statement 2005-06.

Vat is a tax on consumption i.e. more you buy the more tax you pay. It is also a neutral tax on businesses, in that it should not represent a real cost to anyone but the end consumer. Everybody pays a tax to the Government whenever they purchase some goods.

Vat is first devised by a German economist during the 18th century. He envisioned a tax on goods that didn’t affect the cost of manufacture or distribution but was collected on the final price charged to the consumer. Thus is didn’t matter how many transactions the goods went through, the tax always a fixed percentage of the final price.

It was not the consumers who came to the streets opposing the implementation of Value Added Tax (VAT) as they are still quite in the dark about the consequences of VAT. It is not the protagonists of the federal structure who mobilized the people to raise their voice against the VAT. Rather it is the traders who registered their strong opposition to VAT. There were strikes all over the country by the traders. That the implementation of VAT has been deferred is only due to the opposition of the traders’ lobby. Brushing aside this opposition, the ruling classes are determined to go ahead with the implementation of VAT to please their masters. The so-called Empowered Committee, headed by none other than Ashim Kumar Dasgupta, the CPM Finance Minister of West Bengal, has submitted a white paper on VAT giving the green signal for its implementation from April 1, 2005. VAT, which was scheduled to be implemented throughout the country from April, 2001, has been repeatedly deferred not because of the people’s opposition but because of the inability of the ruling classes in arriving at a consensus. Now it seems a consensus has emerged and most of the ruling class parties are now supporting VAT implementation. The so-called ‘left’ parliamentary parties like CPI (M), CPI and their allies who pose themselves as ardent champions of the federal structure, have not only accepted the implementation of VAT but they emerged as the most vocal supporters in spite of the strong unitary features that undermines the authority of the states to levy and collect taxes at the state level. VAT, which was in the form of a proposal until now, is finally becoming a reality from the next financial year. Like every other reform, the ruling classes are talking only about the positive aspects of this dangerous tax reform, which will have a bearing on every commodity in the country. They are cleverly suppressing the serious consequences of this sweeping legislation. The Government, which is spending so much in organizing seminars, meetings and publishing so much literature to win the support of the trading and manufacturing community, is not doing anything to apprise the people as to who will be paying for its implementation. An Instrument to Liberalize the Economy Further It was Manmohan Singh, the then union finance minister, who first placed the proposal for the introduction of VAT, replacing the state sales taxes. In 1993 in his budget speech, Manmohan Singh argued in favor of VAT and expressed his concern about furthering the progress of liberalization programmes introduced by him without this. He clearly stated that the programme to liberalize the economy could not be accomplished without the introduction of VAT. Manmohan Singh, the so-called ‘left’ economist, while muting the idea was simply following the dictate of the IMF/World Bank. Later it was the top IMF official, Parthasarthi Shome, who has been the chief imperialist hachetman in India to push through VAT. Employed with the IMF since 1983 this man has been involved in destabalising Latin American economies in a big way, and was directly involved in pushing through VAT in Brazil. In May 2001 Shome chaired an expert group on tax policy and administration, which concretely planned for a "national integrated VAT". He has said that the main priority of the Indian government must be expansion of the tax net in the country. Since then, it is he who has played a major behind-the-scene role in pushing VAT through. So to understand VAT one must start with the interests of the imperialists in pushing this Act. Tax reforms are an integral part of the liberalization process. The thrust of our Tax Reforms is to reduce the direct taxes like Income Tax, Corporate Tax, Customs Duty etc., to relieve the burden on the rich people and increase the indirect taxes like sales tax, turnover tax etc. to raise the burden on common people. The ultimate objective of these reforms is to open all the gates of the Indian Economy and make it an integral part of the world market. The introduction of VAT from April 1, 2005 is an important step in this direction. Though the efforts to introduce VAT started in the early nineties, the state governments did not show that much interest in the beginning and they considered the introduction of VAT as an effort of the center to undermine the fiscal authority of the state. In spite of reticence of the state governments, the center continued to pursue it, as was directed by the World Trade Organization (WTO), that every member country would have to implement a uniform VAT throughout the country by 2005. It is this compulsion, which made all States fall in line. The White Paper by the Empowered Committee of State Finance Ministers, which is supposedly an outcome of protracted discussions with all the states is nothing but what international capital expects from the Indian market. The objective of VAT as mentioned in the White Paper is to remove all barriers to inter-state trade and commerce and create a unified national market. Its further aim is to raise the quantum of tax from the ordinary people while leaving big business untouched and thereby reduce the budget (fiscal) deficit. [The Kelkar report states that its aim is to raise the tax/GDP ratio from the existing 9% to roughly 17%.] It also talked about the cascading effect of various taxes and unhealthy Sales Tax rate "war" among the states. But its objective is to turn India into a single unified market to facilitate imperialist/comprador big bourgeois plunder.

Vat: A Multilevel Tax

The Value Added Tax (VAT) is based on the value addition to the goods. It involves taxing output at every stage. However it provides for the set-off for tax paid earlier through the concept of input tax credit. This input tax credit means setting off the amount of input tax against the output tax liability. With offsetting of tax on inputs against the tax on output, VAT does away with tax on tax i.e. the cascading effect of tax. But this claim of the FM is hollow as most commodities face a one-point sales tax — on the first sale. Claiming input tax credit under VAT requires proper invoicing and documentation at every stage. In this way it is expected to encourage disclosure of complete information on business turnover. This system is based on the self-assessment and there is a built in check in the system, which will result in automatic compliance from everyone. Implementation of VAT will widen the tax net and will help increase revenue. With the introduction of VAT both the retailers and wholesalers will have to pay sales tax. Moreover, they will have to ensure that the person, from whom they purchase the goods, has paid tax. Otherwise, they have to shoulder the entire tax burden. To avoid this extra burden they will have to collect valid records from whom they purchase the goods. Thus this system is a self-policing one, as it is claimed. Consequently it is assumed that with the introduction of VAT, the tax net will be widened and that will help increase revenue for the state. Some of the advantages being projected by the proponents are:
* a set off will be given for input tax as well as tax paid on previous purchases * other taxes such as turnover tax, surcharge, additional surcharge etc., will be abolished
* over all tax burden will be rationalized
* prices will in general fall
* there will be self-assessment by dealers
* transparency will increase
* there will be higher revenue growth
The VAT will be implemented replacing state sales tax and some other taxes, eg. work contract tax, lease tax, turnover tax and luxury tax. But they will have to pay other taxes such as octroi, central sales tax (CST), service tax and excise duties. What is going to be implemented as VAT in India, is not a full fledged destination-based VAT. It is not ‘a tax to unify all taxes’. The proposed VAT, which is a distorted one, will nullify many of its declared aims. Inter-state movement of inputs will be taxed. This means those companies who buy inputs within a state, will enjoy better advantage than those companies who have to buy their inputs from other states. This is going against the very purpose of VAT, i.e. a common market for the whole of India. The proposed VAT that the sates have agreed to implement, is based on consensus. It is not a perfect one. Ramesh Chandra, member secretary of the Empowered Committee on VAT, also, holds the same opinion, but believes that the govt. will gradually advance towards a unified VAT. He states "Let there be no doubt that this is only a first step towards the final journey of single unified VAT."
For making it simple let us consider a manufacturer who buys raw material worth 1,00,000/- on which 4,000/- (at 4%) tax is paid. If his sales are 2,00,000/- and his VAT liability on sales is 24,000 (at 12%), then he can adjust the tax credit of 4,000/- paid on his inputs against the tax liability on his sales so his ultimate tax liability is only 20,000/-.
From the above it seems that VAT is simple, logical and fool proof system of taxation. But it is not as simple as it looks. No commodity will reach the final consumer unless it is passed through many hands. This calculation and payments of VAT are required to be done at every level even if the activity is simply transportation and no value addition in a true sense. So if the final retailer sells the goods for Rs. 3,00,000 he will again have to pay VAT on the value added of Rs. 1,00,000 as lomg as he has invoices to show that VAT was paid on the initial 2 lakh. If he does not have this proof he will have to pay VAT on the full Rs. 3 lakhs. In the proposed VAT only few goods such as liquor, lottery tickets, petrol, diesel, aviation turbine fuel and other motor spirit are outside VAT and will continue to be taxed under Sales Tax or any other relevant act. Under the VAT system covering about 550 goods categories, there will be only two basic rates of 4% and 12.5%, plus a specific category of tax-exempted goods and a special VAT rate 1% only on gold and silver ornaments. Currently about 46 commodities are under the exempted category and about 270 commodities are under 4% category (including food grains, which now attracts no sales tax) and the all the remain commodities are under the general VAT rate of 12.5%.

VAT: No Fool-Proof Formula to Avoid Tax Evasion

The biggest advantage of VAT as cited by the policy makers are that it will bring transparency because of it’s built in check system. It will bring out automatic compliance from the traders and reduce the tax evasion to a negligible level. In the existing system the traders generally do not maintain proper records. Underreporting of sales is very common to them, and on the basis of this under-reporting they can evade not only sales tax but also income tax. In the VAT system, it is argued that tax evasion will be minimized to a greater extent. Though this is true to a large extent it is no fool-proof formula for tax avoidance.
The experience of MODVAT (Modified Value Added Tax) introduced by the center is contrary to this. The union government had to withdraw this after the large-scale misuse of central excise tax credits. So what is the guarantee that a similar thing will not happen now. The international experiences of VAT are also not that encouraging. The experiences of other countries where VAT was introduced, show that the VAT is also evasion-prone. In South Africa, VAT has become a ‘source of dirty money and money laundering" (VAT Monitor, July 2002). France, the inventor of VAT, has also been facing the problem of evasion. In 1981 the figure of evasion was 18.1 percent. This constituted 6.6 per cent of total revenue (EPW, May 10, 2003). The Economic and Social Committee appointed by the European Commission reported on April 25, 2001. "... VAT system provides opportunity of fraud because of the fact that goods are in circulation on which no tax is imposed. Temptation is therefore great to divert such untaxed goods on to the black market".
According to Transparency International, the Berlin-based anti-corruption organisation, India is one of the most corrupt states. In India it has been estimated that more than 40% of GDP constitute the black economy. Those who are so efficient to turn white into black to evade taxes, there is no reason to believe that they will fail to utilise VAT for the same purpose. Suresh Bindal,
secretary-general of a body of textile merchants, has expressed his view that he "isn’t very hopeful about the prospects of VAT reducing tax evasion". But what the VAT system does is that it equips the tax authorities with greater powers, which will mean even more corruption by these officials. As the VAT system has a lot of checks and one of its main aims is to widen the tax net it will be able to enforce more compliance amongst the traders. This will entail not only the payment of VAT but other taxes as well, like income tax. With a mere Rs. 5 lakh yearly sale exempted from VAT (i.e. anything over Rs. 1,500 per day) the tax authorities can harass even the smallest retailer for records. The tax officials can became a terror police for the lakhs of small traders and businessmen. The government is openly propagating that it is only the "tax-dodgers" who are opposing VAT. Haryana has already increased its revenue by 30% last year after the introduction of VAT.

Traders Opposition to VAT Is Justified

Though the introduction of VAT is going to adversely affect large sections of people it is only the traders who have shown an organized protest against this. After protesting at state levels they called for an all India traders’ bandh on February 21. After the success of the bandh their all India body, Confederation of All India Traders (CAIT), which is spearheading the protest has threatened to go on an indefinite strike against VAT. Though VAT requires the traders to maintain proper records, it is unfair to say that they are opposing the introduction of VAT only for that reason alone. Besides, the bulk of the small trades and business find it difficult to survive even now. This tax will crush them. They are also protesting against the "harsh" clauses in the VAT and the inclusion of essential commodities. The penal provisions in the proposed VAT are deliberately made harsh not with the intention of ensuring compliance from traders but to push them out of the business. They are basically meant for facilitating the entry of giant retail store chains.
To dilute the opposition for VAT from traders, small dealers with a gross annual turnover not exceeding Rs. 5 lakh are presently exempted from VAT. For those with an annual turnover not exceeding Rs 50 lakh, they are given an option either to pay VAT or gross turnover tax of 1% (which will be more than the VAT amount.) However those who opted for turnover tax will not be eligible to claim input tax credit. The Rs.5 lakh limit is ridiculously low as that would mean only those traders who have sales of about Rs.40,000 per month. Besides, most States switched over to single-point-taxation in the 1990s (on the first sale), VAT will entail a multi-point taxation. Though all goods may not have been under this system a large proportion was. Under single point taxation, a large section of traders, especially the smaller ones, were out of the tax net. This exempted them from not just the demands of record-keeping, paper work and costs it entailed, they were also free from the arbitrary harassment of tax officials. Now, with VAT, even on the smallest of value added (say even through transport) it will attract tax. So, in the earlier scheme the bulk of the sales tax was paid by the manufacturer (i.e. on the first sale) and the traders escaped most of the burden. Now the overall tax will fall equally on the traders — both big and small. Not only that, tax officials can harass each and every trader who will be forced to keep records as very few will be able to explain that they have sales of mere Rs.40,000 per month. And even to prove this they will have to maintain proper records. So, we can have a VAT terror police roaming the lanes and by-lanes harassing even the small retailers. After the introduction of VAT small shop keepers will not be able to comply with the documentary evidences to claim input tax rebate and they will end up in paying more tax than what they are paying now. The complicated system of VAT will force them out of the business paving way for the large retail chain outlets of MNCs.
The small traders and retail shopkeepers see a threat in the invasion of Indian markets by international giants and are fighting for their survival. Their demand to exclude essential items from the purview of VAT is a demand of the general public. Their fight against VAT, which they are fighting for their own interests and even survival should be seen as a part of the anti-imperialist struggle.

Consumers Will Suffer

The consumers are still in the dark. They do not have proper knowledge about the consequences of the VAT though the implementation of VAT will primarily affect them. The implementation of the proposed VAT would affect the consumers adversely by leading to a price-rise. VAT will be a multipoint levy and will replace sales tax. The rates of sales tax are 7 to 8 percent, whereas the rate of VAT will be 12.5 percent, in general. It means there is a straight 50 percent increase in taxes which is going to increase the return to the government. VAT at 12.5 percent is one of the highest tax rates in the world. Not only that the actual tax paid will always be on the final sales value (as all value added will be taxed at each stage of the chain), while in the earlier case most of the sales tax was on the first sale, at the point where the goods were manufactured. So, overall the tax paid by the consumer under VAT will be much higher than what is paid now. Another important aspect is that VAT covers almost all goods. The prices of diesel, kerosene, petrol, eco-friendly CNG, other petroleum related products, rice pulses and other such essential commodities will go up after the introduction of VAT. Under VAT, the present level of 12% tax on petroleum related products will be increased to 20% and the essential items like bread, salt, spices, pulses, food grains and other related items on which there is no tax at present will come under a 4% tax slab. Who is going to pay for this? Definitely not the traders. It will be borne by the consumers. Moreover as VAT will be a multipoint levy, the value and the rate will be higher at each subsequent higher rung which means the actual tax which consumers are going to pay is not just 12.5% but it is much more than this. There fore the introduction of VAT instead of bringing down the prices it will break the consumers back with a sharp rise in prices. Besides, in the name of encouraging exports the tax rate on them is made zero and yet credit will be given on tax paid on inputs. This helps the exporters to make super profits.

It Weakens Federal Structure

As per the constitution by virtue of Entry 54 of the State List, State governments are empowered to levy and collect the Sales Tax. Sales tax is the major source of revenue and contributes up to about 80% of the states’ revenues. It is the constitutional right of state governments to decide the sales tax structure suitable to the specific conditions in their states. Tax rebates and additional taxes are not only important sources of revenue for the states but also an important tool in their hands to promote industries. In the name of a uniform tax structure under VAT throughout the country this basic right of the states to have their own tax structure is being snatched away. Though their revenues may not come down as the center has promised to compensate the short fall of revenues but their dependence on the center will grow. After the introduction of VAT, states will be reduced to the level of municipalities whose only role would be to collect the taxes that are decided at the central level. In a large country like India with diversified features having a uniform tax structure means undermining the authority of the states.
Though VAT is now in operation in more than 120 countries, not many countries in the world with a federal structure have introduced VAT. The biggest example is America where VAT is not introduced. Another example is Canada where though VAT is introduced it is not uniform through out the country. The administration and structure of VAT across the provinces differ because of the heterogeneity among the provinces. In Canada some states like Quebec both central VAT and provincial VAT are in operation by the state; in some states like Newfoundland, Nova Scotia both Central and Provincial VAT are operated and administered by the center; in some states like Ontario both provincial and central VAT are operated by the respective governments and some states like Winnipeg which has rich natural gas have not introduced VAT at all. The European Union, which is a loose federation of countries has introduced VAT but its structure is not perfect and is currently undergoing changes. So a uniform VAT is not a universally accepted tax structure. The purpose of the so-called Empowered Committee formed by the state governments is only to protect their revenue interests and the committee has not taken up the task to safeguard the constitutional rights of the states. As a consequence, the state governments are contended with the assurance that the center would compensate for the loss of revenue. But they are forgetting the fact that their dependence on the center will increase. And it has been agreed that to overcome the constitutional problem every state well adopt a resolution to replace the existing state sales tax by the new one (i.e. VAT), mentioning this only as a change in the method of taxation. Another aspect has been indicated by the union finance minister. That is, a patch-work VAT will not serve the purpose, so a full fledged VAT is necessary. The union govt. prompted by the imperialist forces, has been advancing towards that direction step by step. In such a case, all other taxes levied by the state govts will be rolled into VAT. This will further curb the fiscal authority of the states.
This is nothing but concealment of the true aims of VAT of robbing the state of its authority. This will go against the interest of the federal structure by strengthening the controlling power of the center. In all practical senses the centre will take charge of its implementation. It is the centre and not a body of states’ representatives, who is to be entrusted with the controlling power to decide commodity classification, rate fixation, identification of taxable items and all other matters regarding taxation. The union ministry of finance has already started this business. The states are preparing their draft following the central draft. The union ministry of finance will supervise the draft legislations of all states so that they maintain uniformity in expression and definitions of terms. Thus all the state governments, including those avowed champions of the slogan "more power to the state" have surrendered to imperialist forces via the union govt. All these parliamentary parties have once again betrayed the people who aspire to a decentralized federal India with more powers to the states.

More And More Abject Surrender To Imperialist Forces:

As it was mentioned earlier the objective of VAT is neither to increase the revenues for the states nor to facilitate tax collection and nor to reduce the burden on people by eliminating the cascading effect. The single objective of VAT is to create a unified single market in the country without any trade barriers. This is a pre-requisite for fulfilling their ultimate objective of fully and totally integrating the Indian market with the global market. The imperialist and comprador big bourgeois forces want removal of all impediments for economic integration of country to smoothen the expansion of their capital and the creation of a homogenous market in India for their commodities. (In fact they want to extend this even further to entire South Asia through SAFTA) It simply means further intensification of their exploitation. The implementation of a uniform VAT throughout the country serves this purpose by replacing sale tax which varies from state to state. The other important purpose of VAT is to hike tax collection by increasing the tax on commodities and by drawing a wide net of traders and small businesses into the tax net. The Kelkar report has stressed this; so have the IMF in its obsession to reduce the budget deficit. In its recent review the World Bank ‘had stressed on the need to give utmost importance to reforms in taxation...’ (The Hindu, July 22, 2003, Delhi edition). It is clear from this that the World Bank is not happy with the present pace of progress. It wants a complete free play for the international market forces so that the expansion of imperialist capital can be facilitated further. A unified tax structure throughout the country will facilitate the capitalists in taking their investment decisions. Once VAT is in place they no more require to have different business strategies for different states. Another very important factor behind the introduction of VAT is the large retail market of an estimated $ 180 billion. With international capital desperately in search of new avenues for investment opportunities to tide over the severe crisis they are facing, the large retail market is an attractive destination for their investment. The Finance Ministry is already talking of allowing Foreign capital even into retailing. (In fact, today the biggest TNC in the world is a retailing chain — the American giant Wal Mart) They need the consolidation of the Indian market by outplaying the small retail traders. VAT will act as an important weapon in achieving their goal. The union govt. has already reduced tariffs and removed import control barriers providing wide scope to imperialist forces. There is no mention of imposing internal taxes eg. VAT and service tax on imports to protect the interests of the country in the white paper on VAT. Rather in his budget proposal (2003-’04), the finance minister suggested to exclude anti-dumping duty, countervailing duty and safeguard duty, from the base of calculating additional and special additional duties on customs. These three duties are levied to protect domestic producers against imperialist dumping, subsidizaion and the sudden surge in imports. Even then, these are not enough to quench the thirst of the imperialists. The imperialist forces have been continuing to pressurize and both the union and state governments have been surrendering more and more to their pressure providing them further opportunities to intensify their exploitation.
According to a report jointly prepared by McKinsey & Company and the Confederation of Indian Industries (CII) global retail giants such as WalMart, Tesco, Kingfisher, Carrefour and Ahold are waiting in the wings to enter the Indian retail market. This report also states that the Indian retail market holds the potential of becoming a $ 300 billion (Approx Rs 13,50,000 crores) per year market in another 5 years i.e by 2010. It is this huge market which the imperialists are eyeing. The proposed VAT will help in consolidating this market
for them. In a nutshell, the VAT which is come into effect from April1, 2005 is another instrument to serve the imperialists and another weapon in their armory to exploit the vast masses. The tall claims of our policy makers about its advantages, the rosy picture they are painting and the justifications they are giving about its logical working is only to mislead the masses. Behind their massive misleading propaganda they are covering up their treacherous and exploitative motives. VAT, contrary to the claims of the ruling classes, is being introduced only to serve the imperialists and comprador big bourgeoisie. It will pave way for MNCs into the retail market, displace the small traders from their business, push up the prices of all commodities especially essential items like food grains, and deprive the states of their political fiscal authority and increase their dependence on the center. Seeing the way all parliamentary parties without any exception (with the CPM in the lead, but with the SP still hesitant) are supporting this anti-people and pro-imperialist VAT it is evident that they all are willing to serve the imperialists with the same enthusiasm. The state governments of different political parties including the revisionist parties are competing with each other to show their commitment to push through this anti-people legislation. In these circumstances only a broad based strong anti-imperialist people’s movement is the alternative to resist this imperialist onslaught. That the consumer will be the worst hit by VAT brings out this urgency even more.

The wise man said just walk this way
To the dawn of the light
The wind will blow into your face
As the years pass you by Hear this voice from deep inside
It's the call of your heart
Close your eyes and your will find The passage out of the dark
Here I am
Will you send me an angel
Here I am
In the land of the morning star
The wise man said just find your place
In the eye of the storm Seek the roses along the way
Just beware of the thorns
Here I am
Will you send me an angel
Here I am
In the land of the morning star
The wise man said just raise your hand
And reach out for the spell
Find the door to the promised land Just believe in yourself
"I hope someday we will stop killing each other and live in peace"

There is never enough time to do everything that has to be done at work. Sorting the urgent from the chronic leaves a person either hungry or guilty a half-hour later. One article in a national newspaper suggested that getting organized and throwing things out is the new form of dieting. Drifting and stumbling along in professional practice or even in firm management is more hazardous than ever. Clients are sophisticated and demanding, and competitive forces are unforgiving.

The essence of strategy is making choices about what to do and what not to do. Professional practice, careers and firms must be actively managed. Personal and firm goals should be set and aligned with each other – and the firm comes first. Here are four sets of choices that can help determine your own strategy.

The first sets of choices are those that concern the clients and their legal needs. Three questions need to be answered:
1. With which clients do I want to work?
2. How can I learn a great deal more about these clients and theirchallenges in a very short period of time?
3. What type of legal work and advice are they likely to need?
The second set of choices is about reaching the clients. Some would call this "business development and marketing." Fundamentally, legal services are still a relationship-based business, even for price-sensitive practices like conveyancing and family law.
Individual expertise or the firm’s brand count in getting the first file -- but after that, service and results are all that count, regardless of experience.
4. Can I make and sustain 50 regular contacts every 90 days?
5. Who, in the firm or elsewhere, can I rely on to help do this?
6. How will I manage to speak to five new contacts every week?
7. What is my plan to meet three new or established contacts each week, even when I am busy?
The third set of choices concerns the economics of professional practice. Assuming that 50 hours are available most weeks of the year, then choosing what to spend time on each week (not each month) becomes critical.
The first year of call, the next three as an associate, the first five years of partnership, turning 40, 50 and 55 are all milestones. Each stage requires its game plan.
8. Am I investing five hours a week speaking to clients and prospects not related to a specific matter?
9. Is my effective billing rate where it should be, or am I "dumbing down" and not delegating enough?
10. Are there ways to replace hourly-based work with fixed fee or results-based arrangements?
11. Am I taking four weeks' vacation each year?
The fourth sets of questions are designed to tap creativity and innovation. This is a backdoor to living with change in a rules-based and rights-oriented industry. Clients want solutions at a reasonable cost – whether for an injury, to acquire a competitor, or to solve a labor dispute. Predictability and risk management command a higher price.
12. What specialty can I say that I have?
13. Can it be defined by type or client as well as by type of law?
14. Is it possible to innovate in the solutions I offer, in the way the service is delivered, and even in the pricing for both?
15. Am I spending two hours each week reading non-legal materials about professional services, leadership, management and my clients' sectors?

Management consulting (sometimes also called strategy consulting) refers to both the practice of helping companies to improve performance through analysis of existing business problems and development of future plans, as well as to the firms that specialize in this sort of consulting. Management consulting may involve the identification and cross-fertilization of best practices, analytical techniques, change management and coaching skills, technology implementations, strategy development.
U roam around, lots of consulting organizations with different nomenclatures; it seems consulting wave has swept everybody!!
One latest I found is "Revolution Consulting"-
Concept 1-
So-called negative emotions, those natural human feelings of anger, despair, envy, hate, resentment, etc. that we all have from time to time, have an important place in building intimacy. They need to be expressed and released when they show up in order to be detoxed. Having 'negative emotions' doesn't make us bad people. Thinking that they do is what keeps so many people from expressing and releasing these emotions, thereby keeping themselves stopped up and sick. After all, 'we're only as sick as our ugliest secrets,' which include our repressed bad feelings. It is when our feelings - all of our feelings, including the ones we're afraid of, embarrased about, or uncomfortable with - are openly revealed and then forgiven that we have a chance to heal, become whole, and truly connect with others."
So much of healing work is the emptying out of old repressed feelings - stuff that I might have bottled up to the boiling point for many years, and now the volcano is about to blow. And then, as the rumblings begin, other people will often urge me to "stop dwelling on the past" and "just suck it up and move on." Well, I'm not built to "ignore" my feelings, nor am I built to "stuff them," and yet it's true that it's never effective to "dwell on the past." But the best way to put myself in a position to never have to dwell on the past is to "own and express each present feeling, as I feel it," even the ones that I or those around me might have labeled as inappropriate or ugly. They are all mine -meaningful and meant to be experienced, and, once they are owned and released, they are meant to be let go of completely to enable me to effectively move through them to the next experience. Without storing them up as baggage, I learn to flow through them and learn from them how to be healthy and whole, and how to encourage others to fully express themselves and connect with them in their wholeness.
Concept 2-
“Compassion costs. Sharing it sincerely is a form of suffering - the 'suffering with' another. And it's the hard work we're asked to do. However, it is much easier - in fact, it's almost effortless - to argue, criticize, and condemn, all in the name of being right, making these actions and attitudes empty lies. Redemption is costly, and giving comforting support draws from the deep. Brains can argue all day long, and then brawn can take over when they're tired, but it takes great heart and tremendous effort to care about, comfort, and lift up others.”
It's so fascinating how we can turn our use of personal, organizational, or governmental "force" - in the form of argument, criticism, and condemnation - into a "good" thing in our own minds. We often conveniently define this as "being strong," just because it is the place to which we naturally gravitate in our weakness, and in our pride we don't like to admit that. We will even go to war and kill each other to avoid facing it. There is a bigger war to fight, however, and it is an inner war - the war within ourselves to learn and understand that the wars outside ourselves are only a sign of our having given up on God, and that "now we must take control." It makes a mockery of our faith, and then we insult God even further by waging our battles in His name. How much history will it take to show us the folly of this?
William Sloane Coffin once said, "The trouble with saying, 'The only thing that the other side understands is force' is that you must behave as if the only thing you understand is force." Many of God's most powerful lessons are based on St. Augustine's insight: "Never fight evil as if it were something that arose totally outside of yourself." If we seek God's peace, if it is really peace that we say we are fighting for, it is not in being hard, mighty, and strong that we will find it, but in being willing to do the really hard thing - to suffer for it (and that means the decision-makers who are calling the shots, not the "front-line soldiers" and their families who end up doing most of the suffering). We must be willing to die to our own hardened ways in order to rise up. We must be willing to question ourselves first and most often - our anger, our contentiousness, our deepest motives, our laziness, our pride. The answers will not be found in doing things the way they've always been done. We must find new ways. And they will likely be found in the midst of paradox, by turning logic on its head.For example: "Come to think of it, 'attacking' worldwide poverty with everything we have - all of our abundance, resourcefulness, and wealth - could turn out to be our best 'defense' policy. It certainly would marginalize extremists and dramatically slow down the recruitment of new terrorists."
“The reason why many fail in battle is because they wait until the hour of battle, and then angrily insist on winning. The reason why others succeed is because they have gained their victory on their knees long before the battle came, having already humbly acknowledged their failure.”
War is a cowardly escape from the overwhelming problems of peace."
Wishful thinking....perhaps the consulting has gone beyond human head or brain!!
Still searching the answer????
I hope the smoke wont go down

The monkey sat on a pile of stones And he stared at the broken bone in his hand And the strains Viennese quartet Rang out across the land The monkey looked up at the stars And he thought to himself Memory is a stranger History is for fools And he cleaned his hands In a pool of holy writing Turned his back on the garden And set out for the nearest town Hold on hold on soldier
When you add it all up The tears and marrowbone There's an ounce of gold And an ounce of pride in each ledger And the Germans killed the Jews And the Jews killed the Arabs And Arabs killed the hostages And that is the news And is it any wonder That the monkey's confused
He said Mama Mama The President's a fool Why do I have to keep reading These technical manuals And the joint chiefs of staff And the brokers on Wall Street saidDon't make us laughYou're smart kidTime is linear Memory's a stranger History's for fools
Man is a tool in the handsOf the great God AlmightyAnd they gave him commandOf a nuclear submarineAnd sent him back in search ofThe Garden of Eden
The powers that beThey like a tough gameNo rulesSome you win, some you loseCompetition's good for youThey're dying to be freeThey're the powers that beThey like a bomb proof cadillacAir conditioned, gold taps,Back seat gun rack, platinum hub capsThey pick horses for coursesThey're the market forcesNice car JackThey like order, make-up, lime light powerGame shows, rodeos, star wars, TVThey're the powers that beIf you see them come,You better run - runYou better run on homeSisters of mercy better join your brothersPut a stop to the soap opera right nowThey say the toothless get ruthlessYou better run on homeYou better run - runYou better run on homeThe powers that beThey like treats, tricks, carrots and sticksThey like fear and loathing, they like sheep's clothingAnd blacked-out vansBlacked-out vans, contingency plansThey like death or glory, they love a good storyThey love a good storySisters of mercy better join with your brothersPut a stop to the soap opera stateThey say the toothless get ruthlessRun home before its too lateYou better run - runYou better run on homeBilly: Goodnight, Jim.Jim: Goodnight, Billy.Uncle David's Great Dane: Woof, woof, woof!The canyon - daytime. Billy plays with Great Uncle David's Great Dane.Paraquat Kelly: Bull heads, three red snapper, one pink snapperand your Pacific coastal trench hosemonster fish.Cynthia Fox: Ohhh! At Sky David's juke joint of joy reports,forty under the console giggle stick ling cod,twenty-three purple perches four sledgehammerhead sharks,and what a surprise, eightyfour crabs, and no red snappers.Paraquat Kelly: Hey, and that'll do for the triumphant returnof the fish report with a beat.Jim: We think of it as mainstreet, but to the rest of the countryit's Sunset Strip. You're listening to KAOS in Los Angeles.

These are glimpse of legendary basist, writer's lyrics. For more log on to
www.lyricsdomain.com

Internal Audit- By definition we captures the catch words as
· Efficient utilization of resources (We don’t know how to collect resources)
· Safeguarding the assets of the company (we don’t give a damn shit to liabilities!!)
· Designing and testing the efficiency of internal controls (How? Don’t ask us please!!)
· Keep a tab on fraudulent characters and activities (We may be part of that!!)
· Bark at strangers who looks like idiots (May be he is a typical dhoti wala billionaire, we will chase him out of the campus!!)

People went forward again and modify the catch word to buzz word
· Keep a watch on ethical behavior of management and their sound practices
· To raise a hue and cry for a bigger hound (oversight bodies with independent and bigger dogs!!) and constantly pursue for that coveted post
· Quality assurance
· Benchmarking and Best practices
· Fraud Management as preventive measure and so on……..

The list goes on like never ending tail of famous “drauapadi’s sarees”. One publishing magazine wondered, what’s happening with IIA (The prime body for internal auditors) Accounting fraternities. Why they are changing the definition again and again!! They were clueless and decided to ask nobody else rather the Grand Father (Marvin Bower!!). Well Bower was aging and mostly on pills. He didn’t dig again like his young hay days, rather answer was point blank. I am not sure whether Bower knew something like “Mahabharat” or not. He said coolly like a sick underworld don “they change the definition because in democracy dogs are not allowed to bark”.
With that kind of diplomatic answer, magazine editor wondered for three days. What does that mean now? If a human being can bark in democracy why not a poor doggie? They turned to Mr. Rajat Gupta, as they thought Gupta is the best person to understand Bower what’s the hell is that Drauapadi???
Gupta didn’t go by Mahabharat and stuffs. Rather with two eye brows itching for Meta oblivion he replied if internal audit is drauapadi’s sarees then Accountants are Dushashan and clients are pandavs. (Who are watching helplessly and hoping for some god damn Lord Krishna to come and take them out, they are not interested in Draupadi, rather the sight!!)
Internal Audit devolves day by day to the new scale and heights. Time and time again definition got changed but unfortunately not the people. Targeted cost reductions, hitting employee’s heads and speak something with their bigger hound friends some facts and truce which pandavs never heard of.
Finally one objective statement is declared by IIA once again in 2002!!
· Provides assurance and consultancy services (Expect a different bill too!!)
· Improves and add value to the organizations
· Help the organization to achieve its objectives (Remember we helped Enron too!!)
· Auditing the managerial process, internal control processes and risk management
· Systematic and disciplined approach (May be heads down, with a query asked by somebody we love to raise finger at others like a malnourish umpire signaling a wicket!)
The statement includes consulting services, IT Audit, law governance and so on.
With all these things ready, suddenly there is a spurt of activities. Business Process Outsourcing, Re-engineering services/Supply Chain Management redefined, Change Management etc. Ha ha….. Time to change the again the definition.
Here we go…
Internal Audit includes:
· Macro risk analysis
· Auditing management process (here is a shift from managerial, by the way what’s the difference??)
· Production of future oriented performance
· Contributing to project developments
· Management Consulting (Suddenly management has become a budge word)
· Performance measurement and efficiency analysis

And surprisingly there is a conclusion to the definition as if we are expressing aero dynamics to vegetable vendors!! With the effort goes inside the definition now we should be happy. Looooooooo……… What’s this now? Something called as “Trade way Commission Report” is adopted as the best control model. Another blunt reminder that vegetable vendors are better when it comes to controls!! Shall we bow down in front of the vendors…..no way sir.
Then what to do?? Nothing much call it as COSO. Phew….Made in Japan, marketed by USA.
Is this really called audit? Let’s see what thinkers said all about……

“If you suspect my husbandry of false hood call me before the exactest auditors and let me on the proof”- William Shakespeare

Oxford dictionary defines “Audit” as
· “A hearing: a judicial examination of hearing complaints
· An official examination of accounts with reference to vouchers and evidence.
Audit is old as the hills. It is the sibling of distrust and temptation. The record of Mesopotamian culture reveals there is a tick in front of the financial transaction way back 5500 years back!!
Auditor observed the construction of Great Wall of China; they counted blocks while building pyramids. They criticized the labour costs. Of course we owe the Roman meaning as “hearing” the most common ostensibly used word for auditing.

There is a direct line between audit and confidence. As the later declines because of reported failures, falling standards, organizational change or whatever so the demand for additional service of assurance or protection. Hopefully the auditor will be doing a real job. The word audit has entered the vocabulary in common parlance, representing any reasonable objective and thorough appraisal of objective, representation of state of affairs.

Obviously there is a cost to everything; over-auditing is not welcomed at all. The story of factory manager who welcomed financial auditors on Monday, tolerated internal auditor on Tuesday, On Wednesday fettled and quibbled over findings of quality auditor, Thursday lambasted the trainee and health safety auditor, Friday blew his top at environmental auditors!! This shows the demographic changes the auditors.
“The typical auditor is a man intelligent, cold, and passive, non-committal, with eyes like coldfish, polite in contact but at the same time unresponsive in contact, damanable as a contract post, a human petrifaction with a hard feldspar and without charm, minus bowels/passion or sense of humor. They all go to hell”. This is a sarcastic comment by one of the CEO!!’
Later part of the century something called as internal audit evolved from soil. The guys appear to be jovial, play a second fiddle along with management, tried to listen carefully, remain calm and helping.

“An internal audit may be defined as organized arrangement for securing a continuous and thorough check on transactions. It should be regarded as supplementary to external audit. The presence of internal auditor is to boost the morale of the employees, efficiency and creates a jovial atmosphere.”

The Institute of Internal Auditor in 1999 sharpens it’s sword on external auditors. “Internal Audit is an independent, objective assurance and consulting activity designed to add value to organization’s operations. Unlike the counterparts who loves to hide their face in confusing skirts of compliance laws”.
Mr. Ron Daniel had couple of words for external auditors “An auditor is not to be confined to the mechanics of checking vouchers and making arithmetical computations. He is not to be written off as professional adder-upper-sub tractor.”
Nit-picking connotation
“You will recognize the unhappy inadequacy of the phrase of internal auditor. Years ago it was probably satisfactory services of collecting documentation. Auditing today means some other phrase; we must bow to our predecessor’s mistake.”
You don’t have to be a mad, a sadist and a masochist to be an auditor but it helps. Most auditors regards themselves sitting back happily asking for details, deterrent effort-provoking conduct through fear.
“Assumptions of distrust sustaining audit processes may be self-fulfilling as auditees adapt their behavior strategically in response to the audit process, there by becoming less trust worthy.”
Eric Collin ham describes external auditor function as “I know of cases where the auditing department is looked upon as a spot to faithful employees, who has served their usefulness to constructive accounting. Where as internal auditing department does the ability of highest order management skills comprise of old and new”
Let’s wake up!!!
Auditor’s business analyst…visionary ….diplomat……entrepreneur …an international challenge.

Forwarded by Rajat
From the International Futures Forum Meeting at St. Andrews in Scotland
Introduction
This is the record of a workshop held in St Andrews on the eve of the second plenary meeting of the International Futures Forum. The IFF is a two year project, supported by BP, that brings a diverse range of deep strategic thinkers together to seek to understand how the modern world of boundless complexity works, and how to operate effectively within it to sustain human aspiration. We call this, in shorthand, the search for a second enlightenment.
The workshop was led by Eamonn Kelly, President of the Global Business Network (GBN) and a member of the IFF. It took as its starting point the discussions at GBN’s own annual members’ Forum in San Francisco, October 22-25.
The GBN meeting considered the issue ‘What’s Next: preparing for the new business agenda to 2010’. The focus of the meeting was the development of a set of scenarios for the future business environment. The IFF workshop took these as an input and considered the wider question of the possible future roles of business corporations and what an ‘enlightened corporation’ might look like in a period of fundamental transition.
This record draws primarily on notes taken by participants in the workshop, on input from the GBN Forum, and on the presentation of the workshop outputs by Arun Maira, Boston Consulting Group, India, to a wider group in the IFF plenary meeting that followed.

Participants
Eamonn Kelly*
GBN
Graham Leicester*
IFF Director
Tony Hodgson*
Decision Integrity Limited
David Lorimer*
Scientific and Medical Network
Charles Lowe*
Telecoms and IT consultant
Wolfgang Michalski*
OECD International Futures Programme
Maureen O'Hara*
Saybrook Graduate Research Institute
Ian Page*
Hewlett Packard
Rebecca Hodgson
IFF researcher
Nick Rengger*
St Andrews University, Dept of International Relations
Andrew Lyon*
IFF Converger
Napier Collyns*
GBN
Arun Maira*
BCG, India
Harry MacMillan
BP
Jane Saren
GPC International, Scotland
Alf Young
Glasgow Herald
Jonathan Star
Scottish Enterprise
Joyce McMillan
Journalist, political commentator and theatre critic
* denotes member of IFF.

The GBN Forum: scenarios for the evolving business environment
After a lengthy round of introductions and reflections on the world after the September 11th terrorist attacks on the US, the workshop heard a brief reprise of the work that had taken place in San Francisco. Eamonn Kelly suggested that
‘Today’s business executives have lived, matured, and succeeded in a world in which the business corporation has been essentially unchallenged—except by other business corporations. Competitiveness has been the theme. What might happen if, in the coming decade, it’s less about competitiveness and more about adaptive ness — the ability to adapt to quite fundamental shifts in the social environment in which the corporations are working? What challenges does that present?’
It is GBN’s hypothesis that the business agenda may have to shift quite abruptly in the coming decade as the business environment is shaped more and more by forces other than market power. The events of September 11 are but one example.
Jonathan Star and Graham Leicester, both of whom had attended the San Francisco meeting, described the process by which the GBN Forum had developed a set of scenarios for the future business environment. A consensus had quickly emerged in the meeting around some key predetermined elements — those trends or shifts that will unfold during the next ten years in any possible scenario:
Rising scepticism toward corporations
Increasing importance to business of things that are not measured by money
Increasing complexity and interconnectedness, which make it impossible to ignore the "other”, shift the balance of power, and force new models to emerge.
The conversation about critical uncertainties (possible developments that are both the most important and uncertain) had revolved more around values, inclusion, and governance than around markets or technology. This discussion suggested a number of axes of critical uncertainty, including:
Market
Values that shape institutions
Beyond market
Market-driven
Institutional Order
New markets/ non-market institutions
Fractured
Global Consciousness
Inclusive
Local (tribal)
Global Governance
Global Shrinking Pie
Prosperity
Expanding Pie
Reactive Restrictive
Response to Anxiety
Proactive Expansive
Ultimately the participants had chosen one matrix from those possible to frame the business environment to 2010 and developed four scenarios, one for each quadrant. The axes chosen ere ‘global consciousness’ and ‘values shaping institutions’.

· Navigating the Niches (Global consciousness is fragmented; meta-market values are driving the economy.) This is a world in which we thought we were disintegrating, but emerged as reassessing and revaluing our communities.

· Common Wealth (Global consciousness is increasing and meta-market values prevail.) This is a world in which environmental crisis leads corporate players to invent new institutions to address global inequities.

· Capital Wisdom (The trend toward more global consciousness is accompanied by strong market values.) This is a world in which market values trump local values. Market mechanisms drive globalisation and the globalisation of the marketplace supports an increasingly global consciousness.

· I’m OK, You’re Not OK (Market values drive the economy; global consciousness fragments under local pressures.) This is a volatile world in which the nature of risk changes due to the growing complexity of micro-markets, weakened government controls, social turmoil, balkanized international politics and me-first leadership. In this world, successful businesses create their own order.

IFF Workshop

There was some discussion of these scenarios, and in particular of the critical axes of uncertainty. The term ‘global consciousness’ was questioned. In this context it seemed to mean ‘social psychology of the world’ rather than technically ‘consciousness’. There was also doubt about what ‘beyond market’ values meant. It was noted that if we were dealing with corporations then they would, by definition, have to be operating in a market. The market is a mechanism not a set of values. Hence the distinction between ‘market values’ and ‘beyond market values’ might be more clearly expressed as a distinction between the kinds of products and behaviours valued and rewarded in a market. The market remains a given on both ends of the axis.

Stimulated by this discussion and the GBN material we then moved to explore our own agenda. We were not all business leaders all of us, hardly any of us. The GBN meeting had been predominantly business leaders, so their view would be inside out from business. We had journalists, we had people working in government and in other social work, psychologists, academics, so for us the role of the corporation was seen more from the outside looking in. We asked not only how business might prosper in the future environment, but also, given the world we see emerging, what should this entity called a business corporation be doing?

We asked ourselves, five questions. Two of them are the classic scenario questions - What trends are certain? What trends are uncertain but critically important? The third - If the role of business corporations does not evolve, what might be the consequences over this decade? Finally, What is the nature of the enlightened corporation, seen from the inside and the outside? And what makes it difficult for business corporations to change their role and behaviour?

Future Trends

We identified a number of elements that we saw as predetermined in the future business environment, and a number of relevant and important uncertainties. These are listed below. It is certain that the world is interconnected and becoming increasingly so. Technology is playing a role in that, but there are other forces also. Therefore, there’s another certainty: that there will be great uncertainty. When you get interaction between many parts, at much faster speed, you’re going to get uncertainty. The speed at which these interactions can spread is much higher, and therefore the pace of change is almost instantaneous. The implications are profound, and we’ve seen the evidence of them: that any part can infect the whole, and it’s difficult to isolate that part in the connected world.

As the world is getting so interconnected, there is a fear of loss of identity. The feeling of unbelonging and powerlessness is spreading, and there is a struggle for recognition. We saw continuing inequality on a global level, within and between countries, as certain over the coming decade. That too breeds resentment. If you combine these trends, people who feel this imbalance in some way can use the interconnected world to make themselves known and powerful – through terrorism.

Yet we were also struck by some of the certitudes that it seems reasonable will endure for the corporation. That corporations will continue to see the world in two dimensions, looking for a simple understanding as the basis for action. That corporate structures and culture will remain resistant to change. And that the market and its disciplines will continue to exercise a strong influence – to the extent that corporations will still have to look to survival and financial viability before they consider anything else. Even so, given the rapidly changing environment, we felt it is also certain that corporations will evolve in the next ten years.

Locked-in predetermined elements over the next decade:

· Greater scepticism towards business (tempered by questions of scale – smaller is more beautiful?)
· Many things important to business will not/can not be measured by money
· More complexity and connectedness makes it impossible to ignore ‘others’, shifts power, forces new models
· Search for security leads to greater concentration on shareholder value and a corresponding rise in government intervention, rules and regulation
· Corporate behaviour will be based on a simple two-dimensional view of the world
· Corporate culture will remain strong and resistant to change
· Inequalities of wealth globally will persist, within and between countries
· ‘Survival’ (profit/financial viability) will remain a prerequisite for anything else
· Wider, sustainable networks, including across generations
· The market will continue to exercise a strict discipline
· Very noticeable climate change
· Economic migration: push and pull
· We will have enough of all vital resources, except water
· Demographics – rising population, ageing population
· Scepticism – no longer a ‘single truth authority’
· Further development of technology
· A dominantly hydro-carbon economy
· Corporations will evolve

Important uncertainties over the next decade

Our list of uncertainties, naturally, was longer.

· Dominant values shaping institutions
· Effectiveness of government
· Future of energy – both in terms of supply and new technologies
· Role of China
· Role and evolution of Islam
· Ecological disaster
· Amount and scale of terrorist activity
· Is capitalism really sustainable and superior?
· Rationalism under increasing challenge as the only way to solve problems
· What will students want to study and why?
· Where will young people want to apply themselves?
· Who/what will provide a source of security?
· Will we go with the flow of the greater tolerance of value diversity evident in the young, or react against it?
· What are the boundaries of liberal tolerance? When does it become decadence?
· Where are the sources of optimism in the future if not wealth?
· Big business replicates successful models. Small business is more individual and value-based. Shift in that balance in the future?
· Who will care for the discarded? Corporations (pensions), government, family, social institutions, no-one?
· The nature and sources of ‘consent’
· Where will ‘civic society’ manifest itself, and how?
· The world economy – how much growth, how much profit?
· Will the wealthy put up the barriers?
· Can the world cope with lawlessness and terrorism?
· Which culture of capitalism will prove most successful in the next ten years?
· Will a 15 degree change in N hemisphere temperature happen in the next ten years (as some predict)?
· What is the future for the CAP, CFP? Will the EU discover in reforming these an alternative to market discipline? What consequences for the topography of Europe?
· Can food supply keep up with economic growth?

What are the Consequences if Corporations do not Evolve?

Having spent some time exploring the future environment in this way, we went on to consider the implications of existing corporations and corporate behaviour persisting as these trends emerge and grow in coming years. What are the consequences of failing to evolve?

We saw a picture in which the scepticism against business which had been identified as a certain feature grows into something more vicious, focussed and potentially violent. A backlash against business: antiglobalisation protests, consumer boycotts, negative media, hostility to new technologies introduced by business (eg Monsanto), physical and cyber terrorism/attacks against corporations and employees. We saw a collapse of trust in corporations making the whole business environment more unstable. The customer base could vanish overnight as fashions – and corporate image – change. There could be more mergers and acquisitions as companies seek to ‘buy’ a good name. In this environment potential employees are likely to become more choosy about who they work for, and companies will have difficulty replenishing themselves, attracting and retaining staff. Profit will remain a driver, even if it comes to be defined in different terms and new business models emerge to maximise profit under these new guises. And, based on the certain fact that corporations will evolve in this changing environment, the main consequence of failing to do so will be to see others come in, perhaps from other cultures, to take over unevolved corporations.

How Should Corporations Evolve?

The classic scenario approach would have dwelled on this third question: if the role of the corporation does not evolve, what might be the consequences? But in this meeting none of us wanted to stop there. It is usually necessary to use this question – the consequence of inaction – to wake people up to the need for change. But neither this group, nor those business people meeting in San Francisco needed much convincing of that. They didn’t want to waste too much time considering the consequences of business as usual. We too found it difficult to take the question seriously. There was far more energy in imagining what the enlightened corporation of the future might look like. We came up with the following characteristics:

The Enlightened Corporation might be structured and behave as follows:

· A deeper investment in creativity, capacity building and social education for staff – removal of blind spots
· Relaxation or diffusion of the hierarchy
· Locally recognized frameworks for actions – don’t strive for consistency
· Discussion of business principles with stakeholders
· Commitment to a place. And the people in a place
· Have longer term perspectives for local areas: 50-100 years
· Invest in strategic partnerships with local actors
· Take responsibility for the locality and the culture they leave behind
· Enlightened business leaders become positive celebrity role models
· Government could articulate the demand which companies compete to fulfil
· Practice a robust, flexible, enlightened self-interest
· Respect the law in participatory dialogue with civil society
· Consider all stakeholders – consumers, shareholders, staff, communities – responsible, both for the present and the future
· Make a surplus to sustain itself and fulfil its objectives
· Be clear about values: ownership reflects and embodies those values (so the enlightened corporation would not be publicly listed)
· Promotes/supports individual and collective self development
· Does not exploit staff or customers (meets their needs), or suppliers
· Is small or structured into small communities
· Puts something back into society – enhances/does not diminish society’s capacity to cope with the future
· Delights customers: honest, trustworthy and reliable
· Allows its staff time and some corporate resource to ‘put something back’ themselves

Will Corporations Evolve?

Naturally we did not expect these changes and this kind of corporation to emerge overnight. We recognise that there are strong forces of resistance. The downturn in the economy might limit innovation as much as it requires it. There will be plenty of ideological and intellectual resistance to an ‘enlightened’ model. The forces of conservatism in the market are strong – decisions of longer term investors in pension funds, for example, or the need to work one’s way up an organisation that breeds a large cadre of detached professional middle managers biding their time until the next move up the career ladder.

The business schools have also not caught up with the new agenda. They still teach the ‘John Harvey Jones’ model of ‘grow or die’. Just like the education system more generally, this is a paradigm that assumes the only growth and development must be up not sideways. It leads to the ‘Glengarry, Glenross’ mentality of heroic, machismo deal making. So long as there is so much easy money to be made out there, can we really expect many to go to the trouble of earning the difficult money that flows to those who are unusually enlightened?

Even so, we did see a number of positive and hopeful signs:

· Young people’s enthusiasm to make a difference
· There is a skills revolution going on (soft process skills)
· Internationalism and diversity
· The near universal improvement of the status of women, and also of ethnic minorities
· Emerging role of women: listening/inclusion/consensus. Women play the ball, not each other
· The preparation of staff for multiple careers
· We have examples! Plus more debate and wider engagement in the question
· Technology and its potential to enable a wider civil society
· Emerging global ‘consciousness’
· Wealth of resource that can be and is applied outside the profit framework even within corporations
· People questioning the intrinsic significance of what they are doing (post 9/11): opens new space
· Lots of people experienced in the disciplines of the market now released into the community (early retirement, redundancy)
· Scotland in particular might take a lead: our brand identity is to be trusted with money, seen as closer to ‘people values’

Concluding Observations

In presenting the thinking in this workshop later in the week to other IFF Members, Arun Maira singled out the following themes that had struck him as significant:

Systemic Thinking and Systemic Action
What we need is work crossing between and inventing new disciplines, interconnecting existing disciplines so that one can have a better view of the whole network system, this world, while also acting in a systemic fashion. Not merely just thinking about it but taking actions that encourage a net result from the actions of many different players in the system.

Governance
We need structures of governance that have two characteristics: that enable many voices to be heard, and that enable parts of the system to retain their identity, and have sufficient autonomy. Processes of governance that require everyone to be the same and do the same thing are not likely to be very effective in a world exhibiting the trends we have identified.

Scale
Systemic thinking and systemic action and the processes of good governance need to apply at several levels of scale. That is true within corporations themselves, which could move to a more networked model with more distributed autonomy, enabling the parts in their actions to contribute to a destination governed only by a set of principles for the whole. We heard some good things from Harry MacMillan about the way BP is already moving in this direction, to a more human and manageable scale within a large corporation, and others also.

These same challenges exist at the level of global governance. Does the WTO, for example, operate by these principles today: systemic thinking, systemic action and the types of processes and concerns about scale noted already? Perhaps not. Global levels also need to have these. The same applies in local communities. We saw in our visits to Kirkton and Ardler community centres in Dundee that this kind of cooperative relationship with government doesn’t seem to be the norm. It looked as if someone from the outside, with their model of the state, is imposing what these local parts need to do. The result is either rebellion, as we heard from some, or helplessness in others who can see no way of changing things. Neither is a good condition. We need local communities participating in processes of governance that enable many voices to be heard. Governing together, doing things together. Good people, retaining their identity and their voices.

New skills
Corporations need new skills, new skills to listen to many stakeholders, to understand their present and future needs. We heard a story about the CEO of one of the largest banks in Scotland making a vigorous public defence recently of the profit motive, including as a people management tool. That line of argument seems totally closed to the needs of other stakeholders. Yet it is a position that is richly rewarded at present. One trend that is worrying is the deal mentality. In corporations particularly, the executives, chief executives in particular, are compensated in relation to the “big deals” that they do. Merchant bankers and other advisers are involved too. All are richly compensated. The heroes we worship in business are thus those who do something dramatic and make a quick impact. Never mind the consequences, or the fundamental requirement for systemic thinking and systemic action.

Women
More than half the intelligence of humankind in the world is in women – and that is a resource we have not yet brought sufficiently to bear. When we unleash that resource, like a power of nature, who knows what might be possible? Women seem more naturally to have the quality we seek in a generative conversation, of being able to be more inclusive – not seduced by speed and the demand for recognition. There will be more women in enlightened corporations.


For the rest, we concluded the session with some thoughts about the key stakeholders we had identified in the search for a second enlightenment – governments, the media, leaders at all levels in society, corporations like BP and the people. Having deliberated the question of enlightened corporate behaviour and the challenges of the next decade, what did we think each of these constituencies needed to learn? And what should they do?
What Governments need to learn

· Learn what government’s new role in the future is
· Learn how to operate on a human scale
· Listen to business but don’t interfere with it
· That they don’t need standard solutions but strong principles for local actions
· To get off their back foot and stop apologising for existing
· Support the skills revolution

What Governments need to do

· Apply cultural competence/sensitivity
· Flatten hierarchies
· Develop participatory mechanisms for decisions with constituents and employees
· Consult better (eg using technology)
· Dialogue better with business
· Give leadership on common values
· Engage now!

What the Media needs to learn

· Learn about the wider context and consequences of their influence
· Women and minorities matter
· Good news can be sexy
· Small is beautiful
· How to become enlightened corporate structures to encourage creativity and intelligence

What the media need to do

· Use this period of growth to innovate/introduce new voices
· Widen the voice of those not currently heard
· Engage with civil society
· Embrace enlightened management models

What Leaders need to learn

· To learn more and do less
· Learn from other models of leadership and the power of rhetoric/communication

What Leaders need to do

· Set middle management free – small scale and networks
· Build networks to enhance appropriate scales of operation
· Listen weekly to one of those they aspire to lead

What BP needs to learn

· To become better integrated in America/ American culture

What BP needs to do

· Make sure that their performance matches their rhetoric

What people need to learn

· Cultural competence/sensitivity
· To have greater empathy and more respect for others

What People need to do

· Question authority and have faith in each other

With thanks to Arun Maira, GBN, Rebecca Hodgson

Mr Maira on his book "Shaping the future"
Question 1: Your new book published by J. Wiley & Sons, "Shaping The Future: Aspirational Leadership in India and Beyond" is a book about Leadership with a focus on many Indian examples but also with a sprinkling of non-Indian case studies. When you started to write the book, did you intend to focus predominantly on problems in India and the use of new techniques to resolve them or what was your initial focus?
Answer: My objective was to highlight that new approaches of leadership are required to solve problems arising in business and society all over the world, as a result of a combination of three forces that have come together in the past two decades. I have explained these forces in the book. India is experiencing the combination of these forces, which I call the Perfect Storm, at least as much as any other country, perhaps more, and hence India needs a new class of leadership to accelerate economic development. However, the conditions and solutions apply globally. I had a choice: I could give examples from all over the world and not focus so much on Indian stories, in which case the universality of the problem and the potential solution may have been more easily evident. Or, I could go more deeply into analysing the situation in India and use more examples from India, which would give the book more depth, though at the cost of breadth. Ultimately the publisher and I chose to delve into India, to make the book into a richer story.
Question 2: In your early chapters, you note how what you call a "Perfect Storm" of forces – you note Globalization, The Death of Distance and Atomization – are coming together to test leaders as never before. Could you explain your thinking on these forces and how the challenges created are different today from those of say several years ago?
Answer: The significant development on the economic side of the world is ‘globalisation’, which is the opening up of the countries of the world to trade and to flows of finance across borders. This is not an entirely new phenomena to mankind. Trade and investment were not restricted in the nineteenth century. However in the first half of the twentieth century, the boundaries had gone up with protectionism, and so the opening up again in the latter part of the century created new opportunities. It would appear that this openness will initially cause that which is stronger to roll over that which is not yet so well developed: hence MNCs will grow, US brands and entertainment will spread, etc. Which makes the smaller feel threatened in many ways, including concern for survival of traditions and identities.
Opposing this force, in a way, is the most significant development on the socio-political side which is the spread of the values of human rights, the rights of individuals, minorities, and democracy. The weak do not want to be steam-rollered and the world will support their rights. This force has gathered universal strength only in the last three decades since the collapse of the Soviet empire.
On the technology side, the revolution in communications has been startling, with computers, telecommunications, and the internet, providing people instant access to information from anywhere. This development has accelerated rapidly only very recently, in the last ten years or so. This force has increased the interaction between the other two forces. The combination of rapid, ubiquitous communications with trade and financial globalisation has opened up all parts of the world to rapid contact and influence from other parts as never before. At the same time, the weaker who feel threatened by the stronger can take advantage of modern communications to strike back anywhere, as September 11th demonstrated so gruesomely. Hence anything can happen now it would seem.
The development of this Perfect Storm has two consequences for leadership. It is very difficult for leaders to set a detailed course because of the uncertainty. And it is not easy to get people to fall in line because people will not accept authority so easily any more.
Question 3: In Part II of the book you set out the new learning that leaders must embrace to get out of the trap created by these forces. You propose a framework, the Learning System, distinguished by four types of learning – know-what, know-how, know-why and know-want. Could you explain this system more to us?
Answer: I would like to highlight two features of the Learning System. The first is the distinction in it of levels (or depth) of different types of learning and knowledge. It points to levels of learning that are deeper than traditional ‘knowledge management’. These are the levels of "Know Why" and "Know Want". Know Why is are our hidden ‘theories-in-use’, at the back of our minds as it were, which guide the way we think and determine what is useful information and what is not. Know Want is our deep aspirations. The Learning System guides us to these deeper levels at which lies the greatest leverage for change in attitudes and for innovation in ideas.
The second feature is the recognition that social systems such as organisations, and even societies, learn and collectively apply new ideas, and that this wider organisational and social learning is not merely a summation of the knowledge of individuals within the organisation and society. To produce change in the way organisations and societies behave, one has to do much more than train and educate the individuals in them. The book suggests some processes by which organisations and societies can learn and adopt new ideas.
Question 4: Also in Part II, you give examples of different companies, groups, etc. that are using this system and talk about some of the results they are achieving. Are there key specific examples, both in India and beyond, that you can mention that you believe are effectively using this framework and achieving promising results?
Answer: In the book, I give several examples of large-scale change mapped onto the Learning System. These examples include the transformation of a public sector oil company in India, the evolution of a business association, development of a new business model by a poultry company, and the beginnings of the development of a new state in India.
Question 5: In part III, you describe five "tuning knobs" – shared vision and values, delineation of decision-rights, measures and accountability, means of influencing behavior and leadership skills that can assist companies and communities to coordinate and govern. Can you explain how these variables work to help the system work correctly?
Answer: I would make three points to explain how the five variables are tuned to produce transformation in an organisation. The first is that the ‘tuning knobs’ are connected to the both the so-called ‘soft’ side of the organisation viz. aspirations and emotions, and to the ‘hard’ side of organisation structures such as distributions of decision-making powers and design of financial incentives. The second point is that the knobs have to be tuned together. In many efforts to produce change in organisations, the people working on the ‘soft’ and ‘hard’ sides do not have an explicit model of how their efforts are linked together, and end working like a bone and a heart surgeon both operating on a person at the same time without a common view of what makes the human body really work. The third point I would make is that generally deeper change begins with tuning the ‘soft’ variables such as aligned aspirations (a shared Know Want), then moving to the tuning knobs for the ‘harder’ variables such as organisation strategy and structure.
Question 6: You also note in this section that these five variable work must be directed at four principles derived from a study of living systems otherwise the system won’t work. Can you describe how all of this works and perhaps give an example?
Answer: Having understood how the tuning knobs work is the first step. The next is to know the condition of the organisation one wants to produce by turning these knobs: in other words, how will we know our instrument is properly tuned up. What is the sound we are using as our guide to tune up? The four principles are the guide.
Many organisations must be wondering how they will tune up their cultures and governance systems to avoid the problems that are now surfacing at many companies in the USA and elsewhere. Creating more rules and regulations seems to be one approach. However this may violate a basic principle of healthy social systems that have the ability to self-adapt, and that is "Minimal Critical Rules". I have given an example in the book of a multinational company in the USA that got tangled in a web of alliances and joint ventures and was worried about how good governance would be excercised. Rules had to be laid down but they were concerned about the difficulty of framing an agreed set of rules between the partners without creating two many rules merely to achieve a consensus by accepting too many suggestions from all sides. Another principle they realised that they may have been inadvertently violating was the principle of "Permeable Boundaries". They then looked for best practices from other organisations of how a set of applicable rules can be a kept to a minimal critical set and how boundaries within an organisation and between partners can be made suitably permeable, and thus they were able to focus their approach to improvement of governance.
Question 7: Finally in the last section of the book you talk about Generative Scenarios Thinking which you note can give an observer insights into how complex systems actually work. Could you explain what exactly Generative Scenarios Thinking is and how it relates to your learning system and to effecting change in modern structures like businesses, etc.?
Answer: Generative Scenario Thinking is a way in which organisations and members of larger social systems can practically apply the insights into organisational learning and transformation that the book explains. Generative Scenario Thinking enables large groups to develop a shared aspirational vision and to understand the deeper forces in their environment through which they have to navigate to realise their aspiration.
The process works at the deeper levels of learning of Know Wants and Know Whys. It enables many people, crossing social boundaries and boundaries within an organisation, to think together. Thus it applies the ideas of the Learning System. It combines ideas of change in ‘soft’ and ‘hard’ systems in the organisation or society.
Question 8: You now head the Boston Consulting Group in India and have worked both in the U.S. and in India plus numerous other places in the world. In addition, you travel often and are constantly meeting business leaders from many different areas. Given your experience, do you think Indian business people in particular have a different view of leadership than their more Western counterparts? Further, is the Indian way of doing business more related to Asia in general or to the West and Why?
Answer: People everywhere are creatures of their histories. And the wise are always in tune with their own surroundings. Indian business leaders have been deeply involved with the socio-political development of India in the last century. They were partners of the political leaders during the Freedom Movement. They have have been deeply involved in social development also. They have created some of the best institutions for education and scientific research in the country as well as effective community development programs. I think Indian businesses are not as separated from other social institutions as businesses in the West may be.
Many Indian business leaders were educated in the West. India has a "Western" system of higher education. For over 30 years, India has had some excellent institutes of management associated with US business schools. Therefore Indian business leaders are very close to Western business practices. At the same time, as I mentioned earlier, they are close to Indian, and hence Asian values.
Perhaps India may be the place where there is the deepest synthesis between Eastern and Western ideas of the role and conduct of business.

Mr. Arun Maira is currently heading The Boston Consulting Group in India. He is one of the leading business consultant's of the world and among the best thinkers.
I am quoting here three of his best articles any time

Do economists have real answers?
I wanted to study economics but I studied physics in St. Stephen's College because the Principal would not let me switch from physics to economics. He said physics would teach me to think clearly, which would stand me in good stead through life. For 40 years, I have worked as a manager and a consultant to business corporations. I have thought a lot about the role of corporations in society. For the past few years, I have been reading and thinking a lot about economics. I was at the World Economic Forum in Davos last month. At the commencement, several hundred business leaders voted in a 'global town hall' meeting to determine issues uppermost on their minds. Clear winners were: 'poverty', 'equitable globalisation', and 'climate change'. "The World Economic Forum now sounds like the World Social Forum", a journalist commented. While some people would be delighted with this apparent change of heart amongst profit-obsessed businessmen, others, like The Economist, would be aghast. In its recent issue focussing on Corporate Social Responsibility, the journal argues that good economics (citing Adam Smith to explain good economics, as it often does) requires that corporate leaders' social responsibility must be limited to the pursuit of profits for their shareholders and nothing else.
On the same January days, meeting in warm Porto Alegre, far from frigid Davos, participants at the World Social Forum slept on the ground in tents and railed against the corporations of the world and berated their erstwhile hero, President Lula of Brazil, for betraying them by going to Davos. And at Davos, a prominent social worker (from India) chastised business leaders for not coming down to earth to listen to the people on the ground. Perhaps the time has come for the two forums to listen to each other and shape one World Forum. And for fundamentalist economists to question their orthodoxies and build more real models of the world, rather than abstractions based on false assumptions about the nature of man. Perhaps the most erroneous assumption in economics is that men and women take purely rational decisions driven only by self-interest. If this were so, why do economists, like those who write for The Economist, and financial analysts who believe in the sagacity of markets, have to explain the changes in market indices with words such as 'moods', 'sentiment', 'fear' and 'confidence'-words more associated with emotions than pure reason? They do this because they do not have models to explain even economic phenomena such as the 'behaviour' (another tricky word) of stock markets in purely rational terms.
Economists tend to over-simplify their assumptions to enable mathematical modelling. For example, The Economist says, 'Measuring profits is fairly straightforward; measuring environmental protection and social justice is not. The difficulty is partly that there is no single yardstick for measuring progress in those. How is any given success for environmental action to be weighed against any given advance in social justice-or for that matter, against any given change in profits? Measuring profits-the good old single bottom line-offers a pretty clear test of business success." This is sheer intellectual laziness. If Newton had decided to ignore the concept of gravity merely because, when it occurred to him, he did not have the means to measure it, or Faraday ignored the force of electro-magnetic induction because he did not have instruments to gauge it, physics could not have developed its power to change man's world.
Market movements are caused by perceptions, as well as perceptions about others' perceptions. Which causes markets to swing up and down, even when there is no change in the 'fundamentals' (to use another popular term amongst financial analysts and economists, and also a vague term because they cannot agree what these fundamentals are). Businessmen and investors cite the need for confidence and trust as factors that influence their investment decisions. And businessmen would like their stakeholders, be they investors, customers, suppliers, or employees, to have confidence and trust in them because this gives their business economic advantage by way of lower costs in attracting capital, acquiring customers, and retaining employees. Hence they spend time and money in confidence building measures, such as brand creation and advertising, which are considered necessary for business. Then why are 'corporate social responsibility' programmes, which aim to build bridges between corporations and society, dismissed by some economists as bad for business?
In his book, "Complexity", M. Mitchell Waldrop describes a meeting between physicists and economists (including some Nobel Prize winners on both sides) that took place at the Santa Fe Institute some years ago. "As the axioms and theorems and proofs marched across the overhead projection screen, the physicists could only be awestruck at (the economists) mathematical prowess-awestruck and appalled. "They were almost too good," says one young physicist, who remembers shaking his head in disbelief. "It seemed as though they were dazzling themselves with fancy mathematics, until they couldn't see the forest for the trees…I thought they often weren't looking at what the models were for, and what they did, and whether the underlying assumptions were any good. In a lot of cases, what was required was just common sense."
Since the collapse of the Soviet Union, a fundamentalist school of capitalism has dominated both politics and management practice: the school in which markets are supreme, nations are merely economies, corporations are merely profit-making machines, and citizens are merely consumers. This school traces its recent political roots to Thatcherism and Reaganomics, named after the two leaders who together stood against the 'Evil Empire' which, in their minds was as much the military empire of the Soviet Union as it was the socialist view of economics prevailing within their own countries. With the collapse of the Berlin Wall, Fukuyama claimed that history had ended because there was no longer any threat to capitalism, and the Washington Consensus of capitalism prevailed unchallenged. But there are as many schools of capitalism as there are varieties of Heinz pickles, said Harold Minskey, the economist. Therefore, why cannot a country that provides social services through the public sector and does not privatise in a big bang, describe itself as capitalist without an apology to The Economist? Fundamentalist economists who came to reign after 1989, and against whose domination civil society has begun to react, should read the book, "20:21 Vision, Twentieth-Century Lessons For The Twenty-First Century", by Bill Emmott, the editor-in-chief of The Economist, no less. Emmott says that capitalism has to evolve much further, and if it does not it will remain under threat, because the predominant school of capitalism is "unpopular, unstable, unequal, and unclean".
'Human society is also about respect and relationships, not merely profits', says Francisco Whitaker, founder of the World Social Forum. A better model of human society (and business corporation) can emerge from a dialogue between experts who, like the blind men confronting the elephant, see only a narrow view of reality from the perspective of their own discipline. For a better world to emerge, as well as a more credible, scientific, and human model of economics, the participants of the World Social Forum and the World Economics Forum must enter into a dialogue, rather than harangue and denigrate each other, as they are wont to. My hope is that India will take the lead to sponsor this integrative World Forum and also create an inclusive model for development for its own development, integrating the country's social, economic, and political development. A better idea is needed than what economic theory has been able to provide so far.
The next piece, following this, will question whether economists have gone too far in their influence on human society. And whether one should venture, like the little child watching the imperial procession, to ask whether the present day emperor-the profession of economics-is wearing any clothes. (This could be heresy and I may be compelled to drink the hemlock cup, I fear!) The concept of homo economicus, of man as a rational decision-maker acting in his self-interest, suits mathematical modelling. The reality is that we that we do not take decisions rationally (whatever that means!), that our emotions play a strong part, and that very often our decisions emerge without any rational application of mind.
Economists are wont to describe countries as economies, in terms of their GDP, the sizes of various economic sectors, and the flows of trade between them. And we listen in awe to their evaluations of nations' strengths and prospects.
But nations are not merely economies. They are also societies, communities, and polities: in fact they are a complex amalgam of many facets, and therefore their trajectories cannot be explained by the equations of econometricians that factor only those variables that economists understand. No wonder there is so much acrimonious debate between economists themselves about the fundamental solutions for a country's progress. Do physicists and engineers need to argue as much about the right way to build and maintain a structure? Therefore, should we not take the priests of economics less seriously than we do?
I think we should also talk about what is the proper role of 'scientific' approaches. I have been working with the International Futures Forum, which is a small group of thoughtful people from many disciplines who have been meeting for three years to understand the power of scientific approaches that have led to the so-called Enlightenment of mankind, as well as the inherent limitations of scientific approaches to solve major problems facing mankind, such as persistent poverty in spite of the scientific means and the material resources at disposal to eradicate it. Scientific approaches run into difficulty when confronted by complex phenomena in which many different aspects of a system (that are subjects of different scientific disciplines) interact. And when one thing does not lead to another in a linear, cause-and-effect relationship but things just 'come with' each other and 'mutually arise'. Like chickens and eggs and yin and yang. Our lives are surrounded by such wonderful phenomena. Systems thinking is a more useful way to comprehend them. It can give better insights than many prevalent scientific approaches. So let me talk about systems thinking in my third article. In that conversation, I also want to comment on man's desire to play god-to change the state of systems and alter their course. Stanley Kubrik's memorable opening scene in Space Odyssey 2001 put the idea eloquently: that human beings are more evolved than other animals because they have the desire to understand why things are the way they are with the desire to change them.
In our fourth conversation, let's talk about freedom. And how societies of truly free people can shape a system that will benefit them all. Amartya Sen won a Noble prize for expanding the limits of materialistic economics to broader wants and needs of human beings with the concept of development as freedom. George Bush' drive to change the world, beginning with Iraq, is ostensibly about spreading democracy-the freedom for people everywhere to shape their own futures. The United Nations is struggling to develop an effective, yet democratic institution of nations. India's economic growth is supposedly hamstrung, when compared with China's, by India's democratic drag. I believe there is a fundamental clash of theories about how results can (or should) be produced. What mankind needs, and India maybe one of its' best laboratories, is a way to produce faster, all-round progress in societies that aspire to be both efficient and truly democratic at the same time. What does it mean to "manage" in such a system? And what is the relationship between those who manage and those who are managed?
The fifth conversation maybe about how an outsider to a human system, whether it is a nation, a local community, or a business organisation, can help it become more capable and more free. This should be the objective of international aid organisations, social NGOs, management consultants, and even spiritual gurus! Let us talk about the motivations of such change agents and how these can complicate, and perhaps impede the process of development of freedom in the client system. Therefore what are principles for intervention with humility, recognising the Heisenberg-like interplay between observer and observed, 'intervener' and 'intervenee'? This is at the core of the learning agenda of the International Futures Forum, the International Society of Organisational Learning, and other forums.
What shall the sixth article be about? Let us see what emerges as the conversation unfolds. Maybe some readers may have something to say as we talk that I could weave into my last piece.

This is one for you....Consulting really matters in Charity, as they do carry a heart...
Grrrrrrrrrrrrrrrrrr...LOL
Paul Cardiff- An inside offbeat soul searching by an Oxford student
June 26
I arrive for my first day with the firm as a summer intern in the New Jersey office and meet with Elisa, the staffing coordinator. She presents three options I can choose to pursue, one involving improving distribution of AIDS drugs in Africa. The study hasn't kicked off yet, so there's not a lot of information available, but it's a compelling opportunity. My background is in medical devices, and this study fits into pharmaceuticals and medical products. In addition, I've always been keen on politics, especially after having studied at Oxford as an American. I believe policy plays a role in the processes of doing business, and this case is an excellent example.
July 6
I speak by phone with David H., the study's engagement manager, who is in London right now. He tells me about his fieldwork in Zimbabwe and his role as an advisor during Phase 1. As David explains it, the team will focus on distribution in a specific country or countries, and talk to different distributors to find out what is really going on. My role will involve nontraditional distributors, such as NGOs and other goodwill organizations.
July 11
David introduces me to Ann, who was involved in Phase 1. I am working with Ann out of the New York office; she's getting me up to speed, and we are preparing an AIDS fact pack summarizing the situation in Africa, along with information that was uncovered in the first part of the study, for the kickoff meeting.
July 18
The team assembles for the kickoff meeting. Judith lets us know that the clients have asked us to focus on Uganda. Early work focuses on a 2-hour window every day in which we have to reach people in Uganda to get information and set up interviews for when we go in country in about 2 weeks.
August 1
It's our first day in Uganda, and it's overwhelming. I've been to Mexico, but no other developing countries. You look around and you see every little kid and every mother with a yellow plastic jug, since a daily task is to walk to get water and then walk back with this container on their heads. If a population does not have access to clean water, how are they going to have access not only to expensive drugs but also to medical care?We meet with the head of Uganda AIDS Commission. Hearing him talk really opens our eyes. With improved distribution alone, we're not going to solve this problem – we're only going to be able to move the drugs. How do we introduce these sophisticated drugs to people who may or may not understand what this medicine means, and how strictly they have to follow a certain regime? There are many hurdles, and distribution is just one of them.We came here thinking that distribution was the real issue, but after 1 day of interviews here, we all agree that it's only a part of it. The problem is much greater than we could ponder in our cozy New Jersey office. The team agrees that we need to shift to address that.
August 2
Our team gathers for our daily breakfast meeting and plans our interviews for the day. My focus has flipped to adherence and sustainability. One alternative is other points of interaction and follow-up care with HIV-positive patients. Existing research has a very Western, hospital- and clinic-focused point of view. Being here shows us that sustained adherence is a large challenge outside hospital-focused health care system.
August 5
Acha and I attend a meeting at the AIDS Information Center (AIC), a local NGO based in Kampala. We expect to see just the director and a few doctors, but what we encounter is a town-hall-style meeting, with 20 to 30 AIC people, most of whom are HIV-positive and play different roles with the organization. We meet members of an AIC drama troupe that works to raise HIV awareness.
It is amazing to speak with these people.They know about AZT and drug cocktails, even though they are not available.They know they need to take these drugs more than once a day and and that if they miss a treatment they'll get sick. Talking with them and sharing their personal experiences help us see the concern over why this understanding of the disease has not brought treatments and cures to Uganda.
August 7
We have our nightly meeting at the hotel around 6 p.m., and discuss what we have heard, what our hypothesis are, and what our plans are for tomorrow. Our focus so far has been on the situation in Kampala. Tomorrow, I will visit a regional clinic to gain a better understanding of the situation in the rest of the country, away from the urban capital city of Kampala.
August 8
The regional clinic that we're going to is in a "major" city on the highway to Kenya. The "highway to Kenya" is basically a one-lane asphalt road with so many potholes that it is smoother driving off road than down the highway.This clinic is one of our primary targets for reaching out to people in rural areas. When we had talked about being able to send blood samples to Kampala for testing, we had no idea how difficult that could be. You look at a map, and you see it's just 100 miles away, and you think you could leave in the morning and go back in the afternoon. But the infrastructure is too poor for something as simple as that.
August 14
We are back in New Jersey, working on our final recommendations. Our time in Uganda was invaluable for gaining a real understanding of the issues. We could never have learned about the true situation if we'd stayed in New Jersey. We see that distribution is just one of the hurdles. We also have to contend with issues of affordability, patient access, and sustained adherence.
September 18
I'm back at Oxford, and telling other students about my McKinsey experience. It's a common notion that if you go to work for a consultancy or an investment bank, you're selling your soul – you're going to work 100 hours a week, and you're just going to help some huge company make 1 percent more profit. This study was a real eye-opener. It was a total change of pace, a nonprofit effort trying to save the world. It was different than I expected McKinsey to be. I'm grateful to have had the opportunity and to see the impact McKinsey can have in a public policy context.

Extracts of Varun Gauri-Member, World Bank & Vice President-Mckinsey & Co; London
NGO's In Bangladesh-Activities, Resources, and Governance

Examples of low service quality:
Bangladesh-Absenteeism rates for doctors in primary health care centers: 74 percent
Zimbabwe: 13 percent of respondents gave as a reason for not delivering babies in public facilities that “nurses hit mothers during delivery”
Guinea: 70 percent of government drugs disappeared
Increasing public spending is not enough
* Percent deviation from rate predicted by GDP per capita
Source: Spending and GDP from World Development Indicators database. School completion from Bruns, Mingat and Rakatomalala 2003
Similar changes in public spending can be associated with vastly different changes in outcomes
Market Failure and State Failure in Service Delivery: Are NGOs the Answer ?
Altruism to overcome incomplete contracts
Flexibility for allocative and productive efficiency
47% of World Bank projects involved NGOs/CBOs (1997)
37% of USAID budget channeled through NGOs (2001)
Even Jesse Helms likes development NGOs
Theories about what makes NGOs tick?
Altruism
Benefits for founders and managers
Worker control
LITTLE EMPIRICAL EVIDENCE
‘Massive proliferation’ of NGOs in Bangladesh
27,000 registered with MSA, 1600 with NAB
90% of villages have an NGO (2000)
One large NGO claimed to have reached 70% of villages and 70 million people (2003)
Largest NGOs employ 10 to 70 thousand staff members
About 10% of ODA channeled through NGOs
Business entrepreneurs: cell phones, dairy, publishing, handicrafts
A bit of history
Bangladesh began as a nearly ‘failed state’ in 1971 due to civil war and cyclones of 1972
Recurrent floods and cyclones (1988 and 1991)
Donors poured resources into NGOs
NGOs moved from humanitarian relief and reconstruction to ‘development’ tasks
NGOs moved from ‘consciousness raising’ to ‘service provision’
Donors encouraged self-sufficiency
Conflicts with the state
1991 NGO Affairs Bureau established
1991-2002 slow approval process, transparency issues and for-profit activities
2001-2003 perceived politicization of NGOs
2003 division of apex body
2004 push for new regulations
Objectives of the Survey
Descriptive statistics
NGO characteristics
Community perceptions
What works?
Pilot survey for use in other contexts
Sampling Overview
Thana selection
35 chosen; random sampling weighted by NGO activity
Within each thana:
Divided into ‘big’ NGOs and ‘other’ NGOs
Sample 100 ‘big’ NGOs
Collect lists of other NGOs during ‘big’ interviews
Choose six other NGOs in each thana randomly from list
Methodology
NGO interview
Conducted with branch managers
Quantitative and qualitative data collected on a range of aspects of NGO operations
Focus group
Conducted with selection of community members / NGO clients
Qualitative perceptions of NGO services and activities
Questionnaires
NGO survey topics
Activities
Sources and uses of funds
Relations with community, other NGO’s, government
Governance structures
Focus group topics
Various measures of NGO ‘performance’
Community characteristics
Field Implementation
Field implementation: March – April 2003
Six ‘other’ NGOs refused interviews
Only 2 ‘other’ NGOs in two thanas
One NGO in operation for less than one year
Field staff interviewed only four NGOs in one thana
193 ‘other’ NGOs in sample, 310 total
Table 1: Number of NGOs in each selected thana on initial list, updated based on enumeration, and surveyed
What do NGOs do?
Sectors and Activities
131 NGOs lobby national government
97 NGOs had at least one meeting with national government in last year
93 at least one meeting with local government
58 ‘other’ NGOs had meetings with national
58 ‘other’ NGOs had meetings with local
NGO Resources
Finances and staff
Dominant source of fund is fee for service:
Full sample: 50% of funds
Big NGOs: 62% of funds
Other NGOs: 43% of funds
Membership fees – common but small amounts
Over 90% of organizations collect membership fees
Represent less than 3% of overall revenues
Fraction of organizations with other sources of revenues
Specialized Labor: Summary
Teaching is most prevalent type of skilled labor
Majority of NGOs that provide education services have skilled teachers (67%)
Relatively few healthcare organizations employ doctors or nurses (31% and 25%)
Median size and labor intensity of NGOs
Constraints on improvement
Constraints: Summary
Smaller NGOs report greater resource constraints
Government restrictions are not an (self-reported) impediment
Governance
Autonomy, Evaluation, Participation, Accountability, and Management
Which decisions are made by the NGO without consulting the supervising branch/headquarters?
Percentage of NGOs needing permission from an oversight committee to perform the specified activities
How the NGO manager was chosen
Methods used by NGOs to collect information about community needs
Percentage of NGOs involving community members in provision of services
Methods used by NGOs to collect feedback about how well they are meeting community needs
Employee Review
Additional elements of accountability
Auditing of accounts: 70%
Organization has Board of Directors: 65% of ‘other’ NGOs
Donor oversight: 84% of grant recipients (n=57) visited by granting agency in last year, 75% had community assessment conducted with agency
Ever visited by NGO Affairs Bureau: 36%
Ever visited by thana/local government: 55%
Ever visited by one or more line ministry: 26%
Employee Review
Additional elements of accountability
Auditing of accounts: 70%
Organization has Board of Directors: 65% of ‘other’ NGOs
Donor oversight: 84% of grant recipients (n=57) visited by granting agency in last year, 75% had community assessment conducted with agency
Ever visited by NGO Affairs Bureau: 36%
Ever visited by thana/local government: 55%
Ever visited by one or more line ministry: 26%
Characteristics of NGO managers
Summary: An Institutional Isomorphism
Branch and headquarters structure
Overwhelming focus on credit services
Service fees / operations main sources of revenue
Salaried and professional staff, not volunteers
No religious affiliation
Partnerships, little sub-contracting w/ government
Middle-class, college-educated male managers
Focus group summary:
Qualitative and quantitative measures of NGO performance:
NGO efficiency at providing services relative to community
NGO efficiency at providing services relative to local government
Perceived ‘self-servingness’ of NGO
Performance rating of NGOs
NGOs are perceived to be approximately as efficient at providing services as communities themselves
NGOs are perceived to be significantly more efficient at providing services than the government
(Performance rating = allocation out of 100)
Correlates of Success & Community Perceptions
Direct evaluation by supervisor
Direct community feedback
Involvement of community members in project execution

Money, get away.

Get a good job with good pay and you’re okay.

Money, it’s a gas.

Grab that cash with both hands and make a stash.

New car, caviar, four star daydreams,Think I’ll buy me a football team.

Money, get back.

I’m all right Jack keep your hands off of my stack.

Money, it’s a hit.

Don’t give me that do goody good bullshit.

I’m in the high-fidelity first class traveling set And I think I need a Lear jet.

Money, it’s a crime.

Share it fairly but don’t take a slice of my pie.

Money, so they sayIs the root of all evil today.

But if you ask for a raise it’s no surprise that they’re giving none away.

”HuHuh! I was in the right!”

”Yes, absolutely in the right!”

”I certainly was in the right!”

”You was definitely in the right.

That geezer was cruising for abruising!”

”Yeah!””Why does anyone do anything?”

”I don’t know, I was really drunk at the time!”

”I was just telling him, he couldn’t get into number
He was askingwhy he wasn’t coming up on freely,

after I was yelling andscreaming and telling him why he wasn’t coming up on freely.

It came as a heavy blow, but we sorted the matter out”
Like it. Loathe it. Want it. Waste it. But you just cannot ignore it. What is the value of money, that rumpled piece of printed-paper in your wallet that the world bows to its power? The secret lies in your own mind! Let’s talk money! Mammon’s earthly incarnation. Satan’s weapon of temptation. Capitalism’s rightful expression. We are talking about a piece of paper, right? A scrap created from wooden goo that wouldn’t even fetch a glass of water if used for trade on the basis of its actual worth. So what makes money tick? We love it, we condemn it. We go all out to get as much of it as we can, then we berate it for being a temptation! We live with it and realize our dreams through it, yet are the first to say ‘money
can’t buy everything’. Why? But then, how do you evaluate the worth of something that in itself defines worth, at least commercially? Is money a capitalist weapon for exploitation? Or the most tactile evaluation and reward of our
capabilities? Perhaps it’s only fair that we begin with one of the few people who
actually championed money and its philosophical and ethical worth.
VALUE FOR VALUE
“Money,” wrote Ayn Rand, cult author and controversial propounder of objectivist philosophy, “is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value.”

The catchphrase is ‘value for value’. And, maybe, trust in a promise made on a piece of paper. In this sense, money or trade recognizes the belief that nothing in the world is free. Whatever we wish to have, has to be earned. So, if A wants what B owns, or is in a position to give, then A has to give B something of equal worth. Rand believed that only those who did not want to trade would condemn money. Who wanted for free what others had created with their effort and capability.
“Money has served as a medium of exchange after trying a variety of other items, which were found lacking,” explains N.K. Somani, CMD of Shree Vindhya Paper Mills, Mumbai. “Every person needs products and services in life. Money plays the role of a recognized value for the exchange of commodities and services. If there was no commonly-accepted unit for these transactions, there would be anarchy in the world.”
Rand went a step further in recognizing money as the means of sustenance.
“Money is the source of survival,” she wrote in Atlas Shrugged. “The verdict you pronounce upon the source of your livelihood is the verdict you pronounce upon your life.” Perhaps it is worthwhile to wonder why money still draws so much flak. Why is it that most people hesitate to proclaim that they actually like money? What’s the taboo all about? When did a simple tool for exchange metamorphose into an ambivalent entity that is at once a source of shame and exultation? “The man who damns money has obtained it dishonorably; the man who respects it has earned it,” proclaims Ayn Rand boldly.
IS MONEY EVIL?
Remember your first salary check? And the pride you felt to have earned something? How would you have felt if somebody had pointed out that it was wrong to like money? That the pride you were feeling was evil?
A large part of this negative image has come about thanks to a misreading of the scriptures by the world’s major organized religions, notably Christianity and Brahminical Hinduism. Wealth, claimed the pundits of yore, was a sin if it was not accumulated for a ‘godly’ purpose.
Renunciation was the catchword, poverty the goal and austerity the norm of the day. If you did not practice these, you were a sinner, decreed to being either reborn as a lower animal if a Hindu, or to be barbecued in the fires of hell, if a Christian. There was, however, an easy way out. Just keep donating money to religious institutions and God would turn a blind eye to how you earn your wealth. As Canadian Nathan Lester says: “Do you see a pattern here? Religion
denounces money and then accepts 10 per cent of our earnings!” But the scriptural truth was far from this bribe-God-be-happy image. Notes American financial consultant and inspirational author J. Grady Cash in his book Value-Based Money Management: “Money is not evil. The actual Biblical quote that leads to this common misconception is ‘for the love of money is the root of all evil’. The ancient Aramaic text might more accurately be translated as ‘for the lust after money is the root of all evil’. It’s perfectly acceptable to want to make more money. Only when money is accumulated for its own sake or its accumulation hurts others does money become bad.” Ditto in Hinduism. Artha, or wealth, is legitimate; money is indispensable in the present state of society. A man of the world without money is a failure; he cannot keep body and soul together. In fact, according to an injunction of Hinduism, first comes the body and next the practice of religion. Furthermore, money is needed to build hospitals, schools, museums, and educational institutions, which distinguish a civilized society from a primitive one. Money gives leisure, a key factor in the
creation of culture. But money must be earned according to dharma; otherwise it debases a man by making him greedy and cruel. The basic issue, therefore, is not whether money is evil but whether it has been earned ethically.
THE ETHICS OF WEALTH
Despite knowing this, many of us still shy away from talking about it openly. As New Age guru Deepak Chopra puts it: “Most people find it difficult to tell someone exactly how much money they make. This is because they believe that they are worth only what they earn.” Why should this be so? American journalist Marjorie Kelly tried to answer this question in her article ‘Are you too rich if others are poor?’ (Utne Reader, Sept/Oct 1992): “One of our unconscious but profound beliefs about money is that it is a zero-sum game, and that for one person to have more means another has less. In short, that wealth is made on the backs of the
poor. But there is an assumption here that is only partly accurate, and that is that money is a physical commodity that can be moved about like a pile of marbles. I suspect that the truth is that money has a dual nature. For if the zero-sum theory holds part of the truth of money, the other part is this: prosperity can beget prosperity.” John Stussel, host of the 20/20 American TV show’s episode on the positive side of greed, accurately puts it: “Bill Gates is a good example. He’s now one of the world’s richest men. He’s got about $40 billion. But does his having $40 billion mean the rest of us have lost $40 billion? No.” According to Stussel, in a trade-driven economy even if a person is greedy for more wealth, he just can’t grab it from others. “To get your money, he has to persuade you, entice you. To do that, he has to make something that you will willingly give him money for. All commerce requires both parties to benefit. Take the simple example. I buy a quart of milk from a farmwoman. I hand her the dollar; she gives me the milk. We both benefit, because she wanted the dollar more than the milk, and I wanted milk more than the dollar.” Ram Piparaiya, Chairman, Aridhi Hitech Industries, Mumbai agrees: “Money does not corrupt. It depends on the user. Corrupt people become more corrupt with it.” He, however, feels that those who don’t earn but win money, especially through lotteries or gambling, are more likely to be
corrupted by it. B.R. Tangri, chief manager (PR) at the Oriental Bank of Commerce, Delhi, has a pointblank response to the debate: “How can money be evil? After all, can one survive without money?” Actually, the notion that money corrupts is itself debatable. Money, intrinsically, is a means of trade. And the person who holds more money has greater power to dictate the terms of trade. Now, we have all heard that ‘power corrupts’. But does power corrupt all? What about great leaders who have had the power to shape history, yet did it with integrity and wisdom? Then, shouldn’t the responsibility of not being corrupt lie
with the person and not the object of temptation? “A knife can be used by a terrorist or by a surgeon,” agrees Somani. “Bofors guns can be used to defend the country or get embroiled in an underhand deal. Whether money corrupts or not depends on one’s attitude and character.” “Your attitude towards money,” says Pradhyot Somaiya, management accountant with Davnet Telecommunications in Sydney, “has a significant reflection on your attitude to life. Some people see money as a means to an end, some as a tool to wield power, some as an end in itself-thinking it will bring them happiness. A person who sees money as only a means to satisfy needs will be relaxed and more benevolent than one who craves
money for providing self-worth, security or power.” Money may buy you ten yachts and five mansions. But, as the cliché goes, it really cannot buy you happiness. Or self-worth, for that matter. If you run after money to find what you couldn’t find within, you are chasing a mirage that will only leave you more at a loss.

THE RIGHT ATTITUDE
So what may be the right attitude to money? Joan Sotkin, inspirational teacher and creator of www.prosperityplace.com, views human-money interaction as another form of relationship and argues that laws applicable to any other healthy relationship also govern the attitude towards money. “Your individual relationship with money,” she says, “is similar to your relationship with yourself and others. In other words, you deal with money the same way you deal with yourself and others. Your financial relationships develop along the same energy pathways as everything else in your life.” “Money,” says Somaiya, “is necessary for my life. Money keeps me comfortable, but it is not the only reason for my happiness. Happiness comes from within me. Money is an indicator of practical success, but not of my self-worth.” The general attitude towards money, however, is two-fold-we are either eternally running after it or are busy berating our fate for keeping us away from more of it. The grapes are eternally sour and yet we keep jumping for the ever-higher bunch. The few of us who manage to break this vicious cycle are the ones who have a good relationship with money. In his book, You’ll See It When You’ll Believe It, Dr Wayne Dyer warns against this anomalous attitude: “If we have a scarcity mentality,” he argues, “it means that we believe in scarcity, that we evaluate our life in terms of its lacks. The theme of so many people’s life is ‘I simply do not have enough’, or ‘I would be a lot happier if I had...’ People believe that they live a life of lack because they are unlucky, instead of
recognizing that their belief system is rooted in scarcity thinking. Yet as long as they live with a scarcity mentality, that is what they will attract to their lives.”
Most personal growth trainers, however, insist that this attitude is easily rectified. All it needs is a change in thought patterns regarding money. Says John McMurphy, author of Living Deliberately: “Money is only a state of mind; not a reality in, of, or for itself. If money remains a state of mind, therefore a spiritual reality and not an end in itself, then you always will have what you truly need and deserve.” Easier said than done, you may snort. After all, it does hurt when you see others making less effort at making money but succeeding more than you.
Perhaps you could ponder on what it is that successful people do to reach where they are.
SUCCESS V/S MONEY
Like it or not, most often success is judged in terms of a person’s bank balance. In a consumer-driven economy, a penchant for selling; ideas, concepts or products; goes a long way in earning money, as well as in being materially successful. “If you don’t want to sell what you produce,” asks Lester, “why would you produce it?”
Which is why, today, even spiritual leaders and healers need to advertise their unique capabilities because the most successful are those who reach out to a wide variety of people. After all, how would a person sitting in Timbuktoo know where to go for something as esoteric as rudraksha therapy, if not through advertisements? Despite consumerism, it would be a mistake to read success as a synonym for money. Although the two often go hand in hand, money itself cannot
make you a success, and vice-versa. Take A.P.J. Abdul Kalam, former chief of India’s Defence Research and Development Organization. A simple man who came from a not-so-well-to-do family, nobody can deny that he is a success. Yet, who is interested in how much money he makes? What makes him a success is his intellect and achievements. What about the sages who left all to seek something much more intangible? Were they any less of a success? Would the Buddha have been more successful had he stayed with his palace and wealth? Money rarely defines a person’s worth in the real sense of the term. In an ideal world, money would change hands ethically and the money that you earn would be directly proportionate to your capability. In the real world, money is often a result of lineage, contacts, unethical shortcuts or exploitation, so that the respect it should demand in ideal circumstances eludes it.

AMBITION OR GREED?
In the ‘80s, Gordon Gecko; a reptilian stockbroker played brilliantly by Michael Douglas in Oliver Stone’s movie Wall Street; extolled greed thus: “The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works; Greed captures the essence of the evolutionary spirit.” Like it or not, in the market-oriented world of today, Gecko might just be stating the obvious. The word greed is defined in the Oxford English Dictionary as ‘intense or inordinate longing, especially for wealth or food; avarice; covetous desire’. It is the inordinate desire for wealth and affluence that has made material
evolution possible. At least in terms of trade. Had we not wanted money, would we have got it in the first place? But even if one accepts Gecko’s argument as factually true, it may not necessarily be ethically correct. As N.K. Sohal, who retired as manager of Hongkong Bank, Northern India says: “Money is functional as it sustains life. Human beings have certain basic requirements. Once those are
fulfilled, then we begin thinking of comfort. I don’t condemn that because
anybody who is working hard is entitled to a certain amount of comfort. But anything beyond that falls under the category of greed.” “A person who desires money,” says Canada-based Adarsh Jain, a professor of philosophy, “desires it for a purpose. If you are greedy, you will forever covet, irrespective of how much you have. And this has nothing to do with your social or monetary status. A millionaire can be as greedy as a daily wage earner.” In fact, in one of political science’s greatest ironies, the twin concepts of communism and socialism-which arose from a desire to overthrow greedy capitalism-also gave in to greed in their practical application. “The government,” says Nathan Newman, “transfers wealth to business in indirect ways; society pays to educate and train workforce, takes care of their workers when they are sick, pays for transit system maintenance and
provides a whole range of public goods extracted through the public purse. This is a transfer of wealth that is not purely zero-sum, but raises the whole question of whether average folk are getting their fair share of this deal.” Fair share! This is a topic that keeps cropping up each time we talk about money. Somehow, fair share is often taken to mean equal share, where, irrespective of your capabilities, you get as much as everybody else. “Why is it,” asks US-based software designer Tony, “that people should eye what others have earned? Isn’t it against the very basis of religion to covet? Then why should it be considered okay for a ‘have not’ to covet
what a ‘have’ has? And isn’t this greed the very basis of communistic and social welfare philosophy?” Gecko equated greed with ambition, with the desire to better your own self. Actually there is a subtle difference between the two, and one can easily be transmuted into the other. The difference, most often, lies in the motive. Dan Sullivan, a US-based personal growth trainer, notes: “Ambition is the desire to have more, but greed is the desire to have more at the expense of others. Ambition is natural and rational, but greed is a product of fear. Where there is no fear, there is no greed.” So, if you want money without being attached to it, you remain free of greed in spite of being in the rat race. But when you let money dictate your life, you become its slave, and in the end, money begins to rule you.

THE COMMERCE OF CHARITY
While on one side of the money spectrum there is a tussle between ambition and greed, on the other side commerce tries to find common ground with charity. We asked a number of Indian businesspeople and entrepreneurs whether philanthropy or charity helps the cause of money. The unanimous answer was that charity is an integral part of making money and of success. As K.V. Krishnamurti, Chairman of Bank of India, Mumbai, categorically stated: “Philanthropy definitely brings money. When money is spent for the uplift of the poor, it can be earned and spent without limit. The universal law of nature is ‘give and take’. The more you give, the more you receive.” Would this mean that even charity has a pecuniary purpose? There is a school of thought that considers charity to be a personal issue-if you want to give, go ahead and do so. “It doesn’t matter whether charity brings in more money or not,” explains Somaiya. “A philanthropist may treat charity like business and put money where there are chances of a return. In that case, he’s not a philanthropist. Charity, by definition,
is an activity carried out without expecting material returns.” As Roy Davies, a librarian at the University of Exeter, England, puts it: “Ideally, philanthropy should have nothing to do with acquiring money.” Lester gives in to sarcasm on this issue. “I guess charity does pay,” he says. “Ask the philanthropists how rich they’ve become. There are a lot of them, so I guess it pays well.” Charity pays. It pays the same way as a good deed does-by leaving more good in its wake. But to practise charity because it pays? Doesn’t sound quite like cricket, does it now?

THE SPIRIT OF MONEY
So, to what extent does money define our life? Is there anything beyond money? Interestingly, this brings two sharply contradictory theories in focus; money as the basis of trade, with which we are all concerned, and money as temptation, where the less we have to do with it, the better. How does one balance the two?
With money, things that seem fair play from one point of view turn into ethically suspect areas from other perspectives. Actually, the problem does not lie with money at all, it lies with our perspective. At its basest level, what is money? A piece of paper, a promissory note, a piece of plastic, a punched-in number on the stock market. That’s it. Nothing more, nothing less. The person who amasses great wealth through hard work, and the person who gives away all in the blink of an eye share the same platform from a spiritual perspective. Both are following their dharma. Money plays but a negligible role in terms of their spiritual evolution, since money is the outcome, not the source of their perspectives on life. “Money does not define us”, says Tom. “ We define what money means.” And so long as our life is governed by a reliance on our swadharma, the innate
correctness of action that one is born with, the money that we earn would not just benefit us, but also contribute to a better and prosperous society. The enigma of money is a creation of our own minds. Then why get ensnared in it? It may come as a cliché to many, but we are the masters of money. Believe that; and you have money by the short and curlies!

THE FOUR PROSPERITY PRINCIPLES
1. Intention: It is being clear about your life purpose. Your life purpose is what you are here to do. You will know that by paying attention to what works for you and what does not.
2. Preparation: Reading, going to school, formal and informal discussion and above all, questioning everything. Argue pros and cons until you come to a point of understanding the ‘why’ of something. This helps convert information into wisdom.
3. Attention: It’s about staying in the present moment. Actually being in your body and observing what is going on with you and around you. Your body will give you very important clues, which will help you make more informed choices.
4. Action: This is the purpose for which you have prepared. You are now in the driver’s seat. Choose the best you can and take action.
MONEY MANTRA
To get the blessings of Ma Mahalakshmi, the Hindu Goddess of wealth and
prosperity, chant the following thrice a day, and watch abundance and affluence surge into your life. Believers say that many lives have changed, many fortunes have been made overnight as the ‘mantra’ recital has been rewarded with the blessings of the Goddess of wealth, through a shower of wealth and riches. (Recite thrice)
Om shreem heem shreem kamle kamalalaye praseed praseed, shreem heem shreem om mahalaxmi namaye.

Source -Mr. Montek Singh Aluwalia, Deputy Chairman, Planning Commission
Narendra Jhaveri, Senior Professor, IIMA

Taken from the working papers of Planning Commission- 22nd December, 2004.


A. The Concept Broadly
In the broadest sense the concept of value for money (VFM) is what the term means in simple English viz, ‘is the society getting value for the tax payers money?’. As the taxpayers money is what finally finances government expenditure and transfers the issue is really one of
(1) The efficacy, and
(2) The efficiency of
of government expenditure. As is obvious there can hardly be efficiency if the expenditure is not correctly directed, or in other words the allocation is not optimal. A completely unconstrained discussion/ analyses of VFM is no less comprehensive that a discussion of state, and the nature of the government, class and the economy.
B. The Concept
Hence in a narrow and meaningful sense VFM assumes that the current state and its political basis is not fundamentally flawed to give adequate value for money. Therefore the focus gets somewhat narrower to
(1) Looking at allocation of government expenditure across sectors and activities
(2) Looking at budget processes and identifying and removing possible dysfuctionalities therein: (Expenditure demands; decision; monitoring; change and auditing).
(3) Asking the question: is not the government’s current expenditure pattern and hence basket of activities such as to be where it has comparative advantage?
(4) Recognizing the limits of governments (organizational and incentive compatible) in enterprise like activities and hence more specifically asking the question of why not the private sector? Why not the private sector in various forms such as unregulated private enterprise (PvE), regulated private enterprise (RPvE) and the private finance initiatives (PFI) ? Or even why not Public Enterprise (PEs) sufficiently distanced from the government and with autonomy over operational and managerial decisions. These questions are particularly important since governments tend to have little variety in the organization forms that they have (for fundamental reasons) and hence enterprise activity is not an area of comparative advantage of government. The question: ‘what form is optimal ?’, has to asked at an activity level rather than at a sector level since newer ways of “unbundling and putting together” have become possible with the developments in contracting and in measurability. The question also needs to posed dynamically since there is the possibility of change in the comparative advantage of governments, and the private sector that includes markets more generally.
(5) Given that many sectors /activities remain natural monopolies (wires business in electricity distribution and transmission for example), the importance of right structuring and managing regulation cannot be overemphasised
C. The Concept Narrowly
Even more narrowly VFM has been discussed in the “project evaluation sense” or even in an (post project) “audit sense”. This has been especially so in the UK, where given an acceptance of privatization/ PFIs etc and light regulation as ways to reach optimal allocation and right structuring, the need for documentation and analysis to argue the case as well for making the choice from among alternatives, and for post facto diagnoses has been important. These requirements have considerably enriched accounting, financial analyses, government audit, regulatory oversight and project evaluation. The difficulties around finding a meaningful public sector comparator should not deter from the major strides made in value for money audit of projects and programmmes.
D. The concept for the Infrastructure
The concept as in C and B above and focused on physical infrastructure would be the domain of 2004.
Given also that the situation in India presents its own features (as an economy that has yet to create its network), the issue in B(4) has to be worked out, and perhaps tempered by the politics (but not by accepting every seeming political constraint). This does not a priori mean a greater role for PEs or for heavy handed regulation. As argued by JR Varma and S.Morris it could actually mean the reverse in such areas as where much of the networks have yet to come.
There are many constraints to efficiency and efficacy of government expenditure that arise even before the issue in B(4) is recognized: lengthy highly gamed dispute settlement process; archaic government accounting processes; dysfunctional politics; confounding effects of subsidy or of inappropriate modes of subsidization; inappropriate design of contracts, bad policy, even perverse restructuring efforts and reform; unacceptance of ‘government failure’ as an idea in discussions; abhorrence or ignorance of markets in the design of projects and policy; entrenched discretionary allocation processes; perverse audit; perverse incentives for public functionaries; deep interference in public (and private) enterprise by ostensibly distanced government; contrary role combinations; inappropriate laws.
In a pragmatic sense for much of the problems as in D(3) the solutions may well lie in the pursuit of privatization/ right regulation, better design and private finance initiatives. So that as a report that points the way forward, per se discussion of the failures /constraints as in D(4) are not of value. [As an example the suggestion that governments should distance themselves from Public Enterprises is not of much practical import since that raises the question: Why has this not happened despite designs and ex-ante pronouncement that PEs would have the autonomy? Or how is one to bring about the same?].
VFM especially should cover (e.g):
Stories of initiatives/ actions by officials and others to improve some public infrastructure; create new infrastructure; reform existing infrastructure
Policy, framework, design, and institutional developments / changes that have much import for VFM both at the level of sectors and more broadly
Privatisation stories; PFI initiatives;
Legal and constitutional changes
Market developments
The Concept Again
The concept necessarily assumes that it is possible to do some measurement of costs and benefits and as such is similar to cost benefit analysis. But there is major difference from the more traditional Cost Benefit analysis (CBA) of the economists; where the object is purely to assess the social costs and benefits given a project. Therein issues of incentive compatibility appropriates of organizational forms including regulation to achieve the project /stream of services; consistency of pricing with the fiscal situation and fiscal process; consistency of prices with dynamic efficiency and efficacy; issues that stem from design but have an impact on management and hence efficiency are all either subsumed or assumed given the ‘public policy’ basis of that approach – i.e. given market failure the state (as being necessarily concerned with the common good) enters. In VFM the recognition of markets is important. While CBA leaves the issue of the large difference between social costs and private costs; and social benefits and private benefits and their second order effects unaddressed, VFM does or ought to recognize these. Thus, CBA would say (because of such difference –and of the social IRR being large) the state or through subsidies the activity is taken up. VFM would or ought to say that when there are large differences (between the social and the private, ie when there are externalities) what (light regulation, PPPs, reduction in transaction costs, design of markets, unbundling, punitive measures, settlement procedures, clearer and more appropriate definition of property rights, liability measures, more general institutional measures) can be done to develop markets to nurture and regulate (them) such that the differences are reduced; and when the differences are fundamental (i.e. when market failure is endemic) then how best can the public sector deliver. Additionally there is (or ought to be) keener recognition of risks (and the asymmetric import or capacity to bear and to reduce them as between the state, private parties, and markets) in VFM.
Conclusion
At most basic level value for money implies returns/benefits exceeding costs. For a precise measure, quantification of costs and benefits is essential. With regard to public expenditure, often benefits are not easily quantifiable. Besides, public expenditure is not always amenable to single goals such as profit maximisation (with regard to private sector also goals are becoming more complex). Although infrastructure, unlike social sector expenditure is more amenable to measurement, simple ratios such as return on investment or economic cost-benefit analysis or for that matter socail cost-benefit analysis are not easy to measure.
Value for money, with regard to infrastructure could best be a descriptive concept built around following four aspects. One is cost. An alternative such as private sector involvement in infrastructure lowers the cost of provision of a given service then it is a movement towards improving the value of money. In this regard, simple comparison between cost with involvement of private sector with a public sector comparator is not always decisive. For instance, if public sector is grossly inefficient in providing a particular service, reduction in this cost will definitely be an improvement but not the LEAST COST OR MOST COST EFFIEICENT ALTERNATIVE. Operations research and other mathematical techniques have been used to determine optimal cost structure in areas where there are no private sector comparators. Theoretically, therefore, one may have to determine optimal cost or least cost solutions and then compare value for money of service being provided with or without private sector involvement. Second aspect is service. Key issue here is budget constraint that is alternative uses for scare capital resources used for a particular service. This remains valid whether a particular service is provided with or without private sector participation. With regard to infrastructure there are two sub elements. One is the level of service to be provided. For instance, if the level is designed top down then it may sometimes result in the level which is well beyond the short-term affordability of the potential users. Outside infrastructure two examples come to mind which will illustrate the issue. For instance, it is well known that Mercedes was an overengineered car, which enabled manufacturers to extort premium when competition was somewhat less intense. During the last few years, one of the thrust areas has been to rationalize engineering without compromising on some of the attributes desired by customers. Second example is the 'bare foot doctor' approach deployed by China to tackle most common ailments by training midwifes and nurses. This might be possibly a relevant aspect in determining, with regard to infrastructure, phased provision of a service. Third aspect relevant to value for money is beneficiaries. While most infrastructure services can be priced as per normal market practices, there could be elements of externality or, almost invariably, need for subsidization for some users, who otherwise could 'vote against' building infrastructure. How to tackle this issue is, relevant for value for money analysis. Finally, there is an aspect of resources. Given that resources are scarce, investment in infrastructure, especially if it involves an element for fiscal or other preference, may crowd out other investments.
The economies should build 'excess capacity' infrastructure as 'supply for infrastructure could create demand', which, in turn, could have significant multiplier and spread effects. The gist of the foregoing is that while it may not be highly productive exercise, as far as the report is concerned, to quantify value for money with great precision but most discussions/contributions could throw some light, depending upon the relevance, and quantify wherever possible, one or more aspects of value for money which come to my mind, though there might be some others.

Extracts of Mr. Jhaveri’s Statement

Closely associated with this concept, and in my view an important aspect is budgetary processes which could help improving value for money from infrastructure. By and large, these would deal with managerially and economically efficient budgetary practices and optimal allocation of resources. Fixation of targets and milestones, their close monitoring and measures to achieve these could form a part of this exercise.

One of the major shortcomings of 'political and bureaucratic' allocation is spreading butter too thinly or riding on too many horses at the same time. Incomplete projects and resultant time and cost overruns are inevitable results of such budgetary practices.

1. How did a Chicago professor's firm of accounting and engineering advisors grow to become the most prestigious consulting company in the world? What was the unique source of competitive advantage developed by James O. McKinsey and later Marvin Bower?

2. How effective was Ron Daniel in leading McKinsey to respond to challenges identified in the Commission on Firm Aims and Goals and why? What contribution did Fred Gluck make to the required changes?
3. Judging from the three mini-cases on front-line activities in the mid-1990s, how effective has the firm been in its two-decade long change process?

1. Some of you may identify a whole range of reasons why McKinsey has achieved the enviable position it has: their early commitment to consultant training, their development of a sense of professionalism, their recognition of a niche in top-management consulting, their focus on general management problems, particularly strategy and organization, their recruitment of first-class minds, the power of their "one-firm" culture, etc.
However, given the importance of the firm's culture in supporting subsequent changes, it is helpful to look in to the importance of the "One-Firm" concept to McKinsey's success.
At the heart of McKinsey's overarching cultural values and at the core of its day-to-day operating practices lies the "one-firm'" concept that Bower put in place. It is important to see its centrality to the shared belief system and the way in which this concept provided the firm with an important source of competitive advantage. Unlike many other professional service firms that tended to fragment by office and type of service (sometimes resulting in destructive internal battles over profits, clients, people, etc.), McKinsey was able to use its firm-wide integration to build a strong internal capability. Among the most important issues that may be raised are the following:
- By treating all clients as a firm-wide responsibility, it ensured that there was both a consistent consulting philosophy and a uniformly high standard of work, since there was a consciousness that one weak office could lose a worldwide client.
- By recruiting and developing consultants into the firm, not an office, it ensured uniformly high quality people who were readily transferable, a characteristic that was vital to knowledge transfer.
- By making people and profits firm-wide resources, it could ensure the most efficient utilization of its financial and human resources, two assets in short supply in the rapid expansion phase.
The important issue to highlight here is that even from its earliest days McKinsey was transferring knowledge and expertise through the informal networks it created as a by-product of its "one-firm" culture. However, the expertise was largely a methodological approach (e.g., a way of framing issues, a problem solving methodology) and, even more importantly, a set of strongly held values (e.g., a commitment to client service, and adherence to professional standards). In this way they transferred McKinsey's commitment to providing a disciplined problem-solving approach that generated unique solutions to problems faced by top management of leading companies. There was no attempt to package knowledge or transfer the specific learning from one-assignment to the next.


2. Before engaging the issue of what Daniel did to respond to the perceived problems with the old "client relationship" model McKinsey had pursued for 50 years, it is intriguing to recognize that although the Commission on Firm Aims and Goals presented its findings in 1971, significant change did not occur until Daniel became MD in 1976. One might then wonder as to why it has taken so long to make significant change to a system recognized as flawed.
In a clear case of "Physician, heal thyself," McKinsey found it hard to implement change for several reasons, including the following:
- At an individual level, most firm members—including, and perhaps especially the partners and directors-had succeeded in the system by developing their generalist consulting skills and building client relationships. To many, it must have seemed threatening to be asked to develop specialist skills and become "T-Shaped."
- At the organizational level, the power structure had always been built around local offices that were responsible for hiring and developing consultants and building their local client base. Any changes that would threaten either of these sources of power were likely to be resisted.
- At the level of basic beliefs, many-including Marvin Bower—were concerned that the changes would damage the firm's deeply embedded value of client service by promoting "one-size-fits-all" tools-based consulting driven by visiting experts without long-term client knowledge or commitment.
- Fundamentally, the proposed change to "thought leadership" consulting implied a major shift in the whole business model and organizational capabilities on which McKinsey had been built.
However, under Daniel's leadership, the change process clearly took root as he initiated many of the changes. One of the most important initiatives he undertook was to appoint one of the firm's most productive and respected directors to head internal training. The symbolism of this allocation of a highly productive "snowball thrower" to consultant development role must have been very powerful; the impact of the programs he initiated even more so.
The structural changes—creating industry-based and functional-based groups—were also powerful signals, but it is worthwhile probing what Daniel was trying to achieve with these changes. Clearly, they became McKinsey's repositories for firm expertise—in financial services, strategy or organization, for example. More importantly, they served as affiliation groups for consultants trying to develop their "knowledge spike" as required by the new firm guidelines.
Finally, Daniel oversaw the institutionalization of these changes in a formal redefinition of McKinsey's mission. While Bower was focused only on client service, the new mission now puts equal weight on building a great firm. This recognition that “attracting, developing, exciting, andretaining exceptional people” is at the heart of the McKinsey's mission represents a major step in the development of its intellectual capital.
Many of you may also immediately focus on Gluck's initiative in starting a Knowledge Management Project in 1987 through which a series of information systems were developed. FPIS provided a computerized database of client engagements and PD Net was structured to capture consultant-generated ideas and concepts. These Systems were designed to support the task of capturing knowledge that existed within the firm, and facilitating its transfer and application in other parts of the organization. In other words, it was building on the initial phase of developing "T-shaped" consultants by focusing on the task of institutionalizing the individual expertise and leveraging it across the organization.
In particular, those with strong computer backgrounds may voice strong support for Gluck's initiatives, saying that at last the firm has begun to create the infrastructure that will provide them with a sustainable source of competitive advantage. They may highlight the power of computer-based data systems that can efficiently capture and transfer knowledge throughout the system.
Some other issues to consider are:
* How much of a source of competitive advantage do FPIS and PD Net represent for McKinsey?
* What is different about the focus of cluck's actions compared with Daniel's emphasis?
* Why Is Gluck so fixated on embedding knowledge and institutionalizing the firm's intellectual capital?
* What is the difference between the “discover-codify-disseminate” model of knowledge development and the “engage-explore-apply-share” approach? Why are they keen to develop the latter?


3. It is important to focus on the activity described in the case section "Knowledge Management on the Front," so we can evaluate the effectiveness of the changes made. Each mini-case reveals both the strengths and the limitations of the structures, systems, and processes that McKinsey's leaders have developed. This would allow us to enter debates about the effectiveness of the emerging knowledge-based organization.
For example, some of you may be amazed that the Sydney office project could have been staffed by such junior and inexperienced consultants supervised by an engagement manager who did not even arrive on the scene until most of the analysis was completed. It is not surprising to them that a director John Stuckey was disappointed that the team did not come up with a breakthrough.
On the other side of the argument, you may argue that this is a perfect illustration of how the system is supposed to work. Far from being abandoned, the team was advised and supported by five experts acting as consulting directors on call, educated on firm expertise through 179 PD documents, and backed by the specialized input of more than 60 associates answering specific questions. This safety net of organizational support allowed a junior team with little personal expertise to deliver the firm's knowledge and experience to a demanding client.
Similarly, on the European telecom example, some may be impressed by the way in which McKinsey seems to be transferring and leveraging specialist knowledge through personnel transfers (Bray to Europe), documented learning (PD publications), systematic networking (practicecoordinator's role), and embedding knowledge (the evolution to team leadership of the practice).
On the other side, some may express concern about the insularity of industry practices as they turn inward for input and support. Even beyond John Stuckey's concern that the Sydney team only looked within McKinsey for expertise, it appears the telecom group prefers to look only within its own practice. With the development of a telecom intranet, some may ask whether the information technology is opening up or insulating this practice.
Finally, on the business-to-business competence center, some may see Dull's assignment as a successful redirection of a valuable firm resource to develop as a specialist. The high ranking of B to B documents on the PDnet Best Seller list (Exhibit 7) indicates he is generating valuable knowledge and the success of the conference shows he is developing the networks to develop his ideas to clients.
On the negative side, however, other students may point out that McKinsey still does not appear to have solved the problem of how to support the development of specialists and that people like Dull are constantly worried about promotion. Dull's thoughts about writing a book sounds like a plan to develop his own "brand image" to allow him to leave the firm and take his intellectual capital with him.

PS-The note was shared by the contributor in Mckinsey Annual Conference in Chicago, 24th January, 2005.

1. Health Advances
2. The Gallup Organisation
3. Putnam Associates
4. Droege & Group
5. Kurt Salmon Associates
6. PRTM
7. Booz Allen Hamilton
8. The Boston Consulting Group
9. Braun Consulting
10. Mercer Oliver Wyman

1. LEK Consulting
2. ZS Associates
3. Harverstick Consulting
4. Putnam Associates
5. Booz Allen Hamilton
6. Monito Group
7. The Gallup Organisation
8. Dean & Company
9. First Manhattan Consulting Group
10. PRTM

1. Mckinsey & Co
2. The Gallup Organisation
3. The Boston Consulting Group
4. PRTM
5. Monitor Group
6. Mercer Management Consulting
7. A.T. Kearney
8. Kazenbach Partners LLC
9. Marakon Associates
10. Bain & Company

1. The Gallup Organisation
2. PRTM
3. Mckinsey & Co.
4. Braun Consulting
5. Booze Allen Hamilton
6. The Boston Consulting Group
7.Kurt Salmon Associates
8. Strategic Decisions Group
9. Bain & Company
10. Droege Group

1. Bain & Company
2. Marakon Associates
3. ZS Associates
4. The Boston Consulting Group
5. PRTM
6. Booze Allen Hamilton
7. Mercer Management Consulting
8. LEK Associates
9.Putnam Associates
1o. Gallup Organisation

1. Gallup Organisation
2. The Boston Consulting Group
3. Putnam Associates
4. Bain & Company
5. PRTM
6. Katzenbach Partners LLC
7. Health Advances
8. Droege & Group
9. ZS Associates
10. Mercer Management Consulting

Source- Top Consulting Magazine
1. The Boston Consulting Group
2. Mercer Management Consulting
3. Mercer Oliver Wyman
4. Katzebanch Partners LLC
5. First Manhattan Consulting Group
6. Dean & Company
7. Marakon Associates
8. Bain & Company
9. The Gallup Organisation
10. Diamond Cluster International

Source- PA Consulting Group and Supply Chain Council represented by GM Group

What is Supply Chain Management?

Supply chain management is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service, manufactures that product or service and delivers it to customers. The following are five basic components for supply chain management.

1. Plan-This is the strategic portion of supply chain management. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

2. Source-Choose the suppliers that will deliver the goods and services you need to create your product or service. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments.


3. Make-This is the manufacturing step. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity.

4. Deliver-This is the part that many insiders refer to as "logistics." Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

5. Return-The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.

The Supply Chain Operations-Reference Model has been developed by Rabin Todd and McGrath. This one is the latest consulting tool which is ready to hit the market.

What is a Process Reference Model?

For the first time the patriarch of the consulting world sat together and tried to reach the bottom line. Despite of runaway success of SCM it was nevertheless possible to merge the individual factors of SCM. SCOR integrates the well known concepts of business process re-engineering, benchmarking and process into a cross-functional framework.

Business Process Re-engineering (Capture the as-is process and design the to-be future state.)

Benchmarking (Quantify the operational process of similar companies and establish internal targets based on “best-in-class” results.

Best Practices Analysis (Characterize the Management practices and software solutions to give the result the “best-in-class” performance.)

SCOR addresses all three basic aspects.

SCOR Contents:

· Standard Description of Management Process
· A Framework of Relationship among the Processes
· Standard Matrices to Measure the Performance
· Management Practices that produce the best-in-class performance
· Standard alignment to features and functionality

Objective of SCOR

· Implemented purposefully to achieve the competitive advantage
· Described unambiguously and communicated
· Measured, managed and controlled
· Tuned and re-tuned to a specific purpose

Boundaries of SCM

From your supplier’s supplier to your customer’s customer

Scope of SCOR

PLAN-Plan- Demand /Supply and Planning Management

· Balances resources with requirements and establish/communicate plans for the whole supply chain, including return and the execution process of source, make and deliver.
· Management of business rules, the supply chain performance, data collection, inventory, capital assets, transportation, planning and configuration, and regulatory requirements and compliances.
· Align the supply chain unit with financial plan.

SOURCE-Sourcing Stocked, Make-to-order, and Engineer-to-Order Product

· Schedule deliveries, receive, verify and transfer the product and authorize supplier’s payments.
· Identify and select supply sources, when not predetermined as for engineer-to-order product.
· Manage business rules, assess supplier performance and manage data.
· Manage inventory, capital assets, incoming product, supplier network, import/export requirements and supplier’s agreements.

MAKE-Make-to-Stock, Make-to-Order, and Engineer-to-Order Production Execution

· Schedule Production Activities, issue product, produce and test, package, stage product and release product to deliver
· Finalize engineer-to-engineer product
· Manage rules, performance, data, in-process products (WIP), equipments and facilities, transportation, production network and regulatory compliance for production.

DELIVER-Order, Warehouse, Transportation, and Installation Management for Stocked, Make-to-order, and Engineer-to-Order Product

· All order management steps from processing customer’s enquiries and quotes to routing shipments and selecting careers.
· Warehouse Management from receiving and picking product to load and ship the product.
· Receive a product at customer and install it of necessary
· Invoicing the customer
· Manage delivery rules, performance, information, finished product inventories, capital assets, transportation, product life cycle, and import/export requirements.

RETURN-Return of Raw Materials and Receipt of Returns of Finished Goods

· All return defective product steps from source- identify product condition, disposition product, return authorization, schedule product shipment, and return defective product-and deliver-authorized product return, schedule return receipt, receive product, and transfer defective product.
· All return maintenance, repair and overhaul product steps from one source-identify product condition, disposition product, request product return authorization, schedule product shipment and return MRO product- and deliver- authorize product return, schedule return receipt, receive and transfer MRO product.
· All return excess product steps from source-identify product condition, disposition product, request product return authorization, schedule product shipment, and return excess product-and deliver-authorize product return, schedule return receipt, receive product and transfer excess product.
· Manage return business rules, performance, data collection, return inventory, capital assets, transportation, network configuration and regulatory compliance and requirements.

SO CLOSE NO MATTER HOW FAR WE ARE
COULDN'T BE MUCH MORE FROM THE HEART
FOREVER TRUST WHO WE ARE
AND NOTHING ELSE MATTERS
NEVER OPEN MY SELF WILL
I BIZZARE WE LIVE OUR OWN WAY
ALL THESE WORDS I JUST DONT SAY
AND NOTHING ELSE MATTERS
TRUST AND SEEK I AM FINDIN YOU
EVERYDAY FOR A SOMETHING NEW
OPEN MIND FOR A DIFFERENT VIEW
NEVER CARED FOR WHAT THEY DO
NEVER CARED FOR WHAT THEY KNOW
AND I KNOW
NOTHING ELSE MATTERS

This high voltage number of mother of all metal band "Metallica" created revolution in youth and old in south america and other parts of the globe.

For me it's no less than national anthem!!

This city Banaglore is a bonaza for rockers. May be that's one of the reason many international hippy guys throng this city like mad cows. The extent goes upto Bryan Adams, Roger Waters, Mark Knopfler, Deep Purple and so on...

So anybody should rock here. No problems even if Waters is not here you dont have to worry. The potholes in the city make you rocking always.

This city has three distinct advantages:

1. Clement Weather- The weather is awesome. The working hours shoots up. If you are from dry and high place like Delhi then you feel as if you are bat out of hell.

2. Crowd-You get the most honest and decent crowd in this piece of land. They can accommodate you even if you belongs to some other part.

3. Enterpreneurs- The city has given birth to array of enterprenuers. Murthy of Infosys, Shabeer Bhatia of Hotmail fame, Premji of Wipro, Kiran Mazumdar of Bio tech. These are to name a few.

Long live Bangalore!!

I will be back soon.

Bangalore- Six Months- A Roller Coaster Ride
Beyond the horizon of the place we lived when we were young
In a world of magnets and miracles
Our thoughts strayed constantly and without boundary
The ringing of the division bell had begun
Along the Long Road and on down the Causeway
Do they still meet there by the Cut
There was a ragged band that followed in our footsteps
Running before time took our dreams away
Leaving the myriad small creatures trying to tie us to the ground
To a life consumed by slow decay
The grass was greener
The light was brighter
With friends surrounded
The night of wonder
Looking beyond the embers of bridges glowing behind us
To a glimpse of how green it was on the other side
Steps taken forwards but sleepwalking back again
Dragged by the force of some inner tide
At a higher altitude with flag unfurled
We reached the dizzy heights of that dreamed of world
Encumbered forever by desire and ambition
There's a hunger still unsatisfied
Our weary eyes still stray to the horizonThough down this road we've been so many times
The grass was greener
The light was brighter
The taste was sweeter
The nights of wonderWith friends surrounded
The dawn mist glowing
The water flowing
The endless river
Forever and ever
ALL GONE!! IS IT SO?
I came to a place called Bangalore on August 24th 2004, didnt have any idea that I will be here for next six months !! Bangalore-the place i always loved never gave me surprise niether a nightmare..yet introspective muses a roller coaster ride naturally!!
My personal encounter with Bangalore- August 2004 to March 2005..A random thought of confused mind...
1. People-
I will sum up as 1+3...Rest I dont know by writing some momo short of lines will solve a honest portrayal of expression. Yeah I will come back to 3+1..
One CA (Chartered Accountant) and Three Articles...
They were always there during the period..straight jacket thinking..perhaps balesphmy??
Definitely cherry on ice cream!!
2. Places- Three only....

• Purple Haze, Residency Road-New life devolves day by day,As friends and neighbours turn awayAnd there's a change that, even with regret, cannot be undone. You hang on to this place you will as if you are falling straight from a cliff hanger..yeah..draught beer..kewl rock music..and a place which can take breath away.
  

• Styx- Another high voltage pub, plays some extremely noisy music..yet sometimes it's fun to be there.
  
• Office- Backyard of the devils..if you dont want to do anything and then go and disturb somebody..LOL..For a useless like me its always better beat the bushes...fungus inside the den. You dashed inside...you feel you are in den!! May be for millions of years mankind has lived just like the animals. Then something happened which unleashed the power of our imagination, we learned to talk. 2.30 P.M., Weekdays-There is a silence surrounding, i cant seem to think straight..uummm..I will sit in the corner..No can bother you..I thought I should speak now...I seems to cant speak ever..I sometime wonder..where do we go from here? It shouldnt be like this...all we need to make ensure that we keep talking. 6.oo P.M.-Suddenly there is a hush...no one is there...you realized from the corner..something has happned...you feel somebody has thrown the lock into ground. And with glasses high we raised a cry for freedom time has arrived...i started wondering..where is freedom or shall i call it wisdom...Hey still some peoples are there like the ship of fools run aground..promises lit up the night like paper doves in flight. 6.45 P.M.- Your vicinity is empty!!Oh no..no warmth not even pride remaining.. Next day 9.30 A.M.-Again new frontiers shift like desert sands while some feel they have washed their blood in hands!! of loyalty, of history or sheds of gray!! You can see the smirk and victorious smile once again...deja vu...?? Yup man..I woke up to the sound of drums, the morning sun streamed in..I turned at cell..but all but the bitter residue slipped away... One more dream is over....

The roller coaster ride hasnt acheived the target..

The show must go on....

Part II later on..

Idea Generated and Concieved by "The Demented Devil"...never meant offence to anyone...Sorry and sincere apologies if somebody is offended. This is my ray of thought...

Have a nice day all!!

Extracts from the aticle "Competitive Business Strategy in Historical Persepectives)
Author- Pankaj Ghemawat- Senior Proffessor, Havard Business School
BCG’s founder, Bruce Henderson, believed that a consultant’s job was to find “meaningful quantitative relationships” between a company and its chosen markets.In his words, “good strategy must be based prima-rily on logic, not . . . on experience derived from intuition.”Indeed,Henderson was utterly convinced that economic theory would someday lead to a set of universal rules for strategy. As he explained, “[I]n most firms strategy tends to be intuitive and based upon traditional patterns of behavior which have been successful in the past. . . . [However,] in growth industries or in a changing environment, this kind of strategy is rarely adequate. The accelerating rate of change is producing a business world in which customary managerial habits and organization are in-creasingly inadequate.”In order to help executives make effective strategic decisions, BCG drew on the existing knowledge base in academia: one of its first em-ployees, Seymour Tilles, was formerly a lecturer in Harvard’s businesspolicy course. However, it also struck off in a new direction that Bruce Henderson is said to have described as “the business of selling power-ful oversimplifications.”In fact, BCG came to be known as a “strat-egy boutique” because its business was largely based, directly or indi-rectly, on a single concept: the experience curve .The value of using a single concept came from the fact that “in nearly all problem solving there is a universe of alternative choices, most of which must be discarded without more than cursory attention.”Hence, some “frame of reference is needed to screen the . . . relevance of data, methodology, and implicit value judgments” involved in any strategy decision. Given that decision making is necessarily a complex process, the most useful “frame of reference is the concept. Conceptual thinking is the skeleton or the framework on which all other choices are sorted out.”BCG and the Experience Curve. BCG first developed its version of the learning curve—what it labeled the “experience curve”—in 1965–66. According to Bruce Henderson, “it was developed to try to explain price and competitive behavior in the extremely fast growing seg-ments” of industries for clients like Texas Instruments and Black . Tilles credits Henderson for recognizing the competitiveness of Japanese industry at a time, in the late 1960s, when few Americans be-lieved that Japan or any other country could compete successfully against American industry.
BCG consultants studied these industries, they naturally asked why “one competitor outperforms another (assuming compara-ble management skills and resources)? Are there basic rules for suc-cess? There, indeed, appear to be rules for success, and they relate tothe impact of accumulated experience on competitors’ costs, industryprices and the inter relation between the two.”The firm’s standard claim for the experience curve was that for each cumulative doubling of experience, total costs would decline by roughly 20 to 30 percent due to economies of scale, organization all earning, and technological innovation. The strategic implication of theexperience curve, according to BCG, was that for a given product seg-ment, “the producer . . . who has made the most units should have thelowest costs and the highest profits.”Bruce Henderson claimed thatwith the experience curve “the stability of competitive relationshipsshould be predictable, the value of market share change should be cal-culable, [and] the effects of growth rate should [also] be calculable.”From the Experience Curve to Portfolio Analysis. By the early1970s, the experience curve had led to another “powerful oversimplifi-cation” by BCG: the “Growth-Share Matrix,” which was the first use ofwhat came to be known as “portfolio analysis.” The ideawas that after experience curves were drawn for each of a diversified company’s business units, their relative potential as areas for invest-ment could be compared by plotting them on the grid.BCG’s basic strategy recommendation was to maintain a balancebetween “cash cows” (i.e., mature businesses) and “stars,” while allo-cating some resources to feed “question marks,” which were potential stars. “Dogs” were to be sold off. In more sophisticated language, a BCGvice president explained that “since the producer with the largest stable market share eventually has the lowest costs and greatest profits, it be-comes vital to have a dominant market share in as many products aspossible. However, market share in slowly growing products can begained only by reducing the share of competitors who are likely to fight back.” If a product market is growing rapidly, “a company can gain share by securing most of the growth. Thus, while competitors grow,Bruce Henderson explained that, unlike earlier versions of the “learning curve,” BCG’sexperience curve “encompasses all costs (including capital, administrative, research andmarketing) and traces them through technological displacement and product evolution. It isalso based on cash flow rates, not accounting allocation.”

11th April, 2005, 9.54 P.M.- Rajat Called up.... I told him man Mckinsey is loosing out, yeah it is..is it the dawn of a person who literally dig consulting out mother earth's soil and throws into air which became oblivioun.. Of course dude!! I am referring to dad only...he said what??? how come your dad in consulting?? My reply was spontaneous..no man...my dad will never be a consultant, he prefers to be an academician..hope one day he will understand other dad's virtues!! He asked me what are you talking about??
I hesitate for a moment.... I told him...man...father of consulting.....Marvin Bower!!!
There is a hush, silence.....no consultant dares to stand up when it comes to bower?? Truly, he is the innovator of consulting...the patriach, legend, mercurial ...no more please!!
All Marvin Bower wanted to do was solve a problem, he had no idea he was about to create industry!!
Company post world war II started falling down, most of these companies were managed by investment bankers who put financial matters above anything . Bower known as father of management consulting never wanted any client to how to dictate his time on what.
"When you are doing something in an intangible field, we have a few old desks and people you have to motivate people basically"
He put his own money when every other firm was going public. When he turned 60 he sold his shares to firm at book value. Selling them at real value would have forced the firm into debt and bankruptcy perhaps!!

"Here we begin to throught too much about money because we have so much coming in. People who makes a lot of money get to thinking about how they will spend. May be four homes, a yacht. If an individual consultant has to make a professional decision on the spot and he has too many obligations , i worry he is likely to make a decision to attract a client who shouldn't be attracted."
"At a big management meeting the head of the company who was autocrats of all autocrats kept interrupting and speaks his own mind. Marvin was in other corner of the room and at one point of time he bellowed out the problem with the company is you Mr...." There was a deathly silence and after that Mckinsey never back to that company.
Darwall said Bower thinks aheads of decades!! His long term plan was mesmerising and outstanding.
Forbes declared in 1968...will vatican go public? May be Marvin Bower can reply..
The ultimate tribute from the ultimate magazine.
The last achievement of Bower was to help Goerge Bush to win the elections....perhaps the heights of consulting and consultants.
Shine on you crazy diamond!!

Source-Booz Allen Hamilton

Contributed By Mr. Arun Maira, Chairman-The Boston Consulting Group of India

Way back when (pick your date), senior executives in large companies had a simple goal for themselves and their organizations: stability. Shareholders wanted little more than predictable earnings growth. Because so many markets were either closed or undeveloped, leaders could deliver on those expectations through annual exercises that offered only modest modifications to the strategic plan. Prices stayed in check; people stayed in their jobs; life was good.
Market transparency, labor mobility, global capital flows, and instantaneous communications
have blown that comfortable scenario to smithereens. In most industries and in almost all
companies, from giants on down heightened global competition has concentrated management collective mind on something that, in the past, it happily avoided: change.
Successful companies, as Harvard Business School professor Rosabeth Moss Kanter told in 1999, develop a culture that just keeps moving all the time.
This presents most senior executives with an unfamiliar challenge. In major transformations of large enterprises, they and their advisors conventionally focus their attention on devising the best strategic and tactical plans. But to succeed, they also must have an intimate understanding of the
human side of change management the alignment of the company culture, values, people, and behaviors to encourage the desired results. Plans themselves do not capture value; value is realized only through the sustained, collective actions of the thousands perhaps the tens of thousands of employees who are responsible for designing, executing, and living with the changed environment.
Long-term structural transformation has four characteristics: scale (the change affects all or most of the organization), magnitude (it involves significant alterations of the status quo), duration (it lasts for months, if not years), and strategic importance. Yet companies will reap the rewards only when change occurs at the level of the individual employee.
Many senior executives know this and worry about it. When asked what keeps them up at night, CEOs involved in transformation often say they are concerned about how the work
force will react, how they can get their team to work together, and how they will be able to lead their people. They also worry about retaining their company unique values and
sense of identity and about creating a culture of commitment and performance. Leadership teams that fail to plan for the human side of change often find themselves wondering why their best-laid plans have gone awry.
No single methodology fits every company, but there is a set of practices, tools, and techniques that can be adapted to a variety of situations. What follows is a ;Top list of guiding principles for change management. Using these as a systematic, comprehensive framework, executives can understand what to expect, how to manage their own personal change, and how to engage the entire organization in the process.
1. Address the human side systematically.
Any significant transformation creates people issues. New leaders will be
asked to step up, jobs will be changed, new skills and capabilities must be developed, and employees will be uncertain and resistant. Dealing with these issues on a reactive, case-by-case basis puts speed, morale, and results at risk. A formal approach for managing change Beginning with the leadership team and then engaging key stakeholders and leaders should be developed early, and adapted often as change moves through the organization. This demands as much data collection and analysis, planning, and implementation discipline as does a redesign of strategy, systems, or processes. The change-management approach should be fully integrated into program design and decision making, both informing and enabling strategic direction. It should be based on a realistic assessment of the organization history, readiness, and capacity to change.
2. Start at the top.
Because change is inherently unsettling for people at all levels of an organization, when it is on the horizon, all eyes will turn to the CEO and the leadership team for strength, support, and direction. The leaders themselves must embrace the new approaches first, both to challenge and to motivate the rest of the institution. They must speak with one voice and model the desired behaviors. The executive team also needs to understand that, although its public face may be one of unity, it, too, is composed of individuals who are going through stressful times and need to be supported. Executive teams that work well together are best positioned for success. They are aligned and committed to the direction of change, understand the culture and behaviors the changes intend to introduce, and can model those changes themselves. At one large transportation company, the senior team rolled out an initiative to improve the efficiency and performance of its corporate and field staff before addressing change issues at the officer level. The initiative realized initial cost savings but stalled as employees began to question the leadership team vision and commitment. Only after the leadership team went through the process of aligning and committing to the change initiative was the work force able to deliver downstream results.
2. Involve every layer.
As transformation programs progress from defining strategy and setting targets to design and implementation, they affect different levels of the organization. Change efforts must include plans for identifying leaders throughout the company and pushing responsibility for design and implementation down, so that change cascades through the organization. At each layer of the organization, the leaders who are identified and trained must be aligned to the company vision, equipped to execute their specific mission, and motivated to make change happen. A major multiline insurer with consistently flat earnings decided to change performance and behavior in preparation for going public. The company followed this cascading leadership methodology, training and supporting teams at each stage.First, 10 officers set the strategy, vision, and targets. Next, more than 60 senior executives and managers designed the core of the change initiative. Then 500 leaders from the field drove implementation. The structure remained in place throughout the change program, which doubled the company earnings far ahead of schedule. This approach is also a superb way for a company to identify its next generation of leadership.
3. Make the formal case.
Individuals are inherently rational and will question to what extent change is needed, whether the company is headed in the right direction, and whether they want to commit personally to making change happen. They will look to the leadership for answers. The articulation of a formal case for change and the creation of a written vision statement are invaluable opportunities to create or compel leadership-team alignment.
Three steps should be followed in developing the case: First, confront reality and articulate a convincing need for change. Second, demonstrate faith that the company has a viable future and the leadership to get there. Finally, provide a road map to guide behavior and decision making. Leaders must then customize this message for various internal audiences, describing the pending change in terms that matter to the individuals.
A consumer packaged-goods company experiencing years of steadily declining earnings determined that it needed to significantly restructure its operations instituting, among other things, a 30 percent work force reduction to remain competitive. In a series of offsite meetings, the executive team built a brutally honest business case that downsizing was the only way to keep the business viable, and drew on the companys proud heritage to craft a compelling vision to lead the company forward. By confronting reality and helping employees understand the necessity for change, leaders were able to motivate the organization to follow the new direction in the midst of the largest downsizing in the companys history. Instead of being shell-shocked and demoralized, those who stayed felt a renewed resolve to help the enterprise advance.
5. Create ownership.
Leaders of large change programs must overperform during the transformation and be the zealots who create a critical mass among the work force in favor of change. This requires more than mere buy-in or passive agreement that the direction of change is acceptable. It demands ownership by leaders willing to accept responsibility for making change happen in all of the areas they influence or control. Ownership is often best created by involving people in identifying problems and crafting solutions. It is reinforced by incentives and rewards. These can be tangible (for example, financial compensation) or psychological (for example, camaraderie and a sense of shared destiny). At a large health-care organization that was moving to a shared-services model for administrative support, the first
department to create detailed designs for the new organization was human resources. Its personnel worked with advisors in cross-functional teams for more than six months. But as the
designs were being finalized, top departmental executives began to resist the move to implementation. While agreeing that the work was top-notch, the executives realized they
hadnt invested enough individual time in the design process to feel the ownership required to begin implementation. On the basis of their feedback, the process was modified to include a deep dive. The departmental executives worked with the design teams to learn more, and get further exposure to changes that would occur. This was the turning point; the transition then happened quickly. It also created a forum for top executives to work as a team, creating a sense of alignment and unity that the group hadnt felt before.
6. Communicate the message.
Too often, change leaders make the mistake of believing that others understand the issues, feel the need to change, and see the new direction as clearly as they do. The best change programs reinforce core messages through regular, timely advice that is both inspirational and practicable. Communications flow in from the bottom and out from the top, and are targeted to provide employees the right information at the right time and to solicit their input and feedback. Often this will require overcommunication through multiple, redundant channels. In the late 1990s, the commissioner of the Internal Revenue Service, Charles O. Rossotti, had a vision: The IRS could treat taxpayers as customers and turn a feared bureaucracy into a world-class service organization. Getting more than 100,000 employees to think and act differently required more than just systems redesign and process change. IRS leadership designed and executed an ambitious communications program including daily voice mails from the commissioner and his top staff, training sessions, videotapes, newsletters, and town hall meetings that continued through the transformation.
Timely, constant, practical communication was at the heart of the program, which brought the IRS customer ratings from the lowest in various surveys to its current ranking above the likes of McDonald& and most airlines.
7. Assess the cultural landscape.
Successful change programs pick up speed and intensity as they cascade down, making it critically important that leaders understand and account for culture and behaviors at each level of the organization. Companies often make the mistake of assessing culture either too late or not at all. Thorough cultural diagnostics can assess organizational readiness to change, bring major problems to the surface, identify conflicts, and define factors that can recognize and influence sources of leadership and resistance. These diagnostics identify the core values, beliefs, behaviors, and perceptions that must be taken into account for successful change to occur. They serve as the common baseline for designing essential change elements, such as the new corporate vision, and building the infrastructure and programs needed to drive change.
7. Address culture explicitly.
Once the culture is understood, it should be addressed as thoroughly as any other area in a change program. Leaders should be explicit about the culture and underlying behaviors that will best support the new way of doing business, and find opportunities to model and reward those behaviors. This requires developing a baseline, defining an explicit end-state or desired culture, and devising detailed plans to make the transition.
Company culture is an amalgam of shared history, explicit values and beliefs, and common attitudes and behaviors. Change programs can involve creating a culture (in new companies or
those built through multiple acquisitions), combining cultures (in mergers or acquisitions of large companies), or reinforcing cultures (in, say, long-established consumer goods or manufacturing companies). Understanding that all companies have a cultural center the locus of thought, activity, influence, or personal identification is often an effective way to jump-start culture change. A consumer goods company with a suite of premium brands determined that business realities demanded a greater focus on profitability and bottom-line accountability. In addition to redesigning metrics and incentives, it developed a plan to systematically change the company& culture, beginning with marketing, the companys historical center. It brought the marketing staff into the process early to create enthusiasts for the new philosophy who adapted marketing campaigns, spending plans, and incentive programs to be more accountable. Seeing these culture leaders grab onto the new program, the rest of the company quickly fell in line.
8. Prepare for the unexpected.
No change program goes completely according to plan. People react in unexpected ways; areas of anticipated resistance fall away; and the external environment shifts. Effectively managing change requires continual reassessment of its impact and the organization willingness and ability to adopt the next wave of transformation. Fed by real data from the field and supported by information and solid decision-making processes, change leaders can then make the adjustments necessary to maintain momentum and drive results.
A leading U.S. health-care company was facing competitive and financial pressures from its inability to react to changes in the marketplace. A diagnosis revealed shortcomings in its organizational structure and governance, and the company decided to implement a new operating model. In the midst of detailed design, a new CEO and leadership team took over. The new team was initially skeptical, but was ultimately convinced that a solid case for change, grounded in facts and supported by the organization at large, existed. Some adjustments were made to the speed and sequence of implementation, but the fundamentals of the new operating model remained unchanged.
10. Speak to the individual.
Change is both an institutional journey and a very personal one. People spend many hours each week at work; many think of their colleagues as a second family. Individuals (or teams of individuals) need to know how their work will change, what is expected of them during and after the change program, how they will be measured, and what success or failure will mean for them and those around them. Team leaders should be as honest and explicit as possible. People will react to what they see and hear around them, and need to be involved in the change process. Highly visible rewards, such as promotion, recognition, and bonuses, should be provided as dramatic reinforcement for embracing change. Sanction or removal of people standing in the way of change will reinforce the institution commitment.
Most leaders contemplating change know that people matter. It is all too tempting, however, to dwell on the plans and processes, which dont talk back and dont respond emotionally, rather than face up to the more difficult and more critical human issues. But mastering the soft side of change management neednt be a mystery.

The happiest moment in your life....what could be? Getting an increment? Meeting your gf after long time? Joined a big wig organisation? For me it's "meeting a devil". A devil is meeting another devil..lock horns!! You are wrong.. they understand each others words very well, perhaps soul too....

Rohit Laxman working as a networking engineer at Wipro lives upto Bangalore reputation..yup..rockers city. You name anything..Metallica, Ozzy, Black Sabbath, Floyd, Knopfler..the list is endless. He blessed me with 1600+ clips. Yo man..made my next one month.
Mama now coming home....
Always should be...
Mothers love granted , no you think it should be me...
Laid my heart door..let your son glow...mama...
Techie rocks always!!

Who told devils doesnt have soul?

The inside out of a dream at mid-day..no nightmares please!!
1. The spectrum of consulting services manifolded to the extent like..whom i should marry? how to win the elections? how to tackle disaster management? how to save the greenfield?....owo...sounds amazing...i wish it would happen
2. No MC, BCG or BOOZ ALLEN...small firms dominating at top..i am wondering whether thats feasible?
3. Aliens strikes on earth..yo....more insurance for AIG and Metlife..by the way where LIC will stand? I hope it will get a place
4.Yup..Tesla's mommy arrived..two big green eyes..scary face..lots of bandages allover..by the way whats the hell is that? Nuthin much...thats ghost of Andersen....one more Sarbanes Oxley..
5. Services streamlined..Indian food chain..Bidi...Huh!! they are much bigger than Mcdonald or Pepsi..will they get a chance..Excuse me Jatin..no excise duty on them for gods shake!!
6. Many global headquarters shifted to India..the next powerhouse..will uncle sam allow? Mute...no..rather pause... Let Uncle Govind relax the so called pradigm of FEMA & brothers.. Yo..Balki..now don't run to them with some red tapes to cut the ice with bureaucrats.
7. New Delhi..the power center for consulting...no problem man..i will enjoy in Safdarjung..wishful thinking..my employers should abandon the clement weather in Bangalore..will they? Dont know man..Mallya has to answer after intoxicating Bangaloreans with draught beer!!
Deja Vu!! Get back to sleep...it's not midday dream..2.40 a.m.

There will be hardly anyone illustrious like Robert Mccullay, born in small town in Lockport (IL) a downtown of Chicago, to a farmer made his intentions very clear from the age of 18 when he changed sewage systems of his small city!!! The born consultant got a degree from Newport (After four unsuccessful attempts!!) and graduated his skills in Arthur D Little where he was rejected at campus attributed to his poor academic records. Known for his sarcastic comments he started his career in strategic planning and devised the reforms of so called social security systems in Wisconsin. Rest is history. Arthur D Little to Mercer to Bain and Company. He was involved with Larry Ellison to create a software giant called Oracle. He was lethal and ready to attack none other than the tiger!! Needless to say Mr. Gates. History repeated once again!! His aggressiveness and rudimentary approach finally landed him up in one of the most bizarre exit in corporate history. The giant stepped out from the full meeting of Oracle in 1998 in front of none other than his co-founder friend Larry. The tiger was down; but certainly not out. 2003 gives another opportunity to strike at his colonial friend Paul Sarbanes. His skills and presentation were so acumen even younger Bush and his courtier found very difficult to counter punch the massive explosion. The infamous but lethal attack went to cold storage in the wake of horrible memory of Andersen and Enron.

1886Arthur Dehon Little and Roger Griffin form first consulting firm devoted to improving processes and products

1909Arthur D. Little is incorporated as the world's first company seeking to apply technology to industrial growth

1911Organized first R&D lab for GM

1949Pioneered application of operations research (developed during World War II) to industrial problem.

1951Projects with Johnson & Johnson and General Electric led to the development of modern logistics management

It all started with an MIT professor who though that his research could help the firms he was studying. Frankly, ADL grew out of a campus (i.e., university) structure. Hence we are principally research-based.

Arthur D. Little Goes To Mars

Arthur D. Little Brings Engineers Out of Retirement to Manufacture Critical Device for 2001 Mars Odyssey Mission
A device designed and built by Arthur D. Little will be one of the critical elements of the NASA 2001 Mars Odyssey mission, which is scheduled to launch on Saturday, April 7.
One of the unsung standard bearers of the space age, the highly sophisticated ``passive radiative cooler'' has been customized for use in 27 prior space launches. Although a version of the device has been to space many times, this is the first time it will go to Mars.
The design of the passive radiative cooler is so complex that Arthur D. Little brought two engineers with the specialized expertise in the technology out of retirement to assist with the project. The cooler the team built for this launch is the largest ADL has ever designed, with an 18-inch outer diameter and the greatest cooling capacity.
``We are pleased to continue our long history of providing technology and consulting expertise to NASA space missions, first to the moon and now to Mars,'' said Pamela McNamara, acting CEO for Arthur D. Little. ``This project is a prime example of how ADL draws on its years of valued and proven experience to develop the most advanced innovations for our partners.''
The device is an essential component of the Gamma Ray Spectrometer (GRS), a primary instrument on the mission that will search for water and other potential signs of life on Mars and map the distribution of about 20 chemical elements across the planet's surface. The cooler keeps the operating temperature of the GRS stable by radiating heat away from the device's delicate sensors and electronic components and conveying it into deep space. As a result, the GPS is able to function properly and take accurate measurements in space.
2001 Mars Odyssey is part of NASA's Mars Exploration Program, a long-term effort of robotic exploration of the red planet. The Odyssey is scheduled for arrival at Mars in October 24, 2001 and the primary mission will take place January 2002 through July 2004.
The cooler is a complex and delicate assembly consisting of five primary parts and more than 60 total parts made primarily of titanium and a rare alloy of magnesium. As part of the preparation, the development team conducted comprehensive structural analysis of the cooling device to ensure it would survive the shock and vibrations of launch.
Many of the passive radiative coolers Arthur D. Little has built have been used for military weather satellite systems. Others were used in a Transient Gamma Ray Spectrometer, launched in 1994 as part of the WIND mission to investigate Gamma Ray Bursts and Solar Flares.
Arthur D. Little has done extensive work for NASA over the past four decades. In 1969, the first Apollo mission to the moon included five key experiments designed and developed by Arthur D. Little.

Arthur D. Little is the world's premier consulting firm working at the interface of business and the technologies that drive innovation and growth. Drawing on its unique blend of knowledge and hands-on experience across global industries, the firm collaborates with its clients to develop significant breakthroughs in practices, products, and processes that lead to dramatic growth and the creation of new value.

A survey by Top Consulting Magazine

This is the survey conducted by the most prestigious consulting magazine. Unlike other years,2004 is a surprise. Top 25 belongs to either below ranked consulting firms or non-rankers. The supremacy of top 5 is dented by large extent. Is it a time to warn them? "says Ron Daniel-former Mckinsey head. Perhaps Mckinsey is more beiliving in recruting academicians rather than consultants". It appeared at 24 where as BCG is 25, pathetic display as per the magazine.

Although top 5 consulting firms are as strong as ever but as a unit, individual brilliancy has taken a back seat. William Green analyses as its not a bad trend for either-
1. There may be too many brilliants in Mc,BCG,BAINS...no individual gets an oppurtunity to hit dias. Smaller firms still runs by individual brilliancy.
2.The negative side may be loyalty of Mc employees has gone down with brand tag, they are more egoistic now.
3.As usual first generation enterpreneurs shine, many of the small consulting firms are run by ex top 5 consulting guys. If Bill Bain came out of BCG and created his history why not others!
4.Time for introspective for top 5 as they are no more driven by their legends, if Mckinsey has produced the highest individual wizards its time for others to shine!

Whatever may be the reason.....the bottomline remains one and only one-------

BOWER'S boys dethroned-may be he never dreamt of that...sorry emperor

But nobody will match you at any point of time

• Charles Beard-BearingPoint
  
• Heather Burns-Booz Allen Hamilton
  
• Lanny Cohen-Cap Gemini
  
• AMCFMurray- DalzielHay Group, Inc.
  
• John Dulle-BearingPoint
  
• Mark Fabro-American Management Systems
  
• Michael GregoirePeopleSoftWilliam M. Goodyear-Navigant Consulting
  
• William D. Green-Accenture
  
• Fritz Kroger-A.T. Kearney
  
• Dan Lewis-Booz Allen Hamilton
  
• Jim McTaggart-Marakon Associates
  
• Darryl Moody-BearingPoint
  
• David A. Nadler-Mercer Delta Consulting, LLC
  
• Darrell Rigby-Bain & Company, Inc
  
• Paul Robinson-Deloitte
  
• Steve Rohleder-Accenture
  
• Kenneth Rubin-PA Consulting
  
• Sandy Shirai-Deloitte Consulting
  
• Chell Smith-Capgemini
  
• Ned Stringham-SBI Group
  
• Steve Taylor-Celerant Consulting
  
• Mark Wietecha-Kurt Salmon Associates
  
• Chris Williams-Fujitsu Consulting
  
• Jonathan Woetzel-McKinsey & Company
  
• John Wong-The Boston Consulting Group
  

The undisputed king of consulting, they reached catastrophic heights and stunningly they never fell from that. Considered as temple to corporates, known for their outstanding end to end solutions, undoubtedly the biggest and premier consulting firm of the world. Laid by James O Mckinsey and groomed by emperor Bower produced array of giants and wizards. They still continue at No.1. This hot spot they never lost in last 32 years!! There is no appropriate word to describe for meteoritic rise of this consulting behemoth. Known as the best place to work for, it has become a dream for aspirants. Here one aspirant says: “Hands down, the most selectively elite firm in the field and possibly across any given industry. The lore is that they accept less than 1% of their 50,000 annual applicants. However, they pride themselves on their diversity, so if you have an advanced professional degree or if you've spent the past few years working in Nepal for a mountain climbing Web start-up, you may have an edge at landing an interview.”
Here is the story about Mckinsey’s consultants: The true measure of success of a consulting firm is its ability to help clients solve difficult problems. Sometimes this happens because consultants legitimize certain viewpoints within a firm because of their "blue chip" backgrounds and ability to persuade. But more often this happens because consultants bring the right ideas to bear on a company's problems. Consulting is unique in the field of business because it is driven by ideas. The essential act of any consultant is thought. And thought is driven by understanding of the factors which lead to success in particular industries and stages of a company's life cycle. Of course, consultants increasingly assist in the implementation of their recommendations, but this assistance mainly comes in the form of education, change management activities and follow-up rather than as the primary service being provided. The process of thinking about client problems is what sets consultants apart from each other. Different individuals and firms apply very different frameworks, or intellectual lenses, to the same problems. There is enormous diversity in the way consultants think, and to a large extent, the results that they obtain. This is why there is such a high premium in the labor market for consultants with an exceptional ability to think, create and communicate. Firms are anxious to hire the best and the brightest because the marketplace rewards them for doing so. The process of solving a client problem starts with framing the problem, followed by diagnosis of its cause, followed by formulation of solutions. Finally, a consultant will assist in the adoption of a solution, providing specialized know-how and talent that is not otherwise available to the client. Each stage of this process requires thought and understanding. The very best consultants probably add the most value in the framing and diagnosis stages. Don Sull, a professor of strategic management at London Business School, has consulted for a variety of firms over the years including Cambria and McKinsey. He argues that the best consultant he ever encountered was distinguished by his ability to look at a very wide and unclear set of facts about a client, quickly suggest a few diagnostic surveys, discussions or tests and then arrive at a conclusion about the root problem. The very best consultants are original and incisive thinkers who can quickly bridge the gap between theories, frameworks and a company's profitability. And Mckinsey have all this!!!! Believe it or not..

After Marvin Bower, he is hailed as the second greatest consultant of the world. In 1914 he formed Booze Allen Hamilton, the world’s fourth largest Management Consulting firm in the world. The firm is contributed so much by Edwin hardly anyone would make such a huge sacrifice for the profession. He remained low profile as usual, never bandwagon his amazing achievements. But in 1973, Marvin Bower summed up all, quoting Edwin E Booze as the greatest consultant of the world. Felicitation from none other than the emperor!!
In 1914, Edwin Booz had an idea. He believed that companies would be more successful if they could call on someone outside their own organizations for expert, impartial advice. In doing so, he created a new profession — management consulting — and the firm that would bear his name, Booz Allen Hamilton. With more than 16,000 employees on six continents, Booz Allen generates annual sales of $3 billion. In 1932, a Northwestern fraternity brother of Edwin G. Booz called him a 'self-made man who has turned out a good product.' Whether the management consulting services Mr. Booz provided or the firm he founded should be considered the 'product' is irrelevant. The statement was prophetic. Born in Reading, Pennsylvania, to a family of modest means and one of seven sons, Mr. Booz worked his way through prep school, college, and graduate school at many and varied kinds of work—tutor, bookkeeper, draftsman, and 'business investigator.' When Mr. Booz left Northwestern University in 1914 with a bachelor's degree in economics and a master's degree in psychology, he went into business for himself to perform studies and analyses of businesses. He conducted studies and business investigations for clients as varied as the Goodyear Tire & Rubber Company of Akron, Ohio; the Canadian Pacific Railroad; Chicago's Union Stockyards and Transit Company; and the Photographers Association of the United States World War I caused a temporary hiatus in his career as an entrepreneur but not in his work as an analyst and solver of business problems. Drafted into the Army as a private to do personnel work in September 1917, he soon rose to the rank of major and worked with the War Department in Washington, D.C., to reorganize and perfect the business methods of its various bureaus. He left the Army in March 1919, ready to turn his business acumen to the service of bankers, manufacturers, advertising agencies, wholesalers, sales managers, publishers, real estate operators, public service cooperations, and other enterprises. Mr. Booz focused on identifying, diagnosing, and recommending solutions to business problems. His client base grew; he expanded his services to include executive recruitment; and he broadened the partnership base of the company so that in 1936, it became Booz, Fry, Allen, & Hamilton, and subsequently, Booz Allen Hamilton. Between the two World Wars, Mr. Booz continued to pursue his vision of dedicated service to businesses. In 1940, he responded to a request from the Secretary of the Navy to help the Navy prepare for war, thus beginning what turned out to be Booz Allen's long-term and continuing service to the Federal Government. Mr. Booz retired partially from the firm in 1946 and died in October 1951.
At that time, the company newsletter published a tribute paid to Ed Booz by one of the staff at an annual conference in 1947. 'I admire his deep sincerity, his high ideals, his uniformity of analysis, his ability to give and to take, his courage, his capacity for absorbing new tools, his burning desire to build soundly, his deep rooted conviction regarding the value of organization, his philosophical grasp of the implication of growth and perpetuation.'

The Marvin Bower & Edwin Booze combination really swept accounting firms in 1960’s. They dented their supremacy and changed the consulting from accounting, industrial engineering to single window solution. Situations became worse in 1970’s when lethal combination of Bill Bain and Bruce Henderson slaughtered accounting firms. By 1980’s it appeared once dominant accounting forces will loose their foothold in management consulting. GAO conducted survey, then unprecedented changes starts occurring. BIG 5 accounting firms bring in different professionals; spin off from the parent unit. One of them is Bearing Point (Popularly known as KPMG Consulting.) Although they are dethroned by King Bower, yet they hit back into main foray with new plans, strategic transformation. As per legendary management consultant Edwin E Booze it’s too late!! But Bearing Point still forges ahead, and in hunt always!!
Their history starts in 1897 with the formation of Marwick, Mitchell & Co. In 1911 Marwick, Mitchell & Co. merged with W.B. Peat & Co. to form Peat, Marwick, Mitchell & Co. In 1987 with the formation of KPMG LLP. It’s called as KPMG Consulting. In 1999 Cisco Systems invest 1 US billion and the unit spun off from KPMG LLP. In October 3, 2002 Bearing Point was listed in NASDAQ. Bearing Point provides business consulting, systems integration and managed services to Global 2000 companies, medium-sized businesses, and government organizations. Approximately 16,000 professionals in 39 countries leverage extensive industry and technology domain experience and flexible tools and methodologies to successfully deliver on time and on budget.

The Story of undergraduate and bible sales man who screwed bible theories!!
Bruce D. Hendersen started the management consulting division of the Boston Safe Deposit and Trust Company called as The Boston Consulting Group in 1963. In those days hardly anybody has courage to look straight in the eyes of Marvin Bower. Hendersen had other plans, he hired young trucks who challenged none other than the king bower.
A former Bible salesman, Henderson had earned an undergraduate degree in engineering from Vanderbilt University before attending Harvard Business School. He left HBS ninety days before graduation to work for Westinghouse Corporation, where he became one of the youngest vice presidents in the company's history. He would leave Westinghouse to head Arthur D. Little's management services unit before accepting an improbable challenge from the CEO of the Boston Safe Deposit and Trust Company to start a consulting arm for the bank. BCG Style-"A Punch between the eyes"-aggression and provocation BCG begins mailing concise, highly provocative essays designed to stimulate senior management thinking on a range of business issues. Statements that senior business managers would find believable are not supported. Only provocative material is argued. The subject matter is chosen to be deliberately provocative, significant in implication, and relevant to the policy decisions of corporate competition.The pieces would be called Perspectives and over the next four decades they would become the vehicle for thinking that consistently challenged both classic economic theory and current business practice. Bruce Henderson referred to them fondly as "a punch between the eyes." BCG Strategy-Business Process Expertise "Bruce called a staff meeting for a Saturday morning in the fall of 1965. He explained that to survive, much less grow, in a competitive landscape occupied by hundreds of larger and better-known consulting firms, we needed a distinctive identity. He had concluded that we shouldn’t fight the competitive battle as generalists, but should instead stake out a special area of expertise. "He asked what we thought that specialty should be. Many suggestions were offered, but in each case we were able to identify several other firms that already had strong credentials in that particular area. The discussion began to stall. Then Bruce asked a momentous question: ‘What about business strategy?’ I objected: ‘That’s too vague. Most executives won’t know what we’re talking about.’ Bruce replied, ‘That’s the beauty of it. We’ll define it.’" One of BCG's first breakthrough concepts grows out of work for a leading semiconductor manufacturer seeking to better understand the industry's chaotic pricing behavior. It's called the experience curve. It is analogous to the well-established learning curve first documented in war-time airplane production in World War II, but has broader implications. It stipulates that unit costs characteristically go down over time as "experience" (cumulated volume) increases. It would become a conceptual cornerstone in the understanding of both the role market share plays in establishing competitive advantage, and the importance of asset allocation in portfolio management. BCG Saga-"Brinkmanship in Business" Bruce Henderson's first article in the Harvard Business Review, "Brinkmanship in Business," is published. It articulates a game-theory view of business strategy that was often ignored by economists at the time. Thirty years later, the Journal of the Academy of Marketing Science would write, "Game theory has emerged as a dominant conceptual framework in marketing to analyze the behavior of competing firms in oligopilistic markets characterized by interdependence." BCG Punch-"Moving to Japan" The Boston Company spins off BCG as a separate subsidiary. BCG enters into a joint venture in London called Attwood-Boston Consultants Ltd BCG hires Sandy Moose as its first female consultant "Controlling for Growth in a Multidivision Business" spells out the dangers in an ROI-centered strategy for resource allocation in a company. The core arguments become the foundation of BCG's growth-share matrix BCG publishes Perspectives on Corporate Strategy and Perspectives on Experience. Each comprises essays written by BCG staff BCG publishes "What Makes Japan Grow," marking the beginning of a lengthy strategic focus on Japanese management and manufacturing practices Vital BCG office equipment includes slide rules, desk calculators, and an extremely loud telex machine that enables communication between offices worldwide BCG Strikes Back-Sorry Emperor (Marvin Bower) Under Henderson's leadership, BCG would become a hotbed of radical thinking in the world of business and finance. As his client list grew, Henderson invaded the nation's best business schools, the Harvards and Stanfords of the world. He eclipsed McKinsey as the top recruiter at Harvard, aggressively wooing its best students with high salaries and the chance to make a difference in a cutting-edge firm. He encouraged the brilliant young minds he hired to come up with innovative ideas that would dazzle hardened corporate veterans. Sometimes he seemed dazzled himself by the success of the whole business. "Consulting is the most improbable business on earth," he would say. BCG Communication Style-Telephones!! Each BCG consultant shares a phone line with another consultant To make an outside call, BCG staff have to call the operator and give a charge number before the call is placed Continuing BCG's tradition of addressing public policy issues, Bruce Henderson offers a strong rebuke of America's energy policy in a Perspective titled "To Create An Energy Crisis." The piece is so well received that several energy companies send copies of it to their shareholders and one publishes it as a full-page ad in major newspapers.Bill Bain and others leave BCG to form Bain and Company An energy crisis in Britain brought on by a nationwide coal strike puts all of the United Kingdom, including BCG London, on a three-day workweek. Client meetings are conducted by candlelight on "closed days," with both clients and consultants huddling under blankets to keep warm. BCG-Segmentation Sy Tilles initiates a decade-long focus on customer and business segmentation on behalf of BCG's clients. The result is a unique set of analytical approaches to this emerging strategic discipline. The techniques recognize that different needs among customer groups entail different costs to serve them. The approaches include deaveraging our clients' costs, identifying the needs and economics of particular segments, aligning value propositions with customer needs, and modeling the costs of players serving each segment to identify potential threats and opportunities. The information revolution of the late eighties would add an entirely new dimension to both the impact and capabilities of segmentation. BCG Values-ESOP In a bet on our own future, BCG stock is sold to its employees through an employee stock ownership plan (ESOP) as a means of purchasing the company from The Boston Company. It's one of the nation's first ESOPs. In the Perspective "The Rule of Three and Four," Henderson adds to the expanding body of business and market dynamics he's enunciated with the empirical observation: "A stable competitive market never has more than three significant competitors, the largest of which has no more than four times the market share of the smallest." A competitor with less than one-quarter the share of the market leader cannot be effective. BCG Concern-Dumping In a Perspective titled "Dumping" (the predatory trade practice of selling goods or commodities below cost to gain market share), Bruce Henderson outlines the classic liberal case against trade intervention, even in the presence of "aggressive" business practices. BCG-Product Portfolio As product complexities and niche markets become more prevalent, Michael C. Goold writes "Specialization or the Full Product Line," a discussion of the natural conflicts between production scale (which reduces costs) and product proliferation, which increases costs but also (sometimes) adds value. BCG completes its buyout of stock from The Boston Company, five years ahead of schedule For the opening of the Chicago office the first employees sit on the floor to work because chairs are not delivered on time BCG Style-Labour Conflict Continuing a long series of social commentary, Bruce Henderson writes "Adversaries or Partners?," a Perspective that begins: "The Labor wars must end. Hostile confrontation between members of the same organization is a barbaric legacy of the past that we should put behind us. It is a fundamental defect in Western productivity….The Japanese are teaching the West a humiliating object lesson."1983 Highlights & InsightsBCG celebrates its 20th anniversary Bruce Henderson is awarded an honorary doctorate by Babson College Rhodes Scholar Clayton Christensen writes "'Bureaucrat' Need Not be a Dirty Word," for the Wall Street Journal, so endearing himself to The Reagan Administration that he is offered a White House Fellowship BCG- Change Management In an era of change management, Jeanie Duck, an expert in the field of organizational change, writes the Perspective "Let Middle Managers Manage." In it, she presents counterintuitive findings that make a case for the much maligned and downsized middle manager and she reminds CEO's that middle managers are still indispensable for most organizations, even in an age of employee empowerment and flat organizational structures.BCG expands its value management focus through the acquisition of Holt Planning AssociatesMark Blaxill and Tom Hout's "The Fallacy of the Overhead Quick Fix" is published in the Harvard Business Review BCG-Legend is no more George Stalk, Lawrence Shulman, and Philip Evans write "Competing on Capabilities: The New Rules of Corporate Strategy," which is published in the Harvard Business Review. The article introduces the concept of capabilities-based strategy, and extends time-based competition beyond manufacturing and operational effectiveness. The piece describes the sources of competitive advantage at highly successful companies such as Wal-Mart and Home Depot. It also anticipates emerging academic theories known collectively as the "resource-based view of the firm,"Bruce Henderson dies at age 77. "Few people have had as much impact on international business in the second half of the twentieth century as the founder of The Boston Consulting Group," eulogizes the Financial Times BCG-Reengineering As reengineering takes the business world by storm, BCG offers a counterpoint in the form of two Perspectives. In the first, "Reengineering Bumps into Strategy," Jon Isaacs points out that what may have started as a reengineering of order processing might become a "reevaluation of all customer service." At that point, fundamental questions arise that are more strategic than process-focused, and those questions are all too often left unaddressed by process engineers. BCG-Cost Reduction Against a backdrop of cost-cutting at the expense of patient care, Joshua Gray and Peter Lawyer write the Perspective "The Promise of Disease Management." Disease management is described as "an approach to patient care that coordinates resources across the entire health care delivery system and throughout the life cycle of a disease." This systematic approach to the challenge of health care delivery focuses on the patient as the "relevant unit of management." This counteintuitive approach "breaks the compromise" between cost control and quality care and becomes one of BCG's biggest ideas of the decade.Tom Hout and John Carter write "Getting It Done: New Roles For Senior Executives," which is published in the Harvard Business Review In the Perspective "From the Insight Out," Michael Silverstein shares accumulated wisdom about promoting innovative thinking in the customer discovery process. With the emergence of a more demanding breed of consumer, George Stalk, David Pecaut, and Benjamin Burnett write "Breaking Compromises, Breakaway Growth," which appears in the Harvard Business Review. The compromise in the title refers to any tradeoff forced on customers not by the nature of the good or service being delivered, but by the operating constraints faced by a business or industry. A company that finds a way to circumvent those complaints can "break the compromise" and achieve "breakaway growth." BCG-e-commerce Long before the term e-commerce is coined, Philip Evans and Thomas Wurster explore the implications of the information age for corporate strategy in their Harvard Business Review article "Strategy and the New Economics of Information." The piece wins a McKinsey Award and inaugurates a long series of BCG publications on the "deconstruction" of traditional integrated value chains.John Clarkeson becomes chairman of BCG Recognizing unseen opportunities, Larry Shulman writes the Perspective "Capitalizing on Anomalies." It advocates the systematic examination and exploration of outliers in a company's operating statistics. For example, geographic regions in which market share is especially high or low, or product ranges for which operating costs seem to vary significantly from the mean, often hide dramatic insights. The "seeds" of new businesses often lie within these seeming anomalies.

Please come now I think
I'm fallingI'm holding on to all I think is safe
It seems I found the road to nowhere
And I'm trying to escape
I yelled back when I heard thunder
But I'm down to one last breath
And with it let me say
Let me say
Hold me now
I'm six feet from the edge and I'm thinkingThat maybe six feet
Ain't so far down

Yeah...thats what BJP is trying to avoid after the huge PC-Union Budget which swept them like tsunami....People might wonder whether Vajpayee started writing like Creed..ummmm..Not a bad idea..cry for a few dollars more......

Aesthetics encounters as what should be the description to the so called taken over patriach of Indian liberalisation who were proudly showing their ill fated "pan parag" mouth over economic rise of India!!!

One big punch, kothari stopped supplying mouth freshener..LOL...they come back to construct temple once again, may be Lord can give USD and Pound Sterling...

Ruling party sucks!! yet hats off two person who can't wear hats, and the man from down south...keep it up....it's your turn!!!

Well..you are 80+ better go and take rest...your image shines always Mr. AVB..don't let it go..or else the Mr. Jaitley will have no option but to sing..

PAPA TAKE THIS BADGE FROM ME..

I CAN'T USE IT ANYMORE..

ITS GETTIN TOO DARK..TOO DARK TO SEE..

FEELS LIKE

I AM KNOCKIN ON HELL'S DOOR..

Source-Mckinsey Quarterly and Business Today
"Congratulations," said Ron Daniel, "I'm very happy for the Firm." That's all Rajat Gupta needed to hear on the telephone while on vacation in Colorado (US) on Friday, March 25. After 21 years of working for the world's most influential and prestigious management consultancy firm, the $1.3-billion McKinsey & Co. (McKinsey, a.k.a. the Firm), 45-year-old Rajat Gupta had finally arrived: he had just been elected its managing director.
That call from Daniel, the chairman of the election committee and a former McKinsey managing director, brought the Gupta-Daniel story full circle. Two decades earlier, it was Daniel who had hired Gupta straight out of Harvard B-School for McKinsey's New York office--after Gupta had been turned down because he didn't have any work experience. That's when one of Gupta's professors at Harvard, Walter Salmon, wrote to Daniel, then manager of the New York office, asking him to reconsider the decision. He did, and the rest, as they say, is history.
For the Chicago-based Gupta, it is the culmination of a journey. A long and arduous journey by a young man from Maniktala in Calcutta, where he was born in a middle-class family, to the top of a $1.3-billion powerhouse of business savvy. Although McKinsey-watchers had predicted that a non-American could take over as CEO this time around, Gupta wasn't always mentioned as the top choice. "McKinsey is truly a meritocracy. I don't think anybody would have considered for too long whether I was Indian or American," says Gupta.
Despite his characteristic humility, Gupta will have done more than cross a milestone on July 1, 1994, when he becomes the first-ever India-born CEO of a US transglobal corporation. Indeed, Gupta is the first Indian to have successfully broken through the impenetrable glass ceiling at the top which most transnationals have erected. Reckons Gupta, who was interviewed for two hours by BUSINESS TODAY at his 29th-floor office in Chicago, which he heads: "Over the last few decades, McKinsey has become truly global." Adds McKinsey's India office managing director, Anupam P. "Tino" Puri: "Rajat was selected inspite of his being Indian. The process of choosing the managing director is blind to nationality."
With 62 offices in 31 countries, priorities at the 68-year-old company--which now earns 60 per cent of its revenues outside the US--are shifting overseas more than ever before. Says Norman Sanson, managing director of McKinsey's London office: "The time was near for a non-American to be the MD. This shows the non-Americanism within McKinsey."
FACTFILE NAME: Rajat Kumar Gupta
DESIGNATION: Managing director-elect, McKinsey & Co. Takes office on July 1, 1994
DATE OF BIRTH: December 2, 1948
AGE: 45 years
PLACE OF BIRTH: Maniktala, Calcutta
NATIONALITY: India-born US citizen (US citizen since 1984)
EDUCATION:Modern School, New Delhi, 1966; B. Tech (mechanical eng), IIT-Delhi, 1971; MBA, Harvard Business School, 1973
CAREER: Joined McKinsey in 1973; New York office, 1973-1981;Scandinavia office (Copenhagen), 1981-86; Chicago office, 1986-1989; elected principal 1980; elected director 1984; managing director (Chicago), 1989-94, managing director-elect, McKinsey & Co., 1994
SPECIALISATION: Strategy, energy, industrial goods, consumer products WIFE'S NAME: Anita Mattoo Gupta, engineer
CHILDREN: Geetanjali, 16; Megha, 12; Aditi, 9; Deepali, 4
AFFILIATIONS: Advisory boards of Harvard & Kellogg B-schools
LANGUAGES KNOWN: English, Hindi, Bengali
CURRENTLY READING: The Complete Works of Vivekananda, Gita Mehta's The River Sutra
INTERESTS: Bridge, old Hindi film songs, and Western classical music To the casual observer, Gupta's education--Indian Institute of Technology-Delhi (IIT-D), Harvard Business School--and his membership of the Firm could suggest he's part of the old boy network that is so special at McKinsey; a typical McKinsey consultant has been to an Ivy League college and graduate school. Gupta's past tells another story. After living in Calcutta for the first five years of his life, he moved to Delhi in 1953. One of four children, Gupta lost both his parents by the time he was 18 years old. Completing most of his education with the help of scholarships, Gupta passed out of Modern School at Delhi, and was ranked 15th in the all-India IIT entrance test in 1966. At IIT-D, he won not only a five-year mechanical engineering degree, but also his future wife: Anita Mattoo, an electrical engineering student who was two years his junior. They first met at a play rehersal-- "Ratan" was a keen debator and actor--where she played Gupta's grandmother. In 1973, the duo married.
When Gupta finished at IIT-D in 1971, he had several choices: a job at ITC, a management degree from IIM-Ahmedabad--or an MBA from Harvard Business School. Not surprisingly, he picked the last. Boston brought culture shock--he'd never even seen TV before--but the academics was easy.Recalls Reuben Aragon, a Mexican-American dorm-mate from Harvard, now CEO of the Oklahoma-based Duralast Rubber: "There was a spark there. You knew he would definitely be going some place."
That turned out to be McKinsey. When he joined McKinsey in 1973, it wasn't as if he was the first Indian to work for the Firm. Puri had signed up in1970 and became Gupta's mentor and big brother. Interestingly, around three per cent of the Firm's 3,000 professionals were born in India--and that doesn't include second-generation Americans of Indian origin.
Of these, 80 are associates, 10 are principals, and three are directors: Gupta, Puri, and Adal "Scratch" Zainulbhai, who works at the New York office. "Good Indian minds are good at consulting," reckons Arun Maira, a former TELCO executive director, who now works with the Boston-based consultants, Arthur D. Little. Consider some of the qualities that allowed Gupta to beat the pack:
WHAT TOOK RAJAT TO THE TOP
Several partners, consultants, and directors at McKinsey--as well as McKinsey's clients and alumni--were interviewed to identify the specific factors for Rajat Gupta's rise to the top:
Intelligence: Was a brilliant student at IIT-D and Harvard
Vision: Has always seen the big picture very quickly
Integrity: No doubts about his dedication to his clients
Track Record: Did exceptional work in Scandinavia and in Chicago
Experience: Experience in India, Europe, and the US will be handy
Loyalty: Has worked with McKinsey for 20 years
Patience: Low-key approach is refreshing
Hard Work: Willing to work at a problem until the job's done
Team Play: Spends time building teams and working by consensus
Creative: Uses unusual methods to arrive at solutions
Open: Always available to offer advice
Maturity: Is one of the youngest in most settings
Humility: Has a down-to-earth approach and did not lobby for the job
GLOBAL PERSPECTIVE: As McKinsey gears up for the challenge, who better than the India-born Gupta, who won his spurs in Europe and the US? Gupta's first test came in 1981 when he was sent to Scandinavia to manage McKinsey's operations there. Gupta was one of the youngest partners to have been entrusted with such a responsibility. "I was 32, and still a principal. It was very unusual for a principal to be office manager," he admits. At the Scandinavian office, Gupta turned around McKinsey's prospects.
LEADERSHIP: Gupta showed early signs of being a general rather than a foot soldier. Soon after he graduated from IIT-D--where he was general secretary--Gupta was called for a job interview at ITC. On the panel was R.C. Sarin, who now heads Carrier Aircon. Twenty years later, Sarin bumped into Gupta at a seminar in Delhi and instantly remembered the young man he had once interviewed. For, when asked the attributes of a leader, Guptahad given a memorable reply: "One who can motivate his colleagues and get things done without making his teammates feel that it was the leader who had actually got the work done." Summing up Gupta's leadership style, a colleague in the Chicago office, director Chip Chandler says: "Very quiet. Leads from behind. Builds consensus."
INTEGRITY: Advocated by Marvin Bower--the guiding spirit of the company founded by James O. McKinsey in 1926--McKinsey consultants are expected to function by the Firm Code. The five tenets: to put client interests ahead of Firm interests; to serve the client in a superior manner; to adhere to high ethical standards in everything the Firm does; to preserve the confidence of clients; to be ready to differ with client managers and tell them the truth even if it hurts. Not surprisingly, Gupta has treated the code as sacred and has won a squeaky-clean image in the process.
PEOPLE-ORIENTED: Gupta always finds time for people and their problems; he personally knows all the 148 senior McKinsey partners around the globe, and most of the 400 partners. Says Varun Bery, a former McKinseyite, who is now with the investment bank CS First Boston: "He has a very down-to-earth style. He is approachable by colleagues at all levels." In December 1993, Gupta flew down from Chicago to spend three days with the young McKinsey recruits in India. Says Ashok Alexander, partner, McKinsey India: "He found the time to have dinner with a group of associates whom he will possibly never see again in his life." Adds Shashi Khanna, director, MAP Consultants, Delhi, a friend from his IIT-D days: "He values relationships."
LOYALTY:At a time when loyalty is at a premium, Gupta has spent his entire working life with one organisation. Especially as McKinsey is a rich hunting ground for CEOs: IBM's Louis Gerstner, Westinghouse Electric's Michael H. Jordan, American Express's Harvey Golub, Tele-Communications' John Mallone, and Levi Strauss' Robert Haas have all been McKinsey consultants. Gupta, however, has never looked askance at any McKinsey command, always putting the Firm's interests before his own. He refused the offer to try out Copenhagen for two weeks when the Scandinavian move was mooted. And while moving back to Chicago, he only asked a McKinsey associate to buy him a suitable house to move into--without even seeing it.
PERSONAL VALUES: Despite cut-throat competition, Gupta is admired in the McKinsey world for his humility and unassuming airs. Says Sanson: "He cares for other people's successes like his own, and does the right things for his clients. And more than everything, he is very humble." Adds Richard Cavanagh, executive dean, Kennedy School of Government, who worked on-and-off at McKinsey for 17 years: "I'm a real fan of Rajat. He has astounding maturity for someone so young."
That is important, as McKinsey's partnership environment is a flat organisation, where the managing director of the firm isn't a typical CEO. Even the election--not selection--is more like the cardinals in Rome electing the Pope. There is no electioneering and you cannot declare yourself a candidate. All the directors around the world vote on the top few candidates every three years. This year, the 148 directors narrowed it down to two candidates, Gupta and Don Waite, head of the New York office.The vote was by secret ballot, processed by Price Waterhouse.
Does Gupta's appointment mean that Indians are finally ready to storm the bastion of White Anglo-Saxon Male CEOs? Not likely. Says Shyam Lal, an IIT-D and University of Chicago McKinseyite: "It is less a breaking through of the glass ceiling, and more a reflection of the fact that it was time for a young man with a global background to step forward." Adds Atul Kanagat, 38, a principal at McKinsey's Chicago office: "It will not have that kind of effect. Few companies would model themselves along our lines. At the same time, Rajat's been one of our most successful partners, and so, it's quite a natural progression for him."
McKinsey follows a brutal up-or-out policy: if you don't make it to the next level within a reasonable number of years, you are expected to leave. Associates, the new recruits, usually take about six years to become principals; about one in six makes it. It takes another six years to become a director, and only one in 10 associates becomes one. As a result of this policy and the constant headhunting, McKinsey has about 3,500 well-connected alumni the world over.
Ironically, getting to the driving seat may prove to be a lesser challenge for Gupta than steering the McKinsey juggernaut in the future. One criticism is that the Firm has grown too fast to deliver value for money. McKinsey has also been accused of being too bloated to serve its clients well. Gupta admits he needs to fix this: "We'll simplify our structure a little bit. We may have become--because of our size and growth--a little complex in our governance structure."
In the meantime, smaller firms-- A.T. Kearney, Bains & Co.--are chipping at McKinsey's business. While they don't have the Firm's reach, they are expanding. For instance, A.T. Kearney CEO Fred Steingraber is initiating a blitz in India this month.
Another sore point with carpers is McKinsey's fees, which are the highest in the business. Gupta agrees, but says: "We are expensive because of what it takes to attract outstanding talent." Talent doesn't come cheap: associates earn up to $250,000 a year until it's time for a promotion. And according to David Lord, editor of Consultants News, Gupta should make "between $2 million and $4 million a year" when he takes over.
In the history of the Firm, two managing directors are credited with playing a crucial role: Ron Daniel and Marvin Bower. If Tom Peters is correct, Rajat Gupta may be the third CEO whose tenure could be a watershed in the history of the Firm.
'Rajat Is The Firm's Future' THAT the world's best-known management guru is a former McKinseyite shouldn't surprise you. Fifty-one-year-old Tom Peters is now an institution himself, but he used to work with McKinsey until 1981. In fact, it was a McKinsey project which led to the publication of the seminal best-seller, In Search of Excellence, which was written by Bob Waterman, another McKinseyite, and Peters himself.
On Gupta's election: To say that I was thrilled is an understatement. It came as a total surprise. I wrote Rajat a little note saying how delighted I was. He's the best thing to happen to McKinsey since Marvin Bower's days at the Firm.
On McKinsey's search for excellence: The project set out to answer one question: if we're so smart at generating great ideas, why are clients having problems implementing them? An informal core group of 15 to 20 people worked on the project between1977 and 1981. One of the best people in the core group was Rajat.
On McKinsey today: It's hard to criticise its effectiveness. It adds tremendous value for clients. It's still the best place to turn to.
On fixing McKinsey:McKinsey isn't showing the kind of intellectual leadership that it should. McKinsey always defined the business model. But no longer. Why is Microsoft defining the business model, and not McKinsey? Many of the best thinkers have moved on. There's a sense of predictableness. There's too much conservatism. Things aren't as wild, woolly, and wacky as they could be.
On Gupta and McKinsey: McKinsey could be a more exciting place than it is. Rajat can make it so. He's the future of the Firm. He has the ability to understand clients well and then give them creative solutions. But remember, I have a very strong bias!
McKinsey's Indian Connection
December 1993. Fort Aguada, Goa. A few hours before the conclusion of the first-ever annual retreat of McKinsey in India, an unassuming person, who had sat quietly at the back through the three-day meet, walked up to the dais at the invitation of McKinsey's India office managing director, Anupam P. "Tino" Puri.
For the next 45 minutes, Rajat Gupta, then head of McKinsey's Chicago office, spoke animatedly about his career path, the choices he had made, the values of the company that he holds dearly and, finally, McKinsey in India. Says Ashok Alexander, partner, McKinsey India: "At the end, there was no applause. We were too stunned." Explains Puri: "Rajat is sympathetic to India. He will do what is expected of a managing director. And McKinsey is truly committed to this country."
Indeed, McKinsey's India affair began equally passionately in 1988, when the Puri-Rajat duo came on a recce mission. Whirlwind meetings withbureaucrats, businessmen and cabinet ministers set the basis of a courtship that was formalised four years later, when the Firm set up itsIndia office. In the last two years, the Firm has grown from a fledging six-person bureau into a 40-strong team; 10 of whom are Indian repats.
As corporate India scrambles to restructure, McKinsey is targeting four kinds of clients: large Indian groups, smaller business houses,transnational corporations, and state governments. Says Puri: "These are unusual times, with most of our clients undergoing an unprecedented degree of turmoil." And the Firm's clients include the State Bank of India,Larsen & Toubro, RPG Enterprises, Hindustan Lever, Arvind Mills, HindustanMotors, Shriram Fibres, the Council for Leather Exports, Coca-Cola--Parle, and the State Industrial and Investment Corporation of Maharasthra.
In the next few months, the group plans to focus on transnational corporations for whom India is an integral part of the global market, and public sector units desperate to become competitive. But McKinsey India will well and truly pick up the gauntlet when it tries to rebuild at least a dozen companies into Indian transnationals. Says Puri: "We have plans totake about 10 to 12 companies in different sectors and make them world leaders. The idea is to build on the competitive advantage of Indian companies."
To effect these changes, McKinsey has already prescribed radical solutions, based on its organisational restructuring models. Clients trying to instil cultural changes and cost reduction exercises, for example, are asked to go beyond total quality management (TQM) and apply McKinsey's model of a transformational corporation. Similarly, the consultancy supremo advocates setting up horizontal companies, rather than flat organisations, for better and quicker results.
New offices are expected to come up soon in Madras and Calcutta, and McKinsey is in the market for quality personnel. Already, the consultancy faces a dilemma in finding the right kind of people and training them. In the last two years, to circumvent the scarcity of skilled people for specialised tasks, it has flown in at least 35 senior consultants from McKinsey overseas. Increasingly, the focus will be on developing local talent, which is a time-consuming mission. Points out Puri: "Consulting is like a craft. To major from a carpenter to a master craftsman takes time. Our size here is supply-constrained, not demand-constrained."
Manpower is important for the services company, since the Firm will need 70 to 100 staffers to gain critical mass. Until then, McKinsey plans to bring in consultants from outside the organisation to work on specific aspects of a project, or even work side by side with other consultancy organisations in the country.
Points out Alexander: "We do not think in terms of competition. If it makes sense to work with other consultants, then we will do it." Still, McKinsey must watch out for the competition. Global rivals Coopers & Lybrand set up local operations much before the Firm, while Booz Allen & Hamilton, A.T. Kearney, Arthur D. Little, the Boston Consulting Group and Bains & Co. are also testing the waters.
Says CEO-elect Gupta about McKinsey's India strategy: "We have no quantitative objectives of any kind. We want to build the practice one client at a time, one study at a time. We want to be a long-term partner to improve the performance of Indian institutions, as the country becomes more and more part of the global economy. We are there for the long run."
For his mentor "Tino" Puri, the implications are clear and simple: he will probably have less time in future for his wine collection, classical music, dance, and the game of golf that he loves to play.
'I'm A Product Of McKinsey'
IF YOU are a young man dressed in a business suit, visiting Chicago's First National Plaza for the first time, the chances are pretty high that the security guard there will ask you: "29th floor, right?" Right, but how did he know? "A lot of young men like you go there to be interviewed for a job." The 29th is one of the three floors occupied by the Chicago offices of one of the world's most influential and prestigious management consultancy companies, the $1.3-billion McKinsey & Co. It is also where Rajat Gupta, 45, who will take over as McKinsey's next managing director on the historic day, July 1, 1994, works.
Last fortnight, the receptionist at the CHO--as this office is called in McKinsey-speak--had a sign on her desk saying Congratulations, Rajat, On Becoming Firm Managing Director. Yes, plenty of eager young MBAs do come here to be interviewed.
Q. When former managing director Ron Daniel called to say that you had been elected, were you surprised?
A. Surprised is not the right word. I'd say I was very honoured. Obviously, I knew I was in the running, and there were two candidates in the final round. So, I wasn't so much surprised as honoured by my election as managing director.
Do you remember the thoughts that went through your mind at that very moment? I think the thoughts running through my mind had pretty much to do, frankly, with how terrific a place McKinsey is. I've never worked anywhere else in my life. So, whatever I am, I'm a product of McKinsey. I take all the congratulations as a great compliment to the Firm.
What role did your Indian-ness play in your election? What I feel about the Indian-ness is that it's a great tribute to McKinsey. I can safely say that this is one place which is truly a meritocracy. I don't think anybody would have considered for too long whether I was Indian or European or American or from anywhere else. That is characteristic of the fact that McKinsey, over the last few decades, has truly become a global institution. That's reflected in what we now see as priorities for the Firm. Although the US is still important, many of our priorities are outside the country. It's become a global institution, and in a sense, McKinsey is blind to the nationalities of its partners.
Is the fact that an Indian has become the head of such a huge American corporation the equivalent of the running of the four-minute mile? I wouldn't quite characterise it that way. I've never felt, throughout my 20 years here, that there was any issue about my nationality or the colour of my skin.
Tell me about your India days. I'll give you a quick snapshot. I was born in Maniktala in Calcutta, and lived there for the first five years of my life. My parents, Ashwini Kumar Gupta and Pran Kumari Gupta, had three other children. I have a sister a year older, another two years younger, and a brother 10 years younger than me. My father was a journalist with the Ananda Bazar Patrika Group. He was a prominent freedom fighter and had been to jail many times. My mother taught at a Montessori school. When I was five we moved to Delhi, where my father went to start Hindustan Standard, and I studied at Modern School on Barakhamba Road. My father died when I was 16. My mother died when I was 18.
What did you four brothers and sisters do then? We decided to live by ourselves. It was pretty unusual in those days. Normally, we would have been sent off to live with various relatives. Instead, we asked a spinster aunt to come and live with us. All of us were good students, so we all had scholarships. After Modern School, I went to the Indian Institute of Technology at Delhi (IIT-D) to study mechanical engineering.
What were your options after you graduated from IIT-D? Well, everybody was going into management; you either began as an management trainee or you went to B-school. I had got a wonderful job at ITC. I had also applied to B-schools, both in India and abroad. I was accepted at the Indian Institute of Management at Ahmedabad, but preferred Harvard, where I got financial aid. I told ITC then that I wasn't going to join them. They wouldn't believe me because nobody had turned them down. So, they actually paid my airfare to come and meet them in Calcutta to explain why I wasn't joining them. Ajit Haksar, who was then ITC's chairman, was among those whom I met. I explained to them that I was going to Harvard, and only then did they understand.
What was Harvard like? It was sort of classic. You always feel you're going to flunk in the first month. They give you so much to do that you say this is impossible. But once I got over that initial scared feeling, it was relatively easy.Because the IITs give you a wonderful education, better than you get anywhere, actually.
Were there many Indians at Harvard with you? There were a couple in my class. One was Praful Gupta, now with Reliance, who worked at Booz-Allen & Hamilton for 20 years. He's a very good friend of mine...
How difficult was it being an Indian student at Harvard? Well, people were surprised about how good your English was. Another thing is that Indians typically don't speak up that much, which you must at business school. I was very reticent in class.
Did your professors point that out? Yes, everybody would comment on that. Right after the first term, there were only two of us who got perfect grades. Most of my classmates were surprised that I got all excellents. I never said much, you know.
Why did you opt for a consulting job after school? The most practical reason was that there were precious few companies who would even want to talk to me since I was on a student visa. Second, consulting was the most sought-after job at B-school.
Why did you choose McKinsey? McKinsey was important, and willing to talk to me. We had two interviews, back to back, on campus. The second was conducted by Bill Clemens, who was then head of recruiting in McKinsey's New York office. He told me that my credentials were terrific. "And you're obviously very smart, but you need to go and work somewhere else for three or four years before we'll consider you." I was, obviously, not very happy with that. One of my professors, Walter Salmon, who was a classmate of Ron Daniel, who then ran McKinsey's New York office, wrote to him to reconsider the decision. Then, I was invited to a full day of interviews at the New York office and, eventually, offered a job.
Why have you stayed on at McKinsey for so long? I was never tempted to leave. I believe McKinsey is an absolutely unique institution.
Why? Its people and its culture. McKinsey is a collection of extraordinarily talented people, who are also very interesting in their diversity. What ultimately keeps you is the people.
Former managing director Daniel describes the CEO's job at McKinsey as trying to herd cats. How would you describe it? It isn't a classic CEO job. This is a sort of servant-leader job. We don't have one leader; we have at least 150, if not 400, leaders. So, you have all these highly talented leaders who--given the freedom--will do the right thing. What you need to do is figure out what their aspirations are, synthesise them, and distil them in the direction the Firm should take. Create the environment so that they can do what they think is right.
Only one in 10 associates at the Firm becomes a director. How did you make it? You need the basic skills of consulting: problem-solving, interpersonal skills, developing relationship, serving clients, and so on. Then, you have to constantly think about how you can make a difference to the Firm. About the leadership you can provide.
What are your special skills? The dimension I would pick is team building. The ability to build a real partnership.
Are there some areas you need to work on? I'm sure there are plenty. At times, I'm not tough enough or firm enough. Generally, I'm a soft person. I'm probably not as good in large public settings as I am in more intimate settings.
How will your life change when you become CEO? I suppose I'll have to do less of client work and more travel...
Will you move to New York? I'm not planning to move to New York. Only a fraction of our partners and principals are in New York. So, there's no particular reason to be in New York, or any particular place. There's no such thing as the Firm's headquarters. It doesn't exist.
What makes McKinsey so unique? It's a global partnership, which is almost impossible to build from scratch. We have an extraordinary internal value system that holds it together. The people are special. We attract the best and we hire the best. We have a unique way of developing them. We invest a lot in building competencies in various industries and functions.
Critics complain that McKinsey is simply too expensive. Do you agree?
We are very cogniscent of the fact that we are expensive. We are expensive because of what it takes to attract outstanding talent. While some of our clients may comment on that--I mean, who wouldn't?--they still come back and are very happy with what we do...
What about clients who have had problems? It is always easier to tell in hindsight. We hope that we can turn things around, but sometimes it just doesn't work...
What is your personal vision for McKinsey? We will continue in many ways the way we are. We'll simplify our structure a little bit. We may have become, because of size and growth, a little complex in our structure of governance...
Isn't there too much management by committee? You can take off a bunch of committees, I don't think all of them are essential. You can involve the director group in making more decisions directly. You can emphasise the value system, and manage more through values...
How practical are Marvin Bower's (McKinsey's guiding spirit) values these days, when the bottomline is everything? The bottomline isn't everything. I think professional values--the interests of the client come before the interests of the Firm--all hold true. If we do those things well, the financial rewards will follow. The financial rewards are a result, rather than an objective.
What criteria, then, do you use to judge performance? In order to be a real member of the Firm, you have to adhere to its values. And have a strong personal impact, radiating those values. We look at two dimensions: client impact, and firm impact. Client impact means: what difference are you making to the performance of our clients? Firm impact means: what is your contribution to building the institution?
How closely are you in touch with India? Very close. I go every year... I was involved in the opening of our India office. Of course, Tino Purie pretty much led our effort to establish ourselves there. I have very strong ties with India, and I would like to contribute as much as I can. I owe my success to the basic, underlying philosophy of India.
Which is? It goes back to the fundamental philosophy of the Gita, which is that you worship work and do it for its own sake and don't judge it by what results you achieve. Concentrate on doing your best in what you do.
What is your relationship with Tino Purie? Tino has meant more to me than anyone else at the Firm. He's been my big brother and my mentor for 20 years now. He was the senior-most Indian here when I joined. Whenever I need personal advice, I turn to him.
What are your plans for McKinsey's India office? We have no quantitative objectives of that kind. We want to build the practice one client at a time, one study at a time. We want to be a long-term partner, as India becomes more and more a part of the global economy. We are there for the long run.
Why didn't you go back to work in India? I have been extensively involved in the governance of the Firm in some form or another for about 10 years, and I feel that all the things I was doing would be difficult to do if I went to India. The other reason is that it would have been difficult for our children; they've all grown up here.
Tell me about your wife, Anita. First of all, let me make it clear that she is a lot smarter than me. She was a gold medalist at IIT. After doing her electrical engineering there, she studied at Columbia and worked at Bell Labs. We married after she finished IIT, and before I started at McKinsey. She stopped working after our second child. Now, our youngest is four years old.
You met at IIT? Yes, she was two years junior to me. We used to do plays together. I was quite active in dramatics, both in school and at IIT-D. I did 17 plays in those five years, Hindi and English, modern and classical.
Is there still life outside the Firm? Of course there is, in many different dimensions. Even though I work about 12 hours a day, I make it a point not t