Thursday, October 30, 2008

The culture conundrum

Mr. Geddy Teok, an American – Chinese (second generation) employee of a large New Jersey pharmaceutical firm, was based in Tokyo, Japan. His main aim was to get a major joint venture going with one of the largest Japanese pharmaceutical manufacturers. After four years of negotiating, the supreme moment had come for signing contracts. Obviously the lawyers from HQ in New Jersey were well prepared and sent the contract to Geddy one week before the ‘ceremony’.

After four years of Japanese experience, Geddy was shocked when he received the document from the USA. He thought: “I could not even count the number of pages. There were just too many. But I remember the number of inches it measured when laying it on the table. I would guess that with every inch one of the Japanese would leave the room in despair. I hope they come will come with a group of ten. Then at least I will keep one person to talk to. The Japanese will sign the contracts, but this can’t be taken this far.”
Geddy Teok decided to call HQ and ask for some help. The legal department said that the relationship was so complex that the contract needed to cover many possible instances. Moreover, a consultancy firm that advised them regularly said that Asians in general and Japanese in particular had a reputation of being quite loose in defining what was developed by them and what came from the USA: “we better have some pain now and be clear in terms of our relationship, than to run into problems later because of miscommunication. If they sign it at least they show that they are serious.”

Geddy was in despair, but he only had a day to decide what to do. The meeting was tomorrow. Should he perhaps call the Japanese CEO, with who he had built up quite a relationship? Or should he just go for it? Geddy framed his dilemma quite clearly. “Whatever I would do, it would hurt my career. If I insist on the Japanese partners signing the contract they will see it as proof of how little trust has been developed over the years of negotiations. This might mean a postponement of the discussions and in the worst case the end of the deal. If I reduce the contract to a couple of pages and present it as a ‘letter of intent’, HQ in general and even worse the whole legal department will jump on me, jeopardizing my career.”

If you were Geddy, what would you do?

(Adapted from: Riding the Waves of Culture: Understanding Cultural Diversity in Business by Fons Trompenaars and Charles Hampden Turner)

Thursday, October 23, 2008

A cultural perspective on Indian business mindset

Today, I received an email from one of my friends relating to if Lehman Brothers were an Indian enterprise. It makes it quite an interesting read and relates to some deep rooted Indian business values. An interesting read for sure. Here it goes....

I happened to run in to Nanubhai on Dalal Street . He was eating Khaman Dhokla in a farsan shop.

Kem cho (How are you), Nanubhai?"

"Saru che." (I am good.)

He was looking glum but gestured me to join him.

As I bit into the tasty dhokla (a Gujarati dish) with tangy chutney on the Friday afternoon, which was fast turning into a 'Manic Friday' as per Dalal Street lingo, he was staring at the bull near the entrance, which overnight had become a Russian bear hugging everybody that passed the Street.

Nanubhai is a well-respected Dalal Street dada with an answer to every shareholder's query.

"What went wrong with Lehman Brothers?" I asked.

"Lots of things. If the founder brothers, Henry, Emanuel and Mayer were alive this wouldn't have happened. Lehman Brothers were more than a 150-year-old company. But yet, it had no Lehman in the company. Such a situation can never happen in India ."

"Are you trying to tell me an Indian would have handled this differently?"

"Bilkul (absolutely). If it was an Indian firm, Lehman Brothers would have fought as soon as their father died and divided in to three companies. They would have diversified into clothing, polystyrene, petrochemicals, vegetables, movie making, telecom, drilling oil, mobile phones, retailing, books, spectacles, gyms, wellness. In short, anything and everything under the sun. They would have made money for themselves and their shareholders."

"But when there is massive failure there would be no option but to file for bankruptcy?"

"Fail-wail chance hi nahin! (no chance of failure) Even if they encounter tough times, they would have friends like Mulayam Singh and Amar Singh (politicians) to bail them out. They could finish off competition by befriending the finance minister and getting duties levied on the imports of competition. They would fund and befriend ruling parties. Unfortunately for Lehman Brothers in 2008, without a Lehman on the board or some Indian business brothers at the top, they couldn't open the survival kit to stay afloat."

As we were sipping double kadak chai (tea), I asked:

"Did anybody anticipate this global meltdown?"

"Anticipate? Mazak chodo! (seriously) I will tell you something. America has some 45 Nobel laureates in economics from 1970. From 2000 alone there are 15 Nobel laureates in econometrics sitting on company boards, treasury benches and in places like Harvard, Stanford etc. Kisiko kuch patha nahin tha (nobody knew anything)! How come none of these had any inkling to the disaster awaiting the banking circles all over the world? Even the finance ministers of G-7 talked of strong "fundamentals" of world economy around this time last year! Two months back the only topic they were discussing was the rise in oil prices."

"What will happen if it goes all on like this?"

"Some American economist will study this, write a new a theory and get Nobel Prize next year, dekhna (you see). Seriously, they forgot things like control, double check, systems-in-place etc and brought in vague words like Subprimes to give loans left, right and centre."

"What will happen to the Indian market?"

"It's already having the Lehman Brothers' effect. Our finance minister seems to like the figure 60,000. While presenting the budget earlier in the year he pledged Rs 60,000 crore to write off loans given to farmers. Now he is pumping Rs 60,000 crore to help out the banks! I don't know what he will do next. He is again from Harvard!"

"What is the lesson to be learnt from the Lehman Brothers' episode?" I asked as we were leaving.

Nanubhai took a spoonful of snuff said:

"You know, we have an old elementary rule for keeping hisab-kithab. Divide a page into 'Left' and 'Right' with a line in the middle to denote Debit and Credit. In case of LB, as somebody said, nothing was right in the 'Left' and nothing was left in the 'Right'," concluded Nanubhai

Storytelling is such an art and the author of this (whoever it is) has nearly perfected it. With a use of sarcasm s/he brings about a fabulous caricature of the Indian business culture. Though, as an Indian I do see a lot of businesses breaking free from it, the real questions is that, are we?