Satyam means ‘the truth’ and the company’s fortunes have fallen on the sword of anything-but-the-truth. India’s first IT company to list on the NASDAQ and also trading on several Indian stock exchanges is being described as India’s Enron.

The Satyam saga is a complex case that raises many questions. On the one hand, these questions are about the role of board directors, the possible complicity of auditors, and the efficacy of regulator oversight. On the other hand, the case raises profound doubts about the basis of growth in emerging markets. On yet another level, one has to wonder if companies from countries with less advanced corporate governance frameworks should really engage in the masochistic exercise of going public and raising money in markets which hold them to tougher standards of growth and profitability, and then watch them like hawks to ensure those expectations are delivered upon.

There is inevitable collateral damage within India. Institutional investors are hardly likely to be happy about the lead-balloon like drop in the share price although some, like Sundaram BNP Paribas, offloaded their stake, ‘before the event’ as they naively point out. I say ‘naively’ because the timing appears highly suspicious to onlookers and the offloading will hardly spare them possible enquiries about alleged charges of insider dealing, for instance. The auditors, PwC, may also find themselves in some hot water.

But there is a silver lining in all this.

Corruption and infrastructure are often cited as India’s twin Achilles’ heels. But the Satyam case is not about systemic corruption and bribery which concern institutional investors aiming to invest in India. It is a more contained crisis, a failure of governance within a company.

That is where the silver lining ends.

Because one wonders if there are other such ‘contained crises’ brewing elsewhere. Because this failure of corporate governance raises a red flag for businesses seeking partnerships and joint ventures in India. There is a systemic angle to it, of course, in terms of regulatory oversight or the role of auditors as I mention earlier. But that can happen in the best regulated, stable, ‘developed’ economies as evidenced by the CDO crisis, the Madoff crisis and of course, Enron. The solutions will have to take into account all the various possible weak links.

Meanwhile, what do you do, if you are a business seeking to enter India or another emerging market, with a strategic partnership or alliance?

Of course, you persist with robust due diligence on companies, which are potential partners. Then there are the wrongly-described ’soft’ aspects of a deal.

An outstanding strategy consultant will not just deliver the numbers, the hard due diligence, but also guide you on the major issue of executive reputation and articulate the tacit knowledge essential to your success in your target emerging market. Choosing the right person to be on your side in your global growth plans therefore is your first step in partnership, and in your quest for success in emerging markets.

Related readings:

Corruption is the greatest stumbling block to infrastructure development in India, says Nita Kulkarni

Technology: innovate-and-monetise or bust

With everyone from car manufacturers to biotechnology industry expecting handouts in their begging bowls, there simply isn’t enough money to go around. Governments of developed nations are leveraged to the hilt, ignoring their own fiscal rules while emerging nations like China are begging off investments in western economies. 

Car manufacturers in America have for years ignored innovation. Their direct and indirect influence on public policy is wide-ranging, their role in catalysing America’s oil dependence second to none. Apart from the huge numbers employed, the industry needs a root and branch overhaul. Some are already taking advantage of the opportunity. Expect that advantage to grow - in their continued favour.

The biotechnology industry’s case for a bailout is even weaker. Private patenting of publicly funded academic research outcomes is seen as a hindrance to innovation. Research suggests that the patent system has failed to deliver actual benefits in the form of better health or reduced hunger. Gary Pisano expresses bafflement at how the biotech industry remains in existence despite its sustained unprofitability. Arthur Levinson, Genentech’s CEO, once described biotechnology as “one of the biggest money-losing industries in the history of mankind”. Governments have however provided continued support to the industry through research funding, subsidies, tax cuts, and helpful regulation, such as the Orphan Drugs Act which some see as being ‘co-opted by the biotech industry’. How long should public money prop up an industry which is all promise but no delivery? 

Then there are the creative players in the Web 2.0 world who are yet to find a profit-making business model.

In MMIX, as money remains in short supply, there will be essential weeding - and possible consolidation but valuations will remain low - in nearly all business sectors. In other words, the choice for businesses is stark: innovate-and-monetise or bust. 

Regulation: I am here from the Government and I am here to help, well, some of you 

Amid the NINJAs, the credit crunch and the Madoff scandal where the SEC has admitted not being too alert, regulation and enforcement in the financial services sector is ripe for an overhaul. However, first, the regulatory agencies need to come to grips with the, um, innovations in the sector they regulate. So expect this overhaul not to be any time soon, even as the proverbial revolving door between industry and regulatory agencies swings into action again. 

Regulation of other sectors will change too, but instead of becoming harsher, it will become friendlier to innovation and business so that new jobs can be created for those seeking refuge from retail and manufacturing, and so that smarter spending can be kick-started.  

I expect both pensions and public health provision systems to start a process of reinvention, creating both investment opportunities and social gains.

Investment: Where’s the party? 

Smart investors and companies will manage market access through maintaining a good understanding of not just regulation but also regulatory trajectories and futures.   

As valuations drop and businesses go bust, there will be opportunities to purchase valuable assets cheaply. Some smart people may be up for grabs too but not for long, as regulatory agencies seek to beef up their commercial nous by upping pay packets to attract good talent. While closing-down-sales can hardly be classified as an innovative offering, new businesses will emerge in their place. They will offer value and quality, over random posturing and stylised nothingness. More Tom’s Kitchen than Tom Aikens if you will.

Consumer conversation will grow in 2009 as they seek information and demand better customer service in return for their spending. We can happily bid good-bye to the nail-filing shop assistant this year!  

For businesses and investors, these changes will mean the need to understand consumer conversations better. They will therefore seek to get actively and visibly engaged in social networks and communities, and the smarter ones will ask for help in bridging the gaps. 

Here’s wishing you a productive, creative and bullish 2009!

Brief and interesting questions indeed! So, what’s the answer? Well, nothing so brief.

My observations on personal linguistic preferences have evolved over the years of living amongst polyglot Europeans, largely monoglot British and American people, and English-aspiring urban Indians in 4 of India’s metros, as well as having grown up in India’s Hindi belt where ‘tatsam*-ism’ is alive and thriving. I speak a few Indian and European languages from the Indo-Germanic family so I have also been observing my own behaviour in picking a language to interact in a context.

A person’s linguistic preference in an interaction is shaped by several factors such as those below.

One’s own linguistic adeptness: Even with their mother tongue, different people have different abilities in comprehending, reading, writing and above all, thinking instinctively in the language. It is easier to use a foreign language, if one is not constantly translating but is able to think in that language. Many Indians I know, for instance, instinctively think in English and can carry on a fluid conversation on complex topics without resorting to their mother tongue.

Aspirations to linguistic fluency: This is an interesting latent factor requiring both empirical observation and good deduction from those observations.

For instance, my Bulgarian housekeeper speaks with me in English and is glad when I correct her or add to her vocabulary. At home, however, she tells me she is keen to preserve her son’s ability to speak Bulgarian by watching only Bulgarian TV, never mind how it will influence the son’s fluency in English! She argues he is learning English in his school anyway.

Inclusion/ exclusion: Language is a powerful tool to signal inclusion or exclusion. Living outside India, I am now quite conscious of how Indians from some regions switch to their own language, even amongst a diverse group, more quickly than Indians from some other regions.

Another example can be seen in ethnicity based sub-groups in larger groups e.g. a Dutch students’ group at Harvard Business School, to which a friend of mine belongs, posts pictures on FB and the following conversation is almost entirely in Dutch because it suits the context. In any case, anybody who is not Dutch at HBS does not belong in the group but the signalling is clear and reinforced with the help of a language.

Choice of languages available in a context: This external factor is more influential than we realise. For instance, years ago, when I lived in Bangalore, asking for water in restaurants serving South Indian fare was easier in Tamil rather than in Kannada, the default language of the state of Karnataka. The serving staff, I imagine, were largely Tamil-speaking.

Back in London, however, it won’t help me much if I insist on speaking, say, German in a restaurant in Britain. However with the growing number of Polish and other East European serving staff, it may well become a distinct advantage in the near future! More recently, when I visited Prague, it was simpler for me to get by in German than struggle with inadequate comprehension of English on offer in the City’s less ‘touristy’ establishments.

Interest in consuming versus creating content: This may seem like ‘internet-ese’ but it is not. In the real world, we could rephrase this as ‘interest in listening versus speaking’. My French is not fluent enough to comprehend slang well but that does not prevent me from having music from the French band Zebda on my iPod. Likewise I am keen on Hindi poetry and cannot always find good anthologies in print. But there are encyclopedic sites on the web where I can read this content.

As a blogger, however, I find the idea of typing in Hindi with its ‘shirorekha**‘ (lit. header line), the several ‘matra***‘ and conjuncts such as ‘ksh‘ quite cumbersome. My interest in creating content is defeated roundly by the disproportionate effort required by my mother tongue.

So far, this was all about the consumer. What are the choices for a business if it wishes to serve its consumers without forcing them away from their preferences to its own?

In its simplest form, the answer lies in two Cs - consumer and commitment.

Über alles, the business needs an intimate knowledge of one’s consumer. Given all the above - and some factors I may not have listed - such knowledge is not simple or easy, but it is a non-negotiable essential. There is no substitute for good consumer research, especially if the culture of a target market is unfamiliar to you. A consumer does not always want or benefit from a huge range of choices; which means getting it right in the very first moment of interaction is critical. Language can be used to include or exclude, and surely a business wants a consumer to feel welcome.

Further, the business needs the commitment to the market, which means the willingness and ability to invest in linguistic adaptation, as required. From my experience, the benefits are easy to demonstrate to and convince most businesses, but negotiating budgets can often be a bottleneck.

A business would be wise in not presuming to impose its own preferences on the consumer. When a business speaks its consumers’ language, it is privy to the chatter, the informal conversations about its business both in the real world and on the web. A willing business knows how to capitalise on these conversations to develop greater consumer satisfaction and make better profits.

Surely it is worth it, n’est-ce pas?

Explaining asterisked words:

* tatsam: Sanskrit, lit. same as that; Tatsam words are those that have been taken as-is from Sanskrit into Hindi.

** shiro rekha: Sanskrit, lit. header line; Hindi is written in the Devanagri script; the letters in a single word are joined together with a line on top like in this word here - हिंदी.

*** matra: in Hindi, consonant sounds are made by combining a vowel with a consonant root. The vowel when used with a consonant is referred to as a ‘matra’. For instance, the consonant ‘k’ can be combined differently to make sounds ‘ko’ and ‘kau’ with vowels ‘o’ and ‘au’ respectively.

Related reading:

Manuscrypts’s excellent post on Minding Languages

My old post on linguistic apartheid and inclusion in democracy: Citizenship and apartheid

A broad, conceptual post on cross-disciplinary communication: Lost in Translation

Are (sic) Healthcare services outsourcing from India the next big opportunity? Health-insurance companies based out of the US are giving the option to customers, to get their surgeries / medical procedures done from Indian hospitals. Is it now time to give healthcare outsourcing its due?

The question fascinates me on several fronts. I work with India investors interested in several sectors, including Outsourcing. I also work with investors keen on biotechnology and pharmaceutical sectors. In addition, I work in comparative health policy which, with my strategy hat on, I cannot help but frame in the context of the comparative advantage of nations.

As an investment opportunity, Healthcare Services Outsourcing (HSO), which also goes by the names ‘medical tourism‘, ‘health tourism’, ‘medical travel’ etc, is a no-brainer. If an investor from Britain or America wishes to invest in facilities in India that cater exclusively to economically well-heeled but health-wise, down-at-heel patients from developed countries, the returns are easy to make. The case is not hard to make from the perspective of the 3Ps of healthcare - payer, provider and patient.

The economics stack up pretty easily from the payer’s perspective although I think there is a divide between private sector payers, such as insurance companies and public sector payers such as the UK’s National Health Service (NHS). Take it with a pinch of salt, if you will, but here is an interesting ‘ready reckoner‘ of relative costs and waiting times in the NHS with those in India. The comparison does not include the cost of poorly understood risks, of corrective action when things go wrong and the cost of any adverse impact on future healthcare premia.

At least to some providers, the risks are manifestly clear. In the recent days, the UK’s NHS, which is also a payer, is asking patients to pay for corrective surgery after elective surgeries abroad go awry. For an opposite perspective - how costs to NHS add up when un-entitled foreigners abuse its free-at-the-point-of-delivery health service - see this short video from Sky News.

From the patient’s perspective, the prospect of reduced waiting times is enhanced often by the possibility of an exotic holiday in a two-fer. Not just that, patients can often get treatments which are rationed or otherwise unavailable from their provider such as obesity operations not easily available on the NHS.

The business model “HSO as medical tourism” is therefore easily fundable. The question is - in Guy Kawasaki’s succinct words - here: it is fundable, but is it viable? From the perspective of comparative advantage of India as a nation, one needs to ask: is it sustainable? Let’s examine this a bit.

India has a sufficiency of factor conditions such as good, English speaking doctors and now good infrastructure to deliver advanced surgeries and treatments. That is an attractive proposition on its own for HSO providers and seekers. But as far as domestic demand conditions are concerned, Indians carry a disproportionate burden of diseases such as malaria on the one hand, and diabetes and heart disease on the other. So there is a need. But a considerable number, estimated between 15% and 25%, remain in extreme poverty, so the purchasing power is curtailed. “HSO as business model” focuses on the factor conditions but sustainable comparative advantage for India will arise from not its relatively smaller magnitude factor conditions but also its considerable demand conditions.

The experiences of doctors in India, working on the coalface are instructive - on the one hand, about the larger failures of public health policy and practice in India, and on the other, about their value as intensive learning or potential for ‘knowledge transfer’, if you will.

Much discussion was generated by a BMJ editorial, titled Poor Countries Make The Best Teachers. My response was:

“… a doctor in the United States, who had trained in India, told me an anecdote that shows the flipside of Byrne’s experience on elective as a medical student in India, a learning experience she described as second to none. In a lecture during my acquaintance’s residency, she noticed that her professor and other residents were puzzled by the x-ray film of a boy’s limbs. They could not identify what could possibly have been wrong with him. The doctor, who had seen much rickets in India, identified it correctly and to the amazement of her colleagues. Poor countries, sadly, still provide reasons to train Western doctors in diseases that may not afflict the West right now but, with mass scale migrations, could easily become a problem in the future.”

What does this mean for investment opportunities? Well, a lot, if we think differently about HSO.

* A better, scalable and sustainable investment would lie in raising the profile of the usefulness of training doctors from developed countries in India. This will enable doctors from developed countries to understand, diagnose and treat better those diseases, which were hitherto geographically confined or eliminated, but are now resurgent and truly ‘globalised’, thanks to travel and mass migration.

* In return, the doctors from developed countries could teach the Indian doctors about innovative methods such as advanced surgical techniques, give equipment and test kits, as well as help with public health programmes particularly expanding capacity and service delivery.

* Indian healthcare system, in turn, could invest some of the profits to provide essential preventative services and public health programmes to its poor populace. India’s main factor conditions, the doctors, could therefore become not just financially better off but also more influential stakeholders in this healthier future for all.

How is that for a model for healthcare services outsourcing?

Yes, I know this is not a fashionable view. But it certainly is the most sustainable way to go forward where good health and access to good healthcare is not the privilege of the few ‘haves’ but the fundamental right of the many ‘have nots’.

As for why I am arguing a case to reduce the primacy of the potential of “HSO as medical tourism” model, I prefer to let Cicero explain that.

“The man who can hold forth on every matter under debate in two contradictory ways of pleading, or can argue for and against every proposition that can be laid down - such a man is the true, the complete, and the only orator.”

Over to you, and Santé!

Related reading:

Credit crunch and public health

Health and the Indian Economy - one of my guest posts on the Indian Economy blog

The world’s front-office? - an old post examining India’s outsourcing industry

New York Times says Uninsured Put a Strain on Hospitals. How about ‘Poverty and inadequate access to healthcare puts a strain on human beings’ for a title?

Trust is a non-negotiable essential in business. The post linked here refers to web-based business-to-consumer interactions. But as social currency, Trust is the most significant in interactions amongst organisations, customers, employees and regulatory bodies.

This post on Trust arises from recent discussions with Dina Mehta, Indian social media maven.

Definitions

Wikipedia defines social currency as “information shared which encourages further social encounters“. Social currency is different from social capital which refers to “connections within and between social networks and individuals“.

Social currency - some characteristics

a) No distinction between ‘physical’ and ‘virtual’ worlds

Social currency should be, and frequently is, freely transferable between diverse networks, just as some relationships move freely between the physical and the virtual worlds. None has primacy over the other. In practice, this means that your dinner party circuit is as important a social network as your LinkedIn network, your School alumni network as significant as your Facebook friends.

b) No distinction between ‘individuals’ and ‘corporate entities’

Both ‘individuals’ and ‘corporate entities’, such as companies or charities, require and use social currency, to advance their social and professional aims.

c) No distinction between validity of negative or positive normative labels

‘Positive’ or ‘negative’ labels are normative judgements applied by an observer, not the inherent qualities of the entities being observed or the information being shared. A negative meme or information module is as valid as a positive one e.g. Peter McCarthy as a reliable shorthand for suspicion of certain political ideologies is as valid as Gregory Peck’s portrayals of reliable, all-round good eggs.

However in high value interactions, a greater emphasis is placed on positive associations than negative ones.

Determining the value of Trust as social currency

The ‘value’ of a currency is determined by several factors including the economic and political situation in a country, natural and human resources, and political and economic leadership. These factors shape buyer perceptions, hence the value of the currency. Similarly several factors serve as the ’signals’ of the value of social currency.

a) Verifiable Identity and antecedents

Would you come to a dinner party or a networking event wearing a mask to hide your identity? It is likely your answer is ‘No’. So, why be anonymous or pseudonymous in social networks, except for fear of persecution?

V for Vendetta (c) Warner Brothers

In meaningful interactions, it is difficult to build trust with an anonymous or pseudonymous person. A verifiable identity allows antecedent checks, establishing a person or a corporation’s ’social capital’, prior performance and hence trustworthiness.

Small businesses sometimes suffer from shortage of ‘verifiability’ or ‘longevity checks’ but it can be managed. For instance, a small on-line start-up, such as Moo.com, may have a solid product offering but may find customers unwilling to give it their credit card information; the use of a trusted brand such as Paypal, may help them tide over this difficulty.

On a related note, you can see my LinkedIn profile here.

b) Consistency

Consistency is a complex construct. It is a function of presence, positioning, and quality of public contributions whether professional or social. Consistency builds comfort, confidence and trust. e.g. I am known to deliver consistently high-quality assessments of emerging technologies, with their technological, commercial and regulatory futures. It is a tough standard to deliver. But it comforts my clients and they keep returning to me for further help.

There are, however, limits to consistency. It is not an excuse for poor standards or unimaginativeness. Each of my projects requires me to ask new, different questions because sometimes the old questions are irrelevant. That is not about consistency, that is about relevance.

Consistency, said Oscar Wilde, is “the last refuge of the unimaginative“. Cited out of context, this sounds like a criticism of my point. But, in the article titled “The Relation of Dress to Art” in the Pall Mall Gazette in 1885, Wilde continued to write, “but have we not all seen, and most of us admired, a picture from his hand of exquisite English girls strolling by an opal sea in the fantastic dresses of Japan? Has not Tite Street been thrilled with the tidings that the models of Chelsea were posing to the master, in peplums, for pastels? Whatever comes from Mr Whistler’s brush is far too perfect in its loveliness to stand or fall by any intellectual dogmas on art, even by his own: for Beauty is justified of all her children, and cares nothing for explanations: but it is impossible to look through any collection of modern pictures in London, from Burlington House to the Grosvenor Gallery, without feeling that the professional model is ruining painting and reducing it to a condition of mere pose and pastiche “.

In other words, Wilde never meant to criticise consistency as abominable, except where it becomes its own end and loses the plot altogether.

c) Reliability

This is as simple as asking ‘Does the person deliver what s/he professes to?‘ and getting an affirmative answer with the qualifier ‘repeatedly so‘. The world’s longest lasting and best recalled brands strive to pass this test. It makes them trustworthy and in many cases, aspirational.

For instance, Patek Philippe stands for precision engineering, exquisite design and extraordinary longevity. Why else would anyone agree to spend several thousands of pounds on their watches? The value keeps going up, the older and rarer the watch.

Patek Philippe print ad

d) Peer recognition

Peer recognition is not the same as ‘reputation’, although the two however are not entirely disconnected from each other. Reputation may even be an well-managed, artificial construct resulting from a person’s own efforts related to managed PR. Peer recognition is a usually unvarnished opinion from a person’s or a firm’s peers, who may not necessarily gain anything from saying nice things about this person or firm but they say them anyway. That is a hallmark of trustworthiness. You can read the views of some of my past and present peers here.

e) Value of the network

This may remind some of ’social capital’ (see above) but value is not simply about the ‘number of contacts’. The value of the network is the ‘power’ resident in the network, however big or small the network may be.

The value of the network may come from one or more of its many inherent qualities - power of individual nodes, influence, diversity of skills, specialised expertise etc. Indeed some of my most powerful contacts are not on any public networks at all! Exclusivity of access to a high value node can make one’s network very valuable.

How does a network’s value relate to trust? Well, in my experience, the world’s smartest and most successful people are careful networkers. They nurture relationships with other smart and promising professionals. A high value network is therefore a signal of a higher order of trustworthiness of the person, who has access to that network.

Neurons (c) IBM Labs

f) Individuality and collaborative consciousness

This is the trickiest marker of a person’s trustworthiness.

Individuals, as we all understand, have identifiable and unique properties. However their ability to function as a collective, collaborative identity signifies their ability to recognise a greater vision or cause, and subsume their identities to it. This ability, on Maslow’s hierarchy, is more valuable than someone who wishes always to march to his own drumbeat. In other words, sometimes the individual is not bigger than her network and a person who recognises the value of collaboration enjoys greater peer recognition and greater trustworthiness.

All Blacks perform the Haka (c) BBC News

So, well, that is my view of trust as social currency. What are your views? Do you think ‘trust’ is a social currency? What signals do you see and use to judge a person’s trustworthiness? What else can we add here? What other social currencies can you think of? Do share your views below.

If you wish to discuss the concept of social currency or social networks, and how they can work for your business, please do get in touch here.

Related readings:

It’s when you deliver that counts

Trust in the Internet God, but…

Chris Brogan asks if companies will value your personal networks. My answer - Yes! But only if you are trustworthy yourself.