By RAVI CHAUDHRY
In every period in history, there is one dominant institution that needs to take responsibility for the whole of society. In the days of the Holy Roman Empire, the church fulfilled that role. In the Middle Ages, it was the kings and rulers of kingdoms and states. Since the second-half of the 20th century, businesses have become the most powerful institution on the planet. As a result, businesses have to accept a new role — one it has never acknowledged throughout the history of capitalism — to share the responsibility for the whole.
Collectively, the business communities’ actions and governments’ implicit complicity have given firm credence to a commonly held perception that business objectives and society’s needs tend to be like the two tracks of a railway line. Looking ahead from any point, they appear to converge In the distance, but in reality, they never do. It is a mirage.
While we do have some of the world’s best examples of corporate governance in India, but on a broader canvas, the corporate sector today faces a loss of confidence. There is a disconnect between the world inhabited by CEOs and board directors on the one hand and the society at large. This systemic difficulty stems from a refusal to accept that we will not be going back to the world we knew.
Five Phases of Human Enterprise
We are entering a new phase of human enterprIse that is redefining the criteria of success as well as re-contouring the routes to success. There have been four phases till now:
• Phase one was dominated by the concept of “strong fish eating weak fish”. This was the law of preservation
for most of recorded history till the early days of industrialisation. Alexander the Great, the Romans, the Turks, the French and the British believed in ruthless domination. The majority of the human race helplessly accepted the rule of the mighty as the privilege of living.
• Phase two was the era of “big fish eating small fish”. It started with the concept of joint stock company. The British East India Co was set up in 1600 and the Virginia Co in 1606, creating an ingenious financing model while lowering risk and ushering in the age of business-politics nexus. It got so bad that US President Rutherford B Hayes declared in 1876 that “This is a government of the people, by the people, and for the people no longer. It is a government of corporations, by corporations, and for corporations.” Since then things have been much worse all over the world.
• Phase three is the “fast fish eating slow fish” phase. Death of distance and birth of Internet gave rise to phase three. Apple Inc was incorporated in 1977, Microsoft Corp in 1981, Amazon.com Inc in 1995, and Google Inc in 1998. They created more wealth for their shareholders every year than the old enterprises did in decades.
• Phase four is about “intellIgent fish eating dumb fish’. Early 21st century, we witnessed the dominance of a new kind of corporation. Indian trio of Tata Consultancy Services Ltd, Infosys Ltd and Wipro Ltd. Embraer SA in Brazil. Haier Group Corp in China. Samsung Electronics Co Ltd in South Korea and many others discovered a new era.
For companies that failed, the change of a phase was often the trigger. But those that prevailed have an eclectic mix of all these traits. They are strong, big (in substance), fast (in responses) and invariably intelligent. The defining moment in the commencement of each new phase is the inevitable need to imbibe the new trait.
We can discern today the emergence of a new “Phase five” which is ‘realistic fish eating unrealistic fish, driven by an increased demand for social consciousness, and the need to function in sync with society and environment.
Corporations that are “realistic” enough to acknowledge this new “realism” will emerge as winners in the 21st century, A company that makes only money wilt be considered a poor company hereafter.
Five Allies to Catalyse Change
Five potent forces are speeding up the emergence of this phase, based on the premise that “another world is possible”.
• Knowledge-based civil society — driven by enlightened citizens.
• Predominance of youth — in demographics supported by the Internet and social media.
• Enlightened stakeholders — customers, investors, employees and alternative media,
• Women — taking on a larger pro-active role in society; and
• Educators — gearing up to face two key tasks. First is de-corrupting the minds of today’s leaders followed by ma king the minds of coming generations incorruptible.
I believe these forces of transformation will prevail over forces of status quo. Base camp traits are not enough for leaders to steer businesses in the 21st century. The biggest risk today is that CEOs are not taking cognisance of the new realities. For sustained and sustainable performance, CEOs need to transform themselves. They need a new set of leadership traits that would make a CEO an “exceptional leader”.
Traits of Exceptional Leadership
The prerequisites for anyone who Is already a CEO, or aspires to become one are “base camp leadership traits” that fall under two domains:
• Physical traits: Qualities relating to strengths within — basic intelligence, energy and drive, and professional will.
• Mind traits: Qualities relating to interface with the outside world — pragmatic vision to foresee opportunities; transactional skills to build and motivate teams; and perseverance to overcome obstacles.
To become an exceptional leader, I envisage the need for a new set of traits beyond the ones mentioned above, These are the traits of conscience pertaining to the heart of the leader. These do not call upon us to “change” our hearts. They only require us to “discover” our hearts. The “tripod of exceptional leadership” has three strong, unyielding pillars: Wholeness, compassion, and transparency.
Pillar of wholeness: This is the defining trait. Typically, the wholeness view is taken from the perceiver’s vantage, with reference to her mind, and processed in her intellect — a complete 360° view. That is exceedingly difficult, and yet only half the job.
Each of our decisions and actions has an impact on others — directly or indirectly. The “whole wholeness” comes when we take an additional 360° view, as perceived by others, with reference to their minds and as processed in their thoughts. “Wholeness is a 720° view” — a 360° view excludes while a 720° view includes those who are excluded. A 720° view is the only yardstick of “inclusive development”. Those who practice wholeness no longer feel alienated; they feel they are aligned with everything around them.
Pillar of compassion: Compassion represents a feeling of unconditional concern and love for others with a “sense of responsibility”. It is the spontaneous wisdom of the heart. Companies that have compassion in their DNA newer exploit society or nature, to meet corporate goals.
Pillar of transparency: it is best explained by holding a coin, tightly clenched in your fist, with the palm facing the ground. If you let go, you will lose what you are clinging onto. But there is another way where you can let go and yet keep hold of it. Turn your hand over. The coin is still yours, with all the space around it. When corporate leaders pursue this journey, they discover a pleasant surprise; they experience a “triple top line of joy, peace, and contentment”. Not only for them, but also in the personal lives of people all around.
It is heartening that many Indian companies have taken cognisance of the new paradigms and have adopted a more holistic approach to business. It is an unavoidable step- ping stone to corporate longevity, a path towards growth with profits and success with happiness.
India has possibly the biggest share of human problems that the world faces. Indian entrepreneurs therefore have the world’s biggest opportunity to deploy their creativity and inventiveness to solve these problems. If they do so with wholeness, compassion, and transparency, they will surely emerge as the champions of a new India in the 21st century.
- Ravi Chaudhry is author of Quest for Exceptional Leadership: Mirage to Reality and chairman of CeNext Consulting and Investment Pte Ltd.
- The presidency of AAMO is currently held by the MIM. AAMO website at the www.aamo.net.