Friday, April 25, 2008


“Dude, have you read the book called The No A$#h%le Rule?” The loud question came quite abruptly from this very well-suited Swiss ‘gentleman’ standing by my side at the roulette table in Luzern’s top casino, who had noticed that I was just about to place all my remaining money on a sure-shot winning bet! Well, you could put your money forecasting that the roulette ball would fall either on an even number or on an odd one! In the past five moves, the ball had always fallen on an even number, and this time, I was 100% certain that the ball would surely fall on an odd number, given my extensive knowledge of the law of averages. I was proudly and silently confident of the load that I was about to make... when I heard that question! The man continued, “It’s a 2007 best-seller written by some well known Stanfordian called Robert Sutton, who says that in business, you shouldn’t take high risks like an a$#h%le!” I was irritated at this thoroughly unwanted interjection from this self-titled risk guru, who was openly slandering my seemingly high-risk move; surely out of pure jealousy! Aren’t the world’s most successful companies and entrepreneurs those who take high risks without flinching an eyelid? Would Steve Jobs have been Steve Jobs sans his proven supremely high risk appetite? Isn’t high-risk the only route to high achievement? A reality check...

The famed David McClelland had proven way back in 1961 that high achievement motivation was related not with ‘high-risk’ taking but, surprisingly, with ‘moderate-risk’ taking. But that was 1961. What about now? Professor T. J. Kamalanabhan of Universiti Telekom, Malaysia and Dr. D. L. Sunder (IIT Madras) concluded in their noted 1999 paper, Managerial Risk Taking: An Empirical Study, that “considering managers are aware of their organisations’ resource constraints, moderate risk taking is eminently rational.” But seriously, aren’t entrepreneurs supposed to be living on the edge of top-end risk?

Dr. Stewart (Clemson University) and Professor Carland (Western California University) in their famed paper, Risk Taking...And Entrepreneurship, concluded that the results of past research had failed to prove that entrepreneurs take any higher risks than managers. For that matter, the American Management Association’s five commandments of great leaders includes a pristine second commandment – “Great leaders are informed risk takers... They act decisively, not recklessly, to maximise ‘lucky’ breaks!” The Australian Institute for Commercialisation’s golden rule book of successful entrepreneurs reads: “Successful entrepreneurs are moderate risk takers, not gamblers. They conduct feasibility studies and test-market their ideas...”

And why not, as shown by the pan-global benchmark 2005 global CEO survey of KPMG, Risk Taker, Profit Maker?, which found that the top two factors leading to reduced margins were ‘Poor Forecasting’ and ‘Poor Risk Identification’! The world famous Protiviti 2007 US Risk Barometer’s global Fortune 2000 gave stark findings. The ‘Risk Appetite’ of global firms – which already was moderate – is further falling, and how! In 2007 itself, even compared to one year before, this factor fell from 5.12 to 5.07 (on a scale of 1 to 10; 10 being the highest-risk level). ‘Organisational Risk’ too fell from 5.62 to 5.23; and ‘Industry Sector Risk’ fell from 6.07 to 5.76! This ‘moderate-risk’ orientation has clearly come because of an increased risk management focus. The classic E&Y 2006 survey (Risk! Let’s Talk!) shows how a mammoth 66% of leading global firms plan to increase risk management investments. The fact is, howsoever competent a CEO might be, high-risk cannot be handled. The path breaking Grant Thornton Survey US Business Leaders Survey (11th ed.) shows how at best, only a puny 19% of CEOs were confident of excelling while facing high risk choices...

I snapped back! I was still on the roulette table. All my money was on the ball landing on an odd number. Statistics be damned, I was sure my command over the topic of probability couldn’t be wrong! The ball rolled across the table, slowed down, and finally landed... on zero!!! Goddammit!!! They said it’s the rarest of rare instances when this happens! Goddamn them too!!!! And where the hell was that suited guy?!? God be with him too... That I left with my clothes on after losing everything on that table was a miracle. Anyway, like I mentioned, the book is called, “The No A$#h%le Rule”. It’s available in all leading book stores. Fortune’s latest issue covers it too. I’ve read it page to page... Ah yes, just for information, I don’t visit casinos anymore... or drink the municipality water... or eat my cook’s food... or argue with my wife on any topic...!


Friday, April 11, 2008


It was in a rare moment of emotional disclosure, that one of my colleagues, who has always looked up to me for guidance, confessed sheepishly that the biggest issue in his life right now was that his wife was too dominating. “She doesn’t let me decide anything,” he groaned. I, the CEO trainer, gloatingly chided him that a man ALWAYS should be authoritative with his wife. “Shout, and she’ll follow your orders buddy,” I sniggered away at him. Interestingly, my team’s research proved that a similar situation exists in companies too!

In a 2006 Harvard Business School case paper, titled Harley’s Leadership U-Turn, Rich Teerlink (ex-CEO of Harley-Davidson), while explaining how his organisation took a U-turn from near extinction, concluded, “When an organisation is under extreme pressure — so much so, that one wrong move can mean its collapse — authoritarian leadership may very well be necessary.” So which, according to you, is the best form of leadership in a competitive business environment? In a comprehensive paper titled Is Servant Leadership Part of Your Worldview?, Dr. J. Howard Baker, Professor, University of Louisiana, argues, “An authoritarian, command and control model of leadership may be very effective for stopping something, destroying something, or conquering something...” Having said this, he rightfully praises John F. “Jack Neutron” Welch, the authoritarian ex-Chairman of GE, who is undoubtedly one of the most highly regarded leaders in the business world today. Welch once said, “Management is looking reality straight in the eye and then acting upon it with as much speed as you can...” Undoubtedly, he was a staunch believer of authoritarian leadership style.

Then there is the common myth of authoritarian leadership style being inversely related to shareholder returns. In his most smashing work, The Affinity of Foreign Investors for Authoritarian Regimes, Prof. John R. Oneal of the University of Alabama, countered that “(shareholder) rates of return have been greater under authoritarian regimes.” Yale University’s Prof. Samuel Huntington’s paper Political Order in Changing Societies further concluded, “Authoritarian regimes are more capable of rational, consistent, and responsible decision making than democratic ones, and a participatory democracy affords special interest groups the power to block, delay or hinder changes that might be beneficial to the economic growth of the entire society.” Interestingly, in 1993, a World Bank study titled The East Asian Miracle endorsed the authoritarian regimes in the region by putting forward the argument that “the ‘Asian Way’ was rightly untrammelled by excessive concern with individual rights.”

Clearly, there have been instances where leaders with their authoritarian style of leadership have given to the world what they hold in awe and pride. One such glorious example can be found in Andrew Keen’s best-seller titled The cult of the amateur where he writes, “There’s not an ounce of democracy at Apple. That’s what makes it a paragon of such traditional corporate values as top-down leadership, sharply hierarchical organisation and centralised control. Without Steve Jobs’ authoritarian leadership, Apple would be just another Silicon Valley outfit run by mind numbingly conventional Stanford MBAer’s. We’d have no iPod, no iTV, no iPhone, no iTunes.” Another book by J. Fentster titled In the words of Great Business Leaders, states how John. D. Rockfeller (founder of the great Standard Oil Company) “saw his relationship with them (employees) as transactional. He led, operating in a directive, autocratic way.” The book also talks of other such leaders like Thomas Watson (IBM), Andrew Carnegie (Carnegie Steel), Ted Turner (CNN), David Packard Henry Ford I and II (Ford Motors) & Sam Walton (Wal-Mart), who have made their mark in the corporate world. Just as Peter Drucker said, “The leader of the past was a person who knew how to TELL. The leader of the future will be a person who knows how to ASK.”

Critically, in today’s world, using authority over intellectuals (like in R&D) or over young dynamic leaders would surely backfire. But when an organisation, or a nation, in general has massive potential waiting to be exploited, a CEO has to necessarily use a killing yet passion-building authoritative leadership, if the organisation has to be world-class one day soon! Having said all that, my less-than-convinced colleague still promised to test out the theory on his wife. I told him even I’ll start putting more authority on my wife. I’m happy to inform you that post our testing this on our respective wives, both my colleague and I have become much closer these days. I was thrown out of my room and these days sleep in the guest house. My colleague too has temporarily shifted in with me...