CIA chief's visit to India

The new head of the CIA, Leon Panetta, was in India in the period March 18-20 and then went to Pakistan. During the course of his visit, he met home minister P Chidambaram. This has come in for some comment because the heads of US security agencies had, until recently, confined their contacts to their counterparts in India. In Pakistan, they have access to everybody including the President and the Prime Minister. But, then, India is not Pakistan- or so one would have thought.

B Raman, writing in Rediff, notes the changed equations:

The Indian intelligence has been having a liaison relationship with the CIA since the days of Jawaharlal Nehru. This was handled by the IB till September, 1968, and thereafter by the R&AW. Many CIA chiefs had visited India in the past. Their visits used to be graded as top secret. Their programme in New Delhi used to be restricted to professional discussions with the heads of the IB and the R&AW and a courtesy call on the prime minister.

This was for security and political reasons. Before international terrorism became a major source of concern, the security reasons mainly related to possible threats to the physical security of the visiting CIA chief from the intelligence agencies of the Communist countries. After the collapse of the USSR and other communist regimes in East Europe and after the normalisation of the US relations with China, this concern is no longer there.

But, since the late 1980s, terrorism has become a major source of concern. CIA officials responsible for the security of their director and their officials posted in India for liaison purposes used to prefer that the visits be kept secret. Indian agencies too preferred secrecy because they were rightly concerned that if the visits were open, jihadi terrorist threats to India and to US nationals and interests in India, including to the US diplomatic and consular missions in India, might increase.

This position started changing when Atal Bihari Vajpayee was the prime minister. The visit of George Tenet, the then Director of the CIA, to India was kept a secret, but the visits of the No.2 to Tenet were publicised. L K Advani, the then home minister, came to be associated with the visits of CIA officials to New Delhi. Their programmes included a courtesy call on the home minister. Not only that, Advani too, during his visit to the US in 2002, reportedly called on Tenet in his office.

A new job for Montek?

Nicholas Stern, former Chief Economist of the World Bank, suggests a new institution for warning against sources of instability in the world economy. He says the existing institutions- WB, IMF, BIS- are unsuited for the purpose because there is interference all the time from representatives on the board of various countries. (How very interesting!- so treat the next IMF country review with the utmost scepticism).

Stern thinks such an institution could be created without huge costs:

With 100 high-quality staff and outstanding leadership, such an institution could be very effective. A budget of $20m (€15m, £14m) per annum would be sufficient. An endowment of $500m would give it the independence it needs for 30 years or more. Its board would be advisory, non-resident and meet not more than twice a year. The board would have the power to appoint the head (for, say, a seven-year term) and ensure its finances are well managed. It would have no power to interfere with, or comment on, its assessments.

Stern says that a requirement for independence of such an institution is that it should preferably be headed by somebody outside the G-8. He lists several candidates. One is our own Montek Ahluwalia. So, if the Congress/UPA does not return to power, there is still hope for Montek.

'Stocks are best for the long term'

That's how stocks are sold to the public. In the long-term, it is said, stocks outperform other assets. The trouble with this statement is that the long-term can be much too long- longer than one's life span. Secondly, in the active period of one's life, one can find that stocks have done worse or no better than other assets. I have written about this, citing various sources of data. An article in the FT revisits this theme:

Anyone who started saving 40 years ago, when the postwar “baby boom” generation was just joining the workforce, has found that stocks have performed no better than 20-year government bonds since then, a forthcoming article by Robert Arnott for the Journal of Indexes shows......To find a period that does produce an outperformance requires a span reaching back a lot further. The 2009 Credit Suisse Global Investment Returns Yearbook shows that since 1900 US stocks have averaged an annual real return of 6 per cent, compared with 2.1 per cent for bonds – while in the UK, equities have beaten gilts with a return of 5.1 per cent against 1.4 per cent. The problem is that they can perform worse than bonds for periods longer than a human working lifetime.

..Last year, most equity mutual funds failed to beat their benchmark indices, even though their managers had the freedom to move into cash and to pick stocks. Mr Malkiel points out that of the 14 funds that had beaten the market in the nine years to 2008, only one did so last year. Both efficient-markets and behavioural economists say it is better just to match the index, with a tracking fund, and avoid the fees incurred in unsuccessful attempts to beat the market.

International Criminal Court

The ICC has issued its first arrest warrant against a ruling head of state. Sudanese president Omar Hassan al Bashir faces charges war crimes and crimes against humanity. The ICC is one of those noble ideas that have been subverted by powerful vested interests. The idea of the ICC is to ensure that tyrannical regimes do not get away with visiting crimes on their people by claiming national sovereignty.

Unfortunately, the ICC is likely to remain a paper tiger because it has not been ratified by and cannot operate against several countries including the US. Indeed, the US allowed the ICC to come into being on the understanding that its own forces operating abroad would be exempt fro the purview of the ICC.

In an article in TOI, Ramesh Thakur places the ICC's verdict against the Sudanese head of state in perspective (the four verdicts given so far are all against Africans). One cannot but conclude that the ICC merely reinforces what we already know about the rule of law: one set for the rules for the powerful and another set for the powerless:

Yet, no senior US general or cabinet member is likely to face international criminal prosecution for Abu Ghraib, Guantanamo or other abuses. Does the world not eserve an honest accounting of what happened in Fallujah in April 2004 how many were killed, and whether any criminality was involved, including the use of chemical weapons prohibited under international humanitarian law? Nuremberg was supposedly about who started the war, not who lost; we know who started the Iraq war and we know they have not been called to account for the crime. What of charges of war crimes by Hamas and Israelis in Gaza earlier this year?

Unlike Bashir or any of the other Africans in the dock, whose alleged atrocities were limited to national jurisdictions, the George W Bush administration asserted and exercised the right to kidnap suspected enemies in the war on terror anywhere in the world and take them anywhere else, including countries known to torture suspects. Many western allies colluded in this distasteful practice of rendition. No westerner has faced criminal trial for it. In a surreal twist worthy of Kafka, western governments send terror suspects to be tortured to countries which they then brand as human rights abusers. Consider the ad hoc International Criminal Tribunal for former Yugoslavia. It has tried several Serbs, but no NATO national. Might it have something to do with the tribunal being located in a NATO country, its budget being paid mostly by NATO countries and its reliance on NATO for collection of evidence and enforcement of warrants.

Siachen Glacier

We approach the silver jubilee of the Indo-Pak confrontation over the Siachen glacier. EPW carries a detailed analysis of the background to the conflict by Col Pavan Nair, a retired army man.

As the Colonel points out, the war is not so much over the glacier as over the Saltoro ridges that dominate the glacier. India did in Siachen exactly what Pakistan attempted in Kargil- occupy positions that give a commanding view of the movements of the opposite side. The difference is that the Pak intrusion into Kargil clearly violated the LoC. In Siachen, the Indian violation is not as clear, although Nair himself believes the decision to occupy the Saltoro ridges was a blatant violation on India's part of the Shimla Accord.

The demarcation point in the map in the agreements signed between India in Karachi in July 1949 and Suchetgarh in December 1972 ends at a place call Khor, with the remark that the line would run "thence north to the glaciers." According to Nair, "The last part of the line, that is Khor and beyond was not made inclusiveto either party.....The Indian claim is based on the watershed principle. Since the last demarcated point NJ9842 lies on or near the Saltoro
watershed, the line should follow the watershed that is the Saltoro Ridge line which runs in a north-westerly direction.".

Whatever the rival claims to the Saltoro ridges, Nair argues that no strategic interest is served on either side by controlling the area. It is in the interest of both to withdraw. Staying on the Siachen costs India Rs 1000 crore every year. Over a 1000 Indian soldiers have died, mostly on account of the hostile weather conditions. Nair says the Indian military leadership had intended the occupation of Siachen as a temporary show of force and did not imagine that the Indian army would be stuck there. Some army generals have even urged unilateral Indian withdrawal, saying that Pakistan would not gain anything by occupying the ridges.

What do we laymen make of the situation? Money is precious and so is every human life. But Rs 1000 crore and 40 lives lost per year do not appear prohibitive in the national scheme of things. Unilateral withdrawal is politically unthinkable especially after Kargil. No government could survive if it withdrew from Siachen only to find that Pakistan had moved in.

As for Nair's contention that there are no strategic gains to be had, you have to remember that military technology and thinking keep evolving. It may not be possible to use the heights to any purpose today. But, with a higher level of technology and if we are under pressure on other fronts with Pakistan in a future war, who knows? That's perhaps why the army balks at the idea of even demilitarising the zone.

The gloomy inference must be that Siachen by itself is unsolvable. It can only be part of a larger Indo-Pak settlement. And that, alas, is hardly in sight.

Rethinking financial sector deregulation

Writing in BS, Jaimini Bhagwati observes:

Further, in the last few years some commentators have called upon policymakers and regulators in India to push for the following: (a) the central bank to adopt inflation targeting as its principal objective; (b) move speedily towards capital account convertibility; (c) raise foreign direct investment ceilings in the Indian banking sector; (d) move from defined benefit pensions schemes to defined contributions and favour larger investments in equity markets; and (e) establish Mumbai as an International Financial Centre (MIFC).

We need to pause and reconsider all of the above propositions

Readers of this blog will have no difficulty in appreciating that I share Bhagwati's scepticism about the proposals listed above. My guess is that the sub-prime crisis effectively ensure that a big chunk of the report on the MIFC and the Raghuram Rajan report on financial sector reforms will remain in limbo in the near future.

Bhagwati, now India's ambassador to the EU, Belgium and Luxembourg, was part of the liberalisation brigade earlier. So he surprises me when he says that, "....no amount of overhauling of the regulatory and credit rating processes can reduce systemic risk in the financial sector unless it is accompanied by a clipping of compensation packages to make these comparable to other sectors.".

I have highlighted here the link between top management pay and sytemic risk in the financial sector. But I have refrained from advocating absolute limits on pay. I am more concerned about the design of incentives. It could well be that once we accept the principle that variable pay must be based on return on risk-adjusted capital, levels of compensation in the financial sector will automatically fall from the present levels. But, I would not start out with the notion of caps on pay.

More on shareholder value

I had a post earlier on shareholder value maximisation and how Welch's criticism of this principle was unfounded. Those who criticise shareholder value maxisation say that it allows managers to focus on short-term value at the expense of the firm's long-term interests. But this reflects market inefficiencies. We should redouble efforts to increase market efficiency- through regulation, governance, better microstructure, etc.

Secondly, managers can get away with short-term results only as long as their incentives or rewards are linked to such results. The way to get them to focus on the long-term is to design incentives accordingly. There is growing consensus now that stock options should vest only over a long period- say, 10 years.

It's not the focus on shareholder value that needs to be remedied. The things that need remedying are the effectiveness of boards, executive pay and, above all, the concentration of powers in the CEO. If corporations are to create sustainable value, we must end corporate dictatorships. More on this in my ET column, Shareholder value's not the issue.

Asia's conservative capitalists

Kishore Mahbubani crows over the relative solidity of Asian economies in the present crisis in a recent FT article. He ascribes it to their refusal to blindly imitate Anglo-Saxon capitalism and to a deeply ingrained caution among Asian policy makers. It is notable that China has been as wary of financial deregulation and innovation as India:

The desire for an orderly society is deeply ingrained in the psyche of all Asians, which helps explain why virtually all Asian states hesitated to copy America in deregulating their financial markets. Instinctively, they felt government supervision remained critical. This was equally true in India’s democratic system and in China’s Communist party system.

It is telling that, while Y.V. Reddy, India’s former central bank governor, was occasionally vilified by his country’s media for holding back on deregulation, he has now become a national hero. His stance saved India from the worst effects of this crisis. China was equally wary of deregulation. Indeed the Chinese leaders may have understood earlier than most that America was building a house of cards with its reckless creation of derivatives. Gao Xiqing, an adviser to Zhu Rongji, then Chinese premier, said in 2000 that “if you look at every one of these [derivative] products, they make sense. But in aggregate, they are bullshit. They are crap. They serve to cheat people.” Mr Gao said all this while Alan Greenspan, as chairman of the US Federal Reserve, was waxing eloquent about the economic value of derivatives.

Regulatory lessons from sub-prime crisis

I list 10 early lessons from the sub-prime crisis in an article in the latest issue of Economic and Political Weekly.

US largesse for foreign banks

There is outrage in the US over bonus payments at insurer AIG, a company that has received billions in tax payer money. AIG paid nearly $165 mn in bonuses and New York's attorney general has launched an investigation into these.

But the more significant revelation is about how bail-out funds went into the coffers of foreign banks that happened to be counter-parties to derivatives and other contracts with AIG. Total payments to foreign banks were a staggering $50 bn. More than 20 foreign banks were beneficiaries. FT reports:

The biggest winners were French banks, with Société Générale receiving $11.9bn and BNP Paribas $4.9bn. Deutsche Bank of Germany received $11.8bn and Barclays of the UK $8.5bn....UBS, the Swiss bank, received $5bn from US taxpayers via AIG – dwarfing the $780m it agreed to pay the US government last month after admitting to helping US clients avoid taxes.

Goldman Sachs received nearly $13 bn. The pay outs to foreign banks were unavoidable because it would have been difficult to honour commitments to local parties and not to foreign ones. Besides, the impact on global banks of not honouring commitments would have been significant and would have inflicted huge costs on the world economy. This highlights an important regulatory issue: monitoring of cross-border transactions of domestic entities that are considered too big to fail.

Subsidies for newspapers?

No, I'm not talking about Indian papers, many of which survive on government ads. The failure of several newspapers in the US and elsewhere in the present crisis has prompted a debate on whether newspapers need to switch to a different business model from the present one that relies overwhelmingly on ads, says an FT report.

In the alternative model, newspapers would be subsidised either by private endowments or by the state. If you regard them as a form of public service, like educational institutions, then such an argument could be made. According to estimates, the New York Times would require an endowment of $5 bn to cover its newsroom costs. The total endowment required for all US papers would be $114 bn.In France, the government is stepping in to support papers by doubling government expenditure on ads- no doubt, a unique form of fiscal stimulus.

Government subsidies for the press are always an uncomfortable matter. As for private endowments, that could create an uneven playing field between papers supported by endowments and those that operate commercially. Besides, as the FT report notes, papers supported by endowments are not insulated from commercial papers- the Christian Science Monitor has closed its print edition.

Another option is charging for the online editions. But other than a few papers such as the Wall Street Journal and the Financial Times, not many papers have met with success in charging for their online versions. Part of the solution, as the FT notes, must be attacking the cost structures. Newspapers are still not disciplined enough in terms of weighing expenditures on coverage of news stories- Rupert Murdoch must be an exception in the game.

Pakistan a 'failed state' ?

For me, the big item in today's news about the turmoil in Pakistan was the resignation of Sherry Rehman, the information and broadcasting minister in the government.

Given the sketchy reporting that, alas, has been all too common in the Indian print media, I had some difficulty making out what precisely had prompted the resignation. One paper said it was in protest against the ban on Geo TV. That is absurd because the channel continues to broadcast. Another paper said it was in protest against restrictions placed by President Zardari on the channel's coverage of anti-government protests. That sounds more plausible. Remember, Geo TV is the channel that lost a courageous correspondent to terrorists in the Swat region.

Rehman's resignation is an act of great courage and conviction. It is not that she herself is responsible for any lapse. She has resigned in the cause of freedom of the media. When was the last time any minister in India resigned on an issue of principle?

To me, Rehman's resignation shows how passionate the elite in Pakistan's civil society is about democracy. In the recent past, several sections of civil society have displayed such passion- the media of course, but also lawyers, the judiciary and various political parties. As I have noted earlier in my blog, Pakistan's media remains remarkably vibrant and varied in its expression of views. I used to marvel at the courage that columnist-turned- politician Ayaz Amir displayed in his writings in the Dawn in the regime of General Musharraf. To his credit, Musharraf gave plenty of latitude to the media although he brought about his downfall by showing an inability to tolerate similar independence in the judiciary.

I am also impressed by the vibrant literature that Pakistan has produced recently in the English language - Mohammed Hanif, Kamila Shamsie and Daniyal Moenuddin are some of the names that figure prominently.

All of which makes me wonder how much substance there is to the talk of Pakistan being a 'failed state'? Can a country with such a committed civil society be possibly regarded as a failed state? The international community would like to think so because Pakistan is a breeding ground for terrorists. Many in India would like to subscribe to this thesis because they find in it a refutation of the 'two nation' theory.

I am not persuaded. We do not regard India as a failed state on account of insurgencies in Kashmir and the North-East and the Naxalite problem in about a quarter of all districts. The key difference between the two countries is that India has managed to keep the army in its place whereas in Pakistan, the army calls the shots whether it is running the country or not. Another difference is that the Indian judiciary has come in the way of any attempts at amending the Constitution that change the character of the Constitution.

The judiciary in Pakistan is capable of asserting itself, as events in Musharraf's time showed. So the fundamental challenge in Pakistan is rolling back the pervasive hold of the army. Given the support of the international community, Pakistan's elite may be capable yet of putting democracy on a solid foundation.

Bankers, watch your lifestyle

This is a time when bankers are apt to be lynched ( no pun on the now-defunct investment bank). So, bankers had better watch their lifestyle- the slightest sign of lavishness will be pounced upon. There's a telling anecdote from FT:

In different times, the offer from the check-in attendant would have been accepted with alacrity. But in the midst of the worst economic downturn since the Great Depression, with an angry public, populist politicians and an aggressive press baying for a crackdown on Wall Street’s “excesses”, the senior banker paused for thought when he heard those usually welcome airline words: “Sir, you have been upgraded to first class. Please follow me.”

Finally replying, “I am fine in coach, thank you”, he gave up the better seat and opened another chink in the armour of beliefs and practices that corporate America had built and spread around the world over decades.

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Flawed b-school ideas

It's interesting that there has been much finger-pointing towards b-schools in the massive debate on capitalism prompted by the present crisis. In the Satyam episode, some of the outrage stemmed from the realisation that two b-school dons were on the board.

As I have pointed out in earlier blogs, I don't really buy the stuff about 'excessive' focus on shareholder value and how b-schools have gone wrong in overemphasising this aspect of capitalism. For a change, I came across something more sensible in this article by Richard Layard of the LSE's Centre for economic performance. Lord Layard points out three b-school ideas that need to be questioned:

Three ideas taught in business schools have much to answer for. One is the theory of “efficient capital markets”, now clearly discredited. The second is “principal agent” theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of “continuous change”, promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.

Corporate reforms

Leave aside the big talk of 'reforming capitalism'. That means all things to all people. Concretely, what can one expect by way of reforms in the corporate world? From a recent story in the FT, I flagged the following:

• The US Congress has voted to give shareholders an annual vote on executive pay, although this will be a non-binding vote
• Shareholders may get the right to nominate candidates to the board- and to remove non-performing directors. These have been management's prerogative so far
• Redesign of executive compensation with less liberal stock options for people at the top.
  
• An improvement in the composition of corporate boards- board members will need to demonstrate better expertise than playing golf.

Is that good enough? Well, it's a good start. But I am a bit of a radical when it comes to corporate reform. I happen to think there is a fundamental problem with the modern corporation: excessive concentration of powers in the CEO.

The world over, democracy has gained ground at the level of nations. But the corporate world remains the last bastion of dictatorship. Greater diffusion of powers and more participative decision-making are what companies lack - and which is why they are prone to disaster. Serious reform is making these things happen.

Jack Welch lashes out at focus on 'shareholder value'

'Capitalism in crisis' is the lament of the day. Heaven knows there's a great deal of reconstruction that needs to be done now, most importantly in the realm of financial regulation. But we have to be careful to sift out populist rhetoric and plain inanity from serious proposals for reform. To put it bluntly, in today's distressed situation, there's a lot of rubbish that is sought to be palmed off as great wisdom by the high and mighty.

When I read in the FT that former GE CEO Jack Welch had condemned the focus on share price, I nearly fell off my chair. This is the father of the 'shareholder value' movement, the man who ruthlessly downsized and restructured in order to enhance shareholder value. Now, safely and comfortably ensconced in retirement- Welch had helped himself to some post-retirement perks that later proved controversial-, the man now pontificates about the evils of shareholder value maximization.

I wouldn't have minded if he had put forth sound arguments for his contention. I can't see any. Welch says:

On the face of it, shareholder value is the dumbest idea in the world,” he said. “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.

Tell me, does that sound terribly original? Has any worthwhile CEO claimed that shareholder value creation was a strategy? Not at all. CEOs merely focus on it as the objective. Now I know that lots of academics and practitioners think there is something terribly wrong with this objective- I wrote about this in an earlier post. But none has come up with a worthwhile substitute for it.

Of course, management must focus on employees, customers and products. Of course, they must focus on innovation. And, sure, they must behave in socially responsible ways. But if the share price does not capture these dimensions, if the stock market is not efficient enough, then what would be the measure of performance and who is to do the measuring?

Let Welch tell us how we are to know whether management is adequately focused on employees, customers and products- other than by watching the share price. I will then take back what I have said here.

PSUs a hit at IIMs

Well, well, well. Who would have thought this was possible? The top recruiters at the IIMs have turned out to be PSUs. I had to pinch myself in disbelief when I read that Union Bank of India had made 18 offers at IIMA, followed by Bank of Baroda, IOC and BPCL. PSUs hired a total of 41 students out of 235 candidates at IIMA. The public sector banks have substituted for the high-profile investment banks with their fancy offers.

What does this mean? Well, it's clearly not a trend. Those who were set on banking and finance careers would not have had other options. And public sector banks do provide a good training ground. So, most of the grads will take up these jobs and wait for the glamorous part of the market to open up. Mind you, at the kind of levels of which PSUs are willing to take IIM grads, the starting packages would not be unattractive.

The challenge for PSUs is not getting IIM grads in. It's keeping them for a while. Maybe they cannot keep them for a lifetime. But there should be a clearly thought strategy to get the best out of them in, say, three to five years. One way is, of course, putting them in positions where skills in PSUs are most lacking. The other is using them as change agents to bring about a cultural change in the organisation- to give public sector employees a sense of how young execs from the best schools think and act.
PSUs need not have a huge complex about attrition among IIM recruits. It happens to the best of institutions these days. Firm loyalty is passe. The trick is to make sure that such attrition is consistent with the business model- IIM recruits should not be money down the drain.

Consultant, heal thyself

Business Standard carries a front page story on how the top consulting firms are yet to get into the black after years of operating out of here. They really can't say they are in it for the long haul or that they are investing for the long term because they have been around for much too long now. McKinsey had a loss of around Rs 2 crore in2007-08, Accenture netted a minus of Rs 18.6 crore in 2006-07 and Bain showed a loss of Rs 16 crore in 2007-08. BCG is marginally in the black as is Deloitte.

There is little doubt that foreign consulting firms are unable to shed the high cost baggage of all foreign firms. Everything about them is expensive- their staff costs, the places they rent (five star hotel rooms often operating as offices for months on end), their travel, flying in experts from overseas offices at huge cost.... All this is passed on to the clients and yet the firms make no money.

Makes you wonder: how do they justify year-end bonuses? And if consultants can't mind their businesses properly, how can we expect them to advise others to mind theirs?

Return of the prodigal

Over a 100,000 Indians will return from the US in the next 3-5 years, ET reports. The estimate comes from a study done by multi-university team headed by an Indian, Vivek Wadhwa.

With India Shining until recently, the urge to migrate had weakened somewhat. The downturn in the US will weaken it further and enhance the domestic pool of talent with returnees.

"With the economic downturn, my guess is that we'll have over 100,000 Indians and as many Chinese return home over the next three-five years," says Wadhwa. "This flood of western educated and skilled talent will greatly boost the economies of India and China and strengthen their competitiveness.

...... Until recently, America has been the prime destination for the world's best and brightest immigrants. "Immigrants have made tremendous personal sacrifices," said Wadhwa. "They would leave behind relatives and friends and accept second-tier status in American society.

"Now countries like India and China are providing equal career opportunities and a better quality of life. So the most highly educated and skilled are often returning home."

I recall with amusement the heated debates we used to have about the 'brain drain' and how to stop it. All sorts of prescriptions were given (eg compulsory home service before migrating, an exit fee for those departing from schools like the IITs, etc). None of this is required. When growth accelerates and creates opportunities, brain drain ceases to be an issue. Growth may not the complete answer to poverty but it is certainly an answer to brain drain.

Old wine in old bottle

Gary Hamel has an article in the HBR of January 2009 on how we need to reinvent management. The article came out of discussions among a group of scholars and practitioners. There is nothing wrong the ideas- some two dozen of them- but I wasn't bowled over because these aren't new. eg. management being more democratic, more transparent and, not least, being focused on nobler objectives than shareholder wealth maximization.

The last is not new at all because Peter Drucker wrote extensively about it. In one of his books, he said management could never win legitimacy as long as it focused on such a narrow objective. Management needed to focus on something loftier. He proposed making people productive as the declared goal of management. But Drucker was writing at a time when the market was far less efficient than it is today. Are we saying that the market cannot judge whether a company is doing enough with respect to, say, innovation and people development? Then, the right question, perhaps, is: how do increase the flow of information on these matters to the market?

My problem is: how do you operationalise such goals? How do we measure performance in ways other than shareholder value? Drcuker never answered this question. He left the definition and measurement of management performance as an important challenge for corporations.

True, shareholder value leads to distortions in managerial actions but at least the market is an impersonal judge. Are we to substitute the market's judgement with that of some independent personalities who will come up with appropriate measures? Well, I hope these personalities are not independent directors!

More thoughts on this in my last ET column, A new paradigm for management?

Management guru

The Economist carries a profile of Ram Charan, a management guru who may not have a high profile in India but who is pretty well known internationally. He has authored books on leadership and board room governance and combines lecturing and writing with consulting. At 69, Charan has an enviable capacity for travel:

Another thing that makes Mr Charan unusual is that few people would want to sign up for the punishing life associated with being both a sage-on-stage and a confidant of many chief executives. A one-man band, Mr Charan is constantly on the move, notching up some 500,000 miles (800,000km) on aircraft last year and spending most of his nights in hotel rooms. To minimise the amount of baggage he lugs around, assistants at his office in Dallas send fresh clothes to him via courier and his laundry is returned via the same route. Until a couple of years ago, the peripatetic Mr Charan did not even own a home. He has since bought an apartment in Dallas, he says, but he has barely stayed there since he bought it.

That bit about the laundry had me foxed. How much does it cost to courier laundry across the world? Maybe it makes sense to courier suits instead of buying these but I wonder whether it makes sense for other apparel. Is it cheaper to use the courier than to use the laundry services of five star hotels where, presumably, Charan would stay?