leading questions for the thought leadership club at ireland’s leading b-school

Leading Questions for the Thought Leadership Club at Ireland’s leading B-School

UCD Michael Smurfit Graduate Business School

Prabhu GuptaraExecutive Director

Relational Analytics LtdCambridge, U.K.

p.guptara@relational-analytics.com

Please noteNOT the official position of The Relational Thinking Movement,

or of any of the other organisations, universities, etc. with which I am or have been connected

• The intention is to provoke us to think!!!

5 Simultaneous and Unforeseen Crises?

“Europe is juggling five simultaneous crises, all unforeseen shocks in different stages of development: - refugees from Syria, - eurozone periphery debt, - a global economic downturn, - Russia’s annexation of Crimea and its aftermath, and - Volkswagen’s crimes and misdemeanours”

Wolfgang Münchau, FT, 27 September 2015

My Leading Question: What is wrong?

Democracy and capitalism have brought us such a long way!

Why then do they produce so much unfairness and inequality?

Why so much moral failure?

Why so many crises?

And why do we seem to be retreating from our social & environmental goals?

My Leading Question: What is wrong?

Democracy and capitalism have brought us such a long way!

Why then do they produce so much unfairness and inequality?

Why so much moral failure?

Why so many crises?

And why do we seem to be retreating from our social & environmental goals?

Vishal Mangalwadi

But *IS* it “democracy & capitalism that have brought us such a long way”?

My Leading Question: What is wrong?

Democracy and capitalism have brought us such a long way!

Why then do they produce so much unfairness and inequality?

Why so much moral failure?

Why so many crises?

And why do we seem to be retreating from our social & environmental goals?

DOES capitalism produce unfairness & inequality?

• Please note: this is NOT an argument for Marxism or Socialism!• Depends on your definition of “capitalism”• But we certainly need to reform capitalism as it is currently practiced

around the world, where the results are precisely these as documented e.g. in:• David Graeber’s 5000 Years of Debt• Irving Fisher’s Debt-Deflation Theory of Great Depressions (1933 - Internet)• Yves Smith’s Econned• John Lanchester’s Whoops!• Gillian Tett, Fool’s Gold

My Leading Question: What is wrong?

Democracy and capitalism have brought us such a long way!

Why then do they produce so much unfairness and inequality?

Why so much moral failure?

Why so many crises?

And why do we seem to be retreating from our social & environmental goals?

Warren Buffet

“Look for three things in a person: intelligence, energy, and integrity. If they don’t have the last one, don’t even bother”

Malfeasance, Fraud, Buck-passing…• Enron, WorldCom, 3Com, Arthur Andersen, Tyco, WasteManagement,

HealthSouth, FreddieMac, AIG, Lehmann Brothers… • Deepwater Horizon oil spill • Merck’s Vioxx • Exxon-Valdez oil disaster • Ford Explorers with Firestone tires prone to fatal rollovers• Aventis (now Sanofi-Aventis) Starlink genetically modified corn “only

approved for use as animal feed” but in human food!!! Recalls & factory shutdowns for companies like ConAgra & Kraft…

Malfeasance, Fraud, Buck-passing…• Bernie Madoff• Satyam • American Home Products (now Wyeth) popular diet combo Fen-Phen

actually caused fatal heart problems - $21 billion• Union Carbide’s 1984 gas leak in an Indian pesticide factory: for many years

the worst chemical accident on record. Roughly 4,000 died within days, and authorities estimate the long-term death toll at 15,000, with hundreds of thousands more stricken with health problems. The catastrophe cost Union Carbide (bought by Dow Chemical nine years ago) $470 million in restitution payments to the Indian government, but the cost to its reputation was much higher. The anniversary of the leak is still marked by vigils and protests

Major corporate collapses and scandals

• https://en.wikipedia.org/wiki/List_of_corporate_collapses_and_scandals• 15th c: Medici Bank• 18th c: The Mississippi Company, & The South Sea Bubble• 19th c: Gurney, & Krupp• 20th c: DanatBank 1931, Allied Crude 1963, Herstatt Bank 1974,

Carrian 1983, Texaco 1987, Qintex 1989, Lincoln S&L 1989, LTCM 1998, Polly Peck 1990, BCCI 1991, Nordbanken 1991, Barings Bank 1995, Bre-X 1997

Major corporate collapses and scandals

• 21st c: Equitable 2000, HIH 2001, Pacific G&E 2001, OneTel 2001, WorldCom2001, Enron 2001, Chiquitas 2001, Kmart 2002, Adelphia 2002, Arthur Andersen 2002, Parmalat 2003, MG Rover 2005, Bayou Hedge Fund 2005, Refco 2005, Bear Stearns 2008, Northern Rock 2008, Lehmann Brothers 2008, AIG 2008, Washington Mutual 2008, RBS 2008, ABN-Amro 2008, Nortel 2009, AIB 2009, Arcandor 2009, Schlecker 2012, Dynergy 2012, Banco Espirito Santo 2014• Joel Bakan: The Corporation: The Pathological Pursuit of Profit and Power

What is the *value* of a leader’s integrity? Can it be quantified?• Dr. Fred Kiel did just that in his book, Return On Character (published

by Harvard Business Review Press in April 2015) • Over a seven-year period, Kiel collected data on 84 CEOs and

compared employee ratings of their behaviour to company performance• Employee engagement was 26% higher in organizations led by high-

integrity CEOs• High-integrity CEOs had a multi-year return of 9.4%, while low

integrity CEOs had a yield of just 1.9%.

The Moral State of the Financial Services Industry•26% have seen wrongdoing themselves•24% think unethical conduct necessary to get on in the industry(!)•16 % ready to commit fraud

• Financial Services Survey July2012 http://www.labaton.com/en/about/press/Labaton-Sucharow-announces-results-of-financial-services-professional-survey.cfm

Bernanke: More execs should have faced prosecution for 2008 crisis

• Reporting a story in USA Today, Sun Oct 4, 2015:

http://www.reuters.com/article/2015/10/04/us-bernanke-financialcrisis-idUSKCN0RY0X420151004

One Clue• “Buddhist morality in general, whether early or late, is based

upon a distinction between the wholesome and the unwholesome rather than between good and evil” -Karl H Potter (1996), Encyclopedia of Indian Philosophies, vol 7, “Abidharma Buddhism to 150 AD, Motilal Banarsidas, New Delhi, page 48

• Any distinction based on “wholesome” begs the question: According to whom? • As that can only be some individual or group of human

beings, it is (and has been) open to manipulation by the more intelligent and/or more powerful.

My Leading Question: What is wrong?

Democracy and capitalism have brought us such a long way!

Why then do they produce so much unfairness and inequality?

Why so much moral failure?

Why so many crises?

And why do we seem to be retreating from our social & environmental goals?