Author Archives: RV Raman
Composed by a reader and a well-wisher in verse form!
A banker, she dies, soon after she has deposed
A chairman, he dies, in him trust was reposed
A server, it’s hacked, in it untold secrets composed
Illicit finance and crime coalesce in a thriller proposed
Will all be unravelled as Inspector Ranade disposed?
A roller coaster ride, if ever there was one
A corporate thriller with twists that get undone
Criminals and crooks with scruples none
Keeps you riveted, as the culprits are on the run
Try solving this locked room mystery, it’s fun!
As cash crunches strike e-tailers, valuations plummet and down-rounds loom large, the stark reality facing e-commerce unicorns become clear for all to see. Protestations that all is well, and attempts to talk up valuations become less credible by the day. As boardroom conflicts escalate and the day of reckoning fast approaches, a shake-out in the sector becomes imminent. The e-commerce sector becomes a pressure cooker.
Against this backdrop, take a hypothetical e-tailer unicorn that is facing a cash crunch. What if the e-tailer suddenly discovers bugs in its offices and finds that it is the target of corporate espionage? To make matters worse, an investor disappears and a massive data theft follows.
The all-important funding round stalls.
As the stakes escalate and risk surges inexorably, murder follows.
This is the fictional tale narrated in SABOTEUR, the latest corporate thriller set in Bangalore. As bots mimic humans in the Indian cyberspace, men risk millions in Hong Kong. A story of a wounded unicorn and its venture fund investors.
Insider trading, I’ve often thought, must be one of the easiest white-collar crimes to pull off. Even easier than procurement fraud, which must be one of the most pervasive.
Someone in the accounts department of a listed company tells his friend or relative: ‘We’ve done better than expected this quarter. We’ll beat market expectations.’ The friend promptly buys a hundred shares of the company. And when the results come out and the share price surges, the friend is a few thousand rupees richer.
Now, how do prosecutors even begin to establish that price-sensitive information was used to profit from the trade? Unless, of course, the insider was foolish enough to put his tip on an email or a text message. Not only is insider trading easy to pull off (at least on a small scale), it is also horrendously difficult to prove.
There are tens of thousands of people in listed companies who possess such price-sensitive information from time to time. It’s not just the blokes in the accounts department, but also others too – both employees and outsiders (auditors, consultants, I-Bankers, advisors, etc.).
During my tenure at the Big Four audit/consulting firms, this was something we had to constantly look out for. The law explicitly prevents auditors and consultants from divulging such information – inadvertently or otherwise – to any party who may benefit from it. And we were prohibited from owning stocks of companies we audited or advised. Independence/propriety is indeed a big deal at these firms.
Be that as it may, many do believe that insider trading is prevalent in India. On a small scale, at least.
A couple of years back, I was wondering how insider trading could be ‘institutionalized’ (by a hypothetical Indian Prof. Moriarty, if you will) and scaled up. I sat down and ‘designed’ a suitable mechanism. To my delight, I found the scheme eminently workable, and reasonably watertight. And more importantly, it could be implemented with simple technology that is widely available.
I then put on another hat (that of an investigator or SEBI), and began looking at how one would go about discovering and unraveling the insider trading scheme once it was implemented. Clearly, that would require sifting through tons of stock market data, and possibly the use of analytics.
Once I had both ends of the scheme figured out, I built a murder mystery around it. That became Insider, the novel that Hachette has just released. If you do get to read it, please drop me a note. I’d like to hear what you think of the workability of the little scheme.
The Reserve Bank Governor is spot on when he says that Indian banking is in the midst of a revolution. The Unified Payment Interface (UPI) launched yesterday is nothing short of revolutionary.
Mobile banking so far has been about doing a few things with your bank account using your mobile phone. It is largely restricted to the bank in which you have your account. UPI now takes it to a new level – it cuts across banks. You can now have a single identifier that can be used across all banks.
The positives are many, as can be gleaned from today’s business newspapers. It can potentially replace digital wallets that impose boundaries on where you can use them. Paytm, for instance, can be used to pay for Uber rides, but not Ola. UPI, once rolled out, will enable you to make mobile-based payments for virtually anything.
But along with this unprecedented convenience comes unprecedented responsibility.
Until a few years ago, your physical signature was your identifier. The advantage was that it couldn’t be ‘stolen’ from you. Yes, a forger could duplicate your signature, but that called for uncommon forging skills. Unfortunately in the digital era, your digital signature can be stolen and replicated if you happen to be careless. And money can vanish in seconds.
Access to our mobile numbers and emails are rapidly taking on a central role in our digital ids, for that is what financial institutions use to validate our identities. Be careless about these, and you will leave yourself open to unprecedented levels of fraud.
One would do well to understand the risks that come with UPI, as there are any number of ways to steal your digital identity. Make sure that you know your way about before jumping headlong into UPI.
For much of the 40-odd years that I have been devouring fiction, the imaginary worlds I journeyed to have been divorced from the real world I lived in. Be it the nineteenth century London of Conan Doyle and Edgar Wallace, or the mid-twentieth century England of Agatha Christie and Enid Blyton, or Perry Mason’s California, they were all a far cry from the Indian city life I was immersed in.
What were moors and mews that Christie and Doyle revelled in? What were these mouth-watering scones and tarts that peppered Enid Blyton’s pages? I had never seen a scone in my middle-class life of the seventies. Nothing I read seemed to have much in common with the real world around me. While they were not as alien as Tolkien’s Middle Earth or Asimov’s Trantor, they were nonetheless unfamiliar.
Why didn’t we have fiction from our own world, I wondered. Was that why RK Narayan appealed to so many of us? Apart from the undeniable craft he possessed, one could relate to his characters and locales. They seemed real; they felt as if they were from our world. Admittedly, what we read was limited by what local libraries stocked and Sunday second-hand book shops offered.
When I gave up studenthood to enter the corporate world, another question popped into my head. Why was so little fiction set where I spent the largest chunk of my waking hours? Why did so few authors write about the corporate world? Surely, there was no shortage of conflict and emotion in the workplace? And the stakes were high too; far higher than in private lives. Talk about motive for crime, and there was ambition, collusion, malfeasance, corruption, love, lust, frustration – you name it!
Yet, there was very little ‘corporate crime fiction’.
Wouldn’t it be great to have good crime fiction set in India? Well-crafted plots that we can relate to; familiar victims we can empathise with; recognisable antagonists we can heartily hate? With more Indians turning to writing, will we see a surge of crime fiction set in India? Above all, wouldn’t it be great to read gripping narratives written by Indian hands for Indian eyes?
Then, the penny dropped. While I waited for others to do it, why not take a shot at it myself?
I had already made a beginning with writing epic fantasy, and I had loads of material from my three decades in the corporate world. I had seen ambition and greed at close quarters, and had witnessed sharp minds cross the thin line that separated the two. Opportunities for crime were aplenty, with many readymade for crime fiction.
I did take a shot at it, and the attempt became Fraudster. I am happy that one of the Big Five global publishing houses decided to back the novel. Fraudster is about greed and temptation in banking, which is a very thin sliver of larger corporate India. There is space for a lot more stories; tons of them. I hope better writers than I turn to it too.
This blog was originally published as a guest post at Printasia.
A question I frequently get asked is whether I had any specific purpose behind writing Fraudster. Was I irked by the atmosphere in corporate India, one newspaper journalist asked. Did I want to expose their wrongdoings, another interviewer wanted to know.
The answer is an unequivocal ‘No’.
I’ve had lots of fun during my three decades in the corporate world, and some of my best experiences have been there. Not to mention some of the brightest minds and the finest human beings I met, and the many friends I made there. Far from being irked, I am thankful to the corporate world for showing me an avenue in which to try my creativity.
Why then did I choose to write a novel about some murky realities of the banking world?
The fact of the matter is that the corporate world is a fertile ground for stories – inspirational or fictional. It is a melting pot of many types of people; men and women driven by different sets of values, priorities and motivations. Each one has a different worldview, and the environment has far more than fifty shades of grey.
It has a fascinating interplay of every emotion one can think of, and every kind of conflict. Fiction, after all, is about emotive conflict. Consequently, the corporate world lends itself wonderfully to crime fiction.
The stakes are high too. A person who is worth a million dollars in his private life may be running a 500 million dollar business. A banker who may be worth even less, could be handling a loan portfolio worth billions. A peculiarity of banking is that ordinary men and women handle vast amount of other people’s wealth. Billions upon billions of dollars of it.
If a banker falls to temptation and siphons off a small part of the money he oversees, he can gain a lot more than he can hope to gain by any deception in his private life. The potential payoffs for crime, especially white-collar crime, is huge.
That, in turn, provides one of the essential ingredients for crime – motive.
That’s not all. The corporate world also provides a virtually unlimited supply of the other two key ingredients as well – opportunity and means. With all three main elements covered, it becomes an ideal milieu for crime fiction.
But merely setting a murder in a corporate office, or robbing an ATM, does not make it a corporate crime. The nature of the deception and the modus operandi of the crime must have business processes at its heart. It must find or construct credible loopholes in the way businesses are run, and must take advantage of them.
To do that, a writer must have spent sufficient time in the corporate world and observed its failings. There must be millions of people who have done that, but yet, we have very little corporate crime fiction in bookstores. Apart from John Grisham, there are very few authors who write good fiction of this variety. I wonder why?
The previous post made the case for banks to focus on the proverbial elephant in the room, i.e. fraudulent loans. With loan frauds touching 12% of PSU banks’ net profit, the case cannot be clearer.
Consider the following incidents:
- The stock in a warehouse is pledged for three different loans, and none of the banks knows that the stock is pledged to others.
- A loan is given to ‘ABC Cables’ for factory renovation, but the factory remains shut. The watchman says that the promoter can be found only at the newly refurbished ‘ABC Bar & Restaurant’.
- A property worth 20 crores bears a valuation certificate showing its value as 40 crores.
- An expensive new CNC machine is hypothecated to three different banks, but the machine in reality is a 25-year old fourth-hand wreck.
- The collateral for a loan is stock, but the actual stock is one-fifth of what it is on paper. And the bank doesn’t have keys to the warehouse.
- Newly supplied cartons of computers have only stones and thermocol.
- An auditor certifies the finished goods inventory to be three times the actual inventory.
None of these is of the scale of the alleged Syndicate Bank scam, but few of these, if any, would be unfamiliar to seasoned bankers. It is such frauds, along with some sophisticated ones, that have cost the banking sector Rs. 16,690 crores between 2010 and 2013.
How did this happen? The problem lies as much within banks as in the wider ecosystem, and the weaknesses are both behavioural in nature and systemic.
Basic banking tenets are ignored when operating staff view a bank’s requirements as blind procedures to be followed, or when supervisors pressurise their staff to cut corners. Some are happy to tick the boxes without doing the necessary due diligence. A good part of loan frauds is due to sheer negligence or lack of tools, but another part involves collusion.
While frauds are discovered only when repayment default occurs, their causes lie in weaknesses in the earlier stages of the loan process.
As with any malaise, prevention is better than cure. To do this, we need to improve operating effectiveness within banks, and at the same time, we must implement a central anti-fraud mechanism that can be shared by banks
Improving operational effectiveness
While processes may vary across banks, some key aspects of the loan life cycle are common, and need close attention (see graphic below).
The idea is to make bankers at all levels more accountable and less susceptible to pressure from their bosses. The operating level person who gathers information claims innocence, as he was not the person who had approved the fraudulent loan. At the same time, the bank’s management disclaims responsibility, saying that their decisions are only as good as the information they get. Who then, is responsible? Clearly, it must be both.
According to Deloitte’s Indian banking fraud survey, the top two reasons for frauds are lack of supervision (73%) and pressure to meet targets (50%). This suggests that the management is as responsible as the staff. Unless both are held accountable, provided appropriate tools, and incentivised, it is difficult to see the situation changing.
A bank afflicted by loan frauds must take several steps.
- Firstly, it must commission a fraud risk assessment of the loan process, which will help identify weak areas and take corrective measures.
- Next, it must institute a practice of conducting independent external audits on a random sample of loans. These audits must include surprise physical verification of collaterals, and independent validation of documentation and valuations.
- Third, whenever a fraud occurs, it must trace the histories of colluding employees to identify frauds they may have earlier been perpetrated.
- And finally, it needs to modify employee appraisal systems to bring frauds into focus, and make fraud management central to a bank’s balance scorecard. This must be supplemented with disciplinary action that includes criminal charges.
Even after implementing these steps, the work would only be half done. The other half involves anti-fraud tools.
Do bankers have the necessary tools to detect potential loan frauds? How do they profile loan applicants? How do they inquire into a promoter’s past loan history? How do they know that a collateral is not already pledged elsewhere? For this, we must turn to the second set of actions: implementing a centralised anti-fraud mechanism.
A central anti-fraud system
While RBI has a central fraud monitoring cell, it does not have the necessary tools to prevent frauds. RBI (or some other central agency) must build a centralised system that enables banks to catch potentially fraudulent loans in time by exchanging information on frauds, collaterals, defaults and fraudsters.
Just as a shared claims register helps insurance companies fight duplicate claims, a shared facility will help banks prevent sanctioning fraudulent loans. And if one is sanctioned, it can prevent the disbursal of funds. The central anti-fraud system should have details of all frauds, loans, defaults, defaulters, failed companies, promoters, their close associates, collaterals and fraud schemes. But it must be done in a way that doesn’t compromise the privacy of borrowers.
A promoter or an employee who hits upon a successful fraud scheme is unlikely to stop with one fraud. A shared facility will help nip it in the bud. Similarly, a valuer who overvalues collaterals can be caught sooner rather than later. Wilful defaulters can be pushed out of the banking system.
It is also important to maintain an ‘incident register’ with details of suspicious incidents that are yet to be declared fraudulent. These incidents may be under investigation or under a legal process, but it is critical that other banks are made aware of suspicious activity at the earliest. This incident register must be designed carefully to ensure that privacy and legal rights of customers are not violated. A metadata approach may prove useful in this regard.
The above graphic outlines the concept of a central anti-fraud system. The system must be adaptive, and should be able to flag high-risk promoters, companies and loan applications, after taking into consideration the linkages mentioned in the graphic. In time, it should be able to take in loan application details and give it a risk rating.
Powerful analytic tools are now available, but for them to be effective, they need to be imaginatively combined with an understanding of the fraudster’s methods and the vulnerabilities of our banking systems. Sound design will be key, and the system must have the inbuilt ability to learn on the job. With fraudsters staying a step or two ahead of banks, we will need some sharp minds to participate in this initiative.
There will be those who will seek to thwart the initiative, but the time has come for the banking sector to take some serious steps to fight fraudulent loans.
Here is a stunning statistic: banking fraud has grown eleven times faster than banks’ profits have. PSU banks saw fraud grow at a CAGR of 102% between 2010 and 2013, when their profits grew at 9%.
One may be tempted to think that this unprecedented malaise must be due to across-the-board vulnerabilities in banks. It is not. Banks have contained certain kinds of fraud very well, but have been spectacularly unsuccessful in dealing with some others.
Shareholder wealth eroded
Disaggregated data on frauds for individual banks is not easily available. However, a recent article by S Pai and M Venkatesh, which was based on RTI data, offers an interesting insight. When their information is combined with IBA’s bank performance data, the impact of fraud becomes visibly shocking (see chart below).
One bank has lost more to fraud than its entire profit. Even the country’s largest bank lost a large chunk of its profits to fraud. The banks in between, which are smaller and earn less, have fared worse. But are these banks representative of the banking sector? Or, are they just outliers that make sensational news? What then is the situation in the sector as a whole?
Combining data from RBI and IBA shows that frauds in PSU banks as a whole stood at 12% of their combined profits in 2013. In any company, the management would be willing to go to great lengths to bring 12% additional profitability. Surely, there is a case for banks to look at frauds seriously?
Projecting the impact of this malaise further, we find that effective fraud management could potentially add a whopping Rs 52,000 crores to shareholder wealth. To put it in perspective, that’s more than the GDPs of 40% of India’s states! This is most likely an underestimate, as the market would reward increased diligence with a higher PE ratio.
Further, bear in mind that RBI’s data includes only reported frauds. Even if we assume that all detected frauds were reported, these figures do not include undetected frauds. Nor does it include incidents that are under investigation, or have not yet been declared fraudulent. Bringing all frauds into the equation would only paint a darker picture.
The elephant in the room
But what kind of frauds are we talking about? Bring up the topic of fraud, and what gets spoken about are phishing, credit card misuse, account hacking, and online/ATM frauds – i.e. technology related frauds. With billions of automated transactions taking place every month, it is not humanly possible to monitor such volumes. Banks therefore turn to technology for a solution, and rightly so.
Software vendors have taken note of this. They offer real time fraud detection tools for online banking, sophisticated pattern recognition algorithms, and a whole range of software products to combat technology fraud. This is indeed welcome, as we need these tools.
To be fair, we have not done badly in mitigating technology fraud risk. In some ways, online credit card transactions are safer in India than elsewhere. The additional authentication factor of sending an OTP to the customer’s mobile phone, for instance, has made online transactions considerably safer in India. This additional authentication factor is missing in many countries. If an overseas merchant’s website is hacked, tens of thousands of customers are immediately at risk.
But in all this discussion, we are missing the elephant in the room.
While technology related frauds account for a whopping 98% of the fraud cases reported, they contribute to a mere 2% of the value. The real elephant in the room is what RBI calls ‘advance related frauds’ – i.e. fraudulent loans.
Between 2010 and 2013, we had 1.12 lakh cases of technology fraud adding up to Rs. 357 crore, whereas a mere 2,760 cases of loan fraud set the sector back by a staggering Rs. 16,690 crore. The loan fraudster is enjoying an unprecedented run.
Technology fraud, on which we focus much of our attention, is now a relative fleabite. It is so because of the attention it has received. Banks have waged war on technology fraud, and have succeeded. But in focussing on technology, we have neglected another vulnerable area – loans. It is in the loans and advances business of banks that the fraudster now stalks.
This disparity between the two kinds of frauds is a result of two things. Firstly, the supply base of tools for fighting technology fraud is well developed. Unfortunately, this is not the case with loan frauds – there are few software products that banks can buy off the shelf. Secondly, the human element (along with the vagaries and moral hazards that come with it) is considerably larger with loan frauds, and the fraudster is seldom alone.
Technology fraudsters are like mosquitoes – they come into your house through windows and cracks, but their damage is limited. But the loan fraudster is a burglar – he breaks in through the back door and makes off with the family silver.
The banking sector has done well in mitigating the technology fraud risk, but hasn’t done enough on the loans front. This has left residual vulnerability in the system that fraudsters have exploited. It is to this that the sector must now turn its attention.
This dire need is underlined by a glance back at RBI’s data. While loan related frauds grew at an astonishing CAGR of 87%, technology frauds have been almost static with a mere 2% growth. Besides, a typical loan fraud is a thousand times larger than a technology fraud.
Tackling loan frauds will be a lot tougher than combating technology frauds. Issues of governance, collusion, negligence and a host of moral hazards will need to be addressed. Software packages that are so effective in mitigating technology fraud risk may be of limited assistance. Further, an unprecedented level of cooperation between banks will be called for.
Part 1 of this article has attempted to make the case for banks to turn the spotlight on loan frauds. Part 2 will discuss what they and the RBI must do to combat this malaise.
This article was published in tehelka.com’s ‘Personal Histories’ column with a different title in their 27 Sep 2014 issue .
It happened almost overnight. A company that had been built brick-by-brick over 90 long years, a firm that employed 85,000 people in over 80 countries, collapsed in a few short weeks due to the actions of one man. Just one man’s greed for higher annual bonuses destroyed a veritable institution in the world of accounting and consulting. Arthur Andersen.
It was a bolt from the blue for us in India. The unthinkable had happened. We had an acute sense of history being made, and being a part of that history. Only, it was the wrong kind of history. All of a sudden, tens of thousands of careers were at stake. Bright young people who had trusted their future to us were left in the lurch. Though the Indian arm was considerably smaller than some others, we nevertheless were a microcosm of what was happening worldwide.
In our midst were some who had married recently, and others who were expecting little ones. There were those who had taken large loans for buying flats. Among the older colleagues were some who had leveraged themselves to educate their children abroad. Across the board, people were desperately dependent on their pay cheques. If Andersen ceased to be, where would they go at this terrible time? In the wake of the 9/11 attacks, the job market was at a nadir.
All this had come to pass because of one selfish man sitting in some office somewhere on the other side of the planet. While India was at last beginning to enjoy the fruits of globalisation, we had the dubious privilege of experiencing the perils of it — first-hand.
The first decade of the new millennium was a terrible one for us. The 9/11 bombing was followed by Andersen’s collapse. As if that were not enough, along came the sub-prime crisis. These three calamities had two threads in common.
First, all three were results of warped minds and dark emotions — be it greed, anger or plain vindictiveness. Second, none of them had anything to do with India, but their impact was felt by us in full measure. Globalisation had truly arrived.
The aftermath was traumatic. The most difficult thing I have had to do in my three decades in the corporate world was to look a colleague in the eye and tell him that he no longer had a job. Knowing fully well that he and his wife were expecting a child in two months, and she had just quit her job in anticipation of the bundle of joy.
Difficult times also bring out the worst in some people. Accusations and barbs began flying indiscriminately. From melodramatic whispers like ‘he is snatching food from my son’s lips’ to more unmentionable ones.
But alongside them were others who showed their true worth during crisis. They worked doubly hard, and took voluntary pay cuts so that some of their colleagues could keep their jobs. Among them were senior people who took such deep cuts that they took home less than their juniors did.
When the dust finally settled and each of us found new equilibriums in life, some of us found that our perspectives had changed. We were now acutely aware of innumerable factors far outside our control that could wreak havoc on our personal and professional lives. We couldn’t avoid them, and we could do nothing to combat them.
The greed of Wall Street could lay low innocent victims in Chennai. Men like Bin Laden could destroy the lives of nameless folk in Hyderabad and Pune. Events on the other side of the planet could bring things crashing down in India. There was only one defence — to be prepared for the unexpected.
The lesson I take away is that in our new interconnected world where unseen strangers can yank the carpet from under our feet, our best allies are prudence and humility.
This article was published in Economic Times Corporate Dossier on 12 Sep 2014.
RV Raman, former head of KPMG’s Consulting Practice, tells five stories from his formative years.
1. Grab your chances.
The battery of tests and campus interviews had finally ended, and I had my first job offer from Tata Motors, a coveted prize for mechanical engineers in the early 80s. Just as I rose and shook hands with the panel, they popped me a question. Did I want to be a mainstream shop floor Graduate Engineer Trainees like many before me, or did I want to join the new Management Services Division (MSD)? The folks at MSD, they said, did computer programming; a new area where the waters were yet untested.
It was in an era when ‘computer science’ and ‘information technology’ hadn’t entered the Indian lexicon. I had a snap decision to make. I could take the tried and tested route to the shop floor, and take the well-treaded path up the organisational ladder. Or, I could risk striking into a new territory.
The thrill of telling a machine what to do was irresistible. I chose MSD. It was a decision I never regretted; a choice that took me into software, and then into management consulting.
Unexpected chances were thrown my way twice more in my career. I grabbed them. I’m happy I did.
2. Never stop adding skills. Reinvent yourself.
“Don’t rest on your laurels,” we were told at Tata Motors. “Opportunities will be endless if you continuously add skills.”
It was advice I took literally. Only, I didn’t limit it to software. Two years later, I realised that learning more software languages was incremental and insufficient. I got myself an MBA from IIM Bangalore and entered management consulting, where we advised clients on IT choices they needed to make. Software was a tool that made operations efficient, but to do that you had to understand all manner of processes – a whole new set of skills for me to acquire.
Gradually, I figured that process improvement was not an end in itself. Clients wanted to maximise shareholder wealth. For that, IT and processes had to blend with people, strategy and M&A. To my technical skills, I now had to add an array of soft skills. It was not easy, but the rewards were disproportionate to the effort.
In search of that elusive meaningfulness in life, I am now reinventing myself as a part-time writer and a teacher. Only time will tell how rewarding this iteration will be.
3. Culture is set at the top
When we merged Arthur Andersen’s consulting practice with KPMG’s, we figured that organisational culture was the key to our continued success. Meritocracy was one of the cornerstones. People had to be rewarded for their contribution, and not for their proximity to leaders, or to the optics of working late hours. But no amount of saying so had the required impact.
We therefore introduced a mechanism for promotions that is now an industry standard. Every six months, Partners and Managers (i.e. the people running the practice) locked ourselves away for two days, where the performance of every consultant was discussed threadbare before promotions and ratings were decided.
There were two instances where my view of a consultant’s performance was diametrically opposite to the view of their managers. Despite several iterations, the gaps couldn’t be narrowed. I was faced with a choice. I could overrule the group’s decision as Partners often do, or I could let the process I had created determine the outcome.
I chose the latter. The consultants in question – both brilliant guys – were not promoted, and left the firm. But the culture of meritocracy was firmly established.
4. The importance of humility
“The day you lose your humility, you lose your soul,” my father had said early in my life. It was philosophical advice that meant little to a young boy then, but it was to come back strongly in later years.
It is easy to let success go to the head when bright young consultants begin addressing CEOs and Boards before they hit thirty years of age. It becomes even easier at 35, when you call industry captains by their first name. It’s a heady cocktail that makes you think that you know all there is to know. You have arrived!
Nothing could be further from the truth. Once hubris sets in, you stop seeing and listening. Your glasses become coloured, and your ability to understand your client’s problems gets impaired. You can no longer advise dispassionately, and you fail as an advisor. Humility is your insurance.
Once every year, I stand in a corner at Mumbai airport’s arrival area and watch the young and the middle-aged hurrying about, wrapped in their self-importance. It helps me keep my feet on the ground.
5. There is a thin line between ambition and greed
Consulting attracts not only some of the brightest people, but some of the most ambitious ones too. Sometimes, ambition can turn into something ugly. Not very long back, a successful and respected consulting Partner crossed the line. It began with a small confidential document being shared with an outsider. One thing led to another, and soon, the Partner’s name was on the slippery slope.
While the breach was not illegal, it was unethical nevertheless. What was shocking is how the Partner, with so many years behind him, convinced himself that he was doing nothing wrong. He wanted to add a zero or two to his wealth.
This was shockingly similar to the Galleon Hedge Fund case, where highly respected executives couldn’t resist temptation. They deluded themselves into doing things that interns in their office would have no trouble seeing as illegal. They have paid a steep price.