Corporate Critical Density
1. What is the Energy force of your organization?
The latest jargon around corporate offices is sustainability, isn’t it? What profits of yours are sustainable? What energy have you derived from your strategies, from your initiatives? Or what have you lost by interacting with the government, with the competition? What does a stakeholder got to do in your day-to-day dispensation of practices and policies? What is your position in the corporate world compared to the best? Will you ever be noticed if you better the best? Who is the best? If not you, then who? If not now, when? What is sustainable of your efficiency? Of your values? Of your profits? What values distinguish between what is valuable and valueless? What abstractions are brought into reality, acknowledged for value where value is due, and deconstructed the valueless?
What concepts ~ Governance, Responsibility, Corporate Governance, Business Ethics,, Corporate Social Responsibility ~ and now Sustainability ~ are of significance to your profits? What implications do they have on energy of your organization? What is the relationship between sustainability ~ of efficiency ~ of values ~ of profits? Are you not in business for profits but in the chicken and egg scenario what do you reckon first – efficiency, values or profits? What steps you take to tom-tom high energy level ~ of your managerial force ~ of your technology force ~ of your operational force ~ of your financial force? What is your energy level of yesterday and today? What energy level your ever expanding stakeholders observe ~ yesterday and today? yesterday and today!!
2. Timely data:
Observation of Mr. D. Subbarao, Governor of Reserve Bank of India: “The RBI’s policy formulation is handicapped by frequent revisions to data. We make policies in real time and if the provisional data that these are based on are inaccurate, the resultant policies can turn out to be sub-optimal choices. Take estimates of GDP growth. For the year 2009-10, the advance estimate of GDP growth rate at market prices from the expenditure side, that came out in February 2010, was 6.8 per cent. That was changed to 7.7 per cent in the revised estimate in May 2010 and further to 9.1 per cent in the quick estimate in February 2011. “The policy that perforce had to use information on advance estimate of GDP was fraught with the risk of underestimating the growth momentum,” Subbarao said[i]. When was error in GDP Growth Rate of 2009-10 found out? - in July 6, 2011!!
Come April 13, 2012 under the banner: IIP numbers: Lies, damned lies and government of India statistics[ii]: Believe it or not. Industrial growth in January 2012 was only 1.1%, not 6.8% as reported earlier! Why? Because of incorrect reporting by the directorate of sugar in the ministry of consumer affairs, food and public distribution, says the government. Sugar production in January was apparently reported at 134.08 lakh tonnes instead of just 58.09 lakh tonnes. This, together with ‘minor updation of data’ received from other sources, has resulted in the growth rate being adjusted downward by an incredible 84%. If that explanation rings false, it is because macroeconomic data in India has lost all credibility.
If not now, when? If not you, then who?
3. What to measure? How to measure?
In a survey of 558 global companies on CSR by KPMG International in cooperation with Economist Intelligence Unit on Corporate Sustainability – KPMG – EIU a Progress report19 – there is a stunning statement – Many firms are grappling with the problem of deciding exactly what and how to measure – page 16; Deciding how to measure is more difficult than deciding what to measure. – (EIU report findings):
a) What to measure?
- Energy of your organization.
- i.e., E = mc²
- The only variable element is m and e is energy, c² is speed of light times speed of light.
- m is the mass.
- A physics textbook describes matter as that which takes up space and has mass.
- Your policies, your practices, your fiscal responsibility, accountability of your ethical responsibility maketh the matter that maketh the mass m.
- what the equation E = mc² is saying is that there is a huge amount – a really huge amount – of energy bound up in every material thing.
- When m is zero the organization is zero. Organization must see the energy bound up in every material thing. Addition of a single unit of mass m, a combined effort of just 5 KPIs in a single building block of your organization, ends with the single unit multiplied by speed of light times speed of light. Huge amount – truly a huge amount.
b) How to measure?
- i. Characteristics
- Each single Organizational atom consists of Policies (protons), Practices (electrons) and Stakeholders (neutrons)
- Policies (protons) form a nucleus with stakeholders (neutrons).
- stakeholders (neutrons) do not change the identity of your company but adds mass to it.
- Policies (protons) are the outcome of creative process ends up as a substance or matter waiting to be liberated. Energy is liberated matter: matter is energy waiting to happen.
- ii. Creative Process
- From fetus to baby, from seeds to plant, from ideas to IPRs (intellectual property rights), to manufacturing to enacting laws to accounting standards to diamonds to Constitution framework, animate and inanimate, sentient (active) and insentient (inactive) objects are all created to be called ‘Matter’ or ‘Substance’ since each goes through an identical Creative Process.
- So does Policies (protons) an outcome of a creative process. A proton has 1836 times the rest mass of an electron. Policies are the energy power base of your organization.
- Policies represent Quality of your company, once it reaches the completed stage of a substance or matter that is waiting to happen.
- iii. Action Process
- The action process begins the moment the substance is created, like a baby announcing the arrival with a cry. That cry is unique to the matter related.
- So does every material-thing with a huge amount – a really huge amount – of energy bound up.
- Policies (protons) and stakeholders (neutrons) are packed into the nucleus, whereas Practices (electrons) spin around outside.
- Policies (protons), as a Substance retains its independence throughout even while performing tasks while yoked with another, enabling accomplishment of infinite succession of finite purposes by controlling each goal.
- Measure what is measurable, and make measurable what is not so.
- An organizational atom consists of five – KPIs split into two categories – Ethical Responsibility and Fiscal Responsibility,each being a substance.
- Ethical Responsibility group consists of Stakeholders with Society topping the list and Fiscal Responsibility group consists of four major performers – of your managerial force ~ of your technology force ~ of your operational force ~ of your financial force.
- Group of five form a single set of KPIs and a goal set by an organization will have any multiples of organizational atoms for each of its building-block, but a goal with any one missing KPI is not worth setting it in the first place. It is a team.
- The team works during the creative process of Policies (protons) as well as action process of Practices (electrons).
- There are six stages of development during the creative process and an identical number of stages during the action process.
- At each stage of development it obtains a value of 1 from the state of nothing in case of creative process to a completed stage of a substance acquiring a value of 5. So is the case during action process.
- Like a document management system of policies and practicesm the entire organizational building-blocks are identified as to the stage of completion 0 to 5 – as on today.
- There is only one resource provider – people – for Ethical as well as Fiscal Responsibility.
- There is only one measurement – a binary value of 1 and 0 – sentient (active) and insentient (inactive) objects,
- Add up the 6 stages of one-set of KPIs as to the stage of development as it is and take a simple average to arrive at the rating for energy level for one set.
- For example, 0, 2, 4, 5, 5 for a set of KPIs total 16 and the simple average is 3. The result represents the energy level of 3 being the sentient (active) elements of an organizational atom.
- Each set of KPIs attains a power base from 0 to 5. Add up all the sets in a goal, add up the results of all the goals of your organization, you have the energy level that is active.
- 5 being the optimized level of energy level deduct the results so obtained to arrive at the insentient (inactive) elements of your organization, by each set by each process area by each resource area of group of five.
- Optimizing the active elements is the process of management first in identifying the inactive elements and activating the inactive ones, called Inactivity Based Cost management (IBCM©)
- The energy level of your organization is found out with the formula:
- ((Policies (protons) + Practices (electrons))/2
- The rating of energy level say at 3 paves way for further infusion to reach the potential of 5. This means every additional unit of effort brings a – huge amount – a really huge amount – of energy bound up in every material thing - creating mass m in the equation E = mc² where m is the variable element which is in your hands. Energy is liberated matter: matter is energy waiting to happen.
- Why should you?
- i. Real-time monitoring
- a passenger in an aircraft is provided with the video display of the real-time information on the flight path, a map covering the route, the position on dot, altitude, cruising speed, distance to destination, time from origination point and time to reach the destination.
- Those charged with Governance[iii] is a misnomer. Governance is a dynamic function. You enter the cabin in the morning, check the energy points 0 – 5 and check-out in the evening to check the number of additional units you have added. This means you have added m the mass the only material-thing that matters.
- RBI Governor says We make policies in real time. Tathasthu!!
- ii. Study of Cost Consequence
- President Obama said during the inaugural speech to Congress: Here in Washington we have all seen how quickly, good intentions can turn into broken promises and wasteful spending.
- Inactivity during the Action Process results in broken promises and wasteful spending. Inactivity during the Creative Process stops with good Intentions. This means good intentions are as subtle as ‘Economic Theory’, and yet good intentions have to be carried through to creativity in order to realize a substance.
- Economic analysts as well as many number of such tools help you in creating strategies. Strategies need to become a substance lest it becomes a wasted effort.
- Strategies as a substance created afford you with an Index of Inactivity creating a basis for study of cost consequence. Address the issues of the organization before the bubble bursts.
- iii. People Participation
- Policies (protons) form a nucleus with stakeholders (neutrons). Your organization has emerged from the stakeholders whose stake in your company is much much more than your own stake.
- Fiscal responsibility is a fiduciary of the beneficiary, i.e., People. A fiduciary is legally bound to act, within the confines of the law, in the best interests of the beneficiary. Fiscal Responsibility has control of property but is essentially owned by the beneficiary.
- If you are a banker or a PE Investor, are you not a stakeholder in another corporate outfit? Before investing get yourself packed into the nucleus, the policies (protons) and the stakeholders (neutrons) of the company you decide to invest.
- Stakeholders (neutrons) don’t influence organizational atom’s identity but they do add to its mass. Without the stakeholders there is no addition at all.
- 5. Corporate Critical Density (CCD)
▪ Quote from the book CCD[iv]: For the universe to exist as it does requires that hydrogen be converted to helium in a precise but comparatively stately manner – specifically, in a way that converts seven one-thousandths of its mass to energy. Lower that value very slightly – from 0.007 per cent to0.006 per cent, say – and no transformation can take place: the universe would consist of hydrogen and nothing else. Raise the value very slightly – to 0.008 per cent – and bonding would be so wildly prolific that the hydrogen would long since have been exhausted. In either case, with the slightest tweaking of the numbers the universe as we and need it would not be here. I should say that everything is just right so far. In the long run, gravity may turn out to be a little too strong; one day it may halt the expansion of the universe and bring it collapsing in upon itself, until it crushes itself down into another singularity, possibly to start the whole process over again. On the other hand, it may be too weak, in which case the universe will keep racing away for ever until everything is so far apart that there is no chance of material interactions, so that the universe becomes a place that is very roomy, but inert and dead. The third option is that gravity is perfectly pitched – ‘critical density’ is the cosmologists’ term for it – and that it will hold the universe together at the just right dimensions to allow things to go on indefinitely. Cosmologists, in their lighter moments, sometimes calls this the ‘Goldilocks effect’ – that everything is just right. (For the record, these three possible universes are known respectively as closed, open and flat.)
▪ 3 Ps – Policies, Practices and People – the Goldilocks effect of your company
- The 3 Ps maketh the critical density. At the optimized level of 5 Sustainability of efficiency, sustainability of values and therefore sustainability of profits by each process area, by each resource area, by each set of 5 KPI, the energy level of your company is at its best.
- Consider each risk factor as a substance. If you are a PE Investor or banking CCD of corporates where investment takes place must be calculated.
- A vendor or a distributor of your products should also be developed to achieve the ‘Goldilocks effect’.
- Corporates collectively must attain the ‘Goldilocks effect’ in order the business and industry are run at the just right dimensions to allow things to go on indefinitely.
- What is happening today? Why this kolaveri di!!
- 6. If not now, when?
a) Intangible is defined as:
- 1. Incapable of being perceived by the senses.
2. Incapable of being realized or defined.
- IBCM © is the first one (rather the only one) to have extensively analyzed defining Intangible as energy and its application to management.
- Intangible: Insular State of no duality, no paradox, no plurality, no opposite values, that creates as well as converts the substance into energy seen by effort.
- Like treating zero when found as a number on its own right, Intangible opens up the entire management processes of every man-made object coupled with the characteristics of matter provides convergence of reporting to a single number between 0 and 5.
- Measuring intangible by sentient (active) and insentient (inactive) with a binary number of 1 or 0, enables convergence of entire global data.
- Is it not the right time to rate the energy force of your entire organization?
b) If not me? Then who?
- Sage Publishers New Delhi went through the process of publication of the book IBCM and obtained the clearance from a sole external reviewer, based on which they offered a contract for my Work.
- An extract from the external reviewer:
|How widely is the subject, as represented by this book, taught?||The subject of Governance has and will find growing interest. However, Governance is dealt with by Jayaraman in a truly path breaking manner. Jayaraman’s book could actually initiate a fairly radical transformation in how this subject is dealt with or taught!As issues of ethics and accountability gain importance, especially after what the world witnessed the last couple of years in the financial sector, the market is ready for some radical thought.|
|Which are the principal books (Indian and foreign) with which this one would have to compete or with which it will be compared? Please compare them with the work you are evaluating, pointing out the relative strengths and weaknesses.||This book is truly in a ‘Blue Ocean’! There are no books that I know of that has dealt with tangibles and intangibles; accountability and governance as dealt with in this book.|
- Amazon way of self-publishing was undertaken on account of series of research publications would be coming forth that SAGE way would hinder by some of the restrictive copyright clauses.
- One of the private universities in India has shown interest in collaboration with IBCM © as Research guide for doctoral subjects including disaster management and Reducing Climate Footprint in the Health Sector, with the personal lead by the brilliant vice-chancellor.
- Several research papers on CSR the biggest and most dynamic corporate function of 21st Century, Israel’s Intellectual Capital, SAP Sustainability Report, How Intangible stimulates Economic Growth and annihilates unemployment? Addressing the issues raised by the conference sponsored by OECD, Athena Alliance, Kauffman, The Conference Board, McDonough School of Business Georgetown University and the National Academics,why EVM is an ultra vires act, analysis of Tamil Nadu Budget, Corporate strategies for social values, Harmonizing CSR and Sustainability, ERP is pas`se´, ERC – for GenNext – Governance@best.simplest, Unilever’s sustainable Living Plan, addressing the 11 challenges raised by corporate glitterati during the conference hosted by G;obal Reporting Initiative (GRI) and NYSE Euronext and many more of interest to you.
c) what next?
- The crucial aspect of the whole exercise is to transform your company into creating sets of 5 KPIs, several of them for each goal and for each strategy.
- Mandatory Grading clauses given by SEBI have the following criteria set:
- 1. earnings per share,
- 2. financial risks,
- 3. accounting quality,
- 4. corporate governance and
- 5. Management quality.
- Make it a habit to prepare a comprehensive plan of action for the 5 criteria of mandatory grading under CCD. Protect your investments with a due diligence report of CCD. Financial budgeting and reporting is pas`se´ and CCD is in for GenToday.
- Training, knowledge management of binary values of intangible with a major database at Kodaikanal, web conferences, will bring in the energy force you would welcome – by speed of light times speed of light.
Be in touch:
Jayaraman Rajah Iyer
[iii] GAO, United States Government Accountability Office, By the Comptroller General of the United States, Government Auditing Standards January 2007 Revision.
[iv] A Short History of Nearly Everything – Bill Bryson Illustrated – Transworld Publishers – p23