Business World – 05 Feb 2007 – Games Egos Play

Games Egos Play

Arjun Bhaskar was utterly confused. Last evening he had left the media planning meeting in a huff. He had been very upset over Robin Kamat’s stance on the bubblegum advertising where he had easily agreed to cancel Rs 1.5 crore worth of plans, and this after Arjun had painstakingly explained to Robin that it was ‘not a feasible idea’.
To recap the events until now, recently Coral India, an MNC, where Arjun was a media manager, had entered into an agreement with Ahora India, a family managed company, to buy off its candy business. Part of this complicated arrangement included seconding Robin Kamat, its vice-president, to Ahora as general manager (GM), and Arjun, too, to jointly enable the integration of the brands. For both men, the nemesis at Ahora, it turned out startlingly, was its CEO Kaviraj who was not just hard as nails, but acerbic too. Robin had, over time, developed the knack to handle Kaviraj and his own ego. Or so it seemed. But Arjun had found the whole situation unnecessary and beyond logic.
As far as Arjun could see, it was a buying arrangement between the two companies and Kaviraj being domineering was really out of place. Kaviraj continued to assert and act as CEO of Ahora, but his utterly overbearing attitude in the face of the sale, rankled. Kaviraj continued to call the shots and Robin was ‘allowing’ that. I really don’t care how Robin chooses to manage his career and Kaviraj, but it comes in the way of my work and the media strategy, which is finally Coral’s now! mused Arjun.
On a few occasions when he had tried to express his displeasure, Robin had calmed him and said, “Be patient, Arjun, no point rubbing him the wrong way… .” But now it seemed clear to Arjun that it was not just with Kaviraj, but he was on an uncertain plane with Robin, too.
Driving to work this morning, Arjun was not sure of his destination. If he went back to Ahora, he would face Kaviraj who would look triumphant. And for some reason, he did not want Kaviraj to get away with all this. Their interactions had no professional logic. If he went back to Coral, he would need to explain coherently to Saxena without sounding like a whiner. Saxena did need to understand what they had to endure at Ahora and recast the relationships, he felt. But he also knew it was going to be difficult to state the interactions in professional language!
The phone rang. Arjun pulled up by the side to take the call. It was a colleague calling to say that the meeting with a large supermarket was fixed for 3 p.m… and on the way back it would be a good idea to stop at Churchgate station to glance at the new danglers and POP material. Arjun was uneasy. By this time, he had missed his position in the morning traffic.
Twenty minutes later, on Marine Drive just opposite the health club, Arjun was on lane 3 and just as the lights turned in his favour, the car next to him on lane 2, beeped loudly and cut from the left to take a U-turn, thus blocking Arjun completely and pushing him into a new signal wait… Arjun was hopping mad, he yelled at the guy, called him names, but the chap had gone long ago. Two little urchin boys who were watching, smiled through their grime and said,“Saab, woh to chala gaya!” Arjun was even more annoyed. He said, “Mereko kya, dikhta nahi kya?!”
All too suddenly Arjun was furious. Everybody is controlling my life… my day has not even begun but one after another people are deciding what I should be doing and when! He was tired of being controlled. Tired of life taking its own course when he should know what to do next, like last evening’s meeting, where Robin had sprung a surprise, after all the effort Arjun had put in. It had annoyed him so much he had walked out of the meeting. Going back to Ahora was futile… Kaviraj had made sure his way won.
The background to what had happened until now: The bubblegum media estimates face off with Kaviraj started last week, when Kaviraj summoned Arjun ‘to discuss’. On a Monday morning when Arjun had so much to cope with, this was too much. Arjun had clucked in his head. He had a hundred different things to get done to start the day; he needed the morning, but Kaviraj’s summons was sacred. So, he had grabbed all the papers and reached his room.
The third quarter estimates were amounting to Rs. 4.5 crore over six weeks, starting in the third month of the second quarter. When Arjun met him, Kaviraj said, “You have barely been here and you already have a plan for me! This MNC style of knee jerk responses won’t work here. What have you understood of our markets, tell me? In four months, you have a plan for spending Rs 4 crore. And that too to be consumed in six weeks. Where is Robin?”
Arjun was taken aback. He could not understand what the issue was. Media planning and spending was old hat for him — he had been doing that all the time at Coral. So now, what was the issue? He tried explaining but Kaviraj busied himself indicating ‘the meeting is over until Robin is here’.
Arjun sought Robin. Robin pacified him. “Give him a few months. Our innings is long, and we have to accomplish all this over three years. Don’t force the pace. Come, let us meet him.” Together they had returned to Kaviraj’s cabin. “Any specific problem with these media estimates, Kavi?” asked Robin. “We need to approve them immediately since the deadline to book spots on some of the popular and busy TV channels is running out. We will not get any air time at good rates if we delay any more!” Kaviraj did not share the enthusiasm and said, “First of all, Robin, where is my approval? You cannot spend all this money together in month 1 and month 2.”
Robin was surprised; “But why not? I don’t understand. The theme advertising has been agreed at the beginning of the year and you have agreed to the overall Q3 advertising spending. So then?” Kaviraj clucked and said, “Ya, ya, Q3 spends are OK, but the first month of this campaign is the last month of Q2. The profits for Q2 are already looking bleak… And this is the third month of Q2; you will have to cut spends for the first month of this campaign by at least Rs 75 lakh–85 lakh. If not, Q2 will end on a bad note. And that is not acceptable to me.”
Robin was frustrated. He said, “We cannot do that, Kavi. This is a new film campaign, with a new message and it needs a heavily front-loaded plan for better notice ability and build-up. If we begin on a thin note, the whole campaign build-up will be low and, consequently, the campaign effectiveness will be LOW. We need to begin with a bang and thin down after three weeks.” Kaviraj waved it all away with a gesture of his hand. “I do not understand all this. All I am saying is instead of spending more in month 1, you spend it in month 2. How is that difficult? Same year after all! Anyway, you should send me the month-wise media and advertising spends for approval before actually spending it. This sort of independence on big monies is not allowed.”
Robin breathed deeply, then said, “But once we agree on an annual budget and the quarterly breakup, then you will have to allow us to spend it during the months in a fashion that best suits the marketing needs. For example, sometimes it is necessary to do press and TV together along with lots of retail activity in a short span of one month to get high visibility. Any spreading thin of such expenditure will be sub-optimal. Please try and understand how media works.”
Kaviraj flared. “If I didn’t understand media you would not be buying a successful candy business, young man. Maybe you need to understand from me how media works. Rather, how business works. Business is not mere media spending. Media is not the pivot from which business runs. Business rules media. And I rule the business. Let that be clear!” Then after a pause, he said, “You optimise using the models and intelligence of your agencies Robin. Every month you will have to send me the forecast for the next four months ad expenditure and you will commit to every month only if I approve it. We will agree to not cancel the current month since it would have been committed to the TV channels or press, but the rest is subject to change… the change of bottom line.”
Arjun who had held his peace until now, spoke, “Robin, media cannot be planned and bought like that. You know that better than I do. We have been through this before. You need to plan in advance, do annual deals to get the best rates and keep up commitments within some limits. If we keep cutting and chopping like that we cannot make firm commitments to the TV channels or press and we will not get the best rates, thus affecting our efficiency of spending.”
At this point, Kaviraj stood up in a manner of declaring the meeting over. And Robin was now completely exhausted with this body language talk. “So, what is the point Kavi?” he asked. “We cannot build brands with such short-term view. Brands are not built on shifting sands but a firm foundation.” Not looking at him, Kaviraj said, “But that is the way it is in this tough world. This is the way I want it done. I have said this before, I shall repeat: I am the CEO, I will have nothing less than unequivocal concurrence to my diktats.”
Robin stood up. His face was deeply lined with controlled hopeless embarrassment and despair. He wanted to have a few moments to speak. But Kaviraj in his feudal manner had stood up to open the door. Robin too decided that it was better to leave. Kaviraj was not receptive anymore. Arjun found this whole situation dramatic. On his left was Kaviraj walking back to his desk. On his right was the receding figure of Robin.
Arjun was frustrated… everybody was controlling him, even Robin… he felt blocked… a bit like the dot game he played with his daughter where you connect dots and mark your territory… and the smart one in the game blocks you in such a way that one slip in this maze and you virtually hand over all your property to the opponent…
Returning to his room, Arjun stared at the fish tank in the corner; it certainly was the most idiotic piece of décor anyone could think up, he felt. He was sure it was Kaviraj’s idea, the whole idea of putting people into cages… For a brief surreal moment, he felt he was in a tank and the fish were watching him. He had been a mute witness to the exchanges between Kaviraj and Robin and was alarmed. Why was Robin so passive? At Coral, they had three annual spend meetings and that was it. No pointless meanderings. And that was because marketing drove the business. How could advertising be effective if they had to have monthly approvals?
Four months in Ahora had drained him completely. The feeling of being controlled and pushed was now reaching a crescendo. This life at Ahora was not a test, it was torture. He had tried to protest but Robin had said simply, “Yes, this is how Kavi orders his life. We have to work around it.”
“You are saying this, Robin?” Arjun had asked. “What has come over you? They have defanged you completely! Look, I am trying. I am here to do a job and that is being blocked. I am perfectly sensitive to orders that make sense. But this is beyond all logic!”
Robin nodded, “That logic which you bank on belongs to planet Coral. In planet Ahora you operate on a different dimension. You need to drop some of the Coral comforts and allow yourself to learn another way of achieving the same success. I am not suggesting you shift your goal post. It remains the same, on the same spot. Only you are playing with a different team. Your defence, your mid-fielders are all different people with different strengths. Find what those are. You need them.”
Arjun was surprised; he said, “But the game rules don’t change Robin!”
“No, they don’t, I agree,” said Robin, “but the players are using a different strategy, you have to play with that. Your strategy will clash, be out of tune and what you think you can achieve cannot be achieved because there is no harmony in thought. So, reformat your process, copy their strategy and work with those variables.”
Arjun stuck his ground, “I cannot do this, not when it does not make sense. And talking your language, even if I reformat and adapt, face it, the media is the same. The TV channels, the publications, are the same people. I have dealt with them wearing the Coral hat. How am I to talk differently to them now? They know what I know and understand — should I now tell them I am denying some of that knowledge of how things work? I will be inconsistent!” Robin was quick to reply, “But then so is the profit line, no? That is where we have to recast our thinking. You are assuming Coral’s profitability and constraints. Ahora’s is different.”
Arjun had kept his calm. He needed to so that Robin would make the right decision at the final review meeting two days later. So he said, “I understand profits and costs Robin, and I know what I am doing. All I ask for now is simple — at next week’s review meeting be firm that we cannot waver and vacillate on media. I have a lot at stake and have gone through agony to get those ad spots.” And Robin had agreed, saying, “I assure you, I will do my best for everyone.”
A week later, that is, yesterday, that ‘best’ had been handing back the Rs 1.5 crore budget and cancelling the media plans. Today, Arjun recalled all this with an increasing sense of hopelessness. Both meetings had shown him that he had not a chance to win. He was utterly confused. Sitting in his car he battled his mind: either go back to Coral and tell Saxena or go to Ahora and take it up with Robin. But he recalled Robin’s passivity and Kaviraj’s ego wars and decided it was a waste of his time. “Enough… I am going back to Coral!” he thought and did just that.
Sitting with Abhay Saxena at Coral’s office, Arjun said, “I don’t think my job is about how to handle Kaviraj. The problem we have concerns two very senior and mature people, not two 20-year olds in a BPO! If Kaviraj wants to behave like a spoilt child throwing a tantrum, the solution may not be to humour him or understand his psychology but ignore him. Let him know where he gets off! And Robin should go about his restructuring plans/ recommendations without Kaviraj. Coral’s job is to focus on the integration process, not to manage conflict and egos. And what learning? What do you all have in mind? I am not learning anything, not strategy, not management… all I am doing is being the punching bag for a man with the most complex mind!”
Saxena sighed. As it happened, Arjun was his blue-eyed boy, precocious but brilliant. He said, “Arjun, strategy, management and all that you learnt at B-school. These are the practicals. You don’t become an efficient manager without either. Who told you that you were sent there to learn strategy? Oh, no! The most critical part of strategy is managing resistance, destruction, attack. Finding a solution is easy; they teach you that at B-school. But it is during implementation that these little emotional goblins jump up! That is what you are learning at Ahora… Arjun, as you grow in the hierarchy, the soft issues matter more. What separates success from failure is these soft issues. The rest of the hard stuff: strategy, structure, systems, can come from two intense readings of Kotler, Drucker etc. Go back to Ahora. Don’t react.”
A little confused, Arjun went back. Sitting with Robin in his room he said, “I am not designed for this, Robin. I cannot be a ‘yes man’. That is not how I build my career.” Robin was not surprised. He said, “You are right. But you are blocking your career by saying ‘no’ too early in the relationship. And you think this does not happen at Coral? There too we have Kavis who sustain on ‘yes’. Maybe at your level you have not encountered them intensely. Here, you are in a senior job that brings with it such encounters. The higher you rise the more the anxiety for approval and being accepted, so a greater need for ‘yes’. The complexities continue except they become more sophisticated; which actually makes it worse because you have to introspect a lot about people’s intentions.
“And yes, by going back to Coral, you are ensuring a return to comfort for yourself and, strangely, a life away from those people who are not saying ‘yes’ to you. You are being paid to deliver results for the business, not run away. ”
Arjun fought back, “I have to have some comfort level to deliver, Robin! This is not what I expected!”
“Sure!” said Robin, “Sometimes the expected and the real are at variance. That is expected too. When you came here, you knew the planet was going to be different, the rules, goal posts, the system and reporting lines. Then, why are you assuming the path to success would be the same as on planet Coral? You are stuck with a given definition of success. Everything that is contrary or contradictory to that path seems like resistance, attack and punishment to you. Because you are seeing it thus, you are unable to step out of the Coral box. So, you experience control and defeat.
“You forget that you are at the foot of a completely different staircase. The steps here are different, Arjun, understand what I am saying. The process of climbing is the same, only you need to hark back to the basics that you learnt at B-school, which is examine the path, mark the potholes, and strategise bypassing them and overcoming the bumps and roadblocks.
At Coral, too, these roadblocks are there, except they have been mapped and colour coded; but don’t be annoyed, they have to be overcome. There is no way out. You don’t have to learn how. That you already know. You just have to apply same knowledge to different variables. Stay with the purpose. Define it clearly. Then flow.”
Arjun knew all this was talk. It could not be walked. There was too much ‘sir’ and ‘ji’ happening here and the big bosses’ views always prevailed. Yes, it was a valid management style for Ahora, but individuals like Arjun could not flourish. “What do I do then? Watch him destroy me?” asked Arjun.
“Not at all,” said Robin. “Kaviraj’s ego just can’t be challenged, it thrives on yes men, on approval. You manage that with restraint and introspection; restraining your own ego to an extent. And teaching his yes men to say ‘no’. Corporate life teaches us to become a bit emotionless, ego-less and strong!”
“Nonsense!” said Arjun, “We are taught to curb egos not because it is nice to do so, but because it is safe!” Robin smiled, “Then stop playing safe, Arjun. Start experiencing. My good friend would have said, ‘Enjoy every experience. You never know if they will come again.’ And let me add, Kavi is playing this round to cause a little strife between us. A man like him enjoys these little crow fights. He derives some power from them. Don’t feed him.”
Arjun never felt more lost. As far as he saw these were all games. But Saxena was playing it too, worse, he wanted Arjun to play along as well. Was Robin right? What Arjun called ‘games’, Robin called ‘management’. Was this management? So was he to eat his pride and give in to mindless ploys? Why were organisations so high on egos? Yet, Robin himself had said that organisations cause the sublimation of the ego, but this did not look like that at all! How did Robin manage to be so calm? Or, was it calm or the lull before the storm? Was he playing safe even if he denied just that? How would he ever know? Who was right?
Robin had said that corporate life teaches us to curb the ego and become stronger… yet none of this made sense. Nothing did… Why can’t we be simple folks?

Analysis 1: Achal Bhagat

Beyond Yourself

Last time when I was trying to understand the situation at the new Coral haunt I had used many lenses to view the situation: the lens of change gone wrong, the lens of differing perceptions of time, the lens of clash of cultures and difference in the way people think. I had tried to see the situation from each person’s standpoint without being judgemental in my thought. I will try to continue to remain neutral in this conflict and understand it further, though this time around I will take the organisational objective as a focal point. The question that needs to be explored is different and that is, “Who is resisting what and why?”
The objective of a decision-making process in an organisation is to arrive at the best method forward. When the players stay with this objective, it is quite possible to resolve the most difficult of problems. However, if the personal objectives of the players in the decision- making process take precedence over the organisational objective, then each player uses strategies to resist the other. All the players then become resistors to change.
The reason they are able to continue to resist so vehemently is because each person continues to see himself or herself as the champion of the change and paint the other person as the resistor to change. The objective is, then, to sustain the conflict because it gives each person a special identity in his or her mind, the identity that has the romance of valour, the smell of victory and the strength of personal validation. So, from where I stand, everyone at Ahora is lost in strengthening their personal identities and they have lost sight of the organisational objective. All players, Robin, Kavi, Arjun and associates are resisting change, but in their minds they are the champions of change.
How do each of these players get the energy to renew his battle every morning? What do they say to themselves? What is the image of work that they create for themselves? What is it that will be lost if they do not fight? It is answers to these questions that will help us understand their identities better.
Kavi, you see yourself as the protector of values and culture of an organisation that has been successful. You protect in your mind not only the past but also what is the essence for future. You accepted the association with Coral thinking that they were interested in the secrets of success of Ahora. However, you believe that they do not understand the secret of success and will destroy Ahora in their restlessness to get ahead of the field. In your view, you are the protector. You protect by slowing down. You slow down by being inflexible and not change.
Robin, you see yourself as the strategist. A strategist who can overcome everything. You want to feel the glow of the sun soon when you can say to yourself, “It worked. It had to. I knew it.” Your image of yourself is of the person who can unravel everything. Your strategy right now is to help Kavi tie himself in as many knots as possible. Once he loses his sheen you will come in and say, “I told you so… now let us do it my way… the Coral way.” You will win. The win will mean going back to what you knew and not what you have learned about Ahora from Ahora. So, your strategy is also to be inflexible and not change.
Arjun, you are the strapped up warrior. You are tall and rippling, proud of the weapons that you have. You want to immediately try all the techniques of buying media and pushing the brand. You have the skill and want to display it, the restless Abhimanyu who does not mind walking into a chakravyuh. With a slash here and a cut there you see victory. You want to be victorious but not understand the battle. The battle has to be played according to the rules you have learned, and that may happen in board games but not boardroom games. You too then resist change in your need for victory.
So, what could all of the players do differently? In my view, the best way to manage the conflict around change is questioning oneself. All players in a change process must sit down and ask themselves two questions. One, what is the similarity between the others, who I am seemingly in conflict with, and myself? The similarity between people is the foundation of success. It is the foundation of a non-threatening discourse.
Robin, Kavi and Arjun, all of you think similarly in that you are passionate about what you do and all of you want Ahora brands to succeed. Perhaps all of you also do not want the workforce at Ahora to be impacted negatively by the present conflict.
Let us start again with these similarities and ask the second question. How will my different way of thinking impact others in the process and what benefit will it bring to the objective that we started with? Here, we define the objective as the primary objective, that is the objective of the association between Coral and Ahora, and not the objective of making sure that ad spend budget is not slashed. So, what value does my different way of thinking bring to the completion of the objective? If the difference in thinking helps the organisation reach its objectives then let me emphasise it and not relent. But if it only helps me validate that I am brilliant then let me stop right now and accept that I need to change.
If images and metaphors in boardrooms stop being those of a battle and change to those of building a road, we may have less crises of personal identity and derive more strength from each other. Take care!

Analysis 2: Matangi Gowrishankar

Total Manager

My heart goes out to Arjun and Robin. What a struggle they face emotionally and physically. It is a struggle that they face alone, for they do not seem to be getting much support from either the folks at Ahora or Coral. Every time they reach out to the leaders, they are told to buck up, grin and bear it — and words to that effect. Is it because these leaders do not want to address the underlying issues, or do they think that people who work in their organisations are robots without feelings? I find that leaders are divided on the matter. Some believe that if you want to succeed in the corporate world, there is no place for emotions, ‘softy/touchy’ issues and, above all, it is a sign of weakness to be stressed by these issues. But with my numerous years of experience in watching and managing human resources, I can say with conviction: strategy and all that can be taught by B-schools, but in the net analysis, what tips the scales towards success or failure as a manager is one’s ability to both cope with and manage emotions in the organisational process.
Somewhere at the heart of this situation is a denial of the basic respect and dignity of the individual. It seems to be guided by a belief that people who want to be successful do not have the need to feel personally valued and work in a safe environment. An organisation that allows for an unsafe work environment can never make the transition to a world-class successful organisation, because sooner or later the best will leave, not as ambassadors but as disillusioned employees. I believe that people are a package deal; they bring all facets of their personalities to their roles and have a serious impact on the success or failure of the organisation. I don’t believe that managers ‘learn’ to be level V leaders; there is a definite personal inclination that makes them so. Equally, a theory X manager operates from a sense of deep insecurity either because he/she is being managed that way or there is a deep sense of insecurity that drives them.
So, the struggle that Robin and Arjun face are real and must be owned not only by them but by the leadership team of both Ahora and Coral. It is painfully obvious from the narration that Coral and Ahora have not even begun to consider a formal process of integration. It is not even clear as to what the conditions of the takeover are and, of course, there is even less clarity around Robin and Arjun’s roles in Ahora
The top leaders at both organisations seem to have left it to Robin and Arjun to figure it all out, which is grossly unfair. Organisations must have the crucial conversations around the ways of working and set the context for individuals to make a success of the business imperative early on. In fact, these conversations need to be an integral part of the business deal.
World class companies rightly call this a process of cultural integration because it is in fact a meeting of the hearts and minds of people that will ultimately make a successful business venture. Resistance will exist but a well-thought-out process of understanding processes around delegation of authority, decision making and communication will go a long way in helping the cause of people in both organisations.
On the face of it, Robin seems to be working things out for himself and trying to motivate himself with his vision of getting a new experience. But for how long? He seems to be withdrawing and making compromises that are affecting Arjun and others around him. If this pressure continues, Robin will either become a part of the problem or will leave. Either way, the organisation will lose a highly valuable resource whose falling from grace or departure will ring the death knell for other aspiring leaders. The buzz would be “If that could happen to them, it could happen to me!” Robin will be another one of those who will prove that people do not leave organisations, they leave managers — managers who have scant respect for the dignity of a human being making them feel less than they are.
Arjun seems to be in an even more precarious situation. The stress of being unsuccessful at work is taking its toll on his whole persona — into road rage and argumentative behaviour. No system or organisation has the right to break the spirit of an individual. Arjun is already thinking: “Is this worth it?”. Soon, he will make choices. If he stays, he may end up becoming sub-optimal with a feeling of resignation. If he leaves, then the organisation has once again lost a highly valuable resource.
One organisation I was a part of made it mandatory for all leaders to watch Love And Profit. It was a film on organisations that focused on capturing the hearts and minds of their people; the profits came automatically. I would urge the leaders at Ahora and Coral to watch it, they may learn something.
I appreciate that leaders at all levels today have an unenviable task of managing the ever-rising bar of performance. But the reality is that they are not going to reach it by themselves. They need the last man and woman in the organisation to work assiduously in a safe environment where they are valued for who they are as much as what they bring to the table. Leaders have to understand what makes people tick and they HAVE to have organisation support systems that create an environment that fosters success. Forget the programming that business is as tough as nails. They have to learn and accept that it is ‘the entire person’ that counts.

Business World – 05 Dec 2005 – A Man Called Machaan

A Man Called Machaan

Manjunath Shanmugham (27), an IIM-Lucknow alumnus and employee of Indian Oil Corporation, was killed in Lakhimpur Kehri on 19 November, allegedly over his drive to prevent adulteration of petrol. The news sent shock waves across the country. This case looks at the issues the incident has raised across different walks of life

Kar chale ham fida jan-o-tan saathiyo Ab tumhare hawale watan saathiyon…”
–Kaifi Azmi

Utsav Virkar stood in the men’s room of his office, choking on his tears. If 3.4, the band of Indian Institute of Management, Lucknow (IIM-L), had sung this, only Machaan could have done the honours, Utsav thought. “Dey, Machha! Big job you have left for us, da!” he sobbed. “We don’t have your grit, da!” Machaan, Manju, Machha… his dear batchmate had been silenced forever by a mindless system, but he had passed on the baton to his contemporaries.
Returning to his desk, Utsav found life going on smoothly. Rohan here was calling distributors, using his usual swear words; Sumant was telling admin in his flat tones that yet again there was no paper in the printer. Anahita was telling the pantry: “Baba re, chai bhejo…” Nothing had changed; the need for paper and tea and sales continued.

“Utsav, are you alright?” asked Anahita. His voice cracked as he said: “I don’t know, but it seems a batchmate of mine, Manjunath, was killed in UP.” And Utsav broke down again.
Rohan, a few feet away, continued to type his sales report. Eyes glued to his monitor, he asked: “How was he killed?” Someone said, “This is life,” and added more sugar to his tea.
Utsav left the room. Alone in the lawn, he recalled Machaan. It seemed like yesterday. Utsav was driving to Bangalore. RAMpack had called him on his mobile: “Hey Mirchi, Machaan is in the neighbourhood, man! Detour maar and come to my guest house.” There, they thumped him on the back, hugged him, pushed him around – all excited to see an old pal again. This was Manjunath Shanmugham, abbreviated over time to Machaan by the Tamilian lobby at IIM-L and then naturally to ‘Deyy Maccha!’

The usual questioning followed: where are you, which company, are you enjoying? Machaan had said in his characteristic jovial way: “UP mein teil bech raha hoon!” Utsav had cackled: “Arre Madrasi, tu aur UP mein?” Machaan laughed good-naturedly: “Perfect challenge for a South Indian, what?”

But he was happy. He enjoyed his stint, his organisation, the work. Everything he talked about was in superlatives. But that was Machaan. Utsav had said: “Yaar Machaan, anybody else in your place would have cribbed, oil company and sales! And B-schoolers are renowned for cribbing about even the best job. And you? You are rare, da!”

Machaan was rare. Utsav recalled those first few months at IIM-L. For many, it was the first time away from home. For all of them, it was a big thing that they were in IIM. Managing parental expectations and their own was a tight-rope walk. So they either studied too much or too little and at the wrong times, each one saying he had ‘cracked it’. But none really came to grips with the monster called IIM exams.

Then came the day before the first semester exams. They were all in the mess eating a late lunch. Stressed out, many had been up all night; almost all of them were unwashed, unbathed. Stress gave way to singing and before long they were singing in soprano, out of tune and hysterically. The mess staff brought in old ghee tins for the boys to use as drums. Machaan had led them in the singing – vibrant, racy and enthusiastic.

Four hours later when they left the mess, almost all of them had a sore throat, but gone was the stress, the anxiety, the nervousness. This became a pattern, semester after semester: Machaan led the singing session (and what a singer!) at the mess, ghee tins and all, ‘for junta to de-stress’.
That was Machaan, who was known for the 3.4 band and his cherished personal values. The band got its name from an inane fact: IIM-L was 3.4 km away from the main Lucknow-Sitapur Highway. Ironically, this was the same township where Manjunath would lose his life. Utsav felt his eyes sting with fresh hot tears. The joy and abandon with which they sang… Those were the days – young, innocent, trusting and happy to have chosen a hard but decent life. How innocent they had been. How trusting and determined. After the teen years spent in rebellion and exploration, getting rapped on the knuckles by teachers and parents, admonished for being wayward and irresponsible – why some were even taken to swamis and gurus for counsel. But all that passed as they grew out of rebellion to a life of commitment, trusting….
The call for Namaaz from the nearby masjid wafted through the air. Between yesterday’s prayer and today’s, Machaan had gone…. Nothing had changed – India, with its billion-plus population, took deaths in its stride.

Then the emails started pouring in. Did you hear? How terrible! What a guy! What is our country coming to? Some blamed oil companies, some blamed all companies, some blamed the system, some blamed the law, some blamed the leadership, some blamed the media. They all blamed someone or the other. Utsav read them all. He did not reply to any. Mercifully, his sister called. Could he sit the night in hospital to watch over grandpa? She could not; her son had taken ill. Utsav was relieved. An evening spent in the suffocating assumed normalcy of life would have been unbearable.

Grandpa was in fact a relief. Through myopic eyes, he looked at Utsav who sat by his side holding the near transparent hand, watching the veins throb. Grandpa smiled his toothless smile and said: “Bol re bala. What’s on your mind?”

Utsav said: “Aajoba, many people die. Many good people die. I understand that. But why are some good people killed?” Grandpa shut his eyes briefly and said: “Parithranaya sadhunaam, vinashaaya cha dushkritaam, dharma sansthapanaarthaya, sambhavami yuge yuge! Thus spoke the Lord, bala. When dharma is displaced and the Lord cannot bear it, He takes birth to put dharma in place. This is kaliyug – an era of depravity and adharma. So much is man dulled by material gain that he won’t recognise God even if He stood before him. Maybe, He takes lives away to stoke mankind to wake up to dharma sansthapana… Who put Jesus on the cross? Did Jesus die in vain? Whether we wake up to that call or sit back and count our dollars is to be seen.”

The next day, one newspaper announced the incident on its front page. Lead media was still pondering. But reactions fired…. Far away in Chennai, Raja, a young school teacher waved the newspaper in front of his Principal who was examining a poster that said: ‘In 2020, India will be the centre of world attention.’

“And who will be running India in 2020, Sir?” asked Raja. “The students we have here will be running the country! Are we equipping them for that? Read what we are doing to dedication… what message is this crime sending to them? Will our students be able to support the economy? I am not sure, sir, I am not… It’s their world that is being messed up! Is 2+2 enough? Is history and geography and physics enough?”

The principal said: “Raja, we also learnt just all that, didn’t we? Is our country any the worse today?” Raja clucked: “You miss the point, Sir! Then was then; today is different. Today, we have a valueless society. Today, people are taking false pride over an India they imagine! Let me tell you, sir. The India that we take pride in today is not a function of today or yesterday’s leadership. It’s the hard work of the 1960s and ’70s! A seed does not grow like that,” said Raja and clicked his fingers to emphasise. “It was sown many years ago! What seed are we sowing today? ‘2020 India will be great!’ How can they say that when all we have to give our children today is the rot we see on TV and crime like this! Progress does not happen by forecasting techniques, Sir! The mind has to evolve too, and such a mind cannot evolve through higher incomes. We need to teach them about how to set a standard in life.”

The principal was surprised: “But Raja, what has that got to do with running businesses?”
“That’s what they need for running businesses, Sir. A values standard. Businesses are about people, and people are only about attitudes and values. Nothing else! Take both away and what is left? Only a body! We need to build inner wealth in our students. They can tell a Honda City from an Accord. But can they tell right from wrong? And one student today was telling me, ‘I want to become the richest man in the world…’ Shouldn’t we teach them more about their real wealth?”

Elsewhere in Kolkata, Shibani Basu shuddered. Calling her son, she said: “Partho, you must reject that job offer in Chandigarh. Look for something here. Kolkata is safe; all our people… and no one understands us better than our own…. We don’t want money, we want safety!”
That evening, Sujoy Basu, an HR man, told Partho: “Life isn’t what it used to be, son. What to do?! I would like to fit you with wings, and let you soar like my father did to me. But times have changed…. This country has become like that.” Then, looking out the window, he said wistfully: “There was a time when we sent our young management trainees to rural towns as part of their training. All we told them was ‘Don’t drink tap water, don’t eat roadside food.’ Today, even keeping them in the city seems dreadful. What caveats do I give them?”

Meanwhile, in a B-school in Karnataka, Prof. Dhiren Vyas stood before his class of first-year students. He was teaching ‘Business Ethics and Society’, when he was interrupted. “What ethics, ‘prof’?” asked one student. “What do ethics do for one? If I must die, I’d rather join the army and die respectfully!” Prof. Vyas replied: “None of today’s wars is for ideals or principles or ethics. Ethical wars are being fought in the open, in the marketplace; we are the consumers of ethics. I want you to be ethical towards me just as you want me to be ethical towards you. You don’t need to be in the army. Life is the biggest battlefield; the world of business and commerce is the only way for intellectuals to put their ideals to test. Ideals have to be lived.”

Back in his room, Prof. Vyas’s colleague said: “How are we to know what to do in situations like this? We are teachers; we deal with texts and students. We don’t encounter these issues in our world.” Vyas replied: “We don’t need words. We need conviction and determination to keep our students on the path of right.”

Further north, in Delhi, four ex-chairmen of large companies sat in the coffee room of the CII and shook their heads. Said one: “I had told them, ‘Five years after liberalisation, take stock of the pulse of the people….’ But for 15 years, all that has happened is a reckless pursuit of growth. Arre, economy ko liberate kiya, lekin people are still in mental bondage! We have changed the government four times in this period. Where is literacy? There has to be a steady pace. Man’s mind has to develop before his material index does. Otherwise, he will not know how to use all the increase in income. Just see this… this boy is as young as my grandson! This is shameful.” The other chairman said: “Today, some TV guys were at my house. Wanted to know why we are giving this so much importance. Idiot.

“I told him, ‘Yes, this loss is important for the country if you consider the numbers. Every year, over 3 lakh students appear for the CAT. Twelve hundred are selected. Twenty five per cent leave the country. So it’s more than just a life lost – it’s a bright, honest person, with preserved albeit untamed integrity who knew the risks involved and had the courage to stay on the front. Or else, he too could have asked like you, Why are you giving adulteration so much importance? isn’t it? As an institution builder, I am saying this country has very, very few like Manjunath. So when one of them is lost, it is important.'”

In Mumbai, Mridula, a journalist, looked up at her colleague and said: “This morning, my mother was telling my brother, ‘Please don’t get into any kind of arguments over anything with anybody. Koi Satyavaan nahin ban-na hai…!’ You know what these boys and girls will take back from this incident? When on the job, quit your principles and beware! This is something they don’t need, Ankush…” He said: “Why are we only grieving for this boy? Because he is an IIM graduate? What about the many poor people who are killed by the mafia?”
“Spoken like a true, well-fed, protected, intellectual bourgeoisie!” said Mridula. “Did you do anything about the poor who were killed by the mafia? No, because they were not your kind. So now, here is someone of your kind who was killed! Now Ankush, now can we do something?! This is our problem, Ankush. We are a country of thinkers, not doers. We know how to audit, but we don’t know how to account! There is nothing wrong about the death of ‘one of us’ getting more publicity. In our newspaper, a death of an American soldier in Iraq gets the same coverage as five Indian jawans in Kashmir and 50 Iraqi civilians. Sometimes, these incidents do help create awareness, which would otherwise never have happened. Satyendra Dubey’s death did more to fight corruption in the National Highway project than any amount of anti-corruption drives.

“We are not grieving only for this boy, although right now we are grieving for him. Those who are grieving are firstly shocked. Because until now, it happened to others – people they didn’t know. Now it has happened to ‘us’, to straight people we know… see? That’s when it comes as a shock. It shocks when crime is closer to your home and not far away somewhere in the wilderness, happening to people whose values we know nothing about. Then, they are grieving because they ‘know’ this guy, have seen him, touched him, walked with him, seen him as a good awesome soul… and at their age, these 25-year-olds are saying, ‘Didn’t he stand for all the good teachings of life? He was picture perfect! How can you do this to him?’
“Their shock forces them to ask ‘Can I continue to believe all that I learnt till now? Has the time come for me to revise my learnings? Is it good to be good, after all?’ That is the nature of their shock, Ankush. All parents tell their kids, ‘Achche se padho, naukri karo, khush raho’ – prescriptions for leading a clean straightforward life. Because education was meant to prevent you from taking to crime, but it doesn’t hesitate while offering you as a victim of crime!”
Mridula called an MBA student for his reaction. He said: “We students believe that this is a huge community of the well bred and the educated. We feel that big corporates are backing us, that they are with us and that we are safe to pursue our honest intentions. All these big people investing big money in big projects look so credible and clean and nice… like our fathers. The whole business community appears so dependable. But honestly, when I read this sort of news, I am scared. You know what one chap told me? Is life worth just a few minutes of mention on NDTV and some loving notes on Yahoo! chat groups? Why take ‘panga’ to prove dedication at the cost of one’s life? We are human, Mridula, face it. What I am saying is a human derivation of the situation and the inference at this time. I am sure that’s exactly what’s on everyone’s mind right now. Then, we blame IIT-IIM grads for going abroad.”

Elsewhere in an MNC, managers were discussing the ‘news’ too. Being in denial was their only armour. Some believed this would never happen to an MNC; they too had found a way to establish distance between ‘their kind’ and ‘our kind’ of people. As long as we are different, we are safe, went the warped logic. Consultants blamed the profiteering in manufacturing companies and lack of a quality system. Consulting was safer, they felt; they didn’t have to deal with third parties.

Back in the hospital on Thursday, Utsav felt safe with his grandpa. So was it about safety then? he wondered. No, it’s about faith. It’s also about being able to work and live among people who work and live like us. But he felt alone. Most people around him had bounced back to chasing sales, targets and planning where to eat lunch. He recalled some emails he had received. Many had passed off the incident as a ‘normal thing’.

Friday morning, Utsav ran into his HR head, Kapil. Drawing him into his room, Kapil said: “I am sorry, Utsav… really, really sorry. Time will heal all this.” Utsav looked at him sadly and said: “That’s what I am worried about. Time will heal all this, and we would have forgotten Machaan’s fight. Trouble is, time does not heal attitudes! Will time change our callousness, our insensitivity, our greed for power and money? This is what amazes me. Why are we all in denial? Why do we want all this to be ‘over’ soon? Like a bad dream or a wound that has left an ugly scar? Why do we want to return to comfort zone again? Everyone I meet shrugs it off as ‘yeh sab life mein hota hai…’ Don’t we have any other way to think about this? Kapil, we have become so desensitised to the media reports of crime, attacks, wars, earthquakes and tsunamis that the related human emotion of pain is something we can only intellectualise and find solutions for immediately. But we cannot feel it.

“Here is a guy who is saying he has just lost everything he ever possessed in the tsunami. And we have a solution: we give him a cheque for Rs 1,001. What he wants is an arm around his shoulder, maybe a hug, maybe he wants you to feel his pain? Sometimes, people just want to tell you how bad their pain is.

“Read these reports, Kapil. Each one is saying: book the culprits, punish them, etc. This is not the solution! That’s my point. Relate to the situation, relate to the pain… feel the pain of the aggressor too! Yes, the pain of ignorance! Do we know what causes them to be deviant? So the law will book them… then what? This is like my nephew. When he sees a cockroach, he will jump onto the table and shout, ‘Usko maro, kaka!’ But where did the roach come from? Isn’t that the point we have to address? What has caused our people to become valueless?
I remember a verse our grammar teacher would give us, which I then thought was weird: ‘When brother raises hand to slay brother, who has thought for the sorrowing mother?’ Even that culprit is our own kind, Kapil. In each of us lurks a killer. The difference is simple: one has killed, one hasn’t yet…

“I know, a lot of people are rationalising, ‘MBA tha. Is liye shor macha rahe ho!’ Absolutely! Because the only people today who can, if they choose to change the fabric and tenor of our country, are the educated. But they haven’t chosen to yet. But this could well be a wake-up call. Finally, each of us is responsible for all this. We are all busy embellishing our lives. We have extracted a few ‘values’ from here and there, and we watch over them like vultures. It’s okay by us to live in a corrupt, unjust society but we cannot tolerate an Id procession in front of our temples. We ‘need’ a few ‘values’ to hang our egos on, and never mind what those values are. Because we have no time; our targets and toplines have to be delivered. Yes, we have become insensitive, uncaring and overwhelmed by our economic brilliance. We are the real criminals, we who pass this off as yet another incident. Why blame the law, the government, the system… we have empowered them, no? We allowed voting age to be lowered to 18, no? Did we ponder? No. We are an ambitious people and we have time only for ‘important’ matters… we are the tribe who read a financial newspaper cover to cover and we know about Jim Watts’ corner drugstore; we know who are the top seven richest men in the world and the movements of the indices on the BSE and NSE…

“Machaan’s cause scares us because none of us can do what he did. Worse, we will not. I know I cannot. That is why we have coined very nice phrases like ‘But life must go on’, ‘Time is the best healer’…. That’s the only way we can drop this incident and forget it before it consumes us!”

Analysis 1: Anchal Bhagat

Long live Manju!

Dear Utsav,
Manju has left us. Torn away from us in a manner most foul. How do we mourn our young? Do we let them pass away without reflection or do we begin a revolution? Can Manju’s death be a revolution for us? For if it cannot, Manju died in vain. Will it be a revolution for us? Maybe not. Maybe not for most of us. Some of us will start our own little unheard battles and some of us may, like Manju, make a dent on people’s consciousness. But most of us will shrug and live our lives.
Can one live in a vacuum where a young man with aspirations is shot to protect some partisan interests by two other young men, and where one does not even stop for a moment? How can a nation, which telecasts the lynching of a young man in an election rally, live? Where women are raped, so that their men can be controlled? Where communities get burnt alive, so that political ambitions can be fulfilled? Where life does not matter?
Are we a nation or a cauldron? How many more lives do we need to sacrifice to become free? How can we celebrate any success when we are witness to murders of our own daughters and sons? Do we cry enough? Do we remember enough? Unfortunately, no!
We have grown not to question. We have grown to accept exploitation. We have grown to see violence as the obvious. We have learned to co-exist in this world which we do not see as our reality. We see our reality within the four walls of our home or our organisation and we do not see beyond our goals.
Of course, this is not new. Some people suffer, so that others can live. Christ did, Gandhi did, Mandela did. Mankind has survived when ordinary people like Manju and Rosa Parks stand up to the tyranny of the few in society in which they live. There is always a need to watch, protect and fight for one’s freedom and rights. But I fear that Manju and many like him are forgotten.
There is a conspiracy and all of us are part of it. If we let the pain of Manju touch us, then we cannot sleep quietly. We cannot let the reality of India be our reality, and so it will have to change. The reason Manju died is not because someone killed him; the reason he died was because those who killed him thought it was possible and reasonable to do so.
They have learnt this over the years. They have learnt this because Manju is an isolated phenomenon and others like him – all of us – do not speak up. Are we not too comfortable with our own goals without being affected by all that happens around us?
So where do we start and who must start it? How do we address this vacuum of ethics amidst us? How do we address the lack of hope and the cynicism that the young in India face everyday?
The beginning of a revolution is with a dream. If we are to be a nation that treats its people with dignity, each one of us has to cherish a dream of such a nation. The revolution doesn’t run only on dreams; it runs through combat.
Each one of us has to combat what is within us and around us. We have to question ourselves and those around us. We have to question each action and ask ourselves: “Are we contributing to our dream or are we contributing to the vacuum that leads to murder?”
A revolution is successful if it questions and demolishes what exists. If we really believe that we have a right to be a sovereign nation, then we need to ensure that Manju does not die in vain. To ensure this revolution, we have to question our own methods. We have to question our opportunities, and we have to question our success.
If in our success, we find that we have unwittingly been supported by processes that undermine the dignity and rights of others, we need to walk away from that success and try again. Each decision that undermines our ethical stance makes us quieter and compromised when we question others. It is this silence that kills Manju, not a bullet.
If we reflect each time we act, we will build ourselves as human beings and we will build a nation of human beings, not some goal-directed, hunting-gathering species. A revolution is successful when it has a framework. We need to nurture a framework in ourselves and our young: of recognising people around us as people. The rest will follow.
Manju could have easily walked into the bubble of safety we all live in. But he chose to risk his life for something as intangible as the ‘right thing’. We choose to walk into our bubbles and leave the Manjus of this world to fight their lonely battles and die. We need to look beyond the walls of our bubbles of safety if we have respect for Manju. We have to look beyond our bubbles to be human.
Come, let us start a revolution. Long Live Manju!

Analysis 2 : Subhabrata Ghosh
A larger conflict. Machaan’s murderers represent the old order. And he epitomised the power of the new order by challenging the exploitation of the old order

The allusion of this case to reality demands that I be objective and realistic. Therefore, I would look at this case from the viewpoint of creating an understanding and what we can do with an optimistic attitude.

What is the fact? A young, educated and honest man gets killed in the line of duty. Let us examine this from the broadest perspective, and then narrow it down to the incident. Currently, the economy is polarising our society into two worlds: the new world and the traditional world. The traditional world when compared to the new one is autocratic and controlled by a few. Historically, the control emanated from the primary resource of the old world: land. Wealth creation was based on exploiting the masses to fill the coffers of the landed gentry.
This economic system pervades all sections of our country, and the landed gentry have evolved a protective mechanism to guard and propagate this system. This protectionism is economic, social as well as physical. It is still prevalent in the majority of the land mass of our country. Education has been and will continue to be the biggest enemy of this system because it moves wealth creation from land to enterprise.
Our economic growth is essentially coming from growth of enterprise and is, therefore, posing a direct challenge to the control of the old economy of the landed. In its most naked form, the resolution of this conflict at the individual level resorts to the basest form of domain protection – through violence.
Machaan epitomised the power of the new order by challenging the exploitation of the old order by an individual.
When we installed democracy in our country, we also resolved to make education a fundamental right. But a large majority of our population is still deprived of education at a time when the world is bursting at its seams with information and has the easiest access to it.
The truth is that most of those in the political system who represent the people do not get elected by the informed choice of people, but by their own economic and physical might. These are also the people whose primary objective is to protect their domain.
Now examine the scenario. We have two powerful groups: one has created economic power through knowledge, skill and enterprise, and the other commands the political system and subverts the enforcement machinery to prolong their control over their shrinking domain. More than a third of our parliamentarians have established criminal records. Yet, we allow them to run the highest decision-making bodies of our country. The magic of this conflict is that it is making a political system irrelevant through democratisation of wealth creation. The old order has never been more aware of this as it is now. So, they will get even more desperate as they become more aware of this shift in power.
Those of us who represent the new order must be more aware and spread the understanding that we put a serious threat to the old order. The greatest threat to the new order is the lack of this awareness. We must also be aware of the power we wield to challenge and break down the old order. When we wish to exert the power, we must also be aware of the consequences. The pain of Machaan’s death is also a gain. It is for us to protect this gain – the demonstration of the power of the individual against the old order establishment. I have great faith in our judiciary, and believe that Machaan’s murderers will be punished. That itself is a blow to the old order.
Let me explain why I believe Machaan’s murderers represent the old order.
Oil is the lifeline of our economy. Therefore, the people who distribute oil exert incredible control in their geographical domain. We also know that the licence to distribute oil is controlled by the state and, therefore, the political class. The political class also understands the shift of economic power. They are also aware that the shift will necessitate their control over the enforcement infrastructure of the country. Unfortunately, the enforcement infrastructure has been subverted so badly that it works more on fear rather than the confidence of the polity. We can only hasten the demise of the old order if we empower the individual economically, which can only come through education. This is where our responsibility lies.
If we are moved by the sacrifice of Machaan, let’s do something about it. If all of us, who have had good education and are reaping the benefits, put some money back into our institutions to create a corpus of funds, it can be used to provide free education to children who are not able to access it. This will be a giant step forward.
If we are aware that we have the economic power to destroy the old order, let us exert it and adopt the teachers. If each one of us shares our economic power with our teachers, I believe, it will be the best tribute we can pay to people like Machaan.

Business Today – 21 April 2001 – Nut Island Effect: When Good Teams Go Wrong

The Nut Island Effect

When Good Teams GoWrong

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They were hardworking, uncomplaining, and dedicated beyond the call of duty. Yet the extraordinary team that ran a vital wastewater treatment plant actually brought about disaster. How could such well-intentioned people produce such perverse results? They fell prey to an organizational pathology that can strike any business.

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They were every manager’s dream team. They performed difficult, dirty, dangerous work without complaint they put in thousands of hours of unpaid overtime, and they even dipped into their own pockets to buy spare parts. They had tremendous esprit de corps and a deep commitment to the organisation’s mission.

There was just one problem: their hard work helped lead to that mission’s catastrophic failure.
The team that traced this arc of futility was the 80 or so men and women who operated the Nut Island sewage treatment plant in Quincy, Massachusetts, from the late 1960S until it was decommissioned in 1997. During that period, these exemplary workers were determined to protect Boston Harbor from pollution. Yet in one six-month period in 1982, in the ordinary course of business, they released 3.7 billion gallons of raw sewage into the harbor. Other routine procedures they performed to keep the harbor clean, such as dumping massive amounts of chlorine into otherwise untreated sewage, actually worsened the harbor’s already dreadful water quality. How could such a good team go so wrong?

This question goes to the heart of what I call the Nut Island effect, a destructive organizational dynamic I came to understand after serving four and a half years as the executive director of the public authority responsible for the metropolitan Boston sewer system.

Since leaving that job, I have shared the Nut Island story with managers from a wide range of organizations. Quite a few of them – hospital administrators, research librarians, senior corporate officers – react with a shock of recognition. They, too, have seen the Nut Island effect in action where they work.

Comparing notes with these managers, I have found that each instance of the Nut Island effect features a similar set of antagonists – a dedicated, cohesive team and distracted senior managers – whose conflict follows a predictable behavioural pattern through five stages. The Nut Island story should serve as a warning to managers who spend the bulk of their time on an organisation’s most visible and obvious shortcomings: sometimes the most debilitating problems are the ones we can’t see.

The Nut Island Story

Nut Island is actually a small peninsula in Quincy, Masachusetts. Sitting at the southern entrance to Boston Harbor, Nut Island was a favourite landmark for seventeenth-century sailors, who savoured the scent of what one early European settler called the “divers arematicall herbes, and plants” that grew there. By 1952, when the Nut Island treatment plant went into operation, the herbs were long gone. Before the plant came on line, raw sewage from much of Boston was piped straight into the harbor, fouling local beaches and fisheries and posing a serious health hazard to the surrounding community.

The Nut Island plant was billed as the solution to Quincy’s wastewater problem. Hailed in the local press for its “modern design”, it was supposed to treat all the sewage produced in the southern half of the Boston metropolitan area, then release it about a mile out into the harbour. From the first, though, the plant’s suitability for the task was questionable. The facility was designed to handle sewage in-flows of upto 285 million gallons per day, comfortably above the 112 million gallons that flowed in on an average day. But high tides and heavy trains could increase the flow to three times the daily average, straining the plant to its limits and compromising its performance.

During most of the 30 years covered in this article, the team charged with running the plant was headed by superintendent Bill Smith, operations chief Jack Madden, and laboratory head Frank Mac Kinnon. The three joined me recently for reunion at Nut Island, which has been converted to a headworks that collects sewage from the southern Boston region and delivers it north through a tunnel under Boston Harbor to the city’s vast new treatment plant on Deer Island. The men’s affection for each other is evident, as are the lingering remnants of plant hierarchy. When someone has to speak for the entire group, Mac Kinnon and Madden still defer to Smith.
The three friends don’t need much prompting to launch into reminiscences of their years at Nut Island, which they still view as the happiest time of their working lives. They laugh often as they tell stories about the old days, featuring characters with nicknamed like Sludgie and Twinkie, and they seem cheerfully oblivious to the hair-raising conditions that were part of daily life at the plant. “It was fun,” Smith says, and his two friends nod in agreement.

Throughout our talk, the men frequently refer to themselves and their co-workers as a family. But Nut Island had not always been such a harmonious place. When Smith arrived there in 1963, fresh out of the navy, he walked into a three-way cold war among operations, maintenance, and the plant’s laboratory. For the next few years, Smith did what he could to “get a little cooperation going.” By 1968, he had gained Madden and Mac Kinnon as allies. Before long, they had weeded out most of the plant’s shirkers and assembled a cohesive team.

The people they hired were much like themselves: hard working, grateful for the security of a public sector job, and happy to stay out of the spotlight. Many were veterans of World War II of the Korean War, accustomed to managing frequent crises in harsh working conditions-just what awaited them at the aging, undersized, under funded plant.

Nut Island’s hiring practices helped create a tight-knit group, bonded by a common cause and shared values, but they also eliminated any “squeaky wheels” who might have questioned the team’s standard operating procedures or alerted senior management to the plant’s deteriorating condition. That was fine with Smith and his colleagues. Assembling a like-minded group made it easier for them to break down inter-departmental animosities by cross training plant personnel. The team leaders also made job satisfaction a priority, shifting people out of the jobs they were hired to do and into work that suited them better. These moves raised morale and created a strong sense of trust and ownership among plant worker.

Just how strong the sense of ownership was can be seen in the sacrifices the team made. Few people on Nut Island made more than $20,000 a year, low wages even in the 1960s and 1970s. Yet when there was no money for spare parts, team members would pitch in to buy the needed equipment. They were equally generous with their time. A sizable cadre of plant workers regularly put in far more than the requisite eight hours daily, but they only occasionally filed for overtime pay.

From 1952 until 1985, the Nut Island plant fell under the purview of the Metropolitan District Commission (MDC). Throughout the early and mid 1900s, the MDC had been known for the quality of its engineers and the rigor of its management. It had constructed and operated water and sewer systems that were often cited as engineering marvels. By the 1960s, though, the MDC had become the plaything of the state legislature, whose members used the agency as a patronage mill. Commissioners rarely stayed more than two years, and their priorities reflected those of the legislators who controlled the MDC budget. The lawmakers understood full well that there were more votes to the gained by building skating rinks and swimming pools in their districts than by tuning up the sewer system, and they directed their funding and political pressure accordingly.

The attitude of the MDC’s leadership toward the sewer division can be gauged by a story that ended up becoming a staple of plant lore. As it was passed around, the story became a central component of the Nut Island team’s self definition. It seems that one day, James W Connell, Nut Island superintendent in the 1960s, went to Boston to ask the MDC commissioner for funds to perform long-deferred maintenance on essential equipment. The commissioner’s only response: “Get rid of the dandelions.” Startled, the superintendent asked the commissioner to repeat himself.

“You heard me. I want you guys to take some money and get the dandelions off the lawn. The place looks terrible.”

At this point, the first stage of the Nut Island effects is in place. We have a distracted management and a dedicated team that toils, by choice, in obscurity. Team members, who share a similar background, value system, and outlook, and place enormous trust in each other and very little in outsiders, especially management. Now, an egregious display of indifference from management is all it takes to set the downward spiral in motion.

On Nut Island, this display came in January 1976, when the plant’s four gigantic diesel engines shut down. Since the early 1970s, the workers at Nut Island had been warning the top brass in Boston that the engines, which pumped wastewater into the plant and then through a series of aeration and treatment tanks, desperately needed maintenance. The MDC, though, had refused to release any funds to maintain them. Make do with what you have, plant operators were told. When something stops working, we’ll find you the money to fix it. In essence, the MDC’s management refused to act until a crisis forced their hand. That arrived when the engines gave out entirely. The team at the plant worked frantically to get the engines running, but for four days, untreated sewage flowed into the harbor.

The incident propelled the conflict between the Nut Island team and senior management from the second stage to the third-from passive resentment to active avoidance. The plant workers viewed the breakdown as a mortifying failure that they could have averted if MDC headquarters had listened to them. In ordinary circumstances, management indifferences might have killed off the team’s morale and motivation. It had the opposite effect on the Nut Islander’s. They united around a common adversary. Nut Island was their plant, and its continued operations was solely the result of their own heroic efforts.

It became a priority among the Nut Islanders to avoid contact with upper management whenever possible. When the plant ran short of ferrous chloride, a chemical used for odour control, no one from Nut Island asked headquarters for funds to buy a new supply. Instead, they would contact a local community activist and ask her to complain to her state representative about the odours emanating from the plant.

The rep would then contact MDC headquarters, and Nut Island would receive a fresh supply of ferrous chloride. Another way Nut Islanders stayed off the management’s radar screen was to keep their machinery running long past the time it should have been overhauled or junked. Among the plant’s most troublesome equipment were the pumps that drew sludge into the digester tanks. Years of deferred maintenance had degraded the pumps, but instead of asking Boston for funds, the Nut Islanders lubricated the machinery with lavish amounts of oil. Much of this oil found its way into the digested tanks themselves. From there, it was released into the harbor.

Rules of Thumb

A team can easily lose sight of the big picture when it is narrowly focused on demanding
task. The task itself becomes the big picture, crowding other considerations out of the frame. To counteract this tendency, smart managers supply reality checks by exposing their people to the perspectives and practices of other organizations. A team in the fourth stage of the Nut Island effect, however, is denied this exposure. Isolated in its lonely outpost, the team begins to make up its own rules. These rules are terribly insidious because they foster in the team and its management the mistaken belief that its operations are running smoothly.

On Nut Island one such rule governed the amount of grit-the sand, dirt, and assorted particulate crud that inevitably finds its way into wastewater-that the plant workers considered acceptable.
Because of a flaw in the plant’s design, its aeration tanks would become choked with grit if the inflow sewage exceeded a certain volume. The operators dealt with this problem by limiting sewage inflows to what they considered a manageable level, diverting the excess into the harbor. Reflecting the distorted perspective typical of teams in the Nut Island effect, these diversions were not even recorded as overflows from the plant because the excess wastewater did not, strictly speaking, enter the facility.

Another rule of thumb governed the use of chlorine at Nut Island. When inflows were particularly heavy the plant’s operators would add massive amounts of chlorine to some of the wastewater and pipe it out to sea. The chlorine eliminated some pathogens in the wastewater, but its other effects were less benign. Classified by the Environmental Protection Agency as an environmental contaminant, chlorine kills marine life, depletes marine oxygen supplies, and harms fragile shore ecosystems. To the team on Nut Island, though, chlorine was better than nothing. By their reckoning, they were giving the wastewater at least minimal treatment – thus their indignant denials when Quincy residents complained of raw sewage in the water and on their beaches.

In its fifth stage, the Nut Island effect generates its own reality-distortion field. This process is fairly straightforward in management’s case. Disinclined in the first place to look too closely at the team’s operations, management is easily misled by the team’s skillful disguising of its flaws and deficiencies. In fact, it wants to be misled – it has enough problems on its plate. One reason MDC management left Nut Island alone is that even as it was falling apart, the plant looked clean.

The manner in which team members delude themselves is somewhat more complicated. Part of their self-deception involves wishful thinking – the common human tendency to reject information that clashes with the reality one wishes to see. Consider, for instance, the laboratory tests performed at the plant. These tests were required by EPA. A former scientist with the Massachusetts Water Resources Authority tells me the staff in the Nut Island lab would simply ignore unfavorable test results. Their intent was not to deceive the EPA, the scientist hastens to add. “It was more like they looked at the numbers and said: “This can’t be right. Let’s test it again.” A long as Nut Island’s numbers appeared to fall with EPA limits; MDC management in Boston saw no reason to question the plant’s testing regimen.

Maintaining the alternate reality that prevailed on Nut Island required more than wishful thinking, however. It also involved strenuous denials when outsiders pointed out inconvenient facts. Consider what I learned from David Standley, who for several years was an environmental consultant to the city of Quincy. “I remember taking one look at the tanks’ operating parameters and saying, “this is going to die soon”,”Standley says. Predictably enough, these misgivings found an unfriendly reception on Nut Island. “Their initial reaction,” Standley says, “was hostility – they didn’t like me sticking my nose into their business.” Besides, they insisted, there was nothing seriously wrong with the digesters.

If external events had not intervened, conditions on Nut Island would probably have continued to deteriorate until the digesters failed or some other crisis erupted. The plant’s shutdown in 1997, forestalled that possibility. As part of a large-scale plan to overhaul Greater Boston’s sewer system and clean up the harbor, all sewage treatment was shifted to a new, state-of-the-art facility on Deer Island. The Nut Island team was disbanded, after 30 years of effort that left the harbor no cleaner than it was in the late 1960s when the core team first came together.

The field of organizational studies is a well-established discipline with extensive literature. Yet, the syndrome that I call the Nut Island effects has, until now, gone unnamed – though not unrecognized as I learned when I described it to other managers. Perhaps the lack of a name indicates just what a subtle and insidious thing it is; the Nut Island effect itself has flown under the radar of managers and academics just as the actions or team members go unnoticed by management.

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Five Steps to Failure

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The Nut Island effect is a destructive organizational dynamic that pits a homogenous, deeply committed team against its disengaged senior managers. Their conflict can be mapped as a negative feedback spiral that passes through five predictable stages.

1. Management, its attention riveted on high-visibility problems, assigns a vital, behind-the-scenes task to a team and gives that team a great deal of autonomy. Team members self-select for a strong work ethic and an aversion to the spotlight. They become adept at organizing and managing themselves, and the unit develops a proud and distinct identity.

2. Senior management takes the team’s self-sufficiency for granted and ignores team members when they ask for help or try to warn of impending trouble. When trouble strikes, the team feels betrayed by management and reacts with resentment.

3. An us-against-the-world mentality takes hold in the team, as isolation heightens its sense of itself as a band of heroic outcasts. Driven by the desire to stay off management’s radar screen, the team grows skillful at disguising its problems. Team members never acknowledge problems to outsiders or ask them for help. Management is all too willing to take the team’s silence as a sign that all is well.

4. Management fails in its responsibility to expose the team to external perspectives and practices. As a result, the team begins to make up its own rules. The team tells itself that the rules enable it to fulfill its mission. In fact, these rules mask grave deficiencies in the team’s performance.

5. Both management and the team form distorted pictures of reality that are very difficult to correct. Team members refuse to listen when well-meaning outsiders offer help or attempt to point out problems and deficiencies. Management, for its part, tells itself that no news is good news and continues to ignore team members and their task. Management and the team continue to shun each other until some external event breaks the stalemate

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How to Stop the Nut Island Effect Before It Starts

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What forms of preventive medicine can we prescribe to help organisations avoid the Nut Island effect? Managers need to walk a fine line. The humane values and sense of commitment that distinguished the Nut Island team are precisely the virtues we want to encourage. The trick is to de-couple them from the isolation and lack of external focus that breeds self-delusion, counterproductive practices, and, ultimately, failure.

On Nut Island, the worker’s focus paralleled their reward system. That system evolved by default as a result of MDC headquarters’ lack of interest and by explicit action from dedicated local managers. It rewarded task-driven results – avoid grit in the sedimentation tanks, keep the sludge pumps from seizing up, keep the digesters alive, maximize flows to the treated through the plant, produce fertilizer-quality sludge. The Nut Island crew were heroes, but unfortunately they were fighting the wrong war. As in combat, the generals were to blame, not the enlisted personnel.

The striking persistence of the syndrome – which lingered on Nut Island until the plant was shut down in 1997, despite a decade of structural and management changes that afforded the team greater financial resources, new career options, top management support, and other opportunities – should send a strong message to corporate managers. While there are probably ways to counteract the Nut Island effect in your company, you for better off to avoid it in the first place.

1. The first step is to install performance measures and reward structures tied to both internal operations and company-wide goals. The internal links are necessary to help build the team’s sense of local responsibility and camaraderie; the link to external goals ensures the proper calibration of internal operations to the corporate mission.

2. Second, senior management must establish a hands-on presence by visiting the team, holding recognition ceremonies, and leading tours of customers or employees from other parts of the organizations through the site. These occasions give senior management a chance to detect early warnings of problems and they give the local team a sense that they matter and are listened to.

3. Third, team personnel must be integrated with people from other parts of the organization. This exposes the local team member to ideas and practices being used by colleagues elsewhere in the company or in other organizations. This encourages them to think in terms of the big picture.

4. Finally, outside people-managers and line workers alike-need to be rotated into the team environment. This should occur every two to three years-not so often as to be disruptive but often enough to discourage the institutionalization of bad habits. So as not to appear punitive, this rotation must be a regular feature of corporate life, not a tactic aimed at a particular group.

Capitalideasonline.com – 09 Jan 2007

Rear view syndrome

In a great book “Five Eminent Contrarians: Careers, Perspectives and Investment Tactics” the author, Steven L. Mintz, writes about Michael Aronstein of Comstock Partners.

“On the links at the Westchester Country Club, Michael Aronstein is nearly as awesome as the giant clubhouse-hotel that is a throwback to the 19th century. He’s a scratch golfer who might have earned a spot on the professional circuit if someone has taught him the proper way to grip a golf club. As it is, he has had to settle for top golfer at the keenly competitive country club and a volatile career on Wall Street, where an unorthodox grip fosters his iconoclastic outlook.

Golf magazine’s former instruction editor argues that profligate use of credit ultimately breeds deflation, not inflation as conventional observers suppose. That is not good for owners of financial assets—the last bastion to withstand the tidal force of worldwide deflation. The current credit cycle will end the way every previous cycle has ended for 2,000 years, says Aronstein, with a default by the biggest borrower. It’s unthinkable until it happens, and then it happens. When the wave hits, prices of financial assets will plummet. Contracts tied to these assets, from home loans to multi-billion dollar commercial loans, will transmit ill effects to the rest of the economy just as ill-conceived commercial loans played havoc with banks and thrifts.

Prices, therefore, are pinned to nothing more palpable than expectation of what prices will be tomorrow. This is as true today, he warns, as when frenzied Dutch investors bid prices of tulip bulbs to stratospheric levels in the 17th century Tulipomania. Not only can it happen here, he says. It will. The wrecking ball is already in motion.

Critics consider Aronstein unduly pessimistic about the prospects for financial assets, but they acknowledge that the argument has merit. “Though it seems almost contra-intuitive, there is a chilling logic to it,” Barron’s reported in August 1989.

On the strength of his convictions, Aronstein surrendered most of his interest in Comstock Partners in 1992 to launch his own firm, West Course Capital—named for one of the Westchester Country Club’s two golf courses. “The whole premise is to give people an alternative to forms of wealth storage that are now popular,” he says. If the crowd wants financial assets, Aronstein reasons, then real value must lie somewhere else, namely, in commodities. So West Course Capital invests in commodities, but not in the fashion that commodities have come to be viewed by traders.

To Aronstein, commodities markets in 1994 resemble the bond markets in 1981 and 1982, after a thirty-year bear market drove out all players except hard core bond traders who live and die with each uptick or downtick. They focus on supply; Aronstein watches demand.

When intuition supported by exhaustive research persuades Aronstein to anticipate an upsurge in demand for a commodity—say lead, or cotton, or coffee, or even hemp—Aronstein invests long term, rolling contracts over at maturity rather than taking profits or losses at frequent intervals. It is a sort of Graham and Dodd approach to commodities, using many techniques of fundamental value investing. That this sounds odd to modern ears supplies one more piece of evidence that Aronstein is on the right track. Fundamental analysis with no companies? Says Aronstein: “Commodities are the most fundamental things. There are no treasury departments, no threats of tax increases. Commodities are the original concept of money.”

Initial results support this offbeat concept. “So far, so good,” offers Aronstein with characteristic respect for the vagaries of market behavior. In its first full year, 1993, West Course Capital generated a 15 percent return on investment, net of fees—outpacing the S&P 500 (adjusted for dividends) by five percentage points. Aronstein’s biggest single investment was in coffee, which he predicts will reverse a decades-long decline in consumption as baby boomers’ increasingly forgo soft drinks—a conclusion supported not least by the rapid proliferation of cappuccino makers. More convincing still, the price of coffee chalked up a 90 percent gain soon after Aronstein began to accumulate contracts. Nevertheless, Aronstein’s investment style won’t ever win over most investors. It can’t by design. “I just hope the wind is at my back,” Aronstein says, “and then try not to do what other people in my business are doing.”

Aronstein fell out of step with other folks in his business almost as soon as he arrived on Wall Street in 1979. Small surprise, for a Yale graduate who wrote his senior thesis on the poet Wallace Stevens. “Michael Aronstein, of the famed Comstock Partners, is extraordinarily bright, reflective and articulate,” Barron’s gushed in April 1992, “which always prompts the question, ‘What in the world is he doing on Wall Street?’”

Aronstein gives this explanation for an investment career: “The whole process of financial analysis didn’t intimidate me,” Aronstein says. “I didn’t see in reading the Wall Street Journal and Barron’s that there was a Wallace Stevens, where I would say, ‘Jesus, that’s fantastic, but I can’t write that way.’ I didn’t see a Stephen Hawking (the acclaimed author of A Brief History of Time). I looked and said I could compete in this field. It just seemed to suit my way of looking at things.”

He took his first job at Merrill Lynch, the giant wire house that is almost a proxy for the crowd, after friends urged him to join IBM, the only other employer willing to train him for a management role. Merrill paid about half the starting salary, but Aronstein soon found ample compensation in a small group of like-minded colleagues. With Merrill veteran Stan Salvigsen as tutor, Aronstein expanded his intuitive understanding of the way financial markets operate. “[Salvigsen’s] work in 1970-1980 was seminal,” Aronstein says. “It agreed with things I had thought, but it was the first really rigorous exposition of long term credit cycles and long wave bond prices. It was instrumental in opening my eyes to how things worked.”

As their collaboration progressed, Aronstein emerged as the expositor. His flair for expanding and articulating implications resulted in a series of economic analyses that were as fresh as their wacky titles: The Big Enchilada; Homesick; Bingo, Bango, Bongo; Little Shop of Horrors; Snouts, Lips & Tails; Twin Peaks; 32ds Over Tokyo; That Ain’t Mud on Your Boots, Partner, to name a few. It was splashy marketing if nothing else. And from someone who lasted only six months in the public relations business before being fired for coming to work late.

Once it became obvious that their bearish outlook didn’t jive with Merrill’s bullish image, Salvigsen, Aronstein and a third Merrill colleague, Charles Minter, formed their own firm, Comstock Partners, in 1986. “We knew we wouldn’t be able to talk about out view of the world,” Minter says. “There is no way to run a large brokerage firm with a negative point of view.”

Never mind that Comstock’s contrarian analysis was grounded in the work of classical economists like J.M.Keynes and Ludwig von Mises, or that Salvigsen and Aronstein published dead-on predictions that sky-high prices for oil and commercial real estate were due for comeuppance. Or, for that matter, that they said that inflation was not as intractable as it seemed after almost two generations.

On their own, they quickly drew a following. They polished Comstock’s fledgling image by pulling clients’ money out of the stock market in August 1987, on the very day that the Dow Jones Industrial Average touched a high that it did not surpass again for several years. And then they weighed in with a timely prediction that spiraling prices for residential real estate would come to an abrupt end.

Visions of Armageddon suit Aronstein, an affable worrier with a poetic bent. In an era where most of his peers tend to trace their roots to Paul Samuelson and Milton Friedman, Aronstein is more of a renaissance type. Armed with a photographic memory, he has attacked the library of modern and classical economics without ever having taken a survey course in the subject. But he puts as much or more faith, at times, in lessons from literary giants like Wallace Stevens, whose treatment of disorder and renewal has plenty of resonance in modern finance.

These intellectual bearing seem odd if not wholly irrelevant on Wall Street today—in sharp contrast with past eras when finance was nearer the world of letters. Maybe, however, the kinship between finance and letters remains closer than most observers believe. Time will tell.

Deep-seated pessimism separates Aronstein from fellow contrarians, who usually are optimists as a necessary condition of their out-of-favor investment strategies. But if the last vestiges of wealth do go down the tubes, he is not likely to rub his hands and gloat. Like a modern-day Cassandra, who warned to no avail that tragedy awaited Agamemnon, Aronstein bears ominous tidings with considerable dread. He does not expect most people to pay attention. Nor, in any event, will paying attention reverse the trend. Fate has handed Aronstein a nasty job. The only question is, when to launch the lifeboats.

That’s a tricky question, especially for contrarians. Lowering the life boats late is disastrous, of course. But lowering them too early also carries a stiff penalty, a lesson that Comstock Partners learned only too well in 1991. Convinced that bloated financial assets were in imminent danger of shrinking, Comstock stayed out of the stock market. Meantime, April 1991 saw the Dow Jones Industrial Average roar past 3,000 for the first time in history. Standard & Poor’s 500 stocks gained more than 30 percent while Comstock barely eked out half as much for its investors. From a lofty berth in the universe of top tier institutional investment managers, the young firm crashed to less-than-average performance. The excruciating plunge highlights the soul-searching that sometimes lurks in wait for investors who chart a contrarian course.

Aronstein’s dire predictions about looming deflation are linked to wealth creation, a core concept in capitalism. Each time a bank lends, it creates a new asset for itself and corresponding liability for the borrower. But it does not create the means to pay interest costs. In early stages of a credit cycle, wealth resides in the hands of suppliers of commodities. Over time, the interest burden drains wealth from suppliers of commodities to suppliers of labor. Then, in the terminal stage, wealth ends up in the hands of the holders of financial assets. It’s what Aronstein calls Bingo, Bango, Bongo. After inflation’s final hurrah, the much touted magic of compound interest turns diabolical, working its effect on the liability instead of the asset. Instead of creating wealth, deflation destroys it.

Countries dependent on commodities in South America and Africa felt the deflationary wave first, as commodities prices swooned. The means of paying interest costs evaporated, but the accumulated debt remained—as if the balloon burst and left a corpus of debt resembling an indestructible Plexiglas block, too heavy to lift.

After toppling governments on southern continents, deflation moved north. It hastened an end to the Soviet Union, a giant, inefficient, third world-esque system highly dependent on commodities. “It starts with the weakest ones first,” Aronstein says. “That’s why I couldn’t understand people here celebrating the collapse of the Soviet Union. It was like a miners’ canary dropping dead when gas begins to leak in the coal mine. It should not be a point of amusement.”

From the time he landed at Merrill Lynch, Aronstein sniffed something potentially explosive. Hired to become a stock broker, selling stocks made him uneasy. He could not persuade himself to cash in on investors’ stunning capacity for overindulgence and self-delusion when it seemed clear to him that economic calamity lay straight ahead. No sooner did one pie-in-the-sky expectation come crashing down than another took its place. “It was amazing that this was the heart of the American financial system,” he says, “and it was essentially run off grand misconceptions.”

Misconceptions have centered on boundless expectations at every turn, from the Dutch tulip frenzy to clamorous demand for oil, real estate and common stocks more than 300 years later. Investors act as if booms go on forever, propelled only by insatiable appetites unmoored from common sense.

In 1980, energy groups at major banks took on projects anchored by the flimsy assumption that oil prices would climb 10 percent to 15 percent a year for the next decade. Hardly had that bubble burst when home buyers and mortgage lenders persuaded themselves that home prices would climb ad infinitum, while commercial real estate developers produced spread sheets showing how commercial rents would increase for the next decade at 12 percent a year.

Aronstein often sat dumbfounded in the early eighties as “pretty smart people” on Wall Street jumped blithely on the milk wagon, saying “do you understand what you can do with these new conditions? That you could go out and just set up a savings & loan, pay an investment banker to raise $3 million, and then lend it to yourself to build condos?”

When banks unloaded those properties for 30 cents ton the dollar, not an uncommon outcome after prices collapsed, it meant that initial projections were off by more than 300 percent—hardly within the bounds that anyone could call a reasonable mistake. The system works this way, Aronstein says, because repeated observation validates anomalies, no matter how far outside the pale.

This simple wisdom is rarely attractive when the crowd gets good and lathered. If investors had pondered seriously the implications of oil at $100 a barrel, they’d have concluded that Saudi Arabia would outstrip Japan as an economic force and Mexico would soon possess more wealth than Germany. Warning in 1987 that stock prices were vulnerable to the same deflation that swamped the oil business, Aronstein described the madness of crowds with his distinctive aplomb, in That Ain’t Mud on Your Boots, Partner.

When the oil boom neared its peak, companies in the business were paying young geologists fortunes to find and produce more and more oil. This is a little like the fellow assigned to shovel out the stables paying someone top dollar to come in and cook Mexican food for the horses. The inclination on the part of businesses that are enjoying good demand and pricing for their product to produce more of it at higher and higher cost is the mechanism by which supply eventually overwhelms demand and brings down prices and profitability.

Viewing stocks in light of the oil collapse was not a casual comparison. Extremes do not occur in isolation, according to Aronstein. They are linked over long spans of time. In the closing decade of the 20th century, for example, society is captive of a credit cycle with reflections in the era after the U.S. Civil War and roots in the Great Depression.

In A Short History of Financial Euphoria, economist John Kenneth Galbraith described the bull market that followed the War Between the States. It sounds eerily familiar, a post-war tale of speculative boom that featured “pyramiding values and generally euphoric conditions in manufacturing, farming, and public construction.” Speculation focused in those days on railroads, which seemed to enjoy limitless horizons. Lenders forgot about defaults a few decades earlier, when canals and turnpikes captivated investors’ imagination. Once more, harsh reality restored them to their senses. “The new railroads, and some old ones, could not pay,” Galbraith wrote. “The respected banking house of Jay Cooke & Company, heavily involved with railroad financing, failed in September of 1873. Two large banks also went under. The New York Stock Exchange was closed for ten days. Banks in New York and elsewhere suspended payment in hard coin.”

This post-war tumult also featured double digit interest rates (which did not recur until the 1970s) and a rolling recession. Severe economic distress rippled from one economic sector to another, leaving in its wake a scorched trail of deflated prices. Some citizens enjoyed a boom while others muddled through a depression. Yuppies and poverty proliferated, side by side. It ended with the panic of 1873, from which the country did not recover for twenty years.

The credit cycle racing toward calamity a century later, in Aronstein’s view, was born in the aftermath of the Great Crash. Hobbled by awful memories of 1929, the economy crawled or lurched through the thirties. By a long stroke this was Wall Street’s most volatile decade. World War II brought a bull market, after which fear of depression resumed, fanned by the prospect of millions of unemployed servicemen.

So great was the angst in 1949 that common stocks yielded two and one-half times as much current income as bones. Yet suggesting larger investments in stock would have cost most trust officers their jobs. Convinced that collapse was imminent, Montgomery Ward chief executive Sewell Avery reportedly refused to embark on an expansion-minded strategy. As a result, the once great retailer fell far behind its more adventurous cross-town rival, Sears Roebuck. Three decades later, Ward was a humble subsidiary or Mobil Oil Company.

Yet, in the late forties, actual conditions all but ruled out sliding back into depression. Liquidity and risk aversion prevailed, legacies of depression. Balance sheets were clean, swept free of frivolous investments. The government began introducing safety nets that would support economic growth. Bank loans amounted to a mere 20 percent of deposits. Everything consumers needed or wanted, including credit, was in abundant supply. With production operating at full tilt, the postwar era confounded expectations and produced unprecedented prosperity.

The government’s increasing activism bestowed wonderful effects on the economy. The tax code stimulated borrowing. People took out loans for the first time to buy houses, cars and everything else that came with suburbanization. It was a wonderful confluence of forces, giving birth to the notion that credit was inexhaustible. Under President Johnson’s administration, prevailing wisdom supposed that the government could use its access to credit to do whatever it wanted, without limit. But, as Aronstein sees it, expansion accelerated by the Viet Nam war and Great Society programs started to drain stockpiles of raw materials, including energy. Cars in 1968 went 120 miles an hour on four miles to the gallon of gasoline. Auto makers advertised their products by the size of the engine and horsepower.

The national attitude toward consumption began to erase initial benefits of inflation. As the seventies approached, inflation became a problem. Credit expansion and price appreciation started to accelerate, unaccompanied by real shifts in the economy. Instead, growth reflected shifts in investment. Performance stocks dominated the late sixties, followed three years later by the Nifty Fifty. Aronstein dates the start if the last gasp of the inflationary trend to about 1974, the year that the Organization of Petroleum Exporting Countries (OPEC) delivered a coup de grace in the form of an oil embargo. Sharp increases in oil prices goosed inflation. President Ford sallied forth with his Whip Inflation Now program. The government distributed millions of WIN buttons. But aside from employing workers in button factories, the effects were negligible, says Aronstein. As the price of everything from crude oil to Coca-Cola increased, inflation returned with a vengeance.

Cheap credit accommodated price expansion. The real interest rate—the difference between the rate of inflation and nominal interest rates—was very low in the seventies. At times it was negative, meaning that savings accounts lost money. “Savers were much, much too credulous,” says Aronstein, using a favorite adjective. “After forty years of losing purchasing power, they finally got the message by 1979 that a host of changes had taken place.

Never dreaming that interest rates would go stratospheric before the seventies were finished, lenders began the decade by lending at long-term rates that were much too low. People invented new ways to pay for things they could not afford. Consumer credit exploded. Between 1970 and 1980 credit card receivables grew several-fold. Fifty years ago few people took out mortgages, which matured anyway in less than five years. So people did not buy houses that cost four times their incomes and pay them off over 30 years. That was a natural restraint on the price of residential real estate.

Rules changed once credit began to dominate the picture. Home buyers put down less and less cash. By the early eighties, lenders were accepting five percent down and lending customers the closing costs. It went largely unnoticed that money and credit were becoming interchangeable. “People weren’t buying homes,” says Aronstein. “They were buying mortgages.” Instead of goods, people were buying credit to acquire the goods. The cost of the credit, not the price tag, determined affordability.

Nothing could beat letting individuals put down a tiny fraction of the purchase price for a house, the bedrock of American life. Ancillary to that were office buildings and shopping centers. America was becoming a gigantic real estate bazaar, rife with speculation. The accumulated credit worked itself to a point where it had to expand even more rapidly in order or keep what had gone before from imploding. And the door was open to using credit as anybody saw fit. Credit intended for building soon embraced less tangible activities, like taking over companies.

The trend just played into lenders’ hands. After forty years of getting killed financially, they finally began to wise up. The first important step was aimed at stanching disintermediation, the flow of assets from banks to unregulated financial institutions. Deregulation of deposit rates made the banking system more fluid. Interest rates soared to nearly 20 percent, a major factor in the so-called “misery index” that helped defeat President Jimmy Carter’s reelection bid in 1980.

Afterwards, lenders could apportion credit by price rather than strictly by availability. They could make credit too expensive for most people, but they could not make it unavailable. There is a big difference. Too expensive requires judgment on someone’s part. That was the problem through much of the eighties. The genesis of recent banking crises lay in the ability to borrow at almost any rate as long as borrowers could convince themselves and a banker that there was some chance of repayment.

The biggest new way to exploit credit availability was to boost the federal deficit. Despite the rhetoric of cost conscious, conservative presidents in the eighties, federal spending heaped coals on the fires of profligate borrowing, worsening the swollen credit burden. State and local governments also jumped into the borrowing business to an unprecedented extent, until states like Massachusetts and California started showing symptoms of severe indigestion. In mid-1992, California handed out IOU’s to its employees in lieu of paychecks. Municipalities defaulted on debt obligations.

When loans pinned to crashing oil prices soured, serious faults appeared in the banking system. But instead of letting go when Texas banks were cooked and others were in deep trouble because of loans to oil-producing countries, especially in Latin America, the Feds added a turbo charger. The 1981 Tax Act, accompanied by enhanced deposit insurance, created, in effect, a Real Estate Speculation Act. It became almost unpatriotic for Americans not to speculate in commercial and residential real estate with federally insured deposits.

As if that wasn’t bad enough, Wall Street discovered slick ways to disguise debt products of dubious credit quality that they were selling to eager consumers. A raft of hybrid instruments entered Wall Street’s argot, terms like collateralized mortgage obligations (CMOs), collateralized bond obligations (CBOs) and real estate mortgage investment conduits (REMICs). The magic of diversification and federal guarantees transformed sows’ ears into silk purses. Aronstein wrote Comstock’s cocky broadside, Snouts, Lips & Tails, in February 1991.

Of the many advances in the long history of commerce, the advent of sausage stands out as one of the greatest. The idea of taking something which, in pure form, would be repellent to potential customers, and by thorough grinding, mixing, reshaping and adulterating, creating an entirely new entity that could be marketed free from the taint of its original ingredients, marked a milestone in the annals of business thought.

Sausage making is it the prototype for an entire class of merchandising technique that has become particularly common in modern finance… The financial marketer who uses commingling as an approach is responding to the same general conditions that drive the sausage stuffer: an abundance of lower grade ingredients along with a hungry and credulous public.

Maybe hubris precipitated Comstock’s rude shock in 1991. Or, perhaps, it resulted from obsessive fine tuning of a strategy that should have employed more flexibility. Fixed income strategies fizzled along with investments in sectors already flattered by the deflationary trend—commodities, precious metals and the like. Surveying the damage afterwards, the partners counted themselves lucky that they closed short positions in time. Had they been waiting to buy increasingly expensive shares to cover sales of shares they did not own, Comstock might have been forced to close its doors. But it was small compensation to be able to say that gloom had not completely run away with their senses.

Aronstein still wonders about the lapse that kept Comstock from going a bit further and buying stocks in time for the subsequent surge. He admits ambivalence. “I knew in my heart that we were making a mistake. I just thought it was going to be a small mistake.” The answer may lie partly in Comstock’s heady success as a bearish prognosticator. Hard-fought credibility rested on that position. “It had become too easy to just answer the queries and rattle off a story,” he says. “It flowed too smoothly, and we didn’t have to put up with so much ridicule [that] gets tiresome after a while.”

This kind of situation is pervasive on Wall Street, says Aronstein.

Causes aside, the blow to Comstock in 1991 shook Aronstein’s rugged confidence for the first time. “This was the first big mistake,” he says.

Events did not cause the partners to abandon ship, however. Their contrarian strategy had weathered skepticism before, it just was never accompanied by such a sharp financial setback. In the final analysis, being too early is an endemic risk in their line of work, especially when forecasting economic upheavals that occur only once or twice in a century. “I don’t know how to change it,” Aronstein concedes. “Things that seem patently absurd to me, I assume other people can see. And I assume they are going to behave accordingly.”

Concluding that their methodology was still intact left Minter, Salvigsen and Aronstein to mull a daunting puzzle: When would everyone else wake up to what was staring them in the face? “Sometimes things in here look so clear to us,” Aronstein said at the time, “that we look out the window and say, ‘Are we crazy? Are we looking at a different world?’”

Inscrutable forces will decide ultimately whether Aronstein is remembered as a gifted analyst or as misguided prophet of doom. But as he guides West Course Capital along a contrarian path, Aronstein is sticking to his guns and his golf clubs. For him, that’s the only rational choice in a world where most people fail to recognize what lies beneath the surface.”

Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life – Avinash K. Dixit, Barry J. Nalebuff

Chapter 10

The Strategy of Voting

The foundation of a democratic government is that it respects the will of the people as expressed through the ballot box. Unfortunately, these lofty ideals are not so easily implemented. Strategic issues arise in voting, just as in any other multiperson game. Voters will often have an incentive to misrepresent their true preferences. Neither majority rule nor any other voting scheme can solve this problem, for their does not exist any one perfect system for aggregrating up individuals’ preferences into a will of the people.*

* This deep result is due to Stanford University professor Kenneth Arrow. His famous “impossibility” theorem shows that any system for aggregating unrestricted preferences over three or more alternatives into a group decision cannot simultaneously satisfy the following minimally desirable properties: (i) transitivity, (ii) unanimity, (iii) independence of irrelevant alternatives, (iv) non-dicatatorship. Transitivity requires that if A is chosen over B and B is chosen over C, then A must be chosen over C. Unanimity requires A to be chosen over B when A is unanimously preferred to B. Independence of irrelevant alternatives requires that the choice between A and B does not depend on whether some alternative C is available. Non-dicatorship requires that there is no individual who always gets his way and thus has dicatorial powers.

Capitalideasonline.com – 23 Jan 2007

In a classic “Benjamin Graham – The Memoirs of the Dean of Wall Street”, Benjamin Graham, wrote a self-portrait. It is deeply insightful of the legend.

“It is a clue to his character that B. has a host of loyal friends, very few if any enemies, but not a single chum or crony. Let’s examine his inner life to see why. As a boy, he was bright, winsome, awkward, impractical, and morbidly sensitive. He was careful never to wound anyone, and he could not understand how others, including those who loved him dearly, would so often would him, with nonchalance or even with malice. Very early in life he set to work, like a beaver, to build a breastwork around his heart. He embraced stoicism as a gospel sent to him from Heaven.

B’s character was fully formed by his late teens. Superficially, it appeared wholly admirable. He has adopted all the self-advancing virtues with youthful ardor—industry, temperance, reliability, and a host of others. His natural kindliness was reinforced by what he fancied was a sense of noblesse oblige—for he always thought himself fortunate in his intellectual gifts—but it might just as well have been an overeager desire to make a good impression on the world about him. Confident of his mental powers, he took for granted that he must do everything honorable to attain success.

B’s inordinate sensitivity to criticism worked on his character to produce two traits so marked as to be almost idiosyncracies. The first was his urge to escape any sort of censure by showing exemplary and pleasant conduct. The other was a basic reluctance to criticize others, and this was quickly transformed into an unwillingness to sit in judgment upon them. He set before himself an ideal pattern of behavior towards those around him. He must be invariably courteous, agreeable, patient; he must avoid conflicts of all kinds, even those of abstract opinion if any emotion might be involved.

As he grew older, B. achieved a degree of independence in any area in which his judgment told him that his conduct ought not to be dictated by mere convention or prejudice. He became somewhat impatient with outer forms of etiquette when their result was merely to prevent him from following his inclinations. But the change here was merely a superficial one; it did not affect or reflect his essential relationship with the surrounding world.

The relations were not as brilliantly successful as, earlier, he would have desired and expected. A large area of comparative failure was his dealings with women. Throughout his life he has no difficulty in finding women who attracted him and for whom he had sufficient appeal. Nor was his sex life inadequate or unvaried, after he has overcome the copybook puritanism of his first manhood. In his view his troubles with women came about merely because they chose to take umbrage at his good qualities—particularly his even temper and his intellect. In return he developed some feeling of persecution and exploitation at their hands. Partly out of real experience, partly perhaps out of imagination, he felt that nearly all women were unreasonable, dominating, unappreciative of his kindness and patience, too insistent on penetrating into the forbidden sanctum of his private self.

Only very late in life did B. meet a woman who possessed the qualities of soul and mind, of character and temperament, which he had sought vainly in many others. To her, he felt, he could lower the barriers that had separated him from the rest of humanity. Under this new influence he inquired for the first time into the nature of these barriers. Why, since the end of his college years, has he admitted no one—man or woman—into a true intellectual and emotional intimacy? Why had he no pals, no chums?

B. examined his character afresh, and what he found was not too flattering. He was smugness, selfishness, snobbery, a certain contrived artificiality in his generous gestures, a touch of calculated egoism in his unruffled serenity. His third wife said of him that he was humane, but not human—the phrase struck home. He lacked genuine sympathy, a true sharing of the joys and sorrows of others. His enthusiasms were either entirely impersonal—for ideas, for artistic creations—or else for those things that contributed to his own development, his inner glory. He “turned from praise” with unfeigned modesty, but that modesty was itself a manifestation of a pride so perfect as to be indistinguishable from vanity. His was Horace’s mens sibi conscia recti—“a mind conscious of its own rectitude”—wrapped in the insulation of confident superiority. Like Landor, he strove with none, for none was worth his striving—at least in his own estimation. He recognized only one close companion, only one kindred spirit—himself.

His affability to others was unforced and unfailing, truly a second nature. But his first nature was remote and inaccessible to others. B. saw this all at last. He felt the need for less superiority and more humanity. A new personage from outre mer was entering his life and profoundly moving it. At age sixty and beyond he was to begin his emotional development all over again; he must accept Love not as an experience of life, but as the experience of life. He recalled a poem that he had written as a college sophomore, in the glow of his first romantic passion. Now the rather hackneyed sentiment took on a new dimension of meaning for him:

Inspiration

As a brook slumbers, hushed its tinkling song,

By March’s icy cloak held prisoner,

My soul has music, too, that cannot stir,

Frozen to silence by a witless tongue.

But lo! the bar melts in the breath of Spring,

The water wakes into a melody;

So by the warmth this new love sheds on me

The bonds of speech are burst, and I may sing!”

The Intuitive Alogrithm (2004 Edition) : About Artificial Intelligence, the Mind and Happiness – Abraham Thomas

The Intuitive Algorithm (2004 Edition)
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It had been a long journey. All the file pockets holding exhilaration, apprehension or sadness opened to partisan views. One folder made you feel good. Another made you sad. Depended on the one you opened. On a road that took you to odd places you never wanted to see again. Not exactly a joyful excursion through life, relishing each moment. Somewhere in that early part, before even getting on to the highway, I had taken a wrong turn. A turn that led to a road full of hazards. Crazy or aggressive drivers who pushed you off the road. In the midst of the turbulence and conflict, it was books, which helped me past the gridlocks and traffic jams, down lonely lanes and byways. Those insights from human experience. Not big inscrutable books. Just simple ones. Like Dale Carnegie, in those distant times. Life was easier, if you were courteous and helpful. Books. Hundreds of tomes, which helped, insight by insight, to slowly and steadily take charge. Get off the beaten path. Take the time I found how people got intimidated. That wasn’t from a book. It happened just after the mechanic brought back the buick. But, that was another story.
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It’s Recognition Stupid
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The school yard dispensed lessons on how to avoid pain. The secret was to respect the pecking order. It was not muscle power, size, or wealth which set that order. Unlike intimate friends who knew all about you, participants in the school yard knew little about each other. But everyone recognized their position in the pecking order. Instant punishment befell anyone who failed to respect it. The enforcing weapons were, at best, social ridicule and, at worst, physical punishment. A ready wit, or a strong arm. Both could establish superiority, as observed by a thousand watching eyes. A person on a lower rung would never dare attack someone higher up. The possibility of instant punishment created tensions in the yard. The degree of tension was the subtle signal, visible to all. The leaders at the top had no tensions. Their voices were loud and their bearing relaxed. At lower levels, each participant was fearful of attracting a challenge, leading to prompt punishment. Their actions were more subdued. The shades of tension set the hierarchy, without constant need to re-confirm it. Economy in nature. Everybody learned those lessons. Both the equal and more equal ones. For a lifetime.

I also learned lessons. One as to quietly bypass the war of pecking order. Avoid the crowded highways. As someone said, even if you won the rat race, you would still be a rat. Better to choose your own path. Follow a vision. Pick something you enjoyed doing and do it as well as you could. It seemed to work. Even on this other road, one could accumulate, over the years, a smattering of the plumage valued at the top – a nice designation, a corner office, a penthouse, a chauffeured automobile. A few of the signals recognized in the pecking order. But, even then, relaxed bon homie in the party circuit remained elusive. Not that I disliked parties. Just that, personally, I didn’t want to be there. The tension as still tangible. This was not exactly victory. But, at least, it meant a tranquil workplace and the fun of doing your own thing.
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Movement and habit
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Unhappily, this wonderful contrivance, the drive channel, was also like a child with a hammer. It was a hazardous plaything of emotions. Eckhart Tolle was a victim of those unhappy drives. He lived upto his twenty ninth year in a state of almost continual anxiety interspersed with the periods of suicidal depression. Then he woke up one night, the vague outlines of the furniture in the dark room, the distant noise of a passing train – everything felt so alien, so hostile, and so utterly meaningless that it created in him a deep loathing of the world. “I cannot live with myself any longer.” This was the thought that kept repeating itself in his mind. Suddenly he became aware that if he could not live with himself, there had to be two – he and the “self” he could not live with. He was stunned by the realization. He became enveloped with powerful feelings.

Tolle had little memory of what happened after the powerful feelings overcame him. He woke up into a new world. His depression vanished. For the next five months, he lived in a state of uninterrupted bliss. While it diminished somewhat in intensity, for another two years, he sat on the park benches in a state of the most intense joy. He felt that what he experienced was a form of enlightenment, of union with the eternal, somewhat similar to the experiences of Buddha. He quoted Buddha’s definition of enlightenment as “the end of suffering”. Tolle became a respected teacher, with dedicated followers in Europe, North America and India. His book, The Power of Now, was on the New York Times best seller list. Tolle’s life had been transformed in a single flash of insight. Over centuries of history, there were prophets and sages who could grant such instant insight to their disciples through a prayer, or by laying a hand of blessing. But for the average person, peace of mind could not be a sudden gift. It required years of effort. Understanding helped too.
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Diverting the Stream

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Yet, there were a few inspiring people, who had cheerfully faced overwhelming odds. You may have visited one of those, suddenly paralyzed and confined to bed by a painful fall. Still shocked by the news, you struggled to find adequate words to heal and comfort. Yet, you came away, healed, comforted and cheered. Smiling at their incredible good spirits. You recalled the smile in their eyes. Because eyes conveyed so much. They could glare and intimidate, when they thrust forwards.  Sadness pulled them down. They became diverted and cold with rejection, when a friend said something unforgivable,  betrayed your trust, or ridiculed what you considered sacred.  Eyes reflected your view of life. When those muscles drew up the cheeks, the eyes both reflected and instilled inner cheer. Some people were blessed with eyes which unfailingly smiled with genuine cheer.

We had a duty to become what we could be.  But, many could not be cheerful, because they bore an accidental punishment. They carried a burden of anxiety in the muscles that controlled their eyes. They habitually drooped.  Just as a glare could make you aggressive, the droop triggered gloom. So many carried this tension in their eyes without knowing that it was a needless muscular punishment. The sadness in their eyes was manifest. They could hardly “make up their mind” to be happy. The unremitting frown triggered anxious thoughts about every perceived threat in the environment. Unconsciously, they tugged perceptions down to the depths of despair. But, smile in their eyes could change the world. Smiling eyes moved you into a new friendly neighborhood. An awareness that eye muscles do control emotions could help you. If you relaxed your eyes and forced a smile into them, the mind would immediately switch file folders. The friend meant no harm. He was saying it for your good. Peace of mind was such a hard job. Self awareness was the hardest part. Particularly if you were unconsciously burdened with sad or angry eyes.
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Choice and Creativity
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While the limbic system set priorities for a hierarchy of intelligences, consciousness remained an isolated central government. While the system continually monitored all sensory inputs, only a small fraction entered consciousness. Habitual motor functions were managed independently by the cerebellum. Even acts of will seldom entered consciousness, unless attention was drawn to an awareness of’ the current motor activity. What am I doing now? While the mind continually processed many feelings, the conscious mind experienced only the dominant feeling. While anger seethed below, propriety was perceived to be in control. The current feeling provided a single hook, a focal point for subsequent recall. of a memory. Consciousness was a single channel, which operated as a self contained unit, unconscious of many major system functions. It had access to only the current feeling. It was the channel inputs and outputs, which gave consciousness that special awareness, the sense of self.

Could this, the highest known intelligence, be explained by the IE intuitive pattern recognition process? Because consciousness operated powerfully in the present, it was not a drive. But, its feelings could trigger drives. Consciousness received a massive combinatorial coding picture. That picture empowered human awareness and understanding. The softness of dawn. The whisper of wind. The fragrance of lilies. The sadness of forlorn love. The solution of a design problem. Each barrel received this picture. The memories of the barrel were both inherited and acquired. Inherited wisdom of millions of years. Symbols learned from the cradle. The barrel triggered feelings. The outputs of the barrels were recognized by the system as feelings.

The feelings triggered drives for cortical motor responses, the focus of attention and data search processes. Consciousness could move a toe, focus on a tune, or out a request for the day’s shopping list. The cingulate cortex, a region of the cortex, could be recciving outputs of the consciousness channel. After a stroke in the cingulate area, one woman lay flat in her bed for weeks, her eyes open and aware, yet her face blankly expressionless. Once the swelling in the area subsided she was able to speak. She reported that she was completely conscious, but completely lacked any urge to act. Sensations did not evoke any thoughts or plans. The feeling outputs of this region delivered the will of consciousness. Those feelings entered into competition with other emotions for control of the system.

Consciousness received inputs from the working memory. The consciousness channel could initiate drives which manipulated data to deliver results into a working memory. Kosslyn suggested that working memory assisted in “arithmetic, reading, problem solving and reasoning in general. All of these tasks require not only some form of temporary storage, but also interplay between information that is stored temporarily and a larger body of stored knowledge.” A feeling of curiosity could trigger one of multiple data manipulation drives. There was a moment of stillness when one began to write a shopping list. When a drive searched memory for contextual items. It delivered all the items related to a particular context to working memory in sequence. The list had to be written down, because the working memory had a limited capacity. And consciousness only had access to this memory. It received answers to many a query. It could send out requests to compare for size, emotional content, distances, physical locations, sounds, and sensory inputs. Many drives evaluated such characteristics and delivered the results. Consciousness could investigate, receive the results and trigger feelings. But the system could over rule those feelings.

Was this book suggesting that there was no free will? Surely people had the powerful ability to initiate, cause, activate, begin, create events? Beyond the skill of mere recognition? Who initiated all this activity? Surely, there was consciousness, an “I” with a free will, exercised by the individual to control his actions? But, any engineer who programmed a production line knew of automated decision making. A machine picked components from a conveyor, It identified each component and deposited it in its proper bin. The machine had made its choices and acted. Because it was designed to make choices and act as long as it was switched on. Free will was just an automatic mechanism which triggered the next highest priority activity of the system, while there was consciousness.

The “initiation” was merely a switching process by the limbic system, which selected the most powerful feeling as the current motor control option. And, you could not move your muscle, or focus your attention, if the system decided otherwise.

This was not to forget who “I” was. As Eric Berne had suggested, “I” was a changing personality. As in parent, child, or adult. The parent scolded. “You always forget your keys.” The child complained. “You always blame me, when you can’t find your keys.” The adult responded rationally. “The keys are on the mantelpiece.” Depending on the mood and the feeling, consciousness resided in one of many such personalities. The limbic system chose the current feeling, which provided logical support for the current personality. That feeling recalled memories and shaded events with colors that suited its own unique perceptions. But, the same plumbing circuit represented all personalities. The circuit was the current “I”. The rest were inhibited and invisible to consciousness.

When not dominated by emotions, the adult occasionally became “I”. The “will” of that adult was still over-ruled by WASP  (Worthwhile, Appropriate, Safety, Practical) considerations, which became the will of the mind. It was stupid to tickle your neighbor on a plan with your elbow. So, “I” decided to keep the elbow rigidly still. Such decisions made life. Dr. Jekyll, Mr. Hyde, or someone else occupied consciousness for transient periods. The system carried on. The water balance in the body reduced. A feeling of thirst was triggered. The limbic system switched the feeling in as the highest system priority of the moment. A drive symbol was triggered. Th cerebellum assisted the cortical decision in a habitual to the water cooler. A series of motor events met the goal Thirst was quenched. The drive symbol triggered reminder of the “urgent” file demanding attention. The next feeling arrived to trigger a quick trip back.

Would IE suggest that we were just mechanically constructed objects which responded with electrical and chemical impulses to the external environment? How about the deep down knowledge of being free of the mechanisms that generated the impulses? We could vividly see visual images and powerfully experience a multitude of sensations and feelings. Unlike a television camera or a microphone, we were independently conscious that we were seeing and hearing the world around us. If something was seen, surely there had to be someone who saw it – a ghost, or a soul? But, while neural impulses pulsed through every part of our body, how was it that we had the sensation of seeing only when these impulses impinged on the visual cortex? Nerve impulses in the heschl gyrus alone caused us to hear sounds. Were these portals into the soul?

The geography of nerve channels pinpointed many intercommunicating functions. While all other regions of the cortex interacted mostly within finite regions, the prefrontal lobes had abundant connections with the association regions of the three sensory lobes. The association regions were known to perform the most important act of recognizing perception. The message of recognition was carried to the prefrontal regions. Suppose a computer was constructed to receive, categorize and store received sensory images. Suppose parallel processing enabled a second internal system to receive such processed information, including its own operational parameters. The second system could truthfully say “I can see and hear you. My speech mechanism is functioning at optimum efficiency”. An autonomous intelligence in this region could independently evaluate the system to enhance the impression that it was an independent entity. Consciousness and the sense of self could be molded by just the plumbing diagram. The mystical quality of consciousness may derive from it being a control system, within a control system. It could see quite a bit of itself.

The old adage was that a computer could never be original, since it only spewed out what has been programmed into it. The stupendous creativity of the human mind has been the most potent argument against an algorithmic explanation of the mind. But, the breathtaking memory postulated by combinatorial coding altered the skyline. While an algorithms was just a procedure, a computer could experiment in its memory with myriad combinations, with the goal of achieving a desired result. If it could remember all those possibilities, it could arrive at a “new and original” solution. It could be programmed to “recognize” an “imagined” event which achieved a specific goal. The power of intuition would bring contextual answers, while avoiding exponential search paths. Using its massive memory based on experience, the mind could search a galaxy of images, linking them in exotic combinations to create brand new inventions. With it prodigious memory and sensitive pattern recognition, it could develop imaginative and exciting concepts, products and processes. An algorithmic (and intuitive) recognition process could achieve such a capability.

Such search and match processes are not limited 10 humans. Konrad Lorenz described a chimpanzee in it room which contained a banana suspended from th ceiling just out of reach, and a box elsewhere in the room “The matter gave him no peace, and he returned to it again. Then, suddenly – and there is no other way I describe it – his previously gloomy face ‘lit up’. His eyes now moved from the banana to the empty space beneath it on the ground, from this to the box, then back to the space, and from there to the banana. The next moment he gave a cry of joy, and somersaulted over to the box sheer high spirits. Completely assured of his success, he pushed the box below the banana. No man watching him could doubt the existence of a genuine ‘Aha’ experience in anthropoid apes”.

Most survival situations demanded creative solutions. That effort was not necessarily a human prerogative, but an essential nervous system process existing in all animals. A drive that tested all perceived contexts for an answer to the current objective could merely be another motor activity. Instead of dispatching sequential impulses to manage muscle movements, such impulses could manage a continuing test of current context against current goals. Such testing could occur constantly in the subconscious, bringing on the ”Aha!” experience of discovery, when a set of imagined events was perceived to meet the parameters required for achieving a singular goal. Such an ongoing search could be a powerful subconscious process, which could also be active during sleep. For IE, creativity was an algorithmic process.

website with further details http://intuition.co.in