Bhopal - learning lessons or finding scapegoats?

I support the right of the Indian judicial system to try Warren Anderson, the CEO of Union Carbide at the time of the Bhopal gas disaster.

At the same time, I think prosecution of Anderson now will be quite pointless and is not a priority. And the case against him is weak.

The media and Parliament frenzy around Anderson is mostly a waste of time.


The context

Folks, think about it. As per my quick research, at the time of the disaster Union Carbide ran over 500 installations in 130 countries, with about $9 billion in sales. Less than 2% of sales came from the Indian subsidiary UCIL, which was listed in India and in which 49% was held by investors other than Union Carbide (including individual Indian investors). Bhopal was only one of the dozen factories of UCIL in India.

So Warren Anderson is the CEO of a US company which is in 130 countries. It is invested in an Indian company along with many Indian shareholders, whose revenues are less than 2% of the group revenues. Water gets into a tank and triggers a disaster, and we are baying for his blood?


A culture of laxity

For better or for worse, we in India have a culture of laxity when it comes to safety. Perhaps it comes from a certain spiritual acceptance of the impermanence of life. Perhaps we are just a poor country and do not have the luxury to worry about low probability events.

Whatever it is, we leave wires exposed, drains uncovered, critical equipment poorly maintained. With us it is a way of life.

To illustrate this point, I searched the web to answer the following questions: When did the last person die in Delhi by electrocution due to careless wiring? When did the last child die by falling into a manhole? When did the last Indian Air Force MiG 21 crash?

I have the following results from the last few days. [Note: This article was written on August 11.]

August 11, Times of India

NEW DELHI: A six-year-old boy died on Tuesday morning after falling into an open manhole in Shaheen Bagh, Jamia Nagar. Three hours after he fell in, Adil Raza's body was spotted by children playing on the street, after which labourers who had been working nearby pulled the body out of the manhole. The boy's body was found 20 feet away from the manhole he had fallen into.

(While searching for this, I came across another tragic story from April, where a 10 year old boy died after falling into a 35 deep manhole. Rescuers tried to reach him but the power supply failed. They tried using a generator but - rather typically - it did not work either.)

August 10, Sify News

Man electrocuted in Delhi

A man was electrocuted after he came in contact with a live wire dangling from an electric pole in northwest Delhi, police said Tuesday. Ajay Gupta, a 32-year-old auto-rickshaw driver, had stopped his vehicle near a pit full of water by the roadside in Hyderpur area of northwest Delhi Monday and as he stepped out, he received a shock, a police official said.

and

August 8, Asian Defence

MiG-21 Fighter Jet of Indian Air Force Crashes

A MiG-21 fighter jet of the Indian Air Force (IAF) crashed in the eastern Indian state of Assam, local media reported.The pilot lost control and the aircraft fell on a paddy field some 25 km from the city of Tezpur on Saturday.

Remember "Rang De Basanti"? The story continues.

Such events occur ALL the time. We are inured to them by now.

I can understand how Jagmohan felt when he talked in the Lok Sabha about the Uphaar fire tragedy:

"This is really in my view not only a civic issue but also a civilisational issue. We commit a large number of crimes by omission. This is an omission. Can we find any other (place) which is disorderly, disorganised, chaotic, without any regard for rules and regulations? It shows that we are a dehumanised civilisation." [Source: Wikipedia]

I do not think we are a "dehumanized civilisation" but you will agree there is some truth in his words. The Bhopal disaster was quite likely a result of sloppy maintenance and upkeep, in the normal Indian tradition.


Low value of human life

The government sued Union Carbide for $3.3 billion. In the end, Union Carbide paid $470 million in a settlement negotiated by the Supreme Court even though technically its liability for its subsidiary and technological partner UCIL was unclear. This number was indeed laughably low by US standards. But it was in line with compensation awarded routinely in India where the value of human life remains low.

These days, with the media spotlight, the ex-gratia payments made by the government have started climbing up. When there is a spectacular train wreck, for example, the Railway Minister may loudly announce Rs. 3.5 lakhs or 4 lakhs or 5 lakhs for each person killed and 1 lakh for those injured. But even as late as 2002 an Indian Railways circular announced that:

The amount paid as ex-gratia relief payable to the dependents of dead or injured passengers involved in train accidents or untoward incidents as defined under Sections 124 and 124-A should be as under:-
(i) In case of death :Rs. 15,000/-
(ii) In case of grievous injury (Irrespective of the period of hospitalisation) :Rs. 5,000/-
(iii) In case of simple injuries :Rs. 500/-

And even today, when there is no media attention, ex-gratia payments of compensation are miserly.

In comparison, Union Carbide paid $470 million in 1984 dollars, which is equivalent in buying power to more than double the dollars today. The total payment in today's rupees is Rs. 4500 crores. If you take the toll as 20,000 killed and 250,000 grievously injured and 250,000 with simple injuries, and the ratio of death to injury compensation as in the railways case, you get - in today's rupees - Rs. 13,000 for simple injuries, Rs. 1.3 lakhs for grievous injuries, and about Rs. 4 lakhs for deaths. While not generous, it compares well with Indian government payments till very recently.

This is a macabre calculation and human life is priceless, but I just wanted to show that the Supreme Court settlement was probably not a sellout.


Slow relief effort

There is no law that only Union Carbide money can be used to help the victims. Yet the government's payment of compensation has been slow.

The first ex-gratia payment announced was only Rs. 1500. Till 1992, almost half the claimants for compensation had not been medically examined. The final sum paid for each death was less than Rs. 1 lakh. Even today the ground around the site is laden with chemicals.

Worse, many factories all over India continue to spew poison into wells and rivers. The air in our cities is noxious beyond all health norms. It is not clear that we are safer today against a catastrophic industrial accident than we were in 1984.


What about individual responsibility in government?

Of late, our courts have been more aggressive in fixing individual responsibility for accidents (e.g. in the Uphaar case), which is good to an extent (e.g. building managers are now a little more serious about fire safety). But the the government itself often gets away scot-free.

For example, did any senior government person go to jail for the string of errors of omission that led to 173 people dead and 300+ injured on 26/11/2008? Did anyone get arrested for not planning a serious anti-terrorist force in Mumbai, or for the 10 hours it took for the NSG to get to Mumbai (by road from Manesar to Delhi airport and by bus from Mumbai airport to the site!), or for the fact that NSG commandos were fighting in the dark without night vision devices? The world watched as the fatal lack of training and preparation of India's security forces unfolded on live TV and people paid with their lives. The FBI's investigator had some chilling commentary on the amateurism of the Indian security establishment.

I shudder to think what will happen if we ever get into a real war, how many of our soldiers' lives will be needlessly lost due to lack of basic equipment and real training.

The point

I started this post by saying that "I support the right of the Indian judicial system to try Warren Anderson, the CEO of Union Carbide at the time of the Bhopal gas disaster. At the same time, I think prosecution of Anderson now will be quite pointless and is not a priority. And the case against him is weak. The media and Parliament frenzy around Anderson is mostly a waste of time."

But I want to make a broader point. The "soundbite media" is very dangerous. I think the United States today has been hollowed out by the soundbite-driven media to just a shadow of its former self. I frankly think that the media is the dominant disease that has crippled America. And I don't really know what the solution is. It will always be easier to watch a sensationalist TV "news" show than read the Economist or The New York Times or to listen to the BBC World News.

So as a young person, you must be skeptical of the populist noises coming from the media and politicians of all stripes. Subscribe to sober media. Think critically for yourself. Look at the facts carefully.

As a US Senator nicely observed, "Everyone is entitled to his own opinion, but not (to) his own facts."

And the Bhopal disaster is not about Warren Anderson. It is about us.

The economist and the 100 dollar bill

Yesterday's Financial Times had an amusing little reference to the "apocryphal economics professor who left a $100 bill lying on a busy street, figuring that it would have been picked up already if it were real"!

Even before you think of starting a company and consider whether you are well placed to do it, you have to predict how long the sectoral opportunity will last before others pick it up. It is a very challenging question.

When Indian companies got into IT services in a big way, they were pilloried for providing a commodity service and not being in products and were widely expected to plateau in a few years. That hasn't happened yet!

Then came the turn of the BPOs - everyone was highly enthusiastic. But the golden opportunity lasted only a few years before famine set in and took out the weaker players. Still, some companies did exceedingly well and on hindsight, it was silly for people like me to sit on the sidelines arguing theoretically that BPO services were a pure commodity.

When we started SupplyChainge, I would go to bed each night sick with worry that someone else would "discover" our key insight and blow us out of the water. I was as wrong as I could have been - it has taken a decade for the "lead time optimization" or "flexible supply planning" ideas we espoused to start to become mainstream.

So perhaps the final analysis is this: In the long run, everything is a commodity and we are all dead, but in the short run, there is money to be made off sectoral opportunities. When the tide comes in, even the dead fish rise, said Hemingway.

When the tide goes out, you find out who is not wearing any clothes, said Warren Buffett, but if you are comfortable in your state of (un)dress you should perhaps not be too nervous about taking the tide at the flood.

For as Brutus say in Julius Caesar:

There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.

***

Yet as regards macro-economic trends, I feel attracted to the mindset of that professor. I seldom believe anyone can be wiser than the broad market, especially when it is going up. I feel that all positive information must already be factored in. (Yeah, I'm an optimist.) And when I see a sustained broad surge in share prices or property values that seems to prove my caution wrong, I become even more skeptical.

Luckily I have never been energetic enough to try to (legally) short the rising market, else I might have lost a lot of money! Because as we have seen over the last several years, bubbles can become VERY big before they burst.

The only time I have felt confident about predicting a big surge in the broad market was in the early 2000s. Each time I returned to India from the US I saw such dramatic and fundamental changes that I took a small bet on the broad market that proved prescient or lucky, although true to form my enthusiasm turned to skepticism as the markets continued to rise.

Very small events and very big happenings appear to be difficult to predict. There seems better predictability somewhere in between for some reason.

"Truth and oil will out"

A few days ago, talking about how people always get what they deserve, my father said, "Truth and oil will out".

The phrase resounded with me. It sounded very poetic and accurate...and faintly familiar though later I could not find it even on Google. I interpreted the oil part of the analogy as "If you crush oilseeds long enough, the oil will drip out and, yes, it IS hard work".

But as I write this, it strikes me that the oil this refers to may be petroleum, since my father is a petroleum geologist. Perhaps this is an oilman's phrase.

Be that as it may, coming back to the underlying theme - truth is very prone to coming out.

So when you are a company, it is sometimes easier to actually change your products or services or operations to conform to a truth that you can live with rather than convince everyone around you about a non-existent truth. In the long run truth will out. (Although it is, unhappily, true that in the long run we are also all dead.)

I have realized over time that established companies can more easily speak the truth, even if they choose not to. It is easier for an established company to say that it doesn't do something well but it will fix that or that a product has defects but, yes, it will fix them. There is always a cushion - of cash, of goodwill, and so on - that an established company has. If there is a failure, it is easier for an established company to say "mea culpa" and make the right noises and get away with it.

It is far more difficult to speak the truth when you are a small company angling for new business, or an aspiring company shooting for the stars. Speaking the truth is mostly about admitting weakness, and any sign of weakness may become a deal-breaker if you are not fully established.

I have lived this dilemma some years ago at our software product company, SupplyChainge. Each time a customer would ask, "Does your software do xyz?" I would honestly answer "No, but it could in 2 weeks!" This was in the US and mostly the customer was unimpressed. Finally, a very senior and experienced sales colleague gave me this tongue-in-cheek advice, "If you are 100% confident that you can have that feature up and running within six months - the very minimum time it will take for the customer to buy your product - then in this software industry at least you are not lying if you say you already have that feature!"

Anecdotally, this tradition dates back at least to Bill Gates and MSDOS. I later learnt through observation that many software product customers *expect* it and if you are being very factual what you say gets discounted anyway.

(In balance, I must also say that I also have some friends who think that all software product salespeople are cheap liars.)

Incidentally, most people with international experience will agree that it is most difficult to admit weakness in US and UK sales situations. In Europe, the Nordics are perhaps more forgiving than, say, Germany, although I am not so sure about this. And Asia is even more forgiving but if and only if you belong to some inner circle.

Some of the things I said today during a sales meeting in Copenhagen would have completely destroyed a typical meeting in the US. It took me several years to realize that disarming honesty doesn't really disarm in typical US sales situations. Gandhiji, with his mixed and changing messages and periods of self-doubt, would have been labeled a crank. Similarly, I could not have said these things had Nagarro not been more or less an established company by now.

Changing contexts, in non-business life too, I find it simpler to tell the truth as much as possible. If the truth cannot be told for any overriding reason (e.g. adhering to the dictum that "satyam bruyaat, priyam bruyaat, maa bruyaat satyam apriyam") it is best to tell a story that is as close to the truth as possible. The great thing about a true story is that it HAPPENED, so every bit of evidence taken in or out of context from what actually happened, every sampling of the multitudinous ripples of effects that the event sent out, will all be completely CONSISTENT. No matter how odd any fact may seem, if the WHOLE truth surrounding the fact is considered its various aspects will be completely consistent, by definition.

I love this simple quality of truth. "Truth and oil will out". I likes.

Defining your region of excellence

A business benefits by positioning itself in an established business category - potential customers can easily understand its offerings and business model. So today if you say you are offer "outsourced IT services with a global delivery model", everyone immediately knows what you do. Similarly, if you say you are trying to start an "online social network", you have conveyed a lot with just those three words.

On the flip side, by being part of a well-established category, your business ends up herded together with all the other players in that category. A balance is perhaps ideal: one must be different but not scarily different.

Yet far too many small businesses are so busy with their day to day operations that they do not figure out how to position themselves uniquely. It would be good for these companies if their management could spend a day or two to come up with the "one-liner" that expresses their positioning with respect to customer needs and shows how they are (or want to be) different from their competition. This is also the concept of a Unique Selling Proposition or USP, which appears to date from the 1940s. Ideally every employee of the company must know this one-liner USP and understand what it means in terms of his or her job.

So how do you go about choosing a USP for your business? Some questions you may ask yourself are:

1. What is the biggest pain point for my customers, and how are we better than my competitors in solving it?
2. When customers compliment us, what are they complimenting us for?
3. When customers complain about the competition (or when I talk down the competition), what are the chief shortcomings aired?
4. What are our best people good at?

... and so on.

Such a methodical approach is also important beyond the one-liner. Remember, the customer prefers to buy not just from any adequate company, but from a company that is the *best* for her. So when selling to a customer, you may have to:

1. Find out who the competition is,
2. Choose that subset region of requirements where you can realistically argue that you are better than all the competition, and then
3. Try to convince the customer that excellence in this region is very important for her.

For example, if you were Nagarro, an India-centric IT services company, you could possibly define your region of strength as the intersection of a) between 500 and 1000 people in size, AND b) working equally for both software product companies as well as leading corporates. In this smaller niche, Nagarro is probably number 1! Suddenly your job as a Nagarro salesperson is easier - you have a good chance with all those customers for whom this might be an important combination of requirements.

At Proton, we set out to create "Positive responsible professionals". We were well aware that our typical student might not be the best at, for example, hardcore analytics. So we decided to create MBAs who, while being acceptable in other areas, were second to none in positive outlook, taking responsibility and professional conduct. In this smaller region of an employer's search space, we believe that the school can be number 1. And we believe that we can convince employers that for many jobs, this is the most important combination of attributes that they require. As employers ourselves, we know we'd give anything for a positive young man or woman who knows how to take responsibility and knows how to get things done.

I typically end up needing two or three requirements to meaningfully bound the region of excellence in which a small company can credibly claim to be the very best (in the Nagarro example, 1. Size, 2. Diversity of client portfolio). Perhaps a larger, better-known company can make do with just one. And beyond three, I think you start to lose the customer's attention. I find all this quite interesting as an exercise in rhetoric.

Finally, not every attempt at differentiation comes from the heart. Some companies are a little cynical in their attempts at differentiation. They may pick points of difference that are obviously quite irrelevant and yet customers may be quite willing to be taken in by them. I have tried hard to understand this phenomenon - my best guess is that the customers are so happy to be "intellectually" engaged in absorbing or evaluating the claims that they forget to consider whether what is claimed should indeed be important to them!

This morning, I was shaving in my bathroom while outlining this blogpost in my mind, when I noticed that the bottle of hair product on my shelf announced in large font, "NO ALCOHOL!" It is probably a perfect example of misleading differentiation. Why should I as a consumer care if the product contains alcohol or not, especially if I am not meant to drink it? But somehow that confident declaration probably makes some consumers say, "These guys are making such a big deal about this alcohol thing - it must be important." And they presumably reach for their wallets.

It is at points like these, in my opinion, that marketing - somewhat inevitably - goes from being a useful concept for creating variety and innovation in the marketplace and crosses over to the Dark Side!

It happens only in India

A Meerut couple eloped and was murdered by the girl's family. The police found the young man's body and arrested the girl's father and brother.

Subsequently, the girl's brother confessed to the murder. The press picked up the juicy story.

But then the 'murdered' young man and woman walked into a police station at Muzaffarnagar!!!

The implications on how the police works are mind-boggling.