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Lesson of leadership: Satyam crisis
October, 08th 2010

Do you know there was a fire drill at Satyam's School of Leadership a few years back?" asks Ed Cohen , the dapper 51 year-old ex-chief Learning Officer of Satyam Computer Services . Of course, when the 'fire' broke out, Cohen was aghast to see people strolling out of the building casually.

He took it upon himself to explain to his colleagues why they should never take a crisis lightly. "When a crisis happens, you need to put a plan together for what you need to do and use the time to re-look at your core purpose and values," says Nelson. The words turned out to be prophetic. On January 7, 2009 a multi-crore accounting scandal hit the company with promoter Ramalinga Raju admitting fraud.

After spending a year at Satyam post scandal, Cohen and his wife Priscilla Nelson , who also worked at Satyam as global director of learning, quit their jobs. But the remark made by Satyam founder and chairman Ramalinga Raju in his confession "It was like riding a tiger, not knowing how to get off without being eaten stuck with them. No wonder then that their new book bears the title Riding The Tiger.

Lights on

Today the duo runs the California-based Nelson Cohen Global Consulting, and as the name of their firm suggests, they dole out advice to corporations on how to lead, learn and transform.

The Satyam scandal might be in their past but its influence on them, even as they admit, continues. Could the company have had risk mitigation plans to cover a scam of that magnitude ` 7800 crore if you go by the stated accounts?

"I don't think any company would put a risk mitigation plan up that says what if our founder absconds or cheats on the board... that's like predicting a tsunami," answers Cohen. As the Central Bureau of Investigation (CBI), India's premier investigative agency entrusted with the Satyam case, unravels more incontrovertible evidence, the tsunami only seems to grow bigger.

One thing the company did right, according to Cohen was that as the crisis hit, and its magnitude was felt, people started doing scenario planning. A sample: What if the company is sold in pieces? What if the company was to be bought by the employees? What if the company was to be picked up by IBM, as was rumoured?

"They followed a start-stop-continue plan what should they start/stop/continue doing over time for the next 30/60/90 days," says Cohen. There is a crisis management lesson in that for other companies. "If companies don't have the courage to say what if our top person happens to be involved in a scandal, then can they ask what if our top person gets killed in an air crash?" asks Cohen.

A crisis almost always comes unannounced. Take the case of the former Burger King headquarters in Miami, which was completely ravaged by Hurricane Andrew in 1992. "That's when enterprise resiliency planning came about," points out Cohen.

Nelson advises that people should follow their 'lights on' approach when hit by a crisis. In Riding the Tiger, it is defined as keeping the company's doors open to take it forward during a crisis. "While an organisation is on its first 90-day journey through a crisis, its customers need to be retained, its revenues must still be earned, and its projects must continue to be delivered," reads an extract from the book.

This is when the company needs to be alert and awake to any stimuli. But here Nelson puts a caveat and separates essential from non-essential learning. "We look at what is absolutely necessary to keep our lights on and our doors open." she says.

At Satyam, one of the things that they continued doing even after the crisis struck, were the certificate or degree programmes since most of them were pre-paid and the courses were ongoing.

As the Satyam tragedy unfolded, the duo was overwhelmed by the "heart" the people of the organisation showed. "Everyone saw Satyam as Raju and Raju as Satyam and so when failure happened at the top, the immediate reaction was it's all over! A minute later though, everyone came around saying, 'How can we save this? How can we pull this together? We have a responsibility to our customers, employees, investors, even to society'," elaborates Cohen.

 
 
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