Satyam Is But One Apple

“One bad apple doesn’t spoil the whole bunch,” goes the old saying.  With the Satyam debacle on our minds, this is certainly an adage worth remembering.  Unfortunately, news accounts and opinion pieces are carrying notes like this:

Far beyond Satyam, it raised fears that similar problems might lurk in other Indian companies, particularly in its vaunted outsourcing industry.  – NY Times, January 8, 2009

Let’s hope that’s not the case.  How wise would it have been if, when Enron’s follies were revealed, Indian and other global investors decided that they should stop investing in and relying upon all oil and gas companies?  Or worse yet, if they had decided all American companies were, as a result, suspect?   

I can’t vouchsafe that no other Indian company will similarly fall – but neither can I do so for any other American company, or British, or French, or German or…

Those who know India only from a distance see all Indian outsourcers the same.  Those who know them more intimately, however, have always known there was a suspect culture at Satyam.  They were certainly never regarded as in the same league with the Big Three: Tata, Infosys, and Wipro.  Moreover, even among the second and third tier Indian outsourcers they were widely regarded as having an overly-aggressive culture – promising too fast, explaining too glibly.  While this was by no means proof that a billion-dollar shenanigan was going to take place, it did mean that sophisticated observers were not completely surprised by this outcome – just as many who knew the sharp-elbowed, predatory culture at Enron were not as shocked as the rest of the world at its ultimate fate. 

I have known and worked with Indians for over a decade and I love them as individuals and as a people.  They hold dear all the things that we Americans hold dear: life, liberty, and the pursuit of happiness (even though they’d use different words to describe those values).  Moreover, Indians are a Horatio Alger story for our times.  They pulled themselves up from poverty and are making themselves a world economic power.  A lot of the affinity between India and America perhaps owes to our common ancestry as outposts of the British empire and heirs of its finer ideals.  But even more of it owes, I think, to our common humanity and shared belief that honest hard work can make a better world.

If anyone wants to say that these Indian companies aren’t subject to sufficient scrutiny, then let him take a look at how well U.S. oversight agencies have done in the last few years (Fannie Mae has had more oversight than any other business on earth and how well has that worked out?).  And then consider that if you want to know why Satyam’s auditors didn’t catch this sooner, you can reach out to an office of theirs near you because you’ve probably heard of them: PriceWaterhouseCoopers.

Let us not paint India with a Satyam brush.  It’s not fair, and we wouldn’t want it done to us.

Want Your Insurer To Be More Innovative?

Matt Josefowicz and Steve Kaye of Novarica have just written and published a twelve-page research report titled Innovation and Agility in Insurance IT.   The research included interviews with 31 insurer executives conducted last month through Novarica’s Insurance Technology Research Council, a moderated membership group of senior IT executives from both life/annuity and property/casualty carriers.

The preview page of the report includes a provocative graph which indicates these execs would like to see more emphasis on innovation from the top of their organizations.  It also indicates line-of-business execs are receiving too much pressure for innovation – pressure that should be on designated innovation groups as well as on the senior execs of a company. 

The report promises recommendations for increasing the agility and innovation quotient for a carrier.  Matt is highly regarded in the industry so the report is likely to receive attention.  (Among other accomplishments, Matt is a magna cum laude graduate of Brown University, though I hear Brown does not award summa so he could be a 4.0 for all we know.)   

A key question for those interested in increasing innovation in insurance is the formation of innovation groups in a company and how responsibility is shared between such groups and the line-of-business organizations.

The long-standing argument for innovation groups is that line-of-business organizations are too pressured for recurring operational results to have sufficient freedom to innovate.  The long-standing argument against such separate groups is that only line-of-business organizations can execute and achieve innovation so assigning the responsibility somewhere else just makes for organizational confusion.  While this report doesn’t seek to settle this debate, it does add useful information and advice for achieving the ultimate goal. 

By all means, let us innovate!