Saturday, 2 February 2013

Corporate Lessons from Mythology - 6

The Concept of Corporate Karma

The concept of Karma theory is applicable to the corporates as well. It is not just enough to perform, but you have to be perceived well for a better reputation.

The corporate image, public perceptions on the corporates – all these lead to the term corporate reputation. The reputation is the result of past actions past karma.

Way back in 1982, Johnson & Johnson, the health care MNC introduced cyanide quoted capsule ‘Telenol’. Consuming this pill, eight people died.

There was an internal crisis management group advocating for a liberal compensation and close the case by quietly withdrawing these pills from market.

But the company took a bold step. They publicly admitted the mistake, withdraw the whole pills from the market, and took a huge hit to their top and bottom lines.

This past action created a wave of goodwill and even to-day it is recognized as one of the best governed companies by the public.

Every action has a reaction. See how effectively the corporate Karma works. There are several other examples in terms of corporate actions which will support this theory.

Take a negative action – let us take Enron as an example. Once upon a time, this company was the darling of the stock market. They boosted the results with creative manipulations.

The accounting irregularities were too many. Accounting model was driving the business model. The cart was pulling the horse, than the other way round.

The so called watch dogs became a pet dog with wagging tails, creative manipulations started on a small scale. A frog, when thrown into a heated pan will jump out immediately.

But when it is thrown into a pre heated pan, it will enjoy the initial phases of slow heating, but ultimately will get fried.

The same way, when people are asked to carry out a major violation, they will refuse. But they start enjoying small manipulations (without getting caught), but they finally get fried like a frog.

This is what happened in Enron. The past negative actions lead to a global disaster. This is also the corporate karma – bad result of past bad actions.

The acceptance of  “made in Japan” in the seventies and eighties were due to the good past actions of Japan earlier. Even when we aim at change management, we take validations from past precedents.

The Karma theory is therefore applicable to the corporates, as they apply to the individuals.

No comments:

Post a Comment