Wednesday, August 1, 2007

changing rules of capitalism

Collapse of Arthur Anderson, Enron and a few other big players in the industry was analysed as a misuse of the management for self benefit, affecting the companies and their employees. Still nothing much was done beyond punishing the responsible and changing the law to make CEOs/CFOs accountable for all the mishaps in an industry.
On a broader scale, this can be considered as changing environment of the business overall. In the past, primarily business was controlled by those, who either had access to the government, or had a major advantage over the competitors in the form of cutting edge technology or invention. In today's world with globalised market effect, diminishing technological upper hand and with tremendous amount of competition, the key player is the information. Its only about having the information first and acting upon it ahead of others. Information can make companies, create wealth and make people's career and life. It can also destroy the same if misused as seen in Enron. Apart from very conspicuous cases like Enron, many companies come and go, simply blaming the economy or the market. Necessarily the element of responsibility, and accountability is missing in all these events. In a situation, where millions of people are involved with companies in the form of investors, employees, customers, suppliers, service providers and so on, one single decision can ruin the whole show, irrespective of whether its CEO or CFO or financial analyst who takes the decision. Apart from the number game, which produces the results in quantitative terms of profit, loss, and projections, participants have no bearing over the qualitative analysis of the information which is responsible for changing the course.
The spectrum of accountability towards all the elements involved in the business needs to be widened to make it much more transparent.
The new rules need to defined which would bring all those who are responsible for a demise of an organization needs to be under scrutiny. From prevention perspective, there needs to be better awareness created in terms of future goals and targets and should be hold responsible for the every word that comes out of officials. Its not enough just to blame it on consumer index or inflation or global price war and competition and get away with some of the key decisions which essentially provide the driving force.
Rules of capitalism needs to be rewritten to safeguard Common man's interest, no matter in what way he is connected to it, or have direct or indirect involvement in the business. The transformation of such information into actions can affect employment, investment, family or even lives and hence to be put forth in focus, not only during the successes but also during the failures.

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