• Mind Your Business 
• O&M to reach direct
• Ericsson and Sony in joint cell phone venture in Sri Lanka 
• GE ban upsets trade, welcomed by environmentalists
• Redeemed by aid bound by conditions
• Rethinking governance, leadership and management
• What are we prepared to do?
• News

Mind Your Business 

Paradise lost again

And that is why local star-class hotels which were considering a rate hike have been advised to put that plan on hold- they may soon have to look to the domestic market to maintain occupancy rates. 

Then, there are more worries in store for the industry: the fighting that has erupted in the North will not help matters and a plan to attract more SAARC tourists is not yielding the expected results. 

It's smoking again

If I have a million dollars

The letter, received by many in the corporate sector and by professionals claims that all you have to do to collect the prize is to mail twenty dollars to the sender and the prize money "will be delivered in cash in an unmarked suitcase within seventy two hours!" 

Needless to say, twenty dollars is a small price to pay for a quarter million, and some- including some big corporate names- have obliged. They are of course, still waiting for the prize money.

O&M to reach direct

Harish Vasudevan, Country Head – India of OgilvyOne Worldwide and who is in charge of Sri Lanka, Bangladesh and Pakistan, was in Colombo last week to hold talks with potential clients and to study the local market.

"We believe there is an opportunity in Sri Lanka. We are looking at an alliance to set up office in the short term. The idea is to make it a fully-fledged Sri Lankan operation. Already a few clients have shown interest through Phoenix (Advertising)," said Mr. Vasudevan of OgilvyOne's plans to set up office here.

When asked on the duration of the short-term period, he said that it may be as little as three months. "It is too early to early to speculate but we strongly believe in investment ahead of returns," he said on the kind of investment that would be put in to Sri Lanka. Incidently Sri Lanka is the first on OgilvyOne's map for new investment and another office is to follow in Bangladesh by the end of the year.

OgilvyOne was the first direct marketing agency in India when it set up office in 1987. OgilvyOne, a division of O&M works within a consultancy framework, to build a one-to-one relationship between its clients and their customers. "Basically we work to know more about the customer/consumers. Earlier B2B (business to business) was seen as a high value service. Now FMCG's (Fast Moving Consumer Goods) are getting in as competition is tougher. So we try to identify customers for their brands and build loyalty, rather than trying to find new customers due to the high costs involved," explained Mr. Vasudevan.

The Indian operation's client list includes Ponds, Asian Paints and a telecom company among others. The solution offered by OgilvyOne together with OgilvyInteractive to Ponds is a customer response centre. The response centre provides customized skin advice through any of channel like telephone, email, etc. The customers can also go to the extent of booking a time for an online chat to provide solutions for their skin.

The help line solution to Asian Paints works on a similar format to Ponds across 25 cities in India where customers will be able to consult and obtain advice on what paints to purchase, the shades, the outlet, etc. Once information has been collected the specific outlet is informed by the help line on the potential purchase by such a customer. 

The response centres are manned by the staff of OgilvyOne using Phone Watch, an international tool developed by the organization itself. "Most people think of direct marketing as sending out a mailer. Here we have developed the concept to use database driven technology. Our biggest achievement is setting up OgilvyInteractive. Through this we were able to harness the online channels like websites and email marketing. 

We provide consultancy, communications and connections so clients can choose whether they want advice on how to implement or to implement it ourselves."

The concept behind OgilvyOne started in the UK and it now offers CRM (Customer Relationship Marketing) across all media contributing a 40% growth every year to the revenue of O&M. OgilvyOne is present in 17 Asian countries and in over 50 countries worldwide. Locally O&M is represented by Phoenix O&M, formerly Phoenix Advertising Services (AA).

Ericsson and Sony in joint cell phone venture in Sri Lanka 

By Akhry Ameer

Ericsson, a popular name in the mobile phone market will cease to exist from October 1. On April 24, Ericsson and Sony jointly announced worldwide that they will ditch their own brand names in the mobile phone market and together will create a new brand that aims to be a world leader. The name of the new brand is yet to be finalised.

Both companies have signed a Memorandum of Understanding (MoU) with the intention of creating Sony Ericsson Mobile Communications, a new equally owned company that will incorporate their respective existing mobile phone businesses worldwide and draw upon each other's expertise to harness the growing market of 3G and Mobile Internet.

Ericsson is probably the only mobile phone manufacturer to be represented in Sri Lanka directly. "Ericsson Telecom Sri Lanka will still continue to be a leading provider of infrastructure to the landline, loopless and mobile operators in Sri Lanka. The new joint venture for mobile phones, Sony Ericsson Mobile Communications will be physically represented in Sri Lanka from 1st October," said Mr. Grahame Davidson, Head of Consumer Products and Corporate Communications of Ericsson Telecommunications Lanka (Pvt) Ltd.

Ericsson is currently at number three in worldwide rankings having slipped from the top slot two years ago, which according to the local head of consumer products is "a normal economic cycle that brands go through". According to the last independent survey in Sri Lanka, Ericsson commands a market share of approximately 33 % in mobile handsets. Other popular models in use in Sri Lanka are Nokia, Motorola and Alcatel.

Ericsson covers 8 to10 models on the GSM platform and 4 to 5 models on the TDMA platforms sold commercially through the principle, their distributors and agents.

Speaking on the future of the existing handsets in the market Mr. Davidson said the new joint venture would continue to support existing Ericsson handsets. "We have a general customer service policy that every model launched will be supported up to five years until phased out," he said.

Mr Davidson said the main reason for the joint venture is that Ericsson will be able to tap into Sony's strength in the entertainment industry like games, video and music and the Japanese market. Sony in turn will be able to tap into the Ericsson's excellence in telecom technology. "So it is a complementing relationship." The new global venture will have four board directors each from Ericsson and Sony, while the President and CEO of Ericsson will be appointed chairman.

"I cannot comment on how successful this new brand would be. But as you know the current Sony and Ericsson brand reputation is high both in Sri Lanka and worldwide. There is a good chance that the scenario will improve because we will still use our distributor and agency strength. We might have additional channels and the new company will come out with strong campaigns and aggressive pricing," said Mr. Davidson when asked to comment on what kind of success is envisaged when the new brand is launched.

Ericsson is a leading communications supplier, combining innovation in mobility and Internet providing total solutions from systems to applications with approximately 50 million handset unit sales in fiscal year 2000. Locally Ericsson is represented by Ericsson Telecommunications Lanka (Pvt) Ltd as part of its presence in 140 countries worldwide. Sony is a leading broadband personal entertainment company with consolidated annual sales of over $63 billion for the fiscal year ending March 2000. The new joint venture Sony Ericsson Mobile Communications will provide for approximately 3,500 employees worldwide manufacturing mobile phones and handheld multimedia communication products.

GE ban upsets trade, welcomed by environmentalists

"This is a wonderful decision and we are completely backing the government on this," said Hemantha Vithanage, an environmental scientist and executive director of the Environmental Foundation Ltd (EFL). "This is a decision beyond all expectations."

Share market observers also said the move would benefit local soya producers and help share boost prices in some sectors of the food and beverages sector.

The Health Ministry has said it was banning the imports of all GE foods, in a move that had been long awaited but nevertheless surprised the environmental lobby and has caused some confusion amongst importers.

The ministry gazetted a list of 21 items, which are banned unless proved that they are not GE foods. The list includes a range of soya foods including soya milk, soya bean, soy sauce, soya nuggets or textured vegetable proteins known as TVP – which has fast become a substitute for beef among health conscious consumers -, other soya-based products, tomato sauce, tomato paste and tomato-based products.

It said such foods would be allowed into the country only after a GE-free certificate is provided. Importers of the list of restricted items have been asked to clear the food by a competent authority in the producing country.

"There is going to be a lot of confusion over the ban," said S. Balachandran, a council member of the National Chamber of Commerce. "We repeatedly told the government not to rush into this legislation but it has been done."

He said there was no clear evidence to show that GE foods were injurious to health. "We asked the government to show us proof but there was no response. We also suggested that the government first implement the process of labelling of food items to allow consumers to make a choice but that was also not done."

Chamber officials and environmentalists said Sri Lanka is the first country in Asia to ban GE foods and probably among the few in the world that had resorted to this move instead of the labelling process which is prevalent in many countries.

The debate over GE foods has been going on for close to two years in Sri Lanka and follows a worldwide controversy over GE food. In fact there were moves, exactly a year ago, to enforce a ban on GE foods here. "Yes, in fact we placed an advertisement in the newspapers informing the trade of a possible ban on genetically engineered food imports," said S. Nagiah, chief food inspector of the Health Ministry.

Mr. Nagiah, one of the key officials responsible for the legislation, agreed that there would be teething problems in the implementation of the ban but noted that the trade had almost a year to get ready for a ban. "So they should not be complaining about it."

"When a worldwide controversy erupted last year over the safety of GE foods, we thought it was in the best interests of our consumers that we impose a ban till the controversy is sorted out and the picture is clearer," he said.

Sri Lanka decided to enforce a ban instead of implementing GE-free labelling of food because it is a major food importer unlike other Asian or European countries. "For instance India or Britain doesn't import as much food as we do. We need to take more precautions that the West and we have a responsibility to the consumer," the health ministry's food chief noted.

He said the decision to enforce a ban was taken after several months of discussion, debate and deliberation. "There may be little or no evidence to show the impact of GE foods on human but genetic engineering is a dangerous thing. If we allow a GE seed to invade our local species it could be disastrous."

The bulk of Sri Lanka's food requirements is imported with wheat and sugar coming from the United States and other European countries, where the GE controversy has erupted and led to calls for bans. Much of the country's soya products come from India.

Studies have shown that 65 percent of the soya produced in the United States and 35 percent of the corn produced in the same country is through genetic technology.

Redeemed by aid bound by conditions

The first tranche of 131 million US dollars is expected to be released immediately. The remaining 119 million dollars are expected to be released in four quarterly installments. 

In addition to this IMF facility, the country is expected to receive further international assistance of about 270 million dollars.

This international assistance was absolutely essential to tide the country over the serious foreign reserve situation it had got into due the massive trade deficit of last year. The deficit in the trade balance has continued to plague us. In the first two months of this year the trade deficit amounted to 216 million US dollars. Unlike last year when the trade deficit was incurred owing to a massive increase in imports, this year's performance so far indicates a weak performance in exports. Total exports in the first two months of this year for which trade statistics are available, increased by only 3.6 per cent compared to that of last year.

Fortunately imports have declined by 4 per cent to reduce the deficit somewhat.

While international financial assistance can help us tide over the current balance of payments problem, it is no solution to the basic problem of our exports being unable to finance our imports.

Trade deficits, even large trade deficits, are not new to this country. In fact we have not had a trade surplus since 1977. And that surplus was achieved by strict controls on imports and foreign exchange.

For the last twenty three years we have had trade deficits, but the balance of payments were not as seriously affected as last year as both a positive services account and remittances from nationals abroad reduced the deficit and capital inflows in certain years even resulted in a balance of payments surplus. For instance in despite a trade deficit and a current account deficit in the balance of payments, we had an overall balance of payments surplus in 11 of the twenty-three years from 1978 to 2000. We had continuous overall balance of payments surpluses from 1990 to 1994,despite trade deficits owing to substantial capital inflows during these years.

The situation has changed when substantial capital inflows have not been forthcoming. In fact there have been significant outflows of capital especially from the stock market. The global situation is such that any expectation of substantial capital inflows is unrealistic. Further, our own situation is hardly inspiring to attract foreign investments. In fact, as we have noted earlier, there have been significant outflows of capital.

Consequently the trade balance assumes an importance in determining the balance of payments position. The only bright spot in our balance of payments is the continuing increase in remittances from nationals working abroad.

The resolution of the balance of payments problem through international assistance implies that our foreign debt would be increasing. At the end of last year our foreign debt was Rs. 542 billion or US $ 6.8 billion.

Fortunately a very large proportion of this is on concessionary terms.

Consequently the debt servicing costs are not very high. Nevertheless if we continue to draw on foreign assistance to solve our balance of payments difficulties, the debt servicing costs could rise to burdensome proportions.

The other aspect of obtaining IMF and donor assistance is the conditions placed on the country. The precise conditions of the current assistance are not known to us. They would no doubt have provisions regarding the nature of public spending and the extent of the fiscal deficit, stipulate changes in the public sector, obtain promises of further privatisation and dictate social policies. Some of the conditions imposed may be prudent and good.

However the IMF has tended to be ideological, unrealistic in terms of local conditions and interfering of the people's wishes. Often IMF "conditionalities" have put many countries into political turmoil and disrupted economies and societies. We can only hope that the conditionalities imposed on us with this stand- by facility will not put the country into such a parlous situation.

We have been redeemed by aid, but burdened by debt and bound by conditions.

The lesson we must learn is that though some of the problems we have faced in the balance of payments are no doubt due to external shocks and our tragic civil war, the continuous trade deficits for over two decades is enough evidence of fundamental defects in our economic structure and performance. When will we remedy these?

What are we prepared to do?

By Gerard D. Muttukumaru 

After an interesting discussion on the sad situation in the country, I who had left the island at the age of 10, asked them, "what kind of people would take arguably one of the most beautiful pieces of real estate on this planet, the producer of the best tea in the world, a top producer of coconut, a paradise for film makers, rich tourists, wild life and archaeology lovers, a nation that had the highest literacy rate in the developing world, a rich culture and heritage, once the "envy" of the father of Singapore, and completely mess it up, by turning it into a culture of hatred, death and self- destruction? What kind of people, I asked them again"? They had no answer. We had no one to blame. Not the Americans or the British or any other foreign power. It appears that we are incapable of either governing or managing ourselves. As a person born in Sri Lanka, this saddens me deeply. 

A few years ago in Southern California, where I live, as a result of numerous years in the real world of business and serving on the faculties of MBA and International Executive Education Programs, I had the privilege of founding the Center for Global Leadership Inc. The primary purpose of this organization is to bridge the gap between the "west" and the "east" in leadership and management education. It is no secret that the best and most cutting edge thinking in leadership and management practice, happens to be in the US. And the part of the US that is most "Asia-oriented" is California.

I have spent the last one and a half years, establishing the South Asia regional office in Sri Lanka and conducting numerous programs for the top and senior managers of several organizations on the subject of leadership and the management of change, which must first begin at the top. I have also enjoyed numerous intimate conversations with several top officials and managers in government, the diplomatic community, in business and in international organizations and NGO's. I have to also admit that I have enjoyed very interesting insights from the wealthy and powerful, and those that have almost nothing. Some have been delightful people who were in poverty. These beautiful people have remarked to me in both Sinhalese and Tamil, "You know our people Sir. They are destroying and stealing from each other. What can we poor and ordinary people do?"

The real intellectuals and those that want to be, are so very busy giving speeches and writing articles on Leadership, Management, the knowledge society, global policy, governance etc that are of little relevance to the most critical issues facing this nation. I am told that Sri Lanka and Bangladesh have the largest concentration of NGO's in the world, for their individual populations. I beg to be corrected if I am wrong. Where has all the money and assistance got us? Where has all the international and multilateral assistance got us? How many programs have been conducted on leadership, change management and governance, issues that confront the leadership in any organization or nation? Where have they got us? How many motivational, customer service and teamwork programs have we attended? Where have they got us? It was Bob Dylan who once sang, "How many times must a man (or woman) turn his head and pretend he (she) just doesn't see?" It was the World Bank President at a recent conference in Bangkok who stated, "as long as there is inequality and a widening gap between those who have and those who don't, there cannot be peace". We must face the truth about ourselves.

All real change must begin at the top. The leaders and managers of this country, both in the private and public sectors, must really want change. It was the greatest teacher who ever lived who asked the question over 2000 years ago, "Do you want to be healed?" He saw the one obstacle that a good man, a rich man who wanted to follow him faced and told him, "Go, sell all you have, give them to the poor and come follow me". He did not. Most of us are like that. We attend program after program and talk a lot about governance, the need for good leadership and management practices, but do not do what has to be done. It was Gandhi who once said, "here in Delhi we make speeches to each other, but India lives in its thousands of villages".

We need to examine our individual souls first. Real change demands what the Greeks called "metanoia". Radical conversion or change. A complete turning around. It must come from and happen within. The rest is cosmetic. Are we willing to pay the price for this conversion? Some one once said, "the test of a civilized society, is how it treats the least of it's citizens". Can we meet this test?

A friend who serves on the board of one of the most prestigious companies told me, " our boards are a joke. We are all too comfortable. Very few want real change, real governance. It will upset things". 

A very senior and highly respected international civil servant in Sri Lanka shared with me that the leadership and governance practices in a very prestigious organization was also a joke. He amused me by drawing a picture of how most organizations are really run in Sri Lanka. Where the leader enjoys being entertained by the "court jesters". And these "court jesters" hold the leader in awe and do not dare challenge or question him or her. And God help them if they call the leader by the first name!!!! Somewhere between this amusing description and reality lies the truth.

I recently conducted a program for a very fine organization on "Breaking barriers between top management and other levels". There was only one CEO!!! Apart from a few enlightened organizations, do the rest really want all barriers to be broken? The participants really enjoyed the program and learned a great deal. I did. Apparently one concern was that I had not said enough.

But my objective was to get the participants to think for themselves. We are our own best teachers. Blame was placed on unions and other "disruptive" forces. 

But I believe that if the management and workers in any organization saw each other as a team, were driven by the same purpose, met each others needs and treated each other well with respect, there would be no disharmony. 

There would be no need or place for "disruptive" forces. Good governance, leadership and management, demand this. 

Transparency demands total openness. We cannot have one without the other. We talk a lot about total transparency, but do the people who run our organizations really want it? Or do they want a limited version of it? Colombo can be likened to a village of a hundred people. There is rarely anything hidden here, though secrets abound!!! Most of us know who the owners of luxury cars are!!!

And private lives are not so private anymore!!!!

As a culture, we have a hell of a time, communicating. This is not our forte. We bury and even deny our real feelings. The CEO of a major organization admitted to me, "Gerard, I have a real problem communicating with my senior management team. 

There is invariably a breakdown". We don't trust each other either. We don't really respect each other. One senior board member of a major company told me that he really did not think much of another equally senior board member.

Real, two-way, open communication, trust, and respect for one another, are the very core of good governance, good leadership and good management. 

And whatever happened to integrity? Personal destruction, character assassination and questioning one another's integrity, have become a national pastime. There are self-proclaimed crusaders who make a living out of questioning and even sitting in judgement of each other's integrity. 

"Let him who is without sin cast the first stone". Integrity does not mean "sinlessness". We all make mistakes. We all fail. Integrity involves being in the arena, trying and failing, and having the courage to admit failure and moving on. True character and integrity demand that we admit wrong, when we have done wrong. But this is very hard for us.

Accountability. How accountable are we? Can each board member and member of top management, stand in front of each stakeholder, stockholders, employees, investors, customers and the community, look them in the eye, and be totally transparent? If not, who are we fooling? 

The rap singer, Coolio, in his mega hit, "Gangsta's Paradise" asked the question, "Why are we so blind to see, that the ones we hurt are you and me"?

We are basically a decent and good people. Something has gone terribly wrong. The majority of us are terrified to speak up. We go to our churches, temples and mosques and observe all the rituals, but are terrified to face the truth about ourselves, those we love and those we work with. 

We have also become a people in denial. Most of us don't even know how terrified we are. To keep the peace we remain silent, those of us who feel powerless. What can we do, we ask? 

In any democratic organization, freedom of expression, speech and creativity are the greatest assets. We have become paralyzed and don't even know it. Team building programs are a great first step, but they must address the core issues that pit brother against brother. We are terrified to express feelings. Feelings are neither right nor wrong. They just are. You cannot have healthy governance and healthy management, if people are not free to express feelings, free to make mistakes and learn from them. Having the right corporate culture makes this possible.

The right corporate culture is also at the heart of good governance, leadership and management. At a recent program for a major company, I asked the question, "Do you have a corporate culture?" a few said yes, a few nodded, a few said nothing. When I asked them to describe it to me, they could not.

I have been teaching leadership, Global Management, Corporate Strategy and Global Marketing for the last 15 years in Southern California. I have learned much from the students who were senior managers in prestigious companies in the US and other parts of the world. I have conducted internal programs for companies. The best companies, the companies that have great governance, leadership and management systems, are those that have a great corporate culture that is internalized from top to bottom. 

I may stand corrected here. In the increasingly common flat organization, there is no top and no bottom. There is a common purpose and vision, a strong culture and an effective team.

Women, who now drive the national and global economy, and constitute the majority of our population, should play a greater role in governance, leadership and management

Good governance, good leadership, good management, demands metanoia. Before any of us even thinks of attending another seminar or program, the question must be asked, "am I really willing to change?" "Am I really willing to do whatever it takes?" 

Having lived in the vicinity of Hollywood for the last 19 years, one my favorite films is "The Untouchables". An ambitious District Attorney and two equally inspired law enforcement officers have made it their mission to capture the notorious Al Capone. Sean Connery got the Oscar for his performance as one of the officers. He keeps asking his boss the District Attorney, "What are you prepared to do?" As he lay dying with numerous bullets in his body, with his last gasp of breath, he cries out, "What are you prepared to do? This is my question to everyone concerned with the questions of governance, leadership and management. Are you also ready for radical conversion, metanoia? What kind of people are we? What kind of people have we become? What kind of people do we want to be? What kind of organizations do we want?

Change Management demands that leaders and managers are prepared to face the consequences of this change. It will reveal the good, the bad and the ugly in any organization. Having taught managers from all over the globe, and having been involved in the running of companies, I know that today's new, global, knowledge, economy demands radical change from those who govern, lead, manage and work in our organizations. Are the leaders and managers prepared to face positive criticism and even dissent? Often those who dissent are our greatest allies and assets. 

They feel so much for the organization that they have to express themselves. The founding honorary Chairman of our Center, one of the world's preeminent authorities on Leadership, Dr. Warren Bennis, has clearly stated that "The greatest challenge facing leaders and managers in the twenty first century is unleashing the brainpower within their organizations". It is not about making deals. Are we prepared to face whatever is unleashed?"

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