Public opinion long before legal judgment

Recently the Indian high commissioner in Canada advised people, without exception, to avoid any opinion on an allegation that India had a hand in an assassination before a court conviction. However, the public does form its own opinion. Moreover, the court takes a whole generation to decide. For example, the public does have an opinion on old cases, for example, on the assassination of Mahatma Gandhi and Indira Gandhi, or the anti-Sikh and Gujarat riots.

Likewise with allegations of corruption — do you remember the position of T T Krishnamachari in the 1950s LIC scam? Was there a 2G or coal scam at all? Did the Hindenburg report on Adani Group have a hidden agenda? People have a view, irrespective of court findings. This happens even in the private sector. Of the last four chief executives appointed by BP, the global oil and gas giant, only one retired. The other three parted when they were judged by their board, not by a court of law.

The impact of public opinion is influential and strong. Niyam, neeti, and neeyat boards get the first whiff of a problem, misconduct, or malfeasance, albeit uncertain. Next, regulators and the media view the issue and, finally, courts of law adjudicate. As the issue ascends this escalator from the boardroom through the media/regulator to court, the rigour of proof required escalates.

Boards and the media are influenced by leadership intent (neeyat) and behaviour (neeti). They rely on their judgement. Regulators are influenced by some investigation even if proof is imperfect. Legal courts follow procedures (niyam) because they seek near-perfect proof; that may be why cases go on interminably. There is a tension among neeyat, neeti, and niyam. In the case of startups and founders, there is an additional issue regarding the perception of founder genius. There are three types of genius — intellectual, entrepreneurial, and corporate.
 

First is the intellectual genius, who advances the frontiers of human knowledge. They are extremely rare. Often, an intellectual genius is not competent in converting new knowledge into a business. Such a person may demonstrate a brilliant intellect, but may behave whimsically and unpredictably. Think of Robert Oppenheimer, Alan Turing, William Shockley, and Narendra Karmakar, just to name a few.

Second, there is the entrepreneurial genius, who can convert disruptive knowledge into a business model. This type of genius takes enormous risks, almost bet-the-farm risks. The media creates breathtaking news about them. Think of Cornelius Vanderbilt, Henry Ford, Jamsetji Tata, Jamnalal Bajaj, Steve Jobs, Bill Gates, for example.
 

Third and last, there is the corporate genius, who is able to convert entrepreneurial genius into making company operations increasingly productive, repeatable, and dependable and spewing out the cash to make the whole effort worthwhile and long-lasting. Think of Alfred Sloan, Tom Watson Jr, Satya Nadela, Sumant Moolgaokar, and Faqir Chand Kohli as examples.

The world needs all three forms of genius; indeed, they are not mutually exclusive, and there are shades in every leader. It is just that the proportions vary — the “right” leader is required at the “right” time. While genius can be thought as fuel in the automobile tank, the board of directors represents the transmission system that channels the energy into productive and desirable directions.

A dilemma for the board is about judging early signals — whether to work on them, when to act, and how to act? Judgement could be wrong. Discussion and debate among experienced directors are required to increase the probability of being right. I rely on the SMUBA sequence of sensing, mapping, understanding, believing, and acting. Long before a matter reaches a court of law, the court of public opinion starts to influence perceptions. This is a key point in my recent book Inside the Boardroom. The ChatGPT AI (artificial intelligence) case presents the dilemma clearly.

Sam Altman could well be a knowledge genius. Recognising that AI could develop into a disaster or a boon to humanity, a not-for-profit entity, OpenAI, was established eight years ago. The goal was to ensure that the development would serve humans goodness. However, it seems he wanted to be an entrepreneurial genius as well, so he established a for-profit entity, ChatGPT, under the non-profit entity! ChatGPT raised funding (Microsoft, among others, owns 49 per cent) to design the business model and execute. It seems that three founders and three knowledgeable independent directors constituted the board of ChatGPT.

Then the board judged that their confidence in the neeyat of Mr Altman had declined, but we have no details. By a four-to-two vote, the board fired him. The board, it would appear, responded to the signals they saw and judged. Did they respond too soon or too rashly? We do not know.
 

If the board had ignored the signals, and Chat GPT had developed AI into a monster that later threatened humanity, then people would ask, “What was the board of directors doing?” Recall that boards of Union Carbide, 
 

Volkswagen, and YES Bank ignored the early warning signals they received. Early signals do arise, posing the dilemma of how to interpret them and, more importantly, what to do about them. If boards ignore early signals, later on, retribution and vengeance inevitably follow, and they bear a price tag.

I close with A Tale of Two Cities, set amidst the French Revolution. Madame Defarge was a French woman who bore many grudges against the nobles for what they had done to her sister. She was out to avenge and was emotionally involved with the French Revolution. Of her, Charles Dickens wrote, “Vengeance and retribution require a long time. It is the rule.” 

The writer is an author and a business commentator. www.themindworks.me. rgopal@themindworks.me