Corporate lessons from ancient tales - part 1

In this series I am going to tell a story from ancient literature and draw the learnings in our professional and personal lives from the same. These stories are mostly taken from Panchatantra or "5 lessons" and Hitopadesha or "Good Advices".

The first story (from Panchatantra) goes like this- In a large pond there used to live four fishes among others. These four fishes had some peculiarities. The first one was capable of sniffing, scanning and monitoring the environment and forecast and analyze trends based on changes in the environment. We will call this fish the "Astute Observer". The second one lacked the talent of scanning and forecasting, but he had a wonderful ability to scurry into action whenever a need arose. He used to devise a strategic plan and immediately acted on the plan. We will call him the "Intelligent Actor". The third one was neither an analyst like the first nor as intelligent and active as the second. However, he was extremely level headed, even though he was lazy. He could think through a situation and act decisively at the last moment. We will call him the "Slow Thinker". The fourth one was the laziest and the least talented of them all. He often used to be in tight situation on account of this, but every time his luck saved him. He neither reacted nor planned, but just went with the tide. We will call him the "Passive Floater".

So these four fishes were living happily in that large pond and they did not have any real danger, until one day.

That day the astute observer was as usually observing and monitoring his environment while doing his usual work of being fed on insects and water plants, when he heard some noises. A careful attention enabled him to hear some conversation, of human beings, on the banks of the pond. He realized that there must be some human activities going on here, and that might be too dangerous for fishes. He therefore called a meeting of his friends and told them - "listen brothers, I heard some human beings on the bank today, my gut feel is that they are going to do some fishing in the next few days, lets leave this pond and go elsewhere". Now that pond was interconnected (at the deepest level) with a bigger lake, so escaping was no big deal. However others did not agree. The intelligent actor said, "Well, you may be right, but why bother now, we'll tackle the problem when it comes. Besides, where will you get so much foodstuff like here?"

The other two fishes agreed with him and therefore astute forecaster was quite alone with his fears. But he decided to leave at once, even though that would mean he was leaving his friends behind. And he left for the larger lake.

The very next day his fears came to be true. The fishermen folk had targeted that pond and laid their traps in the form of big fishing nets. However the intelligent actor was sharp. When he saw some huge black net falling on the water, he scurried into action and before the net could engulf him, he was free and went away to the larger lake. While going however he wanted to take his other friends too. But they were lazy and did not want to respond immediately until the danger became very apparent in the form of a net around them.

Both the other fishes were caught along with so many others of their clan. Both the fishes were thinking that they should have believed and followed their friends. However both were having a Micawberian optimism that "something will turn up". The slow thinker began to rake his brain furiously while the fishermen pulled their net up. Then slowly but decisively he chalked out a plan. When the net was on the top of water, some fishes were already dead and fishermen were throwing them off, since already dead fishes don't fetch any value, its the freshly caught one that matters. So our fellow just lay side by side with a dead fish and did not move a single muscle, as if he was dead too. So when the fishermen got hold of him, they threw him away to water again. And once into water, our friend swam away immediately to a safe distance.

And what happened to passive floater. All the while he was thinking something will turn up, he will be saved by luck, but no such miracle happened. He was caught. In the end he rued the fact that he depended too much on chance.

This story is similar to more contemporary classics like "Who moved my cheese" where Sniff and Scurry, Hem and Haw, the two mice and two little men resemble our four fishes in their nature.

So whats the lesson here?

One thing is clear, you and I cannot apply the same principles every time, so there is a situational aspect. We need to be one of the four characters in the story depending on the situation. However its always better to belong to the first three, and best to be the first two, because your luck may run out before you realize and not everybody can think and act at the last moment under pressure.

Lets look into the macro environment of today. With the threat of a global recession looming large what can an investor do? He needs to scan the environment in which he operates and see if there is a disturbance, a threat. He should respond to the disturbance by simply moving away his investments to a less risky environment, e.g. emerging markets. Similarly a person who scurries into action can act immediately and move his assets elsewhere when a recession is no longer a possibility, but a reality in the environment in which he operates. A slow thinker will take time to react, but when he does react, he does it decisively, may be he dumps his bad assets to protect the rest. In fact there is an old sanskrit proverb - "Sarvanasha Samutpanne, ardham Tyajotih Panditah", i.e. when the danger looms large, a wise man may dump half of his wealth to save the rest. There is no need to cling to all when its very clear that all may go, you get rid of some to protect others. However, because he did not react immediately or did not scan his environment, he lost half of his wealth.

Others, like Lehman, go down the bankruptcy route, simply because their luck has run out.

Other applications of the same principles are in general risk management, like in a project. There are four tactics to deal with project risks - mitigate and develop a contingency plan, avoid, accept, transfer. Of these, mitigation is the safest route and generally practised by "astute observers" or "intelligent actors". However all risks cannot be mitigated, so depending on situation you may need to accept some or avoid some. In some cases cost benefit analysis will favour acceptance and thus "passive floating". However its better not to depend on chance when there is a possibility of Murphy striking, because if Murphy strikes, it will strike really hard and therefore some decisive and firm action is needed before the impending doom.

We find echoes of this in our personal lives. Many of us living a comfortable existence is uncomfortable with changes, but changes do happen. And when they happen, its always better to belong to the first three categories and either prepare for changes, take some intelligent but quick decisions, or take a slow but deliberate stand rather than float with the tide which may be disastrous.