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MANAGEMENT OVERRIDE – THE ACHILLES’ HEEL
By Anil Bedi
I have often wondered – pretty much like the bird and its egg enigma - what came first? Money or Greed? Ever since time immemorial, man has spun his wheels in inventing money or anything that money can buy and then devising means to acquire the same thing without having to spend that money. Isn’t that a paradox - first we make something to get us something else in return but then we don’t want to pay the first something to get the second something. So, why did we make the first something in the first place? Too confusing, right? Well, not if you look at it from a different angle – man has always wanted to have his cake and eat it too! And to that effect, man will not (he hasn’t so far….) stop at anything – lying, cheating, stealing or even killing – to get what he wants without having to pay for it.
In the more sophisticated corporate world, this act of commission is called fraud. Fraud has been defined as “a deception deliberately practiced in order to secure unfair or unlawful gain” in the dictionary and according to an analysis performed on U.S. public companies by COSO, an independent, private sector initiative, jointly sponsored and funded by the major accounting and auditing institutes of the world, the following came to light:
- Fraud went to the very top of the organization. In 72% of the cases, the CEO and CFO appeared to be associated with the fraud. (Can anyone forget what happened at Enron, WorldCom or Adelphia?)
- The audit committees and boards of the fraud companies appeared to be weak. Most audit committees rarely met, and the companies’ boards of directors were dominated by insiders along with others who had significant ties to the company.
- A significant portion of the companies was owned by the founders and board members.
- Severe consequences resulted when companies committed fraud, including bankruptcy, significant changes in ownership, and delisting by national exchanges.
So, the thing that stands out from the above is that if the management wanted to, they could have stopped the significant, much-too-well-known frauds mentioned in the second bullet point above, before they even took place. And guess what? Almost all of the major frauds that have been revealed to the general public and the companies associated with them have become household names, albeit for reasons unwanted, have happened between 2001 and 2006. What it means is that most of the accounting scandals and frauds that have seen the light of the day and many that are still under water, could have been avoided but for the greedy management which either perpetrated it or turned a blind eye.
An old saying goes like this, “The bottleneck is always at the top of the bottle” and that does a say a lot! If executive management were to treat the company as their own and keep nurturing it the same way when it was newly created, most frauds would not happen. But that would be asking the mythical Paris not to fire her poison arrow at the heel of Achilles or the legendary Bhima not to crush Duryodhana’s thigh with his mace!
‘Are you kidding me – this is my company, I know where the weak spots are, hence I will plunder it the way I feel good’. The philosophy prevails even among the best.
As long as management and/or owners carry this notion, corporate fraud cannot be fixed. Just because management is responsible for the design, implementation and maintenance of an effective internal control system within a company, the company is exposed to the danger from the same management over-riding those same internal controls to enrich their coffers. This sounds like another analogy that I like to use. Say, I break into my own house by resetting the alarm system, steal my precious items, go sell them or whatever and then come back and file a theft report with the police. Sounds bizarre, you bet it does!! But that is exactly what a lot of company managements are doing these days, especially ones with a lot of public money under their safekeeping and custody.
So, you might ask – shall we stop giving executive management the ability to override their controls, or for that matter, the ability to even create those controls in the first place? There, as Shakespeare would have said, lies the rub. That my friends, is not a viable solution! The real solution lies with the lawmakers to come up with stringent laws and regulations to curb the overly-enthusiastic management from lining its own pockets and taking care of the interests of the people who they work for. The Sarbanes-Oxley Act of 2002 is a perfect example. The second part of the solution lies with the Internal Audit department of the company – to evaluate how successful their management has been in implementing the system. The last, but certainly not the least responsibility lies with the Board of Directors or the Audit Committee of the company. They need to exercise a higher degree of skepticism while assessing the risk of fraud due to management override of the internal control system. Extending my earlier analogy of stealing precious items from my own house, say I make my children the guardians of the items in question, in addition to installing an alarm system at the house. Say I command them not to squeal if they see me entering the house at an unusual hour and if they did, they would have to go without food, clothes, whatever. And say I come into the house, reset the alarm, steal my items and continue with the rest of the drill - do you expect my kids to tell on me when the police arrives? Your answer is probably a no, but what Corporate America needs at this critical juncture ladies and gentlemen, is a big YES!!
What we need is an over-active, strong, unashamed, alert, fearless, and professionally skeptic Audit Committee at the helm of all public companies to protect the executive management from destroying not just the company, but itself too!!
(Writer’s Note: Some of the statistics included in the above article were taken from the websites of AICPA, COSO and IIA.)
The Right Way to Get Media Attention
To boost your business' profile, learn the secret to getting attention: Have a compelling story and tell it to the relevant audience
by Vivek Wadhwa
Most entrepreneurs I know think that when they achieve success, fame will follow. And now that I have made the transition from business to academia, I can also say that my academic friends think that big discoveries automatically lead to big press.
They're dreaming. Ralph Waldo Emerson was wrong when he said, "Build a better mousetrap, and the world will beat a path to your door." The reality is that even if you did, no one would find you. To be known, you have to have a great story and tell it to the right people.
I've co-founded two successful software companies. In the first, we grew into a $100 million revenue machine in five years and pulled off a successful initial public offering. But it seemed as if no one had ever heard of us. Out of frustration, we used to joke that we should change our motto to "We've never heard of you either."
So when I started my second company, I made it a point to understand how the media work and to focus as much effort on public relations as on other aspects of the business. The result? Over a period of four years, we were featured in over 1,000 articles across the globe. Customers did beat a path to our door.
A Compelling Message
What's the secret to getting attention? In theory it's pretty simple—you have to have a compelling message then make sure that the right audience hears it.
But what does this mean in practice? You should start by creating a short press release or one-page summary of what you want to say. Be sure to focus on the right audience. You may find your own products very interesting and expect the world to share your interest. But this is rarely the case. Others aren't usually interested in you, but they may be interested in how your product affects them.
Highlight how your offering is different from everyone else's, why it matters, how it's going to make a difference in the world, and why anyone should believe what you say. At the same time, forget the buzzwords and keep your message simple. Technical jargon doesn't make you more credible and neither do exaggerated claims.
Find the Right Journalists
And while you may want to talk about every single feature, too much detail dilutes your message. Just highlight the few things that differentiate you. Write the release or summary as you would want it to be told and make it interesting. Once you have a solid pitch, your next step is find the right journalists to pitch it to. Read dozens of online and print publications to identify who may be interested.
While everyone wants to be in national publications, you are going to be up against stiff competition if you go after them immediately. Instead, start small. Identify the trade publications, regional newspapers, and industry Web sites that are likely to have the most interest in you. Find out who covers your beat or specific topic. Journalists are always looking to be the first to report on a topic of interest to their readers, or to present a new aspect of a hot trend. Read other stories by the same journalists and get a feel for what type of stories they write. Make sure that your story is relevant to their beat.
Customize your pitch for every journalist you think would be interested and write them or call. Most publications list e-mail addresses on their Web sites and provide phone numbers for their editors. You'll be surprised to find that most journalists do respond to such messages. They may not be interested in you at first, but may include you in a future story. Journalists are always looking for fresh ideas and sources.
Become a Trusted Source
If you do get an interview, listen very carefully to what the journalist is interested in. You will want to talk about yourself and your product, but that may not be what you are being called about. The journalist may be doing a totally different story and want to get your perspective. Your goal is to become a trusted source and build a relationship so you can be at the center of future stories. I can't emphasize enough: Be sure to tell the truth because journalists will pick up on spin and hype.
To increase your chances of being included or featured in a story, give the journalist a news hook. Find some way to tie what you do to the big news story of the day or current trends. Don't forget, the goal is to create a story people want to read. So make your pitch relevant to current events and reader interest. Also be sure to have an opinion and express it. Being provocative and honest is always a good way to get attention and to be quoted. Don't say things that you will someday regret, but don't hesitate to express your feelings and your belief in the message you are communicating.
Also, don't forget to make yourself available. Journalists usually have tight deadlines and need answers fast. If you want to get press coverage, you will have to make yourself available within a short time of getting a call.
You can hire a PR agency to help you with all this. Some are very competent and know who to contact and what to say. But I've always had the greatest success and built long lasting relationships with journalists I've contacted myself (see BW Online, 4/9/07, "Effective PR on a Limited Budget").
Vivek Wadhwa, the founder of two software companies, is an Executive-in-Residence/Adjunct Professor at Duke University. He is also the co-founder of TiE Carolinas, a networking and mentoring group.
Debunking the Money Myth about
Following Your Passion
By Matt Welsh
There is a myth that following your passions is foolish, impractical and will not lead to a financially rewarding career. Well, this could not be further from the truth. In fact in
The Attractor Factor, Dr. Joe Vitale cites a study that debunks this myth and will help to relieve any possible insecurity about following your passion.
Dr. Vitale cites a study where a group of 1500 people were given the option of joining two groups. Group A was a group of people who picked a career they believed was going to be a practical way to make way to make a lot of money and then they were going to follow their passions after they made enough money. 1255 people joined
Group A. Group B was a group of people who picked a career that they were interested in and passionate about and just trusted that the money would come. 245 people joined Group B.
20 years later there were 101 millionaires out of the 1500 people who signed up for the study. 100 of the millionaires came from group B, the group of people who followed their passions and just trusted that the money would come. Only 1 out of the 1255 people
who picked a career because they believed it was a practical way to make a living became a millionaire.
This study demonstrates a couple of powerful points. First, picking a career that you are passionate about is indeed a financially wise decision to make. Conversely, if you ignore your passions when you pick a career, you are significantly decreasing the likelihood of making a lot of money.
Another interesting point that this study shows is that you do not need to have a plan or know how you are going to make money by following your passion. Remember the great
Dr. Martin Luther King Jr. said,
"I have a dream! . . ."
He did not say, "I have a plan."
First comes the dream and then the dollars will follow. All you need to do is just see the next opportunity and act on it. Dr. Martin Luther King Jr. also said,
"Take the first step in Faith, you don’t have to see the whole staircase, just take the first step."
These opportunities may reveal themselves in the form of unexplainable coincidences. For example, you may just happen to come across an acquaintance or stranger who has a business opportunity for you. Or, you may hear a song on the radio, read a book or watch a movie with a message that is perfectly applicable to your current life circumstances. Whether you call these coincidences, divine providence, synchronicity, or serendipity,
it can be very helpful to pay attention to them because they are hints about the next step or opportunity we should take.
During Matt Welsh’s junior year of college at the University of Notre Dame, Matt reached a point of virtual self-destruction that
stirred within him the need to seek out an easier and more fulfilling way of life. This awakening sparked him to study the practices of today’s greatest spiritual teachers. His debut novel, The Bottom Line, tells the story about how their practices forever changed the way he lived his life. Matt also speaks to high school and college students about how they can turn their passions into their career path. Presently, he is a law student at Indiana University – Indianapolis. After he graduates from law school, Matt will work for the William Morris Agency.
You can read the first two chapters of The Bottom Line at Matt Welsh’s website, http://www.followyourpassiontoday.com
Disclaimer: The views and opinions expressed in these columns are solely those of the writers/interviewees and do not necessarily represent those of the editor/publisher.
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