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The Rulebook Dilemma

18 May, 2010

My kids like playing a game called “red light, green light”. It’s a variation of a US game called “Simon says” where participants have to follow directions precisely. Green light means “go or walk fast”, red light means “stop” and yellow light means “move forward slowly”. The idea is to have the leader fool the other participants into making a mistake and being disqualified.

I recently returned from a US trip and on my way noticed that the taxi driver didn’t care to stop at any of the red stop lights. I finally asked him as I got home why he didn’t stop at the red lights. His response, interestingly enough, was that he was afraid of being rear ended if he stopped at a red light (since the guy behind him wouldn’t). I think that conversation brought to the forefront a key dilemma that my wife and I face constantly. Do we teach the kids to follow rules, or simply understand them and bend or break them as and when necessary, the latter, I feel, being normal practice in India. I am considering telling the kids that when they play “red light, green light”, they should do what they think is best for them, rather than go by the book. The point is that India is going through and will continue to go through an unprecedented era of growth and phenomenal change. But one piece that is the hardest to change is “mindset”. Getting everyone to understand that Red means “stop”, even if there is no traffic around you is a foreign concept that will take time to be internalized by everyone, or perhaps will never fully be internalized. And I am using the red light example purely as a metaphor.

Recently I was at an IBM event where the traffic commissioner of Bangalore (who, by the way was extremely articulate) was commenting that several groups from abroad who are expert in traffic systems have visited him trying to offer advice and best practices. The visitors often focused on the idea of making sure that there is lane discipline. But the commissioner’s question to the audience was “how do you define a lane in India”. His point simply was that the concept of a lane is well understood where the traffic is simple four wheelers or trucks, but in India with the amalgamation of everything from a rogue cow to two, three, and four wheelers, horse/donkey driven carriages and everything else pulled by either man, animal or machine, the idea of a lane is difficult to clearly define.

As I pondered the dilemma of what’s right, what’s wrong, what rules need to be followed, and what rules are simply suggestions that can be bent or broken depending upon a particular situation. I also thought about what behavior is taught/learnt versus what is driven by one’s surroundings. For example, the same person who throws trash on the road, and breaks every single traffic rule in India will be the most obedient and law-abiding citizen in the US or Europe. Why is that the case? I think the answer lies in two very critical phrases: “social acceptance” and “consequences and enforcement”. The social acceptance of continuously breaking rules in India further reinforces perhaps not that the behavior is right, but at least “the behavior is not wrong” (implying that since everyone else is doing it, it’s acceptable). In the US, it is socially unacceptable to throw trash on the floor (generally) or relieve oneself by the roadside. And there is a clear understanding of the consequence, and strict enforcement of that consequence if the rules are broken. In India, neither exists. I can just imagine some of the readers jumping up and down trying to defend the typical behavior in India, whether it is on the roads, in a queue (or understanding the concept of a queue) or whatever. The key defense that I have heard is two-fold – you cannot afford to obey rules in India; and it’s through sheer necessity that rules need to be bent or broken, implying that if rules are not bent or broken, that progress will actually be hampered. That line of defense then further implies that the only rule in India is “that there are no rules”, or that creation, following and enforcement of rules (or break thereof) is an exercise in futility.

As I worried about how to bring up my kids and tell them what’s right and what’s wrong, I thought of another incident which provided yet additional color to the dilemma. Recently the family was in Hong Kong on vacation, about to board a tram to Victoria’s Peak, one of the several tourist traps in HK. There was indeed a queue to board the tram, and the wait was about 30 minutes. Interestingly enough, there were primarily Indian and Chinese in line, and I could clearly feel in people’s body language that they were going to pretend to be Usain Bolt as and when the doors opened. Parents were gripping their kids more tightly, sweat was trickling down their brows, and everyone was jockeying for position waiting for that slight opening of the tram door. As expected, when the doors opened, there was a mad rush (reminded me of watching images of the escape from Saigon during the Vietnam War). What was even more amazing was seeing my kids, especially the nine year old, not get phased by the chaos. Instead, she was right in the thick of it pushing and shoving with her younger sister in tow and grabbed a prime seat. I was partly in shock, partly in awe with a hint of disappointment with the behavior. My ultra sensitive girl has pulled a judo maneuver with complete strangers in the tram queue. I also realized that if she hadn’t done that, we would be waiting for the next tram or perhaps the one after. But this was not behavior that my wife or I had taught or encouraged her to undertake, but an automatic response to the situation that she must have gotten accustomed to either at school, the playground or through observation elsewhere in India.

For entrepreneurs doing business in India, a significant dilemma is how to circumvent the various written and unwritten rules that exist. The examples are around the corrupt practices that exist up and down the chain of command in virtually every aspect of business — from real estate, electricity, import/export, various licenses and list goes on and on. The rules are bent or broken by bureaucrats, not the entrepreneurs. But by being forced to give into the corrupt practices, in effect, the entrepreneurs also become accomplices in the breach of law. By the way, there exists an entire industry of “consultants” who take care of the dirty business of payments to various officials, and somehow businesses and entrepreneurs themselves are shielded. Let me give another example. Recently one of our portfolio company CEO got a call from a gentleman who was a retired IAS officer but an employee of a competitor, asking to visit the portfolio company’s facility. The CEO rightfully denied the request indicating that the individual was employed with a competitor. Amazingly enough, the CEO received calls from the Secretary, Additional Secretary and others within that state’s ministry instructing him to allow access to the competitors’ employee. The CEO had no choice but to give him or suffer significant disruption and further threats. As it is, odds are against startups succeeding in a normal environment. But in India, especially in a category or sector that requires approvals or constant contact and support from the government or bureaucrats, the challenge is significantly magnified. So, the only way to counter the above is perhaps by hiring some of your own retired bureaucrats. But at what point do businesses compete not on the basis of who you know, but on the basis of real differentiation around team, technology etc.. Perhaps I am nave and the definition of competitive differentiation in India actually involves the right rolodex, especially in government.

I am guessing that most people would be split on the definition of rules and the thought that in India, just like any developed country, those rules need to be followed. Those in favor would say that both social discipline and enforcement is needed for business practices, for example, to be predictable. Only with the following of rules (which means elimination of corruption, enforcement of social/civic laws around business and IP, as well as civic sense) will India gain the respect of the global players and be a significant global player going forward. Those in the opposite camp might argue that behavior is driven by necessity, and unless the rules are bent or even broken, one cannot get anywhere in India (literally and figuratively).

I guess that’s a key ingredient in the definition of developing and developed nations. Developed nations can have rules, and everyone follows them because they can afford to. Developing countries also have rules, but those very rules are not followed because people cannot afford to follow them. I am still struggling with how best to teach my kids. Perhaps the only answer is to tell them what the rules are, that they should be followed. And like my nine year old in Hong Kong, they themselves will learn how to adapt to their surroundings, even if it means doing something that is considered inappropriate.

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The Rulebook Dilemma

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