The Quarterly BITSian

Dr. Raj Sisodia
_{By Anjum ('98A8)}

Sandpaper 2.0 Your fourth book "Firms of Endearment" came out this year and has become one of the top 10 Business Books on Amazon.com. How does that make you feel?

Dr Raj Sisodia. A 1979 graduate from BITS
Pilani and author of critically-acclaimed
"Firms of Endearment". Raj is a Professor is a
teacher-scholar at Bentley College, Boston

Dr RS: It is very satisfying specially given that I am the first author of this book and this book is about a subject which is very near and dear to my heart.

Sandpaper 2.0: For the benefit of our readers, tell us what this book is about?

Dr RS: It is really about companies that somehow figure out a way where they can not only balance but also align the interests of a lot of their stake holders. There’s one school of thought that why do companies exist. Companies exist to make money for their share holders and anything else that they do is normally treated as a misuse of the capital of the share holders.

There’s a broader view that’s emerging that companies are not just beholders to their share holders but there are multiple stake holders.  All the folks have a legitimate claim or interest in the company. Second thing is that the purpose of the company needs to be broadened and other than just making money they need to be working to achieve something that is really worthwhile – typically from a societal perspective. What we use in the book is an acronym called SPICE which refers to Society, Partners, Investors, Customers and Employees and we say that the best companies out there are those that manage to align all these stake holders together so that what is good for one is also good for the others.

And there’s no reason why you need to harm one to benefit others. For example employees and suppliers are often seen as costs that have to be minimized. That ways of business used to work earlier but we think that this model is not going to work in the future. This is because the world is changing at a very rapid pace.

In the book we talk about how we have evolved over time. If we look at the 200 years history of market capitalism which started with the age of empowerment where people really had the freedom to go out and become entrepreneurs. And this was different than it used to be earlier.  Then we succeeded that with the age of knowledge when we saw massive breakthroughs in science and technology which started in the 19th century and continued till 20th century and we had tremendous material advantage.

Around 1990 there was a collapse of communism and so we had the end of ideology as the world knows it and so there was only one market ideology which was the economic ideology. There were other changes that took place like the Internet which opened up communication which was like never before. It gave people access to information with an ease never imaginable and for free. Most of this applies to the western society. Then from 1989 the ageing population started to increase. What happened then is   that people were driven by different things. How they think about legacy and meaning of life. They looked for deeper things. So that impacted the value system.

If we combine all these factors then we find that for companies now the old model doesn’t work as employees are not satisfied and customers are not satisfied. Another thing is that there’s a lot of transparency so anything that’s done bad or anything negative is easily found out. So people want to be associated with good companies. For example if a company is dumping chemicals in Indonesia the customers are going to come to know about it,  the employees in America are going to know about it.

The world is changing dramatically, imposing new requirements for success. To thrive in the future, companies will have to embrace the social transformation of capitalism.

Sandpaper 2.0: We read an article "Karma Capitalism" in Business Week where the author talks about how business thinkers are using Bhagwat Gita to teach how corporations should look at value creation beyond stock price.  Did Hindu philosophy have any influence on your book?

Dr RS: The interesting thing about this book is writing about companies that were focused on the purity of means or purity of actions.

The CEO of one such company says that if I pay my employees and suppliers better my business will do better and bring my shareholders more money but he said that he would do that even if that was not true because it’s the right thing to do. It’s a tremendous value creation. The companies we analyzed do not say they are doing all these things because its going to yield them good results but they are saying that they are doing these things as they are the right things to do and not worried about the outcome and that’s what karma is. That’s why a company like Costco can afford to pay their employees a living wage, have low turnover, and *still* turn a substantial profit. They have captured the hearts of their customer base, and that base will go out of their way to shop at Costco whenever possible.

I gave this book to my professor in Bajaj and he said he really loved t he book but it’s all there in the Bhagwat Gita. So after that I’ve been on a mission to educate myself about the Indian culture.

Sandpaper 2.0: Can a startup company, with an uncertain future and survival on the line be a Firm of Endearment (FoE)? Or is FOE a clique of big corporations with predictable revenues, fat wallets and massive marketing budgets?

Dr RS: Yes. I have seen companies that start out with that mindset. They have the value system of the founder who looks at the world in that way. But what do they do if they still don’t have the resources for the same. Then they might postpone some of the implementation of values till they are self-sufficient.

Sandpaper 2.0: If a company like Wholefoods wants to outsource part of their IT infrastructure to some place like India and it has some employees who lose their jobs. Does Wholefoods end up not being a firm of endearment or is there some way to say its doing the right thing for itself and its share-holders?

Dr RS: That’s a good question! I think companies like that who can do it by finding other opportunities for the employees within the company and displacing them would be better off.

Sandpaper 2.0: Tell us more about your life. For starters, what did you do/study at BITS and which batch did you belong to? And here’s something to tickle your memory cells! Do you remember your ID Number?

Dr RS: My ID is 1974A3203 (No guarantees!). In Pilani I stayed in Budh Bhavan and then Rana Pratap. I worked in quality control of L&T Mumbai for around a month and meanwhile I had applied to Bajaj Institute and so I did my MBA in marketing there and passed out in 1981.  I didn’t plan to do my PhD but funny how these things happen. Some friends of mine were going to pick up some GMAT forms from the US embassy. I asked them why do you need GMAT forms, you are already doing your MBA; they said they would probably go for a PhD. I didn’t know we could do that, so I went along with them. I casually picked up the forms and applied and forgot about it.

A few weeks later we got the results and it so happened that out of the six people only I had applied and I got admission to Columbia University and did my PhD in Marketing from Columbia. I was there for around three years and after that I got my first job at Boston University. I taught at BU for three and a half years and then we moved to Washington where I taught at George Mason University for ten years. It was during that time I met Jag Sheth, who is a well known Indian academic in the marketing area.

Jag and I met at a conference in Delhi and I started working with Jag quite a lot. Most of the work that I’ve done subsequently is with Jag. In 1998 when I was well settled in DC, by coincidence I came across an ad in a magazine in my colleague’s office for this position in Bentley College which at that time was trying to become a Business School. The position was for Business in IT which was my work. The deadline had already passed but I still called and they said they hadn’t found anyone till then and so I was interviewed and then got the offer.

Sandpaper 2.0: What are the best memories of your time at Pilani?

Dr RS: I remember the Saturday lunches, the parathas, Sunday feasts, night canteens, going to C’not and the occasional sand storms. When we are younger five years seem so long. I remember my PS experiences too, one in Delhi and one in Mumbai.

One particular incident I remember - there was a strike in my first year and all of us were sent home. The students were striking for the cost of the salaries of mess employees. The Birlas wanted the students to cover this cost in addition to the food cost and so all the students were sent home for a month and the loss of time was made up during summer.

The highlight of the year used to be Oasis though, considering the fact that we were quite deprived out there!

Sandpaper 2.0: One of the biggest challenges facing BITS today is lack of good faculty.Academia is way down in the list of career choices for the brightest Indians. What can BITS do to change that?

Dr RS: It’s a huge challenge. Even the IIMs are facing the same thing. I think you have to offer better pay and better benefits. At some point it has to enter the global market for talent. The problem a lot of institutes have is that they can’t charge very high fees. I don’t know how they can solve this problem easily. Salary might not be the only thing and consulting opportunities would probably attract better faculty but quality of life is surely something they would have to provide.

Firms that made the final cut
Amazon	Honda	Southwest
BMW	IDEO	Starbucks
CarMax	IKEA	Timberland
Caterpillar	JetBlue	Toyota
Commerce Bank	Johnson &Johnson	Trader Joe's
Container Store	Jordan's Furniture	UPS
Costco	LL Bean	Wegman's
eBay	New Balance	Whole Foods
Google	Patagonia
Harley-Davidson	REI

Sandpaper 2.0: Has the BITSAA network been helpful to you in your career after Pilani? If yes, then how can others get benefit from the network? If no, then how can BITSians build an effective network?

Dr RS: I have maintained friendships and I meet some of my friends but I’ve not been too active in the BITS alumni. I have gone to some of the events organized here and what I have noticed is that there are people from 1957 too. There is such variety in the kind of people we meet there.

Sandpaper 2.0: What would your advice be to all the aspiring writers who are planning to write a book? Vivek Paul said in an interview that the Rol for writing a book just isn’t there. What do you say?

Dr RS: He’s in a different line of work. For a Professor it is definitely worth it but not for an engineer or executive. In terms of the ROI as you mentioned, from the executive perspective it doesn’t make a lot of sense but from an academic perspective, I find that books have much more life long impact than articles.

Books get translated in other languages and have influence on more people.

Dr. Sisodia is one of the first of three teacher-scholars at Bentley College. Dr. Sisodia joined Bentley College from George Mason University, where he served as associate professor of marketing and director of executive programs at the School of Management. His teaching, curriculum development and scholarly activities focus on digital commerce; technology management; technology as a change agent; the telecommunications and information industries; services; marketing  productivity; and the impact of information technology on marketing strategy. His work has been featured in professional journals such as the Harvard Business Review, Wall Street Journal, New York Times, Washington Post and American Public Radio's Marketplace. He co-hosted a monthly talk show on business and management issues broadcast on National Public Radio. Dr. Sisodia received a BE Hons) EEE degree from BITS Pilani (1979), MBA from Bajaj Institute of Management (1981) and MPhil PhD in Marketing from Columbia University 1988).

Sandpaper 2.0: Was it tough writing your first book?

Dr RS: It was definitely tough but writing a book for the first time is more of a mental block. Jag encouraged me as he had already written 15 books and said write it as chapters and don’t think of it as a whole book and that helped.

Sandpaper 2.0: Tell us something about your family.

Dr RS: I have three children, one boy and two girls. One is 18 one is 15 and the last one is 13 and they all go to school.

Sandpaper 2.0: Every time we travel to India we feel that wireless telephony in US lags with respect to services offered by carriers, phone models and tariffs. Why is the world’s richest country a laggard in embracing wireless technology?

Dr RS: I think it’s an interesting question. They are a number of factors behind it. One is the update of wireless here was slow perhaps because the wireline infrastructure was so well placed that the urgency for wireless wasn’t felt. The second factor could also be that we had multiple standards like CDMA, GSM etc so I think that also slowed down the evolution because different people were promoting different things.

KESAR KOTHARI’S ELFIT ARABIA WINS AJMAN INDUSTRIAL EXCELLENCE AWARD

Elfit Arabia was awarded the coveted Ajman industrial excellence award this year and Kesar Kothari, Managing Director of Elfit Arabia and BITSian, received the same from His Excellency Sheikh Ammar Bin Humaid Al Nuaimi the Crown Prince of Ajman. Elfit Arabia is one of the leading manufacturers and suppliers of Telecom and Electrical products in Ajman, UAE.

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