CorporateMOM turns
April Fool’s Day to
Goal Congruence Day

April Fool’s Day
* •April Fools’ Day or All Fools’ Day is an annual custom on 1 April consisting of practical jokes and hoaxes.
* •Is an important day for Corporate India and the Government of India. On this day New Fiscal Year starts, and the old one comes to a close.

Closing the books – Beating Retreat ceremony
* It is a frantic day. Scope 1 parameters spoil the broth. Upstream companies could not hold their fixed costs.
* It is matched with our own fixed costs that had gone awry, despite frantic efforts in the last month.
* Every company on this all Fools’ Day plays the game of passing the buck.

Profits, profits, profits
* The CFO team is the most important on April 1st. Drums and bugles herald the New Fiscal Year. ERP is ready. Let us look to the future, not the one that had gone away. We can’t do anything now.
* Journal entries after journal entries are passed. Profits, profits, and profits do not match the expectation. Worried faces wonder what would happen in the stock market, when would the bankers start crawling back to our office. Ha foolish to be an accountant, sighs the CFO on this eventful All fools’ day.

Emergency kitchen cabinet meet
* CEO, the retinue of VPs, and the CFO call for an emergency meeting of the kitchen cabinet. Adverse variances analytics make each VP jump and accusing the other responsible for the All Fools’ Day.
* CEO dismisses all but one.
* Can we do something? Our reputation is at stake.
* CFO returns and journal after journal entries passed are reversed. CEO comes to CFO’s office. A new recipe is put forward. CEO nods ok. The cooking is complete. Reputation restored.

Reality Check Flat Organization Structure

* My book extract:
* For decades, the structure has remained the same. The platform is a unidimensional organization that runs from procurement to manufacturing to sales and every other structure. It comprises the board of directors, CEO, and vice presidents. All form part of a flat organization, with all the eggs in a single basket. The results are completely anarchic. Where every individual is different, each is different in different places. In any organization, you see how each individual is governed by their own idiosyncrasies. There is no corporate goal congruence. What is comprehensible in an organization is how incomprehensible it is. Corporate must shake themselves free from the “earth is as flat as a trencher” outlook.

My experience Forestry Operations
* My book extract:

Working on wood accounting while I was a forestry operations accountant of WIMCO (a subsidiary of Swedish Match Company) in Mysore, in the south of India, also served as an interesting perspective. The Mysore branch supplied wood to two WIMCO factories—one in Ambernath (near Mumbai) and another at Chennai (in Tamil Nadu).

* My book extract:
The accounting year for WIMCO was January to December whereas forestry operations took place between September and April, on the basis of the monsoon. So, at the beginning of an accounting year in January, factory costing would have to take note of wood felling from one season of the current season (September previous year to April current year) and 4 months from the next season (September to December current year, as part of next season September current year to April next year), which is unpredictable. It is unpredictable, as the foresters mark the trees for felling for the next season and start their work in the following September.

* My book extract:
I introduced a cost accounting method called the likely ultimate cost (LUC) for the factories to get a uniform cost throughout the year so that their monthly profitability statements would not fluctuate from month to month. LUC is the cost figure related to the end of the accounting year charges for the wood supplied but a standard cost from the beginning of the year.
This LUC helped me in projecting a figure for the future and bringing it to today’s level in the form of compound annual growth rate (CAGR) and compound annual reduction rate (CARR) converted into CDGR and CDRR (D-Daily), which you see in CorporateMOM.

CorporateMOM adopts
CAGR and CDGR
When we discuss Scope 1 parameters to be met it extends to 2030, 2040, 2060, and 2070 targets to be met.
CorporateMOM converts CAGR to CDGR or CARR [Reduction Rate] to CDRR. That’s Daily. Keeps track of every component that makes up the targets.

CorporateMOM adopts CREAM Report
Playing an ODI Cricket

In my case study of HUL P&L and Balance Sheets are analyzed from 2007. In one year when they switched to the April fool’s Day Fiscal Year the number of days for the fiscal year was 457.
Revenue or consumption per day was analyzed for uniform day-to-day ratios.
CREAM is an acronym for Corporate Governance, Risk management, Earnings, Accounting Quality, and Management Quality. Earnings are quantitative with 12 process blocks and the rest constitute 188 Process Blocks that are qualitative.
When companies adopt CDGR it is like playing an ODI cricket.

My experience
Shipping Construction

* My book extract:

I took up a consulting assignment for the Shipping Credit and Investment Company of India (SCICI) on cost accounting of shipping construction. SCICI was providing funds to shipowners at a low-interest rate (a third of the prevailing bank rates). There were three parties to it: the shipowner, the shipbuilder, and SCICI. Shipowners taking the funds from SCICI would divert them to other than shipbuilding in their group companies. SCICI asked me to bring out shipping construction stages so that it could release funds according to the stages completed. This called for a detailed shipping construction manual, literally.

* My book extract:
While working on this, I found Japan’s influence on the scenario in shipbuilding most interesting. After World War II, an air force veteran in Japan was entrusted with the charge of shipbuilding. He went around the globe visiting various shipyards and found they were building in the same pattern as before, from laying the keel upward.

* My book extract:
Being an air force man, he could not accept this practice and introduced the block development process of shipping construction. Different blocks constructed at the same time at different places and assembled at the shipyard reduced the time of construction substantially, from 16 years to 4 years. Placing an order 3 years in advance for items like the main engine, which would arrive in time for the requisite blocks, is an example of the kind of changes he effected.

CorporateMOM adopts process blocks technology
*
I adopted the shipping process block technology for the preparation of a CREAM— corporate governance, risk management, earnings, accounting quality, and management quality—Report.

In an organization, there are 200 open-ended process blocks. If there are 100k people in a company a 5-member team is formed of 20k teams. Each team is assigned specific tasks accomplishment – creative as well as action. Each member is yoked together but works independently.

CorporateMOM brings in Goal Congruence
* Return on Intangible is the equation CorporateMOM provides.
* Intangible is the effort and for each person the same capability that is 1 as the denominator.
* Numerator is action or inaction brings a binary value for each person.
* Each is a gold medalist. Silver and Bronze medalists strive to get gold in an organization, enabling the accomplishment of an infinite succession of finite purposes by controlling each goal.
* That goal is the same for all, optimize capability, the Goal Congruence.

My Message
Matter and Energy:
The three laws CorporateMOM uses for Corporate Sustainability are:
Law 1: Energy is liberated matter. We show under P&L and Balance Sheet.
Law 2: Matter is energy waiting to happen. Raw materials to godown to finished goods stores to NPAs.
Law 3: When anti-matter collides with matter it forms pure energy. That’s to say push Law 2 to Law 1.
Each process block is dealt with under these three laws of the Universe.

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Podcast Episode #31 CorporateMOM
Calls the Banks for Spontaneous Urge to Action –
Measure Cost Consequence Now, Now, Now.
A Credit Suisse case study.

CorporateMOM
Calls the Banks for Spontaneous Urge to Action –
Measure Cost Consequence Now, Now, Now .
A Credit Suisse case study.

CorporateMOM is a derivative of my IPR –
IBCM – Inactivity-Based Cost Management:
Activity has a Cost Incidence, whereas Inactivity a cost consequence.
Measure Cost Consequence, Now, Now, Now.

Lessons we learn from Credit Suisse?
1. Unstable corporate architecture.
2. No Accountability:
3. No Governance

Let us explore how CorporateMOM looks at it.

CorporateMOM is already published with a Case Study on #Volkswagen. I shall present here an extract of the same that is relevant to the case study we are looking at – a case study on Credit Suisse, succinctly.

1. Unstable corporate architecture.
CorporateMOM deals comprehensively with Corporate Atomic Structure.

2. No Accountability:
CorporateMOM deals comprehensively with Return on Intangibles.

3. No Governance
CorporateMOM deals comprehensively with Subject – Object – Self-governance Framework.

I present here an extract from CorporateMOM – a Volkswagen Case Study.

Quote:
1.3.5. Governance – 1. Economic –
Troika of entanglement – [Subject -Object – Self-] SOS -Governance
1.3.5.1. Volkswagen Case Study – a spontaneous urge to action rather than inaction’ On 28th October 2015 Matthias Müller, Chairman of the Board of Management announced the five key steps to realign the Group. They are stated as Priority #1 to #5. The webpage no longer exists. Matthias Müller was replaced in 2018 by Herbert Diess Chairman of the Management Board, CEO, and Chairman of the Volkswagen Brand Board of Management. For the sake of the sustainability of responsible policies, I am keen to go from what Matthias Müller had planned then and assess what Volkswagen Annual Report 2021 has come out with.

Priority #1: Customer Satisfaction
Priority #2: “uncover the truth and learn from it”
Priority #3: Change in Organization Structure:
Priority #4: Establishing Corporate Culture
Priority #5: Strategy 2025

We will take the stock of the situation in VW Group based on what Matthias Müller had intended to do with this set of 5 Priorities.
Unquote:

VW and Credit Suisse Case studies compared:

Priority #1: Customer Satisfaction

CorporateMOM case study on #Volkswagen 2021 is an eye-opener. VW has done well in scoring well on Priority #1.

But it has taken 6 years. Credit Suisse shall note that customer satisfaction takes time but the process must start now, now, now.
Policy making, Policy Accidents, and Policy Politics need to clearly made and tracked.

That depends on focusing on Priority #2 to Priority #5.

Priority #2: “uncover the truth and learn from it”

My study on #Volkswagen reveals a big thumbs down.

Credit Suisse is in a better position because the top brass has come under a different top brass – UBS. Whereas #Volkswagen has to continue the journey with the unchanged Supervisory Board. The job undertaken by Dr. Herbert Diess who changed VW is quite remarkable, given the circumstances under which he had to function.

For Ralph Hamers Group CEO of UBS Group AG, Credit Suisse is nothing but a plug-and-play USB for UBS. Priority #2 when done well would get a thumbs-up sign from CorporateMOM.

Priority #3: Change in Organization Structure:

My Comment on #Volkswagen: Priority #3: Change in Organization Structure: – This is the crucial aspect of a company to bring abstractions into reality. Governance must be managed. When there is attrition of values how do we control the gradual decline of morality? Changes in organizational structure must reflect in the corporate value system.

For Credit Suisse: hierarchical one-man call center be scrapped. Establish Corporate Atomic Structure in the same pattern as the Universe.
1. It assists individuals to accomplish tasks in an infinite succession of finite purposes., by controlling each goal.
2. It provides you with everlasting benchmarks and metrics, aiding your strategy Planning Process.
3. Delineation of responsibilities between the troika of entanglement – The Board, The CEO Team, and the Society.
4. Matter and Energy well calibrated.

Priority #4: Establishing Corporate Culture

A culture is a function of true knowledge of awareness, an identity with ethical responsibility, that by which corporate infers and society teaches.

From Volkswagen Analytics:

1.3.11.4: Code of Collaboration and Together4Integrity

The Code of Collaboration, along with our integrity and compliance program Together4Integrity (T41), is a central pillar of the new Group strategy NEW AUTO. This Code describes how collaboration is to take place within the Group and between individuals in their day-to-day work. Its core values are encapsulated in the terms “genuine”, “straightforward”, “open-minded”, “as equals” and “united”. T41 brings together all activities relating to integrity, culture, compliance, risk management, and human resources, creating • common path toward a new corporate culture. Unquote

Good initiative by Volkswagen. Credit Suisse shall adopt similar initiatives.

Return on Intangible.

For Credit Suisse: Priority #4: Establishing Corporate Culture:
Return on Intangible. : CorporteMOM provides you with Return on Intangible. Is an Equation: Numerator – Action or Inaction: Denominator – Intangible – Effort by one person.
The denominator is common to all, each and every person of your workforce. That is Intangible bears a value of 1, equal capability.. The equation gets a binary value of 1 or 0 based on Action or Inaction. Performance or contribution by each person is Measured.

Priority #5: Strategy 2025

From Volkswagen Analytics:

Quote: As the new Group strategy NEW AUTO is currently being concretized and enhanced, the content of the KPIs and the correspondingly adjusted targets for 2030 in the target dimensions are still being determined. As part of this, the relevance of the KPIs will be reviewed at the Group level and their focus will be continuously monitored and adjusted as necessary. Unquote.

My comment: Strategy 2030 is the next stage. For a company like VW group Scope 1, Scope 2 and Scope 3 parameters are crucial for undertaking the fiscal responsibility to its natural growth and expansion. At this juncture, VW Group has taken it forward impeccably.

The next stage is the Action process how the efforts are greater. Efforts are of the people. This calls for a different denominator than the Return on Investment. So Return on Intangible is the solution.

For Credit Suisse: Priority #5: Strategy 2025: CorporateMOM – Strategy blueprint in 6 Stages of the strategy planning process – 0. Dream, 1. strategy idea, 2. strategy communication, 3. strategy formation, 4. strategy formulation, and then 5. the strategy plan, comprising of the creative process as to how the Strategy Plan Credit Suisse – Transformation, is created.

Then to 6. our efforts greater is the action process. Get ready for Strategy Plan 2025 on a priority basis, by CorporateMOM MeRIT – Measure, Record, Implement, and Track.

Over to [Subject -Object – Self-] SOS -Governance Framework – for UBS – Credit Suisse.

Governance – Fiscal & Ethical-cum-co-Responsibility Framework –
Troika of entanglement –  [Subject -Object – Self-] SOS -Governance
Sustainability Report – UBS Group AG –  Credit Suisse

Summary:

Two groups:
Fiscal and Ethical-cum-Co-responsibility
Under Fiscal Responsibility:

1. Priority #1: Customer Satisfaction
2. Priority #3: Change in Organization Structure:
3. Priority #5: Strategy 2025

Ethical-cum-Co-responsibility

1. Priority #2: “uncover the truth and learn from it”
2. Priority #4 Establishing Corporate Culture

We prepare a CREAM Report:

CREAM is an acronym for Corporate Governance, Risk Management, Earnings, Accounting Quality, and Management Quality.

If you look at the chart, Corporate Governance, and Risk Management comes under Fiscal Responsibility. Accounting Quality and Management Quality come under Ethical-cum-Co-responsibility. The net result of it is E which is Earnings.

When you look at the Corporate Governance aspects you are looking at several risk factors, as The OCC has defined nine categories of risk for bank supervision purposes. These risks are Credit, Interest Rate, Liquidity, Price, Foreign Exchange, Transaction, Compliance, Strategic, and Reputation.

Barring Reputation the eight would be under Fiscal Responsibility. The Reputation aspect of it would come under Ethical-cum-co-responsibility.

Looking at the chart you will notice Sustainability of Efficiency gives you profits whereas Sustainability of Value System alone gives Sustainability of Profits & Growth. It’s important.

Return on Efficiency and Return on Intangible

Return on Efficiency looks at the Object that’s Matter. Create Team Work. 4 from Fiscal Responsibility and 1 from Ethical-cum-co-responsibility.

You have Men + Women Equity created from Return on Efficiency and from Return on Intangible Ethical-cum-co-responsibility factors are accounted for.

Here I have given Ethical-cum-co-responsibility entire responsibility is given to women’s Empowerment, from where you get Women’s Equity. Women also work under Fiscal Responsibility where you get Men + Women Equity. Women’s Equity is on both sides Fiscal Responsibility and Ethical-cum-co-responsibility because Women have contributed or not participated in all these Boys only Club problems. Women hold the dual-responsibility.

If you look at Credit Suisse itself as well as you will find there is no mention of SVB and any of those banks that have gone bust, I have not seen any woman being indicated as being responsible for [the bust].

This is very important. We have about 200 Quantitative and Qualitative Elements of Management, Quantitative about 12 elements we show under Earnings. Qualitative we don’t show at all. The entire 188 Qualitative Elements warrant Women to take over Ethical-cum-co-responsibility factors.

That’s what CorporateMOM pulls in then you can easily find out in the Credit Suisse example. These are 10k teams as Credit Suisse has a 50k workforce with each team made up of 5 members. That each and every member from the janitor to the CEO and the Board knows what the work requirements are or what effort they put in to reorganize and completely change Credit Suisse to what it is today to what you would like to be as per Strategy Plan 2025 or 2030.

This you can measure by Return on Intangible, if you have 2025 CAGR put that as on today converting to CDGR – a Daily report – CREAM Report – of how things are moving further to reach the target. CAGR to CDGR of profits and growth targets.

That’s about it. I would very much appreciate Gender Equality being maintained, particularly in this Credit Suisse Framework – SOS Governance Framework.

My Message

CorporateMOM
Calls the Banks for Spontaneous Urge to Action –
Measure Cost Consequence Now, Now, Now
A Credit Suisse case study –

Keynes’s Animal Spirits call for a spontaneous urge to action rather than inaction. The 50k workforce of Credit Suisse are the only people who can trigger their urge to act upon the 5 priorities SOS Framework has brought in. CorporateMOM downloadable files have all the building blocks necessary to construct value and deconstruct valueless of Credit Suisse.

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Podcast Episode #30 CorporateMOM – Sustainability of Corporate Stability

CorporateMOM is Corporate Management Orbiter Mission. Corporate is the central pillar of the global economy but collectively the current eco-system has made it unstable. Make it stable. The mission is to make sure the Sustainability of Corporate Stability is ensured. That’s the purpose. There’s no different opinion among any as to stabilize the corporate management. The key word is sustainability, which is sustained corporate stability.

Lessons we learn from SVB?

Lessons we learn from SVB?

1. Unstable corporate architecture.

CorporateMOM deals comprehensively with Corporate Atomic Structure.

2. No Accountability:

CorporateMOM deals comprehensively with Return on Intangible.

3. No Governance

CorporateMOM deals comprehensively with Subject – Object – Self-governance Framework.

[Amazing isn’t it? Same issues as they were from Industrial Revolution – i 1.0, i2.0, i 3.0 and going on in i 4.0?]

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Podcast:
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