Angel’s Advocate Measuring National Grid of Governance

Angel’s advocate:

In Corporate history we often see the role played by Devil‘s Advocate and seldom we come across the use of Angel’s Advocate. The essence of Economics lies in risk taking without which bartering system would be in use even today. Risk taking is very essential to business where entrepreneurship is an expression of freedom. Freedom when exercised with full force, business enterprise enters into strategic moves with ambition. That’s when Devil’s Advocate plays the part as a sounding board to ensure that the ambitious strategy of the Donigers goes unrestricted. Ambition keeps pace with Freedom.

Robert Doniger is a character from Timeline by Michael Crichton, who says `I’m not interested in the future; I’m interested in the future of the future’. To-day was the future of yesterday and tomorrow is the future of to-day as well the future of the future of yesterday. Effectively what Doniger says is that he dwells in the past all the time the fascinating historical events and ever interested in tomorrow, a dreamer and a maverick he is, that he ignores ‘to day’ completely. Working like a beaver, he takes his scientists and cultural experts to the past making them stuck in the ruins of history and the genius that he is, promises a great future of the future making the people of to-day to sit in awe and wonder till they realize the future ever remains a distant dream. Ambition turns out to be greed overtaking Freedom.

This is when Angel’s Advocate emerges, long after the events have passed by, when awe and wonder result in despair and hopelessness, when Madoffs and Lehman Bros have left the scene of disaster, picking up the pieces of history bringing to the attention of Corporate to look at `the opposite values’.

Opposite Values

Devil’s Advocate is logical always, offers alternative action for the same view. When Madoff finds difficulty having come to the end of his tethers on his ponzi scheme Devil’s Advocate tries alternative routes available to continue with the same Ponzi scheme. Ambition continues its journey and ponzi scheme brings in more number of gullible investors. $1 billion grows steadily to a fund of 10..20..30..40..50.

Devil’s Advocate does not offer Doniger the options available to the scientists and cultural experts taken into the ruins of history who could never come back, for the very purpose of the project is to experiment with the disaster and the scientists had been made aware of the risks well in advance, well paid and more than sufficiently covered by the insurance, in the event they choose to stay back. Devil’s Advocate checks Doniger’s logic as to the preservation of his fees, endorses it and admires Bob’s acumen of his wording – they choose to stay back. Devil’s Advocate is the only person who gains and the rest despair and disaster. That’s the power of logic, it is straight, does not have any opposite, ambitious strategic moves on the same plane, moving the pawns to convert into Queen and check mate the opponents, without an iota of risk to the strategist. Quite logical indeed, for all.

Usually the proponent of one school of thought makes a claim and the opponent from the other school raises objections to the claim. What one believes in with great conviction, the other has diametrically opposite views. Both are right in their own sphere of thought process. Logic makes it right on both the ends, never wrong in either. Whereas Truth is always paradoxical. That’s why Truth is illogical. Truth has opposite values. Truth involves completely opposite values; then only, it can be Truth, is what Angel’s Advocate propounds. Angel’s Advocate is never seen, never listened to, not during the journey expressing the freedom of enterprise, not even after the disaster strikes many ruining every family across the nation, for the perpetrators turn to be the Devil’s Advocates for themselves even from the prison cell for a chance to become like a man again who sold Eiffel Towers twice.

Logic does not resolve paradox. Then what does?

Locating the kernel

Let us take a simple equation. X2 = 4, then what is X?

X = √4, going further

4 = ?

4 Ξ ± 2.


Ξ, is a symbol with three dashes meaning – identically equal to. Without this symbol Ξ, the equation is not accurate. In this equation X acquires two values that are not just equal but identically equal to +2 as well -2. X acquires two opposite “values” and not opposed to each other. They are in the same plane. ± are two aspects of a single movement, like a pendulum. One second it could be sitting in one and the next at the other end.

When we stand on the equator and look at North Pole and South Pole they are so far apart. But it is no different from a small coin having two sides head and tail, when North and South Poles are watched from the moon. Poles apart, true but Earth is a single indivisible unit. Genghis Khan and Gandhi are in the same plane but with different values. Both belong to a same specie. It is like identifying left hand and right hand but they are part of the single inseparable unit.

Business Enterprise is part and parcel of economy inseparable from the overall context of its very existence and responsibility. Madoff and IBM exist in the same plane, not opposed to each other but having opposite values. If Charles Ferguson’s inside job is anything to go by, all those trillions of dollars are entirely due to regulators who have failed to regulate. Charge them, push them, make them pay for it, put them behind bars, remove them from the top posts they hold today – then what? back to the pavilion, start from the scratch, right from square one – same set of mismanagement. If IBM could manage well but Madoff couldn’t, then where does the responsibility lie?

Let us try buttonhole on the opposite value. Illustratively, a statement that “I used to smoke 40 cigarettes a day, now I don’t”, could give rise to something that is missing or raise some doubts. When the person is found smoking a few minutes later one can get a reply: “I used to smoke 40 earlier, now I smoke 45 cigarettes a day”. The statement has a shortfall that none of the other reasoning would be able to dig out the truth. Inference would at the most, confirm that this person doesn’t look like a non-smoker. If a person wants to make certain to the other person to communicate clearly, then he has to say: “I used to smoke 40 cigarettes a day, now I have given up smoking”. A clarity is clearly evident in the statement without any doubt. In the said statement: “I used to smoke 40 cigarettes a day, a. now I don’t and b. now I have given up smoking”, ‘giving up smoking’ gives the clarity for the opposite value.

Smoking is one end of the value and giving it up at the other end of the value chain. Both the actions require one characteristic – intangible. In the domain of intangible there is no paradox, no duality, no plurality, no complexities or gridlock. It is an indivisible unit that treats everything same, ‘identically equal to’. Opposite value of smoking is giving up smoking and the one that triggers that value is intangible. Opposite value of eating is not hunger but fasting, triggered by intangible on special occasions like lent. It is purely voluntary. If one deeply contemplates on shall find, the opposite value of hunger is not eating but morality.

We allow the hunger to exist, more than a billion people go hungry in this world of bountifulness. We allow Madoffs to siphon off billions of dollars to worthless speculative enterprises. Regulatory authorities ‘allow’ the economic perpetrators to go scot free. The other end of the opposite value of `allow’ is not `disallow’ but Governance. That’s the truth. Truth always and completely involves opposite values, and then only it can be truth.

Governance = Resolving Paradox

In the Domain of intangible two becomes one, in the Domain of tangible one becomes two. Without reference to tangible, intangible is impossible to be perceived, with all the faculty of our mind intact. Vacuum is a space with the absence of matter, but cannot be explained without matter surrounding it. Non-existence is relative to existence. Matter by itself is inert. Anything and everything that one looks at is matter – substance. A substance has got two characteristics – 1. Quality and 2. Action. Without Quality, without Action a substance can never be referred to as a substance. Quality of a substance cannot be separated from nor the work associated with it. It is an integral part. Unless the quality of the substance is completed it never reaches the stage of a substance.

Intangible Asset is not a substance, it is a substance in the making. Once the Intangible Asset becomes a substance it is no longer an intangible asset, it merges into Fixed Asset in a Balance Sheet as a substance. Intangible Asset is an oxymoron, where intangible stands for everlasting and asset stands for a finite time. IAS 38 defines “An intangible asset is an identifiable non-monetary asset without physical substance.” IAS 38 Intangible Asset was created without defining what intangible means right from the Exposure Draft stage. The damage Intangible Asset has done to the World Economy by sucking into it all the available funding resources and using it for unproductive purposes is very enormous, almost singularly responsible for the financial crisis 2008. It has to be found out, however. How?

Corporate Governance, Corporate Social Responsibility, Business Ethics, for that matter Democracy is not a substance, but a written Constitution of a democratic nation is a substance. UNCAC – United nations Convention Against Corruption is a substance of Quality that had been created with 140 countries of signatories as Member States of UNCAC. Several IFRS and IAS standards are individually a substance. A substance has to be created. The creative process of a substance is identical and make no difference be it sentient or insentient. The process flow is same. But each substance has unique Action process very independent of any other. One substance keeps its independence even while performing the tasks yoked with another, enabling accomplishment of infinite succession of finite purposes by controlling each goal. All finite purposes create a substance for consumption either immediate or after a period of time.

Meaning any item that is not a substance cannot be ‘Governed’. Look at the Financial Crisis 2008 and every one of them without exception is due to an Action process without a substance being created. Leaping before thinking phenomena that investors in Madoffs’ ponzi schemes failed to see the task accomplishment. Same for a Private Equity Investor who invests in a company, ready to participate in their equity, based on valuation of intangible asset that is doubtful to become a substance. PE funding finds it difficult to manage their portfolio as they do not see how these companies are governed and burn their boats much after the governance reports reach them very late. Same for an individual investor in stock market. The entire stock is based on speculative information and there is none as to how the management governs its operations. Insider trading is a stigma because the governance of the company is made available to an outsider without the knowledge of the public. It is like match fixing where the outsider is able to move into the corporate cabin breaking the firewalls. Firewalls are brittle. There is only one tool available to strengthen the firewalls.

When antimatter collides with matter the mass is converted into pure energy. Collision takes place constantly without which there is no action. Mass is an inert object. Many remain inert without any collision taking place. Substance remains insentient. Only when it collides, it becomes pure energy. The cause of it is the intangible, the effect of it is Governance. Intangible when collides with substance the inert object is converted into pure energy. That pure energy is Governance, the most dynamic force in the body of management.

When sentient or insentient objects remain inert there is loss, when it collides with intangible it turns out to be profitable. Governance resolves the paradox – loss or profit.

Inactivity Based Cost Management [IBCM]

Creative Process:

During the inaugural session to the US Congress, President Obama said: ‘Here in Washington we have all seen how quickly, good intentions can turn into broken promises and wasteful spending.’ Inactivity during the Action Process results in broken promises and wasteful spending. Inactivity during the Creative Process stops with the Good Intentions. Meaning they are very subtle, like Economic Theory. It has to be taken to create a substance. Inactivity Based Cost Management tries and analyzes a common factor in every substance that is being created – from subtle to gross, to create a substance.

There are six layers that get added before a substance emerges:

0. State of quiescent. / Non-existent

1. The subtlest of the elements created is space, has only one quality – sound. / Material cause is at the conceptual stage.

2. Air, which is less pervasive, in addition to sound, has the quality of touch that can be heard and felt. / The Material cause is being made aware of and is communicated.

3. Fire has three qualities, in addition to sound and touch possesses a form that can be heard, felt and seen. / The Material cause assumes a shape.

4. Water has four qualities in addition to the qualities of sound, touch and form has the quality of taste that can be heard, touched, seen and tasted, to distinguish the flavor. / The Material cause is unique with discrimination of intellect.

5. Earth has five qualities, sound, touch, form, taste and smell that can be heard, touched, seen, tasted and smelt. Matter is in completed form. / The Material cause is wholesome and the effect is a substance.

Creative process is a continuous one adding thin layer after layer. At each stage the one that triggers the process of creation is the intangible. Inactivity at each stage is evident and measured as 0,1. If the creation process has completed the 5th layer gets a rank of 4. Although the 1st layer gets a 0 it is the beginning of the intangible getting ready for experiment. Mahatma Gandhi contemplated the next course of action after deliberating in the state of quiescence. Dandi Salt March or We have a dream march is not an instant decision as the state of quiescence is the primary cause of triggering intangible.

Action Process:

Action process follow the same pattern as the creative process. During the action process the substance joins with other substance and accomplish the task but retaining its independence. During the Action process the task accomplishment could be repetitive and therefore the ranking is based on the ‘relative efficiency’ within a range that goes with the Quality of the substance.

StagesRelative EfficiencyRank
Conceptualization>0% < 20%1
Communication>20% < 40%2
Formation>40% < 60%3
Formulation >60% < 80%4
Action taken >80%5

Innovation is the first step towards creative destruction of the ones that it tries to supplant, the essence of human endeavor to conquer the frontiers of space and time. Its journey towards becoming a substance has significance beyond the fiscal measures. The layers that are added one after the other therefore needs watchful effect on World Economy. Nakamura1 estimates in 2001 the amount invested in intangibles exceeding $1 trillion. What is relevant and appropriate that IBCM emphasizes is the stage by area of innovation as on today. Innovation is a substance that has the inherent characteristics of quality and action that cannot be separated from it nor the work associated with it, like a piece of cloth and the threads making up the constituent parts. If Financial Crisis of 2008 is of any consequence the majority of this substance under the head Innovation had never seen the daylight and disappeared into the darkness sucking a good portion of available funds. Of this estimated $1 trillion how much has gone through Devil’s Advocate and how much of it through Angel’s Advocate?

The purpose of this exercise by IBCM is primarily the study of Cost Consequence.

Cost Consequence

Illustratively, a passenger in an aircraft is provided with the video display of the real-time information on the flight path, a map covering the route, the position on dot, altitude, cruising speed, distance to destination, time from origination point and time to reach the destination. What would be the reaction of the passenger if the captain were to announce that there is no sufficient fuel in the aircraft while on mid-air?

Study of Cost Consequence is always as of now. The cost consequence is relevant for only one day, i.e. to-day and as a corollary Governance is feasible for only one day, i.e. to-day, neither by the dateless past nor of the infinite future. Governance is a dynamic force ever on its toes studying the cost consequence as of now. Meaning Governance reporting is on Real-time monitoring and then only study of cost consequence is possible.

Real-time Monitoring

UNCAC – United Nations Convention Against Corruption is one of the well crafted document in the world with about 95 countries being signatories to the Convention and many have ratified the Treaty also. Chapter II of UNCAC deals with Preventive Measures and in it Article 10 represents ‘Public Reporting’. Governments, many in democratic nations, had resisted the attempts to bring about RTI – Right to Information. Article 10 Public Reporting is a pro-active information repository on a daily basis stored in a public domain that anyone can have access to.

IBCM considers this particular Article 10 Public Reporting far superior to Freedom of Speech. Article 9 of UNCAC deals with Public procurement and management of public finances. IBCM with the status as on today, by ranking of Article-9 Public Finances, by Article 10 Public Reporting, on real-time monitoring basis of every substance being managed by the captain would make the passenger ready to listen to him to fasten the seat-belt on the announcement on the impending turbulence.

Preventive Measures is feasible only by Real-time monitoring. The monitoring aspect of it is the responsibility of the passenger, whereas ready to provide the information is the responsibility of the captain and the crew. Angel’s Advocate deals with the opposite values of Responsibility.

Participation of society

What is the purpose of Corporate or Government? “When the people fear their government, there is tyranny; when the government fears the people, there is liberty ” said Thomas Jefferson. Governments ignore people and they suffer as they do now. Same applies to corporate and customer relationship.

Government or Corporate is a substance, with the creative side representing Responsibility and the Action side representing Accountability. It comprises of several good intentions that have been taken to become a substance and the relative task accomplished for each such substance. Government gains and Corporate profits. In both the cases the focus of attention is People. Donigers are prompted by Devil’s advocate, so are the Governments pushed in one direction by Cheneys and Rumsfelds. Government loses and Corporate Los[s]es. Freedom of speech remains unhurt but unheard.

The result – Governance is not seen.

IBCM splits the creative side of Responsibility into two portions: 1. Ethical and 2. Fiscal. Ethical Responsibility is assigned to the only one category `People’ and the rest Fiscal Responsibility.

IBCM defines:

Ethical Responsibility – the state or position of being responsible for the resources entrusted to the people to run a government of the people, by the people and for the people, including the delegation of authority for the governance of the said resources to those who are entrusted with the usage.

and Fiscal Responsibility – Individual entrusted to manage and administer the resources authorized by the Ethical Responsibility for the benefits of the people.

Fiscal responsibility is a fiduciary of the beneficiary, i.e. People. A fiduciary is legally bound to act, within the confines of the law, in the best interests of the beneficiary. Fiscal Responsibility has control of property but is essentially owned by the beneficiary.

IBCM highlights the importance of People participation for the successful Governance, Corporate and Government alike, with the recognition: Free enterprise is an expression of freedom, whereas Ethical Responsibility is an expression of liberty, that threshold values emanate to bridge Ethical and Fiscal Responsibility.

Gridlock of Accountability

IBCM prepares for each substance the status report as on today reflecting the layers of completion. Inactivity in each such cases are individually accounted for by preparing an Index of Inactivity. This index becomes the bedrock of solid evidence to measure the performance of each Responsibility Area. Illustratively, Article 9 Public Finance analysis by IBCM brings out this information.

By Resource owner:

Index of Inactivity – Public Procurement & Management of Public Finances
By Resource OwnerActive Inactive Inactive %
1. People02520.00%
2. Technology15108.00%
3. Managerial Force2054.00%
4. Operational Force101512.00%
5. Finance15108.00%
Total: Resource Owner606552.00%

and by Process Area:

Index of Inactivity – Public Procurement & Management of Public Finances
By Process AreaActive Inactive Inactive %
Systems of Procurement: APF:9.1:01:1 121310.40%
Internal Control APF:9.2:01:2121310.40%
Risk Management APF:9.2:02:3121310.40%
Maintenance of records APF:9.3:01:4121310.40%
Accountability – Public Finances APF:9.2:09:5121310.40%
Total APF:9:01-04606552.00%
Index of Inactivity – Article 9 – Public Procurement and Management of Public Finances 52%
Total: Process Area – 5, Resource Owner – 5; max. Rank @ 5 = 125

There is no escape from the Gridlock of Accountability either by Ethical or by Fiscal Responsibility Group.

Angel’s Advocate Measuring National Grid of Governance

Three criteria are set for a functional Governance – 1. Realtime Monitoring, 2. Cost Consequence and 3. People Participation.

In every step of a substance creative and action process Angel’s Advocate looks at the Truth. Truth involves completely opposite values; then only, it can be Truth, is what Angel’s Advocate propounds. In Governance, Corporate or Government, People’s participation is a must to carry the Fiscal Responsibility unburdened.

A substance yoked together performs yet retains its independence. The entire earth is made of such. It governs systematically day in day out. Every day it accounts for itself by Public Reporting. Tomorrow sun raises at 6.23 AM and it does.

A substance in Government, in Corporate, in a specific industry all have a common creative process. The Governance Reporting system enunciated by Inactivity Based Cost Management enables Public Reporting on a real-time monitoring basis yoked one with the other to arrive at an Index of Inactivity, jointly and severally.

Study of Cost Consequence of Investment in the substance `Innovation’ today with the Governance Reporting by Inactivity Based Cost Management will have far reaching lessons derived for the future.


The above is the essence of the book authored and published by Jayaraman Rajah Iyer, Titled: Inactivity Based Cost Management, with the sub-title: Measurement of Intangible: Governance, Ethical & Fiscal Responsibility and Accountability. IBCM is a tool going by the dictum set by Galileo Galilei: “ Measure what is measurable, and make measurable what is not so.” In order to make measurable what is not so, IBCM exhorts the way to do i.e. create a substance. Without a substance created with Quality and Action integrated, Governance is not possible. Illustratively, googling the words given below, the search results provide the need to be specific by creating a substance for the words lest it remains jargons.

About 50,900,000 results (0.07 seconds)  Democracy, About 13,100,000 results (0.07 seconds) Corporate Governance, About 12,000,000 results (0.07 seconds) Business Ethics, About 5,130,000 results (0.07 seconds) Corporate Social Responsibility.

Meaning, there are any number of ways to interpret and analyze a word, each bringing out scholarly words of wisdom and knowledge. Governance of disparate interpretations could be good in individual cases but collectively would fail to provide a comparative analysis, as the six blind men of Hindusthan of John Godfrey Saxe, tried to value an elephant.


So six blind men of Hindustan
disputed loud and long,
Each in his own opinion
exceeding stiff and strong;
Though each was partly in the right,
they all were in the wrong!

This article contention is to bring a common Act applicable internationally to all Corporate and Government Governance. The main case-study of the book is Chapter II Preventive Measures of UNCAC – United Nations Convention Against Corruption. It is a very good document that can easily replace every one of the above stated disparate elements such as Democracy, CSR, Business Ethics, or Corporate Governance under a single banner. Check whether IBCM could have prevented BP from its disaster with three criteria Real-Time Monitoring, Cost Consequence and People Participation under Ch II UNCAC had been in operation. Apply the same principle for Iraq and bring in Iran as a Member State of UNCAC, then the world has something to look forward to on Governance.

Purpose of IBCM as stated in the book is: “In the line of International Accounting Standards Board [IASB], an International Ethical Standards Board [IESB] be formed.” Corporate, Government, educational institutions, Rating Agencies will have a common ground for analysis and measurement of Governance.

Universities as a substance with quality and action process of responsibility and accountability can do the self-assessment by IBCM as to the extent of being a Devil’s Advocate or Angel’s Advocate. Angel’s Advocate exhorts ethical responsibility.

1Working paper no. 01-15, what is the US gross investment in intangibles?, (at least) one trillion dollars a year! Leonard I. Nakamura, Federal Reserve Bank of Philadelphia October 2001

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Jayaraman Rajah Iyer






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Author - CorporateMOM - Sustainability of Corporate Stability

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