Letter to CEOs : CREAM™ Report – Jump out of GAAP to measure Corporate Energy e = mc²


Letter to CEOs : Jump out of GAAP to measure Corporate Energy e = mc²

CREAM™ Report – assured Profits maximiser – Insures the n-dimensional problems – ensures robust Value System: by Return on Intangible – <Return on Investment is passé>:


Harvard Business School professor and former Medtronic chairman and chief executive Bill George argues that this obsession with short-term performance comes at the detriment of long-term value creationi.

Harvard Business School professor Michael Porter makes the case that business can help tackle social problems. The systems that we’ve developed to deal with social issues, including NGOs and philanthropies, are well-meaning and motivated, but they’re not designed to scale. “The awkward reality is that we’re not making fast enough progress. We’re not winning,” says Porter. “These problems seem very daunting and intractable. Any solutions we’re achieving are small solutions, incremental progress.” The issue: the current model doesn’t have nearly enough resources to finance the necessary change. We need to confront this issue head-on. “How do we create resources?” asks Porter. [TED talk].

CREAM™ Report addresses the issues raised by the Harvard professors on two counts:

  1. Long-term value creation,
  2. How to tackle n-dimensional problems facing the Society.

IBCM© Research has just released CREAM™ Report – Hindustan Unilever Ltd. Is of 350 pages analysis of Hindustan Unilever Ltd., of 200 issue areas – pertaining to CREAM – Corporate Governance, Risk Management, Earnings, Accounting Quality and Management Quality. [Available through Amazon].

The template remains the same for all companies, as below:

CREAM™ Report
CREAM™ Report

1) What can you expect from a CREAM™ Report for your company? What conclusions you derive from a CREAM™ Report?

i. Profits – What’s the bottom line that CREAM™ Report assures?

ii. Efficiency – What’s it that CREAM™ Report insures at the backdrop of n-dimensional problems your company face?

Iii. Value System – What’s it that CREAM™ Report ensures that your company possess a strong value system.

  • CREAM™ Report ensures your company value system with metrics unique to Nature and therefore everlasting, universal, indisputable and comparable to all companies.
  • CREAM™ Report insures your company efficiency by converting n-dimensional problems to n-problems of one dimension with the Subject – Object distinction of Qualitative and Quantitative elements of Corporate Management.
  • CREAM™ Report assures profits as a measure of effort put in and lists block by block governance-deficit for maximisation of profits. Relating governance-deficit to profits from individuals in your company is unique to CREAM™ Report, an optimisation of effort.

2) The background:

Corporate history since the industrial revolution has been an enormous growth in freedom of enterprise, economic prosperity, innovation, technical and intellectual advancement but it has also been, stoking the passions of greed, a slow and sure decay of morality and social order culminating in high unemployment and Occupy Wall Street movements.

i. The n-dimensional problems relate to the slow and sure decay of morality, whereas the single dimensional resolution is innovation, technical and intellectual advancement.

ii. Intangible Assets, the investment: To quote the conference paper1: “Nakamura estimated the value of U.S. gross investments in intangibles in 2000 to be at least $1 trillion annually. More recently, Corrado and Hulten (2010) estimate that in 2007, by omitting investments in intangibles, $4.1 trillion was excluded from published national accounts data in the United States.”

  • Hardly an IPR is created into a substance there is a rush to exploit the financing aspects of it. Financing companies or PE Investors add to n-dimensional problems to their portfolio.
  • Pension fund assets in OECD countries hit a record USD 20.1 trillion in 2011 but return on investment fell below zero, with an average negative return of -1.7%s, [Japan -4%, US -3.1%, UK -2%] according to the OECD’s Pension Markets in Focus. (Source OECD – 21/09/2012)
  • The weight of equities in portfolios was at a historical low in 2011. Australia had the highest, at 49.7%. The only other countries where equities outweigh bonds are the US (26.0% in bonds to 48.1% in equities) and Finland (35.4% in bonds to 41.3% in equities).(Source OECD – 21/09/2012)
  • USD 20.1 trillion is a huge amount. An average return of -1.7% scares away the investors, particularly India where there is a huge, very huge cash available to the market that otherwise is put in safe deposits and gold.

iii. “ Economic Survey – 2013: Demographic Dividend: Policy-makers are usually focused on short-run economic management issues. But the short run has to be a bridge to the long run. The central long-run question facing India is where will good jobs come from? Productive jobs are vital for growth. And a good job is the best form of inclusion. More than half our population depends on agriculture, but the experience of other countries suggests that the number of people dependent on agriculture will have to shrink if per capita incomes in agriculture are to go up substantially. While industry is creating jobs, too many such jobs are low productivity non-contractual jobs in the unorganized sector, offering low incomes, little protection, and no benefits. Service jobs are relatively high productivity, but employment growth in services has been slow in recent years. India’s challenge is to create the conditions for faster growth of productive jobs outside of agriculture, especially in organised manufacturing and in services, even while improving productivity in agriculture. The benefit of rising to the challenge is decades of strong inclusive growth.”

  • Should industry look at ‘India’s challenge is to create the conditions for faster growth of productive jobs outside of agriculture’ then one more of a dimension is added to the corporate list of problems.

iv. What do n-dimensional problems indicate?

  • Acceptance of defeat, industry can do nothing about it, n-dimensional problems will remain unsolved.
  • For Corporate there is a tendency to overlook ethical responsibility and extol its own intellectual superiority. The tragedy is, society is not conscious of corporate apathy, worse still corporate admires itself and is lost in the masquerade.

3) What CREAM™ Report can do to your company ? How could you energise your Corporate management?

i. CREAM™ Report is the comprehensive measuring system of how your company is governed?

  • Annual Plan and Budget would be ‘finance’ centric, what your company profits for the next year, CapEx for the next three years etc., a traditional budgeting exercise Corporate and Governments are stuck with.
  • CREAM™ Report provides you with a platform as to how the Annual Plan is set to achieve the targets.
  • Corporate Management deals with n-dimensional problems that relate to variance analysis after the events are known whereas CREAM™ Report puts your company to deal with n-dimensional problems ahead of occurrence of material events.

ii. What does the term “Accountability” mean to your company?

  • In the traditional Annual Budget and weekly meetings Accountability is a factor of conflicts where problems created on account of negative variances, are systematically argued and disowned.
  • Accountability is hierarchical top-down management with one call centre.
  • CREAM™ Report breaks down the entire template to several process blocks where each one of them is ‘owned’ by a 5-member team. [See the chart above.]
  • Whereas CREAM™ Report entrusts each process block to a 5-member team run by self-governance, the foundation for spreading Risk Culture within.

Please observe self-governance’ is possible whereas Accountability is not!

iii. How CREAM™ Report is structured, for your company?

Zubin Mehta Orchestra
Zubin Mehta Orchestra

CREAM™ Report is a symphony orchestra with a conductor directing a team of people who play as many numbers of instruments preparing the musical ensemble for public presentations.

  • There are two processes: 1.Creative Process and 2. Action Process.
  • What public see on stage is Action Process – practices and what individuals work behind the stage is the outcome of Creative Process – policies.
  • The instruments are the Object, the persons playing them the Subject.
  • Object is the end result of a Creative process., when an IPR or a Policy is visible and tangible.
  • The notes in front of the players you see in an Orchestra is an Object, displaying a policy statement, Code of Conduct, Code of Business Principles, Code for Independent Directors, Conflicts of Interests, conflicts of personal interests, conflicts of conscience besides use of tangible objects in manufacturing, marketing, buying, vendors, AR, CapEx, investments.
  • Every one of the above is an Object moved or an Object in-progress, an inanimate, inert substance that individuals behind these Objects move, move, move to a different space.

CREAM™ Report deploys the same category of a 5-member team to each process block. Each process block can be either in a creative process or in an Action process. For example, a policy in the making and a policy that is being used.

  • The behavioural characteristics of an Object-in-making during the creative process, CREAM™ Report captures by a system of metrics connatural to Nature. Every Object under creation goes through the same identical process, Natural or man-made.
  • The Object you see in front of the player is unique to the Quality of the Object created specifically for the player to play while conducting the Symphony. When played according to the tune set, the Symphony is a musical success. Any single player plays or doesn’t play or finds missing the Object to play results in cacophony of orchestra.
  • CREAM™ Report has structured each process block with a 5-member team [see the chart above] yoked together but plays independently. A missing beat reduces the Quality of the output.

CREAM™ Report has shrunk the entire Corporate Management to a) two processes – Creative and Action and b) single dimensional – the player – how he/she plays the music or does not play.

  • The numerator is the Object being moved or not – a binary value of 1[one] or 0[zero].
  • The denominator is 1 [one] representing the human energy. The effort put in by people entrusted with the Object for moving it.
  • The denominator being 1 any two or more process blocks can be combined to derive the results by simple average, integers only, as to the stage of completion of the movement process of the Object in question.
  • The entire Corporate process blocks are added to arrive at a single rating structure 0 to 5, representing the binary value addition of effort of many, called by CREAM™ Report as Return on Intangible.
  • The cacophony of orchestra represents the n-dimensional problems of people who have not played according to the notes.

CREAM™ Report captures simultaneously the stage yet to be covered or the gap created by individuals playing the musical instrument by way of Index of Inactivity. Index of Inactivity represents the numerator value of each process block as the difference between the optimum value of 5 to the current status.

  • CREAM™ Report brings the abstractions into reality, acknowledges value where value is due, and deconstructs what is valueless.

Note, the Orchestra Conductor does not play any instrument?

4) Why your company should adopt CREAM™ Report?

You may recall when Prime Minister Manmohan Singh had set himself the task of reviving the animal spirits of businessmen, while taking over the FM portfolio.

i. It was Keynes who talked of Animal Spirits, as such: “Animal Spirits: – Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.”

Quantitative probabilities modeling tools have taken the enthusiasm from almost all the people working within, of any company.

  • CREAM™ Report assigns process blocks to a 5-member team with goal congruence.
  • CREAM™ Report affirms the ownership of each process block to people working within the company, neither the shareholders nor the customers. For 40 odd years an individual works and slogs for a process block and if he is not the owner who else could be?
  • Metrics adopted 0-5 are the basis of benchmarking the performance for each process block.
  • Accountability by a hierarchical top-down with a single call centre is passé’, replaced by self-governance.
  • CREAM™ Report brings enthusiasm in the working of your company.

ii. Subject-Object distinction of Qualitative and Quantitative elements of Corporate Management aligns Ethical Responsibility that is substantive to Fiscal Responsibility which is attributive.

  • Honesty, integrity, reputation, business ethics, sustainability etc., etc., have no meaning unless they are presented as an Object.
  • An Object is a tangible substance where musical notes are marked clearly that the player tunes in to the music.
  • By creating and entrusting several process blocks to a 5-member team, Ethical and Fiscal Responsibility of your company are ensured.
  • By deriving a single digit rating [0-5] for Your company, the gap analysis by CREAM™ Report traces to individual process block by an Index of Inactivity. Inactivity refers to inactive elements of intangible, pulsating energy awaited for moving an Object entrusted. Move, move, move the Object then only music is heard. Index of Inactivity is displays the guys in an ensemble holding the violin and drums but static. The 5+ year study of HUL shows the management is stuck at level 1. No point in declaring them as the best among the companies on Corporate Governance, as it tells more on the rest of India Inc.
  • Governance rating and governance-deficit rating are made available by CREAM™ Report simultaneously.

Subject-Object distinction of Qualitative and Quantitative elements of Corporate Management gives human capital its due place in your company, particularly Research and Development.

iii. CREAM™ Report shrinks the data differentiating between two processes, Creative and Action, and with the same denominator.

  • With the optimised level at 5, when any process block currently say at 3 reaches 4 it is a cause of celebration to the entire company because each process block is manned by the same 5-member team yoked together but work independently.
  • Quantitative probabilities modeling tools is an art of analysing more and more of less and less, whereas the art of corporate management rests on compacting less and less of more and more for decision-making that CREAM™ Report presents.

Data handling will no longer be of any consequence for you, be it Inventory management or project implementation. CREAM™ Report has shrunk your data.

iv. Real-time monitoring:

  • The rating system is updated as and when the tasks assigned are performed.
  • Let the default page of the computer screen shall display the company rating status on real-time.
  • In a complex project management spread over say three years from the state of non-existence to completion can be tracked in real-time by each of the several process blocks pertaining to the project by CREAM™ Report.
  • A rating of 5 means dT/dT i.e. series of Tasks in respective series of Time move at the speed of 5.
  • The speed relates to the effort put in.

Aligning Ethical responsibility with Fiscal Responsibility will facilitate real-time monitoring for your company.

v. CREAM™ Report helps create music within your company, eliminates a number of problems by preventive measures, enhances self-governance, stops risk appetite, spreads risk culture and brings in enthusiasm connecting to the Society.

  • CREAM™ Report is a musical extravaganza.


i. CREAM™ Report on Hindustan Unilever Ltd. culled from the published data since 2008-09, is worth comparing to your company. The beauty of CREAM™ Report is the comparable ratings for one process block to another across the corporate – local or global. Hindustan Unilever Ltd., is an 80 year old company. The study reveals how vulnerable they are as on today. IBCM© Research CREAM™ Report is a change manager, is the pole-shift theory of management, from Return on Investment to Return on Intangible. Your company would be benefited by the case study of CREAM™ Report on Hindustan Unilever Ltd.

ii. That’s capitalism, isn’t it, Return on Intangible? Make the best use of the human capital, to energise your company.

iii. CREAM™ Report helps companies in Industry, Banking sector, Financing Investors to measure themselves in order to look at the rest with whom they do business with. One is dependent on the other, having an AR, AP, loans and advances in its Balance Sheet, creating a cascading effect on the way as to how the company makes itself known. Collectively all companies move forward what is called for the Goldilocks effect where the several dots are connected to each other i.e., .com, .agri, .org, .edu, .gov are just right. CREAM™ Report blends companies together for a goal congruence which is – be part of the Society we live in.

iv. Balance Sheet preparation is the work of a specialised department whereas CREAM™ Report is for each set of process blocks by the owners of the respective block. Balance Sheet is a convoluted process of displaying self-deception of Fiscal Responsibility that is attributive whereas CREAM™ Report rests with owners of each process block with Ethical Responsibility that is Substantive. Growth of companies will be measured by Return on Intangible that is substantive not by Balance Sheet which is indeed a primitive instrument unable to extend its hypothesis to corporate management. CREAM™ Report connects the dots.

v. The best bet for companies is preparing a CREAM™ Report for each process block where the ownership rests, not the shareholders or customers. IBCM © Research will assist your company achieving in its preparation from a state of non-existence to conceptualisation to communication to formation to formulation to a tangible substance, the six stages of evolution of creative process. Be an innovator.

vi. How to be an innovator? Check the HUL energy level as below:

e in e = mc²












Optimum energy level is 5 that HUL should aim to reach from the current level of 1. Find out what’s yours? What is the energy level you are now and where you would be tomorrow? Keep it online.

vii. Application of e = mc² to corporate management satisfies the question Kant posed whether a science of metaphysics with a logical structure like that of the well established mathematical and natural sciences is possible. Management is part of the science of metaphysics e = mc² which is Return on Intangible. Intangible is the pulsating energy that addresses the concern raised by the Harvard Professors:

  1. Long-term value creation that e in e = mc² represents the pulsating energy and
  2. How to tackle n-dimensional problems facing the Society – identifying m in e = mc² by converting n-dimensional problems to n problems of single dimension. m is the mass added to Corporate Intangible Value Capital.

viii. The issue: the current model doesn’t have nearly enough resources to finance the necessary change. We need to confront this issue head-on. “How do we create resources?” asks Porter. CREAM™ Report says you have it, enough resources by optimising your effort to generate Intellectual Value Capital and tackle the problems by emotional value capital. Assuming Ethical Responsibility expands your capability whereas limiting to Fiscal Responsibility contracts your efforts to understand the Society. Corporate looks for problems created for the Society, by the Society and of the Society but forgets the solution is within to excel by using its resources – only one i.e. the Human Capital. Convert ERP to a single source of Object moved by a single source of Subject. Walk on this earth light.

ix. CREAM™ Report has no qualms about utilisation of e = mc² to Corporate Management as immediate albeit urgent, for it is up to you to apply the formula to your company. You may take your own time. Know it e is the pulsating energy and m the non-pulsating one that it is the ethical responsibility of e to collide with m for industrial growth. Know it you are stuck with a Balance Sheet, come out of it.

x. MNCs and big corporate mean managers within the company. Don’t get offended when your ratings are perceived to be low. CREAM™ Report has given you a targeted advancement of capability. Move towards the target. As CEO get your energy level checked first by CREAM™ Report. You are what your company’s e level.

wish you the best of 2014:

For more details and assistance in implementing CREAM™ Report please contact:

Jayaraman Rajah Iyer: jayar.ibcm@gmail.com; +919869972349

IBCM © Research 2014

1Emerging Measures for Strategic Management http://bit.ly/oe97Ta Page 3

i Bill George on rethinking capitalism: http://www.mckinsey.com/Insights/Leading_in_the_21st_century/Bill_George_on_rethinking_capitalism?cid=other-eml-alt-mip-mck-oth-1312


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By jayar

Author - CorporateMOM - Sustainability of Corporate Stability

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