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Executive Interviews: Interview with K Ramesh on Management Guru
October 2010
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By Dr. Nagendra V Chowdary
K Ramesh K Ramesh Professor of Accounting,
Jones Graduate School of Business
Rice University
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It is often noticed that several such
lists (Wall Street Journal's world's
most influential business thinkers,
Fortune's world's best gurus in
strategy, etc) are dominated by North
Americans, with abysmal
representations either from Europe or
Asia? What explains this
polarization?
In some sense, it is what it is. The
various lists are based on different
methodologies that could lead to
different results. For instance, the
Wall Street Journal's ranking
apparently follows the methodology
developed by Richard Posner. He received a lot of criticism for his
methodology, but he explains his
choice of methodology as follows:
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"It's been assumed despite my
disclaimers that I was attempting to
create a new order of merit. Actually I
was just trying to create an
appropriate sample for a statistical
investigation." Posner was more
interested in doing statistical analysis
to see whether, for example, the
number of academic citations is
correlated with someone being
considered a public intellectual based
on media coverage. He also wanted to
see whether age, gender, race, etc.,
were correlated with public
intellectual status.
Regardless of the merits of the
approaches, the Wall Street Journal
ranking is determined by the chosen
methodology, similar to any other list.
I understand that the compilers of the
WSJ list started with the 110 business
gurus from the book "What's the Big
Idea?" and added names of others
who had since gained a sizeable
following. Then, the final list was
prepared by summing ranks based on
Google hits, references in Lexis/
Nexis, and citations in academic
publications. Without fully
understanding the selection process
at each stage of the ranking
methodology, it is hard to explain
why the list was dominated by one or
other groups of individuals,
assuming it did. At the end of the day,
Darwinism will take over and
rankings that are viewed as more
credible should survive.
Now turning to your teaching,
you have developed a course on
corporate governance that seems to
integrate academic research and
practical thinking, and furthermore,
puts in forefront the key role of
accounting information in
management leadership. How
important is the connection from
accounting to governance to
management leadership? What tools
do you use to highlight this link
when reaching out to business
executives and professionals?
My graduate course is all about the
economics of financial reporting. An
important focus of my course is to
understand how accounting has
evolved over the years to be a key
element of corporate governance.
There is extensive academic thought
and research on the role of accounting
as a governance mechanism, and of
course, we periodically hear about
major corporate governance failures,
so there are many real-life cases to
study. My course integrates the two
by linking academic thought and
research to understand past
governance failures, and possibly, to
guard against future ones. Several years ago when I was in the process
of assembling the framework for my
course based on the works of Jensen,
Meckling, and others, I came across
ITC's website2 which included
concepts that are very similar to what
I had been using to develop the
framework. I now refer to ITC's
website as I discuss the framework in
my course, although I organize and
discuss the elements of corporate
governance somewhat differently.
The rest of the course expands on
this framework and goes through an
elaboration of the role of accounting
in voluntary (external and internal)
and mandatory governance. An
important message that I try to deliver
to my students is that accounting
numbers don't come from accounting
rules, company spreadsheets or SAP
systems; they come from people.
Consequently, understanding the
incentives of management and
employees is sine qua non to
ensuring that accounting systems and
reports are built for long-run
shareholder maximization. To tie all
this together, I have developed a
corporate governance fitness test
(Exhibit) that I give to graduate
students and business professionals
as a way to qualitatively assess their
own organization's governance.
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You have had the rare experience
of taking a hiatus from the academic
world to engage in full-time
economic consulting to
multinational corporations,
international law firms, and global
professional services firms. What
academic thinking were you able to
bring to the economic consulting
world? Conversely, how did this
experience influence your academic
agenda? Was this a two-way street?
1.
The Multi-Branding Strategy Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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