Substance Matters

Given the dearth of interesting material in the financial press this week, I thought I would devote some blog-space to one of my other passions: Bikram Yoga.

For the uninitiated, Bikram Yoga is a series of twenty-six postures (called asanas) developed by Yogiraj Bikram Choudhury performed in a room heated to about 105 degrees Fahrenheit. While Al-Qaeda members get sent to “Gitmo” to be put into stress positions in extreme heat for free, I pay for the privilege. But, I digress…

How did Bikram Yoga teach me about finance, tax and transfer pricing risk management?

Focus

The single most important aspect of yoga is focusing on breathing. By setting your objective at the outset, focusing on yourself in the mirror and centering your energy and attention on a single point, you are able to accomplish a tremendous amount of very hard work in 90 minutes. As a consultant, I work with companies who have many, many strengths, but often lack the ability to focus clearly on a single point or aspect of their business or strategy. Why? Because of the frenetic pace of business activity and the daily crises that are a way of life for every multinational enterprise. Consequently, the state in which most in-house finance, transfer pricing, tax and legal professionals operate is somewhat ad hoc in nature; akin to fire-fighting. As in yoga, the ability to successfully filter the surrounding chaos in order to identity the underlying matter/challenge-at-hand and at the same time hold-in-check everything else that is going on, is the only way to succeed individually or organizationally. It is thus a great balancing act that requires constant stretching and adjustment to remain in balance.

When practicing yoga, the focus is on maintaining the breath. If you hold your breath you cannot sustain the postures. If you panic and start to breathe erratically the “fight or flight” instinct kicks in and you lose your ability to concentrate and maintain your postures. In finance, transfer pricing, legal, and tax matters, the focus has to be on designing, developing, implementing, maintaining and sustaining the strategy that supports the business objectives of the organization; which are dynamic. Focus is the single most important tool of the corporate or consulting professional. You cannot manage enterprise risk if you are constantly distracted from the purpose. We have a saying in East Texas: “When you’re up to your neck in alligators, it’s tough to remember that the objective was to drain the swamp.”

Balance

My favorite pose in the Bikram series is Dandayamana-Dhanurasana (try saying that five times fast…). Standing Bow Pulling Pose is possible because you are kicking your foot back and at the same time stretching forward – it is a balancing act. The same is true for finance, tax, legal, operations, and transfer pricing-risk management. No matter how well-run the business or excellent the planning and implementation, the company will have risk. How that risk is allocated, managed and aligned operationally around the world impacts the organizations’ success. No Board of Directors or Senior Officer wants to hear that an organization has significant unmitigated risk. However, risk is an inherent part of what we deal with as professionals. In finance, transfer pricing, legal, operations and tax, balancing risk means understanding the full benefits and challenges of the enterprises’ operations and keeping those pros and cons in tension – pulling in some places and stretching in others. Balance is critical for enterprise risk management.

Everything Working Together

In the series of standing postures, yogis work up to a master pose – Trikanasana, the Triangle Pose. Triangle is a challenging asana that involves every muscle, tendon and ligament in the body working together. Finance, legal, transfer pricing, and tax are fundamentally issues of facts and circumstances. For a corporate finance or consulting professional to add value, he or she must understand how the organization works both in terms of individual product or service lines and collectively as a business. Finance, tax, legal and transfer pricing cannot exist in a vacuum where decisions are made without a foundation in the business substance and strategic objectives of the enterprise. In many ways, transfer pricing is the “master pose” of a multinational enterprise: It involves understanding the operations and inner-workings of an enterprise from its most basic and fundamental levels up to its global corporate objectives and then translating that understanding into a structure with accompanying processes and procedures that support the objectives while being as financially efficient as possible and at the same time minimizing enterprise-related risk. It is the multinational enterprise equivalent of the Triangle Pose.

Ultimately, yoga has taught me to breathe in difficult and challenging situations, to not lose sight of the vision and objective (no matter how distinctly unpleasant the circumstances), to keep balance between stretching forward and pulling back, and to bring many components together to achieve a singular objective while respecting the individual parts. All of these skills and abilities help me to be a better consultant, advocate and advisor for my clients and colleagues.

-          EAS

Tags: bikram, enterprise risk management, Intercompany, risk, risk management, tax, transfer pricing, yoga

This entry was posted on Wednesday, October 14th, 2009 at 8:10 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.