It’s about time we face reality as it is. Not as it was or as we wish it to be. If we want to make our dreams come true, the first thing to do is to wake up.
It’s been a while since I wrote. I'm not a typical blogger. I do not spit out every thought that comes to my mind, but rather try focus on significant issues, the resolution of which will promote the diamond industry.
A case in point was my article
which was first posted on March 4, 2016, and dealt with instances in which two parties to a rough diamond transaction do not have equal information about an internal scan performed on the stone. Among the first to react was WDFB President Ernie Blom, and the issue was then raised during the meeting of the leadership of the World Federation of Diamond Bourse, which took place at the 37th World Diamond Congress in Dubai in April of last year. The results of that led to precedent-setting legislation on transparency and fair trade.
The conclusion that can be drawn from the entire incident is that, with requisite effort, everyone has the power to influence and transform facts on the ground. My blog had been inspired by the efforts of a group of courageous young diamond manufacturers, whose protest about what until then had been common practice eventually resulted in real change.
Since the WFDB ruling, there have been several arbitrations in which, where the defendants have been found to have not have properly disclosed the fact that diamonds have been subject to internal scans, transactions have been canceled. Several international companies that hold tenders have changed their contracts with the suppliers, noting that if there are any stones that have been scanned, and information to that effect has been withheld, the purchases are to be canceled.
This is the power of grass-roots activism in a business community.
Act. Never React.
There is tendency in the industry to respond to challenges instead of preventing or preparing for them in advance.
We treat debtors with indifference, allowing them to stack the pack in their favor, while we – the creditors – are generally most concerned about how we best may reduce our damages from losses. We are more inclined to settle instead of unequivocally opposing the phenomenon of unfair debt relief, demanding and even initiating rehabilitation programs for businesses in crisis, as well as imposing severe punishment for those who do not obey the rules. By passively complying with situations that are thrust upon us, we are ineffective in curing a general deterioration in the responsible payment culture that undermines the stability of our industry.
If we compromise on our own worth, treat our colleagues with disdain, disparage the female gender that accounts for 95 percent of the final customers for our product, we will never succeed in overcoming the real challenges that confront us.
For the often silent majority in the diamond industry, who go about their business fairly and ethically, we need to be more proactive in declaring our self-worth, and work together as a demonstration of unified mutual respect, together calculating a new route and strategy for success.
Professor Robert John Aumann is an Israeli mathematician at the Center for the Study of Rationality in the Hebrew University of Jerusalem in Israel, who in 2005 won the Nobel Prize in Economics for his studies in game theory. He explains that in life, and also in business, you need to set a goal and then: "If you are willing to pay the price, you will not have to pay,” and “If you are ready for war, you will not have to fight."
The Blackmailer Paradox
Professor Aumann’s approach can be best explained in a story.
Peter and Paul are brought into a small room with a suitcase containing bills in various denominations, together totaling $100,000. The owner of the suitcase offers them the money in the suitcase on the condition that they themselves negotiate and reach an agreement on its division.
Peter takes the rational approach. Appreciating the golden opportunity that has presented itself, he suggests to Paul what he considers the obvious logical proposal: "You take half that amount, I'll take the other half, and each one of us will leave this room with $50,000.”
But, surprisingly, Paul replies in a determined voice. "Look, I do not know what your intentions are with the money, but I'm not leaving this room with less than $90,000, You can either accept it or we will both go home with nothing.”
Peter cannot not believe his ears. “What happened to Paul?” he thinks to himself. “Why should he receive $90,000 of the amount, and I get only $10,000?”
He decides to try to persuade Paul. "Let's be rational,” he urges him. "We're both in this together, and we want the money. Let's share the amount equally, and we will both go home with money.”
But Paul is determined. He declares even more emphatically: "There's nothing to talk about. Ninety to ten or nothing, that is my last and final offer".
Peter's face turns red with anger. He is about to hit Paul, but thinks better of it. Believing that Paul is prepared to take the “irrational” step of walking away empty handed, Peter decides that, in his case, something is better than nothing. From his perspective, the only way out of the room with some sort of gain is to give into Paul’s blackmail. He puts on as dignified a face that he can muster, pulls $10,000 in bills out of the suitcase, shake hands with Paul, and leaves the room feeling humiliated.
This case is known in game theory as "The Blackmailer Paradox." It refers to a situation in which seemingly rational individuals are forced to act irrationally, in order to make the most of a situation in they find themselves.
But who acted more rationally, judging on the results? Apparently Paul, who was able to blackmail Peter into accepting an unfair arrangement, simply because he was confidently insistent in his excessive demand and was determined to stand his ground.
Paul’s confidence and Peter’s lack thereof was what tipped the balance.
If we brand ourselves correctly, and are prepared to stand up for what is right, the forces that face us are considerably less relevant.
Together is better.