Capitalist Dreamz

For the crime of success

2012-01-10T00:12:00.001Z

Recently, I have been reading a lot about the rising inequality in the US, its possible effects on the upcoming presidential elections, and even fears about the same happening in the UK.

I have two points to make.

Firstly, economic equality, as much as anybody may want it, is an ephemeral chimera that at best can cause frustration in the society and at worst lead to birth of a mediocre, self-annihilating socialist state. Even communists, with all the bloodshed and programs, were unable to achieve it. Are we really thinking of achieving it in an apparently capitalistic society? Nevertheless, we can (and should) aim for absolute equality before law and possible equality of opportunity for everybody, without fear or prejudice. That means making corporate lobbying and graft difficult. It also means making employment laws more meritocratic and employment process more transparent. It does not mean demonising the successful and ramming down their throat socialist taxes for the crime of being successful.

Secondly, it will be a mistake to make the current state of US economy a matter of class-warfare or a matter of punishing corporate America in the upcoming election. In the end, it is corporate America that will create jobs. Instead, the public of Unites States needs to do extensive soul-searching to understand what is blighting a great country. Is it really just greedy corporate? Easy answers are seldom right. If the country of democracy and free-enterprise is held hostage to things like corporate lobbying, excessive litigation, disintegrating social fabric, and a new-found worry about equality, something has gone wrong horribly somewhere down the line. Discouraging industry will only make it worse.

As unions and score of people cry out for good jobs and better pays, I am almost tempted to ask them to pluck it from the bush they think it grows on. Successful people make the jobs possible, demonising them is the worst possible thing that the society can possibly do to itself.

About VAT

2011-11-30T11:19:00.001Z

Some useful links for understanding VAT and importing services, specifically for a services company.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageImport_ShowContent&id=HMCE_PROD1_029955&propertyType=document

http://www.hmrc.gov.uk/vat/managing/international/exports/services.htm#2

http://www.hmrc.gov.uk/vat/managing/international/imports/importing.htm#3

http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-thresholds.htm

Bank Mergers in Europe?

2011-11-29T23:27:00.003Z

I agree that tighter regulations and worsening economic climate may lead to bank mergers in Europe: http://on.ft.com/rS5PEO

Other news clips of interest for this week:

WPP acquires Glover Park Group

BHP puts diamonds division up for sale

Free Accounting Software

2011-11-17T20:40:00.003Z

Following free accounting software are available for small businesses:
http://www.icebergo.com/
http://www.tassoftware.co.uk/products/tas_accounts_software/basics.html
https://www.bionicbooks.com/
http://www.sage.co.uk/softwaresolutions
http://www.adminsoftware.biz/software.html
http://www.quickfile.co.uk/
http://www.vtsoftware.co.uk/cashbook/index.htm

If not Capitalism, then what?

2011-11-01T19:00:00.001Z

Going through the recent articles in the FT by Ken Costa and Martin Wolf got me thinking: if not Capitalism, then what? In fact, it has been quite some time that I have been reading anti-capitalist articles all over the media and it makes me wonder: how many protestors actually understand what they are protesting against?

If they are protesting against the current system, we are in a continent that has a strong welfare system, difficult employment rules, strong unions, high taxes, generous pensions, and subsidised access to education & health. This is not capitalism, just ways to live beyond our limited means. We live in a system that has increasingly made it difficult for entrepreneurship to prosper, as pointed out by Luke Johnson. A system of greed and entitlement, be it banks, governments, unions or the people, has led us to where we are.

If anything, I would argue we need more of Capitalism if there has to be prosperity. I would argue that in today's world China is more capitalistic than Europe, and the results are for everybody to see. At the same time it is undeniable that comprehensive regulations, fostering a culture of ethics and a well-aware population are necessary for free enterprise to flourish.

Finally, I would like to say that while free-market played its part, it is absurd to blame it for everything. If the West was living beyond its means, are businesses the only ones to blame? Perhaps not, but they do make a convenient target. The truth remains that, given all things equal, Democratic Capitalism produces more prosperity and equality than systems like Communism, Socialism, Monarchy, Theocracy or any other system that the protesters may know about. The big question is still this: if not Capitalism, then what? Reform, not revolution, is the way ahead.

Olympus Saga

2011-10-23T12:32:00.001+01:00

Olympus agrees to acquisitions probe

The more I learn about business, the more one thing becomes clear: ability is a small part of running a business. There are many ways to excellence and profits in business, and ability is definitely one of them. Business however, I have learned, is more complicated than that. As the Olympus saga illustrates, many times businesses are able to survive misspending millions. As long as the business model remains intact and there is somebody who thinks that the business can generate cash at an acceptable rate of return, the business will survive. I also see compliance and not ethics as the defining force for the code of conduct, which I attribute to the fact that self-interest is the defining force of capitalism. Unsurprisingly, unbridled self-interest can be fairly self-destructive as well. Regulations keep that in check to some extent, but there are always people looking for a loophole. So goes the game of cat and mouse.

In terms of M&A, it brings out some critical questions like value of an acquisition to the buyer and the fees paid to advisors. Already enough research papers have indicated that, at least in the short-run, the value of the acquisition goes to the seller. Deals like the infamous sale of ABN Amro raise a pertinent question on the effectiveness of advisors. The last thing the M&A world needs is the use of advisory as a cover for siphoning away millions from a company. All in all, an ignominious event in the corporate world that should be dealt with firmly.

Potential Upcoming Deal-business from European Aeronautic Defence and Space Company (EADS)

2011-10-03T16:22:00.001+01:00

In a recent article in the Financial Times (August 2011), EADS’s chief financial officer stated that the company is looking to make acquisitions to put its €11bn of net cash to work and rebalance its portfolio.

Data from public sources indicates that in 2011 alone EADS subsidiaries have announced five acquisitions valued at about £1510m. These include acquisition of Vizada by Astrium, Satair and Metron Aviation by Airbus, Vector Aerospace Corporation by Eurocopter Holding and Grintek Ewation by Cassidian. Of these, Vector Aerospace Corporation deal was completed recently in June 2011. With so many acquisitions already in the pipeline and with presumably more to come, a full service firm can offer EADS a variety of services and advice.

For example, 'Consultancy’ practice can possibly help EADS with acquisition search and due diligence. Then ‘Corporate Finance’ can provide M&A Advisory and deal accounting service. Finally, ‘Transaction Services’ could offer M&A Integration and post-acquisition performance improvement advice.

About EADS: EADS engages in the manufacture and sale of commercial aircraft, civil and military helicopters, commercial space launch vehicles, missiles, military aircraft, satellites, defence systems, and defence electronics, as well as provision of services related to these activities worldwide.

About Aeronautics and Aviation industry: According to a report by ‘Ecorys Consulting’, the aviation industry has been under duress due to the financial crisis, which is critical for a capital intensive and global industry. Another recent report by ‘Roland Berger’ indicates that due to the crisis defence sector is also expected to suffer due to cuts in state spending. Business leaders expect the industry to return to pre-crisis growth levels at least by 2012. Overall, this state of aerospace and defence industry should present cash-rich EADS with good bargains in the market.

Writing on M&A

2011-09-06T13:20:00.003+01:00

Working with Deloitte has certainly whetted up my appetite for M&A. Thought it may be good to do some pointed reading to further improve my understanding of the subject. So, from now I will periodically post articles highlighting companies that have shown interest in dealmaking, and it may be possibly worth somebody's time to pursue them for business. Sometimes I will also post my opinion about a deal, or simply aggregate some M&A specific news articles that I find interesting. All the views expressed are my own, and I will duly acknowledge and mention all the resources I use. Like a true consultant, in no way I take responsibility for anybody following any advice that I may ever give. Nevertheless, I hope you find the articles useful.

Status Report

2011-09-05T18:42:00.001+01:00

Sometimes I am amazed by the unpredictability and complexity of life. In this cacophony of thoughts and events it is so easy to loose track of the self, of how subtle existence is. How does one prevent oneself from complaining or being complacent? The divine libran balance seems ever elusive. As I live to understand the subtleties of my own mind and of this world, I experience at least some moments of genuine bewilderment. Other times, I am simply too tired or lost to care. Yes, I can reaffirm that the world is chaotic and , at least, apparently not fair. Equality is a bad joke and don't even get me started on fairness. Yet I must admit that there is simply too much that I don't understand. So I wait, I watch, and I play. Sometimes I do fear being consumed, decimated, and destroyed by my inquisitiveness: after all curiosity did kill the cat (or so they say). At these times I feel like going back to a safe refuge of mediocrity and dependability just for the relative respite it would bring. Unfortunately, I know that respite may be temporary and may turn into a suffocating, inescapable prison. And, then, it may not. At the same time the desire to be my own master and insanely rich keeps calling, even though I now realise that being "my own master" is more about an attitude, a deep confidence that can possibly emanate only from deep self realisation. But I ain't no saint, and I have no idea how near or far the doors of realisation lay at this point of time. So where does that leave us? Apparently on planet earth in a now familiar human habitation by name of Oxford. With an MBA and without a job, for now. Everything changes, I have heard and I hope. Here I stand: wiser, monetarily a shade poorer, humbler, and more knowledgeable than I have ever been before. And I look to move to the future with hope, determination and absolute focus. Yes, I am wary and tired, but I know with certainty that nothing except my own self- effort done from the sphere of awareness can possibly take me anywhere. Cheers!

Hunting the Celtic Tiger

2010-11-27T19:11:00.000Z

I find the letter to FT by Rhodri Morgan (Freakishly low Irish corporation tax is damaging) a bit amusing. Essentially, he seems to be complaining that Wales, Scotland and host of other places lost out to Ireland because of their inability to compete with Ireland's low corporate taxes. He moves on to a discussion about tax havens and asserts that Ireland needs taxes to fund the bail out. What if the whole Europe goes for 12.5 percent, he argues.

One thing is for sure, it is not Ireland's interest or well-being that Mr. Morgan has in mind. Irish problems have resulted from a host of factors, and low corporate tax is certainly not one of them. If anything, FT's article in the same edition (Ireland's Low Corporate Tax Rate Vital to US Business) clearly shows how low corporate taxes have created over 100,000 jobs in Ireland, creating wealth in general. Moreover, if corporate tax was the only reason for choosing Ireland, there are a host of ultra-low tax destinations within Europe that have even lower tax-rates (like Liechtenstein).

Right from German surplus to French protectionism, there is no country in Europe that can possibly adopt a "holier than thou" stance with a straight face. This is not to say that Ireland does not have its problem, but it does seem that its European partners wish to take full advantage of the problem to further their own interests rather than to help the Irish.

Imagined Communities

2010-09-17T18:42:00.000+01:00

Just finished reading “Imagined Communities” by Benedict Anderson, and I am seriously not impressed. The book is difficult to read and has a strong left bias.

I believe that all human beings have a strong need to belong. Add to this a primeval power dynamics and a probabilistic system, and we get some interesting results over time. Any form of organization, even the communist brotherhood, can be defined as stupid imagination of the mind. The rise of the concept of nation is indeed another invention to organize, control and belong. Disproving and scorning it will never be a problem. Nevertheless, the human beings would have to settle on an alternative form of governance that is stable if they have to either understand or leave this abstraction behind. And I seriously hope that the alternative form is not Communism, Marxism, Leninism, Stalinism, Maoism, Pol-potism or the like. The book could have been written in simpler words with lesser footnotes and could have traced the development of the concept of nation with lesser normative/value based judgements.

I seriously doubt the book’s usefulness for a business student, except perhaps to learn a trick or two about propaganda and make believe. Students of nationalism or history will, however, find it useful. My recommendation to an MBA would be to avoid it.

When Azure Meets Joomla, Facebook and Twitter

2010-09-10T22:58:00.000+01:00

Two days ago I attended an event by SalesForce.com, CloudForce 2010. In the CRM world, SalesForce is an awesome company that has given companies like Siebel or SAP a real run for their money. I feel it is the best CRM around. Not content to occupy the CRM space only, SalesForce is now targeting cloud computing with a difference: it is trying to marry cloud computing with content management systems and rich-internet application (RIA) development to develop and popularize an alternative application development and deployment model. A very ambitious and daring venture, I must say. Even though the market is immature today, in the world of IT changes can be pretty fast. Or they can linger on (if not, we wouldn't find a single mainframe on the face of earth). A complex proposition at its best, I see many "goods" and "bads" to it.

On the up side, SalesForce has built a brilliant RIA and is trying to leverage its knowledge to both help and tie in its clients. It is doing a brilliant effort to make partnerships and sell the idea on the force of its network. The marketing strategy seems to be brilliantly thought out, and the execution is marvellous. The deployed applications are said to take lesser time, are on the cloud and readily deployable to browsers, iPad, iPhone, Android and BlackBerry. With lower costs, it can potentially be tempting for an entrepreneur to use the set up to launch an internet application. With "Chatter", they are also trying to be the secure facebook of the corporate world. With tools to analyse Twitter feeds and integrate it with SalesForce products AND the applications developed, the possibilities indeed seem mouth-watering. Having a functioning CRM RIA is a big plus here.

On the down side, I feel they are trying to do too many things and trying to be all things to all people. I am not sure how this hopscotch of ideas (as suggested by the title) would work out without some seriously tough strategy planning and implementation. There have been systems that have promised develop once and run anywhere in different ways, but have failed when they have not given enough flexibility to developers and designers. Content management systems like Joomla or Drupal come in handy on a typical LAMP set-up with a nice net based UI to develop a reasonably powerful and secure application that can run on any Windows or Linux based cloud. At any time a company can switch the cloud-operator or host themselves. With SalesForce, you are pretty much tied to them if you want the app. Joomla and Drupal, however, may not be compatible to build mobile device applications, and would still need you to maintain or upgrade your own code. Another worry I have is that they have tied-up with Adobe to deliver their application development IDE. In many of my earlier blogs on RIAs, I have often complained about the lack of end-user focus in Adobe RIA applications like the erstwhile Flex. I sincerely hope SalesForce does not depend on them only for this IDE.

In conclusion, the product definitely has an immense potential to succeed, but the path is far from easy and there are some problems that I can already envision. It will be interesting to see how the application develops eventually.

The Rise of PaaS

2010-09-06T22:56:00.000+01:00

After Software as a Service (SaaS) we are now slowly entering the domain of Platform as a Service (PaaS). As the Internet speeds pickup and our hardware increasingly becomes more powerful, there is little to stop this transition. With enough competition in the domain it would possibly present benefits to a lot of people from a business point of view at both ends of the spectrum.

The possible apprehensions that a business may face while adopting PaaS include:

Security: Keeping proprietary code on alien servers may be hard to stomach for many businesses, with a constant fear about data-theft and data-loss. This is always going to be top-priority
Speed: Technically proficient companies may feel that they are ceding control of the speed of application as they would no longer control many things in the server, database and application development. For majority business owners, though, this may not be as big a consideration.
Portability: This would be another major issue. With their experience with computing over the last so many years, business owners in general would hate to tie down themselves with any PaaS provider. This means PaaS provider would have to either leverage some existing and popular framework or invent and popularize an entirely new one. Both challenges are not for the faint-hearted!

With respect to development of Rich Internet Applications, this would only further complicate the equation in this nascent field. Tie-ups, support, marketing and smart technical development is the way ahead, I guess. The big horses to watch include Red Hat, Microsoft, IBM, Oracle, Google, HP and SalesForce. I am sure many others would try as well. I feel that the dominant advantage would lie not primarily with better technology but with better marketing and reach as the product will increasingly get commoditized. Lets see.

Immigration and Difficult Choices

2010-09-04T21:37:00.000+01:00

With reference to Tony Barber’s article, “European countries cannot have it both ways on immigration” in FT on September 4, I feel that Europe’s predicament about immigration is self-invented and will only get worse as time goes by.

In an earlier letter to FT I had advocated for a careful immigration policy for UK. I think the same holds true for Europe. Either Europe officially promulgates that it is not open to people who are different from them or they live with the spectre of "open" immigration. Unfortunately, it is perhaps cheaper in terms of wages to get the people who are "unlike" them. Split wide open by contradictory economic and social considerations, sitting on the sharp wedge of human rights declaration with the sword of a dwindling, ageing population hanging over its head, Europe indeed finds itself in a very uncomfortable position.

What I understand is that EU countries wish to maintain a healthy proportion of young, working, tax-paying population so as it is able to finance its generous (and I dare say populist) welfare policies. Immigration is the only viable alternative if fertility rates do not improve (even that would take time and would have to be actively supplemented by immigration). The other unpalatable choice may be cutting benefits wholesale, raising minimum working age, reducing wages, cutting pensions and raising productivity per person. I don’t think that any politician who cares about his career and understands even an iota of economics will even dare to say or implement this, or, for that matter, even people will not accept it. There would be strikes, riots and the like. So, Europe is pretty much stuck with immigration whether it likes it or not. Try as it may, its demographics will change, its social structure will change, its politics will change; as is already happening. Whether the change is for better or worse will depend on the countries and their ability in successfully integrating the immigrant population.

The Hedge Fund Manager and the Economy

2010-09-03T21:20:00.002+01:00

Even though I have no problem with hedge-fund managers paying more taxes, I am not sure what it has to do with fixing the economy. Yes, to a socialist mindset the appeal may simply be the effect of “equalizing” it a bit more, but in practical terms I would say it is nowhere near top-priority. Politics can make a show of “fixing” the problem by finding a scapegoat and then getting back to business as usual, but will this solve the problem of an economy living precariously on the edge? Is this the best that the Government can do? Will we ever see more concrete policy changes instead of populist posturing which can think of nothing but CEO pays, Wall Street bonuses and “equalizing”? I wonder.

If CEOs are Accountable, so is Tony Blair

2010-09-02T11:17:00.000+01:00

With reference to “The hatred of Blair is over the top” by Mr. Gideon Rachman in Financial Times (August 30, 2010), I would like to remind Mr. Rachman that CEO accountability is the norm of the day. The top-leader has to always take responsibility for the mistakes that are committed under his tenure, and the same holds true for Mr. Blair. Labelling it unfair makes no sense. Further, whether UK looks back at the wasteful extravaganza of Blair years, that set the stage for the financial meltdown, with nostalgia or disgust will depend a lot on the effectiveness of spin-doctors and the not-so-remote-possibility of a collective public amnesia. Barring this, the UK may not let off the hook so easily the leader under whose tenure such disastrous policies were implemented and the country went to a meaningless war. And it is no different than holding the CEO responsible for disastrous company policies.

Looking to History for Roots of Management

2010-09-01T12:02:00.003+01:00

I have just finished reading three books: "Concept of Corporation" and "The Practice of Management" by Peter Drucker and "My Years With General Motors" by Alfred P. Sloan. I read these books to understand how management as a subject was born and what is management all about actually.

History, I have always believed, has the roots of what we see today and lessons about what to avoid. The central theme that I have picked from these three books is that optimum decentralization with a strong core is the secret of managing growth. Not only it makes managing easier, but also it helps to test and evaluate managers without endangering the whole enterprise. An enterprise that cannot generate its own leaders is bound to run into trouble sooner or later. To generate leaders and retain good people, the company's course of action and its expectations from its people needs to be transparent. This brings us to what Mr. Drucker calls managing by objectives, that everybody in the organization has clearly defined goals and is able to track his progress objectively. The next challenge is aligning the interest of the individual to that of company by helping each person to see the whole rather than one, small, obscure part. Giving people more responsibility and meaningful tasks are the suggested remedies.

The concepts, as simple as they may seem, offer a powerful perspective supported by recent books like "Good to Great" and "In Search of Excellence". This makes me feel that there do exist some basic, common-sense tenets or principles that remain unchanged over time, but still need some experience and wisdom to apply correctly. Perhaps this will keep the management an art known by many and perfected by few.

Globalization and Its Discontents

2010-08-31T17:26:00.000+01:00

Just finished reading "Globalization and its Discontents" by Joseph Stiglitz. One thing is for sure: you will never read any news about IMF, bailouts, austerity packages and other related things in the same way as before after reading this book. Whether you are a die-hard capitalist or communist, you will find something to love or hate in this book. The book does not mince words to squarely lay blame at IMF's door for some of the biggest economic declines in the last 30 years or so, including Russia, East Asia and Latin America. Even if you do not have a very good idea about Macroeconomics, quite a few things would make sense. And if you do, this book would give you a lot of things to think about and chew on. Very nicely written book. Nevertheless, even though I recommend reading this book, there are some things in the book which I understand but don't agree with in terms of its feasibility in the real world.

Goodness and fairness are good to have. Unfortunately, goodness and fairness can permeate only from the strong. And nobody can teach that to the unwilling strong or moral-lecture the strong into being good. Such is the nature of power. And, as much as one may not like it, the world operates on principles of power and self-interest, which in turn derive their strength from how we are brought up. The question of making the world a better place is not simply the question of having the right policy: it is always possible to game a system. The question is about the basic human learning and understanding. If the values of humanity and universal brotherhood are not imbibed at an early stage, it is virtually impossible to get it later in life. The definitions of right and wrong, acceptable and unacceptable vary so wildly that it is nigh impossible to reach any kind of common standards. Further, it is fiendishly easy to use, abuse and mislead an economically deprived crowd. So, it is in the interest of most political leaders to keep things that way. There are simply too powerful vested interests that do not understand the meaning of fair or good. For them might is right, and so the world moves on. This problem will not be solved with intellectual discussions.

The book also comes down to some veiled rich-bashing, blaming the rich for all ills, and poor are generally exonerated by virtue of their suffering or their mistakes are generally toned down. Nobody forces anybody to take a loan. To live within one's means and getting the house in order is one's own responsibility. Fairness is good to preach, but as far as the eyes of history go, it has never-ever been successful. Is it desirable? Definitely. Is it possible? No. Yes, we can try. But it is good to know the odds you face. It may be good to build consensus and avoid hubris, but avoiding hubris and working with a committee are two different things. Making the collective wiser than the individual is a skill that very few have.

Overall, I find the book's position centrist, leaning a little towards left. The writer is also either naive or idealistic to assume that the world should operate on principles of fairness on its own account. The truth remains that in this world powerful rule over the weak. As somebody said, the meek shall inherit the earth but not the mineral rights! The writer is right to point out the imbalances and unfairness, but his approach is solve the problem is somewhat idealistic.

Who Can Overhaul China?

2010-08-19T11:51:00.000+01:00

I find Arvind Subramanian's article "India’s weak state will not overhaul China" (August 16, 2010) pretty amusing. It seems that the writer is not happy with India's 8.5% growth as he is not able to truly explain it within the framework of his understanding.

It is true that India is not progressing as fast as China. But then who is? Nevertheless, it is the second fastest growing economy and the fastest growing democratic nation. It is one of the few countries that can make supercomputers, lauch satellites, and build nuclear reactors. It has some truly international corporations and a vibrant capital market. As far as market friendliness is concerned, I would recommend the writer to read Joseph Stiglitz's "Globalization and its Discontent" so as he gets a more balanced view about the "benefits" of textbook liberalization that destroyed economies of Russia, Czech Republic and Argentina, to name a few. India is perfectly justified in taking it nice and easy. Post 1990 it has been wise to avoid the mistakes of star IMF pupils, and the results speak for themselves.

India is a relatively young nation and has its shares of problems, including corruption, terrorism, naxalites and poverty, to name a few. However, to term a nation with the third largest standing army weak smacks of intellectual arrogance. Perhaps India will not overhaul China. But in its current form I doubt if any nation, including US or UK, is capable of overhauling China. What is that supposed to mean?

Co-evolution of Firms

2010-08-17T12:28:00.001+01:00

Was thinking of "Knowledge and Competitive Advantage: The Coevolution of Firms, Technology, and National Institutions" by Johann Peter Murmann again.

I was thinking of what makes the approach of the writer different. That environment affects business is increasingly understood. In strategic planning, SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis uses frameworks like PESTEL (Political, Economic, Social, Technological, Environmental and Legal) factors to evaluate impact of external environment on a firm. Then what is new in co-evolution? Co-evolution attempts to show that as external forces affect a firm, the vice-versa is true as well. Moreover, all the players in the game affect each other. I like it as I feel that it is something very close to what I believe about the world in general (Masterplan and Gaming the World). I think a good understanding of probability and vectors (Mathematics) along with relativity (Physics) would help to model the proposed economic theory. Due to the inherent complexity, it will also acquire an intellectual and philosophical dimension. The theory will also help to dispense away with the idea of a corporation as a helpless victim or lucky benefactor of its environment. Lobby groups are a hard-truth, and the level of their success can have a positive or negative impact on the industry's growth or decline. This does not do away with firm specific advantages (management, marketing, R&D), but adds additional influencing factors and uses the paradigm of co-evolution to explain how an entrepreneurial culture and a pro-active corporate organisation (that is all companies in the industry finding a platform to work collectively and affect the external environment) play an important role. A good example is that the failure rate of dye firms was similar in UK, US and Germany: around 75% of the dyes failed. However, in Germany the number of dye firms that tried starting a business was significantly higher than either UK or US. It, hence, had more successful and unsuccessful dye firms than them. This higher level of trials, experimentation and growth was facilitated by the education system and the legal framework. In turn, a stronger dye industry fostered and lobbied successfully for better educational institutions and favourable legal framework, hence creating a virtuous circle. The opposite was true for US and UK: other industries were more powerful in these countries and dye firms were simply sidelined.

Concluding, I love business history books as they present rich, factual data about real-events. Very much a case study. This book does not disappoint on this front. Additionally, it collates the events in a pretty practical and useful fashion. I agree that co-evolution in business context needs more research and that it has the potential to become a powerful theory. On the other hand, it also points to the fact that common sense, love for work and long-term perspective on events is very important. It also reaffirms that basic principles espoused in "Good to Great" and "In Search for Excellence" are pretty much accurate. A nice book overall.

The Difficulty of Being Good

2010-07-28T19:04:00.002+01:00

Just finished reading another awesome book by Gurcharan Das, "The Difficulty of Being Good : On the Subtle Art of Dharma". A gripping book about ethics, politics and goodness. The writer draws examples from both West and East, referring to philosophies from ancient Greece, Renaissance, Buddhism, ancient Hinduism and Modern philosophers to wrestle with the idea of goodness in day-to-day life. The book draws the base examples from Mahabharata, the ancient Indian epic narrating the story of the great feud between cousins that marked the end of the third age of man. The story is complex, rich and meaningful in equal measures, but I doubt it if anyone without an interest or roots in India will be able to enjoy it fully. For any intellectual Indian with a strong interest in Hindu mythology and philosophy, this book is a treat.

The book advocates reciprocal altruism instead of either pacifism or real-politic solutions. In this it addresses some fundamental questions surrounding sticking to the merits and demerits of available choices and problems: way of righteousness, way of deceit, way of duty, the need to be recognized, the power of the feeling of vengeance, importance of mentors, role of a ruler and role of merit, among other things. It is rich, intellectual gymnastics that will help you to gain a fresh perspective about life and living without compromising integrity.

Thinking About PE and Entrepreneurs

2010-06-02T17:05:00.002+01:00

Private Equity also needs a host of tools to gather and analyse Business Intelligence. These include public records searches, news archives, legal proceedings, patent awards & applications and employees. It seems that PE Governance relies strongly on elaborate processes and ruthlessness. The discipline imposed by debt means that they are pretty conservative in their attitude. It also means that it can be extremely difficult for an entrepreneur working with a PE firm to find breathing space. PE firms simply have too much money on stake and hence need strong internal controls, auditing and monitoring. An entrepreneur, on the other hand, lives to be free. PE firms provide an effective alternative to governance by boards. Nevertheless, it may prove to be more effective for mature firms rather than start-ups. Moreover, since PE firms must focus on returns, I wonder what stops them from milking a company dry in 10 years and leave the rotting corpse for anyone who wants it. I am, therefore, a bit sceptical about PE model being the best one, especially for start-ups. Or perhaps I am missing details about operations of firms that specialize in start-ups. Either way, there is much to learn.

Knowledge and Competitive Advantage: The Fibre of Success

2010-05-26T15:34:00.000+01:00

While explaining the development of the industry, the writer attributes the success of German dye firms to their access to quality knowledge centres in organic chemistry and their strong marketing structure. With very little patent protection in the hey-days of German dye industry, the German firms had to face very fierce competition and always strive to find cheaper ways to produce the goods. Like any commodity or consumer product based industry, they had to develop a strong marketing organisation to differentiate themselves from the competition. It is said that what does not kill you makes you stronger. Nothing could be more true about the firms like Bayer and Hoechst that survived this cut-throat environment. The marketing efforts involved activities like localizing packaging graphics, making efforts to educate customers in order to foster customer retention and kickbacks. Even though the writer praises the marketing efforts of Germans, it is noteworthy that such generalist statement are simply not true. As we have read about Deutsche Bank, many famous German institutions made horrendous mistakes with their marketing tactics while most British alcoholic beverages companies did an excellent job of the same. Building on what the writer states and my understanding, I would say that it really depends on a particular organisation, the state of the industry it operates in (both nationally and internationally) and the knowledge centres available to it (depending on the national institutions and culture). National cultures and institutions can combine to give the industry specific advantages and disadvantages, but to predict how they will do so is anybody's guess and it is only with the benefit of hindsight that one is able to attempt to put a structure around it.

As national institutions affected the growth of dye industry, the vice-versa was also true. Dye industry leaders in Germany rallied effectively for the most part to promote education in organic chemistry, creating a virtuous circle. The business-academia-government partnership promoted education. The business leaders also played an important role in the growth of the company. For example, strong entrepreneurial leadership and willingness to bring in professional managers helped Bayer to become a powerhouse. The development also explains the dynamics of first-mover advantage, the mechanics of exploration in a new industry and the institutionalisation of R&D for technology based industries. The writer asserts (and I agree) that chance does indeed favour the prepared mind. The first-mover advantage is a fact, but political changes, wars and complacency are facts as well. The only truth is that one has to keep eyes and ears open without fail, look towards the future with an entrepreneurial spirit, respect and remember history without carrying its burdens and yet remembering its lessons, ethically promote institutions and lobbies that are good for the business and to be able to nurture and reward talent. To cut it short, it was never easy and never will be. But it was always fun and will always be!

Knowledge and Competitive Advantage: Development of Knowledge Centres

2010-05-24T13:54:00.002+01:00

This book specifically focuses on three countries: UK, US and Germany. In order to make the user understand the context of observations, the writer explains the attitude towards education in these three countries and its corresponding effect on the dyes industry. But what were these attitudes?

In UK, where the first industrial revolution was led by inventors and tinkerers with no special education background, education on the whole was ignored in favour of practical experience. Except the centres of excellence at Oxford and Cambridge, not much attention was paid to education. This was especially true for synthetic organic chemistry, a crucial component for the development of the dyes industry. Even though London was plush with imperial capital, it found itself lagging behind Germany and US in this sector.

The US spent heavily on education, but with a very pragmatic outlook. Generally, only if research could prove directly and immediately beneficial was it encouraged. Engineering, management and other practical disciplines got a major boost and in turn contributed to the growth of US as an industrial superpower. US, however, largely ignored research for research's sake and consequently lagged behind in organic chemistry. Nevertheless, it researched production of base chemicals and its firms producing base chemicals were fairly competitive in the global arena.

Germany made research and knowledge the backbone of its industrial setup. Its strong knowledge economy and commitment to research helped it to produce figures like Hoffmann and Kekule in the field of organic chemistry. This, along with the fortuitous timing of the German patent law, helped Germans to dominate the global pharmaceuticals and synthetic dyes industries. Overall, students who wanted to study organic chemistry needed to know German and many travelled to Germany to obtain PhD in organic chemistry.

Knowledge and Competitive Advantage: Of Evolution and Dyes

2010-05-20T11:42:00.001+01:00

I have started reading "Knowledge and Competitive Advantage: The Coevolution of Firms, Technology, and National Institutions" by Johann Peter Murmann. My first impressions are of intelligence and almost a child-like enthusiasm in the writer. He tries to "woo" all audience, trying his best to be agreeable (the way he tries to explicitly and elaborately tries to disassociate himself with biological aspects of coevolution is a case in point). Another aspect of worry is that the writer evaluates the growth of industry only till 1914, the eve of WWI. This would give a distorted picture of evolution as it squarely ignores an important aspect: political risk. Sometimes the national institutions that are responsible for a country's rise also contribute to its downfall. This important dynamics of power is squarely ignored. There is a difference between achieving progress and in sustaining the progress, I feel. Nevertheless, the book may prove valuable in understanding the basics of coevolution theory and enable the reader to develop a different way of viewing industrial progress. The book also promises to shed some light on the development of patent laws and their application in UK, US and Germany. The writer also intends to study the subject post WW1 in some future book.

The first thing that I gathered is the concept of "initiator" and "replicator" used to define a coevoluting system. Initiator is the actor that actually interacts with the environment (the manager, employees etc.) and the replicator is a unit that is being replicated in the environment, is responsible for affecting the actors and plays a crucial role in survival (genes, company culture). I also came to know why purple is considered a royal color: before synthetic dyes the color was from a natural dye called Tyrian Purple. This was very expensive and hence only the rich and the royalty could afford it. Hence the association of purple with royalty. The writer goes on to explain the major technical innovations and changes that led to the growth of the synthetic dye industry, and the way this led to the gradual extinction of the natural dye industry. It also explains how and why R&D laboratories came to dominate the industry and lone inventors were not as effective on their own: it is one thing to invent something and another thing to be able to get commercial value out of it. It required not only the traditional investment in marketing and distribution but also persistent effort to make the production process cheaper, reliable and mechanized. This translated into huge costs that could not be afforded by a single individual. This reinforces the observation that capital-intensive industries with small product life-cycles are best served by big companies run by professional managers.

Striking Down the Economy

2010-05-12T14:22:00.000+01:00

Does union action stand for a fight against exploitation and injustice? I would definitely not say so about the planned 20 day strike action by Unite, the British Airways union. Driven by an impeccable, self-righteous sense of entitlement, Unite seems to be in a relentless, suicidal pursuit of destroying economic value. It seems that it is taking a sadistic pleasure in killing the very source of its own bread and butter without taking into account the current economic scenario.

The boding is not very good as heaven only knows what mayhem will be unleashed once the new Government tries to put in austerity measures. it doesn't look like that UK is game for the impending hard times, and unions would lead this charge of self-immolation. I wonder what lies ahead.

The PE Governance Model and its Implications

2010-05-07T11:22:00.000+01:00

PE promises a new governance model that is more ruthless, hard-nosed and realistic when compared to traditional governance models (family-owned, professional managers controlled by a Board of Directors - public or private). Although I have to take it with a pinch of salt as I believe that too much pressure can destroy team fabric, there is some truth to what is being said here.

PE firms are anything if not efficient. The pressure brought on by debt forces them to a discipline not seen in other private or public firms as it forces them to monitor their dealings closely. In absence of the sword of debt hanging on their heads, as will be the case with PE firms going public, it will be interesting to see if the PE model holds. Further, ignoring the human element of business can be a dangerous mistake, especially because humans can vote in elections and can influence. Hence, I am not surprised why PE firms seem to be the favourite punching bag in the current financial crisis. Step on a few feet, make some enemies and wait for them to get even. Personally, I think it is an excellent model capable of delivering value due to its meritocratic and impersonal approach. But it is likely to make them more enemies, something that may be responsible for that talks about PE firms being punished for a crime they never did. PE firms need a strategy to re-package (but not change) their governance style, I say.

Legal Obligations for PE and its Implications

2010-05-06T15:45:00.000+01:00

Merger and Acquisition activities are bread and butter to Private Equity, and M&A activities are directly affected by Antitrust Regulations in the US. Hence, PE firms need to be aware about them. This is what I learned about the main Antitrust regulations in USA:

The Sherman Antitrust Act of 1890 prevents companies from horizontal/vertical price fixing, boycotts, bid rigging or forming cartels/market allocation. This focussed on limiting monopolies. It, however, did not outlaw any attempts to reduce competition. This was addressed by Clayton Antitrust Act of 1914 that further prevents interlocking directorates, price discrimination, acquisitions with the view to reduce competition and tie-in sales agreements (unless needed to maintain selling company's goodwill). The Federal Trade Commission Act (FTC) of 1914 further prohibits using market share to strong-arm the suppliers and using misleading/false advertisements. Robinson-Patman Act of 1936 was brought in to "save" small retailers from chain stores by prohibiting price-discrimination that is not cost justified or that is not done in response to a competitor's price- an odd-man (according to me) that stands out for its populist undertone. An anti-merger loophole in the Clayton Antitrust Act was closed by the Celler-Kefauver Act of 1950, which prevented acquisition/merger by buying of assets (earlier act outlawed acquisition by buying of stocks only). Hart-Scot-Rodino Antitrust Improvement Act of 1976 further tightened the regulation by making it mandatory for companies to go through at least a 30-days waiting notice period for a merger or acquisition. In principal, this allows the authorities to investigate the case thoroughly, ask for more information and decide if it violates the anti-trust laws.

Overall, the Antitrust laws in US seem robust and well developed. These laws are further supplemented by a long and inclusive list of more than 40 laws to protect consumer rights, indicating a well developed consumer protection system as well. PE firms need to take them into account, depending on the industry vertical they are operating in. In addition to Antitrust laws, PE firms are also affected by laws governing the Capital Markets. This includes 8 different acts, including the recent Sarbanes-Oxley Act of 2002. It seems the PE firms rely on the exceptions stated in the laws governing the Capital Markets to prevent or reduce the overhead associated with it: offering the securities to a limited number of accredited investors (499) with a pre-existing relationship with the firm. All the same, the bottom line that I gather is that private equity functions can get impossibly out of hand in the law-maze without the presence of an able lawyer in the team. After reading "World's Newest Profession" by Dr. McKenna, I also gather that Management Consultants may to be involved to keep clear of legal issues. I am not sure about this as PE firms have their elaborate processes to impose internal control and check fraud, which if sufficiently developed or recognized may obviate such a need. No matter which way it turns, it makes my head reel to think of the amount of bureaucracy and paper-pushing inherent to businesses at larger scale.

Re-discovering a Ghost

2010-05-05T11:40:00.000+01:00

Just finished reading "A Ghost's Memoir: The Making of Alfred P. Sloan's 'My Years with General Motors' " by John McDonald. It is a small book of 187 pages, and I found it so interesting that I finished it in barely 2 days. That is what can happen to reading speed when a book is good. Perhaps in terms of pure business education this book may not have as much to offer in absolute terms, but in terms of realism, strategy, organizational behaviour and group dynamics, the book offers some remarkably deep insights. It is an ode to a person without whose effort the world would not have seen one of the best books in business studies. The book does not reflect well on Peter Drucker, whose introduction to the revised edition of Sloan's book appears both delusional and ridiculous in light of the facts presented in McDonald's book.

I cannot help but observe one thing: a strategist needs to remain unobserved and even under-estimated while being very alert and perceptive, making the right moves at the right time to be silently influential. This, however, can translate into a genius dying unheard and unsung in his time. Only in the long-term and only if somebody is willing to dig enough does the genius appear. A strategist needs somebody who can handle his PR and marketing without jeopardizing the strategist's position of power or influence. A tricky bit but is perhaps necessary. Like Mr. McDonald became a channel to show the world the genius that was Mr. Sloan, sadly nobody was able to play that role for Mr. McDonald. In fact, had it not been for Mr. Drucker's inaccurate foreword, his story would never have been told. We also learn of the importance of the discipline of business historians and their corresponding role as Ghost Writers in bringing out an accurate description of the history of successful enterprises.

The book brings out the importance of chance, networking, strategy and perseverance in any kind of conflict. Luck plays its part, but fortune does favour the brave and the persistent most of the times. It is important to start over with a basis to fight on, without which the fight may prove to be unsustainable. As McDonald discovered that he could bring up a case against GM for suppression of the book and found lawyer friends willing to fight it out, he persisted with it and played his cards right. He never took what was told on its face-value and tried to place it in larger scheme of things. Overall, it is a good example of group dynamics in hostile situations and I would recommend the book to anybody who has read and enjoyed the original book by Mr. Sloan.

Global Brands: Conclusion

2010-05-04T16:29:00.003+01:00

Due to growing concerns about alcoholism, effect of alcohol on health and other social concerns, alcoholic beverages companies were further under constant pressure to diversify. Internationalization was a key component of this strategy and so was diversification and acquiring complementary brands. This applied to beers, spirits and wines. The companies, generally, found it easier to diversify into sectors where they could draw upon some common manufacturing, marketing or distribution knowledge. Only the companies who were able to develop a coherent strategy, worked on building marketing knowledge, expanded internationally and diversified appropriately were able to survive. Others were either liquidated or acquired by other companies in the long term. The spirit producers were the first to diversify due to possibility of controlling the production process and relative ease of transportation, followed by beer brewers (discovery of the process of pasteurization of beer helped). Wine producers were the last to diversify due to inherent difficulty in maintaining a consistent quality of the wine from year-to-year.

The book mentions four waves of consolidations since 1960, with British companies leading the pack. In first two phases consolidation took place at a national scale in form of mergers and acquisitions. Phase three saw the birth of global alcoholic beverages firms as we know them today. Firms no only merged across borders with each other, there was also a lot of vertical integration and diversification. Some M&A activities came under the scanner of anti-trust enquiries and blockades for the first time. The last phase has seen rationalization and assimilation of resources and the emergence of trading of brands like a piece of intellectual property. Given the high cost of developing a brand from the scratch, brands in this industry tend to outlive the founders and even the company. Very few new brands are able to make a global mark, and need a sustained & well-thought branding strategy.

Another thing that I have learned is the basic ways in which a company can attempt to break into an international market: e-commerce, merchant houses, agents, distributors, an employee working in the new country, wholly owned distribution channels, partnerships, M&A and starting a new business on their own. The choice depends on the industry in question, desired control on marketing and distribution, the ease with which the company may want to come out of the market, risk appetite and the desired level of expenditure. Overall, the book helped me to take a fresh perspective on consumer goods industry and the strengths (and weaknesses) of a family owned enterprise compared to a firm run by professional managers. I also came to appreciate the role of branding and the marketing knowledge gained over time in the life of a company. Another interesting Business History book over, time to move on to the next one!

Global Brands: Importance of Branding for Consumer Goods

2010-04-26T11:37:00.001+01:00

That reach is king is well-known and affects technical and non-technical businesses alike, albeit in different but very crucial ways. For a purely technology business, being accessible and customer friendly may take precedence over perceived quality or benefits, i.e. a client is more likely to invest in systems and technologies that promise to be reliable and are easily maintainable, even if they are not as efficient as other "transient" alternatives. Efficiency and quality is good to have, but mean little in the absence of a strong support structure of distribution and maintenance. Brand management, then, becomes a function of this image: branding is both functional and perceived in almost equal measure.

For consumer goods, on the other hand, brand management is a different ball-game. Due to lack of concrete differentiating factors in general and lesser protection in terms of patents, perceived benefits may take precedence over functional ones. In fact, as the author asserts, food and drinks sector is the most "brand managed" and can have very tight margins. This is highly applicable to the Alcoholic Beverages industry as product life-cycles are larger and differentiating factors fewer. Players in this industry try to ensure survival by clubbing both Marketing knowledge and distribution networks. It is common to find consolidation and cooperation even with rival firms to build a economical and reliable distribution channel. This has been brought out very nicely in this book.

Global Brands: Introduction

2010-04-21T15:42:00.001+01:00

Currently I am reading "Global Brands: The Evolution of Multinationals in Alcoholic Beverages" by Teresa da Silva Lopes. As the name suggests, this book focuses on the development of MNCs in Alcoholic Beverages from 1960 to about 2003. Here, it focuses on an industry that has been traditionally dominated by family-owned businesses and relies heavily on marketing: managing brands and distribution channels more specifically.

Why does purely professional management that seems to outshine family-dominated businesses in other industries lag behind here? The author believes that this happens because there is a strong element of heritage and pride in this business, which makes it more than just a "money-spinner" for the family. This ensures that the family tries to take decisions keeping in mind the long-term consequences. For this, they are prepared to bring in professional managers but maintain a controlling stake in the company. Managers, on the other hand, may focus on short-term results to demonstrate performance. While this may work very well for industries with a small product lifecycle (like technology), it is not as effective for the Alcoholic Beverage industry where brands sometimes outlive the company. The business is also marketing-intensive and needs sustained brand management, perhaps more than any other product from the food and drinks industry. The book explores the critical role of effective and consistent distribution channels along with the optimum use and nurturing of the Marketing knowledge. I am impressed with the effort put in to produce this exhaustive research. Overall, as a data repository it is an excellent source to get a bird's eye view of the alcoholic beverages industry and in the process learn some important bits about consumer goods based businesses.

Of Lehmans and Goldmans

2010-04-20T15:41:00.001+01:00

Mr Dick Fuld is unrepentant and will portray Lehman Brothers as a "victim" of the crisis. He claims that if other banks were denied the government support, they would have collapsed like Lehman Brothers. Further, he asserts that Lehman was justified in using Repo-105 as it is legal and the regulators knew about it.

Where do I even begin... The defence given by Mr. Fuld is alarming as it implicates the government, the regulators and the big banks in a scam of unprecedented levels. His argument is simple, let the one who has not sinned cast the first stone at Lehman. In other words, Mr. Kettle please don't call Mr. Pot black. It just turns my stomach to think about how deep the rot runs. So deep that it gives somebody the audacity to defend a wrongdoing because it was done with the permission of the authorities, or at least by keeping them in the loop. This is going to prove mighty embarrassing for SEC. Taking down Lehman and then going after Goldman Sachs will not help the cause of economy but will perhaps help the governmental bodies to escape blame. Allowing a misdemeanour and then punishing it; I think relevant SEC officials should be tried for criminal negligence. But, like that's going to happen any time soon. Authority without responsibility or accountability seems to be the defining factor of government bodies around the globe. How many government employees have you heard of who got fired due to lack of performance?

The final word is that big thieves hang the small thieves. So goes the law of jungle. I increasingly feel that it is useless to expect any concrete justice because that would mean prosecuting too many powerful people together. The government is simply in a hurry to find a scapegoat and then continue with its disastrous business as usual. In fact the cancer has been allowed to go so deep that it is difficult to even talk about from where to begin a possible reform. I guess that in God we trust, but the Devil is a good business partner as well. Amen.

Global Electrification: Conclusion

2010-04-19T15:18:00.001+01:00

As electricity started playing a critical role in industrial, military and civilian life, it came to be viewed as an indispensable strategic resource. This, combined with rise of nationalism and intensive capital requirements of the industry, led to the "domestication" of electric utilities and hampered the development of international electric grids. American and Foreign Power, which had come to dominate the electric utility scenario post WW1, lost sizable assets in Latin America and Cuba. Post WW2 big names like Sofina became investment houses. This decline continued well till end of 70s, when barely 1% of the world's electric generation was in private hands. The big Belgian, American and Canadian names lost their considerable clout. Post 70s, the world has witnessed a trend back towards globalization and private ownership. The trend has accelerated considerably after the collapse of erstwhile USSR and the end of cold war. The multi-national organizations entered the arena again, with separation between generation and distribution becoming sharper, and their presence over multiple countries and complex cross-shareholding patterns have re-emerged. It seems that for now the balance has once again tilted towards globalization, a long time after the first great war. For how long it will stay this way is something to look out for.

This book demonstrates the effective use of holding company structure for entrepreneurial activity in capital intensive sectors. It also brings out the political risks inherent to capital-intensive sectors that grow on to become strategically indispensable. The critical role of international finance in the growth of such sectors is also explained nicely. In my view, in the current age a lot of lessons from the book may be applicable to the telecommunications industry. All in all, an excellent book that will give you a good understanding about the development of global enterprises in the last century despite of political risks, set-backs and uncertainty.

My VICTOR Framework

2010-04-16T10:23:00.003+01:00

How does one get the best performance out of the team? This is a fundamental question with no definite answers, a question to which considerable academic research and books have been dedicated. For the uninitiated it can be like the search for an ever elusive fountain of youth. My thoughts on it out of my experience. I believe keeping an eye on the following is necessary to maintain a top level of performance (my VICTOR framework!):

Vision: What does your company stand for? If your company has no concrete vision, what do you think your group stands for? If you can articulate it in few words and communicate it effectively to your team, and then go on to implement it in every aspect of your functioning; you will be able to build a strong team. Your hiring needs to be careful and needs to carefully consider the culture of the company.
Individualization: You have to remember that what motivates and drives you does not necessarily drive everybody. Spend time with your team, get to know how people fit and what they can do best. Focus on strengths and put people in the right place instead of picking on their weaknesses.
Consistency: Whatever you do, you will have to be consistent with it. Random changes (changes that appear random to your team) can confuse and demoralize.
Transformation: If you talk, walk the talk. Make real changes, put systems on the ground and take people into confidence. Else you will loose credibility sooner than later.
Output: Put in place ways to measure the output,without which there is no way to credibly measure the success of the changes.
Reward: Encourage positive behaviour by rewarding it. Take the career of each member of your team member seriously and let them know that what kind of growth path you have in mind for them

I will expand on this more in my future blogs. I will end with saying that any development methodology and any process can do only so much. Without the passion of the leader, consistent top-level performance is only a pipe-dream. If you cannot nurture talent, the talent will leave you. Especially in sectors like IT, where the demand is much higher than the supply, understanding and nurturing your team is of paramount importance.

Importance of CRM

2010-04-15T10:47:00.006+01:00

When your wife is a Marketing Manager, there are always some interesting bits to learn. Often we discuss office situations and see what we can learn from it. In one such recent discussions, I realized how important a CRM system is to a company. Even before talking to her I had envisioned of something similar for my company (when I start it), but talking to her not only helped me to get the "technically" right words for my ideas but to also see the practical implications of the same with a real-life case study.

There are two critical functions that can be made hell lot of easier by automated CRM systems like Salesforce: tracking Sales and measuring Marketing.

Keeping track of the sales data can be a herculean task. If a CRM system has not been incorporated right from the start, the sales executives and managers may get really insecure about sharing their contact lists one fine day. Implementing CRM retrospectively can antagonize people and needs a major internal marketing initiative, after all you will be selling to a sales guy! The sales team needs to understand that their confidentiality will be respected and the CRM system will help them to track and serve the clients in a much more effective fashion. If they are not convinced about this, there is little chance that the organization will be able to benefit from the CRM implementation. Hence, get it in as soon as possible and keep it. Sales professional may feel that such systems would make them "dispensable" by making hand-overs easier and by ensuring that the company does not have to worry too much about a huge portion of sales disappearing with a sales executive. They need to be reminded that sales is, anyway, a strongly personality based activity. Hence dependence on the executives cannot disappear and they will always be invaluable. The CRM would, however, discourage any kind of rent-seeking or unethical behaviour and make Sales more robust. Ultimately, it is good for the company and would make Sales more effective.

Measuring Marketing is increasingly seen as a way to rationalize marketing costs and get "greatest bang for the buck". Many organizations, especially the small and medium sized, tend to see Marketing as a cost and a luxury. Then there are professionals who exactly do that: talk and not back it up with data. This can lead to politically very uncomfortable situations for Marketing and it may struggle to explain the necessity of its existence. No wonder in down times it is one of the first to face the axe. Let us try to understand this with an example. Lets say that the Marketing Department of a company A organises a series of seminars that help the Sales to get an average of three new customers per seminar. The CRM would enable to easily track the sales generated by these leads. This would not only help Marketing to understand the success of the event in terms of ROI but to also tailor future events to be more cost-effective. Additionally, it would provide the necessary political cover to advocate the existence and growth of the department.

Concluding, if I am made in-charge of a Sales and Marketing Department, I wouldn't even touch it with a six-foot long pole if it does not have a proper CRM system in place. In fact, it will be my biggest priority to get such a system up and running before I try to implement anything.

Global Electrification: The Proliferation of Electricity

2010-04-14T10:37:00.001+01:00

Electrification initially followed settlements around railroads, energy intensive industries (like nitrogenous fertilizers, electroplating, smelters), mining operation, plantations besides in capitals, large cities and port cities. By 1939, however, it had become a part of the "modern" living and critical for industrial progress. In fact, the writers wonder if the reason behind the downward spiral of a once prosperous Argentina was related to its lack of electrification. The growth of this capital-intensive industry started with the invention of arc light, electric bulb, electric motor and electricity generator. It is notable that Edison, commonly thought of as the inventor of the electric bulb, was not the inventor of the electric bulb: the concept had been demonstrated and used by others before him. What he did invent was the use of high resistance filaments like tungsten (instead of carbon) to enable having electric bulbs connected in parallel instead of in series. This enabled the birth of first electric utility and enabled proliferation of electricity supply as a business. Initially, both AC and DC current were produced. The invention of transformers, transmission lines, DC adapters and AC motors tilted the balance towards AC power.

Electricity generation, I understand, is capital intensive. Nevertheless, it appears to be a deceptively one time investment. The engineering, financial and management experience required to run a widespread electric utility is considerable. I came across, what is referred to as, "a holding company" structure that was used to mobilize the gargantuan resources needed for such ventures. Such holding companies comprised of respectable names in the domain (to inspire trust for investments) and typically domiciled themselves in business centres that had deep capital markets and were tax friendly. The most popular destinations before WW1 were UK, Canada, Switzerland and Belgium. Additionally, there was a significant level of cross-holding amongst various holding companies and ownership was often cloaked to avoid any country-specific bias (for example, Germans established a holding company in Switzerland to invest in France and vice-versa as there was fierce German-French rivalry). This made a complex pyramidal structures with a lot of investment often being controlled by similar set of companies and investors. Further, these activities were carried in two models: entrepreneurial and buy-outs. Rings a bell? These are two major investment directions in the Private Equity world as well. This helped me to understand that many activities considered almost vintage Private Equity are in fact much older.

Technology, Design or Something Else?

2010-04-13T22:46:00.000+01:00

I recently came across a blog discussing the importance of technology vs design for a product. I beleive that such discussions show how living in one particular domain can seriously hamper the breadth of vision. Like the classic blind men interpreting the elephant in different ways, each person tends to interpret his or her interpretation as the most important one. When you are talking about a product, you are talking about business. And business is a sum of parts. Nevertheless, from business point of view, elements like marketing, service and reach will always dominate either technology or design. Technology and design have to pass a minimum threshold. Beyond that the client retention and longevity of a business is too deeply dependent on the above mentioned key factors. A business is made by the people who run it, who have a vision to find innovative use of design or technology.

Not many engineers or designers go on to become the CEO of a company (unless they start their own company or get business education). This is not a co-incident. Technology and design functions require lesser people management than most other functions. They are also, generally, least political. To research and to simply come up with ideas is not enough. The ability to find practical uses for the ideas, to be able to take them to people profitably, manage people and then sustain the process reliably over a significant duration defines business. Any successful entrepreneur can tell you that technology or design is but a small, though important, part of the whole equation.

Global Electrification: Introduction

2010-04-09T14:16:00.002+01:00

Now, I have started reading "Global Electrification: Multinational Enterprise and International Finance in the History of Light and Power, 1878 - 2007" by William Hausman, Peter Hertner and Mira Wilkins. In the last century, electricity and railroads were two prime forces that changes the face of earth politically, socially and economically. Hence, I am pretty curious about the journey of global electrification and the role of international finance in its development. And so far I find the book pretty interesting.

A few key patterns emerge and re-enforce themselves across various business history books I have read (including the current one). The key time periods that emerge are pre WW1, WW1, roaring 20s, Great Depression, WW2, post WW2 in cold war and post cold war. The whole world saw a lot of change across this timeline. Let us see what we can pick up about electrification and the evolution of business across this timeline.

The countries that played a predominant role in global electrification include Germany, USA, UK, Canada, France, Belgium and Switzerland. Especially Belgians had the first-mover advantage in the domain and continued to be pretty influential well until 1940s (the point till which I have read the book!). The names of Sofina and the Empian group particularly stands out as an influential Belgian holding companies. Germany, pretty predominant on the electrification scene before WW1, rapidly lost its influence after the first Great War and was thrown into a very turbulent time that just kept getting worse. Nevertheless, German manufacturing did reasonably well and some German firms like AEG and Siemens managed to invest internationally either directly or through association with Swiss/Belgian holding companies. The war also saw US getting cash rich and then investing its big piles of cash to electrify communities around the globe. In fact, by 1930 utilities were numero uno in terms of foreign direct investment from the US. UK was not able to capitalize on the decline of Germany and saw its power declining rapidly post WW1. It electrical industry remained mediocre at best. London, however, had the deepest pockets till WW1 and most entrepreneurs who wished to invest in electrification registered their company in UK or Canada to tap these funds easily. Post-WW1, US rapidly displaced UK as the number one destination for raising funds for electrification. UK itself turned more inwards, with the Government feeling that any external international investment would perhaps come at the cost of any internal domestic investment. There was clamour about replacing dependence on finance with dependence on manufacturing of "real" goods (which, strangely, does not sound too different from what I hear today after the recent economic crisis). This, overall, made UK influence on electrification weaker. Even with soft-loans to promote sales of capital intensive equipment for electricity generation, UK electrical manufacturing industry did not do particularly well. Even their massive investments were either sold off or overshadowed by Americans. The role of Canadian entrepreneurs and holding companies in electrification also stands out. In fact, even though US-UK were main source of cash, Belgium and Canada were the main sources of dynamic entrepreneurs, management talent, engineering resources and holding companies. The book is ambivalent about the role of France as I don't see any particular strengths or weaknesses emerging out of the description of their electrification activities. Nevertheless, they did invest in electrification of their own country and their colonies.

Are B-Schools Failing to Produce Business Leaders?

2010-04-06T12:54:00.000+01:00

One of my friends brought to my notice this topic for a debate that took place recently in a business school. What are my thoughts about it?

I believe that leadership is the ability to guide a group through difficult situations without seriously compromising the cohesion of the group and keeping in mind the long term consequences of the actions. Extrapolating it a bit further, I would say that leadership is a direct function of the willingness to take responsibility, decisiveness, perseverance, clarity of thought, empathy, self-awareness, reasoning, integrity, openness to change, ability to moderate tense discussions and lack of hubris (please feel free to add if you think I missed something!). And this, I believe, cannot be taught though it can be learned, i.e. somebody who wants to become a leader can possibly cultivate these traits over a long time, but you cannot teach them to somebody in a year or two. Leadership, talking in mathematical terms, is the vector resultant of a personality that cannot be altered overnight.

Elite B-Schools attract top-notch talent, but does it really translate into great leaders for the society? Let me play the devil's advocate and talk about the possibility that business schools are indeed not producing as many business leaders because they do not need to produce that many leaders: not all roles assumed by MBA graduates require strong leadership skills. How much of a leader does an Investment Banker needs to be? Similarly being a technically brilliant manager is not always the same as being a natural leader. A people-person could excel and even grow in sales, marketing or HR without actually being a good leader. An analytical, people person could excel as a consultant. And so on. Leadership is good to have, but is it mandatory for graduates to be economically successful? Moreover, elite B-Schools can, and do, build a mentality of entitlement in their graduates which can be totally anti-leadership. Hence, in all possibility, the assertion may be quite true: B-Schools are indeed failing to produce business leaders for the simple reason that they were built to educate brilliant people to contribute meaningfully to a business, and many such functions can be achieved without strong leadership skills.

I think that business schools are excellent facilitators of the talent. In fact, they can nurture it and provide an excellent network to support some brilliant minds. Hubris, however, can be the bane of elite business school graduates. Most of the people would like to think of themselves to be leaders, but very few really are. Of those that are, very few would like to take the hassle of exercising it. In fact, fat salaries and corporate growth is possible without good leadership. Business schools can be excellent learning grounds for people willing to grow as a leader, but I am not sure if that would really happen. Good leadership is simply a scarce commodity.

Musings on Existence

2010-03-30T18:41:00.000+01:00

In the realm of relativity everything is unreal and the search for absolute is the vain hope for a world devoid of change. Change is the only absolute in the mortal world; everything changes. And in this flux of everlasting, constant change I strive to define my life and the reasons behind it. I try to define the root of my happiness, sadness, worries, celebrations and all else in between. I try to find "me". I try to understand this creation. I don't find many definite answers, so I treasure the ones that I do find.

The subtle manifestations of cause and effect are undeniable. Yet, in the short-term life can be random. And in the long run? Well, as somebody said that in the long run we all will be dead. Perhaps there is an after-life, perhaps there is not. Perhaps God is the psychotic, vindictive, maniac people make him out to be. Perhaps he is simply a disinterested third-party observer watching his inferior experiments with disdain. I don't know. I don't know if there is a heaven or a hell, or if there is any meaning to life. I just know three things: I exist, I can think and I wish to excel.

Many philosophers deny existence, labelling what we see as an optical illusion conditioned by the mind. Having studied semantics, logic and cognition; I do have sympathy for some of their views and I can definitely see from where they are coming. Nevertheless, I think denying the entire existence is a shade too extreme. At most we can see ourselves as deluded or conditioned, from which one can escape by simply desiring to be free and by keeping an open mind.

NCIC: Conclusion

2010-03-29T13:52:00.002+01:00

Finished reading NCIC. Overall, the book has helped me to appreciate the significant role of political risk in the life of a company. The story of Schering seems like a twisted and horrifying parody based on novels of Ayn Rand. While Rand writes about excellence and mediocrity as clearly defined and antagonistic groups working against each other, the truth is much more complicated. In making her characters so one-dimensional, Rand does manage to crystallize the essence of creativity and mediocrity. NCIC highlights the shades of grey that dictate human behaviour in the real world. This book on Schering, however, demonstrates how these colours can play with each other to produce many variations.

Between the world wars the German business, despite of its several advantages, succumbed to a destructive Nazi rule and, in some cases, even fuelled the ambitions of a destructive, racist regime. Companies like Schering simply tried to find a balance in order to ensure survival, but those like IG Farben actively exploited the adverse circumstances for profit. Schering's excellent marketing, scientific research and quality of manufacturing helped it to build a formidable brand and maintain profitability even in the most adverse of circumstances. Nevertheless, as politics took precedence over economics and as chauvinistic nationalism became fashionable, Schering struggled. Business, in general, either refused or failed to understand the power it wielded. Perhaps, the behaviour is not very different from citizens who do not vote, avoid participating in politics and complain about the quality of politicians. It is definitely not the first time that inertia and narrowly defined self-interest have caused problems for a society, but it is appalling to note that the same pattern has repeated itself for centuries without people learning from it. Indeed, who do not learn from history will be condemned to repeat it.

Concluding, there are a plenty of things to learn, both what to do and what not to do, from the story of Schering. The book will also enhance your understanding of the development of the German business in particular and knowledge-based industries in general. Finally, it will help you to appreciate the reason why the political environment of a country is critical to the success and sustainability of a business and how the culture of a country can be critical in determining an organization's strengths and weaknesses.

What Philosophy Is

2010-03-22T00:05:00.000Z

Philosophy, like art, is an attempt to express the abstract with words and logic. To twist perspectives to try and synthesize all dimensions, as if the attempt would find a solution to the Unified Theory of Physics. To find the one in many and the many in one, to look for that one fundamental principle that runs through every thought that ever was and that shall ever be. It is the quest for freedom from the connundrum of life and its meaning, the song of love that the thirsty soul sings for the Goddess of thought and action. Philosophy is the real you in you, the thought behind your every action and reaction, the mark of your awareness and love for life. Philosophy is indeed love for wisdom.

Understanding Private Equity Fundamentals

2010-03-08T10:05:00.003Z

In parallel to reading about pharmaceuticals, I have also started reading "Private Equity: History, Governance and Operations" by Cendrowski et al. I just wish to understand the place and importance of Private Equity (PE) from point of view of a future entrepreneur. The books consists of four modules: history, governance, operations and special considerations. I will simply record my main observations for future reference.

Reading about history, I understand that PE is a relatively recent phenomenon with its roots in the USA. In fact, the book is primarily written with US in mind. Nevertheless, I hope the basic working and attitude would not differ significantly across borders due to a close-knit PE community. It explains the structure of PE firms and general terms used in the industry (e.g. describing what is a general partner or a limited partner, the fee structure, legal agreements and other legal aspects). The books focuses primarily on two type of PE investments: venture capital (VC) financing and buyout transactions. It is interesting to learn that VC funding is further classified as Angel Investing, Seed Funding and Later Stage VC depending upon the maturity of the product portfolio. PE has developed as a distinctive alternative investment vehicle whose profitability is highly dependent on the overall performance of the economy and government policies (especially wrt Capital Gains Tax Rate).

Due to comparatively higher rate of returns many institutions and high-net worth individuals wish to invest with a PE firm. However, it is a very tightly knit circle that works on "knowing" the right people and by being successful. While the top quartile funds are plush with funds, others struggle to raise basic amounts. It is a highly competitive arena where success breeds more success. In the last decade buyout funds have apparently performed better than VC funds. Consequently they find it easier to raise money.

There are primarily two ways in which the PE firms "harvest" their investments: Initial Public Offerings (IPO) and Mergers & Acquisitions (M&A).

The book notes that IPO can be an expensive, lengthy and cumbersome procedure. It not only depends on the prevalent market condition but also it enforces more complexity and regulation on the organization. Nevertheless, it can be seen as an important step in the life of a company signifying a strong historical growth. It also allows the entrepreneur to possibly maintain the control over his company, something that he may loose in some M&A transaction.

Takeovers are defined as horizontal (same industry), vertical (supporting industry) or conglomerate (unrelated). The can be further seen as strategic, defensive, growth or financial. Reverse Takeover is mentioned as a credible and more efficient alternative to IPO. The company can be acquired either in an auction (can turn-away strategic buyers but attract financial buyers - the company's financial advisor may favour this as it may lead to more fee. Overall useful if there are not many keen buyers) or an exclusive offering (attracts strategic buyers, can be attractive for the entrepreneur. Advisable when there exists many strategic buyers with a high level of interest). It is important for the entrepreneur to realize that he may loose control of the company in this harvesting strategy. The popularity of M&A has increased significantly since 1999, something that has further bolstered buyout funds.

NCIC: Between the Wars

2010-03-05T12:47:00.004Z

Between the two world wars, Schering did reasonably well. This was done by spending substantial amount of revenues on marketing, establishing foreign subsidiaries, investing in research, taking care of its employees, localizing the product, giving cultural training to young managers and forging alliances. Marketing and advertising alone consumed as much as 30% of revenues. The wars, turbulent political and economic circumstances, rise of protectionism after the Great Depression, hostility to German products after WW1 and Schering's own bent towards socialist policies prevented the company from realizing its complete potential. To make the reader understand the circumstances in a better way the writer takes great pains to elaborate the effects of WW1, the problems faced (and created) by the Weimar Republic and the final havoc unleashed by the Third Reich. In modern context, when I read about Germany, I am reminded of how Beirut passed from total prosperity to total chaos. Something similar happened to Germany with WW1. It is a wonder that Germany is what it is today despite all the hardships suffered and problems faced. I can make out as much that the writer has a soft corner for Germany. Nevertheless, the book makes me feel pretty curious about Germans.

Another thing that strikes me is that power dynamics has witnessed an incredible amount of change in the last 150 years. The number of wars and turbulent circumstances has been shocking, and all countries have had their share of troubles. This has not only defined their attitude towards the world but also their own self-perception and way they organize themselves. Unfortunately, sometimes the response to mitigate an adverse situation makes things worse. Particularly, a culture of entitlement or one of seeking more rights and powers but lesser responsibilities and accountability can really eat away the vitals of an economy like termites. The understanding of history, politics and economics can seriously increase the efficiency of a business man, giving him a wider vision of the world in which his business operates.

NCIC: Story Before WW2

2010-03-04T16:42:00.005Z

Read till just after the WW1. Pharmaceuticals industry was historically closely related with the chemicals industry. Camphor, rubber, oil, coal, wood and turpentine oil were some key raw materials. The growth of pharmaceuticals as an important part of the economy has been phenomenal. The demarcation between a purely "chemicals" based business and pharmaceuticals was a blurry one. IG Farben, Bayer and Merck come up as the big German players in the industry. In context of the book, Du Pont also comes up as a major player; a name that before reading this book I had associated more closely with chemicals and its close relation with GM. Schering, though a smaller player, comes across an important player with many innovations, including economically viable synthetic camphor, attributed to it. Its contribution to photography chemicals and contrasting agents also stands out.

Nevertheless, I find the company a bundle of contradictions. Its innovations contrast sharply with its conservative, inward looking, relationships based approach. The way it resisted international investments and engaged in cartels are not exactly the hallmarks of a confident company. I understand that nationalistic passions were running pretty high at that point of time in the history. Germany's bitter experience with WW1 did not help things either. Nevertheless, the fearful attitude and shortage of good managers did affect the growth negatively. Relating it with the history of Deutsche Bank, I also feel that relying on private contacts and relationships was very much a part of business in those days. So much for merit, intelligence and hard-work. Connections and being in the right family could be the making or breaking point. It is good to note that in today's world the number of opportunities has increased, though not equally in all countries. I am not sure if nepotism and elitism will ever go away, but information technology advances have definitely enabled and empowered people to start a business more easily. Three cheers for IT!

Finally, after reading a lot of sugar-coated management books, it is good (though a bit bitter) to read a book grounded in facts. Hard-nosed realism. The complexity and shades of grey that it brings out are, well, enlightening. The sooth-sayers are not wrong, but it is good to know and realize that not everybody is in business with the same motive. Business history ultimately judges a company by its ability to build perception and the end results. It also brings out the role of politics and luck in the life of an enterprise. It demonstrates that there can be umpteen ways to reach the same place, and it is alright as long as you are willing to make the journey.

National Cultures and International Competition (NCIC): Connecting Dots

2010-03-02T13:12:00.007Z

Continuing my reading blitzkrieg, I am now reading; " National Cultures and International Competition:The Experience of Schering AG, 1851–1950" by Christopher Kobrak. Down the first 100 pages, the book looks interesting.

The first thing that I gather from this book is a better understanding about German historical attitude towards business. The presence of two boards in German companies, developing a "community of interests" and legalization of cartels to counter effects of economic difficulties and capitalism, the effect of wars on German economy (and psyche) and why coal and iron were so politicized are few key points to learn. In fact, it relates very well with why coal and steel were the primary focus in the 1957 treaty of Rome. For the first time I am able to appreciate the difference in business attitudes in Germany from UK, US and India. History does help you to appreciate the present and to avoid mistakes in the future.

The second thing I realize is that Germany was in a very formidable position before WW1, with only US hoping to do as good. With WW1, US expropriated 506 German companies and 12000 German patents. This, along with the American capacity to organize and think big, the managerial revolution, elimination of its biggest rival, a favourable geographic location and war sales bonanza transformed US forever. Whatever was left was sealed by WW2, when dollar finally replaced pound. The more I read, the more events interconnect and make sense. I guess victor's justice is a truth of life, and I have to also watch out for the personal bias of authors keeping in mind that this is but one side of the story.

All in all, an interesting start. Will keep you posted.

Banking on Global Markets: Conclusion

2010-02-27T18:21:00.007Z

WW2 and the subsequent division of Germany into two parts saw the beginning of a new era. Dollar replaced Pound as the world's reserve currency, the Cold War began and Bretton Woods system cam into being. West Germany was right at the frontier of the Cold War. Formation of NATO, fear of Communism and the 1957 Treaty of Rome let to stronger cohesion in the Western powers. Overall, the German economy in particular and Western economy in general did pretty well. Despite the protectionist and nationalist passion carried over by the previous era, the period after WW2 saw denationalization of finance. This was a direct result of free-convertibility of currencies and the ease with which money could move from one country to the other. If anything, the advent of information technology made the process faster and more difficult to control.

Under the able leadership of Abs, the Deutsche Bank managed to go through this turbulent period rather effectively. It was able to avoid American pressure to break itself and hold on to its structure of a "one-stop" bank. This brings out a very fundamental difference in American and German attitude towards finance in general and banking in particular. While Americans hated seeing too much power being concentrated in the hands of any one institution, Germans encouraged such institutions as symbols of stability and national pride. The specialized US Investment Banks, though, gave Deutsche Bank some serious competition and were more effective due to their focused agenda. Duetsche bank found it a little hard to adapt from a banking based on relations to a banking based on commoditized services and transaction carried over impersonal capital markets. As far as from 1870, boom and bust cycles have been a hallmark of capitalistic systems. Cartelization and groups of interest were especially strong in the German business to counter the effects of such cycles and deal with the effects of destructive competition. It seems the influence of this thinking lasted well after WW2. A strong nationalistic influence also made it a little difficult for Deutsche bank to adapt rapidly to other cultures. Lack of enough good management talent and shoddy acquisitions continued to haunt the bank as far as 1990. The two world wars, the division of Germany and subsequent reunification had a cumulative effect of not only hurting the bank's bottom line but also making it a bit cautious about international investments. Nevertheless, by 2000 with its acquisition of the Banker's Trust the bank had displayed some significant improvements, becoming a world leader in the business of global currencies, commodities trading and credit derivatives trading. Additionally, it is very clear that the American operations had a very strong influence on the bank in terms of revenues, management and getting a stronger footprint in investment banking.

Concluding, the story of Deutsche Bank is indeed the story of evolution of finance. The book gives a good insight into the working of the financial world besides bringing out the importance of political factors and international co-operation for the profitability of a business. The way Deutsche Bank grappled with changing international scenarios, different cultures and lack of management talent is particularly instructive for any company or individual who wishes to operate internationally. Finally, the way the Bank has survived in face of seemingly impossible obstacles is inspiring. A good book overall.

Banking on Global Markets: Story Till WW2

2010-02-22T15:16:00.008Z

From 1870 to 1914 financial institutions operated on the basis of trust, relationships, family ties and politics. In a fairly globalized world, where the British reigned supreme and ensured European supremacy, exchange rates were fairly stable and cross-border finance relatively less risky and easier to implement. London was the primary banking centre while US and Germany were growing at a prodigious rate, and German technical know-how was already gaining respect and recognition. In this atmosphere, Deutsche Bank led the German effort to invest in the US and other parts of the world. After reading the first part of the book, I feel that in the US operations bad management and over-reliance on only few key people(Siemens, Villard and Adams) were the bank's Achilles heel. Notably, Villard played a roguish role, but managed to thrive due to his charisma and contacts. The bank ended up investing in companies that either took too long to give a reliable (or any) return on the deployed capital. Deutsche Bank found itself frantically trying to manage defaults by American companies and being stuck with investments it did not want. The biggest fiasco were investment in some railroad companies and in an upcoming coking facility. Only the investment in Edison General Electric (later General Electric), though not completely free of problems, turned out to be relatively good. Essentially, the bank found itself playing second fiddle to Morgan and Speyer in the American financial arena. Nevertheless, it seems it managed to turn out a respectable, if not excellent, profit.

WW1 saw finance and economics being made secondary to nationalism. As a direct result of the war protectionism and many socialistic values took deeper roots in many societies across the globe, perhaps with the hope of making a more just society. Nazism, fascism and communism found their roots as a result of economic problems, racism and aggressive nationalism. The period also saw the emergence of US as the world's richest nation, transforming itself from a debtor to a creditor nation, essentially fuelled by its managerial revolution and profits from war. Its strong influence shaped banking regulations with retail banking, investment banking and management consultancy coming out as three distinct fields. Germany, from advising the US to have better financial policies, found itself on getting lectures from Americans about the same; a remarkable reversal of roles in the span of few years. It also found its concept of universal banking directly at odds with its American counter-parts.

Between the two world wars, Deutsche Bank increasingly found itself between a sharp rock and a very hard place. From managing the default of American companies it found itself managing the anger of US investors over default of German companies. Its role in the Nazi government brought it a great deal of notoriety. The wars also saw it loosing many assets to "legalized theft" or Government confiscation. Two wars, strong nationalistic policies by Government around the globe, a hostile dictator at home and effort to help its clients retrieve the assets lost to confiscation took a toll on its profits and performance. It continued with its reliance on relations and a few key people to get things done. Overall, I feel that even though Deutsche Bank's performance was below par in this era due to a host of difficulties and adverse situations, there are quite a few lessons that one can learn by reading this text. It nicely brings out the various pitfalls of an overly centralized management, problems inherent to operating in a different cultural environment, the pros and cons of over-reliance on contacts for business, problems with a leader who can get things done but cannot mentor and the possible effects of unforeseen circumstances, natural disasters and wars on a corporation.

Banking on Global Markets: Inside a Black-Box

2010-02-09T10:40:00.005Z

I have started reading "Banking on Global Markets: Deutsche Bank and the United States, 1870 to the Present" by Christopher Kobrak. To say the least, the book is really fascinating because I think it may demystify the working of powerful banks to some extent. Till now I was reading more about relatively idealistic management literature and theories, where ability, self-awareness and vision are the defining factors. This book, however, brings out the aristocracy of pull rather beautifully. I don't know how much of it has changed over the years, but from about 1870 to well into 1914 (till the point that I have read) banking was the domain of a few rich and powerful banking dynasties like Rockfellar, Morgan, Speyer et al. Business was done more on trust and personal bonds rather than anything else. Level-4 leaders or abject self-promoters were the only other people who could hope for success in these transactions. The writer mentions that the Banking Dynasties operated somewhat like European Royal Aristocracies. And they had a frighteningly strong hold on businesses and economics, something that I reckon continues till date.

A detailed, thoroughly researched and well-written history of Deutsche Bank wrt US also serves as an interesting read for anybody who hopes to do business in a cross-cultural environment with unpredictable laws. In many respects, by the time 1900s started, US was pretty much at the juncture where China is today (and US is where UK was then!). There are a few uncanny similarities: the banks find a rapidly growing economy too hot to ignore but do not know how to best deal with the unpredictable regulatory environment. I am really positive about this book and I hope it will provide some wonderful insights into the inner workings of the best financial institutions of the world.

Built to Last: Conclusion

2010-02-02T13:08:00.002Z

Just finished reading "Built to Last" and I must say I am not very impressed. The book seems to be a research "inspired" by a well-packaged mix of works of Peter Drucker, Tom Peters and Robert H. Waterman. Further, many a times it starts sounding more like a self-help book than a business book for a serious reader. For somebody who has no previous business knowledge, this book may seem pretty good, but for anybody who already has a reasonable grounding in management theory this book is simply not good enough. Even its findings are mired in too many generalities to be of any significant use except perhaps as morale boosters. In fact, I feel that to the uninitiated it may cause more harm!

Nevertheless, the actual data and examples about some great companies is invaluable. They can serve as good examples in management group discussions or lectures on management theory. They can also help a management student to create a more practical and concrete picture of theories propounded by Peter Drucker. The book may also prove useful to quickly recap some useful management basics that can possibly work in certain situations.

Concluding, even though history has much to teach, to exclusively use historic data for decision making may not help. I still believe that nothing can replace a good leader and active thinking.

Built to Last: Thinking Growth

2010-02-01T14:56:00.001Z

Reading more of "Built to Last", the writer identifies two major ways towards growth: audacious goals and continuous, incremental learning. As self-evident it may seem, these goals are indeed difficult to put in practice. Further, to sustain the effort and mental discipline for this, the goals need to be backed by a strong cultural identity. Here, the book is pretty similar to "In Search of Excellence". In fact, I feel that it simply takes the ideas presented by Waterman and Peters to their logical next step, exploring the cultural aspect more thoroughly and expanding upon the idea of "sticking to the knitting". Overall, it has helped me to strengthen my understanding about building a successful organization. Nevertheless, I do have my doubts on one point- that a company does not need a successful product to start with. I agree with the examples of HP, P&G, 3M and Sony; great companies that did not start their lives with successful products. Experimentation enabled them to stumble on good products and then move ahead. Hence, I understand that a super product/idea is not a pre-requisite for a great company. In financial terms, however, the amount of capital this can eat up and the difficulties it may present to sustain a start-up are a bit jarring. For every Sony that makes it through these turbulence, there will be a 1000 who won't. Starting with a good product can provide the entrepreneur the necessary cover to launch his company, provided he does not get too much stuck up with the first product. Overall, I think it would make the whole process less painful.

The book also plays down the importance of MBAs, sometimes actively disparaging them. I am sure it has good reasons to do that. Nevertheless, to judge a degree by few of its people is unfair. To judge all lawyers by example of ambulance chasers would not present a very pretty picture. Similarly, an MBA can prove to be a potent catalyst depending upon the experience, orientation and calibre of an individual. It can help a person to take a more comprehensive view of a business and develop a broader outlook. Nothing can replace a Level-5 mentor, provided one has the inclination to learn. All the same, an MBA can have its own utility and accelerate the process of learning. Even for entrepreneurs, it can help to make the journey to independence smoother.

The book is written brilliantly, but it is still a research. It is definitely not a brand new idea and builds upon previous works in similar direction. The real world examples provide wealth of useful data. The interpretations of the data is reasonably good, and would prove to be more useful if read in conjunction with the history of one of the mentioned visionary companies and in knowledge of earlier works in management theory.

Of Banks and Crisis

2010-01-27T13:53:00.003Z

Reading about Obama and his socialist cronies baying for blood of the banks got me thinking once again about the recent financial crisis.

Government tells banks to lend to people who are not credit-worthy. Banks are not sure, so Government decides to guarantee such loans. After all the American dream means at a least an owned house for every individual. No matter if he is a worthless bum. By virtue of being a human being and an American citizen he deserves the loan. Nevertheless, the risky loans demand high interest rates. If Government wants to gamble the money that it has earned so painstakingly from tax-payers, who are banks to interfere? Besides, getting interest rate reserved for junk bond while holding Government backed AAA+ investment was too good to let go I guess. However, like the proverbial mosquito who drinks so much blood that it is unable to fly, reality caught up with the banks and the Government. Of course the Government cannot be wrong, especially as it thinks about people. Didn't it help its citizens to go on a debt-fuelled consumer frenzy by keeping interest rates artificially low? My, it really cares for its people. Especially the tax-payers and savers. So, banks were the devils who created this spectre of mortgage based securities that threatened to swallow the world. But were they the only ones to blame? I guess not.

My question is simple: why should banks lend money to any worthless idiot because the Government wishes it so? And if they are forced to, why cry foul if they manage to take advantage of it? That is what you get when two looters play chess with each other. Might is right, so the Governments escape blame in name of helping people. But let no one delude themselves into thinking that banks could have pulled this one off all alone. I don't think that banks should suffer the price of socialist dreams because I do not believe in socialism. People who expected banks to self-immolate to satisfy their mediocre vote-banks got a well-deserved shock. And, by all means, the people who allowed and accepted such a system in name of social justice have only themselves to blame. It is a world governed by the laws of cause and effect, and everything we do or don't do has consequences. The banks simply turned a cannibalistic system against itself, but they did not invent it.

Built to Last: Underestimating Leadership

2010-01-20T12:59:00.006Z

I have started reading 'Built to Last: Successful Habits of Visionary Companies' by Jim Collins and Jerry Porras. As the title suggests, the book aims to analyse the habits of visionary companies for the benefit of entrepreneurs, managers, CEOs and other business building professionals. In this, its research methodology is pretty similar to "In Search of Excellence". It differs, however, by the fact that it tries to bring out the successful habits by comparing the visionary companies with good but not visionary companies in the similar sector. I think the book may have some useful insights just because it uses some practical examples and data to assert its beliefs. Nevertheless, I would take what it says with a big pinch of salt.

One of the first assertions that I have read in this book is that one does not need a leader to make a sustainable great company as great companies last much beyond their leadership. Instead, a company that is value-based, can clearly articulate its purpose of existence, find a profitable denominator and implement its philosophy consistently across the board will succeed. Moreover, the author believes that anybody can become a leader.

I find the entire assertion true and childish in equal measure. What the author says is true theoretically, without a doubt. It is akin to a preacher telling us that we all are potentially divine and there is a saint within all of us. It may be a good management policy (or the politically right thing to increase book sales figures) to tell everybody how good and equal they are. But lets face it: human beings are neither same nor equal. Our physical strength, knowledge, capabilities, experience, motivations, morals, beliefs, wisdom and ambition differ. Our faces, finger prints and bodies differ too. Potentially and theoretically everybody can be equal. And theoretically Communism can be the most humane system of governance. We, however, do not live in an ideal world. Hence, the concept of equality is absurd as one can compare only apples with apples. You could, for example, say that one lawyer is better than the other lawyer in the field of intellectual property rights, but to assert that a top lawyer is better, equal or worse than a top athlete is simply stupid unless we can define a common, intelligent and universally acceptable denominator for comparison. Human beings due to their essentially uniqueness are difficult to compare in absolute terms. So, calling them equal is an easy and the wrong way out. In practical terms, everybody is not equal and everybody cannot be a good leader.

Moreover, good leadership is the result of wisdom gained over years and cannot be possibly taught in a three-day workshop. Practical corporate experience or an MBA can possibly help to develop it, but even that is not guaranteed. To cultivate leadership one needs courage, maturity, experience, strong beliefs, patience and the ability to rally people. There is no short-cut to leadership or to grow a company without a leader. He is always the starting point, whose mind and strength will ultimately shape the organization and its future.

I may also add that even Jim Collins was forced to recognize the need for a Level-5 leadership in his other book, Good to Great. The truth remains that only such a leader can create leaders and engineer a self-sustaining process that can carry a company far. A Level-5 leader is indispensable for building a visionary company, as is evident from all the examples given in both the books. Such leaders, like true Level-5 leaders, may shun publicity and die unknown. Nevertheless it does not eliminate the need or importance of such leaders because only such leaders are capable of building a visionary company and can also turn-around a normal company into a great one. Moreover, to assert that anybody can become such a leader is no different from saying that anybody can be Mr. Universe. The hard work, mental discipline and perseverance necessary for it are not laid out clearly enough, to the extent that the need of good leadership has been significantly played down. Without a gardener who sows the seeds properly and takes care of the sapling, chances of having a giant, fruit-bearing tree are downright difficult, if not impossible.

In Search of Excellence: Conclusion

2009-12-15T13:22:00.001Z

Just finished reading the book "In Search of Excellence". I would like to summarize my observations and learning.

I feel that this book is not an attempt to revolutionize but to synthesize, i.e. it does not look to come up with a radically different management theory but tries to consolidate on the existing ones. However, it is not done with a view of academic research. Instead, the synthesis has been achieved by retro-fitting the elements of old management theories with all that seems to work for excellent companies. In this, the book is very practical and hands-on in its approach. There is a lot to take away from this wonderful book. All the same, I feel it does not sufficiently highlight the role of the leader. It does mention how a leader's personality shapes the company and determines its future. But it also tends to make the reader believe that it is possible to reach that stage in a series of calculated steps. I am not sure about this. I agree that learning from experience of excellent companies can help the managers to avoid fundamental mistakes. However, I am more convinced than ever that without an able leader you are not going anywhere. No matter what you do. It is good to talk about building leaders, but only a leader can build a leader. You cannot always manufacture one in any factory, university or consultancy. Finally the company will become the embodiment of the ideals and beliefs of its top leadership. Period.

All the same, the basic principles espoused by the book can make any work place better. It can help all people with any trace of level 5 leadership to recognize what they can achieve (and for them "Built to Last" and "Good to Great" may prove to be good as well). It can also seriously burn your fingers (and more) if you seriously have no idea where you are going. Overall, I think that the basic principles advocated may be an important step in the growth of a leader or forming of an excellent company. This book is also a valuable resource for any management student who wishes to quickly re-cap the main management theories in Business History.

Easy Answers Can Be Misleading

2009-12-14T12:32:00.004Z

Business executives, especially those of large corporations, do bear a responsibility to the society. Nevertheless, I find the recent attack on "executive greed" by GE chief Mr. Jeffrey Immelt in somewhat bad taste. I guess with recession in full force it is becoming increasingly fashionable to air socialist views as panacea of all evil. Why, I think Hugo Chavez would be delighted. It is true that inequality has increased in the US and the corporations have played their part in it. However, to link the current problems directly (and only) to executive greed is both absurd and far-fetched. I think it is a demagogic effort to find an easy answer to a very difficult question. If US wants to find answers to its problems, it will have to do better than trying to throttle its bankers and executives.

The American dream is about the ability to make it big, no matter who you are, by sheer force of your brain. There in lies the magic of US. America's entrepreneurial spirit defines US and ensures its dominance. All the same, US does face a multitude of problems (to name a few: a hyper-active judicial system that can really sound funny, a broken medical care system, an increasingly bureaucratic structure of governance that may stifle creativity, lack of interest in education in youngsters, the weakening family structure, tense race & religion relations, increasing number of homeless, under-privileged & unemployed). People are living much beyond their means, consuming wastefully and getting into debt. The American dream is not about being irresponsible/lazy and not all its ills result from corporate negligence. Accountability is not the domain of bankers and executives only. Unless each citizen learns to take responsibility about their finances, the size of their family, their personal life and their education, it is useless to irresponsibly point fingers. As someone has rightly said, US needs a "Statue of Responsibility" to balance the "Statue of Liberty". Bashing bankers and executives is not going to solve America's problems. But perhaps they would make convenient targets for politicians so as the Government can hide its own failures and escape the public ire. Considering a career in politics, Mr. Immelt?

Excellence: Creativity is not Innovation

2009-12-09T17:16:00.002Z

As I move along this book, I see that Peter Drucker's principle of employing the "whole" person is pretty central to this book. In fact, the book actively champions the principle and supports it with umpteen anecdotes, stories and examples. It mixes it pretty nicely with having a strong focus on the end-user. In this whole mix, something that struck me as pretty important was the place of creativity and innovation in this whole equation. The writers are pretty clear: creative and new ideas come dime by dozen. What is rare is the ability to see a practical use for these ideas, the will to implement a vision and the willingness to learn by experimentation. This is termed as innovation and dubbed as one of the most critical factors behind the success of excellent companies.

I think this should serve as a stark warning for new entrepreneurs and inventors alike: if you do not get the business basics right but have a good product, ultimately you will be displaced by somebody who can take your ideas to the end customer in a better way. Or, as the book says, an innovator can be an idea-thief (not always). Patents may not always help as there can be many ways to achieve the same thing. Once anybody has proved that a market exists, everybody would want a piece of it. Fewer problems and good communication would help to retain customers. Hence, it may be worth it to go a few months late into the market if it means lesser problems with the product. Moreover, the second-mover can potentially learn from the mistakes of the first mover and cash on it. As I read somewhere, the early bird gets the worm but the second mouse gets the cheese! The vice-versa is also true: to start an enterprise one does not need a multi-million dollar research team: an innovative idea and customer focus will suffice.

One-off big bets with strong patent possibilities (as in pharma, computer chips, chemicals and biotech) may come to the mind as exception to this rule. The book points that the culture of innovation and openness fosters new products (as in 3M) and there is no substitute for innovation. Confusing it with creativity can take one down the wrong road.

Excellence: About Culture and Action Bias of Excellent Companies

2009-11-24T20:57:00.002Z

Moving further "In Search of Excellence", I find that in the beginning it more or less advocates the basic principles of sound management laid down by Peter Drucker in his "Concept of Corporation" and "Principles of Management". The points about a need in people to feel like winners/achievers and the need that the top-line leader/CEO should cultivate a sense of pride and ownership for work/manage culture are fundamentally nicely repackaged Drucker principles. "In Search for Excellence" builds on it by squarely grabbing the user's attention when it matters and giving a number of solid examples to demonstrate its point. This makes it easier to understand and enjoyable. There are two major concepts that I have just read - the importance of culture and the inherent action-bias in excellent companies. What do I think about it?

Drucker advocate a definable, unified task in which a worker can take pride. He also urges the manager to have a vision for the company and the people, that people should not be perpetually tied down to roles form where they can never progress no matter how hard they try. He attributes a lot of labour problems and job dissatisfaction to these two factors. Jim Collins' books demonstrate how (particularly the case of Nucor Steel), if successfully implemented, this can lead to "a culture of discipline" and play a critical role in the rise of the company. I agree with it. "In Search of Excellence" re-brands this mix of strong work-ethic shaped by an able leader as culture by bringing in elements of internal marketing to the mix. It also rightly points out that internal marketing tactics can degenerate into "control games" if not implemented correctly. I am convinced about the usefulness of internal marketing as a potent supplement for a framework of strong work-ethic and able leadership. But leadership is as much about inspiring greatness, so this would also need a careful hiring. As Drucker and Jim Collins both point, hiring the right people is absolutely critical; with hire for attitude and can train for skill (within reasonable limits) being the mantra of good hiring in the long-term. Internal hiring and employee development is essential as well. No wonder a lot of excellent companies tend to hire graduates and then hone them over time; a.k.a. P&G, Goldman Sachs.

Action-bias revolves around the willingness of a company to experiment and innovate. To just do something, anything except standing still. Run around, look busy? I am absolutely sold-out on the idea of experimentation, testing and marketing trials. It makes a lot of sense. This principle when juxtaposed with Jim Collin's "hedge-hog" principle makes a potent mix of sound company strategy: experimenting but keeping your ears to the ground. Too long and expensive "experiments" and one-shot untested projects,as the writers point, are a no-no.

Finally, I feel that only a company that has a clear, hopeful vision based on brutal facts for itself and its people can excel, create value for its employees and enrich the society in which it operates. For me, this book captures certain critical aspects of this belief brilliantly. Let us see what else we learn from this book in days to come.

Excellence

2009-11-05T11:59:00.004Z

I have just started reading "In Search Of Excellence: Lessons from America's Best-Run Companies" by Robert H Waterman Jr, Tom Peters. Just down the first few pages, already I have got some interesting insights about some questions that had been bothering me about the sustainability of a profitable corporation over time. The Mckinsey's 7S framework, as the writers point out, presents a good way to diagnose the possible factors holding back a company from achieving excellence but it does not present a solution to actually address those problems. The writers further define eight signs of excellence. However, in the same breath they go on to assert that an excellent company may NOT have all the presented signs but will have at least some of the features. They further acknowledge the role of a "strong" leader in setting the tempo and talk about a CEO as manager of that culture, a person who makes sure that the values set by the leader are carried on. The book sounds promising and there sure will be some good things to learn. Nevertheless, the initial pitch has got me thinking about whatever I have learned about companies by reading from other sources and my own observation.

Excellence consists of delivering quality customer service, quality returns on investment and being able to sustain both of them over a long period of time. I agree that only if everybody in the company is passionate about the product can we have a great company. In this respect, Jim Collin's research in "Good to Great" offers very powerful insights about good-to-great turn arounds. Not surprisingly, the role of a good leader (what Jim Collins defines as a level 5 leader) was a major finding that resonates well with what what this books talks about leadership. Essentially, it boils down to getting the right people, keeping them and having an effective succession. The basic problem is that human beings are not perfect and it is possible to abuse any policy. For this, I did suggest having a "living will" for a policy, that is trying to anticipate when and how the policy should be abandoned. Thinking over, I realize that it may make things more complicated. I am also reminded of Jim Collin's assertion that rules are made for people who are not committed, but they end up stifling the creativity of those who are. And it turns out to be a major factor in the death of the entrepreneurial spirit, so to say. Careful hiring and small teams come to mind as a logical solution. Still, it seems clear from the start that having enough good managers is going to be the final hurdle in growth of a company and sustainability of excellence.

I think a transparent, meritocratic succession system can help provided you have a level 5 leader at the helm and give him sufficient freedom. A good way to get get a level 5 leader may be to identify a level 5 company and try to poach its top people, as Bank of America did to some extent with Wells Fargo. That may not help much,as in this case, if the leader does not have enough freedom to restructure. I completely agree with Jim Collins that getting the right people on the bus, getting the wrong people off the bus and shifting people to places where they can perform best is absolutely critical before starting. The "who" is absolutely more important than "what". Another element to it would be effective internal communication and internal marketing so as the employees identify with the company, trust it and take pride in it. Sustaining it is not possible if it is just lip service. Having in mind a growth plan for your employee and willingness to let him go if you cannot offer him growth is part of the deal.

About sustainability, it is worth remembering that fastest growth does not necessarily mean sustainable growth. Many times a company sacrifices speed and profit for sustainability. Not surprisingly, the best example that comes to my mind is of McKinsey. Christopher McKenna in his book about Management Consultancy attributes the resilience of McKinsey to its simple yet effective organization and strong culture. Due to this, many times even though McKinsey has not been either the number one or the most profitable of all consultancies, it has grown incrementally and has never been in remotely any kind of financial trouble. Its survival ultimately helped it to dominate.

One also needs to remember that success is never final. In fact, sometimes it is easier to achieve success than staying consistently successful. A too successful company can also fall victim to its refusal to change with time, Government greed and unreasonable union demands. In fact, refusal to address the problems right away inflates the problem over time. There is no substitute for constant vigilance.

Finally, there is no magic pill to excellence. Frameworks can help to structure the thinking but they can never replace thinking. Leaders are perishable goods and don't come dime by dozen, so it is quite natural to seek for a way to grow without them. I feel it is like trying to get to heaven without dying. I feel that frameworks cannot replace disciplined thinking and "cultural mangers" cannot substitute for a level 5 leader. The answer lies in nurturing leaders, if we can really understand the alchemy of leadership, or by finding such leaders and promoting them.

Worth

2009-10-02T11:54:00.001+01:00

Life is short, it is going by
Fears and prejudices will make it a lie
Hard work and loneliness may often hurt
But keep kicking your feet in the dirt

Without an aim life is a broken star
Without an aim you will not go far
Life is not a desert, it is an ocean
So get rid of every silly notion
And feel the plenty that you get
For the worst may not have come yet

Wipe your tears and your sweat
With every sunrise and sunset
To work hard and to grow
To move forward and to know
Is the best gift that one can get
Is the blessing that I covet

Past is a shadow and a dream
And as glorious as it may seem
Work for now with the goal in sight
Let valor be your guiding light
Use your time on this earth
Life is short, make it worth

Reasoning and Survival

2009-10-01T14:25:00.003+01:00

I was just thinking about what a system (a nation, a company, an organization) needs (or does not need) to be able to do to survive over the long run.

One thing that any system that expects to survive over a long period of time cannot afford is complacency. I am not talking about any idealistic thought that claims, "Excellence is a never ending journey." No misty-eyed idealism please. This is about one ground fact that is undeniable: change. If there is one thing that is certain, it is that things will change. Sooner or later, for worse or the best. If anything, information technology has just speeded up this change. Only those who keep their ears to the ground and make decisions based on facts will survive in the long run. In fact, only by doing so can a company grow.

Complacency, generally, is the child of success. Success can make a company (or a person) believe in its infallibility and hence become haughty or careless. It is just one step short of hubris and total destruction. In Hemmingway's words. you can be either lucky or exact. Luck you cannot control, but your due diligence you can. Complacency often leads to obstinacy. Following a fixed path blindly can only lead to trouble. Let blind faith be for destructive fanatics who are close to reason. In real time complacency translates to lazy thinking, lazy action and refusal to see the facts. So question everything from time to time. If there is something that somebody says and you do not like it, especially hear that. If something looks bad, it probably is. Do not accept or reject anything at face value, except assertion of a person who refuses to reason.

Gaming the World

2009-09-28T15:37:00.004+01:00

Group dynamics should be of interest to anybody who needs to deal with a group. This can include nations, corporates, religious groups, unions, professional associations and the likes. It can be interesting for individuals in general and can help them to try and understand their position in the society and their contribution to the resulting dynamics. Game theory has been an important step towards rationalizing this dynamics. Its concept of equilibrium between various competing forces is a nothing but a stroke of genius. The theory, however, abstracts the results and a sequence of events. A framework that maybe able to account for human motivations and behaviour may be able to complement the theory. There are two places where I see the potential of extracting such behaviour patterns: the animal kingdom and astrology.

Game theory has found its way to biology. What I propose is that in addition to this we can extract basic behaviour patterns that can be observed. As in physics we begin with the simplest of assumptions, why not first try to extract behaviour patterns from animals? Most animals, after all, exhibit a fairly consistent behaviour when compared to humans. Humans differ from animals in their ability to choose and switch behaviour. A cheetah can never become a vulture but a human producer can transform to sloth. A series of predictable, simple animal behaviour patterns can be used to describe a complex human one, and similarly the way animal groups interact can be used for group dynamics as well.

For example, the diverse wildlife of an African savannah can make an interesting study in basic patterns. We can see that in order to survive the animals seek or develop some kind of advantage. This can take form of numbers, size or specializations. Numbers are sought as either an offensive or a defensive strategy. Most herbivores generally seek groups for a nominal defence against predators, though only few like wild buffalo would take the fight back to the predator. Even carnivores like lions and wild dogs seek numbers to ensure success and survival. Some animals, like the rhino and elephant, count on their size to bully and get their way. Finally, some kind of specialization is used for survival. Giraffe uses its long neck, a cheetah uses its speed while vultures use their flexibility. At the end, various unknown choices on the path of evolution determine the place occupied by any particular animal. This determines their strengths, weaknesses, opportunities and threat; so to say. For example, a cheetah goes hungry despite of being the most successful hunter on the savannah due to its inability to defend what it is able to hunt. Lions, hyenas and vultures manage to harass the cheetah enough to forfeit its hard-earned food. So, when Ayn Rand talks about the fact that the creators are taken for a ride, I think it is a brave defence of the heroics of an achiever (cheetah) but ignores the fact that the strength to defend what one has is as important to succeed. For ages, hungry barbarians at the gate have ravenously consumed civilizations smug with its achievements. Be it ancient Rome or India, the story is the same. Similar parallels can be found in other animal behaviours as well. The bottom-line is that each one tries to maximize their advantage as they know best. Be it the chest-thumping of morality to induce guilt, brute force, majority, cunning, intelligence or hard work; the whole question is about getting an advantage and trying to maintain it. Morals come up to try to enforce stability as such a purely Machiavellian society may tend to get totally turbulent. All forms of social institutions come up with a view of creating stability. Nevertheless, a few always manage to find a way to game the system and the ones who feel left out, feeling taken for a ride, push for changes and alternative systems of organization. So, effectively, we have managed to transform power games between individuals into power games with in groups and alternative organizing principles.

Similar patterns can be found in astrology. Astrology gives us a classification system that tries to crystallize "human" elements (picture a periodic table of elements) and defines a set of rules for their reaction in various circumstances. Most people think of astrology only as the sun sign. My observation says that it is NOT about the sun sign as sun is only one out of nine planets influencing a person. Think of it like a vector problem in Mathematics. It is not the presence of one force that counts, it is where the resultant vector would point to that determines the personality. Or a chemical reaction in which certain elements react to produce a result that may be quite different from the reacting elements. In fact, after some observation, it is possible to map the result to its constituent elements without seeing the birth chart, to see how a person behaves and then try to classify it under any of the observable patterns in the matrix. If we are able to see a fit, it immediately gives us a perspective on the person's current state of mind and the possible behaviour he is expecting. And you do not need any birth chart for this! This, for me, has been the most practical application of astrology. A tool to better understand myself, people around me and behaviour patterns. It has certainly helped me to be more understanding and modify my behaviour according to the situation. It has also helped me to understand my own prejudices & thought patterns.

Further, linking this to artificial intelligence and reducing the patterns to programs can help to further refine the framework. Using studies from emergent behaviour or modelling of a probabilistic systems of interlinked events (a system in which events are not definite but probable, and occurrence of any one event has the potential of affecting the probability of all other events in the system) around this could prove to be interesting.

The Will of a Policy

2009-09-24T15:11:00.007+01:00

The basic principles that define a company are generally codified into a policy document so as it can be institutionalised over time. These basic tenets help companies to reuse experience (something like design patterns in computer programming) and define a course of action for different situations. Nothing can replace a pro-active, thinking manager. Nevertheless, such a document helps to promote uniformity and makes various company decisions, appointments and promotions appear more transparent and rational. It can also serve as a reference point in times of trouble and internal feuds. However, over time there is a serious danger that the map may become the prison if it is not flexible enough to accommodate the changes in the landscape, so to say. The day a successful company thinks that it has found a "Golden Rule" to succeed, it is doomed to fail sooner or later. There are plenty of examples that show this, the most significant being that of General Motors.

So, I was thinking what can be done to prevent this. As any management book will tell you, flexibility is of paramount importance and there is no final word on improvement. To actually implement this in spirit is another matter. The recent attempt by regulators to make bank write their living wills gave me an idea. Wouldn't it help if every policy point also attempts to define the circumstances in which it should be scrapped off gracefully, lest it sticks around like a troubling, evil relic that nobody understands. Effectively, I want every policy point to not only write its will but also a suicide note. A policy can also attempt to define the thinking behind it and possible scenarios when the recommended line of action may not be the best one. The language has to be very direct, clear and reasonably simple; a grade 10 should be able to make some sense out of it without contradictions. This would prevent misuse and misinterpretation. It is inevitable that better ways will be found to do business, technology will impose fast changes and that there will be potential for growth in the future. Old markets will die, new will come up. Good people will come to organization and there will be some rotten, lazy apples as well. Transparency, fairness, speed and flexibility are the only defence, we are often told. But unless this is put into concrete words of policy and then put into action, they are not likely to mean anything to anybody.

Another thing to remember while making policies is that the world exists in shades of grey. So, it is good to be skeptical about any thought that irrevocably ties you to either black or white. A bipartisan solution is often the most balanced one. Another thing to keep in mind is the cyclical, unpredictable nature of things: what is bad today can be good tomorrow and vice-versa. The same ball that gets hit for a six by a batsman in cricket can get him clean bowled as well. The trick, then, is to use all your experience to watch every ball keenly and play it on the merit of the ball with perfect timing(So easy to say and yet so few that are able to do it with perfection). Management decisions are no different.

With these points in mind, this is how I would like to define the policies for my company. And I hope I will be doing it soon.

Finding Merit

2009-09-22T14:44:00.006+01:00

This year I read two books by Ayn Rand- "The Fountainhead" and "Atlas Shrugged". Very beautifully (and bitterly) written. A considerable amount of depth is evident in every word written in these two books. Nevertheless, like most extreme view points, these books fail to capture the complexity of human society. At the same time, they do raise some key questions that we can ignore only at our own peril.

Let me start with what I agree. I agree with the importance of work, the value of ability against need and justice against charity. I concur with the view that collectivism can promote mediocrity and that many do try to ride on the back of few who produce and create. However, I do not agree with a simplistic view of the world that demands enlightenment from everybody. It completely ignores the fact that the world essentially runs on principles of power and opportunism. You cannot wish it away or solve it magically.Moreover, every argument has two sides. Overall, things are much more complex and the solutions are ever more so elusive.

Many people believe that Ayn Rand stands for capitalism. I don't think so. A careful read will convince you that she damns any system that asks people to discard reason, merit, independence, or happiness. She denounces every system that does not value ability or forces one man to live for another. I think that this can easily include most of the known systems of government except Meritocracy (rule by merit). Hence, I feel Ayn Rand stands for Meritocracy and not an exploitative Capitalism. Once we can see this, it is easy to see that all the problems inherent to a state built on tenets of Meritocracy apply to Ayn Rand's philosophy. Interested reader should read about Singapore to understand the advantages and disadvantages of such a system with a practical example.

I feel that most of the systems of government can succeed, provided certain conditions are met. However, only a few have managed to actually succeed in actually enriching the life of its citizens, maintain peace and provide meaningful progress. Too theoretical or puritan frameworks tend to degenerate more easily. Hence, Communism without fail degenerates into dictatorship while Aristocracy often degenerates to Plutocracy and so on. Meritocracy falls just in between the extremely theoretical and the viable. Provided the country can establish an objective scale of merit that takes into account education, practical experience and practical results achieved into consideration; it is possible to make a meritocracy work. Otherwise there is a genuine danger of it degenerating into a Plutocracy (rule by money) or Oligarchy (rule by elite). Till somebody goes on to establish such a framework (and a country), capitalistic democracies remain our best bet for the better or the worse.

Finally, I think that the same principle can help one make a model corporation. In fact I feel that if a country is run like a well-run corporation, the result would be a true meritocracy.

Questions

2009-08-26T12:47:00.003+01:00

Perhaps a man's lifespan is insignificant in the life of the universe. Perhaps he is puny and conveniently forgotten by Gods and Devils alike in one small corner of the galaxy. Perhaps he deliriously dreams of worlds beyond and lives in an inconsequential bubble of his own making, an illusion severely limited by his senses and knowledge. Perhaps.

In this random jungle unmistakeably governed by the rules of power and cause-effect, I live with what I have and strive to grow and learn. Beyond that I don't really see anything. I know that answers come to the one who is not in a hurry to either get them or drop them. So I wait and work with infinite patience, hoping someday I will completely understand the matrix of this world. I don't know if I will find the answers, but I know that I will never give up. My unshakable faith, spiritual Master and unyielding strength of mind are my only true allies. Hubristic Complacency, meaningless laziness and all-consuming despair are my only true enemies. In this game of uncertainty only change is certain.

I cannot live a meaningless existence, so I strive to create meaning from what I know. A meaning that can rationalize my efforts in face of imminent death and give me satisfaction right this moment. This moment is all I have, even though I am told I am forever. I just try to hold to what I can understand and use it to augment happiness and purpose in equal measure.

I also think if it is possible to be bound and yet free; like free-range cows left to roam the pastures but to be ultimately slaughtered to satiate somebody's hunger? Its fate is better than the cow confined to dirty pens for most of its miserable life and slaughtered anyway. The end, however, remains as grisly and unforgiving. A creature dependent on small mercies of its masters. Are we cattle too? Creatures enslaved for their limited productivity, creatures ready to live a second-hand existence out of fear, ignorance, helplessness or peer-pressure? I hope not..

Even if I have nothing, I still have the will, the hope and the spirit. With them I move and with them, I believe, one day I will find all the answers.

The Nomura Game

2009-08-20T16:26:00.006+01:00

Reading an article on Nomura's efforts to radically change its culture and absorb people from Lehman got me thinking. From whatever I have read/experienced about either management or leadership, the effort looks doomed to fail miserably. Nomura is clearly thinking "the best of both the worlds", but all I can see is a "fall between two stools".

On one hand Nomura is trying to change the culture of its own employees from top up. As far as I know, the Japanese society is very hierarchical and people respect "elders", every member is expected to respect his role in the chain. By removing seniority as a defining factor and bringing in performance related pay Nomura seems to be moving in the right direction from corporate point of view. However, that does not mean that it will not create any resentment. I am not sure to what extent these decisions were debated company-wide to cushion their impact. The current facts indicate that they were not.

On the other hand it is trying to absorb the talent it bought from the remains of Lehman. Most of Lehman people may find the culture almost as alien as the Nomura employees may find the Lehman culture disagreeable. At the end who can leave will leave, which means Nomura risks loosing the best of its current AND Lehman employees.

From pure management and leadership point of view, I feel it violates three key principles.

First, it is trying to fix something that may not be necessarily broken. It is worth noting that Nomura was able to buy Lehman only because it had been conservative. If it wants to change to "Lehman" culture, the current employees are well within their right to question the sensibility of the decision.

Second, instead of building two distinct, decentralized units Nomura is trying to have one quick merger of two entities that are poles apart. It is like General Motors deciding one fine day that Chevrolet and Cadillac would be made by one unit to achieve economies of scale and share best practices. At best it is going to be problematic, at worst catastrophic. There are better ways to achieve the same result.

Third, it is not making enough effort to overcome the pretty evident communication gap between the two units, accentuated by the language and cultural differences. Without that the decisions, however well thought, will look like enlightened despotism and further alienate people.

Overall, Nomura has got itself in a tight spot. Although the basic thought process has been correct, it looks like that the implementation will run into problem due to lack of communication and lack of consideration for the cultural differences. Nevertheless, I feel that the situation is still not beyond redemption and if addressed right away can help Nomura immensely.

Master of My Destiny

2009-08-02T20:36:00.001+01:00

A man's life may be a dream, and his dreams a dream within a dream. The existence may be a futile, never ending conviction. The world moves on with a promise of balance and fairness that manifest in equal opportunity for good and bad. In the short term life seems to be rigidly ruled by rules of power, uncertainty and change. The change that consumes everything and anything. Yet in the long term it is non-changing and boringly cyclical. Such is the nature of the balance it promises.

Through this evanescent life of mine I try to extract a meaning that can appeal to my short-term selfish self and the long-term divine whole. Something that gives meaning to me as I am. The futile play and display of consciousness? Whatever. If I am played with, I play in return. At least I try to. So, I move with the prayer of St. Assisi in my heart and a stubborn determination to make the best of it. To strive to be the master of my mind and my destiny.

Numerology

2009-07-21T15:20:00.001+01:00

Whats with numbers? Subjects like astrology, numerology, palmistry etc. tend to evoke wonder and disdain in equal measure. For most part, people ignore them as something that may be useful but is essentially inaccurate. Far worse, some see it as means to exploit and fleece the mentally weak. All these views have some degree of truth to them.

As a science student, I do not rule out anything without trying it myself objectively. With this view, I started exploring various occult sciences from the age of 15. This was inspired by a chance meeting with an astrologer who described many things about me pretty precisely by just looking at my birth chart. I found the whole thing interesting as I saw it an excellent tool to understand myself and the people around me.

Astrology is pretty complicated, either by design or by accident. In essence, I could make out at least 144 distinct elements that can combine in different proportions to give different personality outcomes. I guess it simply reaffirms that every individual is unique. Nevertheless, there are some basic temperaments and approaches towards life, and some basic ways in which people of different temperament would react to others & the environment.

Interestingly, the occult science essentially means that you should be able to derive the same results no matter which route you take. It can be by reading the palm, numbers, vaastu or even the forehead. It all depends which omens you can read, but the omens will match. I don't think it is humanly possible for anybody to accurately predict the future due to so many uncontrolled variables involved. Perhaps a "Krish"(the movie) style super computer which can correlate each of the variables with supreme accuracy will one day show us the future. But for now, the various omens simply point towards a direction and can only help you to understand yourself and your environment in a better way. Beyond this, if anybody promises you anything, be skeptical.

In the same vein, I have studied Numerology and supplemented it with observation, intuition and correlating with other omens I can read. I do not claim to have all the answers, but I can give you some questions to think about and work with if you have an open mind.

Easy Answers

2009-07-03T00:45:00.003+01:00

What do you want to know? What? Why is it that I want easy answers to difficult questions? Elementary my friend: they seem easier and worth a try. Moreover, adaptation is painful and virtue is an unaffordable luxury. So we live for today with least concern for tomorrow. If not this, there are always easier answers to find.

What? Change? Well, it is a good thing. I have been telling my neighbour to change and forgo his greedy nature. I tell you people, short-sighted pigs they are. What? Me? How dare you suggest that?! I deserve this privilege, I was born with it. My ancestors have made the sacrifices and it is only fair that I get the due. What is to be changed here? You must be my neighbour's agent. Tell him he cannot escape from his responsibilities! Better get going before I have you disposed off!

IT Management Practices: Involving the Team

2009-06-26T11:40:00.009+01:00

I have an experience that I feel may be useful to share. Till date, I have worked on two excellent new product development projects and it has been a wonderful learning experience. However, each team had its challenges. Since I do not want to name the companies or the managers, let us say I am talking for company Alpha and company Beta.

Both companies are technically very strong. However, company Alpha had to put together a team to develop a rich Internet web application when RIA as a concept was pretty new. This initially led to ambiguity in terms of experience and possibilities, but the manager ran a tight ship and delegated responsibility. The whole team was encouraged to develop skills and participate very closely at every stage - including interviewing, requirement gathering and architecture. This ultimately led to technical skill development, team bonding, growth of all team members and decent execution of the project. The stress and responsibility were evenly divided, but there was no doubt on who was leading the pack. Leadership was inclusive and far-sighted.

Company Beta, on the other hand, had significant experience with web applications and RIA was relatively known by this time. So they could hire the people with right skills and there was less ambiguity to start with. But the structure was more hierarchical and the manager less keen on sharing "power" across the board, giving less influence to team members on requirement gathering, designing or interviewing. Of this, for me, the most difficult part was not being included in requirement gathering. Working with a requirement document may be the norm in big companies, but for entrepreneurial setups it is absolutely critical to be involve the team closely. This can save a lot of time down the line lost to bugs resulting from misunderstood requirements. Moreover, such involvement creates more urgency, creates an aura of responsibility and gives additional perspective to the whole process. This can be critical in long term.

Ultimately, both companies managed to launch a good product. Nevertheless, Alpha is playing for the long term - trying to nurture second rung of leadership - while Beta will increasingly get dependent on one row of leadership with a big vacuum below. In the long run, it may indeed make a difference between great and good, and would be another testimony to Jim Collins.

Iran's regime can learn from China and Libya

2009-06-25T10:03:00.000+01:00

Iran is increasingly finding itself facing intense criticism and an unsupportive populace. The Revolutionary Guard have been firm and the Government's propaganda machine is in overdrive. Yet the tensions simmer.

In my opinion, if the current regime wishes to maintain its vice-like grip on power, it has two examples to copy.

The first is China. It survived Tianamese Square with decisive, brute force - the world opinion be damned. Nevertheless, the repression could not have been successful without a plan to either integrate or neutralize the aggrieved groups effectively. China's growing economic might and propaganda also helped.

Libya, on the other hand, made a U-turn on its policies and re-built its bridges with the western powers, including the "Great Satan". Its bargaining chips were, of course, oil and building the right public image for the leader. Colonel Gaddafi has carefully crafted a statesman like image using a mix of impossible sweet talks (like United States of Africa) and oil money. The logic is simple: nobody may cry for you if you are thought of to be Saddam Hussein-II. Nevertheless, behind the facade Libya remains as dictatorial as ever. In fact, riding on back of current economic crisis and oil money, they (along with Chinese and Middle Eastern funds) have gained a significant influence in the world market.

Iran's regime can do a bit of both if it really wants to achieve its ambition of retaining power and dominating the world stage. In fact, with its large oil reserves Iran can become an oil super-power displacing Saudi Arabia and Libya (in terms of influence). Iran should know that West doesn't give two hoots about democracy as long as it is profitable. After all, the West does deal with China, Libya and Saudi Arabia. And are Burma and North Korea less oppressed than Iraq? A pity they are not oil rich. Nuclear weapons et al will come if Iran can phase out its problems and take them one by one using diplomacy, money and stealth.

The Fibre of Stability

2009-06-22T20:51:00.006+01:00

A recent article in FT about China and the conundrum that it presents to the democracies of the world got me thinking about quite a few things. A few days of serious thinking has yielded some interesting results.

People like to believe that historically capitalistic democratic societies have been the most successful, prosperous, stable, free and just ruling political systems in the world. Stability and prosperity have been the two most important selling points in the quest of exporting democracy. After all, communism never managed to deliver its promises, fascism was a disaster, theocracies have proved to be repressive, most erstwhile socialist countries were marching towards progress (until this recession) by adopting capitalism and monarchies are all but in name now. Democracy never had it better. That is, if we can forget Iraq.

The only exception to this rule is China. The way the Chinese economy is growing; by 2050 it will be double the size of that of a democratic USA. It is also a fairly stable country with an excellent infrastructure and a very shrewd, pragmatic & ruthless foreign policy. All the wishful thinking of China's demise remains that- a wishful thinking. What went wrong?

Nothing, if you ask me. I feel that it is too early to judge the "stability" of capitalistic democracies as they are pretty young. Generally, stability and prosperity can be achieved by any system (democratic or not) if it has:

a strong & reliable succession mechanism agreed upon by populace(democratic or otherwise)
a strong armed force & intelligence wing
natural resources plenty enough to survive and scarce enough to not cause complacency (and not attract marauders looking for a quick buck at your expense)
fair and fast law system
strong infrastructure and encouragement for education
power blocs (judiciary, armed forces, intelligence, legislature, Prime Minister, President, King) that are divided enough to be controllable and united enough to be useful
open trade and clever, disguised protectionism
enough propaganda to instil a feeling of nationhood
ability to deal with adversaries decisively and intelligently
and finally, full coffers

Ultimately, the discussion about leadership and politics is out of scope and I cannot possibly address all issues. My point, however, is that capitalistic democracies need to look beyond their self-righteousness if they wish to find an answer to the Chinese conundrum.

Cracking the GMAT

2009-06-22T15:52:00.005+01:00

3 months, many sleepless nights, 82 essays and 30 practice tests. Worth it? Yes. Every bit of it. GMAT is not the only thing that you would need to make it to your dream business college, but it can help. At least I hope it does! My learnings from the GMAT for you. Of course these are my views and may not work for you. But I will be glad if they do!

I feel GMAT is a test of will rather than any special skill. The questions are not especially difficult after some practice, but it is challenging to maintain your focus at its highest level throughout the test. The only way to do make focus better is to take as many practice tests as you can. Besides the one you will get from your test material and GMAC, you can buy some from www.800score.com
If you have the discipline, there is no substitute for self-study. Buy all the material you can, but the best material that you will get is from GMAC itself. Kaplan and Princeton will not hurt either. But keep your hands off Barons, bad book. Will waste your time and confuse you.
I went overboard with 82 essays, but it does not hurt to at least brain-storm as many topics as you can with your friends
Nobody is going to come from the business school to meet you personally at the test venue; do yourself a favor and go in the most comfortable dress you can find.

Hope that helps. Cheers!

Motorcycle Sales

2009-03-27T15:51:00.000Z

The following appeared as part of an article in the business section of a local newspaper:

"Motorcycle X has been manufactured in the United States for more than 70 years. Although one foreign company has copied the motorcycle and is selling it for less, the company has failed to attract motorcycle X customers - some say because its product lacks the exceptionally loud noise made by motorcycle X. But there must be some other explanation. After all, foreign cars tend to be quieter than similar American-made cars, but they sell at least as well. Also, television advertisements for motorcycle X highlight its durability and sleek lines, not its noisiness, and the ads typically have voice-overs or rock music rather than engine-roar on the sound track."

Discuss how well reasoned . . . etc.

The presented article speculates about the reasons behind the success of motorcycle X, despite it being copied by some foreign company. This is speculated to be because of the exceptionally loud noise made by the motorcycle. However, even though the article tries to find alternative explanation, it goes ahead to reason based on the premise that its speculation is,in fact, correct. Further, it tries to compare the sales of indigenous cars to foreign cars, completely ignoring the fact that the foreign cars are not necessarily a copy of American cars. Neither does it take into account any differences between the target audience for cars and motorcycles.

Initially the article tries to articulate a reason behind the success of motorcycle X in face of it being copied and sold at a lower price by a foreign company. The reason is said to be the exceptionally loud noise made by the motorcycle by some of the users. By the article's own admission, it is the viewpoint of some and not all (or even most, for that matter). The source of the data is not clear and hence the certainty attached with it is not warranted. To its credit, the article does cast a doubt on reason and states an intention to look for an alternative explanation. To its discredit, it goes on to base the argument on the reason that itself put to doubt, hence basing the examples and arguments around noise. By doing this it also completely fails to explore an alternative reasons (like better quality or brand value) behind the sales.

Further, the comparison used to illustrate the point is invalid as it does not address the same situation: foreign cars are not necessarily a copy of American cars. The foreign motorcycle, on the other hand, is a direct copy of its American counterpart. When motorcycles look essentially same, the end-user can compare everything feature-by-feature easily. Moreover, the target audience would also be similar. For cars the choice may not be that easy with the given parameters. Comparing a Mercedes to a Hummer or a Porsche is simply not possible as they are three different genres of cars. The choice may depend on if the person wants a luxury car, a land rover or a sports car rather than any other feature.

Finally, the article does not take into account the difference in expectations of a motorcycle buyer and a car buyer. While it is possible that a motorcycle buyer may be looking for brash, youthful, loud vehicle; a car buyer may be looking for a luxury vehicle as a status symbol. Since they may not be looking for the same thing, equating their buyer expectations may not lead to correct results.

Concluding, the presented article is logically flawed on many counts. In order to appear stronger, it needs to at least present a more relevant analogy besides actually exploring reasons behind success of motorcycle X. Otherwise it risks appearing poorly reasoned, hypothetical and incomplete.

Professional and Personal Fulfillment

2009-03-27T12:13:00.000Z

"It is difficult for people to achieve professional success without sacrificing important aspects of a fulfilling personal life."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

There are no free lunches in this world. To gain something, one has to often loose something else. The same is true for professional success;it is hard to achieve it without sacrificing important aspects of a fulfilling personal life.

A fulfilling personal life needs enough time with the family, daily exercise and some time for leisure. However, there are only twenty-four hours in a day. Success demands persistent hard work, focus and vigilance. In fact, the more one becomes successful, the more responsibility one gets. Not only that, success also has the potential to attract all the wrong kind of people to one's life: it may be a gold-digger, a jealous rival who or a fraudulent charity. This demands higher level of vigilance and takes its toll on the successful individual.

A pertinent example I can think of is a report that I read in a health magazine on the rise of occurrence of diseases like high blood pressure, cardiac arrests, asthma and depression in young, working professionals. This is attributed to rising stress level in the fast-paced working environment of today. As individuals compete to out-perform the other in a zero-sum game, the entire focus shifts to getting ahead. This leaves people with very less time with their family or themselves. Hence, when professional fulfilment takes precedence, personal fulfilment is often the first casualty.

Even if I had not read the report, my personal experience would have led me to reach the same conclusion. A friend of mine and his wife were two successful professional in the investment banking and sales sector respectively. While the husband worked long, unreasonable hours; the wife had to travel frequently across the country. As they wanted to grow in their respective careers, they also decided to delay having a baby. Over the years their interaction fell down drastically and now they are also facing a problem in conceiving a baby. The situation is so bad that it is likely that they may divorce each other. It is a clear example of how the pursuit of professional success often entails sacrificing important aspects of a fulfilling personal life.

Concluding, I completely agree with the stated opinion. Obsession with the rat-race of achieving professional success often involves forgoing other things: personal fulfillment. This is not something that is planned, but is a consequence of having fixed number of hours in a day and the desire to excel professionally in today's fast-paced environment.

A Language Course

2009-03-23T16:31:00.001Z

The following appeared in an article in a college departmental newsletter:

"Professor Taylor of Jones University is promoting a model of foreign language instruction in which students receive 10 weeks of intensive training, then go abroad to live with families for 10 weeks. The superiority of the model, Professor Taylor contends, is proved by the results of a study in which foreign language tests given to students at 25 other colleges show that first-year foreign language students at Jones speak more fluently after only 10 to 20 weeks in the program than do nine out of 10 foreign language majors elsewhere at the time of their graduation."

Discuss how well reasoned . . . etc.

The presented article aims to promote a model of foreign language instruction. It tries to achieve this by presenting the results of a study. However, it fails to talk about either the source or the methodology of the study. It also fails to address possible cost-handicaps associated with a course that involves living abroad for 10 weeks.

The cornerstone of the reasoning is the result of the study conducted. Hence, it is extremely important to know how effective and authentic the study is as strength of the study will essentially determine the strength of the argument. If it was conducted by Jones University, its neutrality is questionable as the tests may have been designed to favor its own students. On the other hand, if the study was conducted by a neutral third-party, it would make the study highly credible.

Further, the background of students chosen for the test is also important to know. If they had a reasonable level even before they started the course, it would be unfair to compare them to students who were absolutely new to the language. The level of students on which the study was conducted has to be at a reasonably same level for the study to be credible.

Finally, the proposed programme involves staying abroad for 10 weeks. This may make the programme prohibitively expensive when compared to other programmes. A proper cost analysis is important to determine how much more a student may need to spend to complete the programme and whether such an investment is warranted. Sending students abroad may be a good way to teach them, but they should be able to afford to do it as well.

Concluding, the presented reasoning is flawed in some ways. In fact, it looks like a marketing gimmick undertaken by Jones University to promote its course. If Professor Taylor wants the article to be credible, he can do so by clarifying the source and the methodology of the study and whether his programme would inflate tuition cost significantly. Barring, all prospective students should take the presented arguments with a pinch of salt.

Disappearing Courtesy

2009-03-23T15:18:00.001Z

"Courtesy is rapidly disappearing from everyday interactions, and as a result, we are all the poorer for it."

From your perspective, is this an accurate observation? Why or why not? Explain, using reasons and/or examples from your own experience, observations, or reading.

Courtesy used to be the hallmark of a gentleman or a lady, a mark of good upbringing and a way of respecting fellow human beings. Unfortunately, with each passing day such courtesies are abandoned in favour of a more direct and brash approach. Such a transition has indeed left us all the poorer for it.

Courtesy is to daily life as punctuation marks are to writing. Without them many, an interaction seem abrupt, confusing, unsolicited or downright rude. For anybody who has been a victim of road rage, air rage or someone in hurry to save a few seconds, the loss is self-evident. A discourteous society is a danger to itself and is stressful to live in.

Courtesy is not just a sugar coated pill that is just "good to have": it can have a significant practical effect on the day-to-day life of people and businesses as well. Every year companies loose revenues and man-hours to discourteous employees who make the work-environment tougher. A discourteous population is a sure-shot way to kill tourism and local happiness alike. It is no surprise, then, that countries like Singapore have even gone to the extent of undertaking National Courtesy Campaigns that aim at making the populace more considerate towards each other and hence make the society a better place to live in. All this has gone a long way to project Singapore as a business friendly and safe place around the globe. Similarly, the British have long been envied for their flawless, polished politeness and, hence, seen as master diplomats. The position London enjoys in the international circuit is partly attributable to that.

Saying "please" is a recognition that we need help. Saying "thank you" acknowledges that somebody has taken out time to do something for us. Cutting someone to get ahead in line may save a few seconds, but is a blatant disrespect of people's time and sensibility. Respecting each other's space and time, while adopting a less selfish and less greedy attitude, can go a long way in cutting down tension, improving productivity and encouraging happiness. In fact, I would go as far to say that the ever-growing incidents of shooting rampages that the US suffers is a case-in-point of the falling level of respect for human life. The current President of US, hence, deeply stresses on "respect" when dealing with foreign relations.

Concluding, courtesy is indeed disappearing rapidly from everyday interaction. This in turn is pushing down human values, friendliness and compassion. Even when the immediate results of such changes may not be evident, over the long run it increases tensions and make societies rude and unlivable. The loss is not just moral but has practical ramifications in form of mental anguish, loss of productivity, deterioration of work atmosphere and loss of business.

Improving University

2009-03-20T16:06:00.000Z

The following appeared as part of a recommendation from the financial planning office to the administration of Fern Valley University:

"In the past few years, Fern Valley University has suffered from a decline in both enrollments and admissions applications. The reason can be discovered from our students, who most often cite poor teaching and inadequate library resources as their chief sources of dissatisfaction with Fern Valley. Therefore, in order to increase the number of students attending our university, and hence to regain our position as the most prestigious university in the greater Fern Valley metropolitan area, it is necessary to initiate a fund-raising campaign among the alumni that will enable us to expand the range of subjects we teach and to increase the size of our library facilities."

Discuss how well reasoned . . . etc.

The recommendation traces the cause of decline in the number of enrollments and admission applications to the feedback from students that the university has poor standards of teaching and inadequate library resource. This methodology relies on current students rather than prospective students, while the suggested solutions are meant to attract new students rather than improving the "learning" experience of the current students. Further, only one method of fund-raising has been cited;there is no reason to simply believe that it would indeed be the best method. Finally, it is not clear that how increasing the number of subjects taught may lead to better teaching.

It is clear that the Fern Valley wishes to attract more students and re-vamp its brand image. Although the existing students may be able to tell the failings that they have experienced first hand while studying, such issues may not be obvious to people seeking fresh admissions. Hence, a survey that takes account of why students did not choose Fern Valley University may give a more useful insight into the university's perceived weaknesses. Similarly, a survey about the reason why the currently enrolled students chose the university may be helpful in understanding what prospective students look for in a University. Understanding current students' grievances may also help in the long run, but it is in no way a comprehensive set of data on which the university may base its plan of action.

Further, initiating a fund-raising campaign among the alumni is the method proposed to raise funds. Although credible, the reasoning neither attempts to explore alternative ways of raising funds, nor does it specify if the proposed method would be able to generate enough money in time. Why wouldn't it be better to raise money from, say, Government funds for education, educational charities, donations from trustees or some form of financial re-structuring? I feel a proper analysis of each method should be done so as the most reliable and cheap method is recommended.

Finally, it is implied that expanding the range of subjects taught will be able to address poor teaching. The logic behind the correlation is baffling. Is it hoped that simply increasing the number of subjects would lead to a miraculous improvement in teaching standards? In order to address poor teaching the university may need to recruit better teachers, train existing staff, get better teaching equipment and use new media, like computers and videos, in order to enhance the teaching experience. How increasing the number of subjects alone will improve the teaching is not clear at all.

Concluding, the presented recommendation is flawed on many counts. It uses insufficient data to derive arguably faulty conclusions. It also fails to explore alternative ways of raising funds and hence does not logically support the suggested method. Not only that, even one of the recommendations to address the ill-founded conclusions does not correlate convincingly with the deduced problem.

Science, Arts and Humanities

2009-03-19T16:35:00.001Z

"Since science and technology are becoming more and more essential to modern society, schools should devote more time to teaching science and technology and less to teaching the arts and humanities."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

Science and technology have revolutionized human existence. Right from invention of the wheel to the Internet; science has continuously changed the way human beings live- for the better or the worse. Today, science is so hopelessly entwined with our lives that to imagine an existence without it is extremely difficult, if not downright impossible.

However, making schools devote more time to teaching science and technology and less to teaching the arts and humanities can be an overzealous, misguided obsession with science. In fact, it is akin to slitting the golden goose that lays golden eggs in hope of getting all the eggs at once.

Science has no place for subjects like political science, business administration, product design and graphics. Science may make life better, but it does not teach people to deal with practical realities of life. Science is an essential building block of life. It is not, however, the only important part. Absence of arts and humanities has the potential of having a destabilizing influence on the society as a whole and may derail the progress of science itself. Ignoring them can be, hence, as catastrophic as ignoring science.

A key thing to remember is that, historically, business and military have been the driving force behind technology. Without patronage of the Pentagon, the world would not have got either databases (Oracle) or Internet. Similarly, businesses and governments contribute more to technology than technocrats themselves. This brings in a stark reminder: however important technology may be, it is essentially a strategic tool in hands of people who can see life beyond the confines of a laboratory. And such people are not necessarily from science background. A good example is that none of the US Presidents that I can think of were either engineers or scientists, including our current President. This should be enough to convince most people that scientific education alone is not enough to build a modern, prosperous society.

Talking about arts, arts are a testimony to success of science and not a rival to be wiped off. As advances in science make life easier, people find more time to pursue art. The science also contributes to and enriches arts continuously: the mediums to express art have grown to include paper, cloth, canvas, glass and , now, even computers. Arts make life enjoyable after science has made it livable. Promoting one on the expense of the other is neither advisable nor desirable. Imagine having a world without Sistine Chapel or Taj Mahal, without the music produced by Vivaldi, Mozart and Bach and without the mysterious smile of Mona Lisa. It would indeed be a dull world.

Concluding, I do not agree with the stated opinion. Even though science is important, its importance cannot be overemphasized. The essence of life is balance, where each element has a unique place. Science depends on other disciplines as much as other disciplines depend on science. Hence, devoting more time to science on cost of arts and humanities can be an egregious decision.

Environmental Credit Plan

2009-03-19T13:29:00.001Z

The following appeared as part of a plan proposed by an executive of the Easy Credit Company to the president:

"The Easy Credit Company would gain an advantage over competing credit card services if we were to donate a portion of the proceeds from the use of our cards to a well-known environmental organization in exchange for the use of its symbol or logo on our card. Since a recent poll shows that a large percentage of the public is concerned about environmental issues, this policy would attract new customers, increase use among existing customers, and enable us to charge interest rates that are higher than the lowest ones available."

Discuss how well reasoned . . . etc.

The proposed plan aims to help Easy Credit Company in gaining an advantage over competing credit card services by donating a portion of the proceeds from the use of the company's cards to a well-known environmental organization in exchange for the use of its symbol or logo on the company's cards. This argument is essentially based on a survey. The source of this survey, however, has not been made clear- putting into doubt the authenticity of the survey. The argument also assumes that the measure will not only attract new customers, it will also increase card usage and allow Easy Credit to charge higher interest rates. In the process, it completely fails to cite the reason why people would increase usage of the cards or if higher interest rates may actually prove counter-productive by having unintended consequences.

Taking the issues one at a time, the first in line is the survey that is the cornerstone of the whole argument. The credibility of the survey depends a lot upon the organization that conducted it and the methodology employed to achieve the same. If the survey was sponsored by the "well-known" environmental organization, the neutrality of the survey may be seriously questionable. On the other hand, a survey by a neutral, well-known third party may prove to be extremely credible.

Secondly, even though it may be fair to assume that such a policy may bring in some new customers, one is left to wonder how it would increase card usage? Can a company's policy change cause its customer to become a bit more reckless with their finances? Possibly: nothing is impossible. Nevertheless, it may help if the plan establishes the basis of this assumption more clearly: did people who said that they are concerned about environmental changes also asserted that they would not only support environment friendly products but will also increase usage and put up with incompetent interest rates? May be not.

This brings us to the assumption that this policy would allow the company to bring in new customers and over-charge them as well. A lot of current customers, who may not be that environmentally sensitive, may be lost to competition if such a change was made; such customers would not even have a far-fetched incentive to either increase usage or put with high rates. The resulting loss of competitiveness and revenues has not been factored in the argument. Hence, The assumption is not only ungrounded, it also assumes that such an action would not have any unintended consequences.

Concluding, the presented plan is logically flawed on many counts. Before implementing it, the management should try to find more about the survey and examine if the suggested measures would indeed result in a competitive advantage. If implemented as it is, the plan risks loosing revenue and current customers in hope of winning more revenue and new customers.

Importance of Teamwork

2009-03-18T16:38:00.000Z

"Businesses and other organizations have overemphasized the importance of working as a team. Clearly, in any human group, it is the strong individual, the person with the most commitment and energy, who gets things done."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

Have businesses and other organizations really overemphasized the importance of working as a team? Who really gets things done? A strong-willed individual or a team? I feel that such an emphasis is not unwarranted and totally justified: working in a team is of paramount importance.

The basic reason that the team is important is that you cannot run a business or an organization alone- no matter how brilliant, strong or talented you are. True, it is often an individual who thinks of an idea or who pushes through revolutionary changes. There is no substitute for brilliance. Nevertheless, lasting success comes to a business only if all the stakeholders contribute and feel valuable. Moreover, any robust business or organization cannot afford to be dependent on any one individual if it has to deliver value consistently. One also needs to remember that an organization needs several talented people to work in unison to achieve any kind of success. For example, an organization may need engineers, accountants, lawyers, product managers, sales professional and marketing professionals. It is not possible for one strong individual to be able to either do or drive all of these functions alone.

A good example I can think of is of Mr. Thain, the erstwhile CEO or Merrill Lynch, about whom I read recently in Financial Times. The investment bank hired him as they thought him to be a capable leader as he had turned around NYSE. He tried to raise funds based on his personality and projected himself as the "face of the company". Although the strategy worked initially, it upset many key team members who thought they were working as hard and deserved recognition. This finally culminated into his key executives resigning from the company. Further, Mr. Thain's autocratic decisions caused significant losses to the organization. Finally, Bank of America acquired the company and Mr. Thain was soon dropped unceremoniously (after he refurbished his office of $1.2 million). The incident clearly shows the pitfalls of not being able to work in a team and being dependent on a brilliant but headstrong individual. More often than not, the personal hubris of such strong individuals leads to the downfall of the business. Then, why should the businesses not overemphasize the importance of team work?

Another example that is relevant is of Microsoft and Apple. One can argue that one talented designer of Apple has produced more beautiful products than a hundred industrial designers of Microsoft. True. What is also true, however, is that Microsoft has been a more successful organization than Apple. Even without Bill Gates, Microsoft has ploughed on. Apple, on the other hand, may find it tough to survive (like it did) without Steve Jobs. Relying on one single individual is not a good thing for a company.

Jim Collins in his book good to great emphasizes on having "leaders" and not just one strong "leader" if company has to succeed. After spending more than five years in the corporate world, I could not agree more. Works of art, consulting or may be even being a lawyer may absolve certain professions from giving any importance to team work. However, if one is working in a business that needs more than one kind of people to operate, success is not possible without teamwork.

Saving Environment

2009-03-18T15:26:00.000Z

The following appeared in an editorial from a magazine produced by an organization dedicated to environmental protection:

"In order to effectively reduce the amount of environmental damage that industrial manufacturing plants cause, those who manage the plants must be aware of the specific amount and types of damage caused by each of their various manufacturing processes. However, few corporations have enough financial incentive to monitor this information. In order to guarantee that corporations reduce the damage caused by their plants, the federal government should require every corporation to produce detailed annual reports on the environmental impact of their manufacturing process, and the government should impose stiff financial penalties for failure to produce these reports."

Discuss how well reasoned . . .etc.

The presented editorial is logically flawed on many counts.

Primarily, the central assumption, that making managers aware about the pollution caused by manufacturing process can effectively reduce environmental damage, does not even attempt to establish the basis of its authenticity. Was there any survey by a neutral third-party that establishes this fact? Are there any strong environmental laws that can hold managers to account for knowingly polluting environment? Or is it simply the editor's personal view? Without establishing a clear cause-effect relationship, it appears to be an arbitrary assertion.

Further, the argument also assumes that there are no other possible ways to achieve the same goal. It may be possible to achieve the same by introducing tougher environmental laws, scheduling regular inspections, or by giving incentives to industries to switch to more environment friendly manufacturing methods. The reasoning neither tries to explore alternative solutions nor tries to explain why the chosen line of action is better.

Finally, even if we concede that the assumption is right and a good way to achieve the desired goal, the way of implementing it is still questionable. While imposing stiff penalties may work, it is not necessarily the best way to provide financial incentives. Financial incentives can also be provided by giving tax breaks or government subsidies. It is not clear why imposing penalties is a better way.

Concluding, on the whole the editorial appears to be more of an opinion rather than a well reasoned argument. Based on an arguably arbitrary assumption it goes on to reason that the government should impose stiff financial penalties for failure to produce some reports, the benefits of which are not clear. Although the intentions of the editorial may be good, the reasoning is definitely not. While taking note of its concerns, a more well thought course of action may be pursued to achieve the desired goals.

Short-sighted Business Relations

2009-03-17T16:22:00.002Z

"Business relations are infected through and through with the disease of short-sighted motives. We are so concerned with immediate results and short-term goals that we fail to look beyond them."

Assuming that the term "business relations" can refer to the decisions and actions of any organization-for instance, a small family business, a community association, or a large international corporation-explain the extent to which you think that this criticism is valid. In your discussion of the issue, use reasons and/or examples from your own experience, your observation of others, or your reading.

It is said that if envy is the biggest vice of socialism, greed is that of capitalism. This is the first thought that comes to my mind after reading this criticism. I agree that business relations in our organizations, the back-bone of our capitalistic societies, are indeed infected through and through with the disease of short-sighted motives. So much so that they fail to look beyond immediate results and short-term results.

The doubting souls need not look any further than the nearest bank. The current financial crisis engulfing the world is a stark reminder of the extent of damage short-sighted decision can do. One of the columnists in Financial Times, in their recent series of articles on "Future of Capitalism", attributes the obsession with short-term results to the culture of "increasing" shareholder value spawned by GE's Jack Welsch in early 80's. Jack Welsch claims people misunderstood what he said. Nevertheless, since then people have been more concerned with increasing profits from quarter-to-quarter rather than taking a long-term perspective. This has skewed business planning grossly in favour of short term gains. Hence, driven by profit, banks lent to people who they knew would not be able to pay. Institutional investors, lured by higher profits and fooled by rating agencies, bought into these debts without doing due diligence. In each case, the focus of business relations was on increasing profitability immediately rather than taking a fundamentally strong decision.

Deteriorating environmental conditions are another proof of callous, short-sighted business relations. Strong environment laws are needed to deter businesses from polluting environment. Left to their own device, most business organizations give two hoots about disappearing rain forests or greenhouse effect. As long as the current cycle is profitable, it is acceptable to most of them to pollute environment and they fight tooth-and-nail any new environmental legislation that can affect profit.

Lastly, we also see that corporates are often willing to do business even with dictatorial, genocidal regimes as long as it is profitable. Shell will happily work in Nigeria or Venezuela and Chinese business would back Sudan, no matter if that wealth goes to coffers of an inept politician or dictator who exploits its citizens ruthlessly. Conversely, businesses will steer clear of any such regime like Burma if there is nothing of interest to be had. This complete lack of social responsibility among business organization fail to take a long term perspective of geopolitical events as they are too busy to get the profits in for the next quarter.

Concluding, the disease of short-sighted motives is a very real and concrete problem afflicting business relations throughout the world. The current financial crisis is the biggest example of its manifestation. The readiness of organization to, in absence of concrete laws, do business with rogue regimes or pollute environment recklessly also point in the same direction.

A Faulty Business Plan

2009-03-17T11:50:00.000Z

The following is part of a business plan being discussed at a board meeting of the Perks Company:

"It is no longer cost-effective for the Perks Company to continue offering its employees a generous package of benefits and incentives year after year. In periods when national unemployment rates are low, Perks may need to offer such a package in order to attract and keep good employees, but since national unemployment rates are now high, Perks does not need to offer the same benefits and incentives. The money thus saved could be better used to replace the existing plant machinery with more technologically sophisticated equipment, or even to build an additional plant."

Discuss how well reasoned . . . etc.

The reasoning behind the presented business plan is flawed on many counts.

The business plan presumes that it is no longer cost-effective for the Perks company to continue offering its employees a generous package of benefits and incentives year after year. The basis of this statement (high unemployment rate) is neither strong nor clear. If employees loose motivation due to package cuts and,hence, do not perform well, the proposal may not prove to be very cost-effective. In fact, it could cost the company more than it would save. A high unemployment rate not necessarily prevents dissatisfied employees from not working hard.

It can be further said that the stated correlation between national unemployment rates and employee packages may or may not be true.

Firstly, a general high unemployment does not mean high unemployment in all sectors. For example, only the auto sector may be doing bad causing an exceptionally high number of lay-offs but the finance sector may be doing good and still hiring aggressively. Hence, the company needs to look at the data more closely and verify that indeed it is relevant to their sector.

Secondly, the higher rate of unemployment may be specific to a particular type of employees rather than to all employees. For example, if a market has too many engineers, it is possible that many of them are unemployed due to large supply. But if,say, there were too few accountants, their demand would still be high. Hence, by taking a blanket approach the business plan actually risks alienating employees that may have specialized skills that are in demand. This, in turn, may lead to a "brain drain" from the company with many talented individuals leaving for good.

Finally, the plan assumes that there are no alternative ways of financing additional equipment and plants. The company could pay less dividend, cut wasteful expenditures or pay it top brass a little less bonus. Why or how the suggested course of action is superior to other alternatives has not been discussed.

Concluding, the business plan appears short-sighted and weakly reasoned. It tries to take a generalist approach without bothering with details or reasons that could explain the basis or show the strength of the logic employed. Clearly, if implemented as it is, the plan would surely alienate some employees and may even cause loss to the company. The board should not pass this plan and should instead press for a better plan that explores various alternatives and presents stronger reasoning .

Compulsory Public Service

2009-03-16T15:44:00.000Z

"All citizens should be required to perform a specified amount of public service. Such service would benefit not only the country as a whole but also the individual participants."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

Some say, "freedom is not free". That citizens owe their country a debt, that they should think "what "they can do for their country" rather than "what their country can do for them". The stated opinion is an extension of such sentiments, and I do not agree with it.

Supporting an inefficient, corrupt Government cannot benefit anybody. If military junta of Myanmar mandates that all citizens be required to perform a specified amount of public service, I cannot see how it would benefit the impoverished country or the participants. The citizens who barely manage to survive cannot be expected to pitch in while the well-off will bribe their way out of the situation. Such a proclamation would not amount to anything more than forced labour in disguise. If one thinks that this is fine, one may as well legitimize Pol Pot's worker camps in Cambodia that worked people to death in name of agrarian utopia! Such a blanket and generalist statement is not universally applicable.

Even for countries where Governments are better, say for countries in the European Union, expecting hard-working, tax-paying citizens to chip in while the Governments is entangled in bureaucracy does not sound that good to me. Most European countries have high taxes that are used to support generous welfare schemes. Citizens, who may be already caught in supporting a family and a mortgage, may rightly feel that their hands are too full to do anything more. I find it hard to digest that a government may expect a law-abiding, hard-working, tax-paying and over-stretched citizen to do more. Wouldn't the people be better off contributing to the economy the way they do?

Concluding, patriotism and hysterical propaganda are not the same. A citizen has every right to disagree with the functioning of the government and living a free life. He cannot be forced to contribute to public services if he feels he is already doing so by paying his taxes and being a good citizen. The only time that this may not be true is during a time of national calamity like attack of an enemy nation. Barring such extra-ordinary circumstances, there is no strong case for the government to force its citizens to work for it. If anything, it would just highlight the inefficiency of a government that is willing to exploit its own people.

Choosing Ambulance Service

2009-03-13T16:09:00.001Z

The following appeared in the editorial section of a West Cambria newspaper:

"A recent review of the West Cambria volunteer ambulance service revealed a longer average response time to accidents than was reported by a commercial ambulance squad located in East Cambria. In order to provide better patient care for accident victims and to raise revenue for our town by collecting service fees for ambulance use, we should disband our volunteer service and hire a commercial ambulance service."

Discuss how well reasoned . . . etc.

The presented editorial is logically weak and flawed on many counts.

The first doubt that comes to the mind is about the alleged review that is the cornerstone of the argument. It has not been specified what is the source of the quoted review and how it was conducted. If the review was sponsored by commercial ambulance companies, the neutrality of the assertions would be highly questionable. On the other hand, if it has been conducted fairly by a neutral agency, one may give some weightage to it.

Secondly, it is implied that commercial ambulance service would definitely improve the service. The editorial conveniently forgets that if the volunteer ambulance service is disbanded, it would increase the volume of calls that the commercial service would have to handle. Whether the commercial services have the infrastructure to handle it is not clear.

Thirdly, it is even possible that volunteer ambulance services take more time only because they get a high volume of calls. Hence, the claim that a longer average time necessarily means bad service on part of volunteer ambulances is not necessarily true.

Finally, it is not clear if the commercial services would gladly handle emergency services in case of a road disaster or fire when they may not get paid. Would they demand money from a man bleeding to death in a road accident or first drop him to the hospital? It is not clear how effectively they would be able to replace free services provided by volunteer ambulances and if people would even want such a service.

Concluding, the reasoning is weak and cannot be taken on face value. The source of data used to derive the conclusion has not been quoted and many questions have been left unanswered. The editorial seems to be handiwork of commercial ambulance service providers who wish to discredit the volunteer services and get them out of the way.

Leadership and Ability

2009-03-13T14:26:00.003Z

"People are likely to accept as a leader only someone who has demonstrated an ability to perform the same tasks that he or she expects others to perform."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

There are many qualities that people look for in their leader. Hypocricy is definitely not one of them. Historically, the most popular leaders have been the ones who have had the courage to "walk the talk". Ability naturally commands respect. But does it make such a person likely to be accepted as a leader?

Not always.

A leader is not necessarily a top-rank achiever. Yes, many successful leaders are known to have vision, charisma, forceful personality and ability to connect with the emotions of the people. On the other hand many successful leaders are also known to be power hungry, ruthless, populist, opportunistic, manipulative or plain lucky. Yes, ability also figures in the list sometimes; but it is not the case most of the times.

A good example I can think of is Mayawati, an Indian politician hailing from one of the most backward and most populous Indian state. She is in the race for Prime Ministership in the current elections. Majority of people from "backward" castes accept her as their de-facto leader and vote for her despite her corrupt nature. Her one-pointed agenda is to accrue benefits for her caste. Famously, when asked if she is a rightist or a leftist, the cheeky leader replied that she is an opportunist. Her acceptance has nothing to do with her ability to perform a task but her shrewd and opportunistic temperament.

Another example I can think of is of George W. Bush Jr. He was the President of US for 8 years. Yet it was on back of his conservative beliefs and luck rather than any ability to perform some task. If anything, he managed to drag US into a war on Iraq in search of non-existing weapons of mass destruction and saw the economy plunging to new depths. His appeal lies in his conservative values, simplicity and tenacity rather than an ability to perform some tasks.

On the same lines, many politicians around the world have won on back of their populist policies rather than any ability to achieve anything. Be it Iran's Mahmoud Ahmadinejad or Venezuela's Hugo Chavez; the story is the same. This proves that it is not necessary for a leader to demonstrate an ability to perform the same tasks that he or she expects from others to perform; many times only propaganda and populism are also enough.

Concluding, I do not completely agree with the stated opinion. Of course it is possible for an able leader to be accepted: otherwise leaders like Abraham Lincoln and Winston Churchill would not have been able to come up. Nevertheless, ability to perform a task is rarely, if ever, critical in determining acceptance of a leader by the people.

Cola Vs Coffee

2009-03-13T11:09:00.000Z

The following appeared as part of the business plan of an investment and financial consulting firm:

"Studies suggest that an average coffee drinker’s consumption of coffee increases with age, from age 10 through age 60. Even after age 60, coffee consumption remains high. The average cola drinker’s consumption of cola, however, declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider transferring our investments from Cola Loca to Early Bird Coffee."

Discuss how well reasoned . . . etc.

The presented business plan is unconvincing and logically flawed on many counts.

The first doubt that comes to mind is about the "studies" referred to assert that while a coffee drinker's consumption of coffee increases with age, that of a cola drinker declines over time. The accuracy and reliability of the study depends on the neutrality of the organization that conducted it and the quality of methods employed to collect data. Until the plan does not specify the source explicitly, taking the data on face value is not advisable.

The second doubt is cast by the assertion that the number of older adults will significantly increase as the population ages over the next 20 years. This may or may not be true and will be determined by the birth-rate. The plan does not mention the basis of this assertion. It is not clear if it is simply the writer's hunch or based upon some concrete demographic statistics.

Thirdly, the plan does not take into consideration if cola may be popular in other age groups and the quantity of cola consumed. If the birth-rate of the country is high or cola is consumed in more quantity than coffee even when fewer people drink it, the demand of coffee will not necessarily increase. Again. without concrete and reliable demographic statistics and without taking into consideration the relative quantity consumed by each user, it is difficult to ascertain demand for which beverage would fall in the coming 20 years.

Finally, the projection assumes that people's drinking patterns will remain consistent over the next 20 years. It is possible that people may switch to some third beverage like green tea or fruit juices. That would make investment in either cola or coffee equally useless. It seems that the writer assumes that people would always have either coffee or cola to choose from.

Concluding, the business plan is quite narrow in scope and based on questionable data. It would be ill-advised to follow and act on it without chalking out the details and plugging the evident gaps in reasoning.

Advertisements and the Country

2009-03-12T15:45:00.001Z

"You can tell the ideas of a nation by its advertisements."

Explain what you think this quotation means and discuss the extent to which you agree or disagree with it. Develop your position with reasons and/or specific examples drawn from history, current events, or your own experience, observations, or reading.

Is it possible to tell how far a frog jumps by just looking at it? May be not that accurately, but you could always make an educated guess. When looking to invest in stocks, investors often check some fundamental ratios to ascertain the "worthiness" of the stock. Is it always right? Perhaps not. Is it useful? Definitely. In the same way. one can tell the ideas of a nation to some extent just by its advertisements.

This is possible because advertisements are deeply influenced by the culture of the country and the attitude of its people. In fact, to be successful an advertisement needs to be culturally very sensitive and be aligned to the ideas of the nation.

A good example I can think of is advertisements in Dubai. Advertisements there focus on the products and barely employ any human models. It clearly shows the sensitivity to and the influence of religion; Islam prohibits idolatry. I was told by my local friends that this principally discourages use of any models in advertisements. The rich dresses and the theme of advertisements give an overall impression of a conservative, prosperous and value-based society.

Another example I can think of is the famous advertisement campaign run by Cadburys in UK, the most famous being the one in which two children make their eyebrows dance. To the casual observer from a different culture there may not seem much correlation between the eye-brow dance and the chocolate. Nevertheless, to me it indicates a population that will not react to direct sales pitches but responds to clever correlations. I feel that to some extent it indicates a fun-loving, even a a bit eccentric, British interior beneath the formal and polite exterior.

Similarly, advertisements in India, compared to those in UK or Dubai, revolve a lot around positive correlation between brands and celebrities coupled with value for money deals. This speaks a volume about how seriously the country takes its film stars and cricketers. It also indicates an audience that can be both emotional and practical.

Concluding, the experience of living in three different countries has convinced me that even a small things like advertisements can tell about the ideas of a nation. This primarily happens as to be successful advertisements have to be constructed in that way. Metaphors, sense of humor and acceptable motifs change with borders. Advertisements capture these changes pretty effectively.

Bad Investment Advice

2009-03-12T14:36:00.001Z

The following appeared in a newspaper story giving advice about investments:

"As overall life expectancy continues to rise, the population of our country is growing increasingly older. For example, more than 20 percent of the residents of one of our more populated regions are now at least 65 years old, and occupancy rates at resort hotels in that region declined significantly during the past six months. Because of these two related trends, a prudent investor would be well advised to sell interest in hotels and invest in hospitals and nursing homes instead."

Discuss how well reasoned . . . etc.

The presented investment advice is logically flawed on many counts.

The most basic flaw is an attempt to correlate two unrelated pieces of information. On one hand, we have the percentage of people at least 65 years old in some part of the country. On the other hand, we have occupancy rates at resort hotels over a short period of time. It is implied that the demographics are responsible for fall in occupancy rates: this is not necessarily true. The rates could have fallen over 6 months due to end of tourist season in the area, falling standard of hotel resorts or a sudden increase in crime rate. Without more data it is difficult to say what really caused the decline.

In fact, it is fairly reasonable to expect that tourists and not locals would constitute the key customers of the resort. If that is true, local demographics may not have much bearing on the occupancy rates at all. Even if one assumes that locals are the key customers, old people constitute only around 20% of the population. Absence of their patronage alone may explain a small fall but would still fail to explain the reported significant drop in the occupancy rates. Moreover, is it reasonable to assume that old people do not go to resorts? The fact that the newspaper story makes such strong statements without backing them with any concrete data is surprising.

The story does not stop here, it further goes on to assume that old people in the region not only do not go to resorts, they also remain sick. The basis of such a dire assumption is,yet again, not clear. If people in the region are old but healthy, how would investing in hospitals and nursing homes prove beneficial to anyone?

Concluding, the given advice is seriously flawed and circumspect. The advisor has clearly built a castle in the air and God only help anybody who takes this advice. All investors should be wary of following it until it is backed by a study that can verify its far-fetched claims.

Money or Work

2009-03-11T16:28:00.002Z

"Financial gain should be the most important factor in choosing a career."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

We live in a material world. Even the candles that people burn in church cost money. Money is one parameter that can significantly impact an individual's quality of life, social standing and mental satisfaction. Yet, I do not agree that financial gain should be the most important factor in choosing a career.

Even if somebody is not an idealist who fervently believes that a man should follow his dream, how can one hope of making any money if one is not good at the work he is choosing? Money is important and financial gain can be a very important factor in choosing a career. Nevertheless making it the most important factor can be disastrous.

A master plumber can make more money than a bad investment banker (will be good for the economy too!). The marketplace pays for skill. Further, according to demand-supply of talent and the level of skill people make different amount of money. Interest and skill play a pivotal role in determining the actual financial gain, success and recognition that an individual may hope to get out of his career. Hence, interest and skill should be the most important factor in choosing a career. Blindly choosing a career just because majority of professionals make a lot of money can prove to be counter-productive.

Focusing on money alone one can also easily overlook the moral aspect of an issue. The best example I can think of is of Somali pirates who capture ships for ransom. They easily make millions of dollars a month which is more than most of the professionals (if there are any left) ever make in Somalia. Would we give this advice to youth of the country to become pirates just because financial gains are high?

Working and loving a work can be a deeply satisfying and meditative experience. Books like "The Alchemist" explore the importance of finding a work you love allegorically. Santiago, the main character of the story, embarks on a journey to fulfil his personal legend. The story points how being in one's nature and following one's dream one can find success. I completely agree with the writer's point of view.

Concluding, I do not think that one chooses a career only for money. One spends at least one-third of his life with the work he chooses. So being trapped in a job you don't like doing something that doesn't contribute to your growth can be a big punishment. Hence choosing a career on the basis of financial gain alone is ill-advised and even dangerous.

Organic Vs Synthetic Farming

2009-03-11T14:37:00.002Z

The following was excerpted from the speech of a spokesperson for Synthetic Farm Products, Inc.:

"Many farmers who invested in the equipment needed to make the switch from synthetic to organic fertilizers and pesticides feel that it would be too expensive to resume synthetic farming at this point. But studies of farmers who switched to organic farming last year indicate that their current crop yields are lower. Hence their purchase of organic farming equipment, a relatively minor investment compared to the losses that would result from continued lower crop yields, cannot justify persisting on an unwise course. And the choice to farm organically is financially unwise, given that it was motivated by environmental rather than economic concerns."

Discuss how well reasoned . . . etc

The presented speech's reasoning is flawed on many counts.

A study has been cited to drive home the point that organic farming gives lower yield than synthetic farming. However, the source of the study has not been mentioned. If it was conducted by Synthetic Farm Products Inc., the chances of it being fair and unbiased are pretty low. On the other hand, if it was conducted by a neutral agency, one may take it seriously. Making the source of study clear would make the reasoning more credible.

Further, the speech tries to encourage farmers to switch to synthetic farming by claiming that the money wasted in buying equipment for organic farming is peanuts compared to losses that would result from continued lower crop yield. Again, it is not clear how much lower the yield from organic farming is. Will the "extra" yield pay for the loss in 5 years or 50 years? There is no way to know. The argument also fails to take into account the money that would be spent in buying new equipment for synthetic farming. Unless and until the difference in yield is quite significant, this argument does not hold true.

Finally the spokesperson has tried to label organic farming as a financially unwise decision due to low yield. This is highly questionable. Besides the point that the yield difference may not be significant, it is possible that the market is ready to pay a premium price for organic food. It also does not take into account the adverse effect synthetic farming may have on the soil as it is not environment friendly and hence negatively affect the yield in future. Considering these factors, organic farming may indeed be a better financial decision than synthetic farming.

Concluding, the speech's logical reasoning looks like a sales pitch devoid of any merit or good reasoning. It mentions a study but conveniently forgets to mention the source, ignores costs associated with buying equipment for synthetic farming, brushes asides environmental concerns and ignores the fact that market may be willing to pay more for organic products. No farmer should trust this reasoning on face value to switch to synthetic farming.

Working Long Hours

2009-03-11T11:51:00.000Z

"Companies benefit when they discourage employees from working extra hours or taking work home. When employees spend their leisure time without ‘producing’ something for the job, they will be more focused and effective when they return to work."

Discuss the extent to which you agree or disagree with the opinion expressed above. Support your point of view with reasons and/or examples from your own experience, observations, or reading.

I completely agree with the expressed opinion.

The best of machines demand maintenance and care. Why should the human body be any different? The companies that discourage employees from working extra hours or taking work home understand this fact very well. There is a limit to which any individual can do the same work continuously. After that fatigue sets in and productivity declines rapidly. If sustained over long periods of time, this can lead to a falling morale and deterioration in quality of work produced. It is much like a machine that can heat up if run continuously and can even break down if no break is given. And anybody can tell you that maintaining a machine is always less expensive than trying to fix it when it breaks!

Being a computer programmer, I can testify that in our team people working late hours, who are generally dead tired then, inadvertently produce a buggy code (code that fails to take care of all scenarios and produces errors when run). This often takes many hours of time to fix later. Hence, by discouraging people from working extra hours our engineering manager actually manages to increase productivity! It is a good example of why "extra work" can prove to be more harmful than useful in most cases.

Rest refreshes the body and the mind. It also helps employees to maintain a better work - personal life balance. All this contributes to his happiness and health. This in turn ensures better performance when he works in the office. As many a human resource professional say, a happy employee is a productive employee.

Concluding, at the end of the day work is a part of life.Nevertheless, work is not the only thing in life as we are human beings and not robots. Every human being needs to "recharge his batteries" so as he can remain productive. Discouraging employees from working extra hours is, hence, a prudent decision that will go long way in ensuring happiness of the employees and the productivity of the company.

Increasing Bus Shuttle Volume

2009-03-11T10:46:00.001Z

The following appeared in the editorial section of a local newspaper:

"Commuter use of the new subway train is exceeding the transit company’s projections. However, commuter use of the shuttle buses that transport people to the subway stations is below the projected volume. If the transit company expects commuters to ride the shuttle buses to the subway rather than drive there, it must either reduce the shuttle bus fares or increase the price of parking at the subway stations."

Discuss how well reasoned . . . etc.

The editorial suggests two alternatives to help the transit company to increase the number of people who ride shuttle buses to the subway station instead of driving there. The reasoning is flawed on many counts.

One of the assumptions is that people do not use the shuttle buses because they find the bus fares exorbitant. This may or may not be true. It is possible that the bus services run infrequently, are not punctual and are not well maintained. In that case lowering fares would not help. The basis of this assumption is not clear. If the editorial clarifies that, the argument will be strengthened.

The editorial also attributes low usage of shuttle buses to people finding it more convenient and cheap to drive to the station and park their vehicle. This reasoning assumes that there are no alternative parking space near the subway. Even if the transit company increases parking prices, it will have no effect if cheaper, alternative parking was available nearby. The reasoning also implies that all people come from far enough distance. There can be a huge volume of people who live nearby and hence either cycle or walk to the station. In that case, no solution would help. In fact, it would put in question the very need of shuttle buses!

Concluding, the presented argument is plausible but not entirely convincing. It fails to establish the basis of its two key assumptions and does not explore alternative solutions. Moreover, since the reasons behind the problem have not been explored fully, the suggested solutions are also limited in scope. For example, solutions could have included a marketing campaign to make people aware about the benefits of using public transport or the improvement of services, depending on what the real problem is. Hence, the reasoning is weak and merits further investigation.

Worrying About Success

2009-03-10T15:40:00.000Z

"Too many people think only about getting results. The key to success, however, is to focus on the specific task at hand and not to worry about results."

What do you think this piece of advice means, and do you think that it is, on the whole, worth following? Support your views with reasons and/or examples drawn from your own experience, observations, or reading.

I read somewhere that if winning is not important then why do we keep score? To work without a clear aim is unlikely to be productive. Imagine: in a stockholders meeting investors question the CEO about the results he aims to get, and he says: "I don't know about that, I am just focusing on tasks at hand." Not only would he get fired, the company would be but through hell for hiring such an individual as CEO! Results matter.

However, there is a difference between having an aim and in being obsessed with it. The advice above does not ask an individual to not plan for results: it just asks to not worry about them. Often when people become obsessed with results, they often take decisions that are wrong at best and unethical at worst. Such a worry not only robs an individual of his peace of mind, ironically, it also prevents him from achieving the success that he worries about. If an individual charters the way to success with patience and diligence, focusing on specific tasks at hand and not worrying about results, much can be achieved. As it is said, feather by feather you can pluck a goose.

A good example of the perils of obsession with results can be seen in the origin of current economic crisis engulfing the world: its origin were bankers feverishly worrying to achieve their given targets and pocket fat bonuses. It was disclosed in Financial Times that the Royal Bank of Scotland dismissed concerns of a dutch risk analyst about the risk profile of the investments in mortgage based securities. Worry about achieving success blinded them to pitfalls of the road they were taking.

A recent health survey indicates a rise in stress generated diseases like asthma, depression and high blood pressure in young professionals. This gives me conviction that if people follow the above stated axiom in their lives, it can save them a lot of stress associated with worrying about results.

Concluding, I sincerely feel that such an advice is wise and good to follow. Not only it ensures that one does not loose one's head (and health) to worry, but also that one achieves success. Even though success is the defining factor of all actions for most people, worrying about is counter-productive. The best way is to move towards it steadily, focusing on the task at hand as a step towards it.

Violence and Movies

2009-03-09T14:44:00.000Z

The following appeared in a newspaper editorial:

"As violence in movies increases, so do crime rates in our cities. To combat this problem we must establish a board to censor certain movies, or we must limit admission to persons over 21 years of age. Apparently our legislators are not concerned about this issue since a bill calling for such actions recently failed to receive a majority vote."

Discuss how well reasoned . . . etc.

The argument presented in the editorial is flawed on many counts.

The most basic flaw in the argument is that it attributes the increase in crime rates in the cities directly to the increase in violence in the movies. Such a comparison is ill-founded due to several reasons. Firstly, it is not clear that on what basis the editor has established such a correlation. Is it based on some survey undertaken by a neutral, unbiased agency of repute or is it simple, pure prejudice on the part of the editor? There is no way to know. Secondly, there can be many reasons behind increase in crime rate. It could be due to a low police-to-citizen ratio, powerful and organized local gangs, lack of strict laws to punish law offenders, high unemployment, abject poverty or state neglect. Blaming movies alone without any concrete basis seems to be too far-fetched and unreasonable.

Further, rating boards have been established in various countries and limits have been put on limiting admission to persons over a particular age limit; there is nothing new about the suggestion. However, it is not clear why legislators rejected such a legislation. The rejection has been attributed to apathy, but the basis for this opinion is not stated. It again looks like a prejudiced opinion rather than any kind of reasoning. It is possible that the introduced bill encroached people's freedom to see the movies in an undesirable way. In that case it would be reasonable to expect its rejection due to concern and not apathy.

Finally, it seems that the editor sees legislation as the only way to curb crime rate (or stop people from seeing violent movies!). Other ways to achieve the same have not been explored.

Concluding, the presented argument seems more opinionated than reasonable; the tone seems emotional, attacking and prejudiced. Until the editor clarifies the basis of attributing increase of crime rate to increase in violence in movies, presents alternative ways to achieve the same results and clearly states why, in his opinion, the reasons behind the rejection of the bill are pure apathy, the argument will remain weak and flawed.

Training to Decide: Advertisements Mislead

2009-03-09T10:28:00.000Z

"Because businesses use high-quality advertising to sell low-quality products, schools should give students extensive training in how to make informed decisions before making purchases."

Discuss the extent to which you agree or disagree with the opinion expressed above. Support your point of view with reasons and/or examples from your own experience, observations, or reading.

Reality is in the mind, said a zen master. Perhaps nobody understands this axiom better than corporates who spend more money on their advertisement than their do on their products. In fact, the market has many businesses that use high-quality advertisement to sell low quality products. This makes it important to make people aware about these facts and encourage them to make informed decisions before making purchases so as they are not taken for a ride. And what better place to start this education than school? "Catch them young" should be the motto; to make students aware about the pitfalls of taking advertisement on face value.

This is necessary as advertisements can use a variety of sophisticated tricks to fleece an unsuspecting customer. One of the best used way is positive association- associating the product with something or somebody who has a strong positive image in the mind of the masses. In simpler words it is called "endorsement". The best example I can think of is Pepsi and Coke. Cola products do not have any health value. In fact, they are generally harmful to health as they have a high sugar content and are carbonated. Nevertheless, they manage to sell huge quantities on back of aggressive advertising and endorsements. Despite of being one of the major causes behind obesity and diabetes in US, high-quality advertising helps to sell such a product in high quantities. Clearly, if more awareness would have been brought in from school level, such a scenario could have been avoided.

A similar kind of selling technique is often employed by beauty products. It is impossible to verify if the beautiful celebrities that endorse the products actually use them or if the products actually transform people overnight into something different. Not only the quality of the products is in question, the effect these advertisements have on young mind is bad too. Dove's campaign for real beauty puts this point into perspective that how aggressive advertisements by such company's promotes negative self-image in growing children and puts unnecessary pressure on their minds. This is another case where a training in how to make informed decisions could help save not only the money of parents but also the mind of children.

There is no end to such examples. The real question is what can be done about it? I sincerely feel giving students extensive training in how to make informed decisions before making purchases is a step in the right direction. Such a step will help them to not become a victim of aggressive marketing techniques employed by companies in order to sell their low-quality products.

Using Insider Information

2009-03-06T16:28:00.001Z

The following appeared in a memorandum from a member of a financial management and consulting firm:

"We have learned from an employee of Windfall, Ltd., that its accounting department, by checking about 10 percent of the last month’s purchasing invoices for errors and inconsistencies, saved the company some $10,000 in overpayments. In order to help our clients increase their net gains, we should advise each of them to institute a policy of checking all purchasing invoices for errors. Such a recommendation could also help us get the Windfall account by demonstrating to Windfall the rigorousness of our methods."

Discuss how well reasoned . . . etc.

The reasoning above has many flaws in it and cannot be taken on face value.

The first flaw is that the argument does not say much about the mystery employee of Windfall Ltd. who gave the insider information. It is not clear how reliable the source is and how the information was obtained. If the information was obtained by bribing or threat, such an act would not only be unethical, it could also land the company in legal trouble. Unless the argument covers this aspect, it is risky to accept it.

The second flaw is the assumption that all the clients would be as careless with their invoices as Windfall Ltd was. Though it is possible, it is not necessary. A more prudent approach would be to check the client invoices to see if such a problem exists and then suggest the concerned client. Making a blanket recommendation to all clients may or may not prove to be useful. In fact, if the clients don't find it useful they would see the suggestion as a useless advice that just increased their work.

Lastly, the idea of advising Windfall Ltd. to do something that they are already doing and then hoping to get the Windfall account is counter-intuitive. Why would Windfall appreciate a recommendation that they already know? Most probably they have been implementing it much before the firm even thought of recommending it to them. A new idea would, perhaps, interest Windfall. Not something that they already know.

Concluding, the argument has many flaws and that makes it difficult for anyone reading it to agree with it. The concerned financial management and consulting firm should take the advice given in the memorandum with a pinch of salt. The argument can be considered only if it gives more details about the source, revises its strategy to give a blanket recommendation to all clients and tries to win the Windfall account on the strength of a new idea.

Job Satisfaction and Job Security

2009-03-06T15:48:00.000Z

"A company’s long-term success is primarily dependent on the job satisfaction and the job security felt by the company’s employees."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

I partly agree with the above opinion. Although I agree that job satisfaction is important for long term success of a company, I do not agree that job security is that important.

Job satisfaction is the foundation on which a company can be built. The primary reason is simple and elementary: a happy employee is a productive employee. And nothing saps happiness faster than being in the wrong job. The person has to carry the job like a burden, like a solemn duty. With such a state of mind, there is not much chance of him being productive. An unsatisfied employee is also more likely to leave the company, resulting in re-hiring and re-training costs. Hence, it is not difficult to see that lack of job satisfaction can indeed be detrimental to the company's long term success. A good example I can think of is that of my engineering group where nobody has left the company since past 5 years because everybody finds their job immensely satisfying, rewarding and challenging. This enables them to deliver excellent results which in turn helps the company to grow.

Job security, however, is another ball game. I believe job security should be linked to performance; lack of challenge often makes people complacent and unwilling to either grow or learn. The most pertinent example I can think of is of Government bureaucrats. Government bureaucrats, generally, have the most secure job in the world. Since they know that nothing can take their job away, they are least bothered about the results they deliver. This leads to the country wasting colossal amount of money on ill-advised project executed in the most wasteful fashion. If the bureaucrats were liable for their actions and their jobs were not that secure, I am sure there would delivered much better results and the country would have seen much more progress than we see today.

Concluding, employee job satisfaction is critical to a company's long-term prospects as a happy employee is a productive employee. A satisfied employee is more likely to stick with the company and contribute more to the company's growth. Job security, on the other hand, can make an employee unproductive and complacent;this harms a company's long term chances of being successful.

Reucing Price to Increase Sales

2009-03-05T11:15:00.000Z

Davis Technologies, a computer-chip maker, could solve its problem of declining sales by dropping its prices. This would make Davis better able to compete in the highly competitive computer chip market. The sales of chips would increase and this would substantially boost Davis' market share.

Describe how well reasoned etc.

Even though the above position may appear reasonable on the first look, it has some loopholes that will become more evident as we discuss them.

The major flaw in the reasoning is that it assumes that the only reason behind the company's declining sales of computer chips is a high product price. On this basis, it asserts that Davis Technologies will be able to solve its problem of declining sales and boost its market share by dropping its prices. This is not necessarily true as sales can be driven down by many factors. It is possible that the chip manufacturing quality controls of the company have been lax, leading to production of sub-standard computer chips. This, in turn, may be the reason behind the drop in sales. In that case dropping prices would not help the company in any way. Similarly, there can be other factors like a general recession, sub-standard marketing effort or technically inferior chips (compared to those produced by competitors). There is no way to know for sure if high price is indeed the only problem. Hence, until the statement clearly establishes in some way that it has taken into consideration all factors before establishing high costs as the real reason, this statement cannot be taken as accurate.

Moreover, reducing prices is not the only way to compete in a highly competitive market. The same can be achieved by strong achievements in manufacturing technology, commitment towards research and development, well-thought marketing planning and an excellent customer service. The statement offers no reason why slashing prices is the only way to become competitive.

Concluding, the presented statement is unconvincing and hence appears inaccurate. There is no way that just reducing prices would arrest declining sales, make the company competitive and win a substantial market share. The real action would have to be much more well-thought. Nevertheless, the argument can be made a bit plausible if it establishes that it found high price the only reason behind all the company's problems after considering all the concerned factors .