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.
Thursday, September 2, 2010
Wednesday, September 1, 2010
Looking to History for Roots of Management
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.
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.
Tuesday, August 31, 2010
Globalization and Its Discontents
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.
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.
Thursday, August 19, 2010
Who Can Overhaul China?
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?
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?
Tuesday, August 17, 2010
Co-evolution of Firms
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.
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.
Wednesday, July 28, 2010
The Difficulty of Being Good
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.
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.
Wednesday, June 2, 2010
Thinking About PE and Entrepreneurs
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.
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