Tuesday 29 September 2009

Roll over and die

What do you do when a new competitor enters the market? Or a new technology appears on the horizon? Buy it? Copy it? Beat it? What’s the strategy?

Many are listed and debated in business books and MBA classes. One isn’t: Do nothing.

In 9 cases out of 10, the threat would probably self-destruct. In the one case that it’d destroy you, you may be better off committing suicide (not literally, of course). 

Because you may lose if you tried to fight. Even if you won, you may bleed so much during the fight, that the victory would be quite hollow. Also, your margins post-victory may be far thinner than those before the threat appeared.

But don’t you owe it to your shareholders to fight? Not necessarily, if you can convince them that the immortal corporation is nothing but a counterproductive marketing myth to sell shares. (“You will make money eventually. And if you don’t, your grandchildren surely will.”)

Sounds silly. It did to me, until I read what Sir AJP Taylor said about BeneŇ°’s surrender of Czechoslovakia after the Munich Pact. Taylor said (I am quoting from memory), Czechoslovakia lost relatively few people during WW2. States which didn’t surrender, lost far more many.

I just looked up the figures in Wikipedia (not the best of sources, but in cases like this, no source is likely to be reliable). USSR lost 1 in 7; Greece lost 1 in 9, Yugoslavia, 1 in 15… Czechoslovakia 1 in 44. My guess is that most of that came from the Quisling Slovak Republic.

Perhaps surrender shameful in the history of a people. But why should it be shameful in business?

Wednesday 23 September 2009

The roads of France

Whenever I am on the road, I find myself admiring the French for driving small cars. There are a few big Benzs and BMWs and even some from the French makers, but I guess 4 in 5 cars are basic and small, like the ones most car owners in India have.

The next moment I find asking myself, “What’s wrong with this picture? This city is a town by Indian big-city standards. Why does it need so many cars? Wouldn’t they be better off with more buses plying more frequently?

Or will such a bus system drain the city’s coffers, because people here may expect a bus system to be hugely subsidised, if not state-owned and virtually free?”

The second thing that strikes me here, and which I also found strange in New Zealand, is that the pedestrian has right of way.

This doesn’t make sense. The pedestrian’s time, either by choice or compulsion, is less valuable than that of person driving a car. Shouldn’t the one with the more valuable resource be allowed to go first (very old and very young people, and disabled people being exempted, of course)?     

Tuesday 22 September 2009

Why not collective security?

If you lose your job in France, and want to get a degree before going back to the workforce, the state will pay for your and your family’s upkeep.

The Americans may hate that, but an Indian like me can only wish our government did that. More so, because the state subsidised my education almost entirely before I entered the job market for the first time: It makes no sense to have me rot jobless, and pay no taxes, if I am willing to upgrade, so that I can go back to paying taxes, at a higher rate.

However, one question bothers me. Does the French government give employers easy loans or even straight aid so that they won’t have to layoff people, especially during a widespread downturn, when the employers’ altered circumstances cannot be easily blamed on their misdeeds? Or does that become communism?

Or do you have to be an American bank to have the government take you over – with a guarantee that fat bonuses will be left untouched - once you have ruined the world’s economy (yet again).

Not all employees are willing to retool, though all will have to be taken care of by the state till they get back to their own feet. So the state’s (society’s) expenses don’t (necessarily) change if they keep companies running at full-employment during recessions.

In other words, if French citizens can have social security, why not French companies?

Would that muddle economic signals? Not necessarily. There isn’t much you can learn about running your business form an universal downturn, except that perhaps you should have made more provisions for the rainy day.

(Could you have done that? Keeping aside a nest egg means lowering present spends, i.e., less investment in growth and, more importantly, lower salaries. Both are bound to hurt the present health of your business, unless all your competitors join you in doing exactly what you are doing. In which case, you only lower standards throughout your industry, and do no-one any good.)      

What’s left for the alley cat

Mummy’s grocery purchases = Family’s meal + alley cat’s dinner. This implies mummy cares for the cat (though she cannot keep her at home).

Alley cat’s dinner = Mummy’s grocery purchases - Family’s meal. Most probably, the poor feline has to fend for herself.

Makes sense?

Then why do we keep writing Assets = Liabilities + Equity when it is actually Assets – Liabilities = Equity.

The first, at least if you were a student of science, makes you expect something like a law of nature (e.g., the laws of conservation of energy and mass), impossible to violate and the fountain of much knowledge and progress.

The second tells you what businesses do, and clears weeks’ of confusion.  

Friday 18 September 2009

Six myths of the Raj

Scratch an English historian of the Raj and you’ll find a few set themes:

  • Indians were conquered because they were not united: You were divided, so we ruled. The English united and pacified the country and created India for Indians.
  • The Mutiny of 1857 was to bring back the feudal order, and drive out missionaries. Hence, it wasn’t a war of independence.
  • The demands for representative government did not come from the poor: It came from the English-educated elite. The masses were more than happy with the English for bringing them out of the 10th century BC to the 19th century.
  • In fact, the people were so loyal and grateful, that this vast colony was ruled by a handful of civil servants and soldiers. 
  • Gandhi was no saint. He was a wily politician, who would often change his stands. In many matters, he was eccentric. Above all, he was a sexual pervert.
  • Partition was inevitable because the Hindu majority would have never given the Muslim minority a fair deal. The English had to curve up the subcontinent into Hindu India and Muslim Pakistan.
  • Had it not been for the Raj, we’d not have had courts, colleges, civil servants, trains, and the rest.

Let’s try some commonsense on each of these:

Indians were conquered because they were not united.Indian rajas fought each other no more than their European contemporaries did. Third-parties took advantage of the fighting to create empires, the most recent examples being the division of Europe into American and Russian satellites following WW2. No problem with that.

What I find puzzling is the English insistence that there was no India before the Raj and, in the same breath, blaming the rajas for not being united… as Indians. That’s blaming the past for not being the present.
  
The Mutiny wasn’t a war of independence.This assumes that independence = capitalism + democracy. In other words, unless you were fighting your version of the American War of Independence, you weren’t fighting for freedom.

The Mutiny was a fight for freedom by the yardsticks of its time. Shouldn’t that be good enough?
  
Common people didn’t care for independence.Common people don’t care much about anything. If they did, they won’t be common. Issues don’t bubble up, fully developed, from below. So what?

The question is whether the issues, introduced from ‘above’, found mass support.

And isn’t it strange that there were no mass movements, led by anyone, to keep the Raj. If the common people were so happy with the English, that sort of thing would have sold very well. 

And what’s so horrible about being led by your demographic ‘betters’? Dr King was the son of a minister, not a sharecropper. Should that have disqualified him from leading the black movement? Many Israeli prime ministers are ex-army generals. Should that have barred them from political office? Through most of the Raj, English politics had a fair sprinkling of aristocrats. Did that disqualify England from being a democracy?

By the way, Hitler, Mussolini and Stalin were ‘one of us’. Fat lot of good that did.
  
The people were willing slaves, for they needed so few masters.  Independent India has, most probably, far fewer bureaucrats and soldiers per 1,000 of its population than the poorest developed country. Does that prove that we Indians love our present rulers?

We also have far fewer doctors and schoolteachers than developed countries do? That should mean we are very healthy and are born wise.

And I’ll bet Belgian Congo had far fewer Belgians per 1,000 Congolese than British India had British per 1,000 Indians. So what?

The moot point is not that so few of them could hold the peace; it is that there were too few of them to wage war against poverty, backwardness and illiteracy. By all accounts, the Indian Civil Service was staffed by selfless souls toiling in the midday sun for this benighted land. Wouldn’t it have been be wonderful to have had more of them?
  
Gandhi was no saint.Can we have a few illustrative examples of his famed craftiness please?

Or is he being blamed for not being rigid? His stands on many subjects, like the caste system and women’s issues, changed over time, but never regressively. Isn’t he to be admired for that?

And so what if he was eccentric about many matters? How did that effect his politics and reform work? He didn’t keep his private life private? But what good does it do to put that under focus?

Admittedly, his sex life and beliefs were bizarre, even by the standards of his days. However, let’s not forget that all the information we have about this comes from him. How do we know if other leaders, then and now, don’t have equally strange sex lives?

There is a petty trick in all this, which is best explained through an example. In Empire: How Britain Made the Modern World, Niall Ferguson writes, “An Irishwoman was elected to the presidency of the Congress in December 1918: Annie Besant, a half-mad theosophist who believed her adopted son to be the ‘vehicle of the world teacher’ and saw Home Rule as the answer to the Indian Question.”

That’s the only reference to Mrs Besant in the book. Now, what is the reader to make of that part of her that wasn’t mad? Or of the party that elected her to its presidency? Or of the political (not theosophical) causes she advocated? This is nothing but vilification by omission, trivialisation and distraction. 
  
The English had to curve up the subcontinent into Hindu India and Muslim Pakistan.Whether partition was inevitable, I must leave historians to decide. My problem is with ‘Hindu India’ and the implication that that the British solved our religious problems by dividing us.

How can the country with the second largest Muslim population in the world be Hindu? What in India’s laws or constitution is Hindu? Or does the poverty and backwardness of Indian Muslims make India Hindu? By that logic, USA is white. And China is Huang. Why don’t Western books use these adjectives?
  
Had it not been for the Raj, we’d not have had courts, colleges, civil servants, trains, and the rest.First, which of these is the envy of the world? If not one is, what are the English gloating about? Or do they want to be canonised for being nicer to India than, say, Hitler was to Poland? 

Or was everything shipshape in 1947 and we have made a royal mess in the six decades since then? How about some comparative analysis?

And must we accept the characterisation of all Indian rulers and admirations as oriental despotism at face value. Chance dictates that not all of them could have been that rotten. Or were they?

Or are we being blamed for not having reinvented the wheel? 

Incidentally, what about courts and parliaments in Pakistan and Bangladesh? Should their prolonged periods of military dictatorship be blamed on the English?

 

I’d gladly let the dead past lie, but others won’t. I suspect that has something to do with what they want now, and from me. That’s why I must look back. There are lessons there. And lessons too in how the present interprets the past. The future lies in the eyes of the historian, for what is history but predictive analysis on a mass scale.

PS: I get what really gets me mad is their trying to make a balance sheet of history. This was the good the Raj did; this was the bad. It reminds me of that monster in Austria who kept his own daughter entrapped in the basement for years, raped her and fathered several children through her, who he also kept underground. Would these historians say, "At least he fed them"?

Churchill wrote that the Raj kept Japanese Army out of Indian soil (Mizoram doesn't count) during World War 2. Sure, but what about the Bengal famine? Keeping a war out and keeping an army out are not the same thing, except in a balance sheet. 

Sack all

In an interview with Jack & Suzy Welch, the great (greatest) manager argues that his policy of sacking the bottom 10% of his company each year was a good thing because it allowed the sacked employees to go wherever they could do better.

Further, he argues that because the feedback was continuous at GE, it wasn’t as if the sacked employee would come to know one fine morning that he was jobless. He was given plenty f opportunity to shape up before he was declared as hopeless. To put it differently, GE and the employee tried hard to work things out before GE decided that they were incompatible.

On the face of it, Welch is most convincing, though Pfeffer has argued, equally convincingly, against the policy (in general, not specifically at GE).

However, may we ask two questions, both concerned with cut-offs? Why 10%? And why one year?

Isn’t a year too long to decide that a company and an employee don’t belong together, more so when the former has the collective wisdom of its managers, codified into policies and criteria, on its side?

Does, say, an undergraduate student need to wait to the end of the year to understand he isn’t learning anything, not because he’s stupid but because he hates the subject. (He may pass the exam, but that’s a separate matter, and a sad reflection on the evaluation system.)

Of course, knowing in advance doesn’t help the student much because he can’t change courses mid-year, and has to waste till the next academic year starts. In GE’s case, however, isn’t the company needlessly prolonging the pain (and messing up the employee’s resume)? Shouldn’t the probationary period (surely they had one), whatever it is, be enough? If it isn’t, shouldn’t it be made so, by packing in enough into it for both parties to get a fair idea of whether there’s hope ahead? Was GE too kind?

Second, why sack 1 in 10? Did the 9th chap take the hint and leave anyway? If he did, what about the 8th chap? And the 7th, and so on? How were border-line cases dealt with? Were they transferred within GE?

By the way, what happened to the top 10%? Did they stay, or leave with the great taskmaster’s certificate getting them fatter paycheques from GE’s competitors?

Finally, did GE keep in touch with the sacked employees to figure out if that logic of releasing people for better things held water. That would have some implications for their recruitment system. If (most of) the sacked-employees went on to better things, it’d imply GE picked winners though it couldn’t always find the correct slots for them; on the other hand, if the sacked employees continued to do badly, one would suspect deeper flaws in the selection processes and criteria.

Wednesday 16 September 2009

The how not the why

What would you expect a class titled Introductory Statistics to teach you? You’d expect exactly what the title says, that is, basic stats; you wouldn’t expect Excel tutorials. Not just Excel tutorials, at any rate. 

What would you expect in a class on the basics of presentations? How to do slides, throw your voice, move your hands, etc.

But that’s the how, not the why. Why make presentations, considering most presentations are so badly made and badly received? How else can one inform and persuade? What really happens when we speak? What are the latest theories on face-to-face communication?

What really matters? Who’s presenting? Who he’s presenting to? What he’s presenting?

How much does how matter?

None of these need be as obvious as it seems at first glance. But when each of these are intelligently discussed, the learners may get a sound foundation that’d help them think through their presentations.

I believe, in the end, it boils down to this:

  • If you know your subject, you would be able to speak about it; it doesn’t matter if you stammer or shutter or wear the wrong tie. People's self-interest in getting your expertise will more than make up for any drawback you may have. 
  • On the other hand, if you don’t know your subject, the  rules and tricks can’t save you. Even if you are able to sweep your audience off its feet with histrionics, that would serve no purpose… because you couldn’t have told them anything useful… because you don’t know much yourself.

So, why bother about presentation skills? Just learn the subject.

You can’t win

I’ve been reading and listening to Jeff Pfeffer on evidence-based management. Basically, the good doctor wants managers to look at the theories, instead of mearely going by beliefs that sound ruthless enough, i.e., in line with with Econ 101, e.g., ‘fire the losers, give stock options to winners, etc’.

Two problems come to mind immediately. Managers may not know how to look at evidence. Those who come from the Arts, may not know any statistics, and may even be scared of numbers. Those who come from the Sciences, while somewhat better equipped, may over-estimate the power of numbers… mistake data for information. Men and women are not screws and nails. Companies are not bridges and towers. Markets are not computer models.

The second problem is that the evidence at hand may be misleading for complex systems. Let’s take, say, stock options. Apparently, there is no evidence that it makes any difference. In some cases, it is counterproductive. So what? The question is not ‘What does it do in general?’ but ‘How do the people who do it right do it?’

(Let me take an extreme example to amplify: There is no evidence that keeping accounts will make your business prosper. All businesses keep accounts of some sort; most fail. Hence, we should conclude that keeping accounts is immaterial to business success.

But we don’t. Instead, we try to figure out the best way of keeping accounts, because commonsense tells us, without the need of any research, that accounts should matter a great deal.)

I have the same problem with this thing as I had with The Bottom Billion by Paul Collier, namely that applying data analysis may be as much as an over-simplification as not applying any. A diverse, representative sample may be as wrong as a sample of a single failure or a single super-success.

Monday 14 September 2009

Lost opportunity up the hill

I live in a hostel halfway up a hill. If doesn’t have a grocery. And its canteen is open for only a couple of hours every day. This is gross under-exploitation of a captive market, more so because the nearest alternatives are down the hill, a 20-minute walk.

Tuesday 8 September 2009

When the cat is away…

“Is your wife here in Grenoble?” “No, I came alone.” “Oh, when the cat is away the mice will play.” Thus went a conversation with a Australian classmate with whom I had just become acquainted.

A few quick observations:

  • It’s not considered impolite and presumptuous to suggest adultery… but talk about anything else under the sun and you’re a nosy Indian.
  • The belief is that while men will sin, our women won’t. Women here are another matter: They won’t think twice before ‘playing’ with someone else’s husband. 
  • Almost all my male acquaintances in India had the same suspicion as my Australian friend; not one of the ladies said anything of that sort. 

I wonder, I wonder.

Down with representation without taxation

As soon as the news of the Andhra Pradesh chief minister's crash was on Rediff, the piece attracted scores of hate posts. This was only expected because hate posts rule Rediff news. Never mind what the news, it brings out the worst in Rediff readers. Or perhaps the worst people read Rediff.

Nevertheless, it may be useful to think for a moment about why we, the better off Indians, hate politicians so.

Do we hate them because they’re corrupt and ineffective? But so are we. We use every trick in the book to avoid paying taxes and fines, and consider it perfectly ok to bribe.

In the vast majority of cases, who accepts the bribe? Not a minister, but an official whose demographic profile is not too different from the bribe giver’s. They’d be in the same decile in terms of per-capita income.

We are also morally rotten because we do nothing against the wretched poverty and ghoulish disparity that surrounds us.

As for effectiveness, what have we done lately (in the last two thousand) years that should make the 1.1 billion chests swell with pride?

So, it’s simply another case of the pot calling the kettle black. Since most pots do that, shrinks must have figured out by now why they do it.

However, I believe our rage also has something to do with taxes. We genuinely believe that paying taxes is a stupidity and a sin because it hands over our ‘hard-earned’ money to politicians and bureaucrats to squander.

The trouble is that while we can wriggle out of paying direct taxes, completely avoiding indirect taxes is not so easy. So we end up paying some taxes, which we resent horribly, party because some of it reaches to the poor. Otherwise why can’t we have a discussion on politics without using the terms ‘populist’ and ‘sop’?

Interesting, whatever comes our way is a ‘relief’, a ‘reform’ or even an ‘incentive’. It’s as if changing the words changes the equations of economics.

We only want our tax rupees to pay for things (infrastructure, felicities, public services) that benefit us directly and exclusively, and not at all those who enjoy representation without taxation, that is, the vast majority who earn too little to come within the ambit of income taxes and spend too little to be paying much indirect taxes either, at least on a per capita basis.

We don’t see the redistribution of national wealth – leave alone the levelling of society (remember the ‘socialistic pattern of society’) – as government's job.

At best, we can let a little ‘trickle down’. That’s it.

Why Russia attacked Georgia

Because it wanted to tell other European countries not to build a pipeline through Georgia to bypass Russian control.

Why did central American countries vote for leftists? Because they wanted to harass American fruit companies.

Why were there pro-Nasser demonstrations in Arab capitals? Because they wanted to deny oil to Americans (err… Who would they have sold it to?)

Local issues don’t matter. Only America matters. Not only to Americans, but to everyone else. Perhaps America’s interests would be better served if it stepped back for just a moment and took a look at what really matters to the ‘other guys’.

The baby doesn’t always cry to bother mummy: Sometimes, it is genuinely hungry.

Friday 4 September 2009

Less than $ 2 a day

Extreme poverty is quantified as having to live on less than $ 2 a day.

Now, if you exclude rent, $ 2  is not such a bad deal in, say, Bombay. You can get two reasonably filling meals and buy two bus or train tickets for that amount. Maybe you’d still have some left to send your child to school.

A monthly salary of $ 60 comes to Rs 3,000. That’s a very low salary, even by Indian standards, but it was my first salary!

My point is not that $ 2 is actually fine; my point is that we should be looking at what people should be able to buy, at a minimum, and what fraction of that they can buy. 

The phrase ‘should be’ is loaded. Should everyone be able to buy a bachelor’s degree for their children? Or even 12 years of schooling? Are there jobs out there that can efficiently use 12 years’ of education? If the person so educated can’t use his learning at his workplace, can he use it to tackle the complexity of life outside his workplace?

If there are no easy answers, and answers depend on ‘ground realities’, is there any point in going looking for easy but misleading answers… like $ 2 a day?

Wednesday 2 September 2009

A few observations after 10 days in France


  1. Apparently this means “Drugs available. Inquire.”
  2. The French keep dogs; they don’t keep cats. Which is just as well, because the dogs are rather silly. The cats have attitude.
  3. The bath-cabin at my hostel has only two hooks. So where am I supposed to hang the clothes I got out of? And there’s nothing to hold my soap.
  4. A small coffee costs 1 euro; a big coffee costs 2.4 euro. Now, it doesn’t take more effort to brew the big one than it takes to make the small one: In both cases, you just put a cup beneath a blender. Assuming everything costs so much (thrice as much as it does in India) because labour is so expensive here, why does the big coffee cost 2.5 times the small (actually, tiny) coffee.
  5. The ladies at my present bank (CLC Victor Hugo) can hardly understand English; the ladies at my bank in India (Bank of India Vile Parle [E]) were fluent in English, Hindi, Marathi and Guajarati.
  6. There is a great deal of giggling in the French class, and the Korean girl takes the cake. But when the instructor asked how many weeks of paid leave were normal in her country, she replied, “None. You may get a week or two. It depends…” In other words, that gaiety covers up extreme hard work, as was confirmed by her conversation with the Chinese girl (Me eavesdropping, as usual).
  7. I thought hamburgers were the bottom of the gastronomical pyramid worldwide. They aren’t. That position goes to the ‘kebab’ grilled meat in a pitta, sold by Arab immigrants here. (I hope that doesn’t make me a racist.)