Wednesday, September 30, 2009

Mush and business

Will they , or won’t they ? Get married that is. The very public match making process between K and C is as riveting as any soap on TV.

Readers of this blog would know that I’ve taken a fancy to mush in my old age. Especially since A Journey called Life and The Thoughtful Train have suggested that I better wear black than pink. This is another mushy post to prove that “macho men” can also mush !

K and C had gone out on a date about three weeks ago. K tried to hold C’s hand, but C pulled it back ; you see C is a “decent” girl and doesn’t hold hands on the first date. K , being an American, then wrote a long flowery love letter and then published it for the world to read. K said he was prepared to marry C and if C agreed and would pay C’s parents $16 bn as dowry. C was angered by the public announcement after just the first date. C promptly said NO and that she was prepared to die a spinster and would not marry K, especially with such a piddly dowry.

Despite C’s brave words that she wanted to remain alone, she knows that sooner or later she has to marry. And she’s very scared that if she left it too late, she’ll grow old and nobody will want to marry her. She especially has an eye for H or N. But both have problems. N is already married and C is not sure N will divorce his current wife to marry C (this is called in business parlance as anti trust problems). H is very pretty and rather feminine ; C knows that if they get married C can bully H. But the problem is that H doesn’t have much money to pay as dowry. And H’s parents are rather old fashioned.

K is playing a waiting game. He feels C has no other option but to marry him. C is scared that her parents will cut a deal with K and take the money. But there is a slight problem. K has not shown the money. He only says he will pay if C agrees. And K is keeping quiet, letting all the gossip do all the work for him.

C is furious. This is preventing her from doing her normal stuff – like going to the movies, eyeing other men, etc. Everywhere she goes, people are staring. She’s therefore gone to the village elders (called the British Takeover Panel) and asked them to instruct C to show the money or piss off. This the elders did yesterday – they told K that he has to show the money before Nov 9th.

Now C’s parents know that if K shows the announced $16bn, everybody will laugh at him. And K will lose so much face that no other girl will marry him. So they are hoping that he will bring much more dowry.

C is on the horns of a dilemma. She knows K will bring more money. And if she has to marry him in the end, she doesn’t want to get him really mad. So a week ago, she gave a sly wink and said that sometimes K can be cute (called in business parlance as "I can see the strategic fit"). C’s parents threw a fit. They gave C a bollocking for daring to appear like an indecent girl.

Now everybody is waiting for K to formally propose marriage. Will he go down on bended knees and pop the question. Or will he hire an aircraft and unfurl a banner in the sky announcing his undying love. And, more importantly, is he prepared to bring that posh house he has as dowry ?

Don’t miss the next episode, coming in two weeks time.

Tuesday, September 29, 2009

Grow old at your own risk !

Gender or race discrimination at the workplace has received a lot of attention and any organisation that overtly does this is in for serious trouble. But a different form of discrimination has become widely prevalent in the last ten years. Age discrimination. The corporate world favours youth and tough luck if you are an older person. The problem with this is that everybody has to get “older” sometime or the other.

The dice is loaded against you if you are considered too old. The inflexion point comes suddenly on you in the early forties. If, by then, you haven’t “made it” you are on a slippery slope. You get passed over on the grounds of being “too old” and that a younger person is a better future bet. And then by 50 you are a prime candidate for being laid off.

Therein lies a profound sociological problem. By the grace of God, on an average we’ll live longer. Perhaps for 75 years or so. So if you lose your job, or leave when you are 50, you have another 25 years to go. In countries where there is a well defined social security system, this becomes a huge drain on the working population. In countries which have no system, and where the traditional support system of the family is crumbling, what could you do ?

Consider the plight of a 50 year old who’s been laid off, or has been forced to leave. Chances of getting another job are extremely low (does anybody hire a 50 year old these days ?, a sure sign of age discrimination). For many, their very being is defined by their job. When that is gone, self confidence, respect and social standing take a beating.

In the rich world, there’s a clamour for people needing to work longer and not retiring early and claiming their pensions. But the problem is that few people can keep their jobs until they reach retirement age. They’ll have to leave well before that. How many retirement parties for 60 or 65 year olds have you attended in the last couple of years ?

What can be done ? I am not sure at all. The greying generation can do a few things to help themselves. Constantly retrain and update skills. Price themselves competitively against younger guys, taking salary cuts rather than salary increases. Maintain, and demonstrate, that priceless combination of experience and dynamism. Do all this well before reaching 50. But none of this is any foolproof insurance.

This post comes after I read a report in The Telegraph that a High Court in the UK has ruled that compulsory retirement at 65 was valid in law. I think that its an irrelevant judgement. Forget 65; you're lucky if you can hold your job at 55. It’s a scary thought.

Can we please stop saying that the market is efficient?

The economist Jovanovic wrote, about a quarter of a century ago, “efficient firms grow and survive; inefficient firms decline and fail”. What he meant is that the market is Darwinian; it will rule out the least efficient firms, with habits and practices that make them perform comparatively badly, and it will make sure efficient firms prosper, so that only good business practices prevail.

Yeah right.

When you look around you, in the world of business, one sometimes can’t help wonder where Darwin went wrong… How come we see so many firms that drive us up the wall, how come we see silly business practices persist (excessive risk taking, dubious governance mechanisms, corporate sexism, grey suits and ties to name an eclectic few), and how come so many – sometimes well-educated and intelligent – people continue to have an almost unshakable belief that the market really is efficient, and that it will make the best firms prevail if you just give it time?

That’s because the logic is not entirely wrong. The market is Darwinian, and the firms with the highest level of “fitness” are the ones most likely to prevail. However, our Darwinian view of business is also so incomplete and simplistic that I am unsure whether it would make Mister Charles Robert Darwin cringe, burst out laughing, or pull the hairs from his famously bulging beard in agony. Darwinian mechanisms – or market mechanisms if you prefer – namely work at different levels. And sometimes they conflict. Let me explain.

Some business practices, like the ones mentioned above, will actually reduce the fitness levels of the firms that adopt them, and make them less efficient, yet they persist. That’s because these practices have a fitness level of their own. They survive just like viruses survive among humans. The flu kills many thousands of people every year, and at first glance it seems a slightly flawed strategy of this virus to kill one’s host, yet it persists. Why is that? That’s because it spreads quicker than it kills. It doesn’t matter much, for a virus, that it reduces the fitness of its host, as long as it jumps to someone else before the host snuffs it! And in a way that is what bad business practices do too. They spread easily and kill slowly and stealthily.

Moreover, the flu doesn’t kill everybody that gets it; it often just makes them perform worse. And that is what bad practices do too. Just like an extremely lethal virus dies out – because it kills its host before it can spread – terrible business practices also never quite see the light of day. It is these stealthy, annoying, nasty, creepy, sneaky, and irritating, pains-in-all-sorts-of-bodyparts practices that tend to persist. They don’t kill instantly, but gradually wear a firm down.

And there is another advantage to that – for the practice that is. Firms don’t quite know that the practice is bad. Very bad practices are easy to spot, so nobody adopts them, but not these ones! They’re like a sneaky virus – you catch it before you realize it, and the negative effects only become apparent in the long run.

An example you say? Well, take ISO9000 and apply it in a very innovative industry. Research – by professors Benner from Wharton and Tushman from the Harvard Business School – has shown that ISO9000, in the long run, can have a severe negative impact on a firm because it hampers innovation. Yet, the short-term benefits are clear; adopting ISO9000 often comes with some good reputational effects, an immediate increase in customers, and satisfied stakeholders. However, the negative effect on innovation, in the long run, may outweigh all of this.

Nevertheless, firms adopt the practice because they do see the short-term benefits, but are quite unaware of the long run detrimental stuff. To managers in charge of improving their firms’ performance now, the practice seems attractive because they noticed that companies in other industries (perhaps not so reliant on innovation) benefited greatly at the time they adopted it, many of the firm’s competitors are currently adopting it, and they all see a surge in customer applications too! Of course it looks attractive!

Moreover, once we start to suffer from a shortage of internal innovation, many years will have passed, and no-one quite realizes that the creeping troubles were originally triggered by the adoption of the ISO9000 practice a long time ago. The practice gets adopted by many many firms and continues to persist, despite the fact that everybody would be better off without it.

The same may very well be true for quite a few of our popular governance mechanisms, the practice of excessive risk taking as we saw it in investment banking, many forms of performance management systems, and certainly for corporate sexisms, and pin-striped suits with purple ties on hot summer afternoon. It is not that Darwin is wrong – and the mechanisms he discovered do not rule our markets – it is just that they’re just as difficult to shake off as a common cold. And that they are just as annoying.

Monday, September 28, 2009

Chinese tyres vs American chicken

There’s a spat going on between the US and China that is threatening to become a trade battle, if not a war. The US imposed tariffs of 35% on Chinese automobile tyres on the grounds that imports were surging and that the domestic industry had to be protected “temporarily”. China immediately appealed to the WTO and there the matter stands now.

But China is a prickly nation. It is quick to take offence. It announced last week that its launching an investigation in American “chicken parts” being dumped in China and putting Chinese poultry farmers out of business. Of course, this was entirely unrelated to America’s action on its tyres.

Reading this made me sit up. Is America capable of exporting something that undercuts China ?? How on earth was that possible ? But it indeed does seem to be the case. The “chicken parts” in question are wings and legs. Apparently these have no use in the US – they are virtually worthless and go for 2 cents a pound. But these are delicacies in China – one of the quaint experiences of mine in China is to see elderly women go out early in the morning to buy fresh chicken legs, just as Indian women might buy milk. These “chicken parts” sell for 40 cents a pound in China. Lo and behold America is cheaper than China !

A spat is brewing and if nationalistic fever is stoked (all too easy in both the countries), this can escalate into a mini trade war. This is exactly what the world does not need today, although politically this will be, unfortunately, popular. It will be a sad day if the world’s economic direction is dictated by the likes of Rush Limbaugh and the prickly faceless mandarin in Beijing.

These are difficult times for free trade. Capitalism is on the defensive and free trade is becoming a four letter word to far too many people. But it is precisely in these recessionary times that the world needs more of free trade, not less of it. But then a free market evangelist is somewhat akin to a paedophile these days.

Whatever might be your views, surely there are more worthy causes to fight wars on than chicken feet !

Sunday, September 27, 2009

The "different" Brenda Barnes

Financial Times recently published its list of the top 50 women in world business. The usual toppers were all there – Indra Nooyi (Pepsico), Andrea Jung (Avon), Irene Rosenfeld ( Kraft), the highly controversial Ho Ching (Temasek – as our Singaporean friends will know). At No 14 stood Brenda Barnes, Chairman and CEO of Sara Lee, the makers of Kiwi shoe care, Douwe Egberts & Senseo coffee, Hillshire Farm meat, Good Knight mosquito coils and a whole host of famous brands.

She’s a lady with a difference. And her story merits telling.

In 1997, she was president of Pepsico North America. One of the top jobs in Pepsi. A glittering career. She would have surely risen even higher. But then she turned her back on the job and walked out. To spend time with her family – her three kids - and be a fulltime mom.

Seven years later she came back. Sara Lee hired her. A year later she was Chairman and CEO. Consider this for a moment – the upper echelons of corporate America is a dog eat dog world. If you step off, its even harder to come back than in lower or middle level positions. And yet she did . Any working mom, or dad for that matter, wondering if a career break will end working life need only look at Brenda Barnes' journey

Click here for an interesting interview she gave on her taking that career break. She says she sees life as a series of chapters. She says the time she took out was like going to graduate school.

Sara Lee even launched a paid internship program, dubbed returnships at Sara Lee, targeting professionals with a gap in employment.

The corporate world is not kind to people with career gaps. It’s the women who bear the brunt of this, when they are juggling with starting a family and continuing an aggressive career. This is particularly a serious issue in India. The demands of corporate life are such that balancing work and family life is virtually impossible. Something has to give. And many women, to their eternal credit, refuse to sacrifice the family. And end up sacrificing their career.

To all ye women, who made the right choice for your family. Brenda Barnes is your inspiration. The corporate world will, and must, change.

Saturday, September 26, 2009

The wonderful world of tags

Tags are a wonderful and frustrating thing at the same time. They seem to spring up from nowhere and have a life of their own. They go all over the place. Usually it’s a girl who starts it, with such gems as “What are you wearing ?”.

I’ve now been tagged by Athivas. A wonderful blogger who writes lovely verses. She’s so very friendly and writes such superb comments to make any blogger’s day. So when she tagged me with one of the girliest of all tags, I had to discard all semblance of business, dress up in a “pink dress” , imagine myself as one of the Mills & Boon girls and write this :) Be warned – all answers are of the “pink pink variety”. Athivas is the most sporting of bloggers – so I know she won’t mind me having a little bit of fun at whoever originated this tag.

1.Grab the book nearest to you, turn on page 18 and find line 4?
“She looked into his eyes longingly and her heart fluttered wildly. He held her hand and they gazed into the sunset”

2. Stretch your left arm out as far as you can & touch air?
I stuck my left arm out and touched the love of my life. He smiled a smile that made my heart go flutter, flutter.

3. What is the last thing you watched on TV?
I watched with a lump in my throat as they looked into each other’s eyes . Soft light, lilting music and the credits rolled over.

4. Without looking, guess what time it is?
9.00 PM?

5. Now look at the clock, what is the actual time?
11.30 PM – Oh my gosh – have we been holding hands for so long ??

6. With the exception of the computer, what can you hear?
I can hear the beating of his heart, the song on his lips, the music in his ears ….

7. When did you last step outside? What were you doing?
I went out to buy a rose to pin on his lapel ; for the smell of the rose will keep him mine …..

8. Before you started this Q&As, what did you look at?
Into his oh so lovely eyes, to find that deep inside, I could see me.

9. What are you wearing?
What he gave me the first time we met.

10. When did you last laugh?
Every moment. There’s laughter in my eyes for he is with me and the world looks all colourful and fun.

11. What is on the walls of the room you are in?
He and me – holding hands, laughing , hugging, running, …..

12. Seen anything weird lately?
Not for a long time. For I have been gazing into his eyes.

13. What do you think of this quiz?
Oh; what a great way to wear a pink dress and write all about me and him.

14. What is the last film you saw?
We went to the movies, but we held hands and looked at each other. Forgot the movie.

15. If you became a multimillionaire overnight, what would you buy?
I’ll give it all to him. And he’ll give it all to me. I’ll keep it all for him; I’ll only take a little out to buy a pinker dress.

16. Tell me something about you that I dunno!
I only think of him and he only thinks of me. Did you know that ?

17. If you could change one thing about the world, regardless of guilt or politics, what would you do?
Make sure he’ll be besides me always.

18. Do you like to Dance?
Only with him. And then I like to dance and dance and dance and dance ….

19. Imagine your first child is a girl, what do you call her?
(Blushing) – I’ll ask him what he’d like to call her

20. Imagine your first child is a boy, what do you call him?
(More blushing) – I’ll name him, He jnr.

21. Would you ever consider living abroad?
Yes, wherever there’s a beach, there’s blue sky, there’s gentle water lapping at our heels as we hold hands and gaze into the sunset.

22. What do you want GOD to say to you when you reach the pearly gates?
(sobbing) – how could you ask that ?

Whew ! Ugh ! Phew again !!!

I’m running to get off that pink dress. That was real tough.

PUBLISHERS URGE MORE PUBLIC AID FOR NEWSPAPERS, BUT H.R. 3602 WON'T SOLVE THEIR PROBLEMS

The push for government support for newspaper continues and this week publishers and their supporters—including the Newspaper Association of America—went before the House Joint Economic Committee detailing how the current economic climate has harmed their finances and arguing for preferential changes to tax and pension laws. They asked to be allowed to extend application of the net operating loss provisions from 2 years to 5 years and for changes in laws to allow them to underfund pension funds for a greater period of time. Both would improve their operating performance and balance sheets.

This is a case of the newspaper industry seeking long-term business benefits to solve a short-term crisis caused by poor management decisions and the recession. The leading newspaper firms and their representatives are making concerted efforts to dupe legislators and the public into believing their troubles are part of the general trends in the industry, rather than the result of management decisions and the financial crisis that is diminishing. If the provisions are passed, the public treasury will be diminished for years to come and risks for employee pensions will be increased.

Newspaper executives and other witnesses were sympathetically treated at the hearing this week, but it is unclear whether they will be able to achieve the policies they advocated.

Another proposal that the commercial firms are uninterested in themselves, but expressed sympathy for, would broadening laws regarding charities to include not-for-profit newspapers. Their support was astute because the House Joint Economic Committee’s chair, Rep. Carolyn Maloney (D-NY), has introduced her own bill (H.R. 3602) to allow newspapers to become tax exempt under section 501(C)(3) of the tax code. Her bill somewhat mirror Senate bill 673 by Sen. Benjamin Cardin, D-Md., that was discussed earlier in this blog (Analysis of the Newspaper Revitalization Act, http://themediabusiness.blogspot.com/2009/03/analysis-of-newspaper-revitalization.html). There are some differences in Maloney’s bill that need to be highlighted.

Under Section (b) of H.R. 3602, companies would qualify for tax exempt status through a 3-part test.

First, companies would have to be “publishing on a regular basis a newspaper of general circulation” to qualify. This provision stipulates no periodicity so it does not limit qualification to dailies, which are experiencing the greatest economic and financial difficulties. This language provides the exemption only to established papers and would thus exclude startups until after they were regularly publishing, requiring startups to initially obtain financing through other than tax-deductible donations.

The language in this first test requires that publications be “a newspaper of general circulation” and this will lead to questions whether it applies to newspapers focused on specific audiences in a community—such as African Americans or senior citizens—or papers providing more focused content—such as news and information for a specific neighborhood or devoted solely to politics or crime. This ambiguity could be used by IRS examiners against some papers and could be used by some publishers to take advantage of a policy not intended for them.

The second provision requires that qualifying papers publish “local, national or international stories of interest to the general public and the distribution of such newspaper is necessary or valuable in achieving an educational purpose.” The provision regarding type of coverage is better than the Senate bill because it does not require publication of all 3 types of news—something not done in many local papers.

The third provision requires that content preparation “follows methods generally accepted as educational in character.” This provision is exceedingly vague and its application is unclear because it does not deal with the content of the paper, but with the preparation of the paper. How “the preparation of the material” follows accepted educational methods would seem to require that the papers be part of an educational activity, such as being linked to training in schools or universities. This would highly limit the applicability of the bill to existing newspaper operations.

Like the Senate bill, Section (c) permits papers to carry advertising “to the extent that such newspaper does not exceed the space allotted to fulfilling the educational purposes of such qualified newspaper corporation.” This would require papers to publish no more than an equal amount of editorial and advertising content. This is lower than the limit of postal service limit (75%) and would force most existing papers to drop about 1/3 of their existing advertising or incur damaging costs by printing more news pages than they do now. This would cripple the finances of any daily paper.

Finally, Section (d) of the legislation permits qualified companies to accept tax deductable charitable donations to support their operations.

This bill, like its Senate predecessor, is likely to have limited affects on the newspaper industry because it will not interest newspaper owners because most of their papers are producing profits and it will preclude their abilities to benefit from greater profits when the advertising recovery occurs.

There is a place for not-for-profit media and journalism, but H.R. 3602 S. 673 will not do much to improve coverage or the overall condition newspaper industry. It is likely to continue to gain support from the commercial newspaper industry, however, because it can be used to provide cover for government policies that they really want.

Where should a CEO live ?

These days many companies are global. Does it matter where they are based ? Or where their top executives live ? I believe it does.

This post is prompted by the news that HSBC’s Chief Executive, Michael Geoghegan, will relocate from London to Hong Kong. This is a consequence of the fact that the future of the bank will more and more be in China.

In most companies, there is a corporate headquarters. Usually this is a historic accident – the headquarters are where the company originated from , even though its current business may be in completely different places. The CEO and most of the senior management reside in HQ. Sure they travel a lot. But they live in the base.

In the past, this made sense. The top team had to be physically together. Meet often. It doesn’t make sense today. It is much more practical to meet personally at regular intervals , but meet often virtually. That’s the way most companies are run anyway.

Its important for the top team to understand the countries which are most crucial for its operations. And real understanding does not come from travel alone. It often comes from living there. A CEO’s visit to any country is a carefully orchestrated event that gets him to places and see things that everybody wants him to see. There’s no way you can understand China, by alighting at Pudong airport, driving to the Shangri La, having a zillion presentations at the office, meeting two senior government officials, having dinner at the Yongfoo Elite and going back. However many times you do this, you won’t “understand” China.

For a truly global company, its top team must be spread over the major markets it operates in. The major geographies where its operations are. In the last team I was associated with, the top leaders were based in France, Germany, the UK, the US and China. It resulted in some arduous travel, but it achieved an important objective – it was a truly global team.

Its entirely appropriate that the CEO of HSBC resides in Hong Kong. After all its one of those rare “countries” where a commercial bank issues the local currency notes. HSBC issues most of the dollar notes in Hong Kong and one of its employees signs it. In the future the CEO might want to sign them himself. After all how many CEOs can have the satisfaction of taking his wallet out and seeing his signature every time he hands over a dollar bill. It must be the ultimate status symbol.

Monday, September 21, 2009

Is Your Company Brave Enough to Survive?

As a professor of strategy, lately I've been getting asked quite a lot, "What can our company do to survive the downturn?" I'm sorry, but the real answer is, "Not a lot."

The market is Darwinian: the strongest ones survive. And an economic downturn is like winter in Alaska; many animals can live a happy life in Alaska all through spring, summer, and fall, but when winter comes, it's not a great place to be. It's a much tougher environment — and only the fittest survive.


If you're not very strong, if you haven't accumulated much body fat or haven't developed the ability to hibernate, I am afraid it is going to be tough for you, too. "But what can I do to become stronger? Get thicker skin? It's getting a bit cold here!" you might cry. Well, I am sorry (again), but winter in Alaska is not a great time to try and become stronger. It is a tiny little bit late for that...

But I do think there are a few survival techniques from looking at firms' downturn survival strategies, although they are not for the faint-hearted.

First, we see quite a lot of firms display what we in management academia call "threat-rigidity effects." When under threat, facing a shortfall in performance, firms are inclined to more narrowly and firmly focus on the one thing they do well (e.g. their core product or service), stop doing other things, and become more hierarchical and top-down in terms of management control.


Unfortunately, this often makes things worse, or at least prevents you from coming up with any solutions. What firms are better off doing, is opening up; exploring new sources of potential revenue and experimenting with bottom-up processes to generate such ideas and innovations. Let me give you an example.

I am in touch with a company, here in London, that provides custom-made software for all sorts of logistics systems, which they offer in combination with personnel training. Unfortunately, the vast majority of their customers are automotive companies, like General Motors and Ford... clearly not a great position to be in right now. This recession has definitely been winter in Alaska for them, and at first they went through the usual cost-cutting and rounds of lay-offs.


After a while, though, the CEO decided to try something a bit different. He initiated some processes for all employees to start generating ideas for potential new sources of revenue, which they enthusiastically participated in (it was not like they had anything better to do...). Most ideas were rubbish; some ideas were so-so, but a few ideas were really good! One of these ideas has now brought them a substantial new source of revenue.

One team had noticed that there was always one business unit doing rather well among their automotive customers; the unit providing spare parts. That's understandable; in a downturn, when people stop buying cars, more people need to have their cars repaired. And this greatly helps the spare parts units. So, this team decided to propose an inventory control product specifically aimed at the spare parts units of automotive companies. And it worked.

This is the opposite of the usual "threat-rigidity effects" — rather than focusing and becoming more narrow and top-down, this company opened up, organized bottom-up processes and tried something new.

This is a brave thing to do, when the winter blizzards are turning your ears frosty, because it feels like spending money rather than saving it. But finding the "spare parts division" among your customers might just see you through the downturn.


Sunday, September 20, 2009

Eight is auspicious

In China the number 8 is considered very auspicious. That’s why the Beijing Olympics commenced at 8.00 PM on 8.8.08. When my dear blogger friend, Preeti, tags me with the “Eight tag”, I just had to pick it up. Everybody in the blogging world knows Preeti. I can fill a post with her credits, but let me just say, if you haven’t read 34 Bubblegums and Candies, do get hold of a copy; it’s a lovely read.

With a little journalistic licence, I’ll twist the tag to fit into a business blog and hand the post over to my good friend Abracadabra Technology Ltd. It’s a small company. It’s a legal person (companies are). But nobody lets a company talk. So here’s the opportunity.

8 “TV shows” I like to watch in my office

I don’t watch TV but see plenty of interesting stuff that goes on in the office.

1.The “boss” is flirting with his secy. Now what on earth is that ugly, bald, fat, oldie thinking ?
2. Those two maamis are at the coffee machine for the last 1 hour chatting away when they should be working.
3. Everybody is peering into a computer screen. But Oh God. Some are playing games. Some are checking google mail, some are blogging, some are tweeting, others are idly browsing. Can’t see anybody who’s working. Thank God the IT guys have at least blocked out the porn.
4. Look at that meeting going on. Hey you - don’t snore so loudly.
5. The staircase really stinks. Everybody smokes there. I hate to see that place.
6. There’s somebody yelling at a poor little thingie, who looks like she’s going to cry. That monster of a Project Manager… Grr !
7. Open offices and telephones don’t go together. There he goes again, yelling like mad.
8. They’re all bitching about the new HR head who joined last month. Can’t repeat what they say in the polite company this blog keeps.


8 favourite places to eat

1. The canteen of the neighbouring company
2. Your own desk
3. That streetcart selling kachoris – made from machine oil
4. Andhra restaurant down the road
5. The posh conference room ; especially when dripping sauce on the carpet
6. Dinners when clients come – you always go to a good restaurant. Only pain is you have to smile at whoever has come
7. The coffee machine (not for the coffee; for the gossip)
8. Every place other than the company canteen, which stinks.

8 things I look forward to

1.The day somebody changes my name. Why do people give boring names to companies.
2. When they’ll clean the carpet
3. The annual day. Great fun. Everybody dances like crazy.
4 The day when they’ll shift office from this grubby place and build a campus
5. When I’ll have 10,000 people working in me. After all, size is everything , you see !
6. When they’ll serve some decent food in the canteen
7. When the buses to take my people home takes the right person to the right home
8. When the IT geeks will allow all my nice people to blog from the office.

8 things that happened yesterday

1.The system crashed
2.The power went 27 times
3. 4 visitors from Europe came. And how much all these so called bigwigs here groveled.
4. They had a fire drill. And nobody followed the evacuation plan.
5. 74 people came for interviewed. 26 employees quit. HR didn’t know who was who.
6. The shuttle bus came late and then most of my people were stuck on Marathahalli Bridge.
7. 3 birthdays were celebrated. They really sing Happy Birthday in an awful tune.
8. Travel dept bungled the tickets of 13 of my people who were to fly to Germany. Instead they were sent to Korea.

8 things I love about winter (assuming what goes on here can be called winter)

1. New Year celebrations. Everybody who works here has a ball
2. The annual pay rise. Everybody grumbles, but still ….
3. End of the budget season – what a torture that is
4. The coffee in the machine, suddenly becomes warm and drinkable.
5. Lots of “goras” come – since its too cold “out there”. So all get some nice free dinners
6. Most of the people can come an hour late – as those strange Yanks and Brits have put the clock back by an hour
7. All those wonderful white people are off for Christmas for a week. My people have an easier time.
8. They don’t turn the AC on to max and freeze everyone to death.

8 things on my wishlist

See the list of things I look forward to.

8 things I am passionate about

1. My people are treated properly and are not yelled at.
2. They don’t “window dress” me but show my true colours
3. They make me grow, and grow and grow.
4. They do some good for the poor people who are all around my office.
5. My people are all safe – come, go and work in safety.
6. They spread less bullshit around, for it really stinks.
7. They beat the s$%^ out of that s.o.b who calls himself my competitor.
8. They find new stuff everyday. I get bored with the same thing very quickly.

8 words or phrases I use often

Since I can’t talk, I don’t have favourite words, but I’ve heard these spoken the most in my office

1. HELLO (yelled at 15000 decibels on the phone)
2. You must improve and do better
3. System down
4. Blah Blah Blah
5. Need more money; can you do better than your budget ?
6. Variance analysis – why has the cost of paper cups gone by 14.296 % ?
7. HR goofed up, again.
8. I should be paid more.

8 things I learnt from the past

1. HR will never pay salaries correctly or on time
2. Finance will delay every bill that is to be paid
3. Sales will miss their target and have a wonderful explanation why
4. Marketing will produce an suave, sexy ad, which will bomb when aired
5. Everybody will miss their budget by at least 10%.
6. The project will be late.
7. New ERP costing several millions will be installed and will bomb on day one.
8. The CEO will award himself a 74% pay rise.

8 places I would love to go,visit or see

Since I don’t go anywhere, I can’t really take this on, but I can tell you 8 other places where I would have loved to be incorporated rather than where I am

1. Bahamas
2. Virgin Islands
3. Mauritius
4. St Kitts and Nevis
5. Luxembourg
6. Dutch Antilles
7. Canary islands
8. Barbados

My only slight worry is that the companies who I’ll have for company (if you’ll pardon the pun), there will all be crooks.

8 things I currently need or want

I really don’t need anything, but I would love if the following people joined me

1. A Journey Called Life
2. The Thoughtful Train
3. Le Embrouille Blogueur
4. Reflections
5. Kiwibloke
6. Kanmuri
7. Exkalibur66
8. Athivas

They have such lovely names they hide under. And I have such a boring name …

Friday, September 18, 2009

Forgive me Lord, for I have drunk a glass of milk

There is gathering momentum for product labels to be required to state their “carbon footprint”. So that consumers can feel guilty about contributing to climate change and perhaps do something about it. Nothing illustrates how difficult it is to calculate the environmental impact of daily life , than the attempt to label a milk carton with its carbon footprint. When it comes to environment impact, nothing is what it seems.

Now, what can be the carbon footprint of a carton of milk. After all its as natural a product as can be.

On first thought nothing at all. A little later it strikes us – yes the act of transporting it and packaging it surely has a carbon impact. And what about refrigeration – another significant carbon impact. Slowly milk is starting to look a little less saintly.

But wait a minute. Maybe we should revert to the old Indian habit of getting fresh milk from a cow or buffalo milked in front of your house. Then no transportation, refrigeration and all that carbon spewing stuff.

But what about the stuff the cow eats to produce the milk. Now cattle feed is grown somewhere (carbon spewing fertilizer eeks !) manufactured somewhere and transported. All this adds to the carbon. Right we’ll tell the milkman; no artificial feed for your cow ; it can graze on the natural grass, or more likely, eat paper if you are a self respecting city cow in India.

But it so happens that the greatest contributor to greenhouse gas emission in the supply chain of milk is not in the feed; not in the carton; not in the transportation; not in the refrigeration. Its in bovine flatulence. No, I’m not joking. It’s a real fact. Cows produce so much methane that Arthur C Clarke has written in one of his books that if an alien civilization approached earth, the first signal that there is life on this planet would be from the chemical footprint of our atmosphere caused by bovine flatulence.

If you still don’t believe me, click hereand go to the bottom of the article.

Now the ahem, noxious output of the cow is governed by the nature of the feed. Natural grass feeding may actually be more harmful to the environment. Back to square one.

Just goes to show that nothing is simple when it comes to the environment. Popular fads may actually cause more harm than good – see an example I wrote about sometime ago here. What is needed is a comprehensive research and clear advice from a global organization of high credentials. Focus on the big ticket items only. And then all of us can act on them. And stop making people feel guilty on petty stuff.

Cheers – gulp down your glass of milk.

Thursday, September 17, 2009

Remember the dot com mania ....

Sure public memory is short; but that short ? Especially when it comes to your hard(ly) earned money ?

Twitter is raising funding at a valuation of $ 1bn. That’s right; ONE BILLION. How do you ascribe that sort of valuation to a company that hasn’t made a cent and that has no idea how to make a cent ?

This is exactly what happened during the dot com craze. Get the eyeballs. To hell with revenues, let alone profits. Mad valuations. And when an occasional guy like Warren Buffet said the emperor is wearing no clothes, he was written off as an old geezer who “doesn’t get it “.

Now has all this been forgotten ? One billion for Twitter. Did somebody say we are in the midst of a financial crisis ?

I am gobsmacked. Forget learning any economics or going to business school. Just stand on a street corner and punt like crazy. I am an old geezer and I “don’t get it”. For, you see, I don't tweet.

Wednesday, September 16, 2009

Socially Responsible Consumer

A lot has been, and will be said about the social responsibility of businesses. But what about the social responsibility of consumers ? This article set me thinking

Each one of us, as consumers, have the power to make or break businesses – every time we buy, or not buy, something, we hold in our hand the fate of every business in the supply chain of that product. Should we not exercise this power in a “responsible” way.

Most of our purchasing decisions are purely dictated by what is good for us – cheapest price, the best quality, whatever. Nothing wrong with that. But its worth a thought if some other criteria might also come into the equation.

The area where consumers are beginning to act is climate change. Like buying locally made goods. Shunning products that are harmful to the environment (like gas guzzling vehicles). Carbon offsets in flying. And so on.

A few companies have tried to compete on a social theme. Companies like The Body Shop, Ben & Jerry ice cream, etc. But in the end they have been swallowed by traditional big businesses. That’s simply because consumers and shareholders haven’t attached enough of an importance to their social theme. But I believe that’s changing rapidly in today’s world.

It’s an interesting thought. As a consumer, why do we not consider products (without a too material sacrifice on quality or price) that either do “good” themselves, or come from companies that do “good” more than others. Admittedly it’s a difficult concept and we may not know enough to make that choice. Many a time, what appears on the surface isn’t true either. But if this starts to get into consumers’ mindset, things will change rapidly.

So perhaps the ball is in our court.

Tuesday, September 15, 2009

Gross National Happiness

President Sarkozy of France has proposed “Gross National Happiness” as an alternate measure to GDP in measuring progress of a nation. He was releasing the report of a study he had commissioned by two Nobel Laureates – Jospeh Stiglitz and Amartya Sen - on this subject.

Now even for the flamboyant Sarkozy this is something. Presumably it is an attempt to push the French higher up on the world rankings as 35 hour week, August month long holidays, fine wine and such other niceties contribute to happiness, but perhaps not to GDP.

This is not a new concept. The world leader in this is Bhutan – its former King was the originator of the idea and Bhutan has been adopting this for many years now. Click here for the Bhutanese logic of this – it makes an impressive read. The trouble is 99% of the world population cannot point to Bhutan on a map. Therefore it remained as an isolated concept which the irrepressible Sarkozy has caught on to.

Of course there are many problems with GDP. A common criticism is that it does not measure anything which is not paid for – for example a stay at home mom running the house and bringing up kids does not contribute to GDP, but if a nanny or a maid was employed for the same purpose, it does. Sure GDP can be improved, but the problem is one of doing it in an objective manner that can be followed by every country in the world. The current definition may be having holes, but at least its objectively measurable.

The new assessment will reportedly include figures relating to work-life balance, recycling, household chores and even levels of traffic congestion. Now how on earth do you measure such stuff from Andorra to Zimbabwe ?

Despite all the rhetoric of Sarkozy, this is unlikely to catch on. And in any case Monsieur le President needs to be wary. It is by no means certain that France will be higher up on the table of Gross National Happiness than it is on GDP. God Forbid – it may even be demoted to the ranks of the developing countries in the “GNH rankings”. And surely there will be war if French wine’s contribution to GNH scored lower than that of the Napa Valley in the US !!

Sunday, September 13, 2009

Norman Borlaug

Norman Borlaug, one of the greatest scientists of the 20th century died on Saturday in the US. He was 95.

He was the inventor of the high yielding, disease resistant, varieties of wheat which enabled the Green revolution of the 1960s. While his work benefitted the world – three countries gained the most from his work – Mexico, India and Pakistan. He was awarded the Nobel Peace Prize in 1970. India awarded him its second highest civilian honour, Padma Vibushan.

Its quite likely, that unless you are an agricultural scientist yourself, you have never heard of the man. But he would rank right up there with the greatest scientists of the 20th century. It would be hard to find another scientist, even Einstein, whose work directly improved the lives of so many millions of people. For he helped purge the scourge of famine from India and Pakistan. He started his work in Mexico in the early 60s. Between 1965 and 70, his work was mainly in India and Pakistan. During this period wheat yields doubled in both these countries. He , along with others, then replicated this magic in rice. Both these countries have overcome famine ever since.

But think of 1965. India had famine. There was not enough food to eat. If you really want to know what India was facing then, click here. Readers of this blog might be too young to remember PL 480 , but India’s survival depended on this handout from the US. There were endless queues in ration shops – for foodgrain was rationed. Having enough to eat was a luxury.

By 1970, it was a different story. Agricultural yields boomed thanks to the Green Revolution and India became self sufficient in food. And it has never looked back since. There were many heroes – rightfully MS Swaminathan, the father of the Indian Green revolution is idolized as the biggest of them. But globally Norman Borlaug is recognized as the father of the World Green Revolution.

A 2006 book about Borlaug is titled 'The Man Who Fed the World”. “More than any other single person of his age, he has helped to provide bread for a hungry world," Nobel Peace Prize committee chairman Aase Lionaes said in presenting the award to Borlaug. "We have made this choice in the hope that providing bread will also give the world peace."

Norman Borlaug was one of the greatest citizens of the world. For Indians of the yester generation, he was the “annadaata”, as the Times of India calls him in today’s obituary. We may have forgotten him, but the nation, and indeed the world, should remember with gratitude today, a true hero.

CEOs seek external advice – if you pay them for it…

There is ongoing debate whether performance related pay for top managers – in the form of stock ownership, options, or other types of financial incentives – actually works. We know it alters their behavior but does it improve it?

I’ve quoted some of the research in this area before but, in a way, whether or not it does, it remains a bit strange that top managers would need performance related pay. As I have said before, do you really want someone at the helm of your company if he or she only works hard and smart if they are directly rewarded for it? On the other hand, I have to admit, no matter how rhetorical this question is intended, I do guess it is only human…

It is only human that our behavior is altered due to performance related pay; and you and I are probably no exception. The trick then, of course, is to get the right measurement system, and perhaps to no overdo it; too much performance related pay may alter the behavior of top executives in ways you had not quite in mind when putting the measures in place! We’ve seen ample examples of that over recent years…

So, how might it bias top executives behavior in useful ways? Professors Michael McDonald from the University of Central Florida, Poonam Khanna from Arizona State University, and Jim Westphal from the University of Michigan examined an intriguing aspect of CEO behavior, and that is their inclination to seek advice from others.

CEOs often seek advice on strategic issues from executives of other firms. However, we also know from research that – just like humans – they are often inclined to solicit that “advice” from friends and other people who are just like them. In such cases, it is not really genuine advice-seeking, but it serves more in a self-confirmatory fashion; people seek confirmation that what they are doing is right, and what better way to get that by asking the opinion of your friends and look-a-likes.

To examine which CEOs engage in this pseudo-advice seeking and which ones truly turn to people who might actually disagree with them, McDonald and his colleagues surveyed 225 large American industrial and service firms. They managed to obtain information on how often their CEOs sought the input of other top managers outside their own firm and how well acquainted they were to them. Subsequently, they statistically correlated that to the extent to which these top managers received performance-contingent compensation packages, and found a very clear result.

Those CEOs who had a very small performance-related pay component in their compensation package sought very little true external advice. They relied on asking their friends – and perhaps their wife, uncles, and mother – whether they too thought that what they were doing was great, splendid, and spot-on. I guess it helps people feel more confident and self-assured…

In contrast, CEOs with a relatively large performance-contingent component in their remuneration package much more often sought advice from other executives who were not their friends and who had different backgrounds than themselves. These people may be slightly scary (they may actually tell you that what you’re saying is nonsense!) but perhaps also more useful. Moreover, McDonald and colleagues showed that this true advice-seeking significantly helped the financial performance of the CEOs’ companies, in the form of an increase in the company’s market-to-book and return on assets. Thus, the scary stuff actually led to hard cash!

The pay-for-performance construction paid off; it stimulated executives to repress their “it’s-only-human” inclination to avoid asking people’s opinion who might actually disagree with you. It is much safer and more pleasant to make sure to solicit advice from people who will say that you’re splendid, but it is much more useful – and lucrative – to really put yourself to the test. And if you reward them for it, and only if you reward them for it, CEOs – just like humans – will actually be brave enough to take this test.

Saturday, September 12, 2009

Thank You

This is senti Sunday time. Off day from business, and so a different post.

Every blogger’s lifeline is that wonderful person who takes the trouble to read and comment. And I have been blessed by your kindness – by your warm words, by your sharing of an incisive thought, by your encouragement and by the many “aaawww” moments when your lovely comment touches me.

So want to say Thank You. Xie Xie. In an amateurish, but heartfelt way.

A wonderful couple these two are
Pip pip toodle oo; oh very British
From her, of blogging, I became aware
Thank you Preeti and Satish

A big fella, he sure is
All bravado, but in fact a softie
Those expert comments are all his
Thank you, the bloke called kiwi

From far away in the US of A
Months ago, he b’came my first “follower”
For all his wonderful words I say
Thank you le embrouille blogueur

A fellow business blogger is he
Extolling the virtues of Not Being Sarkari
A more helpul blogger, there cannot be
Thank you Sidhus, Adesh & Zoobie

Among a billion people, I found this man
Produces gems and then disappears for long
The picture of optimism; “yes we can”
Xie xie xiansheng Hang

The warmest blogger of all, even when impromptu
All rolled into one – mum, woman and wife
Who shows us the magic world of Chotu
Thank you A Journey called Life

Now, what can I say about this lassie
Pulling her leg, I shall now refrain
Makes my eyes often go misty
Thank you Oh So Thoughtful Train

His words, are music to my ears
Such a wonderful man is he
A dear friend for thirty or so years
Thank you Ravi, or dada to me

The naughty girl has vanished away
To trace her, shall we place some ads
There’s no Italian dude she doth say
Thank you, you cheeky Rads

And then I bump into this super guy
Foodie, artist, writer, a mind free
His words and thoughts, money can’t buy
Thank you Sir, oops sorry, Sri

A traveller – one among the few..
Lovely blog, but only a few posts, alas
For stopping by, a big thank you
Savitha, or should I say, Athivas

And to everybody else who does comment
Mahesh, Kotla, Aashish, Nan.., and all ye dear
Every word of yours is a fond present
Thank you for all the cheer


Friday, September 11, 2009

Are you human ?

If you would like to comment on some blogs (not mine), or do various other things on the internet, you are required to prove that you are a human being. How do you do that ? By looking at a mangled word and typing the text into a box. Since humans are better at pattern recognition than machines, it is then presumed that you are a human. Though judging by the number of times I get it wrong, I must be at least half machine.

Apparently this sort of stuff is called CAPTCHA – Completely automated public Turing test to tell computers and humans apart). Trust somebody to come up with an abbreviation like that. As a digression, you may want to read an old rant of mine against meaningless jargon like this here.

Now this set me thinking on various other strange stuff we have to prove in daily life.

• I am always amazed at the need for a birth certificate to prove that you have been born.

• Ditto death certificate to prove that you are dead.

• One of the companies I know requires pensioners to reaffirm every year that they are alive, by producing an “alive certificate” (in prescribed format, no less) to continue drawing their pension.

• How many times have I needed to sign on documents that I am “of sound mind”. Now that’s an entirely debatable assertion.

• I am aware that in our good old country, a farmer can get a write off of a buffalo loan by proving that his buffalo had died. Acceptable proof was the production of a buffalo tail. Needless to say a thriving market existed in reused buffalo tails and the service of rendering your alive and well buffalo tailless.

• Certain countries (there being one really notorious one which I shall not name), require a formal marriage certificate attested by a multitude of government agencies to accept that your spouse is your spouse. Now in countries where a marriage certificate was not the norm, this is a really tough matter. The simpler way is to remarry (complete with sons, daughters, grandchildren present), to the accompaniment of much mirth, to get that prized certificate.

• I am often required to prove that my daughter is my daughter. Her calling me papa is apparently not enough. Thankfully, I got her birth certificate which says so; so it must be so !

• I have just signed a visa application to visit a certain country, where I have been required to aver that I am not a terrorist.

But back to CAPTCHA. Apparently an outsourcing industry has sprung up to serve spammers. Machines have outsourced the job of beating CAPTCHAs to human beings in developing countries. I believe the going rate is $3 per 1000 CAPTCHAs broken. You can, but only, marvel at the business acumen in the outsourcing industry. Make a business of proving to a machine that you are a human. Now that’s something …

Wednesday, September 9, 2009

Internet gains vs Wall Street innovations

This is the title of a very interesting article written by Prof Prabhudev Konana of the University of Texas at Austin. Click here to read his article.

He compares two massive streams of innovations in the last two decades – the internet and the financial sector. The Internet has revolutionalised our way of life, created jobs and wealth for a lot of people and , in general, has created unprecedented social good. Financial innovation has created lots of wealth and done good, but it has done bad as well. Prof Konana wonders whether the rewards for financial innovation have been disproportionate and whether our systems for rewarding innovation are appropriate.

Thought provoking article ( the Professor has written it for the average reader and not a scholar – so its refreshingly devoid of 25 letter words that business professors often inflict on us, mortals). It nicely captures one of the dilemmas I have been musing on – is the reward system for the financial sector “right” ? On the one hand, these financial innovations have enabled many liquid markets to emerge, enabled access to capital for business which otherwise would have been impossible, given tools for people to spread and manage risk, and brought efficiency to markets and businesses that have been unprecedented. On the other hand, huge sums of money can be made (or lost) on just timing or luck without an attendant economic benefit – in fact often to the accompaniment of economic destruction.

I am having great difficulty reconciling with the idea that a society can bestow the highest wealth on just being at the right place at the right time. The concept of “easy money” as opposed to one “earned through hard work” is sitting uneasily in my “socialist heart”. I am a subscriber to Narayana Murthy's view that you should be a capitalist in your mind and a socialist at heart !

There are of course many sides to this argument and a blog post is not the equivalent of a research thesis. This blog is a muse on business; so I can take the liberty of wondering aloud and perhaps stimulating you to do so too. As Prof Konana asks – should the contributions of Prof Berners-Lee and John Paulson be even on the same page ??

Tuesday, September 8, 2009

"Shocking" gender pay gap found in UK finance

Thus screamed the headlines from a report by the Equality and Human Rights Commission in the UK. In their report, they made fantastic allegations – Women earn 80% less performance pay than men in the financial services industry in the UK. There was also a 30% gap in basic pay between women and men. Every newspaper in the UK carried this story of how women are discriminated against.

This is precisely the sort of research and conclusions that we can do without. I have some experience of this sector and this country to know that this large a discrimination does not exist. So I read deeper. What has this worthy Commission done ? They’ve simply added up the salaries of women they surveyed and compared with the men they surveyed. And found this difference. So what does this say ? It does not say discrimination. It just says women are doing less senior jobs than the men. Or a greater proportion of women are doing lesser paying jobs than men. The right comparison , in case there was gender discrimination, is if a man and a woman were doing the same job and were being paid different. That is unlikely in any significant scale – its against the law anyway.

But we live in the day and age of instant soundbytes. Message in 140 characters or less. Somehow there’s an air of authenticity to surveys and reports. And therefore you can get away with headlines such as “Shocking gender pay gap”.

Do women face a non level playing field ? Sure. Is there a glass ceiling ? Absolutely. Do companies have friendly policies that are conducive to balancing work and home? No. Do women drop out of work because of having home responsibilities ? Certainly. Are the senior levels in companies filled with testosterone ? Completely. Is there a machismo culture ? For sure. But is there a “shocking gender pay gap” ? NO.

Shame on you – Equality and Human Rights Commission. By such sensationalism, you actually harm the cause of women. By not addressing the real issues they face.

Who can downsize without detriment?

Downsizing has always been a rather popular practice in the corporate world – even for firms not in distress, attempting to boost their share price – but my guess is that, at present, executive courses such as “how to downsize your company” are the last remaining strongholds in many business schools’ executive course offering. So I thought I might as well look into what we know about the effects of such programs from academic research, to see when they can be a good idea.

Let me start by saying: not very often. On average, they simply don’t work. For example, professors James Guthrie, from the University of Kansas, and Deepak Datta, from the University of Texas at Arlington, examined data on 122 firms that had engaged in downsizing and statistically analyzed whether the program had improved their profitability. And the answer was a plain and simple “no”. The average company did not benefit from a downsizing effort, no matter what situation and industry they were in.

So why do they usually not work? Well, for starters, as you can imagine, it is not a great motivator for the survivors. Academic studies confirm that usually organizational commitment decreases after a downsizing program and, for example, voluntary turnover rates surge. Hence, downsizing is not something to be taken lightly, and should be avoided if at all possible.

But sometimes, of course, a company’s situation may have become so dire that it may not be at all possible. What then? Who might be able to get away with?

Professors Charlie Trevor and Anthony Nyberg from the University of Wisconsin-Madison decided to examine exactly this question, surveying several hundreds of companies in the US on their downsizing efforts, voluntary turnover rates, and HR practices. As expected, they too found that for most companies, voluntary turnover rates increased significantly after a downsizing program. Many of the survivors, earmarked to guide the company through its process of recovery, decided to call it a day after all and continue their employment somewhere else – a nasty and unexpected aftershock for many slimmed-down company; they became quite a bit leaner than intended!

Next, however, professors Trevor and Nyberg examined who could get away with a downsizing program or, put differently, what sort of companies did not suffer from such an unexpected surge in voluntary turnover after their downsizing program. And the answer was pretty clear:

Companies that had a history of harboring HR practices that were aimed at assuring procedural fairness and justice – such as having an ombudsman who is designated to address employee complaints; confidential hotlines for problem resolution; the existence of grievance or appeal processes for nonunion employees, etc. – did not see their turnover heighten after a downsizing effort. Apparently, remaining employees were confident that, in such a company, the downsizing effort had been fair and unavoidable.

Similarly, Trevor and Nyberg found that companies with paid sabbaticals, on-site childcare, defined benefit plans, and flexible or nonstandard arrival and departure times did much better in limiting the detrimental effects of a downsizing program. The surviving employees were more understanding of the company’s efforts, had higher commitment, or simply found the firm to good a place to desert!

In general, it shows downsizing can work, but only if you have always taken commitment to your people seriously. Instead, if your employees sense that you may be taking the issue rather lightly, they will vote with their feet. And you may end up losing rather more people than you had bargained for. Or as Fortune Magazine once observed, most firms that downsize, “rather than becoming lean and mean, often end up lean and lame”.

Monday, September 7, 2009

A soap opera begins

On 17th October 1988, late in the day, Monday, Philip Morris announced an unsolicited bid to acquire Kraft. It set off a soap opera , the likes of which have not been seen since.

October 1988 was an unbelievable month in business history. Two weeks earlier, on October 3, Grand Metropolitan (now Diageo) launched a hostile bid for Pillsbury. But then on October 20th, the atom bomb fell. The management of RJR Nabisco announced a bid to take the company private. That set off a bidding war with KKR, a private equity firm, who ultimately acquired RJR Nabisco for a staggering $25 bn. For 10 years that was the largest acquisition in the world by far.

Between October and December of 2008, for the first time, the front pages in newspapers around the world were filled with business news. With three large hostile bids going on simultaneously, daily gossip, who did what, who was seen with who, became staple news. News helicopters hovered above company headquarters taking pictures. The soap opera was in full swing. The food industry was dominating news – all three companies in play were either food companies or had substantial food businesses.

I was reminded of this when I read yesterday of Kraft’s unsolicited bid for Cadbury. Sense of déjà vu. The brash corporate raider from Chicago against a good British company ( pip pip, toodleoo, Right Ho !). It will be another soap opera. Won’t be like October 1988, but nonetheless will be a riveting story to follow.

But back to October 1988. The battle for RJR Nabsico was immortalised in a book – Barbarians at the Gate. It’s a fascinating read – strongly recommend to anybody who has an interest in business. Its written like a thriller, and all of it is true. You can buy it in the US here and in India here. It was even made into a movie.

Fast forward to the present day. The Kraft Cadbury dogfight will be great to watch. For my long time colleagues, this will be particularly interesting, for one of the characters involved is somebody whom we know well ….

Sunday, September 6, 2009

Make a fortune with Lehman Brothers !

Yes that’s right. Lehman brothers. The same company that went bankrupt. You could have made a profit of 600% in a couple of months. Welcome to the insanity that sometimes grips markets. And trust the finance world to dignify the madness with a high sounding name. Its called the “lottery ticket rally”.

Lehman Brothers shares were languishing at 5 cents for most of the year. Last week, they touched 32 cents. If you bought at 5 and sold at 32 , you could have multiplied your money 6 times. They ended the week at 14 cents. Even if you missed the 32 and sold at 14, you multiplied your money a respectful 3 times.

Never mind the underlying economics. Big parts of Lehman’s erstwhile businesses have been bought by Barclays and Nomura. What’s left is all sorts of losses being unwound. Most certainly the rump left has negative net worth. By all laws of economics their shares must be worth nothing. And there’s nothing secretive about this – the travails of Lehman have been well documented. And yet, its stock has zoomed.

This is just mad speculation. People punting with complete irrationality. Apparently the same is happening with shares of other bankrupt companies as well.

Sure the punters who make 600% also lose 1200%. But that’s besides the point. A society that rewards insane risk taking over an honest day’s work needs some navel gazing. This isn’t socialist claptrap. Some introspection is called for, even amongst die hard capitalists.

Saturday, September 5, 2009

Whoever flies first class ?

One of the undisputed pleasures in life is when you enter an aircraft and turn left instead of right.

For all of us not privileged to be in that position, we can console ourselves that only an idiot would fly first class these days.

Its obscenely expensive. HORRENDOUSLY so. And what do you get for it ?

- A flat bed, which is now pretty much standard in business
- The oldest stew in the crew on the grounds that the seniormost serves First Class. The prettiest ones can meanwhile be found in business.
- Some unpronounceable wine. Alright that might be a real goodie. I don't know. Le embrouille blogueur might !
- Same average food - served on nice cutlery.
- A nightsuit that you can change into to sleep,that looks a bit like the stuff you buy at the end of Commercial Street / Ranganathan Street / Shangxiajie lu
- A toileteries kit that's no different from business and increasingly looking like the stuff the state barber uses on the roadside.

Thats it. For this privilege you pay some twenty times the cost of an economy ticket. And some four times business.

Now who does this, I wonder. The seriously rich don't fly commercial at all - they have their own jets. So who is this guy who can afford to fly this way ? Sure his company is paying for him, but isn't somebody axing this perk ?

Actually why am I writing this post. What business is it of anybody, who flies how ? Why grudge the guy who's living it up ? Good luck to you mate !!

A post like this is an occupational hazard of writing from an airport lounge ; which is what I am doing !! I just saw a family of three enter a plane and turn left ....

Wednesday, September 2, 2009

RADIO STATIONS FACE SIGNIFICANT STRATEGIC CHALLENGES

Fundamental market changes are pushing radio stations towards an uncertain future and managers and owners need to begin developing strategic responses to developments in their industry.

The challenges are being caused by declining demand for radio offerings due to lifestyle changes, the wide availability of substitutable audio platforms, and the primary content currently being offered. Audience behavior toward radio is changing and many U.S. stations now only make money for 4 to 6 hours each day. Overall, audiences are spending less time with radio and exhibiting less station loyalty than they did in the past, and young audiences are particularly difficult to attract and serve.

A major impetus of change is that audiences for music worldwide are progressively replacing radio listening with personalized playlists they have created on their computers, MP3 players, and mobile phones and by CDs on which they burned those favorites. They select music that suits their individual tastes and many have wider repositories of music in their own libraries than are offered on broadcaster playlists. Satellite and Internet radio are compounding the problem by offering hundreds of choices of highly focused music formats. These developments are increasingly making radio a less relevant platform for music entertainment delivery than it has been.

Concurrently, a wide variety of non-music programming is being offered by Satellite and Internet stations and audiences are increasingly using these services, as well as downloading podcasts on a variety of topics of individual interest from both broadcast and non-radio sources.

These problems are compounded in the U.S. because the rise of radio groups after deregulation in the mid 1990s led to national radio programmers making selections, reducing the range of genres of music and other content on radio stations. Overall, programming has become less local and less relevant as content decisions have been made elsewhere.

Advertisers sense the problem with audiences and the share of advertising expenditures going to radio is declining. Worldwide radio advertising expenditures are about 7 percent of total expenditures, down from a height of 9 percent in 1999. In the U.S. they peaked in 2002 at nearly 13 percent and are now down to about 10 percent. This downward trend is seen among most of the traditional leaders in radio advertising expenditures –Mexico, Japan, France, UK, Spain—and only in rapidly developing countries such as Brazil and China is the share spent on radio on a clear upward trajectory.

Another indicator of the problem is seen in the considerable weakening of sales prices for radio stations in recent years.

Radio station owners and managers need to start spending a good deal of time thinking about what is happening to their industry and how they will need to change their place in the media use mix. They need to seriously consider what business they are in and what unique value they produce so they can reposition their functions for audiences and advertisers.

The structure and offerings of the radio industry have been adjusted several times during its 9-decade history, but the last time the industry needed to recreate itself so dramatically occurred with the arrival of television. The arrival of television resulted in radio shifting from a general entertainment and information medium to a music entertainment platform in many nations. In the U.S., broadcasters on A.M. radio later shifted toward a talk and sports platform after F.M. developed and music migrated to that spectrum, creating new opportunities on both bands.

Repositioning radio again will not be a simple task, but it is one the industry needs to begin undertaking now. If radio managers do not start thinking ahead about the negative trends appearing in their industry, they will soon experience the alarm and fear that is pervasive in the newspaper industry. It is better for companies and industries to act before crises develop fully because they can respond to and help direct the course of change rather than merely experience its negative effects. Whether decisive action will emerge in the radio industry before we reach that point remains to be seen.

CSR in the developing world - Volunteering

What's the most precious thing in the world ? Depending on the context and the person, you can get hundreds of answers. If I ask the question in the context of Corporate Social Responsibility - What is the most precious thing a company can give to the community?, an expected answer would be money. It would not be mine. Mine would be time.

My eyes were opened on how organised volunteering has become in some parts of the world from Chris Jarvis' excellent blog - Realizing Your Worth. Chris is a practitioner; that's his business and you can see from his posts, how much can, and ought to, be done.

What social organisations often lack are some specific skills and numbers of committed workers. They have passion in plenty. They are committed to causes in ways I can only marvel. They usually feel they are short of just money. No; they are often short of organisational and management skills and of specific technical skills. Very often such organisations have grown from a small group of extremely committed individuals who built an operation through sheer passion. Now its become a largish organisation. It needs support. Step forward corporate volunteers.

The best a company can do, is to encourage its employees to give their time to causes and organisations it supports. For you and me, it can be the way to a very fulfilling experience. How many times have we felt we wanted to do something to help somebody less privileged, but haven't got around to doing it meaningfully. Sometimes we write a cheque. Sometimes we do some bits and pieces. But in a sustained and effective manner - only a committed few. But for all of us, it can give meaning to the work we do. We use our skills and knowledge, not just for business, but also for the community around us. A company can give the framework and the means to make it happen. It will be rewarded in employees who will affiliate to the business with more than a contractual relationship.

Nowhere is this truer than in the developing world. Volunteering is at its infancy, at best. Its where the need is highest and where the maximum difference can be made. So companies - establish a formal volunteering programme. Let it be run by your employees. Run this like any other business initiative - in the most efficient manner possible. Give a little time off for your employees to participate in the programme. It can be the best activity in the CSR space you could do.

I know its not easy for us to volunteer out time. After all, in our parts of the world, the working day is usually 12 hours at the office. And then the 2 hour commute back home. But ..... Take a deep breath. Enrol as a volunteer. It may change our lives.