If you have had the good fortune to be in an Indian airport even once, you would appreciate the unmatchable joy of such an experience. This blogger is uniquely qualified to ruminate on this topic, since he has spent a substantial proportion of his life in the confines of the aforementioned entity. Unfortunately he continues to indulge in this hobby , despite numerous new year resolves to escape from this magical experience. Readers who have specialized in weaning diehards away from their addictions may please email this writer.
The enjoyable experience begins with approaching the airport. As you near your drop off point, you see a traffic jam a mile long. This is because everybody coming before you has parked his car right in the middle and has begun the process of unloading humans and baggage of gargantuan proportions. The famous Rajalakshmi (she of the gargantuan proportions herself) finds the act of getting off from the car a feat that might challenge Nadia Comaneci, and therefore takes a full 9 minutes to complete this test of human flexibility. Then comes the 13 pieces of baggage without which an Indian wouldn’t be caught dead traveling. Having done all this, its perfectly OK to leave the car in the middle and walk off – only 5 minutes saar, solpa adjust maadi. End result, mile long traffic jam.
Indian travelers love to have at least a dozen people to come and bid them farewell . Farewells have to be long and done many times to prove your undying affection to the departing. Hence the traffic jam of people , about 2000 of them, thronging and blocking the entrance. A few are waving wildly and gesticulating comically through the glass at those who have already gone in. The others are all in the various phases of the “send off”. One bawling baby is being passed hand to hand for an affectionate and rather wet cuddle. Other 90+ year olds are having their feet touched, or receiving an endless stream who are falling flat at their feet . Tears are flowing copiously. The departing are repeating this process for every inch they move, somewhat like an infinite loop that the coder spends his life creating (the probability being very high that the departing specimen is a coder; excuse me, IT professional) . Much jostling and pushing. Somebody has just stepped on my toe. Another massive lady has lost her balance and has caught me in a rugby tackle. Much waving is going on – on an average the much loved departing hominid has to wave 1467 times – I am not exaggerating; this has been the subject of 13 separate Phd theses at Harvard ; academicians’ research is usually on such weighty topics.
As the enjoyment of this experience is only extended to a chosen few, Indian airports try their best to exclude the masses. This is done by a laborious checking of a ticket with an identity card at the entrance. Since the guy who checks it is obviously illiterate and since airline tickets come in myriad shapes and sizes, he takes about 27 minutes on an average to accomplish the said task. And since the addiction of enjoying the airport experience is desired by many of the millions who throng India, this activity leads to a serpentine queue where you can explore your fitness by standing for 42 minutes on one leg.
After 74 minutes of an absolutely riveting experience, and one full blog post later, I have finally been able to come to the entrance of the airport. The even greater joys of being in, now await me. To be continued ……. !!
Saturday, October 30, 2010
Thursday, October 28, 2010
The hidden dangers of outsourcing
Outsourcing is one of those words that have become hideously fashionable in corporate lingo in the last 5 to 10 years. A business cynic – which obviously I am not! – might conjecture that perhaps it is popular because it appeals to some fundamental human desires for shirking and procrastination, finally telling managers “to stop doing certain stuff” rather than always pushing them “to do more”. I, as a more thoughtful business observer, on the contrary, think that outsourcing often makes sense, simply because you cannot, and should not try to do everything yourself. Other companies can sometimes do a particular thing better and more efficiently than you, if alone because they can bundle and specialise in it, and then you’re better off buying it from them.
Some companies take it a bit far though… Some time ago I was talking to a senior executive of a major airline and they actually had the idea that in the future they might be able to get rid of all their staff, facilities, pilots, planes, and so forth, and concentrate on “being the director of the chain”; that is, not actually do anything but tie together all the activities conducted by others. Hence, outsource everything accept for the coordination between all the parts. Well… here is my opinion: You can forget about that. Try that, and it won’t be long before nobody needs you anymore.
The classic example of that is IBM’s PC in the 1980s. It was IBM’s plan to outsource everything, add its brand name and just one little microchip connecting all the PC’s ingredients. They outsourced the PC’s microprocessors to some geeky guys who owned one of those founded-in-a-garage little companies in Palo Alto (the little company’s name was Intel) and the operating system to yet another geeky guy with big glasses heading a founded-in-a-garage little company in Seattle (the geeky guy’s name was Billy Gates), in the process provoking the genesis of the most powerful alliance the world of business has ever witnessed: Wintel (Windows and Intel).
Because following in IBM’s footsteps towards Palo Alto and Seattle were all the other computer manufacturers which copied the PC; hence buying their microprocessors from Intel and their operating system from Microsoft. And not for long, Intel, Microsoft and end users alike could not quite remember why they needed IBM in the first place and completely “disintermediated” them. It were Intel and Microsoft that reaped the great big benefits of the booming computer market and not grandfather Big Blue IBM, which ended up in a severe crisis as a result of it.
Hence, be careful with outsourcing; giving up control might get you more than you bargained for (especially if it concerns geeky guys in a garage).
Some companies take it a bit far though… Some time ago I was talking to a senior executive of a major airline and they actually had the idea that in the future they might be able to get rid of all their staff, facilities, pilots, planes, and so forth, and concentrate on “being the director of the chain”; that is, not actually do anything but tie together all the activities conducted by others. Hence, outsource everything accept for the coordination between all the parts. Well… here is my opinion: You can forget about that. Try that, and it won’t be long before nobody needs you anymore.
The classic example of that is IBM’s PC in the 1980s. It was IBM’s plan to outsource everything, add its brand name and just one little microchip connecting all the PC’s ingredients. They outsourced the PC’s microprocessors to some geeky guys who owned one of those founded-in-a-garage little companies in Palo Alto (the little company’s name was Intel) and the operating system to yet another geeky guy with big glasses heading a founded-in-a-garage little company in Seattle (the geeky guy’s name was Billy Gates), in the process provoking the genesis of the most powerful alliance the world of business has ever witnessed: Wintel (Windows and Intel).
Because following in IBM’s footsteps towards Palo Alto and Seattle were all the other computer manufacturers which copied the PC; hence buying their microprocessors from Intel and their operating system from Microsoft. And not for long, Intel, Microsoft and end users alike could not quite remember why they needed IBM in the first place and completely “disintermediated” them. It were Intel and Microsoft that reaped the great big benefits of the booming computer market and not grandfather Big Blue IBM, which ended up in a severe crisis as a result of it.
Hence, be careful with outsourcing; giving up control might get you more than you bargained for (especially if it concerns geeky guys in a garage).
Labels:
Innovation,
Making Strategy
Sunday, October 24, 2010
The Ascent of Man
The Ascent of Man is an all time classic BBC documentary on the evolution of human society. Written and presented by J Bronowski, it was made in the 1970s and traced the evolution of humans into what they are today.
That was before the age of computers. And email. And the Blackberry. With the onset of such a revolutionary step in human evolution, the series needs to be continued. Alas, J Bronowski is no more. So with much tribute to him, this blogger now presents the fourteenth chapter in the series.
Humans will now evolve with amazing rapidity in the next 20 years or so , both physically and mentally. The right hand will now comprise of 5 thumbs so that they can all simultaneously punch away at the Blackberry. The left hand will evolve into no fingers and a velcro palm so that the sainted instrument can rest more snugly. The human neck shall elongate and tilt at 45 degrees so as to see the screen better. All teeth shall turn Blue, so that there is no need for wires at all. The most sensitive part of the body will become the thigh, so that it can sense the ping of the incoming email better. The thigh will be specially linked to the mouth so that it can drool as soon as as the next E Mail comes. The eye will come down in the human body, somewhere in the region of the navel so that they can be as close to the Blackberry as possible.
Sleep patterns will change into a series of 10 minute naps with a five minute break in order to check emails. Air travel will completely stop because it would be unthinkable for the human race to shut off the Blackberry for anything more than 5 minutes. Cars will be Blackberry enabled so that on the front windshield, your emails will be continuously scrolling through - you can reply through a convenient keypad on the steering wheel. Television programs will stop having ad breaks and instead have email checking breaks. Lovers will not hold hands - they'll hold Blackberries instead. And they'll pop the question via an email. The slap will now be replaced by a fully spirited heave of the Blackberry in the general direction of the offender.
The Church and for that matter all religions, shall fully adapt to this new world. You will be able to text God and he shall reply within 1 nanosecond - the ping shall be replaced by a Hallelujah ! The Bill of Rights will be amended to include the possession of a Blackberry and the right to get at least one email a second as a fundamental right. International human rights organisations, including Amnesty International, shall keep tabs on this fundamental right and pass strictures against China for not changing its script into a more Blackberry friendly one.
Afflictions of the human body shall also change. Previously deadly killers such as malaria and cholera shall become extinct. Instead arthritis of the right thumb shall become the bane of human life - the product of a million emails sent.Psychiatrists shall make a killing on treatment of blackberrymailopyschosis - the fear of not getting a ping on the Blackberry in the next one second.
The field of arts and sports will not be left behind. Whole orchestras will make music with thumbs dancing on Blackberries. Gymnastics will be decided by who can text the maximum messages while doing a somersault. The swimming world will be rocked by the news that the new Blackberry compatible body suit is banned for giving undue advantage. And alas, drug abuse in sport will not go away - steroids to dull the pain in the thumb being in all pervasive use.
Children shall be born, Blackberry ready. Kindergartens will be replaced by Berrygartens. The infant's first word shall still be mama, but it will be typed on the Pinkberry (for girls) and Blueberry (for boys).
This is Thiru Kung Tzu signing off with a modern day adaptation of a famous quotation from a long forgotten poet "Into that heaven of Blackberrydom, my Father, let my world awake".
That was before the age of computers. And email. And the Blackberry. With the onset of such a revolutionary step in human evolution, the series needs to be continued. Alas, J Bronowski is no more. So with much tribute to him, this blogger now presents the fourteenth chapter in the series.
Humans will now evolve with amazing rapidity in the next 20 years or so , both physically and mentally. The right hand will now comprise of 5 thumbs so that they can all simultaneously punch away at the Blackberry. The left hand will evolve into no fingers and a velcro palm so that the sainted instrument can rest more snugly. The human neck shall elongate and tilt at 45 degrees so as to see the screen better. All teeth shall turn Blue, so that there is no need for wires at all. The most sensitive part of the body will become the thigh, so that it can sense the ping of the incoming email better. The thigh will be specially linked to the mouth so that it can drool as soon as as the next E Mail comes. The eye will come down in the human body, somewhere in the region of the navel so that they can be as close to the Blackberry as possible.
Sleep patterns will change into a series of 10 minute naps with a five minute break in order to check emails. Air travel will completely stop because it would be unthinkable for the human race to shut off the Blackberry for anything more than 5 minutes. Cars will be Blackberry enabled so that on the front windshield, your emails will be continuously scrolling through - you can reply through a convenient keypad on the steering wheel. Television programs will stop having ad breaks and instead have email checking breaks. Lovers will not hold hands - they'll hold Blackberries instead. And they'll pop the question via an email. The slap will now be replaced by a fully spirited heave of the Blackberry in the general direction of the offender.
The Church and for that matter all religions, shall fully adapt to this new world. You will be able to text God and he shall reply within 1 nanosecond - the ping shall be replaced by a Hallelujah ! The Bill of Rights will be amended to include the possession of a Blackberry and the right to get at least one email a second as a fundamental right. International human rights organisations, including Amnesty International, shall keep tabs on this fundamental right and pass strictures against China for not changing its script into a more Blackberry friendly one.
Afflictions of the human body shall also change. Previously deadly killers such as malaria and cholera shall become extinct. Instead arthritis of the right thumb shall become the bane of human life - the product of a million emails sent.Psychiatrists shall make a killing on treatment of blackberrymailopyschosis - the fear of not getting a ping on the Blackberry in the next one second.
The field of arts and sports will not be left behind. Whole orchestras will make music with thumbs dancing on Blackberries. Gymnastics will be decided by who can text the maximum messages while doing a somersault. The swimming world will be rocked by the news that the new Blackberry compatible body suit is banned for giving undue advantage. And alas, drug abuse in sport will not go away - steroids to dull the pain in the thumb being in all pervasive use.
Children shall be born, Blackberry ready. Kindergartens will be replaced by Berrygartens. The infant's first word shall still be mama, but it will be typed on the Pinkberry (for girls) and Blueberry (for boys).
This is Thiru Kung Tzu signing off with a modern day adaptation of a famous quotation from a long forgotten poet "Into that heaven of Blackberrydom, my Father, let my world awake".
Labels:
Light Reading
Friday, October 22, 2010
When reality pales into insignificance
Imagine a company which was for decades a byword in inefficiency. It pollutes like hell. It has 400,000 workers, none of whom can be sacked, although it needs far fewer. Most of the places it operates in are rife with insurgency, where the government's writ doesn't run very deep. Corruption is endemic. Technology is antiquated. There's a mafia which operates almost exclusively thanks to its presence. It struggles to transport its production to its customers. Governments set prices, allocate stocks and fix wages - not the market.
You get the drift ? Now this company wants to sell its stock to you. You would run a million miles. Right??
Wrong ! You actually fall over yourself in trying to invest in its stock. Welcome to the crazy world of stock markets.
The company, is Coal India. It is a government owned monopoly that has been around for decades and for most of that period was of dubious financial capability. And yet, for the last few days, everybody around me seems to be subscribing to Coal India's IPO - the government is offloading 10% of its stock. Even the famed Rajalakshmi, who's probably never seen a lump of coal in her life, is applying. The IPO has been oversubscribed some 15 times.
Does any of this make sense ?? Of course it does. The IPO was priced at a discount. There is an opportunity to make a quick buck. The equity culture in India is unbelievable. The aforesaid Rajalakshmi, for whom a Balance Sheet is a concept that could very well be from Mars, sits in front of the telly watching the stock ticker creep by on CNBC every day. Investing logic is derived from "buzz" - if everybody is doing it, I must do it too.
Coal India is a monopoly. India's demand for coal, and power is not going to come down for many a decade. Its IPO got the highest credit rating from CRISIL - the domestic credit rating agency. Voila - the ugly duckling has suddenly become a beautiful swan.
Everybody seems to be happy. The punter who's subscribing is waiting to make a quick buck. The government is grinning from ear to ear as the musical sound of the cash pouring in is heavenly. The bankers who "advised"" on the IPO have made fat fees. The employees are burping loudly, having been given the opportunity to make the quick buck themselves. The company itself is finding it wonderful to be in the headlines for the right reasons.
I am scratching my head in bewilderment. Did somebody say the stock market was supposed to be an efficient mechanism to allocate capital ?? As the Americans say, Wall Street and Main Street seem to be operating on two entirely different planets.
You get the drift ? Now this company wants to sell its stock to you. You would run a million miles. Right??
Wrong ! You actually fall over yourself in trying to invest in its stock. Welcome to the crazy world of stock markets.
The company, is Coal India. It is a government owned monopoly that has been around for decades and for most of that period was of dubious financial capability. And yet, for the last few days, everybody around me seems to be subscribing to Coal India's IPO - the government is offloading 10% of its stock. Even the famed Rajalakshmi, who's probably never seen a lump of coal in her life, is applying. The IPO has been oversubscribed some 15 times.
Does any of this make sense ?? Of course it does. The IPO was priced at a discount. There is an opportunity to make a quick buck. The equity culture in India is unbelievable. The aforesaid Rajalakshmi, for whom a Balance Sheet is a concept that could very well be from Mars, sits in front of the telly watching the stock ticker creep by on CNBC every day. Investing logic is derived from "buzz" - if everybody is doing it, I must do it too.
Coal India is a monopoly. India's demand for coal, and power is not going to come down for many a decade. Its IPO got the highest credit rating from CRISIL - the domestic credit rating agency. Voila - the ugly duckling has suddenly become a beautiful swan.
Everybody seems to be happy. The punter who's subscribing is waiting to make a quick buck. The government is grinning from ear to ear as the musical sound of the cash pouring in is heavenly. The bankers who "advised"" on the IPO have made fat fees. The employees are burping loudly, having been given the opportunity to make the quick buck themselves. The company itself is finding it wonderful to be in the headlines for the right reasons.
I am scratching my head in bewilderment. Did somebody say the stock market was supposed to be an efficient mechanism to allocate capital ?? As the Americans say, Wall Street and Main Street seem to be operating on two entirely different planets.
Labels:
Finance,
Stock Markets
Thursday, October 21, 2010
Forced to be stupid
Jessica Nolan, a researcher at the University of Arkansas, was interested in persuading residents of a particular California Community to conserve more energy at home. For this purpose, she designed four types of notes, to be delivered to people’s homes. These notes (roughly) said the following:
1. do it because it helps the environment
2. do it because it benefits society
3. do it because it saves you money
4. do it because everybody else is already doing it
Before using the notes, she knocked on a number of residents’ doors and asked them which of the four arguments would most likely persuade them. Pretty much everybody said, “Not the fourth! (I care about the environment, I care about society, I certainly care about money, but I couldn’t care less about what everybody else is doing”). But did they?
Subsequently, Jessica sneaked out at night and hammered one of the four notes on each door in the community.
Some time after that, she went back to check people’s meter readings. And guess what: households that had received the fourth note (“everybody else is doing it”) had by far the biggest reduction in energy consumption.
We are hugely affected in our decision-making and behaviour by our notion of what others are doing, although we usually don’t quite realise it (and deny it vigorously!). We might think that “oh no, I don’t care what others are doing” but reality is: we do. It is only human
Even top managers can be almost human (or at least some of them). For example, there is a lot of research on what influences managers’ strategic decisions (e.g. whether to choose strategic option A or B). And guess what, it’s imitation.
There is research on where firms choose to locate their new plants, whether or not they enter a particular market, adopt a new type of organizational structure, a governance instrument, etc. etc. Consistently, results show that managers are led by one simple question: “what are my competitors doing?” And then just do the same thing.
The problem is, sometimes what your competitors are doing is stupid. For example, research has indicated that (in certain industries) ISO9000 quality norms are counter-productive. Yet, throughout the 1990s firms imitated each other anyway and adopted the system.
And it gets worse. Sometimes, if you’re the odd one out that does not adopt the new practice, you start to look “illegitimate”. Analysts, shareholders, customers and so on start asking questions: “everybody else is doing it; shouldn’t you?” “Surely, everybody else can not be wrong”. But yes they can!
In this case – because customers start to shun them, investors criticize them, analysts downgrade them, etc. – firms may actually start to suffer from not having adopted the silly practice.
This places pressure on the firm to also act stupid, just to fit in, and be accepted. It takes a brave firm, to stop such a vicious cycle of imitation.
1. do it because it helps the environment
2. do it because it benefits society
3. do it because it saves you money
4. do it because everybody else is already doing it
Before using the notes, she knocked on a number of residents’ doors and asked them which of the four arguments would most likely persuade them. Pretty much everybody said, “Not the fourth! (I care about the environment, I care about society, I certainly care about money, but I couldn’t care less about what everybody else is doing”). But did they?
Subsequently, Jessica sneaked out at night and hammered one of the four notes on each door in the community.
Some time after that, she went back to check people’s meter readings. And guess what: households that had received the fourth note (“everybody else is doing it”) had by far the biggest reduction in energy consumption.
We are hugely affected in our decision-making and behaviour by our notion of what others are doing, although we usually don’t quite realise it (and deny it vigorously!). We might think that “oh no, I don’t care what others are doing” but reality is: we do. It is only human
Even top managers can be almost human (or at least some of them). For example, there is a lot of research on what influences managers’ strategic decisions (e.g. whether to choose strategic option A or B). And guess what, it’s imitation.
There is research on where firms choose to locate their new plants, whether or not they enter a particular market, adopt a new type of organizational structure, a governance instrument, etc. etc. Consistently, results show that managers are led by one simple question: “what are my competitors doing?” And then just do the same thing.
The problem is, sometimes what your competitors are doing is stupid. For example, research has indicated that (in certain industries) ISO9000 quality norms are counter-productive. Yet, throughout the 1990s firms imitated each other anyway and adopted the system.
And it gets worse. Sometimes, if you’re the odd one out that does not adopt the new practice, you start to look “illegitimate”. Analysts, shareholders, customers and so on start asking questions: “everybody else is doing it; shouldn’t you?” “Surely, everybody else can not be wrong”. But yes they can!
In this case – because customers start to shun them, investors criticize them, analysts downgrade them, etc. – firms may actually start to suffer from not having adopted the silly practice.
This places pressure on the firm to also act stupid, just to fit in, and be accepted. It takes a brave firm, to stop such a vicious cycle of imitation.
Labels:
Research
Saturday, October 16, 2010
We are a funny lot
Consumer behaviour is so complex that nobody really understands it. That's why there's a massive and flourishing market research industry to try and fathom this mysterious creature called you and me. Perhaps this is not so mysterious - after all the consumer is usually referred to as "she" instead of "he". And who can claim to fathom the mystery of the female of the species .......
Take the case of consumer behaviour in relation to plastic bags. When I first went to Guangzhou, I did the usual thing - go to a supermarket, buy tons of stuff you don't really need and cart it away in about 27 plastic bags . Since there are a lot of people in China and a lot of supermarkets, this translated into zillions of plastic bags let loose on the environment. Bad. Campaigns to "save the planet" yielded zero results. Mrs Li continued to merrily buy every kind of meat imaginable and carry them away in plastic bags.
The Guangzhou municipality hit upon a brainwave. Instead of banning plastic bags outright, as governments are wont to do, they simply decreed that shops must charge 20 jiao (or cents/paise) for every bag that the consumer wants. You would have thought that Mrs Li wouldn't care less - she's after all buying some 500 yuan worth of stuff. But no; much to everybody's surprise Mrs Li decided that she must contribute to saving the planet after all. She decided to bring her own bag to carry the groceries home . Lo and behold - plastic bag consumption fell by about 80%. You could still get one for convenience if you wanted, by paying 20 jiao, but you could also feel good about being responsible with the environment and bring your own bags. Great. Perfect mix of convenience and responsibility.
But then the same Mrs Li carries an umbrella - you see, it drizzles in Guangzhou virtually every day. And in front of the same supermarket which is shouting hoarse about saving the environment, there stands a pretty security lady who's wrapping your wet umbrella in a polyurethane cover so that the water does not drip in the shop. These are the extremely thin types - virtually no reuse potential at all and they are simply chucked. So zillions of plastic bags find their way into the waste dumps after all.
Why I write about this, is my experience being back home. There's no such rule in Bangalore; so our own Rajalakshmi merrily goes about filling plastic bags in the shop. This being India, and she being, shall we say, rather generously proportioned, there's more food to be bought !! So instead of the 27 plastic bags of Mrs Li, Rajalakshmi fills up 34 bags. And weightlifting not being her forte (in fact nothing remotely athletic being her cup of tea), she gets the shop to deliver this mountain to her home. Bangalore, with a questionable garbage disposal system, is literally choking under the weight of the plastic bags that its coders generate.
This blogger is of the view that he must make a small contribution - so he carries along his jholna bag (rather goes with the non corporate image being furiously cultivated). Try entering an Indian shop with a bag - you are branded a thief unless you can prove innocence; so stealing aids such as bags have to be strictly deposited outside. Attempts to explain green logic to Mr Bahadur Thapa standing at the entrance evokes total non comprehension. And even if you get past Mr Thapa, the checkout insists on putting the stuff into a plastic bag and then very helpfully placing it into my jholna. Environment be damned.
So what will work in Bangalore ? To make Rajalakshmi bring her own bags ?? Even if you are a genius in fathoming the minds of a consumer in other parts of the world, I bet you stand no chance with Rajalakshmi. So nothing short of a completely whacky idea will work. Readers are invited to contribute. Mine is to get some sundry frauds masquerading as god men to issue an edict that plastic bags from supermarkets are likely to result in arthritis of your small toe. The more illogical, the better - if its issued by a so called god man, it will be implicitly believed as gospel truth. Then maybe we can save Bangalore from being choked to death.
Take the case of consumer behaviour in relation to plastic bags. When I first went to Guangzhou, I did the usual thing - go to a supermarket, buy tons of stuff you don't really need and cart it away in about 27 plastic bags . Since there are a lot of people in China and a lot of supermarkets, this translated into zillions of plastic bags let loose on the environment. Bad. Campaigns to "save the planet" yielded zero results. Mrs Li continued to merrily buy every kind of meat imaginable and carry them away in plastic bags.
The Guangzhou municipality hit upon a brainwave. Instead of banning plastic bags outright, as governments are wont to do, they simply decreed that shops must charge 20 jiao (or cents/paise) for every bag that the consumer wants. You would have thought that Mrs Li wouldn't care less - she's after all buying some 500 yuan worth of stuff. But no; much to everybody's surprise Mrs Li decided that she must contribute to saving the planet after all. She decided to bring her own bag to carry the groceries home . Lo and behold - plastic bag consumption fell by about 80%. You could still get one for convenience if you wanted, by paying 20 jiao, but you could also feel good about being responsible with the environment and bring your own bags. Great. Perfect mix of convenience and responsibility.
But then the same Mrs Li carries an umbrella - you see, it drizzles in Guangzhou virtually every day. And in front of the same supermarket which is shouting hoarse about saving the environment, there stands a pretty security lady who's wrapping your wet umbrella in a polyurethane cover so that the water does not drip in the shop. These are the extremely thin types - virtually no reuse potential at all and they are simply chucked. So zillions of plastic bags find their way into the waste dumps after all.
Why I write about this, is my experience being back home. There's no such rule in Bangalore; so our own Rajalakshmi merrily goes about filling plastic bags in the shop. This being India, and she being, shall we say, rather generously proportioned, there's more food to be bought !! So instead of the 27 plastic bags of Mrs Li, Rajalakshmi fills up 34 bags. And weightlifting not being her forte (in fact nothing remotely athletic being her cup of tea), she gets the shop to deliver this mountain to her home. Bangalore, with a questionable garbage disposal system, is literally choking under the weight of the plastic bags that its coders generate.
This blogger is of the view that he must make a small contribution - so he carries along his jholna bag (rather goes with the non corporate image being furiously cultivated). Try entering an Indian shop with a bag - you are branded a thief unless you can prove innocence; so stealing aids such as bags have to be strictly deposited outside. Attempts to explain green logic to Mr Bahadur Thapa standing at the entrance evokes total non comprehension. And even if you get past Mr Thapa, the checkout insists on putting the stuff into a plastic bag and then very helpfully placing it into my jholna. Environment be damned.
So what will work in Bangalore ? To make Rajalakshmi bring her own bags ?? Even if you are a genius in fathoming the minds of a consumer in other parts of the world, I bet you stand no chance with Rajalakshmi. So nothing short of a completely whacky idea will work. Readers are invited to contribute. Mine is to get some sundry frauds masquerading as god men to issue an edict that plastic bags from supermarkets are likely to result in arthritis of your small toe. The more illogical, the better - if its issued by a so called god man, it will be implicitly believed as gospel truth. Then maybe we can save Bangalore from being choked to death.
Labels:
Marketing
Friday, October 15, 2010
How big is your yam? (not that it matters)
Why are so many executives so pre-occupied with the size of their company? Like bigger is always better. It especially annoys me when it is used as an excuse for acquisitions.
“This take-over will immediately make us the largest company in the industry”. So?! What is your point?!
I am sure being the biggest can have certain advantages, but that doesn’t mean that bigger (let alone being the “biggest”) always automatically is better. If you can explain to me why more scale is better, ok, but until then, I remain sceptical.
Of course company size is often associated with (financial) success. For example, the firms that always feature on “the most admired companies” lists are usually Behemoths such as Toyota, Dell, Intel, Wal-Mart, and Pfizer. Several of them became big through acquisitions.
And I am sure a company worth £10 billion attracts quite a bit more attention (for instance in the business press) and admiration than any of the 10 companies that they acquired that were worth a mere £1 billion. But that doesn’t mean that our ten billion Behemoth generates more profits than the 10 smaller ones would have made in combination. It wouldn’t have been as eye-catching, to have 10 small ones instead of one biggie, but it just might have made more sense (and money).
Importantly, managers who opt for a strategy of increasing size reverse cause and effect; although success will likely make you bigger, striving for size per se is not necessarily going to make a company more successful.
They actually remind me of the aboriginals on the Micronesian island of Ponapae. What in their society contributed to a man’s prestige was owning a very large yam. This cultural trait had come into existence because it represented an indication of a person’s skill as a farmer. However, gradually people’s efforts to obtain or grow one big yam started to be detrimental for their welfare, in the sense that it distracted effort and attention away from all other activities, causing malnourishment and hunger. People were putting all their resources, time and effort into growing one giant yam, while their fields were left unattended, their huts crumbled around them and their children cried of hunger.
Similarly, striving for size itself may be counterproductive for companies. It is quite possible that focusing all ones resources and efforts on becoming bigger (for the sake of being big) might actually decrease the firm’s chances of becoming successful. Gaining size may result from firm success, pursuing size per se, rather than success itself, may be quite detrimental.
“This take-over will immediately make us the largest company in the industry”. So?! What is your point?!
I am sure being the biggest can have certain advantages, but that doesn’t mean that bigger (let alone being the “biggest”) always automatically is better. If you can explain to me why more scale is better, ok, but until then, I remain sceptical.
Of course company size is often associated with (financial) success. For example, the firms that always feature on “the most admired companies” lists are usually Behemoths such as Toyota, Dell, Intel, Wal-Mart, and Pfizer. Several of them became big through acquisitions.
And I am sure a company worth £10 billion attracts quite a bit more attention (for instance in the business press) and admiration than any of the 10 companies that they acquired that were worth a mere £1 billion. But that doesn’t mean that our ten billion Behemoth generates more profits than the 10 smaller ones would have made in combination. It wouldn’t have been as eye-catching, to have 10 small ones instead of one biggie, but it just might have made more sense (and money).
Importantly, managers who opt for a strategy of increasing size reverse cause and effect; although success will likely make you bigger, striving for size per se is not necessarily going to make a company more successful.
They actually remind me of the aboriginals on the Micronesian island of Ponapae. What in their society contributed to a man’s prestige was owning a very large yam. This cultural trait had come into existence because it represented an indication of a person’s skill as a farmer. However, gradually people’s efforts to obtain or grow one big yam started to be detrimental for their welfare, in the sense that it distracted effort and attention away from all other activities, causing malnourishment and hunger. People were putting all their resources, time and effort into growing one giant yam, while their fields were left unattended, their huts crumbled around them and their children cried of hunger.
Similarly, striving for size itself may be counterproductive for companies. It is quite possible that focusing all ones resources and efforts on becoming bigger (for the sake of being big) might actually decrease the firm’s chances of becoming successful. Gaining size may result from firm success, pursuing size per se, rather than success itself, may be quite detrimental.
Labels:
Acquisitions,
Growth
Thursday, October 14, 2010
Digital Media Require New Pricing Methods
Newspaper publishers need to explore new methods of pricing content as they expand their digital portfolios because merely transferring the methods used in print can never bring the success publishers desire.
Print newspaper publishers have traditionally tended to set prices based on production and distribution costs and not on value created. Unfortunately, this has made it impossible to possible to obtain a price premium for factors such as prestige, service, experience, and convenience.
New digital operations, however, provide significant other pricing options because they differ in terms of whether they maintain the existing content bundle, whether non-payers can be excluded from use, the types of experience they deliver and how they are used.
Digital media require significant new thinking because they tend to be joint and complementary products with print. These lend themselves to selling strategies of bundling and versioning that permit uses of bundle pricing, option pricing, multiple purchase pricing, differential access pricing, and inventory based pricing that have not typically been used in the newspaper industry.
Pricing is particularly complex in the digital environment because the number of price choices grow exponentially. In the print product managers price advertising and the circulation, but when they add an online product they have to make 8 choices because they are shifting to a multisided platform operation. If mobile, social media and other print products are added to the portfolio, one must give significant thought to the roles each plays in the portfolio and the interactions of pricing choices among them.
Although digital media use is growing significantly, companies need to be pragmatic in their investments and operations and their hopes for new revenue. Online consumption is still only about 10 percent of all media use and online advertising is still only about 13% of offline advertising. Those numbers are significant and rising so companies needs to seek and exploit opportunities in digital spaces, but managers cannot expect those to immediately replace the contributions of their legacy operations.
Print newspaper publishers have traditionally tended to set prices based on production and distribution costs and not on value created. Unfortunately, this has made it impossible to possible to obtain a price premium for factors such as prestige, service, experience, and convenience.
New digital operations, however, provide significant other pricing options because they differ in terms of whether they maintain the existing content bundle, whether non-payers can be excluded from use, the types of experience they deliver and how they are used.
Digital media require significant new thinking because they tend to be joint and complementary products with print. These lend themselves to selling strategies of bundling and versioning that permit uses of bundle pricing, option pricing, multiple purchase pricing, differential access pricing, and inventory based pricing that have not typically been used in the newspaper industry.
Pricing is particularly complex in the digital environment because the number of price choices grow exponentially. In the print product managers price advertising and the circulation, but when they add an online product they have to make 8 choices because they are shifting to a multisided platform operation. If mobile, social media and other print products are added to the portfolio, one must give significant thought to the roles each plays in the portfolio and the interactions of pricing choices among them.
Although digital media use is growing significantly, companies need to be pragmatic in their investments and operations and their hopes for new revenue. Online consumption is still only about 10 percent of all media use and online advertising is still only about 13% of offline advertising. Those numbers are significant and rising so companies needs to seek and exploit opportunities in digital spaces, but managers cannot expect those to immediately replace the contributions of their legacy operations.
Labels:
business models,
internet,
newspapers,
pricing,
revenue,
strategy
Sunday, October 10, 2010
There's a tune in the air
Even in the stupefyingly boring world of business, there can be music that can make you catch your breath at times. So it shall be in this blog, which has, thus far, been scrupulously clean of anything tonal , thanks to the acute tone deafness that afflicts this blogger. No, I don't mean the ritualistic annual day in Indian IT companies where 10,000 coders all try and do weird contortions in the name of dancing to music that is broadcast at 10,000 decibels . This post opts for a little more classical touch, for after all one has to act one's age sometimes. Nothing to do with business at all.
If you are not a connoisseur of classical music (the Western variety, that is), Andre Rieu is probably a very good place to start. He's a bit like T20 to the world of Test Match cricket. Still, I shall confess (no doubt to the disgust of one reader of this blog who will, I am sure, elaborate at length in the comments on my folly) that I like to watch and listen to him. He is a classical violonist who performs grandly in large settings with female members of his orchestra in colourful attire and with, shall we say, a certain joie de vivre.
What he does often is to go to a country and perform one of its all time great songs, usually the unofficial national anthem of that country. The setting, the crowd, the mood, the effects never fail to bring a tear and thanks to the wonders of You Tube everybody can enjoy this in the privacy of your home. Even if the music is a bit strange, even if you aren't really interested in anything of this genre, watch these videos - on an autumn's evening, when the sun is low and there's perhaps a touch of rain, I guarantee that you'll be touched.
So, here is a taste of Israel, a whiff of Australia, a sound of Scotland, a hint of Greece , even one from the US and a touch of Brazil . And one which isn't from any country, but is still breathtaking. All courtesy Andre Rieu, and YouTube. So sit back, turn the volume up , and .........
Now, my dear Chinese friends, you know not what you are missing. Alas.
If you are not a connoisseur of classical music (the Western variety, that is), Andre Rieu is probably a very good place to start. He's a bit like T20 to the world of Test Match cricket. Still, I shall confess (no doubt to the disgust of one reader of this blog who will, I am sure, elaborate at length in the comments on my folly) that I like to watch and listen to him. He is a classical violonist who performs grandly in large settings with female members of his orchestra in colourful attire and with, shall we say, a certain joie de vivre.
What he does often is to go to a country and perform one of its all time great songs, usually the unofficial national anthem of that country. The setting, the crowd, the mood, the effects never fail to bring a tear and thanks to the wonders of You Tube everybody can enjoy this in the privacy of your home. Even if the music is a bit strange, even if you aren't really interested in anything of this genre, watch these videos - on an autumn's evening, when the sun is low and there's perhaps a touch of rain, I guarantee that you'll be touched.
So, here is a taste of Israel, a whiff of Australia, a sound of Scotland, a hint of Greece , even one from the US and a touch of Brazil . And one which isn't from any country, but is still breathtaking. All courtesy Andre Rieu, and YouTube. So sit back, turn the volume up , and .........
Now, my dear Chinese friends, you know not what you are missing. Alas.
Labels:
Light Reading
Thursday, October 7, 2010
Do they know what's going on ?
Remember Jerome Kerviel - the trader who almost brought down Societe Generale ? The French banking giant ? He was convicted by a French court this week, sentenced to jail and ordered to pay back the € 4.9 bn loss the bank suffered as a fine - largely symbolic as he would just become bankrupt.
No doubt at all that he was guilty. He had built an open position of some € 50 bn. He violated trading policies of the bank. His actions almost brought the bank to its knees. He was guilty; and he's been found so in court.
But what is amazing about the judgment is that it completely exonerated Societe Generale. They have been found to be not guilty at all. That completely gobsmacks me.
The bank admits lax controls, but said it did not know. You want to believe that the bank did not know that the guy was taking an open position of € 50bn ? Really ?? Of course they must have known. They just turned a blind eye as long as he was raking in the money. When the retreating tide revealed who was naked, they suddenly have lost the power of eyesight.
Correction. Maybe they did not know. And that's the frightening bit about it all. Financial products are created of mind boggling complexity. Competitive advantage of traders are counted in the nano seconds by which one computer is faster than another. The field is dominated by twenty something whiz kids with the brains of a rocket scientist. Even they may not fully understand what they are creating. And who sits on top of such geeks. Forty something, or even older, dinosaurs (like me ! although I am not sitting on top of anybody) who are too proud to admit that they don't have a clue of what's going on.
So maybe Societe Generale was being very truthful in saying that it did not know. This is probably true of every bank or financial house that's doing such stuff. And that's the really scary bit about this whole case.
No doubt at all that he was guilty. He had built an open position of some € 50 bn. He violated trading policies of the bank. His actions almost brought the bank to its knees. He was guilty; and he's been found so in court.
But what is amazing about the judgment is that it completely exonerated Societe Generale. They have been found to be not guilty at all. That completely gobsmacks me.
The bank admits lax controls, but said it did not know. You want to believe that the bank did not know that the guy was taking an open position of € 50bn ? Really ?? Of course they must have known. They just turned a blind eye as long as he was raking in the money. When the retreating tide revealed who was naked, they suddenly have lost the power of eyesight.
Correction. Maybe they did not know. And that's the frightening bit about it all. Financial products are created of mind boggling complexity. Competitive advantage of traders are counted in the nano seconds by which one computer is faster than another. The field is dominated by twenty something whiz kids with the brains of a rocket scientist. Even they may not fully understand what they are creating. And who sits on top of such geeks. Forty something, or even older, dinosaurs (like me ! although I am not sitting on top of anybody) who are too proud to admit that they don't have a clue of what's going on.
So maybe Societe Generale was being very truthful in saying that it did not know. This is probably true of every bank or financial house that's doing such stuff. And that's the really scary bit about this whole case.
Monday, October 4, 2010
Newspaper Companies Start to Think Beyond Today's Bills
The somewhat improving condition of the newspaper industry is permitting companies to move from merely paying operating expenses to finding ways to improve their balance sheets and looking for new opportunities. In recent weeks:
- The Gannett Co. has placed senior notes totally $500 million that will be due in 2015 and 2018. The notes financed at 6.375% and 7.125% will give the company some financial breathing space by being used to pay a maturing loan and revolving credits. In addition it negotiated an extension on $2.7 billion in revolving credit with Bank of America from 2012 to 2014.
- The New York Times Co. has cut its debt by 40 percent in past 2 years and is beginning to look at small investments in digital media that may position it for future growth. It recently provided $4 million in financing for Ongo, a start-up news sharing site that will aggregate stories from a number of newspapers.
- The Washington Post Co. announced it would repurchase 750,000 of its outstanding shares. Such a move will increase future earnings per outstanding share and boost shareholder equity in a tax beneficial way. This type of buyback typically occurs when cash is accumulating in the company and its stock is undervalued.
Saturday, October 2, 2010
OMG , its a holiday
Hooray, Hooray, It’s a holi holiday – if you were a gawking teenager in the 70s, you would have probably tapped your feet in rhythm to Boney M. If you are a toddler, teenager, 20,30,40,50 something or a laorenjia (old old man), in China, you would instead be singing Oh My God; it’s a holiday and run for cover !
This week is “National Holiday” in China. Oct 1 is the National Day in China – some 61 years ago Mao Zedong declared the People’s Republic as formed. Never mind that China was “founded” long long ago in the mists of time – Chinese history begins with whenever the current ruling dynasty started – that’s the way it has been for all those centuries.
This is not a post on Chinese history. Instead it is a rant against the crazy Chinese concept of National Holidays. This whole week , a full seven days, is a holiday. All offices are shut. Banks are shut. You cannot transfer money from one bank to another. You can do nothing, especially if it involves the government. And since everything in China involves the government – virtually every company of note is government owned – it basically means you can do nothing.
Correction. You can actually do a lot. Go out that is. Some 1.2 billion Chinese do exactly that. Roads are clogged. You can’t get a ticket on a train or a bus or a plane. In every shopping mall, you can only stand on one foot ; there’s no space for the other foot – the only place you can put that is in your mouth ! This is also the time of the year when China is blessed with fairly decent weather. All the more reason why everybody is out. If Indians think they know all about crowds, they haven’t seen China – only Churchgate station at 8.52 AM can even come close to the National Holiday chaos here.
Heroic stories are reported of how police, volunteers, whoever have made huge sacrifices to be at duty and control the crowds. There will be the inevitable snippet of some idiot, who defied laws of physics to be wherever he had to be at during the holiday. And the tragic epic of another who couldn’t be where he had to be.
To compound matters, the Chinese now have at least three National Holidays. Spring festival, which comes in Feb, May Day week and now this first week of October. The madness is repeated for a week each time. Just a few years ago, the holiday would just be a day or two. But the trend recently has been to make people work on preceding and succeeding weekends and then give a full 7 days off.
This all looks a bit too much like the French in August. There are a million things that are great and glorious about France but holidays is not one of them. Why did the Chinese have to ape the French in this holiday madness.
So here’s a message to my Chinese friends. You guys actually work very hard. For all that hard work, you certainly deserve a holiday. Or two, Or even three. But please, oh please, not all of you at the same time !
This week is “National Holiday” in China. Oct 1 is the National Day in China – some 61 years ago Mao Zedong declared the People’s Republic as formed. Never mind that China was “founded” long long ago in the mists of time – Chinese history begins with whenever the current ruling dynasty started – that’s the way it has been for all those centuries.
This is not a post on Chinese history. Instead it is a rant against the crazy Chinese concept of National Holidays. This whole week , a full seven days, is a holiday. All offices are shut. Banks are shut. You cannot transfer money from one bank to another. You can do nothing, especially if it involves the government. And since everything in China involves the government – virtually every company of note is government owned – it basically means you can do nothing.
Correction. You can actually do a lot. Go out that is. Some 1.2 billion Chinese do exactly that. Roads are clogged. You can’t get a ticket on a train or a bus or a plane. In every shopping mall, you can only stand on one foot ; there’s no space for the other foot – the only place you can put that is in your mouth ! This is also the time of the year when China is blessed with fairly decent weather. All the more reason why everybody is out. If Indians think they know all about crowds, they haven’t seen China – only Churchgate station at 8.52 AM can even come close to the National Holiday chaos here.
Heroic stories are reported of how police, volunteers, whoever have made huge sacrifices to be at duty and control the crowds. There will be the inevitable snippet of some idiot, who defied laws of physics to be wherever he had to be at during the holiday. And the tragic epic of another who couldn’t be where he had to be.
To compound matters, the Chinese now have at least three National Holidays. Spring festival, which comes in Feb, May Day week and now this first week of October. The madness is repeated for a week each time. Just a few years ago, the holiday would just be a day or two. But the trend recently has been to make people work on preceding and succeeding weekends and then give a full 7 days off.
This all looks a bit too much like the French in August. There are a million things that are great and glorious about France but holidays is not one of them. Why did the Chinese have to ape the French in this holiday madness.
So here’s a message to my Chinese friends. You guys actually work very hard. For all that hard work, you certainly deserve a holiday. Or two, Or even three. But please, oh please, not all of you at the same time !
Labels:
Light Reading
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