Salary of $ 25 million and on strike

Just imagine this. You earn a salary of $ 25m a year. And then you go on strike demanding improved wages. Believable ?? You better believe it. Kobe Bryant (arguably the best basketball player in the world, for those readers not familiar with sport), earns that salary, but is on strike from tonight. Actually not just Kobe. Every basketball player who plays in the NBA ( unsporting types - that's the National Basketball Association, which runs the League in the US of A.)

The NBA is a private league. Players have formed a union and there is a collective bargaining agreement every few years. The last agreement expires today. Negotiations with owners of the teams has broken down. No deal; so there is a lock out.

The team owners are losing money. The players claim they aren't getting enough money. Despite the wild popularity of the game. Unlike other American sports such as Football (the American variety) and Baseball, which have limited appeal outside the country, basketball  is wildly popular in Europe, and most important of all, in China. Yet the League loses money. As always, money is at the heart of the dispute.

The issues under negotiations are technical, perhaps only of interest to a die hard NBA fan like myself. Both the owners and the players are driven by absurd greed. The trouble is that there are a lot of others, who depend on the NBA for a living, but who don't have a say in this matter. You would think the players should be the last group that needs a union, but that's the way it is. With the lockout, what's going to happen to the cheerleaders. The ushers and ticket sellers in  the stadiums. The guys who clean the locker rooms. The pretzel sellers. All out of a job and on the dole.

And what about the fan. He's the one who pays all of them - owners and players included. If the millions like me stop following the game, there is no $25m for Mr Bryant. Of all the people the owners and the players are taking for granted, its the fan. The poor little (or big !) Joe Public who is passionate about the game. Who relives every great moment in the sport. Who remembers the famous dunk of Shaq against Portland. Or Jordan's 20 footer in Game 6 against the Jazz with 5.2 seconds to go. Or his 38 points against the unfortunate Jazz, battling flu, dehydration , sick as hell. Even Derek Fisher, the current head of the Players Union winning against the Spurs with a shot taken  0.4 seconds before time expired.

You lot - owners and players alike -  need a bollocking. Pampered rich kids who need to stop throwing tantrums. Don't quibble over small change when you guys are very well off. Get an agreement, lift the lockout.

And may the great game keep flowing.

Good Morning Sir, at 1.00 PM

This blogger is not enamoured of traveling now, the consequence of over exposure to this activity over many years.  In this forum, there has been many a rant against airlines, fellow fliers, roads, and even cows. But I discover that there hasn’t been a full throated rant against an important abomination that is an inevitable component of the aforesaid activity – the hotel. This post rectifies the imbalance.

Does anywhere else in the world, the day start at 12.00 noon, I ask you. I can understand that the lazy Senior Division Clerk at Chennai Telephones believes that day starts at 11.00 AM. But 12.00 noon ? or 2.00 PM ? or even at one place 4.00 PM ?  You arrive at a new city after some 12 hours of being frozen in a Nataraja pose (after extensive research, airlines have learnt that it is the best “seating” arrangement in which you can squash the maximum number of people). The blasted flight has landed at 5.00 AM. You leg it to the hotel, to be told that the day starts at 2.00 PM and could you come back in 9 hours please.

Try getting into a hotel around daybreak (12.00 noon is daybreak in hotel speak). There is one bored looking sleepy clerk to check in 722 obese package tourists who have all landed up  to be checked in.  They want your credit card and immediately block it for $ 1 million – heavy hint that that is the amount you are expected to spend. Nowhere else is a potential customer treated like a potential thief – what if you run away without paying the bill; so appropriate your card as much as possible. Never mind that I am a regular stayer in the blasted place, my company has made the booking,  and the company routinely spends thousands of dollars putting up its managers there.

Once you get in, you are a captive “bhakra” (nincompoop), waiting to be milked. They want to charge you for water to drink ($2 for 10 ml ). The biggest rip off is the charge for internet – you pay for 10 mts, what you’ll pay for a whole year back home. Breakfast costs $56 plus taxes, plus service charge, plus surcharge, plus convenience fee please. Then there is the monstrosity called the mini bar – everything costs $10 please and we’ll bill you even if the chambermaid has flicked a bottle or two. God help you if you touch the telephone - $17 for looking and $34 for touching; any further activity at your own risk. And unless you carry your entire wardrobe with you, you are going to be literally be bled white by laundry. You white, the clothes torn, that is.

Dimensions of the room are now approaching the vital statistics of airline seats, especially in Europe. Americans (New York excepted) and Asians are more liberal with cubic capacity. But Europeans believe that chicken coops and hotel rooms must have same precise dimensions. One bed and 1.76 inches walking space.  Try soaping yourself in  1ft by1.5ft shower cubicle and you’ll begin to appreciate the bruises after every trip.

What’s a typical pattern of stay in a business trip ? Land in a place, have a shower and off to office. Obviously, there’s a dinner with somebody in the evening. Perhaps a drink or two at some bar, after dinner,  to be civil and polite. Stumble bleary eyed into the hotel at some 11 PM or so. Fall into bed and hopefully wake up at 6.00 and repeat all over again. For this privilege, pay some $250 (does not apply to those who stay at Ritz Carlton).  I was completely unaware of the value of a shower or the value of horizontal repose, until I started to see hotel bills.

Home away from home, I believe. My foot !

Angola or Mongolia ?

Is Gils living in Angola or Mongolia ?? He isn't, but he very well could be. He is in the state of Tamil Nadu in India, but in terms of GDP he would be no different to living in Angola and in terms of per capita GDP, he would be the same as a Mongolian. This, according to a lovely chart by the Economist, which you can see here. They say a picture is worth a thousand words (something this blogger evidently doesn't believe because he regularly inflicts 1000 words on the reader, without a photo in sight). Surely a chart like this is worth 10,000 words. Brilliant, as the Economist usually is.

Vishal can chose between Turkmenistan and Latvia. Sandhya can opt for Croatia or the Philippines. When she goes home, Reflections , who is now wonderfully active in the blogosphere after extensive bouts of laziness, can chose to be a Tunisian or a Papua New Guinean. Wow. All of a sudden, India doesn't seem to be that great an economic powerhouse, does it ? Each state by itself seems fairly insignificant.  Nagaland, for example, is no better off than the basketcase of the world, Zimbabwe (Naga National Council, please note). And the assorted , unwashed, Islamist groups might want to ponder that the jihad and shaheeds will all lead to either a Bahamas (without the sun and the sea) or a Gambia.

Of course the one number India has in plenty, is population. If Uttar Pradesh were  separate country, it would be the fifth most populous country in the world. Zeno could be a Thai and kiwibloke, when he is not a kiwi, could be a dapper, handsome Italian.

The Economist has published a similar map of China here. Tony Chen  could be in Kazakhstan. Carol Chan (grrr; she's made her blog private) is from Azerbaijan. Zhang Dan could be in Turkmenistan, when she is not actually in the UK.

Very helpfully , The Economist has also published a similar map of the US here. By this token, Hopfrog is a Peruvain, and J has become a Thai. Deepa is really a Begum in nearby Dubai, but I am not sure if Mark is a Kiwi or a Finn.

Interesting, isn't it ?

What Makes Good Journalism?

Journalists and others concerned about the status of the news industry in North America and Europe keep arguing that we are getting poorer journalism because of the economic state of the industry. But when you ask them “what makes good journalism?” they find it nearly impossible to articulate the concept.

Those trying to articulate the elements good journalism tend to use comforting and immeasurable platitudes and to describe it through attributes based on professional practices: pursuit of truth, fairness, completeness, accuracy, verification, and coherence. These are not a definition of quality, but a listing of contributors to or elements of quality practices. Each attribute alone is not sufficient for good journalism and degree to which each contributes is unclear.

In practice, most of us settle on identifying journalistic quality by its absence or by its comparison to poor or average quality journalism. Thus we know it when we don’t see it or we describe by giving examples of excellent journalism.

Other industries are far better in establishing their definitions of quality. If you ask what is quality in washing machines, the answer is that it quality machines clean clothing more effectively, operate quietly, are safe, and are durable and reliable. All of those can be measured by specific indicators of dirt and stain removal, water and energy use, noise decibels generate, user injury rates, and breakdown rates. A quality manufacturer strives for better performance on those measures, provides effective support and service, handles feedback and complaints well, and strives for high customer satisfaction.

The reason quality journalism is difficult to describe is because it involves a body of practices and the mental activity that goes into those practices. Good journalism results from the information gathering and processing activities, PLUS the knowledge and mental processes applied to it.

It is thus labor intensive; it involves collecting, analysing, structuring and presenting information. The best journalism comes from knowledgeable and critical individuals determining what information is significant, backgrounding and contextualizing it, and thinking about and explaining its meaning. It is a creative and cognitive activity. It is difficult to articulate what makes good creative and cognitive activity and nearly impossible to measure these mental processes. Thus, we are forced to use surrogate measures of quality journalism.

Good journalism involves engaging language and fluid prose, but it is not merely a well written and good story; it is not necessarily evident in stories that make the most popular list of stories or are most shared on social media. Good journalism involves stories that have import, impact, and elements of exclusivity and uniqueness; it wrestles with issues of the day, elucidates social conditions, facilitates society in finding solutions to challenges, and is independent of all forms of power. Good journalism is rational and critical; it is infused with scepticism, but not cynicism.

Although it is difficult to effectively measure such attributes of quality journalism, it should be much easier to define and identify quality journalism providers. There are some surrogate and attribute measures available to rate them, such as the percentage of total costs devoted to editorial costs, the amount of serious news content, the percentage of content originated rather than acquired, the amount and handling of errors, levels of reader satisfaction, and brand reputation.

In the end, however, the question of what makes good journalism has to be answered by answering the queries: Good or valuable to WHOM? Good or valuable for WHAT? Only then can one begin to establish direct measures that determine the effectiveness of journalism in achieving those objectives.

Happy Birthday Big Blue

On June 16th, IBM turned 100. Yes, 100 years old. That is a colossal achievement by any standards. As with living beings, so with corporations - the primary motive, and a great achievement,  is survival. Time to bring out the cake and sing Happy Birthday.

The company started life in 1911 as Computing Tabulating Recording Corporation, formed by a merger of three small companies. A decade or so later it changed its name to a more catchy International Business Machines, the name by which it is still known. And over the decades it has weathered many a storm, made many a significant achievement and today, even at a ripe old age, is strong, robust and dancing. That is has done so in the field of information technology, where the pace of change is far more rapid than in other sectors, adds a special gloss to the achievement.

Look at the inventions it has to its credit. The punch clock to record time, the electric tabulating machine, the ATM, the floppy disk, the hard disk, the magnetic stripe card, the barcode system, the relational database, the DRAM .......... Its employees have won five Nobel Prizes. It helped put man on the moon.

It has had towering business leaders. None bigger than Thomas J Watson Sr, who was President of the company for 40 years ,  between 1914 and 1956. A legend, it was he who created IBM. And in the 1990s, when it was tottering and seemed about to fall, it turned to a biscuit king - Lou Gerstner to transform it into a services company.

It was one of the earliest companies to adopt HR practices, that we would consider common place today but were positively revolutionary for those times. Group insurance in 1934, paid leave in 1937, a training centre in 1933. 18 years before the Civil Rights Act of 1964 in the US, it recruited its first black salesman.

Its had troubled times too. Early on, it didn't move away from punched cards and almost died. Another near death experience was when it lost the battle for the PC operating system to Microsoft. In the 90s , until Lou Gerstner pulled it into services, it was stuck on being a hardware company. But each time, it survived and came bouncing back. That's the stuff of champions.

Today its back to its heyday. Its a colossus and in robust health. Its one of the largest companies in the world. And one of the most admired. Happy Birthday old girl. You deserve a toast and cheer, even from your competitors.

Driving, Indian road and bliss in the same sentence

Indian roads are hell; right ? Well, Yes and No. This blogger has characterised them as the most dangerous place on earth, even more dangerous than Iraq or Afghanistan here. But that's only part of the story. They can also be delightfully brilliant. Really ? Yes.

Some years ago, a wise old man, who was the then Prime Minister of India, conceptualised the Golden Quadrilateral (GQ) . The cities of Delhi, Kolkata, Chennai, Bangalore and Mumbai would be linked by world class highways. This is now a reality. Driving on them can be a breeze. Even 5 years ago you could not have dreamt that the words driving, breeze and Indian road could feature in the same sentence.

These four lane highways are truly world class. Not a pot hole in sight. No speed breaker too. Its actually a greater pleasure to drive on them than say in Europe or China, simply because the roads are often empty. These are toll roads, a concept still new to India and trucks haven't got used to the idea that they have to pay a toll. So they avoid the GQ. In any case they prefer to rumble on in the night rather than in the day. Ditto buses - most of them travel in the night too. Indian car owners simply don't do highways (unless you are experts like RamMmm or Kiwibloke, to whom I tip my hat). Cars are strictly to drop munni in school and to take madam shopping. Inter city travel is mostly by train or plane. So the GQ is largely empty in the daytime, except for stretches close to cities. No road works going on, very few diversions ......Driving nirvana.

Of course, the peculiarities of Indian roads won't go away in a giffy. Every kilometer or so, somebody is coming on the wrong side of the road. It is also perfectly acceptable for tractors to come in from a side road blissfully unmindful of the car that is bearing down at it at 130 kmph. And then there is the cow. GQ designers made a grave blunder by trying to have green grass on the median - presumably to sooth the eye. In India, where there is grass, there will be a cow. They want to chew their cud only on the opposite side of the road after a leisurely stroll. Expert GQ drivers know that when they see a cow, they stop - first they let the cow pass and then they know a calf is lurking somewhere which will dart across to follow mum.

Facilities have sprung up on the way. Lots of petrol bunks (gas stations, if you prefer). Restaurants have joined the dhabas; so ensuring that Rajalakshmi will suffer no weight loss during the drive. What is still missing is, of course, the loo. Indians being very conscious of environmental recycling, prefer to return nitrogen to nature.

The GQ is a real pleasure. All those who criticise Indian infrastructure, come take a look. And take a drive. M 25, the world's largest car park, will then feel positively medieval !

The old boiling frog analogy applies in reverse too. When things improve, we don't notice it if we are right in the middle of it. Roads in India are slowly but surely improving.

Fair Price Shops. Fair to whom ?

On a walk the other day, I spied a shop that was a "fair price shop". There are many of them dotted around cities and towns in India. They are usually shut with a "No stock" board hanging in front. They are part of government initiatives to sell foodgrains and vegetables at "fair prices". They are not ration shops, mind you, which are designed to sell subsidised grains to the poor. These are shops where you and I can buy as well. At "fair prices".

Begs the question, fair to whom ?

Here's Economics 101 for the economically challenged. Prices are fixed by supply and demand. A willing seller and a willing buyer together fix the price. As long as there are many sellers and buyers and as long as there is information on what everybody is buying and selling at, the price that is so determined freely is what is a "fair" price.

But to Rajalakshmi, a fair price is a low price. Nothing wrong with buyers wanting the lowest possible price, but that can't be necessarily termed as fair. According to her, the "poor" farmer is being cheated by nefarious middlemen who is then overcharging her and making obscene profits. It is still fashionable in India to rail against all middlemen and term them as hoarders, blackmarketeers, racketeers, and such other colourful terms.

This is complete bunkum. The one market in India that is reasonably close to a perfect market is the one for foodgrains and vegetables. The more perishable the commodity, the more perfect the market. With the advent of mobile phones, farmers now have ready information of wholesale market prices. They usually shop around for the best prices they can get - gone are the days where the villainous middleman could pay the farmer a pittance and sell at the market a kilometer away at a fortune. The middleman has little elbow room to make huge profits. Prices are now very transparent in wholesale markets and price fixation is virtually impossible - the next market is only some 50 kms away and the mobile phone instantly relays prices there.

Speculating is real tough. Commodity and futures markets are in infancy and not a factor. Hoarding in the anticipation of better prices is equally challenging. Firstly storage space is non existent or extremely expensive (India is a country of third world prices in everything except land and property which are above first world prices). The economics simply does not work out. Secondly investment in storage, especially cold storage is wildly expensive. Pest infestation is rampant. That's why some 20-30% of food production in India goes waste. It simply doesn't make economic sense to hoard. And finally Rajalakshmi is the most astute of buyers. She may be intellectually challenged in other fields, but in buying food, she is the queen. If a shop sells something at 0.5% cheaper, she is sure to find out. All the ingredients of a perfect market are there.

That's why food prices fluctuate daily. And often wildly as they move in tandem with supply and demand. When prices shoot up, its not that somebody is making a huge profit. Usually supply is low because of a natural calamity or a crop failure. In that case the high price is a fair price to the producer. Consumers have the choice of switching to something else. The price is also fair to the consumer who buys at the high price because she is choosing to do so, valuing her taste for that particular item. What Rajalakshmi wants is a low price, no matter what, with "somebody" subsidising her. Well , who is that somebody ?I can argue the case for the poor being subsidised and cushioned against high prices of food. But Rajalakshmi ?  She, who is going for a pedicure ? No way.

That's why "fair price" shops remain mostly shut with the no stock sign. They are fair to nobody and are a prehistoric relic of India's dalliance with an outmoded socialist philosophy.

The Business June 15th 2011, "Monday On A Wednesday" Edition

This Wednesday, Monday night stops by the Business. Monday Night Foreplays that is.

Since debuting in November 2009, ForePlays has premiered more than 50 performances, serving up a (farm) fresh female perspective to the SF comedy scene. ForePlays has recently showcased special performances at “SF ImprovFest” and “SF SketchFest” at the Eureka Theater, “WomenROCK” at The Independent, “Comedy Brains” at The Marsh and “A Funny Night for Comedy” at Actors Theatre of San Francisco. ForePlays is committed to creating smart and original comedy while providing a consistent platform for talented female writers, actors, musicians and stand-up comedians in and near San Francisco.

Part of the behemoth Piano Fight sketch conglomerate, Monday Night Foreplays staged it's Spring performance series "Spring EGGstravaganza" on Monday nights this past April here at the Dark Room. The Business is excited to welcome it's stage-mates from the other side of Tuesday.

And as always, you have the steadfast Wednesday night Businessmen: Sean, Chris, Alex and Bucky. Burritos welcome.

Advance tickets: http://www.brownpapertickets.com/event/182496

The UK conundrum on pensions

If you are in the UK this coming autumn, you better brace yourself for a series of strikes. Public sector unions are calling for a series of sustained strikes. Throwback to the 80s perhaps ?? Maybe. My view is that these planned strikes are completely unjustified and the unions are living in cuckooland.

The problem is pensions. Readers of this blog are young enough to completely switch off at the mere mention of this word. But this is one of the biggest problems in business today.

The problem is that, years ago, stupid HR types, gave away a perk called "defined benefit" pensions. This meant that when you retired you were eligible for a pension which was a high percentage of your last drawn pay. To add insult, these would be inflation indexed and accrue to you till you die. That's all fine, but who's going to pay for all this. The even more stupid accounting types, blissfully ignored the ramifications of what they had promised and simply ignored this future promise. When the time came to pay, surprise surprise, there was no money. This is what brought the mighty car industry in Detroit to the shambles it is in today.

Private industry woke up to this menace a decade or two ago. Firstly they started to predict what might be the princely sums they had to pay and started providing for it (which basically meant that the cost of labour went up astronomically). Secondly, the wise ones stopped recruiting new people on this crazy scheme and instead switched to a scheme wherein your contribution was matched by the employer - but did not promise that you will get moneys linked to your last drawn salaries. The problem will therefore go away in a couple of decades.

But the public sector has been sleeping. Or scared to get up because of the unions. This is the problem in the UK. They are still continuing the unsustainable defined benefit scheme. But the government is now asking that the employees increase their contributions by 3% more. This is what the unions are wanting to strike against. 

Public sector workers must be garlanding the government that they still can get defined benefit pensions. Nobody in the private sector can get it today. Instead they want to go on strike to protect some prehistoric "entitlement". The government should call their bluff and let them strike. They risk alienating voters enough so that Margaret Thatcher II would be voted to power. That should make them pause and think.

Land Ahoy !

The call had come to the village. The ship had come. It was anchored in the deep seas, some distance away. Where it was sailing to, nobody knew. Even if they knew, it would have meant little; world geography wasn't their strong point All they knew was that it was going far far away. And that the white sahib was promising work for any able bodied man or woman who was willing to sail.

The terms were simple. Or at least, this is what they understood. The white sahib would feed them and house them. He wouldn't charge them for the ship journey. They were to work for about five years or so. They wouldn't be paid any wages, but they would be given food and shelter. After five years they were "free" ; could come back home (they would have to pay for the trip) or stay or whatever.  This was to be their "contract". When they landed , the white man would thrust a paper in front of them to that effect. They were to sign the contract. Of course they didn't know to read or write ; the thumb impression had to do.

Between the late 1800s and the early 1900s, this was the story of some in India. The story of indentured labour. People were in plenty. But , in the village, there wasn't much to do. Famines were common. And all over the British empire, across the world, labour was needed. Maybe for plantations. Maybe for laying the railways. Maybe for building roads.  So large numbers of people went and therein started the spread of the Indian diaspora across the world.

The main regions where Indians were taken were Africa, especially South Africa, the Caribbean, The Pacific Islands, especially Fiji, and Singapore/Malaysia. It all depended on where the ship that you went to was sailing - pure chance. If it went to Singapore/Malaysia, there was a chance of you coming back some day. But if it went to Fiji or the Caribbean, then distance ensured you never came back. South Africa was different; it was close enough to come back, but apartheid and the global sanctions ensured that they were marooned there.

Imagine their thoughts when they first landed. In a completely strange place, they hardly knew where. Completely shut off from their families back home - neither side would even know if the other was alive or dead. No chance of communication of course. Life was hard. But they survived. Married amongst themselves. Built a community.  Collectively they became true Indians - divisions of caste, languages, etc vanished. They even evolved a common lingua franca sometimes - thus came Fijian Hindi to being.

Slowly the link with the homeland became weaker and weaker. Their children and grandchildren slowly went native. They spoke English. They saw themselves as Malaysians or South Africans or Fijians. But the link remained. There was still an Indian touch to their food. They still married largely within the community. And of course, in recent times, there has been Bollywood. Even if they couldn't understand Hindi, song and dance was in their genes.

This is a small tribute to those magnificent men and women. For those times, what they did, was positively trail blazing. Today there are some 24m persons of Indian origin worldwide. Recent migrants have been the educated and the elite, to western shores, but the large majority trace their origin to the indentured labour of old. They've created magnificent communities in every country they have gone too. They were truly a pioneering generation.

PS : While reading about this topic, I came across an interesting post on the indentured coolie by Capt Ajit Vadakayil here. If this issue interests you, this will make disturbing reading.

The Business LA Edition June 24th, 2011

The Business is back at in LA again this month on Friday June 24th! This will be our last show at The Improv Lab, and we want to thank them for everything...and go out with a BANG! so bring all your folks and their folks and let’s do this!

Alex will not be making it this month, but Chris, Sean and Bucky will. And we have a few ringers up our sleeve to more that make up for it. Plus the Medically Transported Burrito Raffle returns!

http://www.improv.com/ComedyClub/Hollywood
http://thebusinesscomedy.blogspot.com/
http://www.facebook.com/pages/The-Improv-Comedy-Lab/78488692860

To quote Keane:

"Last time, the Medically Transported Burrito was a carnitas burrito from El Farolito. Life is like a Medically Transported Burrito Raffle: you never know what you're going to get. And sometimes you have to make an effort to heat things up."

US Defence Spending

The Unites States spends some $700 bn on defence. Its spending is more than the combined total of the next 17 countries - a list that includes China and Russia (See The Economist's chart on defence spending here) . It's none of this blogger's business to question whether it should be having so many bombs - that's for American citizens to decide for themselves, although we can have a mild interest as to whether it is sensible to fire a AGM Hellfire II from a drone above North Waziristan at a cost of some $70,000 to hit a donkey in its ass !

This blog, having some pretensions to economic bias, instead ruminates on the sheer scale of cost effectiveness that is possible on defence spending. Without reducing the number of bombs that is. You see, the traditional ingredients by which businesses attack costs are simply not present n the field of defence.

There is very little competition. The best way to reduce costs is competition. But there is little chance of that with US defense. Firstly, no foreign competition is possible. Secondly there are very few domestic competitors and anyway they don't really compete with each other - its all an elaborate dance of a little more or little less - the thought of the chiefs of Boeing and Lockheed Martin in a tango sent me into splits of laughter No chance here of a Walmart equivalent coming and slashing prices.

Then there is almost no innovation to reduce costs. All innovation, and there's plenty, is to build bigger and better bombs. Perhaps targeting a camel's ass or an elephant's ass. Nobody is going to get promoted for reducing the missile cost by half.

Thirdly, no offshoring is possible at all. Outsourcing is possible, but is usually only a measure to take personnel off your headcount (hence the mercenaries in Iraq, Afghanistan and so on).But can production be offshored to China or India, where you can cut costs by 50% ?? Not a chance. 

What about operating efficiencies. Like , what is the cheapest way to hit a donkey's ass in North Waziristan. An old 303 rifle perhaps ? No chance. War is all about "overwhelming military power" - and to hell with the costs.

Transparency in accounting ? Worker quality circles to reduce costs ?  Perish the thought. How about cutting Head Office costs. Like shifting the Pentagon from the middle of Arlington County to Supai, Arizona ? Ha Ha.

Somebody is footing the bill for the missed opportunities in cost reduction. It's the US tax payer , of course. Some of the more common business tools to reduce costs may not be possible to implement in the military. But while the wars in Afghanistan and Iraq are pursued, the US would do well to start another war on costs. It may actually find it more productive than the other two wars mentioned above.

Paul Ryan - Are you listening ?

The Business June 8th 2011, "Nato Green & Mystery Guest" Edition

Evidently, Nato Green is also a shade of camouflage. Our Nato Green however rarely conceals his position (when it comes to politics)

Bucky's taking a well-deserved night off, but Chris, Alex, and Sean are back, with two very special guests. First off, we have Nato Green, creator of Iron Comic, co-founder of Laughter Against the Machine, and frequent guest to The Business. His appearances are so frequent and beloved, he's earned the coveted title of "Fifth Businessman", which originally belonged to Billy Preston. A former union organizer turned full-time comedian, Nato promises to delight friends of The Business, though he himself might prefer to perform at The Worker-Owned Cooperative.

We also have a special mystery guest visiting from Los Angeles. We can't reveal his or her identity, but we can offer these clues:

- bigger than a breadbox
- smaller than a bread truck
- has visited The Business before
- not Gallagher
- name rhymes with "Shave Gazelle"

That last clue is false. But the show will be awesome, and admission costs a non-mysterious five dollars. 8 PM, B.Y.O.Burrito.

The legacy of Generation X

When you reach a certain age, you start to think of the legacy that you wish to leave behind. What would you like to be known for ? What would history judge you by ? Generation X , to which I belong, is the post baby boomer generation in the Western world. The generation of transition from Mao to modern China in the Middle Kingdom. The generation that came of age post the Indo-Pak-China wars in India. Our best years may have gone by, but we are young enough to still influence our legacy. So what would history judge us as ?

Alas, my conclusion has to be that of a wasteful generation. A generation that went on a binge and is leaving a debt to its children. Every major country in the world is saddled with mounting public debt, created because we of Generation X wanted instant gratification, but were not prepared to pay for it. Be it health, or pensions, we wanted it all, but are leaving the bills to be paid for by our children. Alas.

We were wasteful also with the environment. More than any other generation, we have done our best to ignore the consequences of our action on the environment. We wanted our comforts but are leaving the clean up to later generations.

Despite given the great opportunity by the baby boomers , who preceded us, we have not been able to abolish war. Or even limit it. Human conflicts continue as ever before - just in a different part of the world. Cambodia, Congo, Afghanistan - the list is as depressing as ever. 

We've also, I am afraid presided over a gradual degradation of values. True we have made some remarkable progress in some fields - we are much more equal at this point in time than at any previous point in history. But overall, moral turpitude is on the ascendancy in a meteoric way.  The word greed, has perhaps taken an altogether new meaning in our time.

We've also not really put our might behind advancement of human knowledge.  No great breakthroughs in science. Yes, lots of incremental improvements, but nothing that would make us stand out in history. Worse, we went backwards in some fields - notably in space science.

Not all is bad however. We do have some accomplishments to our credit. The greatest of them all  has to be the communications revolution, especially the internet, which is nothing short of magic. We've also shrunk the world - we've brought countries and peoples together. More people have visited and experienced other cultures than ever before. We perhaps can claim some credit for the onset of globalisation - maybe one day we will transform into a truly global oneness.

But overall, the report card doesn't look too good. B minus at best. We can improve; there's still time. Maybe move the needle to a B or even a B plus. Improve our legacy to our children. It would be a crying shame if, at the end, our generation would have lived in vain. And didn't leave it a much better place than when we inherited it.

Five mistaken beliefs business leaders have about innovation

The vast majority of companies want to be innovative, coming up with new products, business models and better ways of doing things. However, innovation is not so easy to achieve. A CEO cannot just order it, and so it will be. You have to carefully manage an organisation so that, over time, innovations will emerge. And CEOs often make a number of common mistakes, that hamper rather than induce such processes.

Believe the numbers
One common mistake is to insist on “seeing the numbers” too much too soon. “What is the size of the market?”, “what is the Net Presen Value calculation?”, “payback time?”, and so on. What they are forgetting is that, for a truly innovative product, for example, it is impossible to reliably produce any numbers. If a CEO insists on hard numbers before the project is even started, it will by sheer definition kill off any truly innovative ones, simply because you cannot compute the size of a market that does not exist yet.

One CEO who understood this well was Intel’s Andy Grove, at the time that an engineer proposed to him to work on something called a “microprocessor”. The engineer could not produce any numbers, consumer research, and not even a good idea in what sort of applications this product was going to be used, but Grove gave permission and a budget anyway. It made Intel one of the most successful companies the world of business has ever witnessed.

Believe success has been attained
Another innovation killer is sustained financial success. We call it the success trap. When an organisation becomes very good at something, top of its industry, it usually starts to focus on the thing (product, technology, or business model) that made its success, crowding out other options and points of view. Initially, this may make it even more successful, but there is going to come a time that its business context is going to change: new technologies, consumer preferences or foreign entrants emerge. And then the company and its top management finds itself trapped in the one thing it does so well, rigidly believing that what brought it its success, will continue to make it prosper. But, in reality, it is rapidly becoming obsolete.

A great illustration of this is the 43 companies featured in the famous business book “In search of excellence” by Peters and Waterman in 1982. These companies were considered to be the most excellent companies in the world at the time but, at present, only 5 of them would still make the list; many of them having disappeared altogether (e.g. Atari, Tupperware, Digital). It illustrates that, paradoxically, it is especially the most successful companies, the top performers of their industry that find it difficult to adapt and survive when the world around them changes.

Believe they know the competition
What always strikes me, if I ask a CEO (or anyone else in an organisation for that matter) “who is your main competitor?”, they always reply with the company that is most like them. And subsequently they can tell me anything about that firm; its strength, weaknesses, products and plans. But in a way, when it comes to innovation, that is slightly delusional. The company that is most like you is really the least important competitor, simply because they are in the same boat as you are.

The most threatening competition often comes from a completely different angle: an adjacent industry, innovative start-up, or substitute. And that is a phenomenon of all times. Sailing shipping companies suffered from the steam engine, radial tyre champion Firestone was brought to its knees by the introduction of bias tyres, newspapers are being squeezed by the internet, while watchmakers suffer from the fact that nowadays everybody already has the time at hand on a mobile phone or laptop. Thinking your biggest competitor is the company most like you, will leave a company dangerously exposed to outside innovation.

Believe that because everybody had always done it this way, it is the best way of doing things
Industries are rife with habits and business practices from which no-one can quite remember why we do them this way. When challenging a CEO on one of those business practices, he lamented to me “Freek, everybody does it this way, and everybody has always been doing it this way; if it wasn’t the best way of doing things, I am sure it would have disappeared by now”.

And standard economic theory would support his point of view: The market is darwinian, therefore it should be weeding out bad practices. But, in reality, he is wrong. In many businesses, practices emerged with good reason, but once the circumstances changed, firms carried on using them for no reason whatsoever. Did newspapers have to be printed for so long on ridiculously large (and expensive) sheets of paper? Heck no; the english law, set up in 1712, that newspapers were going to be taxed based on the number of pages they printed was abolished in 1855. Could low-cost airlines not have worked many years earlier? Are buyback guarantees in book publishing (set up during the Great Depression) really still needed? Is detailingin the pharmaceutical industry still a useful practice? That everybody does it this way is no reason not to challenge it. The greatest innovations often come from challenging industry convention.

Believe the customer
The final error CEOs often make when it comes to innovation, is to ask their customers for their opinion. Pretty much any company I know has a yearly customer survey. However, there are two things wrong with this. Firstly, these people are already your customer; sure they are going to be satisfied with you; the others have already long voted with their feet. We call it selection bias. You are selecting to ask the ones who already like you, but what about the ones who don’t?

Secondly, even when a company is asking potential customers about their ideas for innovation, in the form of market research, it is tricky. It is usually some shape or form of asking respondents whether they would like (and buy) the new idea. Consumer research often is useful but not for truly innovative ideas and markets that do not exist yet. Research on the fax machine came back unambiguous: every respondent answered that they would never buy a machine like that; likewise for the mobile phone. As Farooq Chaudhry, producer at the highly innovative Akram Khan Dance Company, once put it to me: “Customers? Forget about them”; if you want to be really innovative, you have to be leading the customers; not be led by them.

Ramamritham goes to the US

Guess which country is this ? The decision on where a company should locate a new factory is made by the unions and the government. The company, which thought it could decide for itself,  is rapped on the knuckles for presuming this right. Where could this be in this day and age - North Korea ? Zimbabwe ? Libya ? Alas, none of these. It is actually the US of A.

The company in question is Boeing. For long it has had factories in the Pacific NorthWest - in the states of Washington and Oregon. It now needs additional manufacturing capacity for making the Dreamliner - the new 787  series that is being launched worldwide.  It set up an additional factory in South Carolina. The unions representing the Washington and Oregon plant workers filed a complaint with the National Labour Relations Board (NLRB). The NLRB upheld the complaint - Boeing was wrong to open a factory in South Carolina !!

The case boggles the mind. Boeing did not shut down any factory or lay off any workers. On the contrary it actually increased its workers at the Northwest factories to run it to full capacity. But instead of building a new factory there, it built it in South Carolina. It could have very well built it in the Northwest. But its problem was that every three years or so the workers there were going on strike and this was severely impacting the company.  The unions complained, and the NLRB upheld this complaint, that "Boeing's actions were motivated by a desire to retailiate for past strikes and chill future strike activity" !

Underneath it all is the big fight between organised labour and business in America. The case of the autoworkers in Detroit is well known. The undercurrent is also the competition between "union shop" states and the "right to work" states. In some states in the US, company workers are forced to join the established unions and pay membership fees by law. Washington and Oregon fall in this category. In other states, workers cannot be forced by unions to become members. South Carolina falls in this group. No prizes for why Boeing, or for that matter, any company, wants to site factories in states like South Carolina.

This being America, Boeing is going to the courts. Lawyers on both sides are rubbing their hands in glee.

A larger trend in America (and more so in Europe) is the rapid expansion of the license raj. Governments and petty bureaucrats are increasingly coming in the way of business, in a manner reminiscent of Ramamritham of India. The Economist in two recent articles has actually used the term "license raj" - you can read them here and here and they make wonderful reading if you are interested in the antics of Ramamritham's ilk.

Ramamritham's counterpart in the UK is called Sir Humphrey Appleby. I now have to invent a name for his American cousin !!