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 !!