Summer 2007

I watched this movie Summer 2007 last week. The movie started like any other college crowd movie - add style, sex and viola the movie would run. I survived the initial part of the movie to reach the rest of the movie set in some village.

The rest of the story was so gripping and meaningful that it left you thinking at end of the movie. How, you could live in an illusion that India is a $1 Trillion economy and I belong to this India and the other India where farmers suicide is a norm and not an exception, I am untouched by it. You need to accept that even that India is part of your own India and sometime the paths will cross and you will not be untouched by it.

Brilliant movie.

What I don't like about Apple?

I have always been a fan of Apple and its products. Therefore, today might be my first ever anti-Apple feeling and a post here.

Over past few months I have seen that Apple comes out with a iTunes updates quite frequently. While, I like constant updates, I don't like the amount of download required to update my iTunes. Everytime I start updating my iTunes, it starts with a download of about 12 MB, followed by multiple downloads, totaling over 50 MB. This is not fair. I am sure there can be an intelligent updating possible which only applies a small patch and updates my iTunes. Even if that is not possible, what Apple should do is to allow download in multiple sessions. Currently, the whole update happens in one session and if it fails, I will have to download the whole damn thing again! With unreliable and slower internet connection this is really painful. Apple update should work like Windows update. Download the update silently in the background over multiple sessions and then offer to install it.

3 Books

I recently bought and read three books. This is important because I don't consider myself anywhere close to a reader, leave alone avid reader. All three books were by the same author, Chetan Bhagat and these were all his books - The three mistakes of my life, one night @ the call center and Five point someone. The best thing about his books was that these were an easy read. I could see a story on television running in front of my eyes. I could relate to all the stories. Nice work. Looking forward to more books by this author.

Next on the agenda:

1. Freakonomics

2. The complete guide to accelerating Sales Force Performance :)

6 Steps to Greatness

Here is a summary from Prof Rajeshwar's class:

Step 1: Reverse the way you get out of bed

Step 2: Look for good in other people

Step 3: Learn how to greet people

Step 4: Establish Symbols

Step 5: Take care of your physical health

Step 6: Feed your mind

Here are the steps in details.

Step 1: Reverse the way you get out of bed

What this step really means is that you should challenge your comfort zone. You come out of your bed in the same way everyday, without consciousness. This is like a metaphor. You should seek what you really aspire. This should not be constrained by what you feel is realistic, because the limits are only in your mind. Of course, there is ambition and then there is over ambition which is when your ambition exceeds your capability. But when you live a dream, you only will know whether the goal is achievable or not. Give it a chance. Change after you have lived it for some time. Because if you would not look out for it, you would not get it.

This also suggests that you should be impractical, irrational while setting your aspirations. You should write down your aspirations and repeat it to yourself everyday. Everyday in the morning, as soon as you wake up say to yourself as if you are what you want to be. Last thought that you have at night, is the first thought in the morning. e.g. if you put an alarm to catch at flight at 4 AM, you would wake up 5 minutes before that. Your mind gets tuned to it. So, write a script and chase it. Stay focused!

There was an experiment done where a few flies were put in a glass tumbler and the glass was covered with the book. The flies tried a lot to come out of the glass, but their struggle failed. After some time, they were hovering near the top of the glass. Then the book was removed. None of the flies, flied out. From their experience they knew they couldn't come out. But they were so wrong. So, don't let your experiences limit you from chasing your dreams. You never know when the passage exists. Keep looking out for it.

Step 2: Look for good in other people

Consciously look for what is good in other people. Admire them for their good. Don't look at their shortcoming because that humanizes them. Look for the gold not dirt. Gold is difficult to find and you have to neglect a lot of dirt to find gold. Darkest hour is just before the dawn. If you see bad, good is just around the corner.

Praise is always acceptable. If you praise someone, there will never be a time that a person will be offended by it. This is a great tip for networking. It can be very uncomfortable, but still needs to be done. You should always look for good and develop others.

Step 3: Learn how to greet people

You should always greet others with energy. A cold Hello is just not enough. Show enthusiasm. Stretch yourself to show the enthusiasm if it doesn't come easily. Differentiate yourself.

Step 4: Establish Symbols

This one is a little tricky. You should develop your anchor. e.g. your calmness could be your anchor or symbol. And it should be one. Its like God. Whoever it is, doesn't matter. It should be someone and should be only that.

Step 5: Take care of your physical health

Would you sell your eyes if you were paid a million dollars? If not, then value them accordingly. Take care of your body and physical health. The old adage that if health is done - something is gone is very true. A health body only can have a healthy mind. Only mind and body are your own - develop them!

Step 6: Feed your mind

GIGO - Garbage In, Garbage Out works for the mind too. Don't feed garbage to your mind. Feed it healthy content like Classics, Motivations, Heroics, Good literature and Good thoughts.

Try to follow these six steps and greatness will be yours!

Tata, bye-bye, and good riddance?

Interesting Read:

http://infochangeindia.org/200809067321/Environment/Politics-of-Biodiversity/Tata-bye-bye-and-good-riddance.html

Is MBA about giving fundas?

My wife complained to me yesterday that ever since I have come back from my MBA school, I have started giving fundas to everyone. She mentioned while listening to a conversation with my friend over phone, that every statement he made, I had an opinion on it. I classified it as either good or bad, useful or useless, interesting or bad, so on and so forth. Her argument was that may be the other person just made a statement and didn't expect that statement to be evaluated on my scale.I didn't agree to her initially but it forced me to think. So, what is it? Is it that MBA helps you to think through everything and helps you make quick decisions or is it that just get so much accustomed to giving your opinion as a part of "evaluated" class participation while discussing the case studies? Whatever it is, I think I need to take this feedback and work on it.

Another Indian Paradox

There was a news item recently that there are more religious shrines in India than schools and hospitals combined. Although, I don't find anything wrong with that, it does reflect that we Indians are quite religious and our belief in afterlife and karma is supreme. Now, the paradox lies here. We all go to temples to get some favor from God, and add to our account of good karma, but for doing this, we add so many more bad karmas. e.g. we pay to get vip darshan, we do not follow any discipline or rules and at drop of hat push people, jump lines, avoid lines, not even caring for small children and infants. We look at beggers with harted, scold them, no do anything to make their lives better but we will give away hundreds in the temple which will be used to make the temple better, add gold to it and make it more attractive and bigger to invite more people and add to this mayhem.

BTW, why do I say that its not baffling that there are more religious shrines than schools and hospitals, because not every one is sick and needs a hospital at a given time and only people of certain age go to school, which is only a fraction. But everyone goes to temples and prays - everyday! or at least they are supposed to. Therefore, I didn't find this news item that striking!

Should there be reservation for OBC?

Today Supreme Court has upheld the government decision to reserve 27% seats for OBC candidates in educational institutions. While government action is a welcome step to bring equality among the people, I am not sure if this is the right step. For one, by not having a robust primary education system, the reserved seats in higher education institutes in futile. Without basics, students in higher classes wouldn't gain much and will be subjected to undue pressure. There are already numerous cases of suicides among students who are unable to cope up with the pressure and expectations of their parents and relatives.

Secondly, this kind of action is more politically driven and any action with no proper basis, leads to more disintegration on the country. This will cause division of society. This is definitely unwelcome. There is this increasing trend of divisional politics (another case in point it Raj Thakhery's Marathi politics) and this will lead to more problems for emerging India and will slow down the progress.

Then what should be done? One way out is to have reservation, if any, based on financial status. This also can be done by providing lower interest rate educational loans which can be repaid after the job. This will bring some accountability to everyone and these seats would not be taken for granted. We already have demand-supply mismatch. Any deserving student should get the seat and finance should not be a hurdle.

We also need a robust primary education system. A system where everyone is encouraged to go to school, the schools should be good with teachers who are motivated. Education should be free at primary level for financially challenged students. Unless this gap is plugged any affirmative action only at the top level would not help anyone and will only have negative consequences.

Fatal Flaws in Shakespeare's Tragic Heroes

All the tragic heroes in Shakespeare’s plays are strong characters and one of their attributes causes their rise and the excess of the same attribute causes their downfall. Some of the attributes of Shakespeare’s Tragic Heroes are:

a) Hamartia – This represents a fatal flaw that the hero has that causes his downfall.

b) Pathos – This represents that particular action, whose consequences will be fatal.

c) Hubris – Excessive Pride

d) Narcissus – Being in love with himself. This is a curse.

e) Peripetia – Reversal in context, but the hero doesn’t realize that and continues to do what whatever he was doing.

f) Anagnorosis – Point of recognition.

g) Angulimaal Point – Point of no return. Non-reversible.

h) Nemesis – A justly deserved penalty, retribution.

i) Catharsis – Purification, Purgation. Sense of pity and fear will have catharsis effect on people reading Shakespeare because of secondary experience and it has emotional cleansing impact.

A tragic hero follows a graph, where on Y axis is the growth due to the attributes and on x-axis is the time. Initially there is a meteoric rise of the hero because of his attribute, e.g. say Hamartia. However, a threshold point 1 (T1) is reached at which the growth becomes stagnant and infact the downfall starts. This point is called Peripetia. Though, a constant growth path can still be charted out, the Hero doesn’t realize that because of Hubris. If the hero realizes that, he can still go back, however, as time passes it becomes increasingly difficult, until it reaches the Threshold point 2 (T2), called Metamoia. As you approach this point, the transition becomes Herculean task and the hero avoids it. By having no corrective actions between T1 and T2, the fall of the hero accelerates beyond T2, until it reaches point T3, called Angulimaal Point. This is the point of no return. The path to go back from here is almost impossible. The hero even if he realizes, would not go back and would rather undergo the consequences. He has to undergo the consequences irrespective. Further fall brings to the point of Anagnorosis where the Hero realizes but it is too late. From here follows death, decay, oblivion, derailment and shame.

On the x-axis as time progresses, there is also an increasing masculinity (assertiveness, desire for material goods) and that squeezes femininity. This hastens the fall. The learning for we future leaders is how to prevent ourselves from reaching Peripetia and even if we reach Peripetia, we can guard ourselves by having mentors, confidants and having a feedback mechanism in place. However, the time duration between T1 and T2 is very short and coming back on track from here becomes increasingly difficult as times passes.

To avoid reaching Peripetia, it is important to have strong Emotional Intelligence which comprises of Self Awareness (Introspection, feedback and Psychometric), Self Regulation (assertiveness), Maslow Hierarchy, Empathy (listening) and Social Skills (Networking – driven by commonality of interest).

Commitment vs Loyalty

One of our professors posed a question in the class, "Is there a difference between commitment vs loyalty?". e.g. Can you be committed to your wife but not loyal or may be you could be loyal to your wife but not committed.

Well, there is indeed difference between commitment and loyalty and he brought it out by an example. He says, as per a study done, most MBA students from top universities would join jobs and they would be totally committed but not loyal to these jobs. Meaning, wherever you work, you would give your 100% to the job. They will work hard, contribute with ideas and whatever it takes to make the company successful. However, if they find another good job where they like more, they would switch easily, i.e. no loyalty! And then they will be totally committed to the new job! Interesting thought!

Can a MBA ship goods?

Funny Ads - Ameriquest

Reliance Digital opens 'iStore'

Reliance Digital opens 'iStore'

The news item says, "Spread over 2,875 square feet, the store will house products such as iMac consumer desktop computers, MacBookconsumer notebooks, Mac Pro and MacBook Pro, iPods and the entire suite of Mac software along with over 500 accessories and peripherals."

So, is Reliance getting a head start over Apple to open stores selling Apple's products? Would India see simultaneous Apple product launches in future? Would it pave a path for Apple to open its own stores in India? Would it increase penetration for Apple's products in India? Is iPhone about to come to India soon?

As an Apple product fan, I would love to have all this come true. Soon!

How to Change the World: Green Building at Stanford Just As Smart As People It Houses

How to Change the World: Green Building at Stanford Just As Smart As People It Houses 

Taken from: Guy Kawasaki's Blog

A very clever idea

Stock Market

I came across this cartoon a long time back and just loved it. Today I came across this and thought I should share it with my readers too. Here it is...

Future Computers?

see the following pictures:

1. What is this?

2. Look closely. Pens with Cameras?

3. Now?

4. This is the future of mobile computing...

No clue, if this is fiction or reality, but this could definitely be a possibility in future. I am waiting eagerly...

Wither Media?

A mail has been doing rounds here at ISB with the following picture. Is that what media has come out to?

MBA has taught me not conclude anything without looking at the facts and in this case, I must admit I don't know in what context was this news shown, but this definitely seems amusing and puts a question mark on the quality of news channels.

Predictions 2008

Ever since I started thinking about the global economic scene, I have been reading and hearing a lot of counter arguments and all of them seem credible. Now, I know why two economists always come out with three predictions. I being a novice will assume anything can come true and let me try to list down the various things that could happen.

US

Fed has cut interest rates: This will impact:

1. Inflation

Scenario 1: Inflation will go up

Lower interest rates and hence lower saving rates, will increase the supply of dollar leading to inflation.

Scenario 2: Inflation will go down, leading to deflation

a) Lower demand of Oil and Commodities will drive prices down.

b) Some people may settle debt and hence will decrease dollar supply because of money multiplier effect .

Conclusion: Inflation will remain under check.

2. Dollar

Scenario 1: Dollar will become strong

US Treasuries are still the safest instruments in the world. Governments invest in US treasuries not because they want to earn returns from it, but because they want to hedge their dollar. Also, China and India have strong internal demand and there is some decoupling from the US economy for both of these countries. Therefore, these countries will still demand more commodities and oil and to make their exports competitive, they will do whatever they can to keep dollar stable. Attractive valuations for US companies and US real assets will increase demand for dollar and will push it northwards. Cheaper US exports will increase demand for dollar too.

Scenario 2: Dollar will weaken further

Cut in rates will make US treasuries less attractive. Though countries that have trade interests with US like India and China will not take any steps that will make their exports unattractive, there are others who do not care. US dollar is the fiat currency and is used across the world for all international trade. Oil rich countries are raking in a lot of moolah because of higher oil prices. They have no obligation to invest in US and are looking at other emerging economies to get higher returns. If they have money invested in US, they may even withdraw it, further increasing supply of dollar and weakening it. China already is facing the heat of high inflation because of artificially maintaining Yuan at lower levels and will try to slow down its economy or may appreciate Yuan. If China will stop buying dollars, that will also decrease demand.

Conclusion: The dollar may fall a little bit, but there will not be a free fall. Dollar will stabilize near the current levels.

3. Stock Markets

Scenario 1: Stock markets will go up.

People will have less motivation for saving in Fixed Income instruments, they will

a) increase consumption - leading to higher revenues for companies; or

b) invest in stock market, making it cheaper and easier for companies to raise money.

c) borrow at lower interest rates and invest in stock markets.

d) Weaker dollar will make exports attractive and help US companies increase revenues.

e) Companies from outside may look at acquiring US companies because of depreciating dollar getting them higher valuations. Cheaper credit also available.

f) Weaker dollar will make imports expensive and demand for imported good will go down increasing domestic consumption.

g) Cheaper oil and commodity prices will make raw materials cheaper and hence decrease costs for US companies.

Scenario 2: Stock markets will go down.

a) People are more risk averse and will shy away from investing in risky assets.

b) No new inflows to stock markets.

c) Consumption will go down as people will have insecurity of losing their jobs.

d) Credit will not be available for investing in risky assets like stocks.

Conclusion: Stock Markets will be steady as both forces will play out.

4. Sub-Prime

Scenario 1: Worst is over

Worse may be over. Lower interest rates will help people settle their debt. Since the Adjustable Mortgage Rate is dependent on base rate, it will go down and hence lesser probability of defaults. Sub-prime crisis may be halted. Lower interest rates may encourage people to borrow and invest in housing assets including foreign countries bring the zing back to real estate market.

Scenario 2: Worst is yet to come

Worst may be yet to come. As the teaser period of loans issued in last two years would get over and AMR applicable, more cases of defaults and foreclosures may happen, further weakening the real estate market. More companies will have to write down the losses. Although rates are decreasing, slow economy and loss of jobs will prevent people from settling their loans. With no correct valuation available as no sales are happening currently, even foreign investors will shy away from investing in this sector.

Conclusion: While it still remains to be seen what will be the total effect of sub-prime, the Fed is doing every bit to minimize the pain. Most companies have already written off their losses and are now looking forward to future. No fresh loans are being given which are as risky. It may take a few years to come out of the whole mess, but the worst may be over. Nevertheless, 2008 will still continue to face the consequences.

Overall Conclusion: I believe, it will be interesting to see which of the above scenarios will play out. Also, it will not be either of the two but will be a mix of two. Most will depend of the public sentiment and the direction that Fed and the government will give. The Iraq war is close to over and the spending there will be cut. I strongly believe that US will be able to come out of recession by end of 2008 because all factors will play in its favor, Fed and US govt will go whatever they can, and most countries in the world want US to do well. Most countries do catch cold when US sneezes. The forces of the economy will play out and free fall of such well connected economy will be very difficult. US has a lot of thought leaders, many of them from India and these sharp brains will make it happen!

Inflation or Deflation and impact on India

Unlike most countries' central banks, The Fed, or the central bank in US is not government controlled. From Wikipedia, The Federal Reserve is:

The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act, it is a quasi-public (part private, part government) banking system^[1] composed of (1) the presidentially-appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) 12 regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors; (4) numerous private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils. Currently, Ben Bernanke serves as the Chairman of the Board of Governors of the Federal Reserve System.

If you look at point 4, a lot of private banks are a part of Fed and they control most of the decisions. At the same time, these private banks control over 75% of Fortune 500 stocks. So, is there a conflict of interest?

It could be argued that these banks would like the stock markets to zoom. Given the happenings in the market in the last month, the argument seems credible. The argument goes, that by cutting the Fed rate, there is less incentive for the US consumers to save and they will have two options:

1. Increase their spending.

2. Invest in other higher risk instruments like stocks.

By increasing the spending, the US companies will have higher revenue and will help their stock prices. And by investing in stocks, the cost of capital for these companies will go down as more people will want to invest in stocks and that will also help the Wall Street. The Fed expects this to provide impetus to the economy and help US come of out recession, or rather avoid it. Whether, this is a good way to help economy is arguable because economic theory suggests that lower interest rates lead to more supply of money in the system (as people do not save it in banks) and leads to inflation. Higher inflation, higher commodity prices means curse for the end users. They will want to borrow more, given the lower interest rates, but with sub-prime ghost still looming finding credit will be difficult and economy may come to a stand still again.

Inflation or Deflation?

My friend, Pratap, argues that the lower interest rates will make more money available to the consumers. However, they will not spend because given the current economic conditions people will not want to spend but will want to keep it for a rainy day. Jobs are decreasing  (http://in.rediff.com/money/2008/feb/02us.htm), so people do not want to splurge yet. They have recently burnt fingers by investing in high risk assets (the whole starting point of subprime crisis), so they will be wary of investing in stock markets too. What they will most probably do is to use the money to settle the debt. With interest rates lower and subprime rate being calculated over that, people will have incentive to pay back the debt at lower rates and excess money supply.

The power of currency comes from the fact that, when a $100 is put in the bank, the bank lends the same to someone else, who will put $80 is the bank, which the bank will lend again and so on. So, the real liquidity of one $100 is much more than a $100. This is the money multiplier effect. So, if people start paying off the debt, the money multiplier effect will decrease because banks will not be able to lend the money as easily now. This will decrease liquidity and cause deflation.

Also, the commodity prices will decrease if US economy slows down. The demand for oil and other commodity like Iron Ore, Coal etc will decrease thus decreasing prices and hence causing further deflation. This will cause the dollar to remain strong and not go down further.

My argument against this reasoning is that, the assumption here is that that markets for US companies are all domestic. When fed dropped the rates, dollar becomes weaker because of excess supply. Also, the commodity prices have downward pressure because of lesser demand from China as was argument in my earlier post. This will decrease raw material cost for US, and make exports attractive. Rest of the world, will want to import from US because they can buy more for the same amount of their own currency that they will spend. China is purposely slowing down and this will also help US exports. This increased competitiveness may cause US economy to come out of recessions, increased jobs, better wall street profits, causing people to invest more, spend more and save more.

What will happen is anybody's guess.

Impact on India

Strong dollar is good news for India. So, if by any of the above arguments the dollar does remain strong, the Indian exports will do well. Also, the lower commodity prices especially oil will help Indian imports and will make Indian manufacturing exports competitive. India might be able to siege some initiative from China though it is light years away from catching up with China. India can also benefit by importing technology and machinery from US or by buying assets in the US. Indian companies can look at acquiring some US companies with a stronger rupee right now.