BlackBerry And The Art Of Becoming Irrelevant in the Business World

Around the time when Mark Zuckerberg was floating around in the dorms of Kirkland House figuring out Facebook (FB) or allegedly plagiarising the Winklevoss brothers' ideas, the market cap of BlackBerry (BB) was about US$64 billion.

Fast forward to 2015, the market cap of FB is at about US$225 billion while BB is less than US$6 billion.

There was a time when owning a BB was associated with busy high-level corporate executives who always felt the need to be connected and have uninterrupted access to their e-mails while on the move. The BB Messenger also known as BBM -- an Internet-based instant messenger -- was a really clever innovation, a sort of wonder that allowed people to remain connected without paying exorbitant prices on GSM texts.

The BB was seen as a well-guarded bastion when it came to security. The best of the hackers around the world could not break the encryption codes of BB. Some pockets of US government including the White House still completely rely on BB since there isn't a platform as secure as this. BB owns some 44,000 patents that form the bedrock of its intellectual property.

But when Android was taking over and becoming a preferred platform for mobile software, BB couldn't see the train coming head on and made three fundamental mistakes that have rendered it irrelevant forever.

These mistakes are similar to those that many companies make in today's business scenario.

1. Overconfidence in one's ideas and existing business models

The clichéd saying "change is the biggest constant" is more conversational than truly understood by the majority. Polaroid, Kodak, Xerox have all become irrelevant and BB had ample opportunity and intellectual capital to correct its course at the right time. But hubris isn't only personal and human, it's organisational as well. And hubris can do you in. Resistance to change and resistance to new ideas and new paradigms can be suicidal.

BB was an amazingly evolved tech company and was at the zenith of its popularity. But its pride and its belief in its supremacy didn't allow it to evolve and open the platform for creation of apps and allow developers to use that platform for creativity; Google's Android did. When BB's market cap was about US$64 billion, Google's was about US$35 billion USD

On most occasions I disagree with Michael Porter but here I vehemently agree. BB had created an amazing barrier to new entrant and it just scuttled it away.

2. Delay to act in the face of an approaching train

Imagine you get stuck on the tracks of an oncoming train while you are with a group of people who are only going to follow you and listen to you (read CEO). You are supposed to shout at the top of your

voice and get your followers (team members) out of harm's way. And yes you have to

scream on the top of your voice. You cannot say,Excuse me - there appears to be a moving object that vaguely looks like a speeding train and if I ain't incorrect it is seemingly moving in our direction and for our safety, we must just step aside, please. What you need to say is Get the *&^% out of the way.

Strategy strategy and (oh my God!) strategy. This word has consumed more than 80% of the educated world especially the folks from business schools. And there is less action and more strategy in the corporate world today. Parkinson's Law.

Someone within BB needed to see the onslaught of WhatsApp. By the time BB figured out that their BBM messenger had to be on an open platform, and WhatsApp had to be BB compatible - it was too late. WhatsApp spread like an unstoppable virus and before you could say Jack Robinson, WhatsApp was a 300 million strong community. Jan Koum started WhatsApp as a small initiative to circumvent the inflated GSM texting costs and that became the nemesis for BB.

3. Failing to protect the consumer's interest / pocket

I love the phrase ceteris paribus. All other things remaining constant, the cost to the consumer must be the lowest in an efficient market. You cannot have a product that's pricey, not-so-good looking, expensive to use and still running on technology that's at the end of its product lifecycle.

BB hasn't thought of introducing a dual SIM mobile phone till date. In fact, until they launched their OS10 about 24 months ago, consumers had to subscribe to a BB plan with a fixed minimum monthly cost of Rs 300 (approx US$5) in a country where average revenue per user (ARPU) is Rs 95 or about US$1.5. Frequent travellers, price-conscious consumers figured out the virtues of carrying two SIM cards for various purposes and taking full advantage of various talk-time plans. Samsung with its duos range at the right time of "need lifecycle" launched dual SIM phones and changed the game forever. Almost all manufacturers now make dual SIM phones but Samsung is far, far ahead of the curve and BB still hasn't figured it out.

BB wrote its own obituary way too soon due to inaction or absence of speedy action at the right time.

Don't let that happen to your company.

Manu also writes in Huffington Post

License to Corruption

Research and data can throw rather interesting theories and a recent one by Uma Karmakar, a Harvard Professor and Bryan Bollinger of Fuqua threw up an interesting argument.

Their research drew a correlation that shoppers who brought their own bags to recycle would tend to buy more organic versions of food. One green action led to another. But the same people were most likely to buy ice cream, chips candy bars and cookies. These shoppers weren’t replacing green items with junk. They were just adding junk to the cart.

Uma’s research says:

You do good and you give yourself a cookie

If I behave well in one situation, I give myself license to misbehave in another.

I get a diet coke – I get myself a hamburger.

If I have carried my recyclable bag, I have helped the environment – so I have earned the icecream.

In consumer psychology ‘licensing is the key’

License to indulge or licence to be corrupt

Corrupt?

Corruption isn’t only in financial parlance. Corruption is a simple word that means questionable intent wherein individuals don’t do what they are supposed to do or they do what they aren’t supposed to do.

‘Corruption in my most simplified connotation is diluted intent’

A simplified parallel can be drawn between the research above and over zealous and tom tomming ceos and executives in positions of authority and also between politicians who pretend to be paragons of virtue. And if you look around you there will be ample to locate.

People who are loud and brash and are over confident of their performance and cannot stop tom tomming are the people that boards and top leaders must watch out for. As corporations grow, more than often we would come across executives who are always on the right side of everything, who would always be too good to be true, whose integrity would always be seemingly unquestionable, who would always get loud in tricky situations to create a facade of invincibility. These could be the very people who would have hidden traits of Jeffery Skilling of Enron, Martha Stewart or Carly Fiorina who would put their businesses and its reputation in harm’s way.

Politicians aren’t terribly different either. The most corrupt politicians are the ones who indulge maximum in public service. India has a huge concept of farm and gas subsidies paid by the combination of fiscal deficit and tax payers money. But a fraction reaches the end user and yet the powers that be seldom show a real intent to weed out this structural flaw in public distribution because this money in some form or the other finds its way back into the politicians personal coffer.

The more money is allocated for infrastructure, the more we hear of people vanishing in open gutters during rains in India, the farmer suicides is now a global debate and yet no serious intent has been shown by the polity - for how else, but through corruption, would the elections be financed in India which is really the root cause and forms the bedrock of all corruption.

Bertrand Russel rightly quipped – Fools and fanatics are always so certain of themselves and wiser people so full of doubts.

And next time be on a watch when someone tries to take the recycling of grocery bags to a level of obsession or talks too loud about ones virtues of honesty and righteousness.

Is Life and Commerce - a Casino?

GMAT is a popular exam that most MBA aspirants appear for. And the sample tests available online throw up a very interesting food for thought. If one is just hovering around being an average or just

above average (Joe Bloggs) in academics he/she would score about 550-570 out of a total of 800 ie 65 percentile (approx) if that person were to mark the entire exam randomly as per ones gut, the score would still be still 550-570

This i figured out when i was preparing for my GMAT in 2007. The trick is to achieve 99 percentile.

The business world

MBA to me is seemingly the most irrelevant education one can ever acquire because it makes you aware of your surroundings a bit more than everyone else. The case studies based on thousands of successes and failures over the last 100 years makes you terribly aware of too many things and you lose your chance to take that risk. Because we fail to forget that its an efficient marketplace.

The more i deal with educated and allegedly experienced professionals the more sceptical i get. Analysis analysis and more analysis. The sum total of all monetary risk is as follows. Every fund every source of money could be parked in AAA rated securities (absolute safety), and as businessmen start taking risks and start leveraging the base equity, the returns start rising. (Risk reward ratio – directly proportional)

In India you can easily park money at 11-12% in almost AAA rated securities or bonds and Warren Buffet’s life performance is about 21% CAGR (and i consider him the epitome of financial performance), so put it simply - the entire economic activity on this planet, the entire analysis, the entire risk reward, the entire funding of start-ups, etc etc is to inch from 12 % CAGR to 21% CAGR.

And yet

Statistically only 8-10% companies have survived beyond 33 years of existence

Only 8-10% of start-ups ever make any money

Only 8-10% of return is guaranteed over a long period of time

And in a casino if one analyses the top 4 games that are played 95% of the time, you have a fairly good 8% chance of winning.

If Ambani (india’s leading businessman) had analysed his pro and cons even an iota more, his children would still be filling fuel in the petrol bunks of Yemen. Thank Goodness he didn’t know what IRR was.

If Bill Gates or Jobs had calculated their IRR on their investment what would they be doing today is anyone’s guess.

Life is about the leap of faith and an uncanny and a very scarce ability to go with ones gut to invest/start/embark on the journies of life. After all you only have an 8 % chance over short to medium term and we are all dead in the long term.

The business of life

Life sucks – I know a dear friend who courted for 9 yrs before getting married and the marriage lasted just a little over nine months. And there are people who didn’t see their potential spouses, went thru an arranged married ( 2/3^rd s of the world doesn’t even know what an arranged marriage is) and they have been married for ages some for decades and many I know for over half a century.

Carrying your heart on your sleeve is the best virtue a human being can have. You win some. You lose some. Whether its life, love, casino or business.

Go by your gut and pursue your dreams. If you win you become rich, if you lose you become wiser.

There is no failure in life – only feedback

And life is just one big casino.

The Hero who moved me

More than often our lives get crowded by motivations that we draw from the super achievers, the great scientists, the billionaires, the inventors, the business leaders who have made an amazing difference to the planet and to the mankind. Mine does too.

But a few days back my wife and I visited Mallaya Hospital Bangalore, for a general health checkup and while waiting for my reports that were seemingly taking an infinite time I was just observing the Bangalore life and traffic go by when i heard an ambulance siren at a distance and this security guard, approx 40 yrs of age wearing the cleanest and most well ironed uniform, emerged from somewhere and immediately, with the agility of a soccer player, readied a wheelchair and a stretcher and an oxygen cylinder.

Within this time an auto driver (tuk tuk) screeched and brought in a very sick woman and this guard pulled the wheelchair got this lady into it and shouted at 2 nurses to whisk away this lady into the hospital’s care.

The ambulance arrived in the meanwhile and this man was ready to open the door and get the patient in emergency out of the ambulance and pushed the stretcher up the ramp to handover to the nurses who were just emerging from the hospital.

All this happened within a 2 min time frame and over the next 15 minutes that i observed this man tirelessly and relentlessly made a difference to the life of every single person who crossed or arrived at the hospital porch spread over no more than 80 sq mts. To a few passerbys he simply enquired about the health of their near and dear ones. I just assumed that this must be the guards first day at a new job/assignment.

I collected my reports and left for the day but somewhere the memory of my 20 mins there lingered on and i asked my chauffeur to go by the hospital next day and stopped my car 50 mts short of the porch and again saw this man, the security guard, at it with same enthusiasm, same speed and same smile.

Couldnt resist the temptation to ask this man what his exact job is – and he said he is ideally supposed to just stand there to ensure a simple law and order at the hospital entrance. I felt a sense of pride shaking hands with K.M. Nathan and felt his infectious energy and enthusiasm. He told me that he has been doing this right here at this spot the same thing for 22 years. And he is 50 now. I have not been so moved by anyones commitment ever in my life. Since 22 years Nathan was performing at 200% of his efficiency, every single day, as if that was the first day of his job.

In an era where billions of dollars are being spent to do research on how to break mission fatigue (repetitive job syndrome) and on office ergonomics where legal rights of employees make them sue their employers just if the shape of the chair isn’t correct, Nathan is a definite outlier and a fine example of what commitment means.

Commitment is really the most important dynamic of strategy and success. A committed team that collectively moves towards common organisational goals can make any company or a project successful. It cannot be taught in business schools, it cannot be developed externally.

The trick is to find Nathans in your midst and nurture them. Nathan is made of an element that doesn’t exist in the corporate world anymore. More than often our myopic corporate visions fail to recognise the Nathans around us. Mallaya hospital did and maybe Nathan is their best brand ambassador.

You are my hero Nathan and you have taught me a new connotation of commitment. 

How Boards expedite the demise of some of the best Companies

We were in absolute-absolute awe of TESCO during my days in the UK, during the hey days of TESCO. The retailer had established itself as the most efficient company, churning out QOQ of phenomenal growth, managing its working capital cycle so beautifully that 3 months of working capital cash (zero debtors and 3 months creditors) allowed it to become the most wealthy real estate company as well. Sir Terry Leahy was regarded as a business icon par excellence and no business management class / case study would go by without the mention of TESCO, its success, its strategy, its leadership and its growth. The customer reward program “clubcard” has been revered as one of the most successful reward/research programs in global retail.

Established in 1977 it spewed a whopping net profit of 3.8 billion in 2011 and attained a market cap of some 100 billion Pounds at its peak.

Circa 2014 overstating of profits, accounting scandal, CEO resigns, Market Cap eroded by 70% and the stakeholders – vendors, employees and most importantly customers lose confidence in one of the best and most talked about companies in British history.

These stories and case studies provide an immense opportunity for CEOs and the Boards to analyse in depth the real causal factors of such mistakes/fiascos and learn fast. And i have come to believe that a greater opportunity lies in failures, bad bosses, bad companies, frauds around oneself as that teaches you what not to do and what not to be. Because the world is full of advisors and teachers who tell you what to do – but not ‘what not to do’.

In the era of ever increasing hierarchies and over paid board members with chip on each of their shoulders, it becomes a compulsion on each and everyone to allegedly perform, review and justify one’s presence in that chain –

And thats where the problem starts. Lets reconstruct what might have actually happened at Tesco.

1    A mom and pop store tries to make it big by focussing on its customer, employees and concentrating on providing value while cutting costs and aiming for superior sales and a respectable growth. (by and large this is the crux of millions of mission and vision statements round the world).

The CEO, a maverick and a confident fellow expands the chain over the next 2 decades to a stratospheric level and achieves some amazing benchmarks in the history of business growth and performance.

After a few good consistent quarters and a few consistent years, the board expands and so do reviewers of the business, each one of them having some success in their pocket in some domain but little or no expertise in retail but having an unbelievable ability and capacity to opine and advise the CEO

From an annual review format, and a distant oversight on the business the board now wants a quarterly review of sales, costs and profitability.

The operational team expands and a reporting division is set up at TESCO to sate the board’s appetite for reams and reams of numbers, data, analysis.

The CEO begins to get a bit edgy as some of his time is now spent in ensuring timely quarterly reporting, new formats of reporting, each of these formats of reporting arising out of each of the reviewers imagination/past-experience and his belief in the effectiveness of these formats.

CEO (ambitious, growth hungry – both personal and organisational, conscientious and diligent) now begins to work harder and smarter than ever before and maintains the pace of growth, trying to outbeat the reasonable industry parameters and ensuring that that the board is happy with reporting and growth and numbers etc.

The board begins to feel that every target, every goalpost that the CEO had been given was seemingly easily achieved, every retail industry benchmark was easily surpassed – so perhaps the CEO needs to run even faster, better and more efficiently and the CEO could do something more and something better than what he has done all this while.

The board members analyse the data even more and come to a conclusion that retail industry needs a greater scrutiny and the company needs to move from a quarterly reporting and review to a monthly review.

CEO by now a bit bewildered and stretched, begins to wonder where to get the next alpha in growth because by now he is concentrating less on the till management, external customer’s sensitivities, he has lesser time for his vendors, he has lesser time for his employees (the greatest asset) and by the time one monthly reporting gets over only to be told by the board that the business could have performed better -  it is time for the next monthly review.

Now the board has become the most important customer, the internal customer and the poor CEO is spending his max time on the internal customer and least on the external. The poor fellow – TESCO’s customer who isn’t now getting the best bang for his buck on the till, who feels that ASDA is doing a better job with customers, who feels that TESCO is losing the grip on the most important stakeholder – its paying customer.

The numbers begin to wane and market metrics begin to flounder and CEO is working the hardest than ever before because he has just been advised by the board that he needs to have a better grip on his numbers and he isn’t reviewing his business closely enough and the board passes a resolution for a weekly review after relying upon a battery of very smart analysts who are now asking questions such as –

Why is Friday sale less than Saturday because UK has historically been a Friday shoppers market.
What marketing initiatives have been implemented between 1600 hrs and 1800 hrs on Friday to ensure that sales are at their expected highest.
Why cant we delay the poor dairy farmers payments from 30 days to 60 days, squeeze the vendor a bit more and improve our working capital cycle.
Why, why, why not???

By now the CEO and the CFO are doing everything else but running the simple grocery chain and looking after their external cash paying customer.

Having lost his own ability and confidence to run his business that he once ran like the king of the jungle the CEO is only making reports, doing number crunching and absorbing advice and suggestions from the all powerful board who are now behaving like  the Sam Waltons of the world.

The CEO and CFO are now on the edge because while they have used their entire competence to do the best that they can possibly do, they can still perform better – as per the board, they aren’t doing enough – as per the board, they are just not analysing the numbers enough – as per the board.

Finally the reporting format of every month every quarter every week becomes so important to pass by that the hapless duo of CEO and CFO having exhausted every arrow in their quiver decide that after all ‘we do get consistent customers’ week on week and month on month and they decide to account future anticipated sales (by a small sum of a quarter of a billion Pounds) in this reporting period (because it has become so bloody important to make the numbers look good for this report – as if this was the last)  and reduce the payables to show higher periodic profits. After all this is the only way that the board will be happy and the share price will reflect the boards effectiveness.

This isn’t only the TESCO story. Every single company that’s over reviewed and over scrutinised is going thru some similar point in its lifecycle and will meet the same fate. And collectively everyone will work and unite to find a fall guy and blame it all on him.

-Subprime crisis of 2008 was a result of greedy executives wanting to perform even better to earn even better bonuses and underwriting junk paper.

-Enron was a result of greed where weather was being bet upon and derivative trades were being exchanged on prediction of weather.

Warren buffet had invested in TESCO and called it his biggest mistake in life (did he not know the TESCO board well enough?)

Buffet meets his CEOs only once a year and sets reasonable and achievable expectations and creates an environment for them to perform.

He allows his rockstars (CEOs) to make mistakes and learn and believes in them as long as he believes that their intentions are correct.

And above all Buffet believes that businesses aren’t built over weeks and quarters but over a lifetime.

No one has had the courage till date to follow his management style and understandably no one on this planet has been able to replicate his success.

Moral:

The world can only grow as much and so can the size of the global economy - only the capitalists will beat the world growth (Thomas Pikkety)

Businesses will go thru spurts and troughs of their lifecycles. Do not view them WoW (week on week), MoM (month on month), QoQ (quarter on quarter)

Build brands that make a difference and last a lifetime. Stop Boards from over scrutiny and from orchestrating the corporation’s demise.

Allow effective CEO s to operate businesses as if it were their own. Dont kill them with specious recommendations and hollow experiences from unrelated industries.

And above all for the success and peace of the planet and suatainable profit of the corporations.........

‘Search for the intrinsically motivated purpose of life rather than extrinsically motivated mindless pursuit of profit’

The great Indian election tamasha and the 6 lessons for the CEOs in corporate world

The recent Indian elections have been interesting for more than a few reasons and the resounding victory with which the ‘allegedly fundamentalist and polarising’ BJP came to power has some deep rooted lessons for the senior management in the corporate world. 10 years was a real long time for ‘the messiah of youth’ Rahul to grab this opportunity and redeem the vouchers of confidence that were secured with the grandson of Nehru. But alas this opportunity was skittled away with surgical precision by the Congress.

On the contrary Modi’s BJP showcased the trophies of growth in Gujarat in the successive years of his Chief-Minister-ship, whether utilizing the various propaganda vehicles including smart mobilization of social media and digital technology or conventional ‘marketing’ through unit offices, and made it unavoidably visible for the masses, the brightness of all his achievements in governance and economic growth, often drawing into oblivion his alleged hands in the communal violence that Gujarat became notorious for….

2004 - At the hilt of India Shining and a great progress in preceding years by BJP, it unexpectedly loses. Even exit polls couldn’t predict this rout

Lesson No 1

Performance and success are relative and always subject to criticism. Even at the crest of your career and performance someone else’s expectation from you could be starkly different which can spell doom for your career. Never be sated with your achievements, no matter how big they are. Remain agile and have your ear to the ground viz a viz the expectations of the people observing you (read the board and your bosses).

Manmohan Singh becomes the 14^th PM of India when Sonia relinquishes her opportunity. But what follows is a decade of muted and sub optimal performance

Manmohan sigh had etched his position as an honest technocrat and economist but was a failure as a prime minister. Each time the country looked up to him to act / speak he came across as an epitome of non performance and a mute.

Lesson No 2

Have the courage to refuse a position of authority if in the heart of hearts you don’t feel capable enough to deliver. The onus of delivery will always lie with you the CEO. And do not hesitate to stand up in the face of adversity to uphold the morals and abilities that you are expected to demonstrate. Only perceived intelligence is of no consequence – ability, gut and courage to take action to perform is of utmost importance.

66% of India’s voters are below 35 yrs of age and a majority of them first time voters. Congress and Rahul and his coterie of colleagues had everything going for them. Agatha Sanghma with a Masters Degree from Nottingham University in UK, Sachin Pilot – a management graduate from Wharton Business School- University of Pennsylvania, Jyothiraditya Scindya with a Masters Degree from Stanford College in US, Naveen Jindal who has an MBA from University of Texas, Milind Deora – an alumnus of Boston University and Rahul Gandhi – the grandson of the very own Indira Gandhi are only a few to name who had opportunities to influence strategies one or other way to swing the pendulum towards growth and governance. They failed, miserably in every responsibility that was entrusted with them.

Lesson No 3

Remain connected with your customers and remember that you are being judged every minute and all the time. Never bask in the glory of present power or past laurels. It can all vanish in a jiffy. You are only as good as your company s last quarter results and your future is only as good as your last customer’s experience.

‘Acche din aane waale hain’ – made its connect and did its job. Modi had a twitter handle that was reaching out to majority of 150 million young voters. He obscured his age camouflaged in the vehicles available through technology that remained close to the young hearts, and spoke their language, showed them what they liked to see – whether beautifully scripted through the Ogilvy’s of the world or designed by the media moguls – it nonetheless reached their hearts, and remained there. In the vacuum of young leaders, they were willing to be contented with the youthfulness of the aged Modi. In his spirit and confidence, the vote bank believed that India will grow young and vibrant. Their patience is not one that’s tested, but their power has been tested again and again through the movements India witnessed on Nirbhaya case (the girl who was raped and murdered in Delhi) no less powerful than the Arab Spring!

Lesson No 4

Embrace technology as fast as you can while remaining genuine. Keep the leadership messages simple and powerful for your teams. Demonstrate good intent – for good and noble intent can neither be faked nor remains hidden.

Rampant corruption marred the Commonwealth games. It was in the face. Substandard execution of contracts, falling ceiling panels, collapsing foot bridges – the list is infinite. It is believed that billions of dollars were siphoned off by phony companies owned by friends and relatives of people in the managing committee including the chief minister of Delhi and that too under the watch of Manmohan Singh and Rahul Gandhi.

Lesson No 5

Take action and punish the guilty fast enough before its too late. The country expected Rahul and Manmohan singh to publicly ostracise the corrupt and come clean. They failed. In the corporate world you are expected to keep a close watch on the team leaders who have been entrusted with big responsibilities. Any sign of irrecoverable failure should be immediately addressed and bad fish (read lazy and underperforming executives) should be immediately removed with surgical precision. Such team members can take you down and are like cancer who will make organisations hollow. Have the tenacity to accept losses emanating out of genuine mistakes but have zero tolerance towards corruption and mediocrity,

Lesson No 6

Corruption isn’t only defined by financial in-appropriation. Lack of appropriate action at appropriate time despite promises made to the electorate is corruption enough. On those accounts I find Manmohan sigh corrupt. When he came to power he said in his first initial days, “I will commit only what i can deliver” and i still remember those lines. He committed and delivered nothing. The result is there to be seen. A decade of opportunity lost due to policy paralysis. If he was a remote control in the hands of Sonia Gandhi he should have demonstrated the courage as the PM to implement his vision, stand upto his past laurels of being the father of reforms in 1991 or resign publicly for not getting a free hand.

Have the courage to say no if you cannot deliver or aren’t confident of delivering on a responsibility and commit only what you can deliver. The problem arises in ones career when you bite more than you can chew and then falter. As a CEO once you have made a commitment, have the courage to give your life to stand upto it.

Speed of the Boss is the speed of the team. Keep sprinters who can run along-with you and can give you Gatorade at the right time. If team members don’t share your vision, speed and passion – they will only slow you down and destroy the company and eventually You. 

Negligible marginal utility of Governments

Circa May 2004. I was holidaying in Binagudi (a remote village in West Bengal) when the India Shining Campaign of the incumbent BJP government was almost set to get them back to power and they lost. Congress put up a good show and Sonia Gandhi / Manmohan Singh was set to become the PM. I had intermittent access to television but saw AB Bardhan (Of Communist party that was to be a key ally of Congress in the Government) come on camera and say “Bhaar mein gaya divestment and Bhaar mein gaya reform” (To hell with privatisation/divestment and to hell with economic reforms).

The nation expected BJP to come back to power and allow the alleged stock market party to continue.

And within minutes all stock markets crashed by over 20% thereby eroding a couple of hundred billion dollars in market cap and trading had to be halted. I wish i had some internet access to invest whatever little money i had because this reaction of the markets was irrational.

Circa May 2009. I was in Warwick a little away from the consciousness of Indian politics and was immersed in the theory of marginal utility and realised that for 2 straight days the stock markets were in an upper circuit, up by 40%, because Congress came back to power and Manmohan sigh was destined to become the PM again. Again irrational exuberance demonstrated by naive citizens of this nation.

The nation suddenly believed that return of congress / Manmohan Singh will be magical. The less said the better about the rout that India saw wrt corruption and inefficiency in years (2009-2014).

Circa May 2014. It is likely that Narendra Modi led BJP might win and Modi becomes the next PM and again irrational exuberance has taken over sound logic and stock markets are re rating every stock - for they expect Modi to do the Houdini and open all hidden treasures leading to unimaginable growth for the nation and for the individuals.

So what’s the point?.....

Human memory is terribly short and so inconsequential that citizens vote based on emotion and a false sense of belief and hope that new governments will weave magic.

Obama’s “Yes we can” reverberated across this planet and US of A expected a change like never before but it has all been slightly above or below average on all issues. Even i thought - that as an Indian, it would affect me positively.

No magic. No earth shattering reform. Business as usual in Obama’s 5^th year of Presidency.

No government, no individual, no nation can outpace the general averages of growth and global development. Nations find their own spectrum/range of growth and development that is closely interlinked with the overall global economic scenario.

Just about anyone can be the Prez of the US of A or The PM of a large country like India – Individuals can barely make negligible incremental difference to the momentum of this planet.

Will revisit this blog post in 2019. In the meanwhile expect a below average performance (just because the expectation is so bloody high) and sell your stock if you have any that has already discounted a Houdini like performance from Narendra Modi.

Case for appointing Google as the Central Banker

5 years after the worst economic meltdown (US housing et al) as i watch the indices erode shareholders wealth and the Indian currency plummet, i cannot help but muse over the underlying cause of economic crises in different parts of the world.

I have read of more than a handful of well known economists (Nouriel Roubini, Peter Schiff, Ron Paul, Raghuram Rajan etc etc) who claim to have predicted the housing bubble and almost all of them have something or someone to blame it on. These are people with considerable influence at a global scale. Yet nothing could be averted.

Housing bubble happened

US/Global deficits are at an all time high

Eurozone is terribly stressed. Greece Spain and Portugal are almost bankrupt

The Ver2. of Asian crisis is in the offing

Excessive liquidity flowed into Emerging Markets

Talks of stimulus-tapering have created a new crisis in Asia

My argument is that if so many Economists had the power and the intelligence to opine and take credit, why are we staring at such a dismal global scenario?

Human beings are driven by emotion of greed and fear (cognitive biases) and no one has the ability to take the most rational decision at the right time. (Thats God’s job really). So our central bankers all over the world have failed consistently. Since the time I developed a bit of understanding of economics, I have come across only 2-3 actions that central bankers take. Reduce/Increase interest rates by a few bps, Issue inconsequential - dovish or hawkish statements, give a dubious sense of calm to the citizens and opine liberally. Because that’s the easiest thing to do.

But has the world economics been sorted?

No! Actually its worse off than what it was 30 years ago.

But there is a counter opinion. Decisions taken by central bankers should be based on big data of cause and action and consequences. Only then can a global equilibrium be maintained. It is not humanly possible for the likes of Ben Bernanke, Mervyn King and Mario Draghi to analyse and act in absolute harmony that prevents future crisis and regulates overspending and irrational exuberance.

Between 2005-2008 maybe US interest rates should have risen far more.

Maybe Global salaries / benefits should have been drastically slashed to maintain export and industry competitiveness and reduced dependence on China that played havoc across the world with an artificially cheap Renminbi.

I believe that today no one can write algorithms and collect/analyse data better than Google. Why don’t we reduce our dependence on our central bankers and outsource this job to Google.

Google can analyse a 200 yr action history of central banks of over 150 economies on the planet and chart the action and consequence graph and effects thereof and create a perfect model for each and every nation and define the interest rates and all economic actions that have a bearing on our lives. Algorithms will take harsh decisions which humans fear to take. Algorithms will become perceptive and computers will develop intelligence to take rational decisions.

This is seemingly the only way out and we won’t get a chance to blame a banker or an economist because the world and nations would be in a state of equilibrium.

No one can deny that all of our economists and central bankers have failed miserably till date.

Warmth - An essential leadership tool

One of the most important tools of leadership is warmth. That’s something, which can neither be taught to a leader nor can it be acquired.

The gait of true leaders can be recognised from miles away. Their warmth, way of interaction with their colleagues, a gentle pat on the shoulder, a smile or a greeting (without expecting one in return) are powerful conduits of influence that align organisations in the directions of common compelling goals.

I have personally met many alleged leaders in life for whom giving a smile or an involuntary handshake tantamounts to parting away with a family heirloom. But there are no awards for guessing what the future of such companies is. And I have met leaders who exude warmth that can move mountains and instill hope and promise within anyone / any team.

Warmth creates an environment of trust and allows communication of ideas. Ideas make an organisation. Companies that allow ideas to thrive and propagate are the companies that become great.

Warmth also helps you to connect immediately. Connections and interactions based on the bedrock of warmth and on being a genuine human being last a lifetime.

I recently watched ‘The Great Gatsby’ who I thought was an epitome of warmth, love and hope. He was betrayed at the end. But then the world would be bereft of trust if we fear betrayal.

The power of dissent

The best service that a company (striving to become great – if it’s already good) can do to itself, is to allow dissent. More than often the culture ‘my way or highway’ stems from the top, driven by the success or falsely assumed success of entrepreneurs.

When God made man, it’s most unique and efficient creation, he whispered into the man’s ear “you are my best and most intelligent creation amongst all” and every human being lands on this planet with this whisper embedded deep in ones consciousness and really believes in God’s this statement.

And this belief forms the culture of most organisations.

Culture of unilateralism in styles of management, business decisions and decisions pertaining to asset management (read HRM) embeds so deeply amongst one and all that it not only stifles creativity but also embeds a deep sense of fear and everyone in the organisation merely operates at a LCM level of creativity and initiative.

This is the best way to sow the seeds of a below average organisation. Companies must work on its culture very early in their existence because while the alleged change managers might profess and sell their ability to make a difference, the difference is impossible to make-ever. Culture is the hardest thing to change.

Dissent is great tool to cultivate creativity. Allow the junior most guy to walk upto his senior and make the stupidest suggestion and to disagree with something. Develop a culture where everyone has a voice. Create platforms for people to ideate.

There are just 2 basic fundamentals for the success and sustenance of an organisation. The happiness of its associates and the satisfaction/delight of its customers. Everything else (topline, bottomline, cost control, product lifecycle) are subsets of these 2 variables.

Google wasn’t made in a day. But it was made in merely 10 odd years. That’s culture.

Success is a dangerous thing. It makes seemingly smart entrepreneurs to believe that they can’t go wrong. 

Remembering a great Man : Some people who made a difference to my life - III

When I first met Sh. O.P. Gupta (OPG) in 2006 he was a man who was going from strength to strength after having established his credentials as a builder of repute in Jamshedpur and establishing townships and retirement homes in Bhiwadi - A rather unsexy place. For me who was only hobnobbing with the British royalty in three previous years, setting up the group’s first hotel in Bhiwadi (then) was far from exciting.

OPG was closely overseeing the construction of this 110 room hotel as that was the group’s first and he used to interact closely with me and advise me from time to time. I was entrusted to set up the hospitality division of the group.

A few distinct memories and ethos on which he laid the foundation of his business are embedded deep in my character. These ideals made him stand out as an outlier in the world of business.

Never grow too fast or recklessly-
I once asked him that while the country is going thru a super boom in real estate, why is his progress so slow. He always wanted to bite what he could chew. 7 years later, top real estate companies (read DLF and Unitech) are reeling under unmanageable debt burden and have completely destroyed the shareholder wealth. The DLF stock, which was once the darling of the markets and most talked about is 85% down since early 2008. Ashiana is the only listed real estate company that has ‘0’ debt on its balance sheet. That has returned 187% in this time where others have wiped out their shareholders.
Lesson – Donot over leverage yourself. When the tide is high its fine, when it turns, you could find yourself standing very very naked.

Care for your employees and consider them your assets-
He would always spend a few mins talking to me and asking about the welfare of my family. He knew everyone in my family and would show concern that I needed to get married at 32 (my age then) and even suggested a few matches. Small gestures and courtesies that he extended towards one and all made him a great man.
Lesson – Care and affection towards your employees add far more value to the balance sheet as compared to a few more zeroes. Ashiana has ‘zero’ attrition.

Treat your customers like God-
The roof of a villa sold by Ashiana leaked during rains. It was a 3 year old villa and outside the guarantee period. On a simple complaint, he made Ashiana spend a couple of lacs repairing the roof and bought the loyalty of hundreds of residents. Ashiana has the highest number of repeat buyers in one or the other of its complexes. This is unheard of, in the real estate industry that is unregulated and undisciplined.
Lesson – Don’t spend millions on marketing and getting ur products endorsed by expensive celebrities. Just treat ur old customers nicely and justly and remain connected to them. They will do the best marketing for you – free of cost.

Don’t grow at the cost of your shareholders-
Ashiana has been very debt averse. OPG never wanted to divest or bring in white collared investment bankers telling him how to run the company. The family owns over 70% of the company and guards its holding fiercely. Listed companies are very very public in nature. Growth can be deceptive and a big sham really.
Lesson - Grow with internal accruals and not by over leveraging. Markets punish you hard if shareholders interest in not paramount for promoters.

I miss you OPG and remember you fondly. You left us for your heavenly journey rather early but you left a lot behind for us in the simplicity and clarity of your thoughts and ideals.

Questioning the existence of GOD

Whilst I bow down in front of the picture of my God with alarming regularity each morning and have unquestionable belief in the existence of an invisible hand that writes our destinies, the recent devastation in Japan has left me with many unanswered questions.

And I believe that most of the theories about laws of karma, and existence of God are at best specious.

An island nation that rose from the depths of despair after the nuclear holocaust in 1945, that worked tirelessly in unison and rose to become the second largest economy in the world thru sheer discipline and hard work, that is meek and has achieved so much in science and technology, that something ‘Japanese’ touches our life every second, had to suffer the vagary of nature – and boy what a vagary.

How could God decide to annihilate over 25000 people suddenly and change the life of millions forever?
Could the law of karma define the destinies of so many people with such queasy perfection..

NO!!

What also surprised me was the pride and solidarity with which the nation stood in its darkest hour. In sharp contrast to the behaviour of citizens in the aftermath of hurricane Katrina and the quake in Haiti, there was no price gouging or looting in Japan. Lessons must be learnt from the Yamato-Damashii or inherent Japanese spirit that allowed the country to rebuild itself after the second world war and definitely will allow now as well.

The course of Japanese history during which it has endured the cycle of catastrophe and renewal over and over again by imbibing the concept of discipline, endurance and perseverance in the face of suffering is a lesson for the rest of the world.

God bless Japan.