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.

Some of the people who made a difference to my life-II

Golf courses are known to be the playgrounds of the rich and the famous and I have heard that people strike big business deals there. For me the experience was entirely different when during an idyllic Sunday in early 2000, while playing at the Annadale golf course, my path crossed with Brig. R. C. Shard on the 8th hole.

He said “Son seeing you for the first time on the course, you seem to be a promising golfer”.
And that was the start of the most beautiful relationship that is my most treasured treasure till this day.

Brig. Shard, then Col. Shard was the Col.Q for Army Training Command and had recently moved into town. He subsequently invited me home for a dinner and rest as they say was all history. Even while I called him a friend he endeared me as his son right from the very initial days of our acquaintance. I was the General Manager of a hotel but longed for a home as my jobs and travels had kept me away from my parent’s home since 1992. Mrs. Ira Shard would call me home now and then whenever she would make ‘Rajma’ (kidney beans made in a certain style and extremely popular with north Indians – which I loved to eat) and later I would simply tell her that I wanted to eat ‘Rajma’ and she would smilingly oblige.

The affection that both Mrs. And Brig. Shard bestowed on me was unusual and early in those years, our friendship graduated to a level of close relationship and not a single day would pass when we would not meet or chat. He would share his plans, ideas and thoughts with me and I was touched beyond words when he first introduced me as his eldest son in a public forum. And his love and affection matched his words and to this day I enjoy the respect and the honour of being the eldest son of Brig. R. C. Shard.

It so happened that he moved to Binagudi as a Brigade commander when I had just taken up a challenging assignment in Assam and once in every few months I would drive 8 hours to spend a few days with them. The bond became stronger.

Very few people have the luxury of 2 sets of parents, Biological and Foster.
It was always a hard choice at every opportunity, whether to go to Chandigarh (my hometown) or to go to Brig. Shard’s home.

During the lower ebbs of life there was always a sound advice and emotional and physical support. Mrs. Shard encashed her bank bonds to finance my MBA and made up for the shortfall. Such are times that one can easily differentiate between friends for a reason, season or a lifetime.

While I was away in the UK, they would check on my mother’s welfare and would call mom to give her strength frequently. Till this day the degree of mutual trust and respect has ensured that no major decision or a function can happen without mutual consultation.

Wealth for most is a function of zeroes in their bank balances. For me wealth is quality of relationships in my life and support system that my near and dear ones provide all the time, unconditionally.

Decoding the festival of lights - Diwali

Diwali is a festival of lights as light is a metaphor for knowledge and darkness represents ignorance. Therefore this festival of lights symbolises the destruction, through knowledge, of all negative forces- wickedness, violence, lust, anger, envy, greed, bigotry, fear, injustice, oppression and suffering.

People distribute sweets among friends and relatives as a token of affection and bonhomie, visit each other’s homes and symbolically start a new year. But lately this festival has acquired enormous proportions and is seemingly the best time to grease the system. Economic activity is at its highest because Diwali allows people to accept gifts (it’s no longer considered bribe during these couple of days). What was traditionally an exchange of sweets (with negligible commercial value) has evolved into baskets full of gold biscuits of considerable sizes, iPods, gift vouchers of premium stores etc. And of course it’s Diwali so it’s all acceptable. Govt officers visit offices even on their off days because they would not want to displease their visitors by not being there and it’s wrong to deprive someone of the opportunity of giving gifts.

And talking of mythology, Lord Rama isn’t getting pleased with the fact that spend on crackers over a single night is over $2 Billion and the industry employs 90% child labour in unsafe and hostile conditions in the cracker industry. All put together by conservative estimates, Diwali costs are close to $10 Billion.

It’s been over 20 years now that i haven’t spent a single penny on crackers – instead I prefer to give monies to a few needy around me or to people who struggle to make their 2 ends meet. It gives me happiness and satisfaction that I haven’t burnt up money in crackers causing noise and environment pollution.

The un-Commonwealth games

I have been receiving messages from my friends in Britain about some juicy dope on the ill fated games that are likely to start in a few days. I am ashamed that some greedy individuals in the position of authority have brought immense disrepute to the nation and to Indians at large.

While I am worried about the images that are being flashed across the world media, the collapsing bridges and the filth, I have a strong belief in the fire fighting abilities of Indian managers who perform far better in times of crisis. The games will be over even before they start and if my guess is anything to go by – with negligible glitches. But I cannot help but stop and reflect as to why India is topmost on the corruption index and why it is still growing at 9% annually and how on earth are we still as resilient as we are that every single business school across the globe is doing case studies on Indian businesses and entrepreneurship.

India is the only country that has never ever attacked any other country in its recorded existence. Instead, it has continuously been attacked and plundered by proselytising invaders. The Mughals and the British have had the maximum impact. Lord Macaulay addressed the British Parliament on 2nd Feb 1835 – “I have traveled across the length and breadth of India and I have not seen one person who is a beggar, who is a thief. Such wealth I have seen in this country, such high moral values, people of such calibre, that I do not think we would ever conquer this country, unless we break the very backbone of this nation, which is her spiritual and cultural heritage, and, therefore, I propose that we replace her old and ancient education system, her culture, for if the Indians think that all that is foreign and English is good and greater than their own, they will lose their self-esteem, their native self-culture and they will become what we want them, a truly dominated nation”

So the Plunderers have been successful in inducing the gene of corruption and lethargy amongst the population of the country that invented the ‘0’ and algebra amongst hundreds of significant discoveries that changed the life of people forever.

But here I am not propounding achievements by Indians. I am making a simple point. We have come a long way in the last 60 years ever since we got our independence. We are still healing our scars left by over 200 years of suppression. And it will be a while before our genetic makeup stops fighting starvation, corruption and suppression.

The wealth in any case was not common or else David wouldn’t have said what he said - David Cameron “I know there is also a great argument about the original provenance of the Kohinoor diamond. I'm afraid this will disappoint viewers, but it's going to have to stay put. What tends to happen with these questions is that if you say yes to one, you suddenly find the British Museums will be emptied”. So what do I say – An empire and its alleged history and treasures are all a result of mass plundering – the world over.

Meanwhile it’s pertinent to mention that that the games village is actually looking good and hopefully everything would be just fine.

Some of the people who made a difference to my life-I

Technology has really made our life simple to the extent that applications like facebook allow you to choose a few people from your friend's list and categorise them as people who made a difference. I think tagging people is an unthoughtful way of appreciating or saying ‘Thank You’.

Its been a while that I have written anything on my blog and I thought that while I am settling in my new job after 2 years in the UK, this would be a great opportunity and forum to say a real Thank You to some people who made a difference to my life and touched me to the core.

My Uncle (Mom’s sister’s husband) has been the most exemplary individual whom I have ever come across.

I shifted from Chandigarh to Delhi in 1988 to complete high school as my mom thought that her love and affection was spoiling me and it was showing adverse results in my academics. My Aunt is the vice principal of a school and mom thought that a hint of Aunt’s discipline would do me good. For the 2 years that I was at my Uncle’s place he would return late evening from office, tired but would still find time to solve each of my academic queries in math, physics and chemistry even if he had to read the entire chapter many times. Never ever did I see a hint of irritation while I would constantly pester him for answers.

While preparing for the big exam, if ever he could not sate my academic thirst, I would see him awake at middle of the night reading my text book and trying to ensure that he has an answer for me by morning. I vividly remember a classic case on the first day of my board exam and he offered to drop me to the exam centre. Halfway through the journey, amidst all my nervousness, I remembered that I had forgotten my admission ticket and he quietly turned back the scooter and came home to pick up the ticket and we resumed our journey to the examination centre only to realise a few minutes later that I had forgotten my scale and eraser as well. He turned back again and rather than reprimanding me for my sheer carelessness. He simply said ‘beta’ (son) we might be late for your exam, would you like to re-check if you are forgetting something? Any other parent / guardian would have reprimanded the ward immensely. I got top score in the exam.

A few vicissitudes of life – but proudly so – bestowed on me the responsibility of my sister and I was lost when my little angel was to get married. For 1 full month Uncle left all his occupations and commitments and shifted to Chandigarh (my hometown) to ensure that the marriage went off successfully and he gave all the emotional and financial support to the family. His blessings have been a great catalyst in Tanu's happy married life.

A few years later, when I thought of taking a sabbatical to do my MBA from Britain, lady luck turned its back on me when my education loan temporarily got stuck in some administrative issue of interpretation of my student status and Uncle encashed a major part of his retirement savings and gave me unconditional loan so that I could embark on this journey.

Throughout our lives and for everyone in the family, Uncle went out of the way to help us, guide us and stand by us in every moment of need.

His greatness and selflessness has touched me and educated me as to what humility, goodness, love and affection are. Thank you dear Uncle. May you live a very very long life and may your love continue to enlighten the lives of everyone in the family forever.

Commitment

Lately I have come to believe that commitment is one of the most important dynamics of strategy. Organisational and personal success is simply a function of commitment. When we lock ourselves into a commitment and leave little choice to ourselves, we as risk takers or decision makers are forced to act prudently and to make things work.

2 months ago I took up an assignment in an industry that is totally new, and has yet to establish itself in India. Many people advised me to test waters before plunging in. But my contention was simple. If the commitment isn’t 100% on the first day, success would be elusive forever. When I moved to a lesser known part of India, 7 years ago, to set up India’s first river cruise vessel, hostile environment, untrained staff and regional alienation added to the anxiety of commissioning a ship within 4 months – Maiden voyage being sold out. The company has 2 ships and 2 hotels today.

Large investments in new projects in which entrepreneurs go all in, is a reflection and evidence of their belief in their commitment. History is replete with examples. Reliance industries’ largest Greenfield refinery in the world, Tata’s $2000 Nano Car, Sir Hillary’s conquest of the Everest, Gretzky’s resolve ………...

Lock yourself into a commitment else you will lock yourself out of success forever.

The health index of organisations

I stole an opportunity to speak to the CEO of a well known company at a dinner to which I was invited - courtesy of a guest who stayed on my ship a couple of years ago. Of course – being unemployed at the moment is a bit of an embarrassment when one is among a group of people who are – by any stretch of imagination – multi millionaires.

I was keen to start a conversation ( as a result of the quantity of food I saw on his plate ) and while he was gleefully savouring the lip smacking food, I asked – what are your criterions of measuring the health of companies. Yours and in general.

He forgot that I was an MBA graduate (finance to be precise) and took me through the jargon of debt equity ratio, current ratio, interest cover, EPS, PE and all that s&*%.

I asked him - has he ever considered reflecting on the health index of his organisation.

No!! Because it doesn’t exist.

An important parameter to judge the health index is simply the health of the CEO. It might sound strange – but a CEO who is fit and worries about his personal health would worry about the company’s health. Unfit sloppy obese CEO’s aren’t a great reflection of the company’s health.

Employees who lack discipline and can’t take care of themselves cannot take care of their departments or their companies.

A large quantum of the problem originates from the eating habits of people. ‘I love my food’ is a common adage. But one doesn’t have to over eat. You love your food but does that mean you hate yourself? Does that mean you hate the company you work for?

Annual increments and bonuses are based on sales figures, profits and all tangible parameters. For the greater common good of the companies and for employee effectiveness an additional parameter of personal health (dependant on weight, cholesterol levels, health of liver, exercising schedules) would do the corporate world immense good.

My blogging inspiration

I did not know what a blog really was till Oct ’08 and it took a while before I started penning my thoughts and reflections online.

Nicholas Bate is an immense source of inspiration who initiated me to blogging and his lectures at Warwick have made a considerable positive impact on me. Time management, presentation, project management and articulation are some skills that Nick has imparted. He has definitely enriched lives of executives and students round the world. His books are great and are an easy read. His blog is thought provoking and provides simple solutions to seemingly complex issues of life.

On his birthday today, I would like to thank him very much.

‘Happy Birthday Nick’.