Is common Indian man financially safer than in the west during this financial crisis ?

This question comes to mind again and again why and how the Indians are not getting hit hard as the investors in the west in last couple of months. The answer seems to lie in two simple facts

1) Indian investors do not have exposure to the equity market,
2) Indian economy is till cash economy and that gives room for black money.

Let's discuss the first issue. Indian investors did not have much idea about the equity market and even the people who have knowledge do not bother to invest heavily into the equity market. One of the reasons is it is still considered as a investing in the gamble/lottery. Though it is not completely true but the financial crisis has proved these people were right. Ideally, investment in any equity should be on the basis of the performance of the company and future expected growth. But we have seen time and again that this does not hold true. People get hurt lose money and within ten years there is again mad rush for the equities. All the investors, naive to guru, forgets all the fundamentals and start buying all and any available equity in the market. This mad rush is the cause of the the crisis rather than the equity market but we are left with no words to defend the financial market after the insane of the financial managers in last couple of years.

In the west, emphasis is on putting more money in the equity market. This is more true in case of America than other countries. Even the pension funds invest heavily into the equity market. But this against the whole concept of pension. People do not want the best return from their pension funds but they are more interested in secured return in their retirement age. In the name of liberalization, Government of India wanted to put pension funds of Indians but fortunately it is still safe.

People in the small cities still dont have access to equity market. Some of the private sector banks have their presence in the small cities and try to lure customers by proposing assured 20% return but Indian investors are not fool enough to get into the trap of private sector banks. I am not against the banks, but i am against the way they do business. They do not tell even the half truth the customers when they sign for any service/product with the banks and later on the banks charge them hefty fees.

Other reason for safer economy is the black money. Most of the growth in India is by the money that comes from the pocket of the shopkeepers and the businessmen who do not pay even a single penny in taxes. For example every shop in any big market in Delhi (Lajpat Nagar, South Ex, Karol Bagh, Sarojani Nagar or any other) cost in crores, these businessmen earns thousands of rupees everyday and Crores in a year but very few of them pay taxes. They have money. But their sons and daughters wants to spend some part of that money so we were seeing some growth as consumption rose.

Even the reality market runs on black money. Very few people declares the real deal price of the property and both the parties involve saves lot of money on taxes. This money has originally comes from tax evasion anyway. So the Indian reality market will not suffer as it suffered in America. Of course the first time buyer who live on salary will not be able to buy the new aged quality apartment and it will ease the pressure on this segment. This is good for everyone. There was no reason why the price of one two-bedroom apartment was around Rs 50 lakhs in Gurgaon. It needs to come down anyway.

I feel Indian economy will just have price correction rather than recession.

Financial capital of India, Mumbai, is burning

Last week India saw one of the worse and well organised terror attacks in Mumbai. I was watching fire coming out of the Taj Mahal hotel on BBC. My heart was crying for India. But it does not help or stop the problem of terror in India. It got lots of media attention worldwide because some of the hostage and victims are of foreign origin and Israel in particular.

We saw some weird comments by our politicians at a time when the commandoes were fighting to rescue the hostages. And after the siege was over, we have same old story, Pakistan based terrorist groups are responsible for these attacks. Does it serve any purpose for the people of the country? I have no information to judge whether the terrorists came from Pakistan or any other country, what matters to me is that some innocent people died in the end. The most inefficient home minister India has ever seen has resigned and a new home minister has been named. What a great action the government has taken. I wonder what agenda this government will take in the next general election. It has failed completely on the national security issue. This is not the first time, we saw same fate in the Jammu and Kashmir conflict a few months back. I am sure that the people will be looking for change in the governing party. We need a government that is efficient and has leaders who are active and have will to execute the dreams of the shining India.

In the last two decades Mumbai has seen the worse time in its history. There have been serial bomb blasts many times, terrorist attacks and conflict by the regional leaders to expel the non-marathi manush from Mumbai. It has seen all but it is so resilient that it will bounce back to its fast speed life very quickly.

People of the country new need to fight back. It is time for them to be aware of their rights and ask for them and fight for them. Every citizen has right of security and it should be ask for by everyone.

Role of media in making current financial crisis worse

It is very the worse time in generations for the financial sector and we have already seen some of the biggest investment banks collapsing. It was out of imagination that a bank like Lahman Brother will go bankrupt and the biggest bank, Citi bank, will ask for bailout package from US federal government but everything has happened and more is expected to happen.

One of the main reason behind the current situation is cited by the economist is low confidence among the consumers. it is a cyclic effect. low confidence means they spend less and it affect the economy even worse and the consumers spend even more. It has not been many months that the consumers' confidence level was reasonable and this crisis did not seem so deep.

Why this is happening so fast? the only reason we can find is the role of media. In current world, we access to too many TV channels, online and off line news papers and many other sources. It is disgusting to see the way the media has played its role in reducing the consumers' confidence. For last couple of months, every sort of media has published report of collapsing banks, insurance companies and financial institutions on front page. My question is is this demanded for?

Journalist and the media will say they need freedom of expression and need to report the truth. I completely agree with this. My only worry is the way they has reported it. I do not think that all the bad news regarding the crisis has to be reported on the front page. Many of the articles related to 'financial crisis' could have been on the inner pages where the news papers publish news regarding business and economy. Probably it was not mainstream news if a bank collapses in any part of the world. Is this the first time that a bank is collapsing? The media has exaggerated the extent of the feeling of the crisis. It will take many years before the same level of confidence will return and economy will start establishing to see another economic boom.

EMI - Are the Indians ready for this credit culture?

Recently I have watched EMI, a movie starring Sanjay dutt. I am not writing movie review so I will not go into the topic of how the movie was. What impressed me was the topic of the movie, EMI (Equal Monthly Installments).

I have worked in indian corporate world for many years to have enough experience of the life of the young and contemporary India. Almost everyone of us was earning more than our parents. We were leading quite good life, going out for dinner, eating pizzas and spending weekends in the malls. Evrything seems very good. but there is a hidden truth that no one knows other the people who are leading kind of "good life". We were paying EMIs. These EMIs can be from credit cards to car loan to house loans.

Many of us had at least 2 credit cards from different banks. We use them in such a way that we can avoid the payment of the bills to maximum possible days without any penalty. Even when we can not pay them in that maximum time frame, we go for credit transfer to second card. Effectively we delay payment by almost 100 days. Even then many of my colleagues have to pay the bills in 3-6 EMIs.

Many of us are too young and have nothing to fall back on in case of any problem arises. We go for buying biggest possible car we can afford to pay EMI for. This is a drastic contrast to the culture of our parents who would have never gone for the biggest car but for the car that would have served the purpose of buying one. None of seems very enthusiastic enough to buy Maruti 800 anymore. Most of these young guys buy at least Santro or something costing in excess of Rs 500,000.

We do not think what will happen if we have some emergency, medical or personal, forget about losing jobs. If we get some other emergency, we always think that we have got so many credit cards so we can afford to spend a few lakhs from them. Everything is fine as long as we understand the cons of this kind of attitude, a new culture.

This new trend has given rise to consumerism in India and is one of the cause of India's exponential growth of urban India in decade. This has been much talked about in all the articles as 'India shining'. We started to behave and act like our American or European counter parts. But there is a basic difference in the life style of the two, Indian and our counter parts in developed countries.

One, though we try to behave like our counterparts but our roots are still liked to the culture of our parents. We change jobs every six months but we seeks and expect permanent and secure jobs from our employers. We are not ready to see pink slips yet. Neither we are ready to work on a petrol pump when we lose. This is a different issue that the working conditions of petrol pump in India are sub standard and exploitative. We have our parents and families living back in small town who see us as urban rich man and feel pride in the local community when they talk about us. Can we break the news of losing job to them? This is what happend in the case of Jet Airways when they fired over 1,000 employees in one go.

Second, people in developed countries have social security system. so they are not going to die of hunger anyway. China, that is always talked about its worse labour laws and long working hours, has public hospitals and education system much better and easily accessible to all the Chinese people.

I feel that we are not ready for the EMI culture. We need not spend all the money every month and try to save a certain percentage everymonth as our parents did. Because just earning more than our parents is not the only way of more happiness. We need to think about total happiness, something I will write another time.

cost cutting by indian companies (manufacturing and the IT)

Recently there has been a lot of talk by the Indian companies about 'cost cutting'. Commerce minister of India, Mr. Kamal Nath, has said that the Indian companies are running on huge profit margin so they have flexibility of reducing profit margin and continue to operate as normal.

The problem is how much cost cutting is feasible, practically. When the demand is going down for all the commodities in market manufacturers can not keep producing. In the developed countries, there is lot of emphasis on firing the employees whenever the companies face any kind of crisis, financial crisis or even low quarterly profits. The tragedy of system is that the management is rewarded, at the share price go up in short term, for taking such drastic steps. It is a problem for the society when there are unemployed people around. But the social security or the unemployment benefits take care of the people before it becomes serious problem. But this option is not the first choice for Indian managers. India does not have social security system to support unemployed people.

But this cost cutting mantra does not seems to be relevant for the manufacturing companies in India. Most of the companies in organised sector are working very efficiently and the salary is a minor fraction of the total expenditure. It the operational cost that can be reduced by using some more efficient ways or just by stopping production when there is no demand. Bajaj Auto has operated only 4 days in a week after the crisis of 2001, dotcom bubble bust. Workers do not seek to exploit the companies beyond a point and coopearate when they understand there is real crisis. I am sure they will not ask for salary hike in the bad time.

It is completely different story for the IT companies. There employees' salary is the major portion of the expenditures. They generally do not own anything. Everything is on rent, desk chair and computers and the building of course. Most of the IT companies had lots of project from the BFSI (banking, financial services and insurance) sector and these projects were quite rewarding as well. Financial institutions pays well to everyone because it is not their money anyway. Most of the companies had big expansion plans and were recruting like crazy in the last couple of years. They had 10-20% on bench for future projects. They have big margin to cut cost by reducing the strength or keeping at same level as they are. Bonuses might go for the workers in this sector. The young generation that was looking for lucrative salaries in the IT sector will be quite disappointed in this recession time.

Is Indian economy safe from financial crisis?

Whole world is facing problem because of the financial crisis started from the Wall Street. Many of the big and once successful banks and financial institutions have gone bankrupt or have to take huge capital support from the national governments. But in India we are made to believe that there is no problem in the market. Though we would like to believe this sort of reports and statements but it is hard to believe that this is true.

For last many months, world is facing the problem of layoffs and recessions but we were denying there was any problem. Jet airways fired over thousand employees who were on probation but the company had to take some of them back because of the government pressure in the election year. No one will say that there was pressure from the government on the Jet Airways but if we look at the huge pending bills for the fuel with the state run companies and the relaxation that the government gave in delayed payment of the bills, it is more than obvious that there was pressure on the company or some sort of hidden agreement to hire some of them back. Now the Prime minister says that the country is suffering from the recession in the world economy but the Indian banks are safe.

This kind of hiding the facts and telling white lie is the biggest concern and it is hard to believe that the Indian banks are safe as claimed by the Prime minister and the finance minister. There is no direct indication that the Indian banks had huge exposure to the subprime problem in the USA but I am sure they will find it difficult to get capital from international market and this will build huge pressure on the liquidity of the banks. Reserve Bank of India is trying its best and injecting more liquidity in the market through reducing the CRR rates etc. But the moral of the customers is too low and low confidence might result in higher rate for the interbank interest rates. This is happening and has been reported in some reports in the Indian media.

Many of the young people working in high paying sectors in India will see large layoffs or recruitment will freeze. This young generation that has taken loans for home, bikes and cars will find it difficult to pay back as per the original plan. If they start defaulting for any reason, Indian banks will have no other option but to declare that they are also facing financial crisis.

Till now nothing bad has happened and we can just hope that it remains so and we don’t face the reality of integrated and open economy started in 1991.

Indian IT workers layoff

Indian economy has been booming in the metros for last four to five years because of the enhanced purchasing power of the urban population. IT and BPO employees are among the highest earners in the urban areas. They are young and many of them are single, they can spend as much as they want. They are buying the most expensive electronics gadgets and having Apple product as their status symbols. But this might change in the coming years, at least temporarily.
There is slow down in the IT sector and many of the Indian IT companies, including big and medium sized, have almost freeze their recruitment process. There might be some job postings on the employment portals and the companies’ website but there is doubt the companies are looking for employees actively. Important thing is “actively”. The companies are not following the employees available in the market as they used a few months back. HR managers are looking for the best available talent for the low price.
There has been some news that some of the companies have also started layoff in the IT sector. It is difficult to say these are because of the slowdown in US economy or crisis in the financial sector or just restricting in the companies. As usual, the redundant and low performing staff will be axed out of the companies to make the companies slimmer and more efficient.
I do not see any major problem for the performing current employees in the IT sector. Major problem is for the people who are coming out of the university now or in near future. They will find it difficult to get break into IT sector. Situation is something similar to what it was after the bust of Y2K bubble. It is even true for the people with a number of years of experience and went for higher studies for one or two years. They need to use their contacts and good will with the friends to get something at this moment.
My advice is if you are working for any company, look for the financial strength of the company and the performance of its clients. If the clients are from finance sector you might be in the wrong company. Do not try to switch company at this moment because your employer of one year might not make you redundant with the same ease as a new employer of one month might make.
It is also good time to go to university for higher education for one to two years. Chances are by the time you will come out of the university, market will be in better shape and you might be able to get better roles in companies’ of your choice when you are equipped with higher education.

How to do Activity Duration estimation

After identifying the resources available for the activities of the project, the project manager can estimate how much time the activity will take to complete. The project manager can take the help of the resource calendar, resource requirement and other existing company processes. The estimator needs to be giving as much as information as possible to get a realist estimation to complete the activity.
Following methods are used to estimate the duration an activity might take.
One-Time estimating: This kind of estimation is based on expert judgement of estimator. This estimate is best when it is made by the resource who will work on the activity. Estimator looks at the historic performance on similar activities and makes her judgement.
One of the biggest problems with this estimation is the estimator estimates some duration for the activity and then adds some buffer time to be on the safe time. This can hurt the reputation of the project manager if the planned activities are completed much before the time. Since the estimations are made by an expert or the boss in many cases, there is no buy-in from the project team. This might impact the performance of the team and they might miss the baselines for the activity.
Analogous estimating: It is top-down approach and very similar to expert judgement but the estimate is derived from the duration for the similar activities or the projects. Though ideally this approach can be used for activities and project both, practice is to use for the project by senior management or the project sponsor. It is the responsibility of the project manager to estimate duration for the activities using some sound techniques.
Parametric estimating: when exact information for the activity is not available, the project managers can use regression analysis and learning curve methods to estimate duration for the activities. In regression analysis two variables are plotted on the scattered graph and their relationship is derived using mathematical modelling. Learning curve method says that any resource will take less time than she took last time to finish a similar activity.
Heuristics: It is just a rule of thumb. After working on large number of similar activities, one knows how much time it takes for a similar activity to complete. This can be derived from the results of the parametric estimation.
Three point estimation: This method believes that there is very small probability that a project will be completed on a given date estimated in the beginning of the project. This method takes into account the most likely cases of finishing a project. The project manager can come up with best, worse and most likely duration for finishing an activity. A simple average of these estimates can be used as best estimate for the activity. The project manager can also use more complex weighted mathematical formula to derive duration for any activity.

How to do Activity resource estimation

This is important to remember that the project manager need to first define the work packages and identify the activities and then to identify the resources. Project cannot be planned based on what the resources are available but they need to be estimated and brought together to complete the project. Resources can be material, machinery or the human. It is very important that the resources are estimated and controlled very carefully otherwise they might be allocated to other projects when they are needed for your project.
Project manager need to review the availability of the resources and decide the duration and quantify the requirement of the resources for the project. Similar resources should be put together so that they can be managed and shifted internally as the need of the project may be.

Milestones of a Project Management Plan

Any event that is important for a project can be marked as milestone in a project management plan. Milestones help the project managers in tracking the progress of the project at some intermediate points. These events work as check points for the project management plan. These can be measured against the baselines for the time, cost and quality. This helps the project manager in controlling the project. If there is any variance from the baselines, some corrective actions need to be taken to control the project and bring it back to align with the original plan. If the variance is too large and the project cannot meet the initial set baselines even after the corrective actions then the project manager should update the other stakeholders and take their buy-in for making other changes to the agreed project management plan.
Some of the milestones can be imposed by the project sponsor or the other external stakeholders and those are to be met to satisfy the requirements and the needs of the stakeholders.

Time Management : Arrow Diagramming Method or Activity on Arrow

Time management: Arrow diagramming method (PDM) or activity-on-arrow (AOA)
This is a tool to draw network diagram for the time management in project management. In this method activities are represented by the arrows and the nodes represent the dependencies between the activities. This kind of diagramming method can only represent finish-to-start kind of dependency. This method also uses dummy activities to show the dependencies between the activities. These activities are shown using dotted lines in the network diagram.
This can be represented by writing the activity name over the arrow.

Time Management : Precedence Diagram Method or Activity on Node

Time management: Precedence diagramming method (PDM) or activity-on-node (AON)
This is a tool to draw network diagram for the time management in project management. In this method activities are placed at the nodes and arrows are used to show the dependence of the activities. Activities can have four types of dependencies discussed below
Finish-to-start: An activity must finish before the next activity can start. This is the most common form of dependence. E.g. you must construct building before you can start the painting of the walls.
Start-to-start: An activity must start before the next activity can start. E.g. you must start the design before you can start coding for the software.
Finish-to-finish: An activity must finish before the next activity can finish. E.g. testing of the software should finish before the finish of the documentation or the installation of the software.
Start-to-finish: An activity must start before the next activity can finish. This kind of dependency is not common. E.g. ignition of the explosive should start before the old building can be collapsed using explosive.
Activities can be sequenced using any of the following kind of the dependencies
Mandatory dependency: These are the dependencies that are inherent in the nature of the work or are required by the contract of the work.
Preferential dependency: These are the dependencies set by the project manager. These can be changed by the project manager if there are change request for any reason from any of the stakeholder of the project. This gives freedom to the project manager to crash the schedule of the project.
External dependency: These are the dependencies set by the stakeholders or the government and have to be met by the project manager to satisfy the requirements of the projects.

Niketa Mehta – case of Indian abortion law

In media there was lot of discussion about the case of Niketa Mehta in Bombay High court. Some so called elite people, hooked to internet and sitting in air conditioned offices, of India were aggressively supporting abortion. They were arguing that it is parental right to have abortion and there should not be time limit by the law at what time parent should go for abortion. Another argument was that this law is very old and is not applicable to present day when technologies have advanced a lot. All the arguments seem valid at surface. Lets delve into little bit more details

The argument Mehta families gave in the court was that they do not want a handicap child in their family. This was one of the weirdest arguments one can give for abortion. There are many questions linked to this argument. First of all, if a baby is handicapped then the child (unborn yet) should be killed? Medical expert may guess about the congenital heart issue but they cannot guess about other issues like blindness, dumb, deaf or cancer etc. what the parents should do in this case? Should they be allowed to kill the baby just after birth as soon as they come to know about the problem? If the question is of the competitive life in the developing countries then a child who fails in the board examinations or gets below 80% should also be allowed to kill by parents.

The Mehtas’ says they do not have money for the treatment of the child every four year. If the money is an issue then most of the parents should be allowed to kill the female foetus because they can argue they do not want to arrange for the dowry etc. (though dowry is not legal but it is acceptable practice in India and very few people will say it does not exist in any section of the Indian society).

Above all a seven month foetus is not a parents’ property at all. It is an unborn baby. It has all the organs. It is a human and has human right. There are some people who support mercy-killing and may argue on this as mercy-killing. I believe mercy killing should be reserved for rarest cases. Otherwise in a developing country where there is no social security system all the old men and women should be killed because they live life of dependent and treated like animals. Why not all the people living below poverty line be killed? Anyway they do not contribute anything to the national GDP because most of them unemployed. Eliminating human being because of their physical, mental or economical disability is not a solution to the problems. It is running away from the problem.

I appreciate the mehtas for coming to court and asking for court permission to allow them to abort the child. They could have done this silently in any of the maternity centre. It has opened a debate but the debate should be about how to support the disabled in the country and not about legalising the killing (abortion) of disabled. We need to create a social support system for them. This debate should not end in the air conditioned offices, common men should get involved in it then only it can do any good for the society.

Honda launches hybrid cars in India

Recently, Honda Motors Launched first hybrid car in India. This was good news for the environmentalist but does it make any practical sense?

Currently it cost over Rs 20 lakhs. In India, someone who is going to buy car with such a price tag is bothered about petrol price. it is status symbol for him. So I do not think it make any sense to launch this car and be happy about environment.

Some people may argue that it is so expensive because of the taxes by the government. even if the tax is brought down to 20% from current 100%, cost will not go below 12 lakhs and this is also not the range of middle class, petrol price sensitive, people. it is just an publicity stunt by the company, I think.

many more IIT in India

For many years IITs have been opposed to the idea of having many more Indian Institute of Technology (IITs) but this year humane resource department has won and we will have many more IITs. I am personally supporting this idea of having more IITs but if they can manage the standards of original IITs. They should not be for the sake of having more numbers.
Many people oppose this idea by arguing that it will dilute the brand name of IITs. I do not agree on this. I would like to compare this mass education in some of the big schools in the west. For example, Harvard, INSEAD and LBS takes thousands of MBA students each year but their name has not dilute by having more student. I think it has only help them by having more alumni.
For the IITs new strategy should be to build brand for themselves. For example, one IIT can say they are very good in computer science and the other can say they are good in nuclear science and the other one in civil engineering. All of them can not be good in all the subjects. they need to create niche for themselves and should not be bothered by more IITs. They have good faculty and there is a sizable alumni network to support them.
I think a new era has started in the history of IITs and they will emerge more stronger once they realize that they have to live with this reality. Good luck to them.

biofuels are good or bad?

these days everyone seems to talk about the biofuels (in support of these or opposition). I will say i will support the production of the biofuels with a condition that all the subsidies given to the agriculture for food are not given to the production of the biofuels. In my view if biofuels are cheaper after the subsidy than it is better to buy oil and why waste the public money on generating biofuels. If biofuels are cheaper in absolute terms without any subsidy than we need to talk about the carbon emission as well. are the biofuels generate less carbon emission in total. I am emphasizing on total carbon emission because lots of fertilizers are used in production of crops and there is carbon as well.
just because it is fancy, we should not support it. if it has merit and logical superiority over the oil then of course we should support it. even if we produce lots of biofules and food prices go up even then the inflation will go up and lots of people will die of hunger in poor and developing countries. main purpose of the biofules is not to keep the oil prices low, but to keep the inflation in control. if that can not be done then there is no point of having oil price at $40 per barrel by using all the crops for biofuels.

Airtel (Bharti) MTN merger talk failed

For last few weeks, there was quite enthusiasm (a sort of pride) in some of the colleagues that Airtel (an Indian company) is going to announce largest bid in the telecom. Now Airtel has officially announced that the talk have failed to result anything.
From beginning, I was doubtful that Airtel, if it were successful, can management such a large company with too much diversified market. One of the biggest problem when we talk about Africa (or a company in Africa), we think it as one country. In reality, there are so many countries and every country has very diverse culture and needs. comparing Indian market with market in Africa might not be correct way to evaluate possible success for the merger. There is also issue of ownership. I am not sure if the people of africa will be too happy to have and Indian company owning telecom so openly. there are many indian companies operating in many part of Africa but generally they are low profile except TATA that is almost everywhere on the streets and many people dont even know it is an Indian company.
Now talks are terminated, I believe this is good news otherwise Indian shareholders might have suffer a big loss.

i am back

I have been off from writing my blog for quite some time because of many reasons. one of the biggest reason for not writing blog was I was just too lazy. I am back for good and I will start writing again.

Have a nice weekend.

Quantitative MBA managers think in terms of finance only, learn human factor as well

Recently, I was reading a book “In search of excellence” by Tom Peters and this article is a reflection of his writing.

Most of the managers in the west (particularly USA) come from management schools with MBA degrees. These managers have little experience of any industry and they directly start working at a very senior and taking decision on behalf of the organization and shareholders. Ironically, many of the MBAs have background in engineering or economics, two subject very closely linked with mathematics or numbers.

Even the admission processes to these MBA schools is design in such a way that only math students can come easily. These managers study mainly finance in the schools and start looking for numbers everywhere.

When they go for finance jobs, they seems to do really well but when they go into other industries they start looking for the cost cutting and economy of scales etc because it makes sense to them (or to their mind filled with numbers).

On the other hand there are countries like Japan that does not have any MBA school but still do quite well in the many industries. Even the Tokyo Stock exchange is one of the biggest in the world.

He further talks about the human factor in the success of the Japan and argues that managers are too much focused on the numbers and they lose sense of the human factor that affect the performance of the organization as a whole.

Even when the question of quality improvement comes, managers with quantitative mind start thinking of putting more employees in the quality department. The fact is that Japan automobile factories have one third of the quality engineers in comparison to USA.

It seems that in big organization people factor is more important than anything else.

Quantitative MBA managers think in terms of finance only, learn human factor as well

Recently, I was reading a book “In search of excellence” by Tom Peters and this article is a reflection of his writing.

Most of the managers in the west (particularly USA) come from management schools with MBA degrees. These managers have little experience of any industry and they directly start working at a very senior and taking decision on behalf of the organization and shareholders. Ironically, many of the MBAs have background in engineering or economics, two subject very closely linked with mathematics or numbers.

Even the admission processes to these MBA schools is design in such a way that only math students can come easily. These managers study mainly finance in the schools and start looking for numbers everywhere.

When they go for finance jobs, they seems to do really well but when they go into other industries they start looking for the cost cutting and economy of scales etc because it makes sense to them (or to their mind filled with numbers).

On the other hand there are countries like Japan that does not have any MBA school but still do quite well in the many industries. Even the Tokyo Stock exchange is one of the biggest in the world.

He further talks about the human factor in the success of the Japan and argues that managers are too much focused on the numbers and they lose sense of the human factor that affect the performance of the organization as a whole.

Even when the question of quality improvement comes, managers with quantitative mind start thinking of putting more employees in the quality department. The fact is that Japan automobile factories have one third of the quality engineers in comparison to USA.

It seems that in big organization people factor is more important than anything else.

Closely guarded (reserved) executives

Everyone is fighting with the next person for something. Even the people working in the same team are fighting for the promotion or getting some sort of rewards. In some of the industries it is very important to have close team work but all the members are competing with each other. How can they be good team members?
Most of the senior executives are very reserve when it comes to communicating with the new people. They speak some very diplomatic things and one cannot make any sense of what they are trying to convey. This is because of their experience of working with different teams and people. Whenever someone opens his/her mouth other people start interpreting something for their benefits.
In today’s fast communication it is very tricky thing to use email system. Anyone can do CC or BCC while replying or writing an email and it puts the recipient in little dilemma. If you don’t want to reply some email, people will put your boss in CC and then you have to reply. Even if you find out problem in others work, they might find other ways to defend themselves by using polished language and you may find yourselves in messy situation.
Because of these reasons, senior executives prefer not to speak much with new people. But this is caused problem even for them. For example, when they hire consultants to solve some issues, they are so reserves that consultants find it difficult to get information. In this situation, how someone can help when the client is not willing to share information.
Consultants first need to build trust and credibility to win the trust as soon as possible so that they get real information to proceed further.

Dilemma of historical relationship with economic benefits

Many a time companies develops relationship with some charity organizations (hospitals trust etc). These relationship are developed unconsciously and no one think about how much it will cost in future or how difficult it will be to break this relationship.

When the profits are running low and the cost of input goes up, these organizations start looking for cost cutting and see these liabilities as a financial burden on the shareholders. These relationships are developed for the social benefits in the beginning and it may not be possible to break relationship publically.

In India, some of the business groups supported social cause to such an extent that they have become synonyms with the trust. There is a very big business groups based in Kolkata, India, that has worth around Rs. 5000 Crore (more than a US $ 1 billion) but all this money is tied with the trust.

This kind of business problem can arise anywhere. I was reading about one of the corporations that has supported a football club for almost 90 years and now want to breaks its ties with the clubs and it is finding it’s difficult to do so.

I don’t think there is any answer to this kind of business problems. Decisions are solely based on the judgement of the management team.

Effective feedback to and assessment of team members

Formal assessment of the team members is very much subjective in most of the companies. It is dependent on the company culture, personality and expectations. Assessment is done by the human beings on some point based system (1-5 or 1-10) that can easily have error of 10% to 20% (depending on what point system was used).
Some of the companies try to assessment project quite objective and quantitative using different methods. 360 is one of the most famous ways to have objective feedback about an employee but in most of the cases your line manager has largest share on your feedback.
Whatever method is used, employees of the organization should have clear idea about the methods used and implication of the output on the individuals. Rules of the assessment should be defined unambiguously so that the assessor and the assessed don’t have scope for argument. But the project managers should be ready for the difficult performance related discussions.
HR can take role of psychological support before and after the assessment. Performance is good or bad, candidate needs support for the next action and how to progress next and achieve targets for the next assessment.
To make it amicable experience, assessment should be of specific targets and how they will be measured should be explained when the targets are set. Targets should be realistic and achievable. Just by imposing some targets those are not realistic will not serve any good to anyone.
Individuals' performance can be improved if assessments are conducted with integrity, skill and communication and can help in building professional excellence.

Managing expectation of the team, clients and boss

How many times you have faced problems because you could not manage the expectations of the team members, boss or the client. It is one of the biggest source of conflicts between the (inter or intra) teams.
I give you an example how the expectations of the client can go up and if we don’t manage them well they can create problems. One of friend was working on the change management project on a client site. In the change management project, privacy of the employees on the client site is very important because if this is not ensured then no one will reveal any information about the organization. During the project, they were interviewing the different teams on the client site. After the interview of team A, the boss of the company asked how was the team, they replied it went very well, team was very cooperative and helpful etc etc. Next the consultants interviewed team B and again the boss came in the evening and asked about the team B. Now the consultant said that they had a contract that they will not reveal any private information about any employee. But the consultant had already done the damage to team B. Telling good things about team A and not telling anything about team B was an indication that there was some problem with team B.
It is better to manage expectation at the beginning rather than waiting till late. Expectation of the clients or the boss or the team always keep increasing so don’t let them become dragon and get trapped in the problem.

Difficult to work in a team, take the responsibility and work individually

Most of the activities we need to work in groups and groups have lots of conflict because individuals have different expectations in the team. Other reasons of the conflicts are no proper work division. If the work is divided at randomly, without giving proper thought to the final result then when the individuals come back with their work that work is not compatible with the other’s work. Because everyone has put his/her effort in working, they don’t want to change their part and that become adamant. They keep finding problems with others work and suggesting them to modify their work. And it becomes the point of breaking the team. As the team becomes bigger, chances of conflict also become higher. I think optimum size of team is 4-5 to avoid bigger problems.
One of the easiest ways to solve these problems is to take the responsibility of whole work. Believe me, most of the time, other team members will not mind if you work alone for everyone. It is important that other team members trust your capabilities and don’t interfere at later stage. You might have to work little harder, but this way of finishing work is much faster than the traditional way doing everything in the team.
This does not mean that I am suggesting to do everything individually and to avoid working in team. I am suggesting that we try to avoid conflict by proper project planning at the very beginning of the project. If this cannot be achieved for any reason, try to work on whole project individually.

Types of conflicts in the teams

All the teams have some kind of conflict because the individuals have varying experience, thought processes and expectations. This is does not mean that a team having conflict is a failure, this conflict can be used as an asset. Team conflict through successful and productive resolution can be done through understanding conflict dynamics and cultural approached to conflict management.
People have different approach to conflict based on the individual psychology. It can be emotional, cognitive, constructive and destructive. A successful team has cognitive and constructive conflicts.
Anger, personality clashes, ego and tension creates emotional conflict. Resolution to a problem is not easy when someone has emotional conflict.
When different team members have different ideas and arguments that generate cognitive conflict and this is mainly depersonalized. This is based on arguments about the merits of ides, ,plans and projects. It forces team members to rethink problems and arrive at a collective decision because cognitive conflict is not based on personal feelings.
Constructive conflicts help team resolve problems and uncover new solutions to old issues in a productive manner (Thompson, Aranda, and Robbins, 2000). It allows change and growth to occur within a team environment. Destructive conflict, like emotional conflict, causes dysfunction when a "lack of common agreement leads to negativism" (Thompson, Aranda, and Robbins, 2000). This disrupts the progress of all group members. Destructive conflict in teams diminishes the possibility of any problem resolution.

Changing world, can we afford to stay neutral and plan long term?

There is a dilemma for the project managers. One hand they are expected to have long term plan for the projects and on other hand, there is nothing like constant so it has to be dealt with flexible system. Though there are always check points to get the feedback of the project and then fill them back into the system so that the system can generate some responsive strategy.
Sometime we get so much confused with this dilemma that we start asking ourselves that when we have so much uncertainty, why plan at first hand. This is true that we need to modify our plan according to the changing demands of the environment and shareholders but the general project outline gives a framework to work in. This framework gives a direction to proceed. Other important thing to remember is if there are lots of changes in the project that also mean that the project was not planned properly or the project is not relevant any more. We should sit back and analyse if the project is still relevant. Many a time, we keep working on projects that are not relevant because we find it difficult to forget the sunk cost.
We should also be clear in our mind that it is not always possible to plan everything in advance because either we don’t have expertise to do so or it is too expensive or time consuming. We need project plan with some realistic goals.

Indian IT major may avoid layoff during recession by focusing on Asian market

During last couple of months, there has been a lot of fear among the IT workers in India. Some of the major companies have either layoff some of the staff or have decelerated the hiring rate. Though it is not clear whether the US is heading towards recession but the companies and the analysts are expecting this for some time now. If any recession comes, Indian IT companies may suffer for short term because companies in the west will cut IT spending on new projects to cut cost. I am of the view that they cannot stop IT spending for long time because IT is backbone for the companies to compete in the fast changing global economy.
During this time IT companies should look at the Asian market that they always ignore. Indian and Chinese market is booming and IT spending is considerably higher these days. If the companies get some work in the home market to compensate for the losses in the western market that will be great. Wipro recently got multimillion dollar project from one of the major retailer. This internal focus will give good backing to fight any fluctuations in the international market.

Regulators raid Intel, DSG in Europe – managers are helpless against antitrust lawsuits?

EU regulators raid Intel offices on Tuesday. They also raided some of the big electronics retailers, DSG and Media market, in EU. This has become a regular practice of the regulators in the EU to raid offices of some of the big retailers or OEMs. EU is becoming difficult market for the big companies to operate in. Microsoft got so much tired of the lawsuits in EU that it conceded defeat after fighting for many years and paying millions of dollars in penalty. On one side companies need to fight with the regulators on the other hand market is not growing anyway. Manager doesn’t seem to have any option to fight with this. Shareholders of the companies demand for the more profit and bigger operations and growth in every sense. When the managers try to do this, they are accused of the monopoly and all. It is very difficult for a company to avoid become monopoly when the customers like the product/service of the company and how can managers say no, we don’t want to grow anymore. One of the solutions to this problem is to keep diversifying the business of the company. But even this is not a viable solution because once the regulators start investigations; they keep broadening their scope of the investigations. For example, in case of Intel, they started with investigations for the possible contract with the OEMs of the computers but now they are also investigating relationships of the Intel with retailers.
I just wonder if managers can have any solution to avoid with these antitrust lawsuits.

Indian IT worker layoff during 2008 US (world) recession is reality?

Though there is no recession officially (If the two consecutive quarters don’t see any growth than there is recession, by definition) but it seems it has already started hitting the IT workers in India. There are rumours that IBM has fired around 700 engineers in India. Other companies are reducing the performance bonuses etc. I am not sure if the layoff has started in India for the IT workers or the companies are just cleaning the redundant, non-performing staff to save the cost on salaries. As we already know that the Indian Rupee appreciation against dollar in the last one year has hit the profit margins for the IT/BPO companies, companies will take every step to make themselves efficient to fight with any recession in the US. Since US is still the largest market for most of the IT companies, any bad news for the US economy will hit the Indian IT industry as well. Companies are trying to diversify into the Europe and Australian and Asian market but the share from these regions is still significantly low.

I doubt that the slow growth or recession in the US market will hit Indian IT companies for very long because companies will cut the IT spending in the first year of recession and they will have more outsourcing to cut the cost and that will help the IT industry in India. In this scenario, engineers working for these companies should try not to take too much risk with the performance and try to improve the skill set that can be used for diverse projects. It should not happen like the Y2K boom time when every engineer had almost same skills and when the boom burst they had nothing else do. If the current employees continue to provide value to the companies and companies see high value in the future, chances are you will not be fired or made redundant.

It may be hard time for the current student looking for the jobs in IT sector. Students should do their homework properly to search for the jobs and be ready to go for higher education for one-to-two years in case economy goes south and they don’t find job. Don’t take this bad luck, but convert it good luck by learning new skills.

Can Yahoo chief stop the merger deal from Microsoft CEO Steve Ballmer?

Today one of the biggest challenges for the managers is to perform well otherwise they need to face with some of the harsh reality of the corporate world. Get sacked or company is acquired by other companies and they eventually lose the freedom. Yahoo Corporation was facing problem for quite a long time in integrating some of the big applications it developed (or acquired) over the last 10-15 years. As I am always sceptic about the valuation of the online business (with most of the asset as intangible), I did find it difficult to understand how it was valued so high on the stock market. I think even the shareholders of the yahoo were also thinking similarly and wanted to see some hard cash earnings from the businesses that yahoo was building for so long. As soon as the shareholders started asking for the return company got into problem. One of the best sources of the earning for the yahoo was advertising. It had lots of online customers and it could attract advertisers to pay for the advertising space but this was not enough.

Yahoo is performing (financially) so poor that now the shareholders will not wait to see some charisma from the yahoo. Shareholders are now very much aware that the company management is not able to turn around to make it a success so one of the options is to replace the whole management team but that is not possible at this moment because it is too late. Other option to merge with some company and Microsoft seems the only interested company to pay such a huge price for the products, yahoo has got. No doubt, yahoo has some of the very well known products (yahoo mail) in its portfolio but getting value out of them is not so easy.

Since Microsoft needs someone to boost its online presence so it would be willing to pay higher price for this deal. At this moment, Google is becoming so powerful everyday in online market that if Microsoft could not catch it now, it will never be able to catch that. Microsoft has money and all resources so it will not stop this deal even when the Yahoo board has rejected the deal. Yahoo can only try to persuade Microsoft to pay little higher price. I doubt that Microsoft would pay too high price now because it knows if it drop this deal then the share price for Yahoo will down (probably to single digit) and eventually, it will not get what it can get now. One of the best ways for Yahoo is to find some other organization that will be interested in bidding against Microsoft. In 2008, US economy seems to slow down so chances are rare that any company (other than Microsoft that has cash earning machine) will be willing to risk such a high amount and it mainly in cash.

Customer satisfaction results in high profit margin in high end market

Most of the consumers’ good retailing companies in the west are fighting to keep large market share even when they are earning low profit margin. Most of the goods are manufactured in China and there is little room for any innovation to have cheaper logistics (and it is more difficult when the oil prices are heading north). Retailers have pushed the manufacturers and suppliers in the People republic of China to such an extent that there is no room left for reducing any cost. But there is still high end market that has not been shifted to any developing country and there is any chance that it will have happen in near future. There are many reasons behind this. First, it is very difficult to translate the exact requirement for some of products and manufacture them in other countries. It’s more about the culture rather than the technical specifications of the product that cannot be translated. Every country has some culture and that is difficult to replicate. As I was talking to one of my friends from Kenya, she told me that they used to have a traditional dress in their country and that used to be quite expensive because that required a specific kind of fibre for clothes and they were hand woven. Now in the last few years situation have changed and now they can get that traditional dress very cheap because it is manufactured in China. Problem is not with manufacturing something in China. Problem is once something is manufactured in China, customers expectations are to get product at cheap price. So these new traditional clothes are made of synthetic fibres and every Kenyan who had seen traditional clothes a few years back can tell the difference. Other problem is manufactured in other countries so far have no idea about the local cultural values and they can sometime make some products those are not easily acceptable in different cultures (e.g. white and black colours have different meanings in different countries).

By understanding this problem, some of the local manufacturers in the developed countries can fight with the flow of the cheap good coming from other countries. Though it is almost impossible to fight with the flow of the goods but the local manufactures in west can still produced some of the high end products that have high quality and adhere to the local cultural taste. For example, Scandinavian citizens are used to of very standards of quality of life. And this has been very well exploited by a company Vipp in Denmark that sells vey high end, high quality bins at a very high price (some of the bins are even for Euro 500). These are handmade with high steel by local craftsmen. For keeping earning high profit margin in this market by selling high end products, one needs to be very clear about following practices

Never compromise on quality for cutting cost: Always remember that by cutting cost by reducing the quality will not work. You are targeting some of the customers, who prefer to pay for the quality, so don’t disappoint them. Short term profit can hurt in big way in long term.

Mixing low quality with high quality: Don’t try to serve all the customers together. Even the company like Walmart is not able to serve the high end customers even after spending lots of money on advertising. It is the culture of the organization that serves the customers. So if you want to serve the high end customers, don’t try to mix product range because competing with the low cost product from Asian countries is near impossible so keep the market that can be protected and gives heavy profit margin rather than single digit that retailers make.

Merger of two of the biggest technology companies - Part 1

Recently Microsoft announced takeover bid for yahoo at a premium of 60% over the 31st January stock price. As the talk is going around in the market, it seems that if the shareholders of yahoo agree, this deal will go through without much opposition from the regulatory bodies in USA and Europe (In any case, Microsoft has got the best lawyers to fight with antitrust lawsuits all over word to maintain its Windows monopoly). I feel that this deal will end the empire of one of the biggest success story in the software industry, Microsoft. There are many reasons for me to say this. I want discuss some of them here.
Organizations are not made of economic units: Both the organizations, Microsoft and Yahoo, have some of the best mind in the world working for them. They don’t have not only software geeks but also marketers, psychologist, graphic designers etc. All of these employees are working hard to make their respective organizations a success. The problem is when the merger talks proceeds senior management think of these employees as economic units and feel as if they can replace any employee by another or reduce any number of employee and will continue to get the same results. In this assumption, there are two problems. First, in any organization there are very few natural leaders who can do work without any supervision and can produce something wonderful that can give big advantages to the technology companies. These people are the first one to leave when there is uncertainty and it is not always easy to identify who these are. Second, when we are working with human, we cannot consider that the work of two employees will be total of the work they can do individually. This is because they are human and they have some friction. Higher the number we have to put together, higher the friction will be. Here we are talking of tens of thousands employees in two organizations.
Number of online visitors: Steve Balmer seems to assume that when the Microsoft and yahoo will merge they will have online visitors equal to the sum of individual visitors on two websites. I have doubt. There will be number of users who will be visiting both sites every day. They might stop visiting two different websites when they will become same.
Money for replicates applications: There are lots of applications both the companies have in common, e.g. mail services, news service, and ad program and so on. When they will merge they will have to decide which program to keep and which to scrap. It will not be easy to decide and it will be more difficult to integrate them. Yahoo has been anti Microsoft for a long time so deep inside the code of the applications, architecture will be such that that cannot be easily integrate with Microsoft applications. If they cannot be integrated successfully or take more time than expected, cost of integration will go high and saving from synergy will be difficult to gain.

How to decide future strategy of the organization?

This is not a simple task because most of us are not clear in our mind about what is strategy. Most of the time what are talking about is the operational issue rather than strategy for the organization. Strategy is long term vision for the organization that provides direction for future actions, in short. It is in evolving processes and we need to keep reviewing the organizational strategy to check if we are align to the present demands of the market and shareholders and are ready to serve the future markets as well. To decide the strategy one need to follow a systematic approach and be honest to yourself and build arguments on logical assumptions. Let’s discuss the process in detail
Identify strategic customers: One of the first tasks is to identify strategic customers. I have discussed this in my previous article .
Identify strategic competitors: It is very important to understand that everyone in the market is competitor but not strategic one. For a bakery retail chain in UK, Tesco Metro is a competitor but not the strategic customer because both of them are targeting customers from different segments. They can be substitute for each other in the mind of customer but not still customer think of them as different options.
Identify core competencies of the organization: This is one of the most difficult tasks because most of the time no one in the organization knows that they are core competencies. Core competencies are practices and processes of the organization that are difficult to imitate by competitors. Managers might say that flexibility is the core competency but it is very abstract. There is something very basic that generate the flexibility and that is the core competency. It needs lots of brainstorming to identify core competencies and most of the time it is the employee very low in the hierarchy who can answer about this than the senior managers. It is shocking but it true.
Identify key issues: These are the issues that are stopping organization from growing further. These are different from operational issues. Many a time, managers start thinking that the poor cash flow is strategic issue but it is not. Key issue can be how to manage cost while the raw material prices going up?
Find Strategic options: Come up with options to address the key issues. Remember we are looking for options and answer to the key issues. Options can be very something out of the blue and completely different from the existing business. It does not matter because anything can be an option.
Evaluate strategic options: One needs to evaluate strategic options in the light of core competencies and if the organization can exploit them it is a viable option. For example a retail chain having logistics as core competency can start logistics business. It is a feasible option. It depends on the shareholder value analysis if this option should be pursued or not.
All these steps are linked to each other if we do any of the steps wrong, we will have completely disastrous strategy. Something Microsoft and Yahoo are trying to pursue. I will talk about this later.

Changing perception about some of the big Technology firms

Technology business has been the target of criticism of monopoly by one or the other company for many years. Microsoft has been the biggest victim (in terms of cost it has to pay to lawyers and fine to anti competition commission in Europe) of this accusation. To a certain extent that is correct and the in recent years Microsoft has gone out of any big innovation (they say that they need to recover cost on innovation and need money to fund future innovation for the benefit of the customers). Well, I don’t want to discuss about Microsoft here, it can be find my other newspapers and magazines. I want to talk about the two most admired technologies companies, Google and Apple.
Google is one of the most admired companies of recent time. Every computer science engineer and MBAs want to work for Google. It worth the praise for what it had done by revolutionising the internet. Google search has remained ad free on the front page and that is one of the biggest advantages for this. But in recent years, it has been accused of its monopoly in the internet search and internet advertising. I see there is a problem. Some of the biggest purchasers of online ad space with Google are blaming it for charging too much because of virtual monopoly in the online advertising. And these same customers are supporting a deal of Microsoft and Yahoo. (Microsoft Makes Grab for Yahoo).
Google needs to understand who the strategic customers are for this business. I understand that the internet users are the end users for the Google ads but the strategic customers are the advertisers who pay to Google for purchasing online ad space (based on keyword search). Though the ultimate responsibility of Google is to serve the end customers but if the strategic customers are not happy and move to another rival for any reason (high price, poor personal attention etc) then Google will not be able to run its business model.
Similarly Apple is also being blamed by the entertainment suppliers (Disney, Sony etc) of its monopoly in online music world. They don’t like the similar price scheme for all the songs and movies. They want to sell the new album songs for higher price than the 99c but Apple is not listening to them. These same music companies who are supplying music to Apple are not pushing and supporting Amazon for the online same of music on Amazon. They know that Amazon has very large customer base and it is willing to listen and negotiate the terms for the differential cost/price structure for the songs.
The point I want to make is that in technology business if the customers are listened properly they start finding another business to serve them. It is true for any business but it matter a lot in the technology business because the amount be talk about is multi billion dollars. Hundreds of billions of dollars will be lost in revenue for these companies if they fail to respond the changing demands of the customers.

Which customer is more important?

How to recognise the strategic customer is a big challenge for the business managers. Most of the time what we concentrate on are not the strategic customers but the end customers of the product we are producing or the service we are delivering. It is always not easy to recognise the strategic customers.
In the retail industry in developed countries most of the sales to the end customers is though the retails chains (Wal-Mart in USA and Tesco in UK). Now all manufacturers, big or small, need to go through these retails chain to reach the end customers. In this kind of environment, the strategic customer is the retail chain rather than the end customers. A manufacturer can do lot of market research and develop a fantastic product but if retail chains refuse to keep on their selves, no end customer will ever see this product. Sometimes these big retailers are so powerful that they even dictate the size, colour and delivery package size on the manufacturers. In happens even with big manufacturers like P&G. To avoid this pressure, manufacturers wants to become bigger and bigger. This was the motive behind the merger of P&G with Gillette.
Other day, one of the senior professors was given the example of the strategic customers for his latest version of the book. He said that for him the strategic customers are the tutors of the course in the universities around the country (and other part of the world too) because if these tutors will not like the book, they will recommend the book to the students and no matter how good the book is it will not be sold. For this reason, he cannot change the content of the book drastically in new version because all the tutors using his book has slides, questions papers etc and they would not like to update them for the sake of new version. And once the book will drastically change they can even look for other books in the market too because for them it will same when they need to prepare teaching material from scratch. It does kill innovations sometime!
Having said this, it does not mean that the end customers (consumers) are not important. They are absolutely important because if they don’t like the product, they will definitely switch to another available product. So for the business managers, it is very crucial task to satisfy strategic customers and the end customers. Not an easy task always.

Organizational Values

Organizational values are the acceptable standards in any organization that governs the behaviour of the employees in day-to-day activities. It is very important to transmit these values in all the employees so that they will also behave in the same way. If these are not there every employee will behave according to his/her individual behaviour and that will conflict with other employees in the organization.
Every big organization tries to have a formal code of conduct, charter, code of ethics etc that governs the individuals’ behaviour inside the organizations. But apart from this there is much other informal behaviour that gets developed in the organizations. In the smaller organizations where there are smaller groups, employees can challenge each other for unacceptable behaviour and sort out the issues but when the organization become bigger and there is no one to monitor every employees behaviour, employees develop and behave according the organizations values. These values can be anything from a large set of identified values (ambition, competency, individuality, equality, integrity, service, responsibility, accuracy, respect, dedication, diversity, improvement, enjoyment/fun, loyalty, credibility, honesty, innovativeness, teamwork, excellence, accountability, empowerment, quality, efficiency, dignity, collaboration, stewardship, empathy, accomplishment, courage, wisdom, independence, security, challenge, influence, learning, compassion, friendliness, discipline/order, generosity, persistency, optimism, dependability, flexibility). It is important for the organizations to identify their core values and promote them.
To ensure that these values are transmitted properly to the new employees and existing employees are following them, organizations can do following
1. Communicate the Values Constantly. Communication is the key for successfully passing the organizational values to the employees. Values should fit with the organizations' communication, both internally and externally. If we say that we're fun, team-oriented where everyone counts, then having a traditional style with a photo of the CEO may challenge this. Refer frequently to the values in talks and sermons, in articles in internal/parish magazines. Acknowledge and thank those people who have achieved something which particularly emphasises the values. Values should become the part of everyday life in the organization and not something written on the company website only.
2. Enroll New Folk. The values should be explicitly available as new members join an organization. If your organization is a business, this can be a part of the selection process, if a church, then explicitly stating the values of the church creates an expectation in the minds of newcomers. The church then needs to deliver on that! This is very important task because employees who will not be able to fit with the organizational values will leave the organization one day. This is good in long term because they will rarely be able to perform better than those who values the value of the organization.
3. Revisit and Refresh the Values. Organizational values changes with time and evolving nature of the business, revisit your values periodically - allowing members to update them. This has the power of enrolling those who have joined the organization recently, and avoids the stated values no longer reflecting the business culture.
4. Confront Contradictory Behaviour. Ensuring that we give feedback to those who don't live out the values of the organization. If people are allowed to live out contradictory values, then over time there is a clear danger that these will usurp the desired values, particularly if it is the more dynamic, dominant individuals who are espousing the contradictory values.
5. Periodically Check out with Feedback. Ask people what they think are the values of the organization - not only members, who may be influenced by the stated values, but outsiders - observers, customers, former members. Organizational values should be a super set of all the values shares by larger community so that they can be valued by almost everyone in the organization and it will be so if they see that their values are also part of the organizational's value system.

How to manage relationship with client when some employees become bigger than company?

SOKIA is one of the largest mobile phone manufacturers in the world and it decided to hire some of the engineers from a reputed IT consulting firm from India, ZIPRO. When the engineers from ZIPRO came to SOKIA, it has no proper documentations and even the work was not properly defined. Some of the best engineers were working on this project to keep the project running because ZIPRO wanted to have long term strategic partnership with SOKIA.
During this progress of project, some of the engineers from ZIPRO learnt everything about the system and problems of the telecom domain (e.g. micro processors, software integration, signal processing etc). As the time passed by, these engineers became very much familiar with the client and the SOKIA started demanding to keep these engineers with them otherwise they will scrap the project with ZIPRO. Even ZIPRO knew if they will call these engineers back to India, they will resign and probably join the SOKIA Company. In a way these employees started blackmailing the parent company in India to stay with the client and much better salary than their peers in India.
ZIPRO HR head, Mr. Arvind Kumar, is worried about this situation and he discusses the situation with the Business Development Manager, Mr. Bala Swami and Corporate Strategy Manager Mrs. Neelam Ramnathan. They discussed about this problem and the main concern was how to avoid this happening in the future. Here are some of the solutions they came up with
Keep the system process-oriented rather than people oriented: It is very important to keep system process oriented rather than people oriented. Process should be so robust that even if a few employees leave the company for whatsoever reasons, there should not be vacuum in the organization. Client should be told in clear term that they are renting employees and the parent company owns them and they can replace them with similar resources anytime.
My experience is clients are not too much worried about individuals in the beginning and they will agree to this condition. Clients are interested in the quality output at a reasonable cost.
Knowledge sharing: All the employees working on any project should share knowledge about the technicalities of the project and work-life with the client. This will give a proper knowledge depository to the company and this can be used to train future staff for the same job in any eventuality.
Communication is the key: Personal communications should be avoided between the client and the engineers deputed at the client project. A proper group should be created where the managers are included by default so all the communication is in the knowledge of the seniors and chances of losing data because one engineer will leave are little.

Documentation: Proper documentation is the key. Keep all the work documented from the beginning. If everything (or as much as possible) is documented, that can be used at a later date by anyone and whole the process of training does not need to start again.

Rotation of employees: Make it very clear to the client in the beginning that employees will be rotated in 6 month to 1 year period so at later that they cannot force to keep same employees.
If nothing works: Promote such troublesome employees and later on use stick. You know what I mean.
Train alternative resource: Always keep some resources that can do the job of others if some problem arises. We are not doing the work on Einstein, so we can always find, train and groom alternative resources.
Client relationship management: Business development team should keep close relationship with the client and the project managers should remain involved with the work (at least high level) so that the client will be know that it is not individuals but the company that is working for them.

India is facing talent problem, how to solve problem?

There is no other solution than the having more educational institute in the country to solve the problem of talent in the country in long run. Country is facing problem because there are not many institute to fulfil the demand for medical colleges, engineering colleges and management schools. There have been some attempt by the private sector to have parallel education centres but that is far from making the real impact on reality. I am trying to propose a solution that can be implemented and solve (to a high degree) the talent problem in the country.
No doubt country does not have many institutes of higher education but there are a lot of institute for higher secondary education and they are producing millions of students every year. There are m any graduates from non-science streams from some of the universities and these guys (and girls) are still not getting the job. Companies are saying they are non-employable. Damn with it. It is traditional thinking and to fight with the talent problem we need to think out of the box and make new solution. I say they are not employable for the job, right. But can’t we change the work so that they can do the work. I have seen work in the high level engineering companies and also high tech software industry and I feel that there is very little work where you need specialization or the skills of a level that is scarce in the country. Why don’t we decompose the work in such a way that anyone with little training can do the work? For example in software, I agree that everyone cannot design the architecture of software for a submarine but I am sure most of the graduates from higher secondary can write a program in C, C++, Java or .NET. They already do this in their school. If they can do the job, let us divide the work with such a fine line that they are doing what they can. When they will do the same work again and again they will become specialised and I am sure they will be able to perform better than anyone else. Everyone does not need to know all the concepts of the computer science and everyone can not know because there is capacity of the mind of everyone.
You might argue that they will not be able to perform to the level other highly qualified/educated do. Take my words these not-so-highly educated do their jobs much better than anyone else. They are highly motivated to work hard and for longer hours. It gives them higher salary and respect in the society and they are inspired by this to perform better. Of course they will be working for the less salary than the others and this saving can be employed to provide these employees to become future leader. New good books can be bought for the company library, training programs can be arranged and they can get online or part time certifications.
If a graduate in history can become a business analyst for Software Company then a guy with good analytical skills can surely do the work if we explain him well. There are always two ways of analysis the problem. If the problem cannot be solved by available resource, then change the definition of the problem, mould it, and transform it. I know there are lots of RMP (Registered Medical Practionars) who are filling the gap of the MBBS doctors. Let’s make this rule of the game and implement it everywhere where India is facing talent problem.

Customer focused product development

I have been talking for a long time that the product should be designed keeping the target market in the mind. Today, India and China are seeing phenomenal growth and almost every company is trying to target these markets. But I see their marketing is still flawed because they want to sell their product at the same price as they sell in the western world. I disagree with this for two reasons. First, production cost is much lower in the developing markets. Second, most of the population of the countries is poor and still living on less than $2 dollars a day wages. So some of the companies can say that they comfortable even if they get the top 10% of the total market. They are targeting a very small segment of the total market. But this is not the right approach. Product should be designed keeping the needs and expectations of the market as whole, the bigger market. (Related articles: US $2500 People's car by TATA Motors - A need and Affordable mobile phone)
This is not to say that the companies should not earn profit, they should. Capitalist corporations are to make profit. But it can be done in a smart way and even by keeping the prices low. For example, Ginger Hotels and IndiOne are providing hotel rooms for under $40 where the luxury rooms are available for over $250 in the cities like Bangalore, India. They are providing all the basic amenities for the visitors but they are still able to make profit on this low price. Same thing has happened with the world’s cheapest car, Tata Nano. For product development for the masses, companies need to remember few points
1) Product should be of international standards (it should not be strip-off version like Windows OS for poor people)
2) Product should be at a much lower cost than the western product (I will suggest 80% price reduction)
3) These must be acceptable by the society in terms of the culture and the price
4) They should be scalable
Indian customers cannot pay the same price for the services as paid by western customers. As I discusses earlier they are want to have new generation products and services but they don’t have the money to buy them. Increasing income of the masses is not possible in near future (next 10-20 years) but reducing the price of the products is possible if the solutions are thought keeping the restriction in mind.
One of the ways of reducing the cost is bypassing the tradition way of doing things. For example in India many people break their bones while working or playing but they don’t time and money to go to cities and hospitals (hospitals are not so many their either). In traditional way, one needs to go for Xray and other checkups and then doctors applies the plaster that needs to be kept for a few months depending on the severity of the break. But these poor people don’t go to doctors and they have some local people who will apply some basic medicines (mainly turmeric power and lime) and hold the broken bones by pieces of bamboo. It cost almost one tenth of the cost of the traditional plaster and it works. I am not suggesting that always works but in most of the cases it works. Companies can provide the same solution with the help of technology after doing proper X-rays. Now digital X-ray machines are available so no need to have X-ray films either and it save money.
By inventing solutions that will help the customers in large number is good way of making money while helping the society.

Best (?) Ideas drive the businesses

I have put question mark in front of ‘Best’ and not ‘Best Ideas’. There is a reason behind this. To me it is not very clear if the best ideas drive the business but it is clear to me that businesses are driven by ideas. We will see this in a moment.
Ideas are not independent of the context and the environment they will be test so even the best idea that comes at not so favourable time may get rejected by the world and the cheap idea may keep getting praise and success. For example dotcom boom was not a boom in fact we see that in present context when there are millions of internet users with high speed internet. How many people today go to a ticket agent to book a ticket or train ticket? Numbers of internet user have gone up and the people freely using internet banking and ecommerce has gone up too. Many people claim that Microsoft Windows was not the best product (operating system) available in the market but the idea of allowing companies to use at their computers helped it become the most known OS in the computer industry. (Related article: Ideas are source of success for organization). It is very important to know that ideas can be imitate, copied and bought for the success so business does not always grow where the ideas come but where it can be exploited correctly it will grow.
Idea can be simple and repeat of what others are doing. When Google came with search engine it was just one of the other search engines available in the market. They differentiate themselves by not giving any add on the first page and they the idea of keyword-based advertising came across. It tells us that everything cannot be planned in advance and a few things come as result of the process.
The cost of generating new ideas may be very little but success depends on how it is persuade further and how the targeted audience take that. Audiences may reject a wonderful idea and embrace the mediocre one. Many a time cost of testing a new idea is too high (not in terms of money but in terms of brand image, organizational culture etc) so it becomes necessary for the business leaders to choose ideas that are perfect fit with the market context. In some cases it is difficult to measure the cost of testing the idea. (e.g. cost of structuring company, implementing total quality management, process redesign etc).
Whatever the consequences, success of the businesses does not always come from the existing businesses but from the individuals who are willing to experiment new things and believe that market should continue to behave it is and they don’t try to change that but gives a solution for the problem. James Watt, perhaps, never had an idea what he was going to build when he started working on the steam engine that was the beginning of industrialization.
My argument is working on new ideas is essential for the success of the businesses and business leader should keep searching for new ideas and they may not be the best ideas but they should serve the market demands and expectations.

How to proceed with project?

During the execution of projects we face many problems. This is natural but some of the problems can be avoided if a proper project planning is done. As some of the project managers say “If you have started the project, you have already finished the project”. I used to think this is just a way of making people fool. But with my experience I have learnt that it is very essential to start a project properly because a lot of the time success of the project depends on how we have started it. During the project initiation phase one need to concentrate on following four aspects to avoid any problem at later stage and complete projects with successful output
Purpose of the project: Project managers should devote considerable amount of time in defining the purpose of the project. If it is not defined properly and agreed upon by all the shareholders of the project then success of the project is not so easy. Many a time we have an idea about the purpose of the project but we never try to write down and discuss with the shareholders. As a project manager we should get the purpose defined very clearly, without any ambiguity, in the beginning of the project.
Success Criteria: Once we have defined the purpose of the project, we have a fair idea about what we want to do with the project and that should help in defining the success criteria or the goals of the project. We have not done so then how we are going to measure our success after the completion of the project. Our success criteria can be qualitative and quantitative both at the same time but it is easier to measure the performance for the set quantitative criteria (e.g. How much money we saved in the process of changing the process?)
Identify you stakeholders: Project managers should also identify the stakeholders very clearly and get their consensus on the previous two aspects of the project. These are the units of the projects who will measure the success of the project based. If success criteria are not agreed upon before the start of the project, it will create a problem and conflict in the end of the project when the success will be measured. So be careful about this.
Reflection: Always check what you have learned during the project, what you could have done better and what the lessons are for the future projects. This is one of the most important activity because one need to keep learning from the experiences of the failure or/and successes of the projects.

Challenges for the leaders in 21st century

Leaders have never been without challenges or we can say that continuously facing challenges make them leaders (In any case leadership is perception of other people around you about you). In 21st century leaders will meet the following competitive challenges:
Intellectual Capital: I have talked about the importance of innovation (Ever Changing USA Economy needs new ways to measure wealth) in 21st century at many occasions. In the knowledge based economy it is very important to guard the intellectual property of one nation through patents and copyright laws because knowledge has become competitive advantage for the companies working in new age industry like professional services, software and technology-driven companies. All the other aspects of competitive advantages can be copied from one company to another and there is little way for differentiating from others. To let new innovations happen, companies also need to cultivate a culture where they can attract, develop and retain the brightest mind of the world. (This is something happening in the software industry where most of the best minds are choosing to join Google rather than Microsoft or Yahoo and this is one of the reasons of rapid growth and delivery of numerous new products from Google)
Global Business Management: Though this not something new and I call this an evolving form of Global Business Management but sheer amount of complexity make it a topic of importance of the leaders of 21st century. These days, companies are operating in different geographies and employing people and serving customers from different cultural backgrounds. Companies are also manufacturing their products (or components) in different part of the world and taking advantages of cheapest available resources (capital, labour etc) in any part of the world. While doing tasks of the leaders have become more complex, they now need to understand and respond to the cultural, political and legal system of different part of the world at the same time. They are operating in global market but they need to respond to the local demands. One size doesn’t fit all anymore.
Profitability and growth: Profitability for the shareholders’ investment and at the same time growth is not easy task but these are the realities for the organizations when the control is going to the market forces from the state. Market is profit driven and to keep providing profits, organizations need to keep innovating and nurture the best minds and ideas. One of the ways of rapid growth is through inorganic growth by acquiring companies. Though this is easy to acquire a company (It is also becoming difficult because of antitrust legislations) but to integrate the two different cultures and work processes takes a long time and time of the leaders. If this can be performed successfully for a number of actuations then growth will surpass the expectations of the shareholders. Companies also need to acquire new customers and retain the old one as well. In competitive world innovative marketing is the key to retain and acquire the customers.
Technology: Technology is fast changing how the business is done. Now we are using internet extensively for many tasks (recruitment, procurement, sell, video conferencing, emails etc). New technological innovations also change very fast how businesses are performed in free market. By exploiting new technological breakthroughs companies can have competitive advantages.

I believe if the leaders can champion in these four areas they can keep themselves ahead of the market.

White House to announce economic stimulus package

White house and Democrats have reached an agreement for emergency economic package to help the economy grow and avoid the much expected recession. This seems a good news as customer spending is going down in last few months. Few days back, Fed also announced interest rate cut in a panic when the stock exchange was heading south. Everything seems a good step on the face. But I have a few concerns about the consequences of these steps.
This package will give tax rebate of $600 to individuals and $1200 to the couples who earn less than $75,000 and $150,000 respectively. The rebate part of this plan will cost the government around $100 billion and $50 billion are announced for the business tax cuts. It seems everyone will have to pay less tax.
One of the concerns for me is effect of these steps on the overall inflation. Since people will have more money to spend and interest rate cut also fuel the increase in inflation rate. If this happens than the real money to spend will again go down and the consumer will not be able to spend any extra money effectively. This higher rate of interest will also make the dollar weak in the exchange market that will further reduce purchasing power of the consumers. Since most of the products are imported their price will go up because even Chinese manufacturing plant cannot produce at low dollar price. I am still afraid that 2008 may see recession because fundamentals were ignored.