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.

Ideas are source of success for organization

There has been a talk in the business community that industries are running out of ideas and there is little innovations. To some extent it looks true if we compare to early part of last century. There were automobiles, aircrafts, electricity and medicines. A lot of new things were coming out at that time. As we say “Necessity is the mother of innovation”, world war was going on that time and people needed to be more innovative. But this is not all true. We need to compare innovation in comparison to the reality of the time.
If we see last few years of this century, I feel there have been a lot of innovations in many fields and there are many lined up for the coming years. Apple iPod, perhaps, is the greatest innovation of this century for the entertainment industry after the Sony walkman in last century. It is there for last 7 years and will remain market leader for many years to come. There is a new car launch by TATA group in India (Tata Nano - An amazing product). There have been some breakthrough in the Neurosciences and we will see their benefits in coming years. These are just a few of the examples that are quite visible or talked about these days.
Innovations are important or we can say they are the compulsory part of the economy to keep running. This become more important when the world economy is becoming more knowledge based economy than the manufacturing economy. It has been recognised by the US government and the department of commerce is trying to find new ways to major US economy to include the value of the innovations being done in the country (Ever Changing USA Economy needs new ways to measure wealth).
It is argued that just throwing money on the R&D will not produce results (better financial performance). It is a set of ideas about sequencing innovation practice that will help the organizations in producing and promoting best ideas. But we need more innovations in fields like urban life (for the first time in the (recorded) history of human, more than 50% population is living in urban areas). I believe more innovations will happen with time and we can believe in what Victor Hugo said “Invasion by opponent can be stopped but not an innovation when the time comes for that”

Should I go for an MBA?

This is a very subjective question for anyone and depends on the circumstances one is facing. There are some basic questions that one should ask before looking for an MBA. I have tried to list them here.
Fast Career growth: A lot of MBA aspirants go for MBA because they want to have fast career growth. One should first decide what limit they want to go in his/her career. On first, look everyone will say, they want to become CEO of a big company. Very good answers but ask yourself again are you sure. I met many MBA students and generally they are not sure of even where they want to go after MBA. Many of them are not even sure they should chose consultancy or investment banking. You might see many opportunity before MBA but after that you are generally looking a very narrow set of companies and industry. Other question should be if you don’t go for MBA, can you not have career growth by some other means like part time studies or online studies?
Value for Money: This is probably one of the most expensive decisions of your life to go for an MBA. Are you sure you want to spend this kind of money? What kind of returns you are looking at this investment? What salary you expect after the MBA? (Don't believ the numbers in some ranking sites, they have different method of quoting numbers than what you will believe) Be realistic and don’t cheat yourself.
Want to change country: Some of the candidates want to change the country, they should be very much sure that this MBA allows them to settle in another country. Check the immigration laws of the country.
Want to change the industry: It is generally not easy and be realistic about this. It is generally less possible in one year MBA programs.
What School and how to choose: One of the most difficult decisions once you have decided for this. Don’t trust the rankings too much. They give you a overall idea (an average of many factors). Check if the schools meet your requirements. Never go to a school you don’t know alumni from unless it is in top 5 of the ranking.

Remember it is a 1-2 years investment and you will not be earning any money, except some money during internships, during this period. Calculate your salary in the current company or industry even without MBA after 1-2 years. Do you still see value? Talk with friends, family members if you are ready for this expensive commitment.

Leadership - simple in theory

This is one of the buzz words in the business community. Wherever you work you will be asked to show leadership qualities. It does not matter at what level of the hierarchy you are in the organization you are supposed to be a leader. What does this imply? This implies that that anyone can be a leader. Everyone is supposed to have some leadership qualities and the organization always want to bring them out.
First question that arises to my mind when I listen discussion about leadership is what the leadership is? I think it is the ability to convince people around you with your ideas and make them follow you, without the authority, to change something or to produce something different and better.
Next question is (since we already assumed that everyone is a natural leader, good or bad) how to become leader (or how to evolve as a better leader)? If we stick to our definition then it can be achieved by following steps (so simple! In theory it is so simple, practicing these steps is no so easy in practice)
Step 1: Get 360 degree feedback about yourself on a regular interval. And be honest about this. You will get some strong and weak qualities about you. Other people can observe our qualities very easily.
Step 2: Try to polish your strengths and work on improvement of the weaknesses. Weaknesses can be overcome (to an extent) by making conscious efforts.
Step 3: Listen to other people. It will help in understanding other people’s expectations and how they perceive about your goals.
Step 4: Tell them what you want in such a way that they trust you and work hard and sincerely to make the goals achievable.
Step 5: Always be critical of yourself. Ask yourself can I do this thing better? Can this thing be made better? If the answer comes yes, you need to work hard to make your goals better and keep standards higher for your output.

This is all about leadership. Of course it depends on what definition one has taken for himself/herself. Define your own leadership an chart out a plan to achieve that.

Listen to your employees: they are your power

Recently I attended a seminar by one of a very (ex) senior global executive of Johnson and Johnson. He was talking about his experiences when he was working in the head office of the company. He told that JnJ has to written strategy plan rather it has its credo that drives the employees to the right things in the interest of the customers, employees, environment and society. Employees will not be fired for taking wrong decisions but they will surely be fired if they breach the credo of the company. One of the important parts of the credo is

“We are responsible to our employees,the men and women who work with us throughout the world.Everyone must be considered as an individual.We must respect their dignity and recognize their merit.They must have a sense of security in their jobs.Compensation must be fair and adequate,and working conditions clean, orderly and safe.We must be mindful of ways to help our employees fulfilltheir family responsibilities.Employees must feel free to make suggestions and complaints.There must be equal opportunity for employment, developmentand advancement for those qualified.We must provide competent management,and their actions must be just and ethical. ” - source

He explained this in detailed and the key point was that managers should give respect to the employees and listen to them because they want to be listened. (You can also visit how and when managers should speak out). This becomes even more important in the knowledge industry (like pharma) where any idea can do wonder for the society and the company. If employees don’t feel respected and turned down for their every ideas even before listen to them properly they will get discouraged. Many a time employees knows better about the problems in the operations of the company and they might be able to propose a pragmatic solution from their experience.
This is very important because as we become higher in rank we start speaking a lot and don’t let other people speak out their mind. This might be hurting the ‘idea lab’ of the organization. Let the ideas come out freedom, make a forum for everyone to share their ideas.

Recession: Who is afaid of layoff?

US economy seems to be heading toward recession despite all the efforts by the White House and Federal Bank (recently announced interest rate cut). Government is trying to push more money into the economy to keep the economy going on but the stock market is heading south and investors are facing heavy losses and companies are planning to cut jobs in coming quarters.
It will not be surprising that when you go to office next day, you see a letter and asked to leave the office immediately. This is not something surprising and we don’t have secure jobs anymore and many people have no interest in having secure jobs (because they used pay less and still they were not 100% secure.) When insecurity is the truth of the job what to do? My answer to this is to prepare for the layoff and act as if you trust that you can be fired any day. Following of the tips will help in taking the layoff letter easily
Keep finding your value in the market: I knew many of the guys who keep going for interview even when they don’t want to change the job. It helps them in two ways. First, they know what the demand in the market is. Second, it let you know how much you worth in the market so that you can bargain with your current employer during the appraisal for the fair market price.
Keep your credit cards history clear: Though credit cards are evil of the modern day economy but they give you more than 50 days credit life to live on. If you have multiple cards you can use them smartly to live for almost 2 months during crisis days.
Keep some money in reserve: It will be great if you have got some money in reserve for the heydays. You may need it more medical, travel, rent, food or anything and it is very difficult to borrow money from someone when you are out of job.
Keep your skills updated: Keep brushing up your existing skills. We don’t use our all expertise in routine jobs and may need to brush up for the interviews. Apart from these keep some secondary skills in your toolkit to make some immediate arrangements.
Keep numbers of contacts in your diary: Some of your friends will help you in finding job during bad days. It only needs a phone call to your friends around the city and some of them will surely come to help you in finding a job.
Don’t take this personal: Very few like to fire their employees so if you are one of them, don’t take this personally there might be some compelling reasons to fire you (first others might be in line as well). If the economy bounds back they might like to hire you back so don’t break the personal and professional relationships if it is not urgently required.

Changing nature of workforce (employees) in India

India has seen a dramatic shift in the public policy and expectations of the individuals. After independence, it was mainly a socialist country and the educated (and non-educated as well) wanted to have secure career, a job that they can continue to do for their whole life. Salary was not a deciding factor in choosing a job but the guarantee of life time employment was important factor (Private companies like TATA, Aditya and MP Birla Group, Godraj, Bajaj had to provide the same kind of commitment to recruit people). People wanted to work fix numbers of hours every day and spent quality time with the family. It was working fine till 20 years back and the new generation asking for different terms of employment and entrepreneurship and zest to become huge arose.
Mainly because of the high salaries in the IT sector in India, aspirations of the India youths have gone many-fold up then the previous generation. Today’s generation does not mind to work for 12 hours every day without any proper weekend if the salary is good and there are chances of getting further salary hike next quarter or semi-annually. These youth don’t even mind changing job if they see higher salary at another company. These youth don’t even care about stability in the career. They want to earn more and at a fast rate. If they are going on a motor bike this year, they want to buy a brand new Honda City (a brand of Honda car) next year. If by changing companies expectations are not met they can change the country too. They don’t have commitment to anyone, for them Money is all about honey.
Other change in the nature of the work place is the number of female employees is increasing at an astonishing rate. Among new recruits in some of the companies, number of females is same as the number of male. These young girls of emerging India are very vocal, open and career oriented. They are ready to work with or compete with anyone. Some of the companies are not ready to deal with such a high percentage of female work forces on their payroll. Some of the companies might not have some necessary facilities for the female employees. Some of the companies are providing childcare and working from home for the females with small babies.
Some of the biggest companies in India, Infosys, IBM, TCS and MindTree are trying to tame the rising aspirations of these youths by providing them global working standards, facilities and support for higher studies and certifications in the domain of the employees. For example, TCS and Infosys have proper internal programs to teach employees about PMP (Project Management Professional) certifications. They are also trying to let them go for MBA and give study leave. Companies also promote some of the high performing employees into the management rank much faster to keep them with them.
Perhaps it is a quite big challenge for all the emerging economies in the world and lessons learnt in India can be applied in countries too. But management will remain busy in how to manage these new employees who want to be CEO in less than 10 years.

Facebook applications putting break at growth?

I had talked about some of the advantages Facebook has over orkut in previous post. There I discussed that Facebook has social engagement feature that is quite missing from Orkut. Facebook is being projected an innovation of the magnitude of Windows OS platform that let everyone built their application on top of the platform. Wonderful! Isn’t it? Anyone can use SDK provided by Facebook and built their application and upload on the Facebook. Many of the developers are earning quite a good money because of this open structure of the Facebook. This open structure also helped the exponential growth of the Facebook community over the last one year.
Now, I am seeing a drastic strategic change in the development of the new applications. Whenever a new request comes to you (when I am getting married?, What kind of drunk I am?), you need to forward request to 10-15 another friends to know the result. I have not forwarded to anyone because I see it as spamming my friends and I don’t like that. On top of that I am getting 10-15 request from other people in my network if I keep accepting every request and then send to another 10-15 members in my community, I can’t imagine what kind of mess it will become. I am sure I will not be the only one who will ignore such application even on the first instance of seeing them in the notification area, forget about the forwarding to others.
I am not sure this is consciously taken decision or it has just happened how the applications should be developed. I feel some of the application developers are getting too greedy (because they earn profit out of it) and want to grow in the Facebook network as fast as possible and earn some quick money. But everytime earning quick money can be detrimental for the growth of whole system. Facebook need to check this from happening further if they want to have bigger share of the online social networking.

Corporate Social Responsibility – Part 1

In last 50 years, Corporate Social Responsibility (CSR) has become a subject of increasing interest for the business community. Many companies did not give a damn to CSR in past and now almost all the companies trying to sensitive for CSR. CSR consist of corporate responsibility towards society and environment in which it operates or it effects. Though it is a very subjective issue and each individual define it based on the values one has. Some of the early attempts were made by Eells & Walton (1961) and Davis (1960).
CSR has become increasing popular in media after the bankruptcy of Enron, Worldcom. McDonald had to invest millions of dollar in designing healthier food after the movie Super Size Me. Though one can argue that it is an open and free market and customers choose to go to another place to eat if the wish to but there is one important aspect is missing and that is the information without which a consumer cannot take rational decision. There are allegations against WalMart that after a certain level only White male can be promoted in the hierarchy if these are proved WalMart may go bankrupt and one of the biggest success of the retail will come to an end.
All sort of arguments (moral, economic and rational) have been given why CSR is important. There has been a gradual realization that it is something that has to be taken by the corporation to be successful organizations. For example Milton Friedman said that corporations are only responsible for the shareholders and they should not waste their money for any other activity and philanthropy done by corporation will bring efficiency and it can be done at personal level (Bill Gates Leaving Microsoft to work full time in the Gates Foundation). Porter and Kramer argued that in long run goals of the corporations and society and not conflicting with each other. He argued that healthy, better educated society is good for the growth of the company as well. And Kotler and Lee have argued that it is must for the growth of the company.
We have seen that some of the companies who did not care about the society have suffered a lot (e.g. Nestle milk case in some of the African countries caused backlash of the company even after decades, though company did not do anything illegal)
Though it is very difficult to understand where line should be drawn by government regulations, CSR and individual responsibility. But in a deregulated, free economy some of the companies have much wealth and political power than the governments of smaller countries so it is difficult to argue that government can do much. It is another thing that what is ethical today for the corporations become legal in coming year.
Managers need to understand CSR and implement in their organization very carefully for sustainable growth in 21st century.

Ever Changing USA Economy needs new ways to measure wealth

Nobel prize winner Simon Kuznets had designed the method to calculate the GDP of the country after the great depression era. At that time most of the economists were too much influenced by the writing of Adam Smith (He still remains the father economics) and perhaps that worked fine at that time because the economy was still the industrial economy. At that time it was easy to calculate total production based on data of manufacturing industry. But world is still using the same method of calculating the wealth of the nation.
World economy and USA economy in particular has changed a lot from that time. Today, US is no more super power because of the manufacturing (some estimates say that US manufacture only 6% of the total product consumptions. China is the manufacturing house of the world now) capacities but because of its knowledge industry. But surprising this knowledge, innovation is not accounted for in the calculations of the GDP. (Adam Smith said that there are many non-productive works and perhaps most of the service industry goes into that)
Recently, department of commerce has come out with some recommendations that suggest to include the wealth of innovation in the national GDP. Though these cannot be implemented immediately because it will take lot of changes in the whole system but it is a good sign that it has been recognized formally. This will put more emphasis on research & development, product design and intangible outputs that worth more than the tangible outputs.

How to become unemployed professional in France?

Some time how the social welfare can be exploited by some lazy people has been represented in the story published by Emma Vandore for The Associated Press, Paris. An employee just stopped going to work and stopped attending calls from the office to get fired so that she can claim for the social benefits. (French Say 'Fire Me' and Sarkozy Listens). Intension of the law to provide social security to the workers who get fired from work was to let the workers live with dignity even if they are fired and they look for another job. If a workers just leave the job, she will not get these benefits so most of the workers play this trick and they get monthly salary (more than 50% of the last month’s salary) and other benefits (like concession in bus and train travel) from state. When I was living there I knew many people who were working part time (for cash) and also getting unemployment social benefits. This way they don't need to pay high taxes in France and (effectively) earn more than when they were full time employed.
Other loophole in this system is one is allowed to reject two job offers when on social benefits. If the citizen rejects three job offers, s/he will not get any social benefits any more. But if someone never gets any job offer s/he continue to get social benefits for whole life. This is explained the book Moi, Thierry F. Chômeur Professionnel” by Thierry how he was getting social benefits for almost 26 years and never had to work officially. How people can work for EDF (state-owned Electricité de France) without working was also explained in another book Bonjour paresse .
Well, finally it seems that the labour union of France have understood that work force is exploiting employers and the state and they have agreed for the labour reforms in France. That is good sign for the employers. I doubt though that it will become free market in next 2-3 years but at least something will happen than nothing.

Free fall of Indian Stock exchange - end of boom?

Bombay Stock Exchange (BSE), India's leading stock exchange saw heavy sell in last few trading sessions. BSE is very sensitive to the world indices, whenever something happens anywhere in the world, it falls. Indian economy is still not very much integrated with the world economy, then why this happens? I think this is more to do with the moral and sentiments of the traders, mutual funds and institutional investors. An Indian population is not interested in investing in stock market as retail investor and even mutual funds are not very popular schemes for investment. Urban population has started to invest in the stock market but still the percentage of retail investor is still very low.
Retail investors are afraid of investing in stock market because of these free falls in the market and they are not well aware of equities to invest in. It has happened in the past that the company get listed on the stock exchange only to collect money from the investors and then it closes its operations (though it is very rare now a day). I feel that retail investors are quite passive investors and invest for long term that helps in reducing the volatility in the market. Since Indian Stock Exchanges are mainly depended on institutions, they can be moved in any direction by just few institutions.
There is no change in the fundamentals of the companies operation in the country. Since most of the production in consumed locally (very little export of anything to be of any significance in the world economy), production should not be affected to very large extent. If the demand of the goods remain there and supply side is ready to fulfil that than the economy should continue to grow.
In fact, I see another good point in recession worldwide. If the export, whatever little India has, goes down, it will have more supply for local market than the demand and that will push the prices down and that should help the central bank (Reserve Bank of India) and Ministry of Finance in keeping inflation low.

So in my opinion, growth might slow down in terms of percentage but it will not be recession for the economy.

Global Business Management

I am introducing different term Global Business Management (GBM) rather than globalization because globalization came recently and companies are using GBM model for many centuries around the world. In any market or business, there are three kinds of exchanges that take place, products, labour and capital. I say that GBM has evolved over the years and now it has become globalization.
Thousands of years back, Global Business Management was done through the trade of some products through land between Asia and Europe. In those days all the production facilities were situated in different countries and owned by local business people. GBM was only transferring products in exchange of capital or other goods. For example, trade between India and Europe was for the gold, diamond (Europe used to export) and spices (Europe used to import).
Then came the colonization period when the management was planning global expansion plans in the headquarters and some of the managers were sent around the world to manage the businesses. In this period, Global Business Management means to have most of the production in one country and send the products for sale in the destination countries. There was little movement of the labour in this era.
After this came the period when companies started having operation in different countries and sell their product in those countries and only transfer the profits to the headquarters. There was limited movement of the labour in this management style.
Now, we are seeing a phase where GBM is about the management of the labour and production around the world. This is most dynamic phase in which all the three components of the market (products, labour, capital) move around the world. Production is done in the country where labour is cheap. When labour is required, labour is transferred (to countries like Saudi Arabia, Kuwait, and Abu Dhabi). Capital is sourced from Japan. So I think there is nothing new in globalization, only a few more factors are added to the dynamics of the Global Business Management.

Time Warner's Tiered Broadband Pricing

Time Warner is trying to test a new tiered broadband pricing system in a city in Texas. This is something new for the broadband customers in USA, though very popular in developing countries. One of the problem that most of the broadband suppliers are facing in USA is the excessive use of internet by a tiny percentage of customers that consume all the bandwidth of the providers. Not only these customers consume high amount of bandwidth, they will also know how to increase the speed or download faster (there are many software available online for free). Till now customers were restricted by the speed of the internet and they could have download any amount of data as much they could in a month.
Let's discuss this new plan from the demand-and-supply perspective in the open and competitive market. (our assumption is that only 5% of the customers use 50% of the bandwidth, refer, so rest of the customers should not much worry about the pricing. Surely, company will need to make sure that the pricing is explained properly to the customers and they should be convinced that normal users will not be affected and will not need to pay higher price. If this does not happen then number of new connection will go down sharply and that will hurt the bottom-line)

Let's assume that there is equilibrium in the demand-supply and price per connection is at point O. After new pricing system comes into existence, number of customers with high bandwidth uses will also go down because there will be very few customers to pay higher prices when other internet supplier will do for cheaper price. Over the time when more and more high bandwidth uses customers will go to other suppliers they will also increase the price and the supply curve will be shifted to left-up somewhere between ON and a new equilibrium will be generated.
Benefit of using tiered pricing is that some of the users who are using internet excessively because they are subsidised by the other users who use less and pay the same price will be concise about the uses. Only the users who want to use internet more will pay more and continue to use that. But this high pricing model may hurt the entrepreneurs who are planning to launch their web-based services with heavy uses of videos and conferencing. I believe the price difference will not be too much so customers will not stop using internet for video streaming etc.

Global investment decision based on GNP of a country?

Gross National Production (GNP) is one of the indicator to major economic prosperity of the resident of a country. This gives an overall idea whether company should invest there or not because company can decide how much will be demand for its products based on per capita income of the company (GNP/population of the country). But companies should carefully consider the socioeconomic environment of the country before reaching to a final decision because there are many factors that are not properly accounted for in determination of GNP. GNP does not consider the cost of human welfare (United Nation has developed another index, Human Development Index and it publish report on this through its office UNDP, to overcome these discrepancies.). There are four major criticism have been made for the GNP and I will discuss them with some example to explain why companies should not give too much consideration to this index.

1) Leisure and household economy: In many developing countries, by tradition, women don't go out for work and take care of household chores (from cooking to washing clothes to clean the house). On the same time in many socialist countries number of working hours are much less than the highly capitalist countries like America. People have more time for leisure and more holidays. There is no provision in GNP for the value provided by the household chores and values this leisure time will bring to the family as a whole. For example, in India millions of people come to work in cities from small towns and villages every morning and they bring their Tiffin (lunch) with them. None of them, spend any money on purchase of food from McDonalds or KFC and the work done by the lady at home will not be counted in GNP. (for simple illustration, let’s do some math. say number of people coming to work with Tiffin is 200 million. It cost around US $o.5 to buy food outside in India. So total daily missing income is US $100 million that US $36.5 billion are missing from the GNP of India). If we add the income of the free baby-sitters at home in joint families of India and the entertainment people get in chopal/Adda (common place in village where many people come after work and have lively discussions, songs, games etc), the difference in the GNP will be enormous.
2) Shadow economy: Many of the traders in developed countries just don't show any income to avoid paying taxes. (I know in India, many of them are earning thousands of dollar every month and own properties worth hundreds of thousands of dollars). There is also corruption. All these figures go missing from the GNP calculations. Though it is tough for a foreign firm to work, initially, if there is corruption but it gives an idea to the management that low per capita income does not mean people are poor.
3) GNP and the environment: This will make sense now and will be very easy for the European people to understand. Recently, most of the electric companies have increased their electric and gas supply charges because they need to use more renewable energy sources. Imagine if all the natural resources are used up one and we need to use only renewable energy sources what will happen to the countries. Till now, environment is considered as free but it will have large impact on GNP in coming years. (of course if it is considered as input and not production).
4) Income distribution: GNP does not tell anything about the income distribution. I had discussed this issue in detailed in my previous post, India : country of poor and cows . if a company has to sell something that is quite expensive and per capita income is low that does not mean there is not sufficient market for the product, there might be enough rich guys who will be able to buy and support or exceed the planned sell figures. For example most of the high end Nokia mobile are going to India and China. It is not surprising that Vertu sells most of the models in developing countries (each mobile cost thousands of dollar)
GNP and per capita income gives initial idea how the economic condition is in a particular country but company needs to analyse from other perspectives too if there is enough market to support the products.

Sprint Nextel facing problems - cutting jobs

Sprint Nextel has announced last quarter’s results for the year 2007 and they are worse than expectation of the market and it has also announced that 2008 is not going to be a better year either. CEO, Daniel Hesse, has also announced that company will close around 7% of the retail shops that will cut the number of jobs in almost same proportion. It is not very clear if they are going to cut jobs at the management level too.
Sprint is facing internal problem and external competition from Verizon communications and AT&T. On internal front problems are of the not-so-successful merger with Nextel that it bought in 2005. It was known that there will be issues with the merger but it is taking longer to integrate these two companies. Virtually both the companies are still running as independent from each other, mainly because they use different technology to run the mobile services. So the expected synergy from the merger is not achieved and integration is still taking the time and energy of the management. Now it seems that the merger was a negative NPV project and sprint many need to take some decision about this issue if does not solve anymore.
On the external front both the bigger competitors are using very successful campaigns to have new customers. Verizon is gaining new customers with the promise of better services. It runs ads like "Can you hear me now?" that is strengthening its brand image as a good network around the America. AT&T is gaining new customers by promising new stylist mobile phones to its customers. First it launch Motorola Razor and then it partnered with Apple to launch iPhone in US.
Since the management is fighting with internal problems and they are not able to take any marketing step to give them new customers. Sprint needs to concentrate on gaining new customers using big marketing budget. For the time being, company has decided to Shed 125 Shops, 4,000 Jobs. It will give cost savings in short term but this is not a solution for the deep problems company is facing. Less retail stores mean less contact with the customers and that will hurt the company in long way.

Indian IT software success - A perfect economic sense

Whenever a sector grows anywhere in the world there should be some economics behind the success otherwise it cannot be sustained for long and market forces will push it towards the equilibrium. Indian IT sector has seen phenomenal growth in last two decades and has enjoyed good and bad time of world economy. Most of the time it has largely been liberated from the government policies, even before liberalization began in 1991. From an economist point of few this success can be explained using growth theory that says that the growth depends on 1) Factors of productivity, 2) Total factor productivity, 3) Skills and motivation of workforce. I will discuss each of these in detail here
1) Factors of productivity : When the software industry was started by some early entrpreneurs in India, resources were under utilised and there was enough scope for growth before they touch the production frontier. Physical infrastructure has been a problem from the begining but these companies have solved these probelms by setting up their centers close the cities where they are not far from the international airports, abandone of universities to supply engineers and science graduates. Since one of the major input was engineers and they were in quite supply so it helped in growth. Quite good percentage (in absolute terms) of GNP was invested in some of the universities after independence of the country. This investment played key role in the growth of the companies in later years.
2) Total Factor Productivity: Some of the major factor that can be highlighted here are 1) Advances in the technology i.e. Internet that allowed engineers to work in global development centers and have live chat and deployment of software products worldwide and reduction of the computer cost over the years. 2) Redistribution of resources from lower to higher productivity sectors, i.e. many of the science students all over the country started to study computer programminig and IT related subjects and the supply of computer related institutes increased many fold. Even engineers from other streams started taking up jobs with the IT companies because of the higher salary and prospects of fast career growth. 3) Terms of trade: Government of India did not interven in the IT sector and the highly protectionist western countries never thought of applyiing import tax on IT related services. 4) Quality of labour force: Indian education system puts lots of emphasis on mathematics and english is second language for most of the educated people that helped a lot.
3) Skills and Motivation of workfroce: Indian universities produce millions of graduates (hundreds of thousands are engineers out of them) every years and basic education system puts lots of emphasis on numbers, these graduates are perfect match for he computer industry that also talks in numbers and some logics. These graduates are highly motivated young guys because they get their job at very early age and earn quite a good salary, get indepence from families.
All these factors have helped in attening sustainable growth over two decades in the country. As I always say if the fundamentals are correct for any company/industry it will grow over time and I see that Indian IT/software industy will continue to grow in near future. Though there are risk of exchange rate fluctuation, salary rise but these are manageble risks and should not affect the growth at large.

Information leak - Wired Magazine knew even name MacBook Air

It is surprising that a online portal like Wired knew with so much certainty and detail what Steve jobs was going to release next day. Wired says "An Apple insider told Wired today that the company's new ultraportable, expected to be seen in public for the first time tomorrow, has an extremely thin profile and is shaped like a teardrop when closed — thicker at the top behind the screen, tapering at the bottom behind the keyboard." Not only this, they had also released the name of the device and it was written on the website "Steve Jobs is widely expected to reveal a new MacBook at Macworld on Tuesday morning, and with the rumoured name being "MacBook Air."" We have no idea how they got details so accurately but it is something that any company working on high tech products should deal with. Who knows if source code is also shipped outside the company? There is no harm to the customers in short term but if companies will not earn out of their innovations, they will stop innovating and in long term customers will not see anything new. One can argue about the prices charged by the companies for the propriety products but just cheating is not going to do any good. I have put two snapshots of the wired website because I feel they will remove this content once Apple will push them to reveal the name of the insider.

US Bond Insurer losing AAA rating

Last week Moody’s placed MBIA under review for its AAA rating after observing heavy losses in the subprime crisis. This is for the first time in decades that MBIA is under threat to lose its AAA rating. Its website says “During the week of January 14, 2008, Moody's placed AMBAC and MBIA's financial strength ratings on watch for possible downgrade.” And this message is on top of the website so that every visitor to the website see this very clearly. A very good, unbiased practice by an professional service like Moody’s.

It was also reported in Bloomberg that S&P was considering this same action for the MBIA rating and it was reviewing Bond Insurer as the losses mounted. Finally, New is out that Ambac financial group has lost its AAA rating. It is pointed out in the news that there will be more selling by the pension and mutual funds in these bonds because they are allowed to invest in AA rating bonds. When they will sell their bonds, it may trigger a series of sales in the market because prices of the bonds will start coming down and investors will be under fear of losing more money. It will have its effect on the equity market as well and the morale will be low there too. If heavy selling picks up in the equity market then the whole US economy will be under pressure and government might need to take some serious steps to stop losses. President has already announce a kick of package for the common user and now it may have to released with urgency.

Apple Macbook Air - Targetting a new market segment

Apple’s new ultrathin laptop (new apple Macbook Air) does not seem to be a regular product from Apple. It is lacking many features users look for in a laptop. Apple, generally, try to launch products that give something more than the expectations of the customers. After analysis the features of the Air, it is apparent that Apple is trying to target a complete market segment with this product. Company is expecting that user of this new laptop will already have another laptop or PC at home and office so this laptop will be only for the people who needs to carry a laptop with them everywhere. But this product is not even for the customers who travel too far and for too many hours. This is for the business clients who have to travel and give presentation in same city or state. Apple has not given removable battery so it cannot be replaced and users need to depend on the life of the battery only (that is less than 5 hours).
Apple is trying to market this product to the user who don’t like working on the PDA and like to see little big screen but don’t like to carry heavy laptops either. I am not expecting too high sales (in term of the numbers) of this laptop. Of course Mac users should not make mistake of buying this new laptop if they need full fledge product otherwise they will be disappointed. Apple should also communicate this through advertising that they are targeting different market segment otherwise if it goes in the hand wrong customers that will create poor reputation for the Apple brand.

Banks are losing but bonus are rising

Some of the banks are under said to be under lot of trouble because of the subprime crises and they are going to every possible source of investment in the world (Sovereign funds in middle east, Government fund from Singapore and banks from China) but it seems that it is not a big problem for the employees of the banks, they don’t seems to care about what is happening to rest of the economy. President Bush calls for economy kick-start with $145 bn package to help the economy but banks are bothered when giving salaries and bonus to their employees.
Merrill Lynch losses billions of dollar in the investments suggested by these financial chaps Q4 financial summary on the website of the banks tells some other story. Salary and bonuses of the employees have increase by 32% (from $3298 mln to $4339 mln for Q4). Raise is 8% for JP Morgan Chase. Case is same for Citi Bank or UBS, only raise differ in percentage term.
How these big salaries and fat bonuses can be justified. In fact, in the last couple of years when the share market was booming all around the world, these finance executives have earned fat bonuses. They have earned so much that they can go to nice beaches of the world for their rest of the life. On an average banks executives have got $350,000 in last year when their banks lost around $274,000 per employee.
Whole debt market is facing turmoil and it can be said that it was an isolated incidence in the mortgage market that has caused all the crisis but they need to keep the talented employees to run the bank so they need to give them bonuses. Economists talk about personnel economics and efficiency wages, it seems they need to go back to library and write new theories of economics.

Dreamliner delays - Implications on brand image

It was one of the most hyped project ever started by Boeing in its history and they claim it is most fuel efficient airplane built in the aviation history. Company has put huge stake on this plane and successfully gained order for over 800 planes till now. Yesterday, Boeing announced that delievery of its Dreamliner going to be further delayed. Though aviation industry is very monopolistic business and there are just a handful manufacturer for the non-military planes, but still brand image is very important in this industry because if the customers lose trust in the company they will switch to another competitor (e.g. Airbus, though it had its own problem in launch of A380 but those are solved now and its production is on in full capacity). In airplane manufacturing industry, customers look for price, dependability, flexibility and of course quality comes first. If Boeing fails in providing Dreamliner on time, it will lose its dependability advantage and it will raise credibility issue. Since, planes are ordered with a very strategic plans in progress, airlines company’s around the world cannot always bear the huge delays in supplies as is the case with Dreamliner now.
Some of the companies around the world are already demanding for the compensation for the delays in delivery of the planes. (Air India wants compensation for Dreamliner delay and Qantas seeks compo for Dreamliner delay). This is not a good precedence in this industry, if this continues and other companies also starting compensation for delays or start moving to Airbus for future orders, Boeing will be in big problem.
It is very important for the management of the Boeing to sit and see what’s the exact problem is and how long it is going to take to solve the problems practically. It is true they have to answer the shareholders every quarter about the share price in the stock exchange but just giving promises those cannot be fulfilled time-after-time will also make company venerable for bigger problems like loss of credibility. Whole aerospace business is based on trust, company can’t afford to lose it.

Japanese Business Culture

I had heard a lot stories about the hard working, sincere Japanese people. Many of those high words of praise about these Japanese people are turning out to be true once I started working with them since last year. One thing that I have noticed from day one of my experience is they are very sincere for their work and want to learn from whatever they are given. It is very surprising that most of them are struggling with their English, keep electronic dictionary on their desk all the time, but they never let it become their weakness. Once they are given a task to perform, you may forget over the time, they do not forget and turn up on time with their solution. They are quite humble and cooperative in work and discussion. Though they are not used to questioning in the middle of conversation because they spend lot of time in thinking if this is right question to ask about and if yes, how to phrase it. But when they come up with some question they have some valid point to make.
Other thing that I have learnt from them is about their work culture in Japan. They believe in collective work and collective goods. It is very clear from the thinking of Mr. Honda when he sees some of his employees playing baseball in the company ground,” In collective bargaining, they complain about having to work too hard. But when it comes to playing baseball, they do it until they become completely exhausted, even though baseball does not bring a single yen to them. What kind of men are they?". Normally, Japanese workers, and managers too, work very long hours. It is not always that all the employees have something to do and their work is pending but they help their fellow employees who are struggling to finish their work. It is amazing that people can stay in office to help other employees when everyone get same salary. They are not very much motivated by the salary and performance but they are loyal to the companies and want to do good for the company because they think companies will do good for them. It is true though companies take care of their worker quite well in Japan. Sometime there is quite high intervention by the office fellows in personal life that western people might just not stand. But that is how they work, they work hard, they help each other, they want to help companies in growth.

Walmart - Is this reacting or acting with launch of Marketside?

I always think that responding to current market requirements will always deliver better results than one company can have just by responding to what other companies are doing. Last year Walmart decided to leave the German market . Walmart has come to Europe thinking that it can have the same kind of success as it did in north America. It forgot that European consumers don’t spend money like their American counter parts and many of the consumers prefer to buy from the nearest store rather than travelling to Walmart (Asda in UK). For example, in UK many of the customers buy from Co-operative where the prices are much higher than most of the super markets (Asda, Tesco, Aldi, Sansbury’s, Somerfield). It is more about the culture of the society that Walmart did not try to understood.
Now Walmart is opening Marketside (Walmart Marketside) to respond to the comingof Tesco in US market. Here, one can ask very logical question, is Walmart out of new idea for its growth? Should the investors think of their return on investment in Walmart, is walmart giving expected return etc. It can also happen that Walmart is opening Marketside to change the strategy for growth because it has experienced that growth is not possible by having those huge super markets. They need to enter the cities for future growth. It is good for the investors of Walmart if it has recognised the changing patterns of the society. If it is just a response to stop Tesco entering US market then management should think again because by fighting with each other no one will gain. It is so big country and Tesco has deep pockets too, in how many cities Walmart can go and have price war with Tesco?

Tehran - Mehrabad International Airport

Recently one of my friend went to Iran to visit his family. He reached there safely and on time but while coming back he was in the airport for 5 days. I can’t believe that someone has to live on the airport for 5 days because of bad weather. It's fine that plane cannot fly because of bad weather, no one can do anything but it is the responsibility of the airport authority and airlines (in particularly) that they take care of the customers came for the flight. Either the airline should have warn in advance 6-10 hours or when they had come to airport for boarding, customers should been provided with accommodation in some nearby hotel. I know this happens few times (2-3 days in a year) in Indira Gandhi International airport, Delhi in December but I have heard that airlines provide accommodation in 5 star hotel for the people coming from different cities for the flight. In any case it rarely happens that the flights are delayed for 5 days. It came to my knowledge that Tehran does not have five star hotels.
I was talking after this incidence to one of my investor friend about investment opportunity in Tehran in hotel business but he told me that they had approached many companies in Tehran for investment but they want capital investment and the investors don’t want to invest capital rather they look only for management control of the hotels because of the political instability in the region. I think its fine for the Iranian business people to invest in hotel construction and let the management control rest with other efficient companies. At least customers will get better service. Particularly international customers who want to stay in good hotels when they go for just few days trip for personal or business purpose.

Dow Jones Dharma Indexes

US based Dow Jones Index has come up with Dharmic Index with India based Dharma Investments. Many of the rules of this index will be same as that of Dow Jones Islamic Banking Index because most of the religions have similar teaching about the way life should be lead. This may encourage companies to follow some basic rule of corporate governance and social responsibility if they want to be included in this Index. There is nothing religious about this index but it is a substitute for the companies those will not like to linked with the Islamic Banking Index.
Dow Jones can set very high and consistent global standards so it will carry good value in the market. They have also formed advisory and supervisory committee with some of the highly regarded institutions in the Hindu, Buddhism, Jainism and Sikhism.
It is not very clear why Dow Jones has created this new Index at this time. There can be following two reasons

• To make money (in the form of licence and percentage of asset managed by funds)
• To make pressure on companies to become more environment friendly that will make products more expensive.

Since Asian stocks market is booming so this kind of funds will have great appeal in this region. It is not very clear what other benefits it will bring to the Dow Jones Index.

Orkut vs Facebook

I had my orkut account many years back and I had not heard much about facebook till one year back. One of the reason for my ignorance was I was living in Asia where facebook is not so popular as orkut is. But when I see overall numbers for the people using either of these services, facebook is clear winner. Both of these quite popular social networking website. Facebook has recently become very popular in the North America and UK.
Orkut could not become as successful as facebook become despite the fact that orkut has support from powerful company like Google. One of the reason, I find for this failure is the cultural factor in two website. Orkut never tried to hide information of users from other users (by default) while facebook does so. Facebook tried to engage the people through its applications like Zombie etc where people were attacking each other and coming again and again to check who has attacked them. It was really social networking site. There were also features like updates from the friends where people could see what was happening with other people. This concepts was new, I think another social networking site linkedin uses this for a long time but orkut failed to recognised that it was becoming more individualistic website. People are already enough isolated, they don’t talk to each other very often but they are still curious to know what is happening in other people's life.
When people are becoming part of some group or network they would like to see the updates in their inbox (or on the screen when they open the website) and not to go to other people's scrapbook to see what is happening there. In fact orkut scrapbook is so bad that one can go to other people's scrapbook and by reading some of the history of scraps and answers knows what is going on there. one can know this thing in facebook too but only for friends.
Orkut could not recognised how to earn revenue out of this website while facebook has done it very cleverly. I am not sure how much revenue facebook is making but the way they placed ad in between of the conversations etc is quite good for the advertisers and facebook can earn high click per view.
Study of these two sites makes very clear about the cultural changes in the society in 21st century. If Google wants to make any profit out of orkut they should try to understand the society around them. They need to think out of the box in this domain because it different domain from their search engine market.

Apple keeps innovating to remain market leader

Steve Jobs has learnt one thing, and very well, that it is important to keep innovating to remain in the market. After coming back to Apple, he has launched something new almost every year and it keep interests of the customers in its products. These days he is in love of launching products with something "ultra" - ultrathin, ultra portable.
Yesterday, he launched ultra thin MacBook Air, thinnest notebook in the history. Along with this there were some of the new feature updates for the iPhone and iPod. One of the most awaited launch was of the movie rentals. One thing that he is doing with all these products in the last few years is integrating all the services so that customers who are using iPhone can also watch movies on the same product, they also provided GPS-like service on the iPhone in collaboration with Google map.
One of the difference with Microsoft is that Apple is not seeing Google as its competitor while Microsoft is spending its energies in fighting with Google, Sun, Yahoo, Apple and so on. Microsoft has lost the vision and desire to keep innovating. Though there has been a culture of copying Apple UI in Microsoft but now it seems they have nothing else but to copy products and services launched by rival companies. Few years back they started developing their own search engine and still there seems to be no success in comparison to Google. I have tried MSN search many times but results are not very good. It seems that Microsoft was good in making only OS and Office once the competition came in these two domains (from open source Linux and openOffice etc) it is trying to go into all other markets where it see proven success but it is not trying to innovate anything of its own.
Now Apple has done same thing in music players (with iPod) what Microsoft did with Windows in PC industry. Microsoft is blamed of killing competition, companies like Netflix will close down themselves by Apple dominance when iTune will start movie rental. Microsoft exploited its dominance in the OS and now Apple can use its power in entertainment industry with the help of iPod. People who use iPod, buy iPhone, they rent movie, who use all these products will buy more MacBook Air and all this cycle (Apple entertainment ecosystem) will help Apple in increasing its market share in all the industries it has entered.
It is true for any company that stops innovation will die one day, perhaps Microsoft is following this path.

Military rulers – Business should runway?

Many of the readers are asking me what the best option is when a country is being ruled by military or what the impact is of the military ruler on the country’s economy? My suggestion is it does not matter what kind of government is there in any country, what matters is how supporting the government of any country is for the businesses. Businesses are essential for the survival for any country and business is very important for the well being of the people of the country. If people are happy they will be supportive of the ruler irrespective of the nature of the government. Just by having military ruler does not change the fundamentals of the country. There are many places in Africa where people have become so used with their poverty that they don’t even try to improve their condition in such a condition how does it matter who is ruling. Many of the small investors who were having good time for last few years (economy was booming) are just worried now and analysing economic impact of benazir's assassination in pakistan. In my opinion economy of Pakistan after Benazir’s assassination will not be go down too much, of course there might be low moral in the investors for short time but it should matter for long time. Pakistan is a good example in recent years that is being ruled by military dictator and still seeing good growth. China also has one party rule but that is not military in technical terms. Some of the countries ruled by military are very poor and there is lot of unrest in the political environment and economy is not good either but these conditions are for many other reasons and they should not be a big factor for the business community to invest in if they see support from the government and get guarantee for their investment.

China-India coming together

A long time back (till 1962) there used to saying "Hindi Chini Bhai Bhai" that translate into "India China brotherhood. Very few people have forgotten this slogan but after the small war, relationships between two neighbouring countries had gone bad and they are trying to improve them but not for the sake of old reasons but for the constraints they are facing.
Both are termed as the largest emerging economy of the world and if both of them continue to grow at this rate, they will become major economic power of the world in next one decade. To fuel this kind of growth they need lots of energy and they have been competing with each other for the new resources all over world. Recently Prime minister of India, Mr. Manmohan Singh, visited China and there had been good understanding between two countries during this summit on many issues both the countries facing globally. China has agreed in principal to support India for the permanent seat in the UN security council, in getting access to the civilian nuclear energy. India also made this clear that India is not working with any group to contain China and India has independent foreign policy.
Much of this cooperation is coming along because both countries are looking for growth opportunities. There is too much pressure on two most populous countries to reduce carbon emission. Practically it is not possible for the countries to reduce carbon emission to the level Doha agreement has demanded, that will dampen the economic growth for the countries. Since China has also signed WTO agreement recently and now there is pressure on it to reduce agriculture subsidy. If these two countries can work in cooperation for the economic growth (and this is the only option in current scenario) they will become major world powers sooner than expected. World business leader should start exploring business and investment opportunities in these countries for future growth.

Low cost Laptop - US $350

It seems that many companies are not seriously considering low cost products for emerging markets. Last week it was TATA group in India that launch its low cost car (TATA Nano) for under US $2,500 and now recently another company HCL Technologies launched its low cost laptop, "MiLeap X", that will be available for just US $350. It is not sure if the Indian market is still so fancy to buy an cheap laptop for this price when a desktop with very good configurations can be bought for the same price tag. Other drawback of the product is the screen size, Indian customers are generally happy with big things for lower price. it has chosen Linux for this low cost laptop that is obviously and welcome step for the emerging economies. It is not a good idea to sell leptops preinstalled with Windows (it was XP and not is coming with Vista). I have used Vista and did not liked that too much and many people have reported that it also have compatibility issues with hardware as well as softwares. Well, issue is not about the technical dificulty for the home users, more important is the cost of the Windows products. Interstingly, demand for the Linux based computers is increasing fast, perhaps because one of the major advantage of having Windows was that it was user friendly but its new versions it is becoming too difficult for the home users and people find it almost same (or even more) difficult to operate as Linux.

I am not expecting too high volume sale for this laptop but company will surely we able to make profit because it has its own manufacturing facilities in India. I am waiting for someone to launch low cost iPod and iPhone in developing countries.

Walmart Marketside

Wal-Mart is planning to open a few small size markets in Arizona under the brand name Marketside. Though one of the point that is very obviously discussed is that it to fight with the low cost UK retailer – Tesco in USA but the it seems that more important assumption at the hurt of this decision is that strong competition policy (antitrust lawsuites) and opposition from the unions has virtually made this impossible for the Wal-Mart to grow further. It has been more than four decades when Sam Walton started the concept of having big retail stores outside the cities when people can come by car to have their weekly shopping for cheap priced items. Probably, Wal-Mart needs to look at this format if this is still viable as the prices of the oil are going up, this is a challenge for the retailers like Wal-Mart to keep prices low and the customers will not be too willing to drive car when the oil is getting expensive. If the rise in the oil prices will continue and say in next 10 years, it become twice expensive as it is now then the whole concept of driving out of city will not work anymore and people would prefer to buy from the cheapest local store. Wal-Mart have repeated the same old concept year after years, now it is time for them to think strategy for the future in the light of the changing economic patterns and life style. Wal-Mart model was a perfect fit for the last century’s economic model, I doubt same model will work in 21st century too.