How did they do it

'How did a handful of British ruled millions' has been a vexing question for me and I am sure for the majority of us who did not major in Indian History.

And a valid question it is, after all what are the odds of a few thousands (126K to be precise according to 1861 census) rule by force a population of well over 200 Million(1901 Indian census). Which essentially boils down to ratio of 1 British to 1587 Indians. That will surely spell Waterloo in capital for any General worth his salt. Then how did the British convince us to fight on against another.

According to many a British journal there are only two things which can make the lethargic native spring into action: Greed and Fear; in that order.

Surely it wasn't all greed, Indians were not getting any more richer working in the British army than in Tantya Tope's. There might have been a slight variation in the benefits or the reimbursment of expenses incurred at the local Hakim but surely not enough for the emotional Indian to fire at his own brethren. And fear it certainly can't be. How are you going to find out a defector in a country of India's dimensions. Or better still just walk over to the next Maharaja and join his army and there you are, a guilt free military career.

My take on the whole mystery is that this was a soft issue, more in the realm of HR rather than Finance, moving slightly up in the Maslow's hierarchy of needs.

Though we have been raised with the mindset that India is a third world poor country and hence a few bucks will get you anything but that holds good only so far, Indians are also very emotional people and very strongly connected to their families; in fact we are never ever able to cut our umbical chord. This coupled with a continuous stream of religious festivals ensures that we are always applying for leave and this my dear readers brings us to the core of the issue, the issue that cost us our independence, the issue that made the Raj survive for so long despite the enormous odds stacked against it, the issue of the canceling leave.

The root of this issue can be traced to the fundamental difference that lies between the 'Desi' and the 'Gora' mindset. When faced with the decision to grant leave, 'Personal Reason' is sacrosanct for the Gora. They will not dig deeper, not try to find out the frivolousness of your time out, not try to impress upon the extremely important work, in the above case keeping the empire intact, that is going to impacted but would rather take the approach of finding a work around. Their policy specially around planned time out is very professional and doesn't bank on individuals making personal sacrifices for the sake of the organizations cause.

The 'Desi' mentality on the other hand is driven from the assumption that a favor has already been granted by giving a job and hence personal sacrifices are something that are not only called for but also activly sought by the recruit in order to payback the debt. Hence the result, vacations cancelled at the last minute for the most trivial of reasons. For the reasons mentioned above this debt repayment does not go well with the natives resulting in they preferring the employment of the Company Bahadur making the Maharaja erstwhile.

This difference in culture and attitude spawns centuries and even today whenever one is scouting around for a new boss "Gora' is the word to go by, their professionalism ensuring the unhindered continuity of planned leaves for reasons personal or otherwise.

And that's how they do it.

Inflation and Brazil

Read this excellent article on how Brazil came out of chronic inflation 20 years back. Any takers in the Indian side.....

This is a story about how an economist and his buddies tricked the people of Brazil into saving the country from rampant inflation. They had a crazy, unlikely plan, and it worked.

Twenty years ago, Brazil's inflation rate hit 80 percent per month. At that rate,  if eggs cost $1 one day, they'll cost $2 a month later. If it keeps up for a year, they'll cost $1,000.

In practice, this meant stores had to change their prices every day. The guy in the grocery store would walk the aisles putting new price stickers on the food. Shoppers would run ahead of him, so they could buy their food at the previous day’s price.

 

The problem went back to the 1950s, when the government printed money to build a new capital in Brasilia.  By the 1980s, the inflation pattern was in place.

It went something like this:

1. New President comes in with a new plan.
2. President freezes prices and/or bank accounts.
3. President fails.
4. President gets voted out or impeached.
5. Repeat.

The plans succeeded at only one thing: Convincing every Brazilian the government was helpless to control inflation.

There was one more option that no one knew about.  It was dreamed up by four guys at the Catholic University in Rio. The only reason they enter the picture now  —  or ever — is because in 1992,  there happened to be a new finance minister who knew nothing about economics.  So the minister called Edmar Bacha, the economist who is the hero of our story.

"He said, 'Well, I've just been named the finance minister. You know I don’t know economics, so please come to meet me in Brasilia tomorrow,' " Bacha recalls. "I was terrified."

Bacha had been waiting for decades for this call.

He and three friends had been studying Brazilian inflation since they were graduate students — four guys at the campus bar complaining to each other about how no one else knew how to fix this.  And now they were being told "Fine, do it your way."

Bacha was invited to meet the president.

"I asked for an autograph for my kids," Bacha says. So the president wrote Bacha's kids a note that said, "Please tell your father to work fast for the benefit of the country."

The four friends set about explaining their idea.  You have to slow down the creation of money, they explained. But, just as important, you have to stabilize people's faith in money itself.  People have to be tricked into thinking money will hold its value.

The four economists wanted to create a new currency that was stable, dependable and trustworthy.  The only catch: This currency would not be real.  No coins, no bills.  It was fake.

"We called it a Unit of Real Value — URV," Bacha says. "It was virtual; it didn't exist in fact."

People would still have and use the existing currency, the cruzeiro.  But everything would be listed in URVs, the fake currency.   Their wages would be listed in URVs.  Taxes were in URVs.  All prices were listed in URVs.  And URVs were kept stable — what changed was how many cruseros each URV was worth.

Say, for example, that milk costs 1 URV. On a given day, 1 URV might be worth 10 cruseros. A month later, milk would still cost 1 URV. But that 1 URV might be worth 20 cruzeiros.

The idea was that people would start thinking in URVs — and stop expecting prices to always go up.

"We didn't understand what it was," says Maria Leopoldina Bierrenbach, a housewife from Sao Paulo. "I used to say it was a fantasy, because it was not real."

Still, people used URVs. And after a few months, they began to see that prices in URVs were stable. Once that happened, Bacha and his buddies could declare that the virtual currency would become the country’s actual currency. It would be called the real.

"Everyone is going to receive from now on their wages, and pay for all the prices, in the new currency, which is the real," Bacha says. "That is the trick."

The day they launched the real, Bacha says, a journalist friend asked him, "Professor, do you swear that inflation will end tomorrow?"

"Yes, I swear." Bacha said.

And, basically, inflation did end, and the country's economy turned around. In the years that followed, Brazil became a major exporter, and 20 million people rose out of poverty.

"We were in awe," Bierrenbach says. "Everybody was very happy."

Beautifully capturing our current existence

"Earning and spending, we lay waste our lives"

Late Shri N.S. Mathur

Strategic Direction

Management students and practitioners know well that focus on both strategic and operational issues is the key balancing act which the organization must accomplish for its healthy growth. Management focus on tactics and operational excellence ensures that the organization works at peak efficiency and profitability while the long term goals and aspirations of the organization are fulfilled by continuously monitoring and refining the strategy to accomplish the set goals. Senior management regularly finds itself torn between these two tasks and how best to allocate their focus so that none is ignored.

If we bring this same management concept to our individual lives, we can view each person as an organization which has survival (operational) needs as well as some long term goals and aspirations (strategic) needs which needs to be fulfilled. Focus needs to be maintained on both for the individual to be deemed successful in life.

Survival for humans in a day to day context means having enough money to live, which can also be called as going through the business of living. All of us spend effort, in terms of time and energy, to ensure that we are able to run our lives smoothly. This essentially means that we find different vocations and get about earning our living.

The strategic direction in life is more difficult to define than survival. The first part is to define the long term goals and aspiration. The best way that I can think is how Stephen Covey does it. Imagine that you are to die in 6 months or 1 year or whatever time frame you deem fit (but keep it short, 60 years does not suit our purpose) list down what all you want to do by then so that you consider your life meaningful. If you perform this exercise honestly and sincerely it should bring out from within you all that you value most and which is most important to you as a person. Now once these goals and aspirations are defined we need the strategy to achieve that and then implement it.

With this background if we look at our lives we will find that we spend an extraordinary amount of time on the tactical and the operational at the expense of the strategic. The first twenty five odd years are spent in a race at school or college fighting to get that top slot to get the most paying job. We read and write a lot but escape the learning bit which is most essential. The remaining part of our active life is spent trying to move into the next pay grade, take a lot of pains to be on the right side of our boss (whose name one will not remember in five years time) while ignoring people who are or can be our lifelong companions. We spend hours at end in office and burn the midnight oil on reports but do not find time to ask ourselves where we really want to go and what we want to become. Finally once out of the race it does dawn on some as to what they have lost but these few also are by now so habituated to only looking at the short term that there is no chance for a change.

This short term focus is a remnant of out animal nature from where we have evolved and holds us strongly in its sway. A cursory look at animal life displays similar patterns in which the animal is completely pre-occupied with surviving (read as winning the race from its predator) and finding food for itself (read as earning a living). This is all that the animal does in its lifespan. The advantage we have on the brute is our ability to think and give a strategic direction to our lives; if we do not use this faculty then we are underperforming on our potential by a wide berth.

It is high time to stop and take some time off from our daily business of life and give some thought to the strategy part and start work on it in right earnest so that we can have a meaningful and successful life.

But be quick because with life you never know!

The Perceived Chinese Strength

Today a heated discussion was raging in my office on the position of strength the Chinese have vis a vis US because of the large amounts owed by the latter to the former. The point being made was that the old order was crumbling with China owning billions of dollars worth of American paper, effectively giving it a large manipulating power and limiting US foreign policy options to those approved and blessed by the Chinese.

Though at first look the evidence is overwhelming in support of the above view but a deeper, more historical and some scenarios analysis throw up other interesting propositions which don't make China look all that strong.

The leverage China has is the huge amounts of American debt it owns and based on which it can try to arm twist US to postures more suited to it's interests. To a certain extent this is true and the leverage can and will work in China's favor inducing Americans to tow the Chinese line as they say it. But there are limits to the influence exerted by the Chinese. On certain policy and financial matters yes but anything more important and influential, specially those  which are contrary to important American economic and geo-political interests, then no.

Ever since America's rise post world war 2 there has been a strong Anglo – European – American axis which has served and propagated its interests which has brought prosperity and power to these regions. They have acted in unison under the NATO umbrella on political, economic and military fronts. They have furthered their combined sphere of control wherever and whenever it has been to their combined advantage. If one looks at major policy decisions one is excused to believe that they have been taken by one country and then religiously followed by others behind a sham of free foreign and monetary policy. The point being whether it be the Iraq war, the Afghanistan war, pressurization of Iran on the nuclear issue, economic bailouts or any other issue this group has spoken and acted as one.

There is no reason to believe that the future stores anything different when this policy has worked out so well for all the members of the coalition.

Consider a hypothetical scenario that China really does come to loggerheads with US and tries to bring the Americans down by putting financial pressure on them, what stops the Americans from cutting all relations with Beijing branding them a Communist (we know how they hate them Commis), human rights abusing, un-democratic and repressive regime with which US is breaking all political, diplomatic and financial ties to pressurize them to usher in democracy and freedom of thought, speech and action. There, behind these lofty goals will wither away all inkling of Chinese power, real or perceived. Other nations would shudder to take such a step fearing what this would mean to their debt rating and their capacity to raise further money in the international market but then there are some perks attached to being the lone financial or otherwise superpower, will Moody's or S&P even in their wildest of dreams degrade American debt, not in my current dreams.

Now who will come to the Chinese rescue? Europe, don't think so based on all the facts and actions we have seen before. Russia, maybe but then again Russia is a mere shadow of its former self and though they have started flexing their muscles again, based on their huge oil reserves, they are still nowhere close to snubbing this powerful axis.

Let us now look at the Chinese contribution to the western economies. Apart from their penchant for collecting American debt China is also the manufacturing plant for the entire western world. So we need to build a new plant, how tough is that? First it was Mexico which was the manufacturing hub  backdoor, then China, after China it can be India, Brazil or Russia or a host of other nations which on the back of some IMF provided funding will be glad to replace the Chinese. The truth is manufacturing hubs constantly keep moving, sometimes the trigger are economic realities but political realities too have the same effect.

Though unlikely some may argue for a scenario in which an escalation happens and China decides to get its dough back by flexing its military might. Personally I don't believe this is a possibility what with the American bases in Japan, the 5^th fleet in the South China Sea, a more than eager India to act as a forward base to settle its own score, the war will primarily be fought on and around Chinese soil rather than anywhere close to US. Any ICBM's on their way will be neutralized by the missile protection shield around Europe and I am sure the debris will fall over Iran (they have been out of favor for long).

The Chinese know and understand this and that is why they may show their displeasure and get irked by Obama meeting Dalai Lama or military hardware being sold to Taiwan, they never take it to the next level because they know well that the current international power setup has been carefully coordinated by the western powers which works to further their cause and interests. Any country whose interests aligns with them gains while if one find itself at the wrong end then the full force of international community falls on it.

History shows that nations rise, rule the world and then fall as others step up to take their place, as time progresses we may see genuine alternatives to the current power coterie, maybe China itself backed by its allies in Africa, but as of now the sun still shines on the Anglo – European – American power axis.

Birthday Blues

Better half hung up the phone her parting shot being an enthusiastic “Yes, surely we will be there”. I was then communicated the purport of the telephonic conversation just concluded the details of which filled me with dread and fear. Oh no, not one of those again! Birthday parties shake the very foundation of my soul.

Generally, I am a man of few fears and knew one less before joining the ranks of the ‘married with children.' Now don’t get me wrong this has nothing to do with children, its not that I hate children or find them obnoxious like some people going around; on the contrary I have always liked them and have a way with them.

Little girls have always been charmed by the dazzling thirty-two which coupled with some friendly and encouraging coos invariably places me on the right side of their favor scale. Ask any baby going around and she will tell you that self is a perfectly good egg in whom complete confidence can be placed.

Birthday parties though are a different ball game, a game in which my handicap is just too much to overcome.

This was not always the case, I distinctly remember a time in life, though very far away, when on being invited to such social gatherings I would happily don my best collar and head with a few friends, who somehow managed to get on every guest list I was on, and would busy myself devouring the dishes which caught the fancy of the palette during round one.

Now that was aeons ago, in a much simpler time when the preparation to go for one of the above-mentioned events did not begin days ahead with hours spent discussing what to gift, the value of the same, which for the uninitiated is a function of:
K * (The value of the gift received * The thickness of the relationship) / The general budgetary constraints prevailing at the time of the occasion.
K being a constant dependent on ones propensity to increase his/her social circle
The times also lacked endless trips to all kinds of retailers checking out every possible item which could make that perfect present. An exercise which invariably results in multiple candidates entering the fray. Once the final selection is made, after long debates on the merits of each, the less fortunate ones are returned in numerous expeditions to the far corners of the city from where they were collected.

Exhausted and tired from this effort one finally makes it to the D’day. For the evening rendezvous there is palpitation and preparations in the air right from the first break of dawn. All plans are made keeping in mind the appointment and everything is supposed to work as clockwork except, somewhere in between there creeps in either a lax hour, an indiscreet siesta or the one of other innumerable ways in which the cosmos conspires to make an otherwise punctual couple become in-fashionably late.

Making past the shrieking kids who greet at the venue the gift is handed to a usually crying baby troubled by all the attention, with the ceremonial “Happy Birthday” and a kiss, in the arms of her mother whose tired smile in-spite of her make up betrays the hard labor she has been subjected to playing the part of a hostess.

One then gets thrown into a melee of unfamiliar and strange faces from which is to emerge a companion for the next couple of hours. If it is not your day then it will be two to three grueling hours of embarrassing smiles to strangers and fiddling with pieces of food and furniture. On the other hand if the goddesses of fate smile there manifests a conversationalist who breaks through the silence barrier and keeps himself and you fairly occupied in between rounds of cold pizza and extra creamy cake till that time when one can make a polite excuse to the hosts and beat it.

The ordeal of a Birthday party makes even the bravest of hearts faint, the vaguest reference of it brings back painful memories and the prospect of attending one would even make Captain Piccard refrain from boldly going there.

Extraordinary Companies

All companies dream of becoming institutions but very few manage to achieve that status. Most of organizations are born, blossom and then either wither away or are amalgamated into a bigger company all in a period of a few short decades. Companies in todays environment have a life span much less than that of a human, strange since so much effort and man hours of very intelligent people are spent trying to make it more than a short lived bubble.

What then differentiates one of these bleeps on the business landscape from the Goliath's which transcends people lifetimes, make an indelible mark on how business is done and leave a legacy for the future generation of companies to learn from.

Mission and Vision are the two terms that are key to the question above. All great corporations be it IBM, HP, Nordstorm, Tata’s or any other live for much more than just quarter to quarter earnings and the associated fluctuations of its stock price. They do business for a purpose and though they keep a keen eye on the profit and loss but that is more of a way to assess their efficiency than being the be all and end all.

Mission is the reason the company is in existence. To accomplish it is what stops the management to sell the company to the next highest bidder which gives the maximum return on investment to the shareholders. Mission of a company is the great goal which it is trying to achieve, which will make the world a better place. Merck for instance has its mission to reduce human disease and suffering. Lofty indeed, but this is what defines everything that management at Merck does. Trying to achieve its mission is the only way Merck can explain its shareholders why it donates hundreds of millions of dollars of free drugs in Africa.

Mission such as above are the purpose of an organization and help everyone in the company work for more than just money. A compelling mission is what brings like minded people together and justifies them dedicating the most productive years of their lives to the growth of the company. What they have worked for is not just the organizations bottom lines but for furthering the cause that the company represents and these employees value.

Vision on the other hand are the milestones on the road to achieving the mission of the company. Vision statements are set targets with a date which the company decides to achieve that will bring it a step closer to making its Mission a reality. Vision should not be just another management update to the employees but should be so compelling that it should be the topic of discussion in cafeterias, company get togethers, when colleagues meet in the hallway and almost every corporate communication. The more colorful or challenging the Vision the more likelihood that employees will go that extra mile to make it come true.

Ratan Tata the chairperson of the TATA Motors set a vision to build a sub $2,000 car to make it affordable to the vast majority of Indians instead of a select few. It was at that point of time considered impossible by the best in the consumer vehicle industry. Nonetheless Tata stuck to this vision and was able to rally his entire company to take up the challenge and they rose to the occasion to prove all the skeptics wrong and come up with the Nano.

Tata is a fine example of what people and companies can achieve when a vision is set, management buy in is visible to the employees and adequate support and resources are provided to meet them.

Another trait of such organizations, which are working for more that just the next set of numbers, is that they treat their employees as partners in a journey, as people who are together based on shared interests and goals and hence who become irreplaceable once they are gone. In times of economic distress letting go of staff is one of the last options which is better left in-exercised. Why, because they realize that economic cycles are temporary but loss of people with shared zeal and passion is permanent.

Layoffs at such companies is a strategic decision such as when a line of business is being closed either because it does not fit with its core business or has lost relevance due to environment changes and hence does not contribute towards the Mission of the company. All strategic decisions including mass layoffs are governed by the guiding mission. Even in such case adequate care is taken to make the transition smooth, just like one would do to an old friend who has seen many ups and downs with you.

When lacking a compelling Mission or when a company deviates from the same a culture of transactional relationship breeds. Such companies are not able to rally staff around a common goal but instead place disproportionate focus on the numbers and how the street reacts to them. The existence of such organizations is very much defined by their profits and profitability every quarter. This places an extraordinary pressure on the management to make the numbers look good, at any cost, which in the long run is detrimental to the health of the organization.

In such companies tactical maneuvers gain importance over strategic direction since the priorities are skewed towards immediate profit booking. In extraordinary companies profits, profitability and other numbers are used to gauge the efficiency of operations and as a feedback to the business leaders but they are not the only criteria in decision making. Strategic thinking in such organizations is governed by the purpose of their existence and how to fulfill that. These companies thus escape the numbers pressure which recently has been the reason for downfall of more than a few, cooking up accounting books to meet expectations. Such short term outlook also results in companies following a hiring and firing policy which further dilutes the culture and invariably results in employees developing a transactional relationship, further making the Mission irrelevant.

To become an extraordinary company is a conscious decision that the management takes. It involves much thought, direction and eventually guts to stick to the right path even when the going gets tough, because only then the tough gets separated from the departed.