My email to Tony Jackson at Financial Times:
2010/1/18
Dear Mr. Jackson,
That was a fantastic read. I have forwarded it to everyone I know in investment banking, although probably their frequent reference Prof. Damodaran would make an ideal recipient.
I have two arguments to challenge your thoughts.
1) Philosophical argument: Are we concluding here that while prices change, value remains the same? How does it matter, since human decisions are driven by current prices more than by the value. For example, a man dying of thirst on 18th January 2010 may not reach the life saving (value driven) decision if he has the choice of spending his last 500 dollars on (a) buying a bottle of water or (b) buying one kilo of gold sold for 500 dollars. Probably that's the reason why Avatar (gold i.e. $1.3 billion) is more exciting than Gone With The Wind ($26 billion i.e. life…much more valuable than gold!).
2) Statistical argument: While I fully agree with your rationale, please consider this. If you apply the 'double discounting' of inflation and available resources, I wonder how the pre-crash 2007 US house prices appear. Probably you would end up concluding that the house prices in a previous boom were higher than those in 2007. Same for gold and oil? We all know available oil reserves are lesser today than in an earlier oil boom. Sorry for my laziness in not using the actual data and showing the conclusions. Also, I may not replicate your exact number crunching so results may not be comparable. However, you might want to do (or may have done) this and share with me how this theory fits with US house prices, gold and oil.
Regards,
Chetan
-----------------
From: Tony Jackson [mailto:tonyjackson09@googlemail.com]
Sent: Monday, January 25, 2010 7:39 PM
To: Chetan Shah
Subject: Price and value
Chetan - my apologies for this belated reply. On the philosophical point, I think the distinction between price and value is fair enough. But my own point was rather more basic - the distinction between price and affordability. If the price of a thing has doubled but wages have quadrupled, we can all afford twice as much of it as before. Whether it is rational to buy twice as much of the thing - cigarettes, say - is of course a different question.
As to historic prices, I bought my first house (in Edinburgh) for £12,000 in 1978. Adjusted for UK average earnings, that makes £83,000 today. Since that's half the UK average house price today, I infer that house prices are now more expensive. And the gold price, as I recall, was nearly $800 at its peak in 1980 - around $3,000 today on average GDP per head. Still some way to go there ....
Regards,
Tony
--------------------
My response email to Tony Jackson on 26/1/2010:
Tony,
I hate to drag this into a further argument, but can't resist.
Would you say that gold is unlikely to reach $,3000 any time soon? Would you also say that your friends/wife/doctor from Edinburgh i.e. the market does not expect house prices in Edinburgh to fall by 50%? I am tempted to believe so, because I guess most of us do not live by statistics but by real physical experiences and the current - nominal - numbers appeal to us more than the real - discounted - numbers. Probably our priorities change, too and that reflects in our spending patterns breaking out of old expense/earning ratios.
I am certainly not sharing your thoughts on gold with my wife and give her a reason to buy more.
Thanks for your response and hope to read more of your brain stimulants!
Cheers!
Chetan
Saturday, 13 February 2010
Friday, 12 February 2010
Why Avatar Is Not Such A Big Hit...by Tony Jackson, January 16,17 Financial Times
I read the following brain scratcher in FT a few weeks ago...worth a read.
Frankly my dear, that record has gone with the wind
The 3D film Avatar is apparently doing well at the box office. Its $1.3bn sales to date put it in contention with the record holder Titanic (1997), at $1.8bn, and eclipse Gone With The Wind (1939), which managed $390m.
Or so the publicity tells us. But for anyone with an ounce of numeracy, this is nonsense. Adjusted for US inflation,Titanic's sales were $2.4bn and Gone With The Wind's getting on for $6bn. Add another pinch of numeracy and a further thought occurs.
Inflation apart, real incomes rise over time. If a thing cost $10 in 1980, the question is not just what it would cost today, but what it cost then in terms of available resources.
Applying that logic to box office sales, let us adjust for nominal US gross
domestic product per head (a proxy for average wages), which I derive from
measuringworth.com. By that yardstick, Gone With The Wind's sales are worth a rather daunting $26bn in today's money.
As with Hollywood, so with Wall Street.
Today's reader of JK Galbraith's The Great Crash 1929 might find the sums involved rather trivial, since the Dow Jones Industrial Average peaked back then at a mere 380. But do the same adjustment for nominal GDP per head, and the level was more than 21,000.
That is thought-provoking. It has become almost conventional wisdom today that the 2000 peak of 11,700 on the Dow was a record level of overvaluation, based on the twin measures of the 10-year rolling
inflation-adjusted price-earnings ratio and the "q" ratio of price to book value. But even ,adjusted for GDP, that was less than 16,000 in today's terms. All the same, the 2000 peak was higher in that respect than any in history except 1929. It was higher even than the nominal 14,000-odd
which immediately preceded the latest crisis in 2007.
What do these comparisons tell us?
First, distinguish between the two measures. The cyclically adjusted real p/e, developed by the US economist Robert Shiller, works on the basis of reported corporate earnings rather than broad economic activity. The two are, of course, intimately linked. But corporate profits as a proportion of GDP fluctuate over time, depending on the bargaining power of capital versus labour. Those fluctuations tend, naturally enough, to be mean-reverting, that is, they vary around a fairly constant average.
Hence the calculation by Smithers & Co that the 2000 valuation peak was a record, based on deviation from the long-run mean. Our "real" valuation of stocks, based on GDP, is rather different. It tells us, in effect, what level of available resources the population has been willing to devote, to ownership of corporations.
The size of the quoted sector, of course, varies over time. But that need not concern us, since we are measuring an index rather than total dollars.
When we look at the reality of economic growth, the picture is one of false
projections from past experience. Average growth in the US economy in the 1920s was 4 per cent a year, and in the 1930s half that. As ever, the 1929 market peak was just in time to be too late.
In the 1990s, which led up to the next market peak, US growth was a more
subdued 3.3 per cent, a reflection of the fact that the rate had been slowing ever since the 1960s. But the figure for the 2000s looks like being being a close tie with the 1930s for the worst on record. The best decade for growth, on the other hand, was the 1940s - a clear case, you
might think of a rebound from the depths encouraging signal for the 2010s.
But when we recall the enormous impetus given to the US economy by the second world war, we might perhaps temper our hopes. All that said, let us return to our basic premise. It is encouraging that in real terms, the market excesses of the past decade have not matched those of the
1920s. Equally, it no longer seems likely that the world will slip into a 1930s-style depression, though you never know. But given the glum outlook for developed world profits in the changed conditions of the new decade, it remains less than comforting that the market should be as high as it is. Let us recall that in the other great bar market of the past century, in the mid-197Os, the peak in today's adjusted terms was only about
7,700.
Look on the bright side. We were never daft enough, it seems, to pay the kind of prices for stocks our great-grandparents did. And if truth be told, I was never that keen on Gone With The Wind either.
Frankly my dear, that record has gone with the wind
The 3D film Avatar is apparently doing well at the box office. Its $1.3bn sales to date put it in contention with the record holder Titanic (1997), at $1.8bn, and eclipse Gone With The Wind (1939), which managed $390m.
Or so the publicity tells us. But for anyone with an ounce of numeracy, this is nonsense. Adjusted for US inflation,Titanic's sales were $2.4bn and Gone With The Wind's getting on for $6bn. Add another pinch of numeracy and a further thought occurs.
Inflation apart, real incomes rise over time. If a thing cost $10 in 1980, the question is not just what it would cost today, but what it cost then in terms of available resources.
Applying that logic to box office sales, let us adjust for nominal US gross
domestic product per head (a proxy for average wages), which I derive from
measuringworth.com. By that yardstick, Gone With The Wind's sales are worth a rather daunting $26bn in today's money.
As with Hollywood, so with Wall Street.
Today's reader of JK Galbraith's The Great Crash 1929 might find the sums involved rather trivial, since the Dow Jones Industrial Average peaked back then at a mere 380. But do the same adjustment for nominal GDP per head, and the level was more than 21,000.
That is thought-provoking. It has become almost conventional wisdom today that the 2000 peak of 11,700 on the Dow was a record level of overvaluation, based on the twin measures of the 10-year rolling
inflation-adjusted price-earnings ratio and the "q" ratio of price to book value. But even ,adjusted for GDP, that was less than 16,000 in today's terms. All the same, the 2000 peak was higher in that respect than any in history except 1929. It was higher even than the nominal 14,000-odd
which immediately preceded the latest crisis in 2007.
What do these comparisons tell us?
First, distinguish between the two measures. The cyclically adjusted real p/e, developed by the US economist Robert Shiller, works on the basis of reported corporate earnings rather than broad economic activity. The two are, of course, intimately linked. But corporate profits as a proportion of GDP fluctuate over time, depending on the bargaining power of capital versus labour. Those fluctuations tend, naturally enough, to be mean-reverting, that is, they vary around a fairly constant average.
Hence the calculation by Smithers & Co that the 2000 valuation peak was a record, based on deviation from the long-run mean. Our "real" valuation of stocks, based on GDP, is rather different. It tells us, in effect, what level of available resources the population has been willing to devote, to ownership of corporations.
The size of the quoted sector, of course, varies over time. But that need not concern us, since we are measuring an index rather than total dollars.
When we look at the reality of economic growth, the picture is one of false
projections from past experience. Average growth in the US economy in the 1920s was 4 per cent a year, and in the 1930s half that. As ever, the 1929 market peak was just in time to be too late.
In the 1990s, which led up to the next market peak, US growth was a more
subdued 3.3 per cent, a reflection of the fact that the rate had been slowing ever since the 1960s. But the figure for the 2000s looks like being being a close tie with the 1930s for the worst on record. The best decade for growth, on the other hand, was the 1940s - a clear case, you
might think of a rebound from the depths encouraging signal for the 2010s.
But when we recall the enormous impetus given to the US economy by the second world war, we might perhaps temper our hopes. All that said, let us return to our basic premise. It is encouraging that in real terms, the market excesses of the past decade have not matched those of the
1920s. Equally, it no longer seems likely that the world will slip into a 1930s-style depression, though you never know. But given the glum outlook for developed world profits in the changed conditions of the new decade, it remains less than comforting that the market should be as high as it is. Let us recall that in the other great bar market of the past century, in the mid-197Os, the peak in today's adjusted terms was only about
7,700.
Look on the bright side. We were never daft enough, it seems, to pay the kind of prices for stocks our great-grandparents did. And if truth be told, I was never that keen on Gone With The Wind either.
Economic Theory of Divorce: FT Responds - January 23,24 Weekend Edition 2010
While I am not happy the way Tim Harford responds to my economic wisdom, I am quite flattered I could reach out to the world's most influential people of business and finance who read FT.
Dear Economist: Resolving readers' dilemmas with the tools of Adam Smith
Should we rethink the reasons for divorce? The betting markets reckon Elin Nordegren will divorce Tiger Woods. Given the experiences of The wives of Shane
Warne and Bill Clinton, that seems hasty. Warne’s wife tolerated his scandals for years before divorcing him. Cricketers do not make as much money as golf stars, so the probability of her receiving a large alimony was low. Hillary Clinton had a much
lower probability of political success as a divorcee. should look at economic rather than emotional reasons for divorce.
Chetan S.
Dear Chetan,
You need to clarify your reasoning. You contrast Shane Warne's earnings with those of Tiger Woods, which suggests you have in mind some kind of income effect, where the richer the husband, the more likely the wife is to divorce him. This has the merit of being a falsifiable theory, but I am not sure it is true. Such cases belong instead to the theory of the firm. When two units of production - Hillary and Bill, say - are worth more together than they are separately, we call them "complementary assets", and there is a strong reason to keep them together. It's a question of how annoying the affairs are versus how strong the
complementaries are. Hillary and Bill are complementary assets; this is less obvious for Nordegren and Woods. As for a general theory, there is plenty of data - a project for a student of economics such as you?
Tim Harford
Questions to economist@ft.com
Dear Economist: Resolving readers' dilemmas with the tools of Adam Smith
Should we rethink the reasons for divorce? The betting markets reckon Elin Nordegren will divorce Tiger Woods. Given the experiences of The wives of Shane
Warne and Bill Clinton, that seems hasty. Warne’s wife tolerated his scandals for years before divorcing him. Cricketers do not make as much money as golf stars, so the probability of her receiving a large alimony was low. Hillary Clinton had a much
lower probability of political success as a divorcee. should look at economic rather than emotional reasons for divorce.
Chetan S.
Dear Chetan,
You need to clarify your reasoning. You contrast Shane Warne's earnings with those of Tiger Woods, which suggests you have in mind some kind of income effect, where the richer the husband, the more likely the wife is to divorce him. This has the merit of being a falsifiable theory, but I am not sure it is true. Such cases belong instead to the theory of the firm. When two units of production - Hillary and Bill, say - are worth more together than they are separately, we call them "complementary assets", and there is a strong reason to keep them together. It's a question of how annoying the affairs are versus how strong the
complementaries are. Hillary and Bill are complementary assets; this is less obvious for Nordegren and Woods. As for a general theory, there is plenty of data - a project for a student of economics such as you?
Tim Harford
Questions to economist@ft.com
Sunday, 20 December 2009
Decision Theory: Extra Marital Affairs
Today I wrote a letter to economist Tim Harford, who writes a weekly Q&A feature at Financial Times, London, which I keenly follow. Reproduced below. Readers not as witty as Tim will be forgiven for logging in their responses at my blogger site.
"Dear Tim Harford,
Some of us are considering if Elin Nordgren was too quick to file for divorce from Tiger Woods. She is going for the split within days of the first discovery, or at least admission by Tiger of the affairs. This is quite in contrast to the actions of the respective wives of Shane Warne, David Beckham and Bill Clinton, each of whom had strayed and was caught in public view.
I believe that the reasons that prompt wives of rich and/or powerful men to file for divorce in reaction to their husbands’ extra marital affairs are mostly economic and professional, not emotional. For example, Simone Callahan, the wife of the Australian cricketer Shane Warne, tolerated his scandals for several years before finally divorcing him. Australian cricketers by no means make as much money as global golf stars, hence, the probability of Simone receiving a handsome amount of alimony was low, pushing her to work on salvaging what she had – a comfortable life, father of her kids as her husband and social status quo. Similarly, the prospect is pretty thin that Victoria will make vulgar sums of money, find a satisfactory new life partner and form a celebrity couple all at one time, after divorcing David Beckham. Hillary had a much lower probability of making the Foreign Secretary, let alone the President of USA as a divorcee vs. with a charismatic Bill Clinton by her side.
It may, therefore, follow that usually a rich and professionally successful male may get an attractive woman to be his wife, who happens to be more objective and analytical, and whose decisions are not predominantly driven by her love for him. Therefore, a rich male must methodically analyze his female partner’s potential upside in divorcing him before he decides to indulge in an affair, and select a break point beyond which he will remain loyal.
Tim, do you think I have discovered a new canon in sexual economics?
Regards,
Chetan"
"Dear Tim Harford,
Some of us are considering if Elin Nordgren was too quick to file for divorce from Tiger Woods. She is going for the split within days of the first discovery, or at least admission by Tiger of the affairs. This is quite in contrast to the actions of the respective wives of Shane Warne, David Beckham and Bill Clinton, each of whom had strayed and was caught in public view.
I believe that the reasons that prompt wives of rich and/or powerful men to file for divorce in reaction to their husbands’ extra marital affairs are mostly economic and professional, not emotional. For example, Simone Callahan, the wife of the Australian cricketer Shane Warne, tolerated his scandals for several years before finally divorcing him. Australian cricketers by no means make as much money as global golf stars, hence, the probability of Simone receiving a handsome amount of alimony was low, pushing her to work on salvaging what she had – a comfortable life, father of her kids as her husband and social status quo. Similarly, the prospect is pretty thin that Victoria will make vulgar sums of money, find a satisfactory new life partner and form a celebrity couple all at one time, after divorcing David Beckham. Hillary had a much lower probability of making the Foreign Secretary, let alone the President of USA as a divorcee vs. with a charismatic Bill Clinton by her side.
It may, therefore, follow that usually a rich and professionally successful male may get an attractive woman to be his wife, who happens to be more objective and analytical, and whose decisions are not predominantly driven by her love for him. Therefore, a rich male must methodically analyze his female partner’s potential upside in divorcing him before he decides to indulge in an affair, and select a break point beyond which he will remain loyal.
Tim, do you think I have discovered a new canon in sexual economics?
Regards,
Chetan"
Thursday, 29 October 2009
Irrelevant name
I have been curious about religions and the basis of belief and wisdom. Over last five years I have taken my the first steps on this front. I went all the way to Haridwar to collect my set of the Vedas and the Upanishads - none were available in Mumbai or Delhi in Sanskrit with Hindi translation, and I did not want to read them in English. I have yet to make serious progress with this reading, though. Got a copy of the Quar'an from my friend Mufazal, which I read up over the next four months; and a copy of Gideon's Bible from the GM at the Taj Mahal Hotel in Mumbai, which I am yet to read. Funnily all star hotels in India have a copy of Bible in their rooms, no other 'book'! As a school kid, I had attended elementary Sanskrit classes where the reference material was the Gita, which I have now read a few times. Also my mom had made us kids recite 'shantakaram bhujaga shayanam..' etc and the Gayatri mantra.
This is not to claim that I became pious or even wise.
Forget about becoming wise - I started asking questions. I noted that the Qur'an several times mentions the word 'Islam' and the the word 'Christian' can be easily referred back to Christ, which goes back to 'cross' or 'crucify'. But in no Indian scriptures you find the word 'Hindu'.
The Gita and other Sanskrit scriptures just use the word 'Dharma' as a generic concept of righteousness, rather than naming it anything. It appears to me that the 'Vedic wisdom', as I prefer to call what is genereally referred to as Hinduism, is against any sort of labelling. It is a pluralistic approach to finding the truth.
The life of certain walls in the back streets of Mumbai is quite sad,funny and relevant in this regard. Mumbai's homeless who sleep on roads at night, spit and urinate on these walls. The municipal corporation cleans up and whitewashes the walls and then it paints the symbols of all half a dozen religions - predominantly Hinduism, Islam and Christianity - followed by the Indian street dwellers. And lo and behold, the sanctimonius street sleepers stop defacating against the walls - so long as the pictures do not peel away under the constant sun and the monsoon lashes. And then there is a new life cycle of urinating, painting and a brief period of lull.
The municipal corporation unintentionally follows the pluralistic approach of the Vedas. Director Manmohan Desai did this with his hit Bollywood movie Amar, Akbar, Anthony - three real brothers raised as Hindu, Muslim and Christian. A predominantly Hindu India loves its gods being surrounded by the photos and statues of Christ, Mary, the Kaaba, the lucky number 786, Guru Nanak and so on. Movie starlet Rakhi Sawant continuously swears by Lord Jesus and Lord Ganesha, as if they were partners owning Sony Entertainment Television. Superstar Salman Khan prays in a Ganesha temple. Hindu girls light candles at the Mahim Church to be blessed with a rich husband.
I love it.
This is what exactly Vedas would have taught us and hence they never labelled religion with a name, they just call it Dharma, the duty, the right path. What is right and what is wrong is so well understood by a vast majority of the Indian masses, that they hardly care for the brand, the commandments and the rule book.
The question then is what is 'Hindu'? My limited research says that 'Hindu' is a Persian word and it may not be older than 1000-1100 years. It is most certainly a post-Islamic word coined by the Farsi or Farsi dialect speaking traders and armies that crossed over to India from Central Asia. It is the word that described the rich exotic civilisation that prospered for milleniums on the valley of river Sindhu. 'Sindhu' led to the nomenclature Hind for the land beyond the river and Hindu for the people residing there. 'Hindu' is the title given to us funny god loving (not god fearing)10,000 year old civilisation by Central Asians who were to cross over and then rule rich parts of that land.
'Hindu' was more of a simplistic description for the people who followed a thousand ways to pray to the same one supreme force and dozens of different languages to speak and hundreds of different food habits and recipes and dozens of different physical features, but one thing that was common to all of them - they did not follow any of the three Abrahamaic religions.
And we have come to love this title as our own - similar to our love for the names Bombay (always has been Mumbai to natives, it's not a new name), Calcutta (Kolkata to natives) and Bangalore (Bengaluru to natives).
My questions is, life has moved on...do we still need to be known by this now irrelevant title? Let's go back to our roots and find who we really are and what is our true name.
This is not to claim that I became pious or even wise.
Forget about becoming wise - I started asking questions. I noted that the Qur'an several times mentions the word 'Islam' and the the word 'Christian' can be easily referred back to Christ, which goes back to 'cross' or 'crucify'. But in no Indian scriptures you find the word 'Hindu'.
The Gita and other Sanskrit scriptures just use the word 'Dharma' as a generic concept of righteousness, rather than naming it anything. It appears to me that the 'Vedic wisdom', as I prefer to call what is genereally referred to as Hinduism, is against any sort of labelling. It is a pluralistic approach to finding the truth.
The life of certain walls in the back streets of Mumbai is quite sad,funny and relevant in this regard. Mumbai's homeless who sleep on roads at night, spit and urinate on these walls. The municipal corporation cleans up and whitewashes the walls and then it paints the symbols of all half a dozen religions - predominantly Hinduism, Islam and Christianity - followed by the Indian street dwellers. And lo and behold, the sanctimonius street sleepers stop defacating against the walls - so long as the pictures do not peel away under the constant sun and the monsoon lashes. And then there is a new life cycle of urinating, painting and a brief period of lull.
The municipal corporation unintentionally follows the pluralistic approach of the Vedas. Director Manmohan Desai did this with his hit Bollywood movie Amar, Akbar, Anthony - three real brothers raised as Hindu, Muslim and Christian. A predominantly Hindu India loves its gods being surrounded by the photos and statues of Christ, Mary, the Kaaba, the lucky number 786, Guru Nanak and so on. Movie starlet Rakhi Sawant continuously swears by Lord Jesus and Lord Ganesha, as if they were partners owning Sony Entertainment Television. Superstar Salman Khan prays in a Ganesha temple. Hindu girls light candles at the Mahim Church to be blessed with a rich husband.
I love it.
This is what exactly Vedas would have taught us and hence they never labelled religion with a name, they just call it Dharma, the duty, the right path. What is right and what is wrong is so well understood by a vast majority of the Indian masses, that they hardly care for the brand, the commandments and the rule book.
The question then is what is 'Hindu'? My limited research says that 'Hindu' is a Persian word and it may not be older than 1000-1100 years. It is most certainly a post-Islamic word coined by the Farsi or Farsi dialect speaking traders and armies that crossed over to India from Central Asia. It is the word that described the rich exotic civilisation that prospered for milleniums on the valley of river Sindhu. 'Sindhu' led to the nomenclature Hind for the land beyond the river and Hindu for the people residing there. 'Hindu' is the title given to us funny god loving (not god fearing)10,000 year old civilisation by Central Asians who were to cross over and then rule rich parts of that land.
'Hindu' was more of a simplistic description for the people who followed a thousand ways to pray to the same one supreme force and dozens of different languages to speak and hundreds of different food habits and recipes and dozens of different physical features, but one thing that was common to all of them - they did not follow any of the three Abrahamaic religions.
And we have come to love this title as our own - similar to our love for the names Bombay (always has been Mumbai to natives, it's not a new name), Calcutta (Kolkata to natives) and Bangalore (Bengaluru to natives).
My questions is, life has moved on...do we still need to be known by this now irrelevant title? Let's go back to our roots and find who we really are and what is our true name.
Saturday, 5 September 2009
Jalal - The Tea Boy
This extract on leadership from Robin Sharma’s book Greatness Guide was forwarded to me by a friend and I reproduce it especially for my colleagues from the investment banking community. If you don’t bother to read it, don’t worry, because rich bankers have rarely made good, lasting leaders (look around and point out if you know any)- they have to be busy predominantly focusing on short term profit targets.
"Leadership Isn’t a Popularity Contest
Being a leader isn’t about being liked. It’s about doing what’s right. Great leaders are different. They fearlessly make tough calls. They speak their truth. They run their own race, making the right decisions and worrying little about public opinion. They are courage in action.
I speak and write a lot about being caring and respectful of people. Treat your people well and they’ll treat your customers well. That’s a no-brainer. Help people get to their goals and they’ll happily help you get to yours. I’ll take that value to my grave. See the best in people and be the most compassionate person you know. But being kind doesn’t mean being weak. Being a good human doesn’t mean that you don’t need to be strong and courageous when required by the circumstances.
Extraordinary leadership is a balance between being tender yet tough, compassionate yet courageous, part saint and part warrior, friendly yet firm.
All that the best leaders really care about is being fair, doing what’s right and getting results.
Do the right thing rather than doing the popular thing. The best thing to do is generally the hardest thing to do. Make the tough decisions. Speak with candor. Let underperformance know when they underperforming. Tell you superstars how much you love them. Just be real." - Greatness Guide by Robin Sharma
Just to add my two bit - a leader is not necessarily the one who has the power to strategise, decide and instruct. Every person is a leader of his own goals,which may be sub-goals of his surroundings. He is a leader if he sees a great dignity and relevance in what he does and if he eventually succeeds in making a remarkable difference to his surroundings; he ceases to be a leader if he fails to do so.
Henry Ford said the he preferred to be a first rate truck driver rather than a second rate executive.
Just check out your surrounding - namely your family business, your home, your company, your Ministry...Probably you will see drivers and tea-boys functioning with more dignity, success, efficiency, precision and quality compared to the nominated leaders.
"Leadership Isn’t a Popularity Contest
Being a leader isn’t about being liked. It’s about doing what’s right. Great leaders are different. They fearlessly make tough calls. They speak their truth. They run their own race, making the right decisions and worrying little about public opinion. They are courage in action.
I speak and write a lot about being caring and respectful of people. Treat your people well and they’ll treat your customers well. That’s a no-brainer. Help people get to their goals and they’ll happily help you get to yours. I’ll take that value to my grave. See the best in people and be the most compassionate person you know. But being kind doesn’t mean being weak. Being a good human doesn’t mean that you don’t need to be strong and courageous when required by the circumstances.
Extraordinary leadership is a balance between being tender yet tough, compassionate yet courageous, part saint and part warrior, friendly yet firm.
All that the best leaders really care about is being fair, doing what’s right and getting results.
Do the right thing rather than doing the popular thing. The best thing to do is generally the hardest thing to do. Make the tough decisions. Speak with candor. Let underperformance know when they underperforming. Tell you superstars how much you love them. Just be real." - Greatness Guide by Robin Sharma
Just to add my two bit - a leader is not necessarily the one who has the power to strategise, decide and instruct. Every person is a leader of his own goals,which may be sub-goals of his surroundings. He is a leader if he sees a great dignity and relevance in what he does and if he eventually succeeds in making a remarkable difference to his surroundings; he ceases to be a leader if he fails to do so.
Henry Ford said the he preferred to be a first rate truck driver rather than a second rate executive.
Just check out your surrounding - namely your family business, your home, your company, your Ministry...Probably you will see drivers and tea-boys functioning with more dignity, success, efficiency, precision and quality compared to the nominated leaders.
Saturday, 8 August 2009
Chetan's Nuisance
I have set up an automated email tool on blogger.com, which sends emails to the 10 souls I have selected as my captive readers. Fortunately for my friends, it can't be more than 10 at a time. Having requested people repeatedly to read my blog - to no avail - I resorted to force. It has evoked favourable response.
E.g. my CFO ex colleague from Mumbai finally reacted - he accused me of being on a 7 day weekend. He thinks I am lazy. If I were a competitive and smart banker, how could I get time to cook and then write about it?
A friend from Dubai told me that making pancakes was sissy. He advised me to resort to one of the multi functional Philipina maids ubiquitously available in the Gulf countries.
Guys, rather than writing mails, why don't you post your barbs on the 'comments' box on my blog? Will appreciate.
Also those who are suffering silently, rejoice! I am about to change settings to move on to the next 10, so will have to let you go for now.
E.g. my CFO ex colleague from Mumbai finally reacted - he accused me of being on a 7 day weekend. He thinks I am lazy. If I were a competitive and smart banker, how could I get time to cook and then write about it?
A friend from Dubai told me that making pancakes was sissy. He advised me to resort to one of the multi functional Philipina maids ubiquitously available in the Gulf countries.
Guys, rather than writing mails, why don't you post your barbs on the 'comments' box on my blog? Will appreciate.
Also those who are suffering silently, rejoice! I am about to change settings to move on to the next 10, so will have to let you go for now.
Eat Words Joseph Leahy...
Over a century ago, Sir Frederick Upcott, the British colonial administrator in India, had scoffed: “Do you mean to say that Tatas propose to make steel rails to British specifications? Why, I will undertake to eat every pound of steel rail they succeed in making.” Tatas not only started making steel soon after, they went on to acquire the Anglo Dutch Corus Steel in a $13 billion deal. "Upcott would have suffered slight indigestion...," says a historic account of the house of Tatas.
We have seen lots of Indian journalists brag about the Indian economic emergence. However, for the first time in my lifetime - and I am happy to be there - the tide seems to be turning in favour of India in the Western media.
The 31st July 2009 edition of Financial Times has a news report by Joseph Leahy on Tata's trouble with Jaguar-Land Rover, with a side piece titled "East Steel Sir Frederick...", all praise for the Indian acquisitions of storied English assets.
It recounts the Hinduja owned Ashok Leyland of the former British Leyland, Tata's Tetley Tea, Eicher Motors' Royal Enfield - the world’s oldest motorcycle company, originating in the English Midlands in the 1800s, Hindustan Motors' Ambassador car, ex-Morris Oxford and again the Tata owned Corus Steel. By no means this is an exhaustive list.
"The colonised has become coloniser — at least when it comes to manufacturing," says
Leahy, and adds, "But the company with the biggest taste for all things British is the Tata group, the 151-year-old company that has become India’s biggest diversified conglomerate. Its association with the UK began more than 100 years ago, when it set up a branch office in London."
“The growth in mature markets will not match what’s happening in India. There will be huge demand over the next 10-15 years,” Leahy quotes Abdul Majeed of PwC in Madras, India’s southern automotive hub. “If you look at the competition, whether it’s BMW or Mercedes or Porsche or Audi or Volvo, everyone is trying to make sure they get their act together in India,” says Majeed.
I reckon Leahy is a strawberries and cream eating tennis fan, because he forgot about the Indian predominance of cricket, a sport of English ancestry, as well as about the bhangra playing in the English pubs and the goras eating tandoori chicken and curry in the UK restaurants - of course with swigs of 'made to the Indian specifications' Cobra beer.
We have seen lots of Indian journalists brag about the Indian economic emergence. However, for the first time in my lifetime - and I am happy to be there - the tide seems to be turning in favour of India in the Western media.
The 31st July 2009 edition of Financial Times has a news report by Joseph Leahy on Tata's trouble with Jaguar-Land Rover, with a side piece titled "East Steel Sir Frederick...", all praise for the Indian acquisitions of storied English assets.
It recounts the Hinduja owned Ashok Leyland of the former British Leyland, Tata's Tetley Tea, Eicher Motors' Royal Enfield - the world’s oldest motorcycle company, originating in the English Midlands in the 1800s, Hindustan Motors' Ambassador car, ex-Morris Oxford and again the Tata owned Corus Steel. By no means this is an exhaustive list.
"The colonised has become coloniser — at least when it comes to manufacturing," says
Leahy, and adds, "But the company with the biggest taste for all things British is the Tata group, the 151-year-old company that has become India’s biggest diversified conglomerate. Its association with the UK began more than 100 years ago, when it set up a branch office in London."
“The growth in mature markets will not match what’s happening in India. There will be huge demand over the next 10-15 years,” Leahy quotes Abdul Majeed of PwC in Madras, India’s southern automotive hub. “If you look at the competition, whether it’s BMW or Mercedes or Porsche or Audi or Volvo, everyone is trying to make sure they get their act together in India,” says Majeed.
I reckon Leahy is a strawberries and cream eating tennis fan, because he forgot about the Indian predominance of cricket, a sport of English ancestry, as well as about the bhangra playing in the English pubs and the goras eating tandoori chicken and curry in the UK restaurants - of course with swigs of 'made to the Indian specifications' Cobra beer.
Tuesday, 28 July 2009
It's Ability, Not Friendship That Matters
Saudi Education Minister Prince Faisal bin Abdullah has signed a SR2 billion contract with China Railway-15 Bureau Group for the construction of 200 school buildings in various cities of the Kingdom. The Chinese company won the contract in competition with several global construction companies, the Saudi Press Agency reported Saturday. The new school buildings with a total capacity of 150,000 will be operational months after the date of the signing of the contract. The contract period has been fixed at 14 months. The contract represented 6 percent of 3,500 projects currently being implemented by the Ministry of Education at a total cost of SR20 billion. When completed, the schools will have a capacity of 1,700,000 students of both sexes. The ministry takes over an average of 80 new schools a month.
This development shows two vital facts: one - China has become the preferred infrastructure builder for the Kingdom in recent years. Apart from schools, the Chinese companies are building Saudi Arabia's railways, and other infrastructure - worth billions of dollars.
Now consider these facts to understand India's relevance to Saudi Arabia:
1. Indians have been working in Saudi Arabia since before the days oil was found.
2. India has the largest number of expats living in Saudi Arabia as of now
3. India has the world's second largest population that follows Islam - the religion that defines the Saudi nation
4. Indian engineers and other professionals have played a huge role in building the existing infrastructure in Saudi Arabia (even though the contractors may have been non-Indian)
5. Saudis for generations have received education in India and have social links with India
6. Indians in Saudi Arabia have assimilated with the society by adopting Arabic language and local customs
Also look at this:
1. The Chinese do not live and work at all in Saudi Arabia, except a handful who work for Chinese companies that have won contracts here
2. China has since 60s suppressed its Uighur Muslim minority
3. There is hardly any cultural or other similarity or interaction between China and Saudi Arabia
However, the big bucks flow to China from Saudi Arabia. Saudi hypermarkets are full of cheap goods manufactured in China. China has wisely started a 24 hour Arabic satellite channel that spreads the virtues of the Chinese culture and the news of how happy the Chinese Muslims are!
The Indian government and companies should get this lesson - Shape up! Understand the world dynamics! The world will love you not because you are a friendly state with law abiding expats enriching the foreign economies. You will be loved for your strength, as in the case of your IT outsourcing abilities. Improve your brand equity. Look at you weaknesses - your inability to put your own infrastructure right - and you lose billions in potential business.
This development shows two vital facts: one - China has become the preferred infrastructure builder for the Kingdom in recent years. Apart from schools, the Chinese companies are building Saudi Arabia's railways, and other infrastructure - worth billions of dollars.
Now consider these facts to understand India's relevance to Saudi Arabia:
1. Indians have been working in Saudi Arabia since before the days oil was found.
2. India has the largest number of expats living in Saudi Arabia as of now
3. India has the world's second largest population that follows Islam - the religion that defines the Saudi nation
4. Indian engineers and other professionals have played a huge role in building the existing infrastructure in Saudi Arabia (even though the contractors may have been non-Indian)
5. Saudis for generations have received education in India and have social links with India
6. Indians in Saudi Arabia have assimilated with the society by adopting Arabic language and local customs
Also look at this:
1. The Chinese do not live and work at all in Saudi Arabia, except a handful who work for Chinese companies that have won contracts here
2. China has since 60s suppressed its Uighur Muslim minority
3. There is hardly any cultural or other similarity or interaction between China and Saudi Arabia
However, the big bucks flow to China from Saudi Arabia. Saudi hypermarkets are full of cheap goods manufactured in China. China has wisely started a 24 hour Arabic satellite channel that spreads the virtues of the Chinese culture and the news of how happy the Chinese Muslims are!
The Indian government and companies should get this lesson - Shape up! Understand the world dynamics! The world will love you not because you are a friendly state with law abiding expats enriching the foreign economies. You will be loved for your strength, as in the case of your IT outsourcing abilities. Improve your brand equity. Look at you weaknesses - your inability to put your own infrastructure right - and you lose billions in potential business.
Monday, 27 July 2009
Smile-o-meter
Recently Tokyo railway station installed electronic scanning equipment on customer facing work stations - check out BBC. These gadgets catch the smiles of workers as they are communicating with customers buying tickets or asking for directions. If the worker is not smiling adequately - ie if the smile is not wide enough or teeth do not show up to a desired degree, she or he gets reported. Throughout the day the scan keeps reporting the smile score - I think the desired level is between 75% and 90% full smile as defined by preset parameters.
My first reaction is that I want to buy the shares of the company manufacturing the smile scan devices, as I can see the universality of this application. In whatever country you are, there would be dozens of institutions where thousands of workers need to be monitored for their smile quotient. It's a multi-billion dollar business in the making. On second thought, I am already dumping the shares. Probably workers will find several innovative ways of cursing the customers with a 90% smile. In that case smile scans will be useless. So the business plan flattens out.
Honestly, I find the stressed out air hostesses and cashiers more homely and predictable - smiling ones will leave me confused and unstable for a few moments!
My first reaction is that I want to buy the shares of the company manufacturing the smile scan devices, as I can see the universality of this application. In whatever country you are, there would be dozens of institutions where thousands of workers need to be monitored for their smile quotient. It's a multi-billion dollar business in the making. On second thought, I am already dumping the shares. Probably workers will find several innovative ways of cursing the customers with a 90% smile. In that case smile scans will be useless. So the business plan flattens out.
Honestly, I find the stressed out air hostesses and cashiers more homely and predictable - smiling ones will leave me confused and unstable for a few moments!
Tuesday, 21 July 2009
Reality TV: How to Select Public Officials
The most interesting TV show over last few days was the confirmation hearing of Sonia Sotomayor, President Obama's nominee for the US Supreme Court. I really do not know how much of the the senators' voting process and the conditions for the appointment to be overturned, but it is great to see a would be public official so extensively questioned. The responses tell us a lot about the personality, her thinking and her track record.
Just imagine our supreme court judges and cabinet secretaries being interrogated. I am all for India emulating this useful democratic process. If not anything, these would provide rich content for the half dozen laughter championships hosted by various TV channels.
Just imagine our supreme court judges and cabinet secretaries being interrogated. I am all for India emulating this useful democratic process. If not anything, these would provide rich content for the half dozen laughter championships hosted by various TV channels.
Monday, 20 July 2009
Nano and others: Why should cars in India be 60% or more expensive than elsewhere?
It's great that India has pioneered the world's cheapest car. This feat must be terribly difficult especially in India due to its skewed tax structure. In most manufacturing/importing countries a standard Honda Accord costs equivalent of Rs.1-1.1 million (USD 22,000). For that model we pay Rs.1.6+ million (USD 34,000). A BMW 5 Series costs Rs.2.3-2.4 million (USD 48,000), but in India it sells for Rs.5.5 million (USD 110,000), etc. This equation is true at the lower end, too.
The thought of taxing cars high is the inheritance from people who thought like the poor - probably rightly so 60 years ago - but its relevance is lost to the people who want to create wealth, not just realign it. Taxes on 'luxury' goods are aimed to redistribute wealth. We do need Robinhood mechanisms to transfer some money from the wealthy to the poor, but we need to redefine who is wealthy and also redefine the mechanisms.
A material reduction in import duties and excise duties on cars will lead to greater production and thereby greater employment. With low cost of labour, steel and other ingredients, India could be a preferred low cost producer for world's leading car companies, especially at a time when most of these companies are making losses. We can certainly be cheaper than likes of Mexico and Thailand, who already enjoy the status of preferred car manufacture locations.
The thought of taxing cars high is the inheritance from people who thought like the poor - probably rightly so 60 years ago - but its relevance is lost to the people who want to create wealth, not just realign it. Taxes on 'luxury' goods are aimed to redistribute wealth. We do need Robinhood mechanisms to transfer some money from the wealthy to the poor, but we need to redefine who is wealthy and also redefine the mechanisms.
A material reduction in import duties and excise duties on cars will lead to greater production and thereby greater employment. With low cost of labour, steel and other ingredients, India could be a preferred low cost producer for world's leading car companies, especially at a time when most of these companies are making losses. We can certainly be cheaper than likes of Mexico and Thailand, who already enjoy the status of preferred car manufacture locations.
Subscribe to:
Posts (Atom)