Friday, 20 April 2012

Book Review: Fault Lines by Raghuram G Rajan

Raghuram G Rajan is the only economist who had predicted the global crash of 2007 - the subprime crisis - before it happened; At an event where the focus was on Alan Greenspan ( Mr Rajan forecasted the crash - and was roundly criticized for this. In his paper "Has Financial Development Made The World Riskier?" the author pointed out skewed incentives in the financial sector, credit default swaps, and the increasing risk profile of banks and warned that the "interbank market could freeze up, and we could well have a full-blown financial crisis"

(Readers' can find any number of blogs and articles that analyse the contents of this book - all of them by qualified economists. I am not one; so my approach is to summarise the achievements of the author; the achievements garnered by the book; and lastly to give readers like me- sales / marketing professionals, students a reason to read the book with the objective of stoking interest in a book I regard as one of the most well-reasoned books I have ever read. One word of caution: if you are totally unaware of the subprime crisis, it would be better if you read The Monster - Michael W Hudson before this book)

Raghuram Rajan is the Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business. Dr. Rajan is also currently an economic advisor to the Prime Minister of India. Prior to resuming teaching in 2007, Dr. Rajan was the Economic Counselor and Director of Research (in plain English, the Chief Economist) at the International Monetary Fund (from 2003). Since then, he has chaired the Indian government’s Committee on Financial Sector Reforms, which submitted its report in September 2008.

(Eric J. Gleacher Distinguished Service Professor of Finance and the Charles M. Harper Faculty Fellow)

  • Winner of the 2010 Financial Times and Goldman Sachs Business Book of the Year Award
  • Gold Medal Winner of the 2011 Independent Publisher Book Awards in the Finance/Investment/Economics category
  • Winner of the 2010 PROSE Award for Excellence in Economics, American Publishers Awards for Professional and Scholarly Excellence
  • Gold Medal Winner of the 2010 ForeWord Reviews Book of the Year Awards in the Business & Economics Category
  • Finalist for the 2010 TIAA-CREF Paul A. Samuelson Award
  • Named one of the 2010 Best Business Books of the Year, strategy+business magazine
  • Best Crisis Book by an Economist and Named one of the 2010 Top Thirty Business Books of the Year, Bloomberg News (
  • Named as one of the 2010 Books of the Year in Nonfiction Round-Up in the Business & Economics list, Financial Times (
  • Finalist of the 2010 ForeWord Reviews Book of the Year Awards, Business and Economics Category
  • Finalist, 2011 Estoril Global Issues Distinguished Book Prize
It is common to blame the big businesses for any and every financial crisis that takes place; whenever you go through one, the blame always goes to the big corporation - as if this corporation is a living entity who can think and act on its own. Second, there is always an undercurrent of suspicion that things were deliberately done... that every player was out to make a killing at any cost

And this is the attitude that this book seeks to change, it attempts to give the reader a wider perspective of the worldwide economic scenario and the forces that led to the meltdown without absolving anyone of any blame. It is not an attempt to protect any player; nor is the book overly critical or full of praise for any single person or entity. These value judgements have been left to the reader: it is merely an objective analysis of various forces that interacted as well as the several positions that were taken by the participants, It is this objective approach that, to my mind, makes this book such a praiseworthy book. It must have been tempting to do a post-mortem so to speak; instead the author has wisely chosen to analyse the situation dispassionately - and in the process give the readers an indepth perspective of the scenario

The author has highlighted how unbridled credit expansion; focus on affordable housing by the US government; global export-import imbalances; the lack of a safety net in terms of unemployment and social-health benefits; the pitfalls of foreign financing as opposed to internal savings and the various government responses like monetary stimulus etc interacted to create a full-blown crisis. What is most pertinent is that the book highlights how individual decisions taken with the right intentions all were rational responses to the situations as they lay at that point in time; how the presence of some deeper systemic problems led to the scenario. The part on FIs and their incentives dwells on how the inbuilt reward and incentive structures in firms lead a person to taking greater and greater risk - till it reaches a point of no-return. 

The book enables a person to get a clear picture of how unchecked risk-taking by organisations combined with a lack of safety nets for people and skewness in the reward structures interacted in a macroeconomic atmosphere where the government of the USA was focusing on housing for all. The presence of easy credit generated the liquidity which  put buying power in the hands of citizens - and export surpluses completed the picture, linking the global economy to what was essentially a local matter! The fear of loss of a job combined with the incentives for success to make higher risk-taking acceptable to people, affecting their decisions.  The propensity of people to cut corners is universal, and rather than berate anyone on this essentially human habit, the book has chosen to look at systemic flaws. With unchecked risk in an atmosphere where success carries tremendous rewards, the higher risk - higher reward finance fundamental meant that people increasingly took on higher and higher risk... the last straw was the belief of everyone in the system that the government would act as a bullwark in case of a major issue. 

The book is a must read for everyone and anyone in business, as it analyses rational responses and  systemic flaws, and stays away form a witch hunt.  It gives you a good understanding of international business, as well as the underlying forces and takes your mind to the big picture, teaching you to look at any situation from afar. However, I would recommend that readers' like me also read The Monster, which goes deeper into the specifics of this particular issue which will give you a clear idea as to what Mr Rajan is talking about. That will enable a fuller understanding of the specifics of the international situation.  

Wednesday, 18 April 2012

Retail : Online vs traditional

I received my first online shipment yesterday - a book titled "The Monster" by Michael W Hudson. Score one for online model, you would think? Not quite - I spotted the book in a bookstore, but purchased online for a price advantage. Therefore, the flipkart site could not have realised this sale without the support of the brick-and-mortar shop. It is the regular shop that sold the book to me by virtue of its display and the facility it provides for leafing through the pages. Without this, chances are I would not have purchased this book at all! 

Further, I had occasion to visit crossroads book store, where I spotted 3 lovely books - The Scam, The 2G Spectrum Scam and Building Brand India. In the first 2 titles, I get a 10-20% saving over the traditional model. In fact, on browsing a little more, I noticed price-offs upto 35% in quite a large number of titles. If you look at this transaction, yet again the initial sale has been created by the traditional model - and it is the price factor that is pulling me to the online model. The third book was not available - not just on flipkart - but anywhere on the net. At least, I did not see it. In this third example, yet again we can see that the traditional model holds relevance in the modern context.

If we analyse the above transations, we can spot some commonalities:

  • The traditional model offers a superior customer interface as you can touch and feel the product. In the book category, this means you can leaf through its pages to help you in your purchase decision. This can be quite easily overcome in the online context by snapshots or teasers or chapter-one pdfs in the online store
  • The traditional model also enables product discovery more easily. I mean that you can spot a book far more easily in the store- or any other product category for that matter. This is a value addition that the brick-and-mortar model provides that cannot be easily matched. Further, this has nothing whatever to do with familiarity of computer and/or internet usage, seeing as I have been working on computers for 20 years now. You can only find a product on the internet that you know exists - this is an issue with the nature of the customer interface
  • Online sites can pass  on cheaper prices to customers simply because companies save on costs when they tie up with online retailers. That translates into customer discounts
  • This will, of course be category specific. In categories which offer other interfaces with the customers - durables, for example- where you can contact customers through advertising and build a brand recall and image, the dynamics involved are bound to be very different. Other parameters will also matter- the more distributed the market / wider product choices and lines etc - all this will alter the business model
The point is that you will need both models in the large majority of consumer products. Each model has its own advantages and disadvantages - you simply cannot afford to ignore either model in your go-to-market strategy. In order to garner consumer eyeballs, build brand-specific choice you will perforce have to have a physical distribution model, since the customer interface is far superior in the physical model.  Not only that, there is only so much you can display on a computer screen - whereas in a store, you can literally have thousands of products on display. Furthermore, there are five senses in operation in a physical store- hence, the cues or stimuli to the brain are much greater and stronger. You pick a book in your hand - and you will recall its name and title even after a day - whereas if you see it online you cannot recall it quite so easily. This might be due to the operation of a variety of cues and stimuli to memory. There is also the addional problem of attracting the customer- in a physical setting you can use packaging innovations, POPs etc to garner eyeballs - which same will be conspicuous by their absence in the online model. And if you fail to garner eyeballs - you will lose out on sales. Physical distribution is not just about generating sales - properly managed, it becomes a vital cog in your strategy. It is a tool for advertising, building brand-specific choice, aiding product discovery, reaching as many consumers as you can. It is a powerful interface that cannot be ignored.

The above does not mean that you ignore the online model. It is a business reality, and you can ignore it only at your own peril. First off. there is already a niche market of consumers who prefer the online model over the traditional one for the convenience it offers- no wasting time going to the mall or the shopping bazaar. In product categories where you build brand choice through other means like advertising - there is already a niche market driven more by value addition & convenience of the new format (as opposed to price driven sales)- as evidenced by the successes of Yebhi, Flipkart and the likes. Next, there is the price differential that consumers gain.

Which brings me to the crucial point: what has the physical book-store gained by displaying the book in his store for me? Nothing! Today, this will not matter to him simply because online sales are in their infancy. But once sales of online stores begin threatening absolute volumes at the traditional models, this is an issue that will need looking into. Perhaps, at that point in time, the publishing houses will most likely stop discounting policies in the online stores.  Please note that I say absolute volumes - so long as the new interface is mopping up incremental sales, nothing needs to be done. But once absolute profits start declining at the traditional outlets- the pressure on the system will increase. And the decline does not have to be 40% - even a 10% fall will suffice to bring things to a boil!

It is a most interesting battle that is unfolding here... 

Tuesday, 17 April 2012

The Experience of a Bandh (Strike)

April 9th to April 11th... 3 days without milk, kirana...  1 day even without medicines.

For 3 days, not a single shop (not of any relevance, at any rate) opened. Only irrelevant immaterial shops opened - apparel etc. That taught me a lesson - if food is not available, then nothing else matters! Seriously, it did cause me to pause and wonder - all the shops that were open with all their customary splendor were not able to attract me, as my eyes searched for the elusive samosa...

Samosa to chhodo, even a cut chai or a paani-puri would have done admirably well. I was 17 kilometers from my residence - and not a single thhelaa gaadi in sight anywhere, let alone shops. And believe me guys, for those 3 days there was not a single thhelaa gaadi on the roads vending samosa-pohaa-chai etc. Most disconcerting, let me tell you. My mind went to the bachelors and students who are dependent on these thhelaas and bhojanalyas for their sustenance... and, with even More, Big Bazaar, Reliance Fresh being closed, even the pack of noodles was not available for them. They must have had a tough 3 days...

I do not recall seeing such a stupendously successful strike ever in my life. 100% attendance (if you can call it attendance). Compliance, more like. But it brought the city to a complete standstill for 3 whole days. Only good thing to come out of it was it gave the people normally involved in serving us a 3-days holiday. Unpaid holiday - but still a holiday. Hope they had a good time- we sure didn't, I can assure you. Another good thing was it allowed some nice, decent, upright, law-abiding, caring, soft, gentle "gentlemen" a chance to make some profit. Tons of it, if rumors are to be believed. You don't get a chance to see milk @ 50 a litre every day, after all. And those poor destitute people, why should they be satisfied with only piffling profits if they can earn 20+ a litre? Sach hai. Common Sense. Money is meant to be kept in rotation - ask any distributor, he /she will readily confirm that more rotations mean more money. So, in effect, these profiteers were doing The Sovereign, Secular, Democratic Republic of India a very great benefit - they were keeping money in rotation. Since they were the only ones trading on those 3 days, they quite logically had to up the prices so that the total money in circulation did not reduce. Besides, they also kept the banks busy!

All the decency, behavioural norms etc were forgotten even by normal residents as we rushed to the milk shops to stock up on the commodity. There was a 6-deep line. (Thinking only 6? Think again. Six in one line, at least 10-15 lines in a shop with an 8-foot front). Every decency was forgotten, every courtesy ignored as everyone scrambled to get milk. You could have dropped a pot of pure 24-carat gold with complete assurance that it would still be there an hour later - no one would have cared to even look at the aforesaid Gold. You cant eat or drink gold, my friend. All anyone cared about was getting milk for I-me-myself - just like those images on television in war ravaged areas, with hungry people besieging a food vehicle. Seriously, everyone should go through one such experience! People with a normal consumption of 3 litres in 3 days were asking for 5 litres and more... it was like pandemonium

Eh? What's That you said? Ethics? Morals? Never heard of these words. Dont speak Greek or Latin, mate. Only Marathi, English and Hindi.

Sunday, 15 April 2012

Soldier, state and society - the ever-growing imbalance

Harsh V Pant: Soldier, state and society - the ever-growing imbalance:

'via Blog this'

Harsh is making a solid point in the article above...

"A state makes a sacred contract with its soldiers: that while they will lay down their lives when called upon to do so, the nation will take good care of their and their families’ needs to the extent its resources would permit. This contract underpins the very survival of a nation, as when its territorial integrity and political independence are under threat, the nation looks upon the only instrument that can protect it — its armed forces. While all governments have to look for a considered bargain between their commitments and power and between power and resources, a responsible government will always be aware of the serious implications of not spending adequate resources on defence."

It is very painful for me to state this, especially since both my Dad and my Granddad were Army Officers, but the fact of the matter is that:
1) The Indian Government has not planned for or allocated resources to the Armed Forces to the tune required, especially considering the range of external threats that confront our country over the short, medium and long term
2) The evidence of innumerable news reports of official apathy towards war-widows etc would seem to indicate that the state has also not done its full duty towards taking care of the families. I say full duties, since by-and-large, various central and state entities have done their bit in this regard.

But the most powerful point in the article is that there is also apathy among we, the people - the citizens of India. Never thought of it that way, but if you ponder over it for a moment - that view of the NRI Mr H Pant does seem to be grounded in fact. Had there been a sincere concern, there would have been much greater pressure on the government to set things right. Further, the dwindling applications for armed forces openings also lay bare this fact. 

My question to everyone goes beyond the article - do we take our independence and our Armed Forces for granted? Based on current evidence, this does seem to be the case. Further, why blame the gorvernment? The government is made up from within us. We have to look within our own selves, to accept the malaise that infests us all - the Chalta Hai attitude, the extreme focus on I-Me-Myself. This is evident everywhere - endemic corruption, lack of civic sense etc. Unfortunately, the government is in it for votes. Their steps will be dictated by what sells. And, not to put too fine a point to it, populism sells. Had it not sold, we would not be in such a dire situation on any number of fronts! 

Having said that, I can spot the winds of change flowing through the environs around me. The India Against Corruption campaign brought out one fact that was noted by quite a few writers: the activism of the inward-looking middle and uper middle classes. For the first time, this class was involved big-time in something that concerned the society - actively involved. Their are other indicators also - well heeled people quitting prime jobs to come into rural service with various ideas or for teaching etc. Let us hope that this gentle breeze of change turns into a wind of change... where all of us can place our country at least on a par with our own self-interest, if not above!

In closing, I would like to quote from this incisive article: The military exists to serve the state; but a military that lacks societal prestige and the attention of the state will not only endanger the security of the state, but will also pose a challenge to the liberal societal values that we so love to espouse. It has become imperative now to get the balance between the Indian state, society and its military institutions right if India is to avoid the high costs that will inevitably follow if the present turmoil persists. A real dialogue needs to start now.

Tuesday, 10 April 2012

Book Review: Mathew Reilley - Scarecrow and The Army Of Thieves

The Plot
Dragon Island is a Russian Outpost in the Arctic Sea region housing one of the most diabolical advanced weapon laboratories devised by mankind. Unfortunately, Dragon Island is also the home of one of the deadliest weapons ever devised. And even more unfortunately Dragon Island has been captured by a renegade group of thugs calling themselves the Army Of Thieves. Their Agenda: World Destruction, which the thugs prefer to call the revenge of the disenfranchised and the downtrodden. The weapon is set to destroy everything in a matter of five hours – and the good guys have 5 hours to save the world. A small matter of travelling several thousand miles in 5 hours, overcoming the “gentlemen” and disarming the weapon. Enter Scarecrow – the hero. Scarecrow is Captain Shane Scofield, a battle hardened marine who is ideally placed a few hours away from the target. With him is a motley collection of people – a few soldiers and a few civilians. The rest of the book deals with how these handful civilians and soldiers save the world. There are more than a few twists and turns along the way that fundamentally alter the way things proceed, which makes for interesting reading. 

The Characters
The book has only 2 real characters that have been properly developed: one directly and the other by inference. The direct one is Scofield, whose rugged nature, tough outlook and character is well brought out by references to the ugly past as well as by his actions in the novel. He comes across as frankly too good to be true, almost a superhero. His quick thinking abiities, toughness are all believable in that he is a highly decorated marine, and a battle hardened veteran. The disbelief is only in the exploits described in the novel, which leave you shaking your head in utter disbelief. The second character is the chief villain, who reigns over this novel by sheer brilliance and brutality. This is in keeping with the intentions of the novelist, who wanted an antagonist who was a match for the main protagonist. In this, the author has achieved success. 
There are several other characters – Gena Newman, who has been reasonably well developed as a tough sergeant, Zack Weinberg, Corporal The Kid Thompson, Lance Corporal Puzo, Emma Dawson, Vassily Ivanov, Veronique Champion and Bertie the robot. Among all of these, you end up remembering only Bertie The Robot, who turns out to be a useful companion thanks to his armaments. Among the others, Emma, Zack and Newman share space occasionally with Scofield as supporting cast in various scenes. 

The Analysis
First, the good. The book is a good read, written in a fast and racy pace – almost hectic, a page turner. The lack of character development is in keeping with the story, which is only about 2 people. Further, the constraints imposed by the time-span as well as the need for a racy speed meant the character development had to be sacrificed. The entire plan of Scofield's party has been described well, making their progress almost believable. It is almost like reading the graphic, shot – by – shot description of a battle, which is only to be expected if one is travelling a few hundred miles on arctic ice to save the world. Not only that, if you have also managed to hold reader interest while you are describing the battle, then you can pat yourself in the back. And most important is the cliff-hanger climactic scene, which is a real humdinger and a genuine surprise, and totally in keeping with the quicksilver thought process of Scofield.
Next, the bad: at times, it gets a bit monotonous – battle after battle. Next, the entirely avoidable use of profanity which takes a bit of the fun away. Third, the needless torture scenes which could have been avoided. 

In summation a good novel, a racy read. Ideally suited for journeys as it is a page-turner!

Thursday, 5 April 2012

Facebook Musings

Circa 1998... I am in my first job - and get a call from the Director-Marketing's cabin. I reach the cabin with all sorts of good, bad and ridiculous thoughts racing in my mind... Mr Khardekar says - "Come in, Vishal. Meet your brother!!!!" Great. Except for one tiny detail.

I had never even seen the guy in my life - this brother of mine! (Sorry, Atul Dada)

We got to know each other that day, then met quite a few times till we drifted apart again in due course of time. What has this got to do with Facebook? Plenty - Have patience! Well, time passed - and then, one fine day, I receive a friend request from Atul Kale on facebook. He had since shifted to England, and we rarely - in fact, never spoke to each other. But then, thanks to technology and facebook, we got in touch again. Score one for facebook!

I myself am a late convert to this platform... rejected many, many requests - till one day, in an idle moment, I decided to see what it is all about. And, that has proven to be one of the better decisions I made. People from all periods of my life came back into my life - classmates from 1984/5 onwards; my closest friends from college - just by the simple expedient of a received request in my inbox - or a simple friend search. And, if that friend has his phone number updated... all the better. The branch commercial manager of my second job; the ex-colleagues; the extended family in the form of Shirish and Milind Dada who I met through Atul Dada.... I could go on and on. Not that I hadn't tried hunting on other websites before - but never with any  great success. Facebook is in a class of its own.

And there is more to it... I found, to my great delight that, by the simple procedure of clicking like on my favourite websites - Hindustan Times, Times Of India, Business World, Business Today, The Economic Times, The Business Standard etc - I could stay updated with news from around the world on my wall. Product Updates from Cakes India, Peter England, Allen Solly etc added spice to it. It all depends upon the consumer - you can configure your wall the way you like it. Share important articles -it gets recorded on your wall - return to read or refer at your leisure! The uses are myriad in number - and perhaps that is what makes it so ubiquitous.

And that, my dear friends, is why I have classified these personal ramblings of mine into Business category. Note the word ubiquitous... the business possibilities are innumerable. From reaching consumers with product updates  - Peter England - to staying in touch with consumer sentiment - Perfetti Van Melle, whose wall was updated with comments on consumers who found their soldier ad offencive - the business uses offered by this platform span a veritable cornucopia of avenues. Like CakesIndia, with their mouthwatering cake snapshots, and ordering possibilities, for one example. Each month (maybe more) I find one or two innovative measures...

These opportunities are based in one simple fact: this is a medium through which you can target almost the entire online population of the nation. Two, most of the regular facebook users are young- 15 - 25. Three, 25-45 age group is also getting into the act (Fact- I just checked the number of my family members who have gotten onto facebook over the past 12 months). Three, the addictive nature of the medium means a large number of users regularly check in. This can be readily seen from the number of old connections who got in touch with me, and vice-versa. Four, you are directly addressing an educated person. Five, it offers a chance to interact with consumers directly. Six, the users span the entire spectrum of product target markets. Point is, it is a ubiquitous medium composed of an educated, and by and large earning people - or related to earning members. At least at this point in time.... 

The icing on the cake? Yup. You got it!


Monday, 2 April 2012

Book Review: You Can Sell

The Genre

The self-help category has, for some reason never attracted me... it always seemed to me that such books would be holier-than-thou, full of lots of advise that may or may not be very practical. In other words, I thought they were, well, pretty well useless. And when it came to books on my core profession - I always looked down upon them with condescension. Even if I thought there was some good to be had, the very thought of reading a book on my profession would fill me with dread... I relaxed by reading, and the reading of a self-development book never crossed my mind. My constant refrain: I stay updated with all industry trends, business magazines and newspapers, internet and blogs, and classmates and colleagues - all of which serve to keep me in touch with the latest trends, while my friends and especially colleagues would update me on my development areas. Further, since I actively sought and gave tips among my close colleagues, wherein we would regularly share everything - successes and failures... so why a book? Read On!

Why The Book?

For starters, the answer to that is that the current book is not just on sales per se. It is also on personality development, client relationships, communication, job basics. The book goes deeper than any discussion with colleagues etc can ever take you. Next, it goes straight to the gut: the absolute basics. As you grow and acquire experience, there is a tendency to acquire some unsavory or unhealthy habits and mannerisms. Not only that, with experience a person tends to focus more on the strategies of selling: who to sell to, and tends to forget to concentrate on the basics. This is only natural, since some mannerisms tend to become ingrained, for one. Two, people wont point them out to you - those who do understand and observe, that is. And, these basics are applicable to every one in every situation and department. Sample this:
  • Who is not selling?
  • Listening is caring
  • Goal setting
  • Fear of failure
  • Sincerity
  • Mental toughness
  • Confidence
  • Communication
  • Time Management
All the above are central to any functioning person in society, and a re-visit to the core basics can identify areas where you as a person might just have slipped a little.

For sales personnel at any level, it is a must read, simple as that. How many times have we- all of us- seen an ill-groomed counter person? How many times have all of us borne the brunt of an ill-mannered company professional? The minor points covered in the book are not each for all. That is, each person will find large parts where he or she does as the book says, or better. But then you come across an area where you could use some improvement... and that is the biggest takeaway. Sure, in some parts it does sound a bit high-handed, and tends to make generalisations all too often. Also, one might think that factors external to the individual have been totally ignored - but please remember that the book is totally focussed on the person rather than on the organisation. It is entirely upto the individual as to what he or she takes away from this book

For people in direct sales of any sort - dont even dream of missing it. The entire art of prospecting, client relationship building has been gone into quite well. It will prove a good pointer for beginners in the field who want to analyse their pluses and minuses. It wont teach you to sell - but it will help you increase your effectiveness - . The take-aways for people in channel sales are a lot less, but even so the parts on grooming, negotiation and relationship building will add some value. Sure, almost all of you in sales of any sort will shrug and say "I knew that". But do you actually practice it? And if you can learn only one thing - any one thing - you will be a more effective employee!

Special mention needs to be made of the questionnaires and work-book portions in the book. While I did not fill them on this first reading - but on glancing through them and answering them in my mind, one thing shone through crystal-clear: if honestly done and answered, they will highlight the pluses and the minuses in no time flat. They are a tremendous value addition.  Especially the self-analysis questions- they will immediately highlight your pluses and areas where you need to focus

All in all, a good book - worth more than a read. It needs to be read once first, and then internalised in a subsequent reading. 

This review is a part of the Book Reviews Program at Participate now to get free books!