Musings

Steering in a downturn

amit January 25th, 2009

I know we are all doing a bit of soul searching and thinking about how to come strong through, what could very likely be, a challenging 2009. I have a few thoughts to share from the perspective of running a business.

A good business is a combination of the right idea (basis of value creation), the right people (means of value creation) under the right circumstances (they dictate the value created). Circumstances have changed and so we must re-evaluate our strategy and expectations. However, just as a good plan can be bad under the wrong circumstances, similarly an otherwise good idea can be bad for the wrong set of people. [Note: For large businesses culture is a proxy for people. It is the same thing, just a collective representation.]

So though we need to keep an eye out on how the world would shape in the coming years. More importantly we need to look inwards to the strengths of our business, to the strengths of our team. The question should be “What can we do best?” and “How can we profit from it?” There are two main reasons why I think it’s important to look inwards.

There is no visibility out there. Even in normal times it is hard to predict what would happen in the future. It’s next to impossible now. I am not saying it’s not important; it’s necessary to look out in future to make sure you place yourselves in the best position to benefit from it. What I am saying is that right now it just can’t be done. The government is changing the rules every day, the corporations are re-assessing their strategy and making changes, business models are changing, and the political environment is unstable. There is no telling what things would look like when the dust settles.

I think our energy is best spent on looking at how we do things and how we can improve. This is an opportunity to forget the outside world, at least for a few months, hunker down and work on ourselves. Moreover, this notion that a “tailor” can suddenly be a “cook” because there happens to be a great demand for culinary skills is misguided. Let me reiterate a good business is the right idea, with the right people, under the right circumstances. Some believe we will see profitable green cars from Detroit – sure, we can all have our dreams.

Harsher the downturn more likely it will be for experimenters to perish. Innovating and risk taking is crucial for financial success. The time for that however is during an upswing when mistakes are relatively cheap. This is the time not to just look inwards but to focus on strengths. We need to assess what our competitive advantages are and act on them with renewed vigor. It is time to spend our energy on technology we already posses, push the brands that already have a name in the marketplace, push the partnerships with people we already know.

Winds of creative destruction are blowing. Only the healthy should survive. It is time we make sure we are one of them; the landscape will be cleaner and healthier for all of us in the future.

Dueling economist: Jeffrey Sachs and William Easterly

amit November 8th, 2008

It is easy to be swayed by seemingly logical arguments made by academicians when it comes to complex problems. The trouble is not in what is being presented; often conclusions are based on good reason, and backed by supporting evidence. The problem lies in a beginner’s inability to spot what is not mentioned at all. How do know that ALL the relevant evidence is presented?

Fortunately, that can happen when you can get a debate going between opposing factions that is not veiled by false decorum. It’s impossible to miss disagreement, even for a novice, when you call your opponent stupid, or bald. Perhaps bald is not called for, but still, what’s the harm in making the discussion a bit colorful. Surely a few hurt egos is a small cost to pay when it comes to thinking about global poverty and billions in aid.

If they can’t agree on anything else, Jeffrey Sachs and William Easterly would probably agree to that. So if you are at all interested in the cause of millions of poor I encourage you to read this exchange (http://www.nyu.edu/fas/institute/dri/Easterly/SachsDebates.htm). Sometimes it’s better not to just do something, but to step back and think.

The following books are excellent reads on the topic on of foreign aid and poverty erradication. Economists might work on some hard and depressing problems, but they do write very entertaining prose. Both these books are very readable.

Have we lost credibility and how do we get it back?

amit October 12th, 2008

Let me start by saying I believe in laissez-faire capitalism and freedom as defined by libertarians. It pains me to see “Wall Street greed” being the public discourse of the day. It pains me to see a CEO being questioned if it was “fair” if he earned what he earned. It pains me to see the very concept of pursuit of self interest (even greed if you must call it that), being challenged. Not here, not in America.

And as we shift through the causes and explore alternatives to the financial setback. Let’s not ignore the crisis of credibility in professional management. Most managers are vanguard of resources that they do not themselves own, and one hopes their incentives are aligned to pursue the best interests of their shareholders, employees, and customers in that order. However, that by itself has been proven to be insufficient. I do believe there is a crisis of leadership which needs to be addressed by those in professional management. If we don’t do something about it soon, the day is not far when the society will lose faith. We will be bound by regulation and adjudicated by courts.

I was heartened to see an article (“It’s time to make management a true profession”) in Oct 2008 issue of HBR that calls towards professional accreditation for managers, something along the lines of the bar for the lawyers, or a license for those in medicine. That is but one idea that could help, but we need to think more critically to protect our collective reputation. It’s no longer just a matter of ethics, it’s bad for business. I appeal to your self interest.

I plead you for 25 minutes of your time

amit October 6th, 2008

As we plan the future of this nation, I implore you to simply listen to its great leaders and thinkers. Milton Friedman (July 31, 1912 – November 16, 2006) was an American Nobel Laureate economist and public intellectual. In this interview held years ago Friedman teaches us lessons we are yet to learn.

Musings

Steering in a downturn

Dueling economist: Jeffrey Sachs and William Easterly

Have we lost credibility and how do we get it back?

I plead you for 25 minutes of your time

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