Changing Time

My latest column for The Hindu Business Line is as follows:

Changing Time

As the Indian economy grows over the next decade or so and a predominantly young population enters the workforce, a big problem that is likely to emerge is a certain loss of meaning. The early symptoms are already visible in the form of high attrition and low employee morale and loyalty across all levels in most industries. It appears that human fulfilment would ironically face its biggest challenge from rapid economic growth and its numerous harmful side-effects. One such side-effect is the commoditisation of time.

Unsustainable bubbles

In a recent article, MIT professor Peter Senge proposes that the very notion of the Industrial Revolution is a bubble much like the dotcom bubble of a few years ago. The current climate change crisis we are facing is a fall out of this bubble, which is now in its last stages. Over a long period of time, rapid industrialisation has occurred in a manner that has been completely out of sync with nature and the costs of those actions are beginning to be borne now.

In much the same way, rapid economic growth leads to another bubble — an unhealthy relationship between people and the time they have on their hands. The people inside the bubble are led to believe that time can be spent on only two kinds of activities — either in the production of goods and services as part of the workforce or in the consumption of the very same goods and services. Needless to say, this view is completely out of sync with the way human beings are designed, as creative agents who seek fulfilment through multiple dimensions (depending on their orientation) including economic activities, community, family, art, service to society, spirituality and so on.

The leisure economy

The Leisure Economy is a book by Linda Nazareth that explores how “changing demographics, economics and generational attitudes will reshape our lives and our industries,” and how the ‘time bubble’ discussed in the previous section is headed towards its end. In the book, she proposes that as Gen X and Gen Y individuals dominate the workforce over the next few years, they will discard many old notions about work and leisure time. It is not hard to see that the cultures of companies founded by Gen X/Y entrepreneurs (like Google) is radically different from the cultures of older organisations with regard to how the workforce spends its time, as well as the manner in which a closer integration between work and other aspects of life is encouraged.

Timothy Ferriss, author of the best selling The Four Hour Work Week also makes a strong case for looking at work and leisure in a new way. Amongst other things, he advocates the idea of taking a number of ‘mini-retirements’ over the course of one’s working life as opposed to the traditional notion of retirement as one long stretch of time (of delayed gratification as it were).

Towards a more balanced world

While the leisure economy may be an emerging reality in highly developed economies of the West, it may well be some time before it comes true in developing nations. However, considering the globalised world we live in today, one could guess that the learning curve would be far more compressed. Either way, the trend clearly points to a future where people will look for fulfilment through multiple dimensions with the underlying currency being time and its balanced allocation across dimensions. Secondly, there would be a growing realisation that human fulfilment is an ongoing parallel activity across all these dimensions and suppressing one in the interest of the other will inevitably fail in the long run. Finally, the notion of time as a commodity would be replaced by the notion of time as a currency, as a form of income that is as important as financial income.

Previously published columns:

• Wealth in Ideas and Relationships
  
• Unlocking Potential
• An evolutionary view of leadership
• Leaderless Groups - a case against hierarchy
• Free riding and social loafing
• Decision making in groups
• The networked marketplace
• The spiritual organization
• Interactive Brands
• The long tail opportunity

Health care entrepreneurship

The invisible hand of the economy is beginning to touch health care in India:

Dr Shetty is turning serial entrepreneur. The grand plan is to set up health cities in several state capitals with training institutes for medical manpower. Health cities are large complexes that will house different specialties for treating major diseases, and both state governments and private equity have bought into Dr Shetty's vision for transforming the health landscape of the country.

While AIG and JP Morgan have pumped in Rs 200 crore each for a combined 25 per cent stake in the holding company Narayana Hrudyalalya Private Limited, state governments have offered large tracts of prime property in Ahmedababd, Jaipur, Bangalore, Bhubaneswar and Dehra Dun.

This is by far the most ambitious expansion drive among private players in the country with Dr Shetty expecting to add 20,000 beds in the next five years.

More here in a feature story on Dr. Devi Prasad Shetty

Wealth in Ideas and Relationships

My latest column for The Hindu Business Line appears today. Providing both the link and the full text below.

Wealth lies in Ideas, Relationships
Mohit Kishore

“If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.” - George Bernard Shaw

In its own way, this quote seems to suggest, and quite rightly, that wealth lies not in physical objects but in ideas.

It seems that the biggest mistake businesses make is in their search for wealth in the marketplace.

There seems to be a notion that the purpose of business is to map the wealth in the marketplace, in the pockets of ‘target groups’ and ‘customer segments’, and somehow transfer that wealth into the books of the business by providing goods and services.

To me this seems a transactional, non-sustainable approach. In my view, real wealth lies in two things: Ideas, and relationships.

Ideas

No business can be sustainable over a prolonged period of time by merely doing the same thing over and over. The outsourcing industry works on the idea that technology can be used to do non-core activities for companies in remote parts of the world, where labour costs are lower.

However, it is evident that this idea alone is not enough to sustain the outsourcing industry for ever.

In India for instance, the fast growth in the economy, high attrition and rising wages means that the cost of operations for the outsourcing industry is going to rise, and the idea of labour arbitrage may soon lose relevance.

This means that for this industry to be successful, newer and newer ideas are required that ensure that competitive advantage is maintained.

The same is true for any organisation. Not many ideas are of eternal value, and hence there is a constant need to evolve newer and newer ways of doing things.

Mature economies realise the value of ideas, and this explains why one finds a strong culture of venture capital investors investing in small, innovative, early-stage companies working on new ideas.

They realise that the risks in such investments are high, but the rewards can be substantial.

Relationships

The second source of wealth lies in relationships, particularly with customers, and on a larger scale with other stakeholders — society, nation and the environment. Iconic companies tend to focus on one or more dimensions of these really well.

For instance, businesses of the Tata group in India have always had a strong sense of nation-building and social responsibility associated with them. The wealth that lies in strong relationships manifests itself in the form of brand equity, which is, in itself, a source of material wealth (through increased sales, customer loyalty, etc.)

Apple is another company that values its relationships with its customers to such an extent that there is a reciprocal relationship from its customers that borders on devotion – something that causes them to buy high-priced initial releases of Apple products despite knowing that the prices will come down drastically in a few months.

Transactions not equal to wealth

It appears today that a lot of organisations value transactions over ideas and relationships.

An undue focus on transactions as a source of wealth means that market share and sales assume a central role in business.

When this happens, there is a large amount of ‘mis-selling’, poor customer loyalty, a lack of focus on customer service, low value on ethical behaviour and an overall deterioration of enterprise value. Some pockets of the financial services industry (like credit cards) are already demonstrating the effects of such a deleterious strategy.

Wealth = Ideas + Relationships

This is not to suggest that wealth in material terms is bad. It is only bad when this wealth becomes the central driver of strategy.

In fact, a study of successful organisations clearly shows us that wealth in material terms (revenue, market share, and so on) is an automatic by-product of the wealth contained in ideas and relationships, and a strong focus on these two dimensions is not just a one-time affair (at the time of the founding of a business) but a long-term, on-going process of adaptation and evolution.

Previously published columns:

• Unlocking Potential
• An evolutionary view of leadership
• Leaderless Groups - a case against hierarchy
• Free riding and social loafing
• Decision making in groups
• The networked marketplace
• The spiritual organization
• Interactive Brands
• The long tail opportunity

Business Today b-school rankings

Business Today has once again come out with it's illogical survey of b-schools. I have already criticized it here last year. Wont add anything more!

Interview of UTV's Ronnie Screwvala

UTV's Ronnie Screwvala makes some interesting observations about "Scale versus control" in this Knowledge@Wharton interview.

That was a crossroads that we had already crossed -- UTV as a company and myself personally. For me, scale is more important than control. Once you start thinking about scale, performance is going to count in any case because we are a public limited company. Whether Disney thinks I am a good CEO or the rest of the shareholders think I am a good CEO is equally bad or good -- because I have to be accountable for my performance. The other thing that comes about when you cross the 51% threshold in shareholding is that of overall accountability in that context -- and therefore management versus shareholding. If I think I am not the right person to lead the company at the next level of its growth, I could just continue to be a shareholder.
More here

Unlocking Potential

My latest column in The Hindu Business Line: Unlocking Potential

Full text follows:

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Self-actualisation is a term that was first introduced by Kurt Goldstein and later popularised through Abraham Maslow’s theory on hierarchy of needs. It is the final stage of human psychological development, when all lower needs (physiological, safety, love/belonging and esteem needs) have been satisfied. Through self-actualisation, the individual attempts to make the most of his true self and potential.

Can this notion be extended to organisations and institutions? After all, in the same way that individuals strive towards self-actualisation, organisations too try to realise their true potential through the strategic choices they make. Of course, in a human context, self-actualisation leads to fulfilment, happiness and so on while in an organisational context, the equivalent end state could be financial success, sustainability, employee satisfaction and customer loyalty.

Relationship to corporate strategy

Organisational strategy creation can thus be viewed as the attempts by an organisation to manifest its inner good. This ‘inner good’ in my view is not a ‘general’ good. It is a particular inner good, specific to the organisation under consideration. Formulation of strategy then must take into account the fact that it is best to actualise this particular inner good, rather than try to simply replicate the models of other firms in the marketplace.

For one organisation, the ability to scale may represent its highest potential. In that case, a market share-based strategy would work well. For another organisation, the highest potential may lie in its ability to serve customers well. In such a scenario, adopting a quality-oriented strategy may work better where the focus is not on the number of customers but on customer satisfaction.

In other words, the human notion of ‘being yourself’ holds true for organisations as well. Indian public sector enterprises have faced this dilemma in the face of aggressive private sector players. Some public sector enterprises and nationalised banks, for instance, have made attempts at re-branding themselves along the lines of their private sector competitors by attempting more youthful and contemporary brand positioning strategies. It is debatable whether this will indeed be effective in winning more customers. Instead, a better strategy may have been to play on their true strengths such as ‘trust’, ‘stability’, ‘relationship orientation’ and so on.

Determination of potential

The question then is how does one determine what the highest potential of an organisation is? One way could be to look to the founding leadership and their values. A disadvantage of this method could be that as organisations begin to outlive their founders, founding values tend to get eroded and in some cases lose relevance.

The other way to determine potential is to look at the organisation as it is today and determine what it could be good at. This method has its own disadvantages because the situation an organisation is in at present may well be the sum total of bad choices made in the past.

One other way could be to start with customers. Finding out how customers relate to the organisation and ‘what works’ for them may be a useful starting point to determine the highest good.

When The Coca-Cola Company launched a new formulation of its drink called ‘New Coke’ in the 1980s it was met with serious protests from loyal customers, leading to the withdrawal of the product. To these customers, Coke was the quintessential American drink that represented American values, and hence any change to the brand was seen as almost blasphemous. It could be argued that loyal customers of the brand had a clear notion of the ‘inner good’ of The Coca-Cola Company much more than the executives working there. Thus, determination of potential may involve a holistic study of three axes — founding values of the organisation, existing values of the organisation and customer-defined values.

The end goal – purpose

Finally, self-actualisation (either for an individual or an organisation) is not necessarily an end result. It is also a process of making choices along the journey. The choice could either be what Maslow calls a “growth choice” or a “regression choice”, and the idea is to repeatedly make a growth choice when faced with a decision point. The act of making a growth choice is an act of evolution and evolution leads to greater fulfilment.

Put in the context of organisations, the very process of self-actualisation is likely to create a strong sense of purpose and direction in the minds of all stakeholders, and that alone is worth the effort.

(The writer is an alumnus of XLRI, Jamshedpur.)

Previously published columns:

• An evolutionary view of leadership
• Leaderless Groups - a case against hierarchy
• Free riding and social loafing
• Decision making in groups
• The networked marketplace
• The spiritual organization
• Interactive Brands
• The long tail opportunity

Amitabh Bachchan's Blog

With the attention that the Big B's blog is getting on Big Adda, it may not be a bad idea to convert Big Adda into a pure blogging platform and get rid of all the social networking stuff. Blogging is a standalone feature, which can succeed by itself, whereas a social network can succeed only if it has a critical mass of linked up users, and I don't see Big Adda achieving that in the face of Orkut and Facebook.

Secondly, with so many "stars" embracing blogging, it looks like blogs have completed the long journey from being a geek's tool to a mainstream medium.

XLRI Placements

XLRI Placements

The lives of others | The conversation

“The lives of others” – this year’s Academy award winner for the best foreign language film stands at the curious intersection between art, love, literature, politics, bureaucracy, and history.

The film is set in the erstwhile East Germany at the time when the Stasi (the secret police) placed pretty much every other citizen under surveillance. One such member of the Stasi (Weisler) is asked to monitor the renowned playwright Georg Dreyman who is suspected of having leanings towards the west. Weisler wires Georg’s apartment and then spends his days listening in and preparing daily reports of his suspect’s activities.

The real reason why Weisler is put on this assignment is so that Georg’s western leanings can be proved as basis for his arrest, which would then allow minister Hempf free access to Georg’s lover, the actress Christa-Maria. Once Weisler discovers this, his sympathies gradually shift towards Georg. Weisler finds himself immersing into Georg’s rich literary world of idealism and hope for a better future. Pretty soon Weisler begins to fudge his daily reports to divert suspicion from Georg on a controversial article that he publishes in the West after the death of his theatrical mentor. A man who was once an impassive arm of the state’s machinery now finds himself moved by Georg’s heady world of Brecht, Beethoven, passion, love and intrigue. From here on, the film takes interesting plot turns as Weisler, the neutral observer turns into an eager, yet invisible supporter of Georg’s actions.

It is here that “The lives of others” reminded me of an older Francis Ford Coppola film called ‘The Conversation’ in which Gene Hackman is a surveillance expert who is tapping into conversations between a couple. What begins as an unemotional impassive project turns similarly into one where Gene finds himself getting actively involved in the lives of his ‘targets’. It reaches a point where Gene steps in to avert a potential tragedy that would have occurred as a result of the information he has recorded (though at this point the film takes a completely ironic twist which I wont give away.)

It’s interesting to note that in both films, the surveillance expert begins as an unemotional witness to events but eventually turns into a sympathizer of his targets. Both films explore numerous other issues too, but central to each film is the idea that it is impossible for any human being to be a mere neutral observer of events around him. At some point the desire to influence events, to correct wrongs overcomes even the most stoic, duty-bound automaton type character like Weisler or Gene. Also, both films expose how ideology (political, professional…) need not always assume precedence in our dealings with the world, particularly in the face of raw human emotions that bind people even on opposite sides of the same issue.

Wikipedia articles on both films:
The lives of others
The conversation

How to make wealth.

How to make wealth.

An evolutionary view of leadership

Yesterday, The Hindu Business Line carried my latest column in which I explore the relationship of leadership to various kinds of wages. Link: An evolutionary view of leadership

Full text follows:
A casual perusal of the management section of any bookstore would suggest that ‘leadership’ is the most desirable goal that people have for their lives. This may indeed be true, but evidence in the real world suggests that there is more to leadership than meets the eye.

In the real world, leadership is often bestowed upon an individual who is most likely to work in the interest of the group he leads, even if it means sacrificing his own well-being. While, the first-half of that statement is rather clichéd, the second part is the one that is more interesting. It is our tendency to choose leaders who will not work for their own self-interest that leads most people to actually not want to be leaders themselves. They will gladly be followers and reap the benefits of having a leader who will work to maximise the wellbeing of his constituency, rather than step on the pedestal themselves. This argument is also found in Plato’s Republic.

Plato’s Republic presents this idea through an argument between Socrates and Thrasymachus in the course of which Socrates says: “No one willingly chooses to rule and to take other people’s troubles in their hand and straighten them out, but does ask for wages… In a city of good men, if it came into being, the citizens would fight not to rule. There it would be clear that anyone who is a true leader doesn’t by nature seek his own advantage but that of his subjects. What kind of wages is Socrates referring to? The answer is — money, honour or a penalty if the individual refuses to lead.” (Source: Justice and the Leader, by Plato from Republic Book I – Hackett Publishing, 1992)

Leaders and wages

Now, this seems to suggest that people only become leaders in order to get the above kinds of ‘wages’ and for no other reason. In other words, if there were no ‘wages’, no one would ever want to be a leader. This may be a bit far-fetched. Surely, history has shown us enough examples of ‘wage-less’ leaders such as Gandhi and Mother Teresa. The idea of ‘servant leadership’ developed by Robert Greenleaf suggests that a leader’s role is purely to serve the needs of his constituency and not to increase his personal power or glory. In other words, for such leaders the wages, if any, are purely incidental.

Is there any way to reconcile these two schools of thought — one which suggests that all leaders work for tangible or intangible ‘wages’ and the other that suggests that leaders should only serve their followers and have no other goals? It may be instructive to view the concept of leadership as an evolutionary hierarchy. At the lower end of the hierarchy are leaders who are in it for the wages. Needless to say, they too serve their followers, but do so with personal goals in mind. As the leader evolves over time, the marginal utility of wages would decrease and finally reach a point where he demonstrates the qualities of a classic servant leader who is focused on the needs of others.

Servant leaders

Examples of such evolution are easy to find, particularly among business leaders who after many years of building great companies move on to set up charitable foundations that are not profit oriented (the Bill Gates Foundation for instance). In between these two extremes, there could be many other variants with differing ratios of ‘wage’ to ‘wage-less’ orientations.

Viewing leadership in this manner, as an evolutionary ladder, also helps us resolve Plato’s problem of people not wanting to be leaders in the first place. The initial steps of this evolutionary ladder allow and encourage wages, thereby ensuring that people are motivated to take up responsibilities that they would have otherwise shirked, and the higher levels of the ladder are for people who are not in it for themselves.

The key thing then becomes identifying the right kind of leaders for the right kind of roles in society. An example of how things go wrong when there is a mismatch between the role and the wage orientation of leaders in that role is the political leadership in this country which has long been tarnished by cases of corruption by individuals who seek personal ‘wages’ over the larger good . On the other hand, middle managers in most businesses belong to the ‘wage oriented’ category, and they certainly seem to do justice to their roles by both maximising their personal gains as well as achieving organisational goals.

In conclusion, it makes sense to allow and embrace both wage oriented and non-wage oriented leadership, provided that the extent of wage orientation in the individual matches with the leadership role that is on offer.

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Previously published articles:

• Leaderless Groups - a case against hierarchy
• Free riding and social loafing
• Decision making in groups
• The networked marketplace
• The spiritual organization
• Interactive Brands
• The long tail opportunity
  

Obama

This is an extraordinary piece of oratory:

The long tail opportunity

Today, The Hindu Business Line is carrying my latest column in which I explore 'long tail' markets, a concept that was first made popular by Chris Anderson at Wired magazine. Link to the article on the Business line site: The long tail opportunity.

Here's the full text.

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We live in a world of infinite choices. Yet traditionally, mass media and mass marketing have always trained their attention on ‘hits’. The reason why they do this is the prohibitive cost of distribution of goods and services. Thus, an average bookstore owner needs to decide exactly which titles to stock in order to optimally monetise the limited shelf space that he has available. In other words, he needs to clearly identify the ‘hits’ which would s ell enough copies to justify their existence on his shelves.

This notion of ‘hits’ extends to all other types of products — music albums, films, fashion, retail stores and so on. So is there a market beyond these hits? Traditional wisdom would suggest that ‘non-hits’ is not a market worth chasing. The facts, however, prove the opposite.

With the advent of the Internet, limitations such as distribution costs and shelf space have ceased to exist. Thus, an Amazon.com can offer an unlimited choice of books by an unlimited number of authors that traditional bookstores cannot offer because the sales of such books would not make up for the cost of printing and distributing them. In theory, Amazon can make a book available on its Web site even if less than 50 people eventually buy it.

The long tail as a concept was first elucidated by Chris Anderson in his bestselling book by the same name. The long tail refers to the tail of the demand curve where infinite choices exist. The head of the demand curve consists of all the ‘hits’ which are very popular, and the tail extends infinitely to cover infinite ‘non-hits’, i.e. products with niche consumers. Earlier, marketers ignored the tail because they did not have the means to make the products in the tail available to their audiences, but today the Internet enables them to do so profitably. An analysis of Amazon’s sales by Chris Anderson indicated that a large proportion of its income actually came from obscure titles and not bestsellers.

Mass customisation

One major advantage of using the long tail benefits of the Internet is that it enables producers — of products, content and so on — to offer truly customised products to their target group. Apple’s iTunes, for instance, can offer songs by totally unknown artists who may not have a market in traditional mass media. YouTube offers small filmmakers the opportunity to showcase their content to the whole world. Self-publishing tools such as blogs allow you to write about extremely esoteric topics and still have a global audience for your offering.

The tail of the demand curve explains why small budget films such as Khosla ka Ghosla and Bheja Fry managed to become ‘hits’ in the face of competition from traditional big budget films. These smaller films managed to find an efficient distribution channel (multiplexes that screen many movies and hence diversify risk) to reach their small target audience (possibly educated urban youth who frequent multiplexes and prefer meaningful cinema to blockbuster entertainers). Such examples also prove that to tap into long tail markets, the Internet need not be the only medium.

The Indian context

Is Indian business geared up to the long tail opportunity? Sadly, the answer seems to be a big no. Not enough companies are actively using the Internet as a significant distribution channel for their products. In a market with about 50 million Internet users that is growing faster than ever before, it is critical for companies to have a significant footprint in the online world too.

Some players use the Internet as an online replica of their offline offerings. Big retail chains have launched such e-commerce portals that mirror their store offerings. A better strategy would be to use the Internet to purely tap into long tail markets. Companies in the financial services space can allow their customers to buy customised products that would otherwise cost a lot to launch due to the prohibitive costs of training intermediaries (this sector is today dependent on intermediaries). Telecom companies could use the Internet to launch a number of niche tariff plans. (I’m imagining a slider-based interface that allows me to precisely set my rental, STD, local calls and SMS tariffs).

The traditional argument against such ideas is that you need a critical mass of customers to launch a product. Yet, the magic of the long tail is precisely the fact that you are targeting customers who are not usually on your radar, but rather the small number of customers (which we could call micro-segments) who buy niche offerings. Multiply an infinite number of such micro-segments with the small volumes associated with each micro-segment and you have potentially huge revenues. The possibilities are endless at the tail of the demand curve and it can no longer be ignored in the midst of the noise generated by ‘hits’. What remains to be seen is how innovative we can get with tapping these micro-segments of the market.

(The writer, an alumnus of XLRI, works with a multinational financial services company.)

Previously published articles:

• Leaderless Groups - a case against hierarchy
• Free riding and social loafing
• Decision making in groups
• The networked marketplace
• The spiritual organization
• Interactive Brands

Social Graphs and Vanilla Networks

Jyri Engestrom has an extremely interesting post on where social networks are headed. In this post, he points out Brad Fitzpatrick's views on how the social graph (the map of how users are connected to each other) should be made universal.

Brad's solution is to create a service where people go to aggregate all their networks into a master network, and then let other services check against that to automate friend discovery. The outcome to the user who signs up to a new service should be "These 8 friends of yours are already users here, would you like to share your books / music / pictures / trips / etc. with them?"

I'm not so convinced due to the following reasons:

1. Firstly, 'friends' is a nebulous concept and it varies from network to network (my Linkedin friends may not be the same as my Orkut friends), thereby making the whole idea of having a universal social graph quite impractical.

2. Secondly, Brad assumes that all the competing services will actually cooperate with each other to share their respective social graphs. I doubt that will happen. If it did, then it would be equivalent to voluntarily reducing exit barriers for its users.

But it looks like the problem that Brad is addressing is one of singular identity (say a Google Account or a Hotmail Passport) that uniquely maps people across applications. That's a separate problem in itself. Anyway, here is what I think will be the future of social graphs and networks.

Where I see this heading
I forsee that in the future there will be two kinds of 'social network' services:
1. A plain vanilla social network with the usual friend of friend and profile features.
2. Satellite social applications like say a photo sharing service, a book sharing service etc.

My guess is that there would be about 3-4 major plain vanilla networks. The satellite services would then sit on top of these networks and share their social graphs. So say I signup on Facebook (the plain vanilla network), and then I feel like signing up at Shelfari.com to share books with friends. I would just activate Shelfari inside Facebook. The Shelfari-Facebook tieup would not be exclusive. Shelfari could go and signup with all the other vanilla providers too. Facebook has already moved in this direction by allowing 'applications' by independent developers to hook into Facebook. The next level is for all these 'applications' to have their separate identity in the world outside Facebook, thereby allowing users of other vanilla networks to use them too. The following image should help clarify what I'm trying to say.

Thus, the vanilla networks would serve the purpose of being repositories of social graphs that independent developers of services can tap into.




An arrangement like this would be very useful for all web applications with a social dimension to them. The major vanilla networks house the social graphs, and the independent guys hook in as satellites and share revenues with the parent network.

Business Today's idiotic b-school rankings

Business Today's annual practical joke entitled 'India's best b-schools' is out. The preliminary evidence is as follows:

SIBM is India's number 4 business school

MBA wannabes prefer ICFAI to FMS Delhi

Welingkar Institute of Management is India's number 3 b-school under the parameter 'Functional Head'. Under the same head SIMSREE Mumbai and ABS Noida are amongst the country's top10

Recruiters voted Welingkar as India's number 5 b-school

'Young Executives' ranked SIMSREE and Welingkar at joint number 3. If this is any consolation, these two b-schools managed to beat IIMC.

Without going into the merits and demerits of the aforementioned schools (I'm sure they are reasonably good places), let us now examine the methodology adopted by Business Today and AC Neilson that enables reality to be twisted and turned in any manner deemed fit by the editors of the magazine. The BT ranking claims to be based on the winning brands model i.e. it asks 'consumers' about their preferences with regard to certain brands (in this case b-schools) on certain pre-defined attributes with pre-defined weightages. Hang on. Winning brands? Do prospective MBA students pick their b-schools based on brands as opposed to facts? If that were the case, these applicants would surely flunk the Marketing Research course when they join b-school.

Imagine you have applied for a job, and the interviewer calls up 30 of your friends to find out their 'perception' of your academic performance, intelligence etc instead of objectively measuring it by asking you what your marks were, and verifying supporting documents. Such an interview would be a waste of time to attend - after all the interviewer is not interested in that trivial thing called facts. He is more interested in the feelings that your friends have about you! Your friend Mr.A might 'perceive' you as being a poor student, but 'facts' may indicate that you actually scored 95% in your boards. This is precisely the model that BT has used to rank business schools. They asked random respondents about what they 'felt' about the b-schools in question, and completely disregarded facts - facts such as average salaries, faculty count, published papers produced by the b-schools, infrastructure, exchange programs, international placements etc. Facts that are easily measurable if you get out of your Mumbai office and conduct a survey by actually talking to b-schools as opposed to conducting an inane perception survey with whoever you found at the water cooler. George Bush would love to commission a survey by BT-AC Nielson on the Iraq war - because like him, the BT-AC Nielson guys too hate facts - the prefer feelings.

I could go on and on, but some reputed bloggers have already trashed this survey in some detail. Do check them out.

Rashmi Bansal: This year, last year

Prof. Madhukar Shukla on last year's rankings:
http://alternativeperspective.blogspot.com/2006/07/b-school-ranking-survey-gets-f-grade.html

Outlook has chosen a fact based approach to rank b-schools. They seem to have done a good enough job for both Rediff and Mint to syndicate their content. Here is the link.

Private Equity Jobs

No, you wont find any of those here. But here's an interesting take on the PE phenomenon by Slate.

Dear Diary:

Whatever possessed me to go into private equity? I was so naive. I thought it was just about financial engineering. That certainly is the impression they give you in the media. But turns out that it's actually about hard work! Who'd a thunk it? Here we are in the last week of summer, and everybody is in the Hamptons or in some villa in Tuscany. Everyone, that is, except for me, Private-Equity Man.

More here

Bonus Link: How to make a powerpoint chart, by Seth Godin, easily the best marketing focussed blogger out there.

Pursuit of happiness

Studies by economists show that money is directly related to happiness until it leads people out of abject poverty. Beyond that point, the marginal utility of money (towards increasing happiness) keeps decreasing. The happiness level of someone making $1 million versus $5million is not too different. This however does not stop people from mistakenly viewing money as a source of happiness, and wasting their lives in it's pursuit, but as Will Smith speculated in the film 'The pursuit of happyness', maybe the whole point of that phrase is that happiness is something to be pursued and never attained?

More on leaderless groups

Forrest Christian has an interesting response to my earlier post on leaderless groups. Do check it out here.

I particularly agree with his views on the 'Big man' school of management that involves people bowing to ONE supreme leader in whom we place our faith to lead us. Such structures may have worked well in colonial times, but certainly have no place in the modern workplace, and indeed society. In this context it is interesting that elections in the US tend to surround the 'Big Man' i.e the presidential candidate, whereas elections in India tend to focus more on political parties and their ideologies. I remember reading somewhere that on 'Individualism', Americans score much higher than Indians. I suspect that the Big Man school of management has it's foundations in individualism.

Personal Leadership

Leadership by its very definition seems to assume the presence of a follower who needs to be lead. However, this follower may not always be another person. One form of leadership that I believe in is Personal Leadership - the ability to lead yourself from your current circumstances or situation to a better future. In other words Personal Leadership means taking charge of your own life or situation before taking charge of other people.

Leaderless groups - a case against hierarchy

My latest article in The Hindu Business Line - Leaderless groups - a case against hierarchy. Full text follows:

In his treatise Dastambu, Mirza Ghalib documents the events in Delhi at the time the revolt of 1857 broke out. He writes: "Band upon band of soldiers and peasants had become as one, and far and near, one and all, without even speaking or conferring together, girded their loins to their single aim... City after city lies open, without protectors, filled with men who have none to watch over them, like gardens bereft of their gardeners studded with trees stripped bare of leaves and fruit." (Ghalib - Life, Letters and Ghazals; Ralph Russell; Oxford University Press 2003)

While Ghalib's political leanings are not the subject of this article, what is interesting is his view that the men behind the mutiny were leaderless and hence not worthy of being taken seriously.

Are there any examples to prove that a leaderless group can actually lead to efficient outcomes? Can independently-deciding individuals help a group achieve its goal?

History suggests that in certain situations leaderless groups can indeed achieve a stated objective. Leaderless resistance movements such as guerrilla warfare are a good example of this. Terrorists too tend to operate in independent cells (and not hierarchies). This probably explains why they manage to escape from beneath the eyes of hierarchical intelligence agencies.

Key advantages of a leaderless group include the fact that there is no centralised command and control system, which is vulnerable to attack. Each small group or individual behaves independently based on some shared values. This means that the group is not burdened by traditional hierarchical chains of command, bureaucracy and red-tape in its decision-making. Additionally, affinity of group members towards the cause is likely to be much higher since there is no central authority who forces membership and neither are there any negative consequences of giving up membership. In other words, only truly passionate individuals would aggregate in such a group.

Clearly, leaderless groups are structurally efficient. Are they functionally effective too? In the best-selling book The Wisdom of Crowds, James Suroweicki argues that large, independent groups of people are smarter than an elite few (leaders/ experts). For instance, on Who wants to be a millionaire, audience polls got the correct answer 91 per cent of the time, while the `phone a friend' experts got it right only 65 per cent of the time. He identifies four prerequisites for a `wise' crowd — diversity of opinion, independence, decentralisation and aggregation. There must be a diversity of opinion within the group, which is independent of the views of other members. The group must not have any central chain of command and there must be some way of aggregating various individuals' viewpoints.

The Wikipedia model

Wikipedia (a freely editable online encyclopaedia) is a good example of tapping into the wisdom of crowds. Individuals across the world collectively edit articles to produce content that is by and large of very high quality. There is, of course, the stray incident involving a writer editing an article to depict a deliberately biased point of view. However, Wikipedia does have a core team of editors who scan content for such anomalies. Thus, in effect, the people who contribute to the Wikipedia project are like a leaderless group, which is loosely monitored by a core team of editors.

An interesting thought experiment to conduct would be to evaluate whether such a model can be extended to other kinds of organisations. How could one structure an organisation to tap into the wisdom of crowds? Needless to say, leaderless groups are not suitable for certain kinds of organisations — for instance, a manufacturing organisation would clearly need a highly supervised environment. However, for organisations whose main output is knowledge (software, media) a leaderless approach does seem to be an interesting alternative. Open source software movements clearly show that people don't have any hassles creating intellectual property free of cost — with little or no supervision — if they believe in the larger cause.

Purely from a human psychology perspective, a group with a `leader' necessarily means that one individual becomes bigger than both the cause as well as the other individuals in the group. While this is good in a political cause (like apartheid) where it is important to truly inspire people, it may not be particularly useful in a more everyday cause, like a company that makes a product or service. In the latter, having overarching leaders can lead to harmful political behaviour and other efficiency-dissipating activities that can lead to drop in motivation levels. On the other hand, people are happiest when they work for causes (not people) much larger than their individual selves. In fact, offering work as a service to the Lord, without worrying about one's ego or the end result, finds support in the Bhagvad Gita too. Maybe, it's time organisations experimented more with leaderless set-ups (perhaps within individual divisions if not entirely). History certainly shows that it can work well in a number of contexts.

(The writer, an alumnus of XLRI, works with a multinational financial services company.)

Previously published articles of mine:

• Free riding and social loafing
• Decision making in groups
• The networked marketplace
• The spiritual organization
• Interactive Brands