The Mid-liers: Why they matter

bell curve1

One of the many subjects typically taught during an MBA course is the one on statistics. Hence the idea for this piece is inspired a subject which I scraped thru in college. One central topic is the study of a classic bell-curve : Normal distribution as it is in statistical parlance. This curve is often used in appraisal process to get the people divided into basically 2 categories:

  1. Outliers and
  2. The Mid-liers

Wikipedia defines an Outlier as an observation point that is distant from other observation. In a bell curve, outliers are either the top-most performers or the laggards who are typically shown the doors in most organizations. Outliers are typically the one’s having the most talent, pedigreed from top colleges, or the ones who get the highest ratings and many more. As this Huffington post article points out, “All too often, in our Talent Management processes — how we evaluate our people, compensation discussions, promotion opportunities, succession planning — we focus on the bottom performers (the left side of the bell) and on the top performers (the right side.)” Grabbing the most attention, outliers are most sought after in almost all fields like industry, sports, arts , name it and most probably an outlier grabs your eye.

Which comes to my main focus of the article which is Mid-liers. This term does not exist in the popular lexicon (another possible effect of outliers, observed). This author would define mid-liers as the middle, stocky part of the normal distribution curve. Midliers , typically are the largest in terms of population and strangely ignored despite most people falling into this category. Mid-liers are the middle class of the talent pool.

Here’s why midliers should command more heft than they usually do and why they matter:

  1. They are captive outliers: A case may be made that mid-liers are outliers-in-waiting. Top leaders always have a pool of leaders to select their successors. These people, essentially in the middle of the pack, on the timely opportunity are converted into outliers. There are many examples where this model may be seen. Whether it is TCS appointing N Chandrasekharan, or Satya Nadella being appointed Microsoft head, it is clear that in many cases the void from a leaving outlier is filled by a mid-lier.
  2. Greater probability of success : In six sigma concept, a 2-Sigma means 95.7% range of the bell curve is covered by the mid-liers and 4.3% are Outliers. That’s an overwhelming majority of people falling into this mid-category.
  3. Mid-liers can be more realistic: Owing to constraints under which they work, mid-liers can be excellent managers. Having moderate expectations can result in better employee relations and less stress at workplace.As Scott Sonenshein Writes in his book, Stretch, “Why might fewer resources lead people to view them more expansively? Diving in deeper, the researchers uncovered a key explanation for their results. With abundance, people treat resources as what they appear on the surface, utilizing them in traditional ways. But when people face scarcity, they give themselves freedom to use resources in less conventional ways. Our problems, challenges, or opportunities become more manageable with constraints that direct us to make the best out of what we have. Without constraints, research finds that our tendency is to retrieve from memory exemplary uses of resources—we typically sit on a chair, so that’s how we think of chairs. It’s the functional fixedness that drives chasing—seeing resources only as what they appear to be on the surface. We follow a “path of least resistance” model, which allows us to conserve mental energy by instinctively turning to commonplace ways of thinking”

Can’t we all be outliers? Of course not. Being an outlier necessitates being ahead of the pack. But with luck and talent combined, one can be a future outlier.

 

 

 

 

 

Advertisements

Gita- An SOP for life?

Last week I had some free time on the weekend just before my MBA classes. Movies, outing with friends were on the cards. But I somehow decided to spend time alone and listened to the Gita As it Is in an audio book format (You may listen to it here.) I was yearning for some fresh insights into life without leaving current life. I listened to all 20 chapters and this is what I could learn from the timeless text and which is applicable to common life as such:

Mahabharta In Images (98)

  1. Moderation is key in life: As per Chapter 6:16, Krishna advocates a balanced lifestyle with good diet, sleep and Yoga practice. This is key as we increasingly are in a stress era. We have erratic sleep,eating and exercise habits, resulting into illness and lifestyle diseases. Hence it is key to keep things in moderation in life in order to keep ourselves fit.
  2. Doing is a part of life: An interesting verse from the Gita (verse 3:5), says we act helplessly according to our bodily nature. Have you observed that people around us are so different in their habits? Some are early risers, some late, some eat a lot, some don’t, some manage with 3-4 hours of sleep, others need more. One can surmise that people indeed behave according to habits they espouse in their formative years of life and it is these habits that control our nature. If we understand the habits, we can have a idea as why people behave the way they do. Thus a person doing his task in faulty manner is better than that person who shirks his responsibility.
  3. Detachment: This is perhaps the most quoted, yet the most mis-understood of the verses of the holy book. On a literal meaning, we need to remain detached to outcome of our efforts. The hidden meaning is actually a sort of psychological chicken soup for the soul. The lesson is that stress happens when were want things to be deterministic in life. When things don’t happen as per plan (usually they don’t) , we’re mentally unsettled. We need to understand that our own efforts may form only part of any outcome and many other factors remain outside our control or comprehension. Once we understand the probabilistic and uncertain nature of life, we are less hard on ourselves when things go awry.
  4. Change is the only permanent thing in life: Change is everything in life. Our life, our relations, our jobs all have a seed for change in the future. Acknowledging this fact in life, goes a long way in living a worry free life. Once we accept truths of life like ageing, supersession by younger generation, we have truly grasped the juice of life.
  5. Concept of Mentoring: The Gita is in essence a manual for mentoring of people as such. We see energetic youth bogged down by small troubles and cares of life and thus they miss the big picture of life itself. Krishna , live on the battlefield, guides the shaken but talented Arjuna to perform his tasks and achieve glory. It is this aspect which managers should focus on whilst dealing with sub-ordinates in the current workplace. When we are managers we need to mentor and nurture future leaders by guiding them through various aspects of life . It may include personal life, professional and social life. Never has been a more important time than now to nurture talent and pass on the knowledge for the future generations’ well being.
  6. An honorable exit: We see in corporate life that promoters remain attached to their company even though it may be in hands of a talented professional. Many a times promoters interference hobbles a company’s progresses, distracts management focus and in the end ruins the reputation. We observe in the Gita, that Krishna plays the role of king-maker but plays no further part in the administration of the kingdom of Arjuna. This is truly the meaning of detachment in practice. Once the seed of the idea is planted , the management of the tree which germinates, is passed on to the future generation.

In the end Gita is more than just a spiritual text for religious purposes. It can very well be taken as guide to a more fulfilled life as such. A treasure truly to to be cherished by one and all.

Right to Disengage-A new frontier

It’s the era of information overload. We are constantly bombarded by sensory inputs from all directions. Gone are the days when people used to have free time (aka a free mind). Now we are part of the contagion of “tweeple”, not people anymore. Our limited attention spans are even more distracted by our ever active smartphones, laptops and smart TVs.

But, we need to ask ourselves this question, “have we engaged too much with this virtual jungle?”. Even as we seem to be more connected online, we seem to lose touch with real people as we speak. A worrying trend. A “Big Data” revolution is already raging quietly, in the background, while we are blissfully unaware. The rampant monetization of personal data is another worry.

Main offenders causing the chasm of real life vs reel life is social media. What started as an attempt to connect far away people has in fact alienated people who are near to one another. Nothing seems more piquant that travelling in public transport and seeing drooping necks and shoulders, something that should be practiced at funerals. Or maybe sense of being human is slowly dying away. A worrisome prospect indeed.

So, why is right to disengage with online world so important? Let’s take a look at the following points:

  1. Too much mental noise: As such we battle everyday to keep our concentration during our work and its constantly challenged by beeping smartphones. This leads to diminished mental capacity to concentrate.
  2. Information is the new caffeine: Just observe your own behavior when you get up in the morning. Do you look at your family members, the sun or your smartphone? Do you speak to your wife/kids first or check your email, fb, twitter, or RSS feed? You get the point.
  3. Information is not wisdom: Just reading mounds of data isn’t enough. Your brain needs time to assimilate this much information, Distractions only make it tougher to achieve this objective. Our minds have indeed become cluttered with useless things which we aren’t able to discard. Truly , a case of “hoarditis”
  4. There’s a very small and growing wave against slavery of our minds: Some have taken their anti-social-network stance public to espouse the need to cut out such attention draining tumors from our minds(This author has also moved in the same direction, albeit privately, and is no longer on FB and Twitter). Authors like Cal Newport, shatter the perception that a distracted mind is good. (you can read why he advocates leaving SM and still is alive in the world, here)

cuting-chain-12780685

The right to disengage is something I thought of from one of the marketing lectures I attended just yesterday in my MBA school. The marketing concept is about engaging customer. I wondered why the right not engage by the person is never discussed as a counter argument. For the detractors, distraction means a money-making tool disguised as connecting tool. having been on social media for sometime, I never found any useful value addition which such networks provide in lieu for my limited attention span. Thus this makes me more of “me”, than just likes on FB.

The right to disengage should be on one’s own terms and should never be dictated by what people think or friends believe, it’s whats right for you. and no one will knows this better than yourself. This right means using social media on own terms, having time to professionally and personally grow , do quality work and spend time with family or even yourself! Somewhere down the line I hope people realize that in our short lives, we really are short of time to do meaningful things.

This involves taking up activities which grant a sense of deep satisfaction and well-being. Being selfish is key here, for you have only limited mind space to expend. Your time needs to be spent on family, friends, yourself, studying, introspection, reading and the list is endless.

Thus the right to disengage has a far deeper meaning. It means prioritizing important like an adept manager, cutting useless distractions like an expert surgeon as well as make an effort to be oneself like a hermit. Not doing so means a mental death despite a thriving digital life.

Demonetization or Demonization: Boon or Bane?

A lot of froth has been generated over the recent demonetization exercise by the Narendra Modi Government. The event itself took place on the 8th of November and announcements made late evening to the utter shock of the masses looking bleary eyed, after their currency notes of Rs 500 and Rs 1000 ceased to be legal tender w.e.f midnight. The move sparked panic on the streets , long queues in Jewelry shops, shopping malls and shady enterprises that took in their old notes for lower denomination notes.

This move is very controversial, since there hasn’t been any precedent of a large economy the size of India , which basically removes 86% of currency notes in circulation. What happened next is a sequence of policy decisions regarding exchange, deposit and withdrawal of notes from bank. Cash is the blood of the Indian economy, but now the very life out of the economy is being taken out by this daring executive decision.

Modi, the expert communicator that he is, has reached out to his voters by ways of telecasting on TV, and his own apps on smartphones. arguably, he still maintains his popular ratings despite caustic attacks by the opportunistic opposition parties, who seemed bereft of any cogent ideas to corner the BJP government.

But, any move has its consequences, no matter how much the government wants to wish away its evil. One very scary prospect is the risk of deflation. This means a drop in prices all around. Why this happens is that consumers hoard whatever cash he/she has and uses it only for most essential uses like food and fuel. This causes immense stress on the sectors of the economy which depend on discretionary expenses of the consumer. Hence we should expect consumer goods and real estate and even FMCG feeling the heat due to loss of purchasing power. This is live demonstration of deflation at work, perhaps the first in independent India. One just needs to see state of affairs of government controlled mandis where there’s practically no demand for farm produce causing farmer distress.

The government on its side, has claimed to have extinguished significant amounts of black money in this exercise. Critics of the move will scream conspiracy citing the big ticket elections of UP and Punjab in 2017. But such an argument is not a convincing one as elections are held every year in one or more states each year. The real reason for the move might very well be to bolster the strongman image of Modi among his voter base. That he has almost antagonized the trader’s lobby due to this move as well as the pushing through the GST , proves that Modi is willing to take tough measures for the nation as a whole which wasn’t possible during the coalition politics of the previous two decades.

Opponents have cringed at this move. Mihir Sharma in this piece on Bloomberg has called the move a “vegan fallacy” and a “moral project” , not an economic one. Some others like Ruchir Sharma (of the breakout nations / rise and fall of nations fame) have suggested that retributive justice is no development strategy. Writes Ruchir, “The impassioned debate obscures a basic problem with the demonetisation scheme, which is that it presumes to know what comes first, development or growth. In general, institutions grow stronger as a nation grows richer. India cannot expect to leapfrog up the development ladder simply by purging black money from its system. Certainly no other nation has done it that way.” One would tend agree that he’s broadly on the right track but misses the elephant in the room. Indians have culturally been trained to bend or break rules. If that weren’t the case previous measures to hit black money wouldn’t have been a miserable failure. People appreciate bold daring action and not just mere legislative paperwork. This may very well be the reason why that even after more than a month after the fateful announcement, common man on the street still is patient and we’ve still not seen riots over cash dispensation.

Modi may have thought that it’s better to take big notes out of circulation because hiding black money in cash is difficult when higher denomination notes aren’t available. Imagine giving a bribe of  1 crore all in 100 rupee notes. Besides taking up a lot of space carrying so much cash is conspicuous invitation to law enforcement agencies. Besides this practical aspects, one doesn’t really know how much black wealth is hidden in cash or already converted to other forms like bullion or forex or shady real estate deals.What happened is that even the government has no estimation of the total amount of black money in the financial system. This is something that the finance minister Arun Jaitley told the Lok Sabha in a written reply to a question that had been asked by Anant Kumar Hegde, a BJP Lok Sabha MP from Karnataka.

As Vivek Kaul rightly points out in his piece, “…such a huge decision that impacts every citizen of this country was made, even without taking a basic estimate of black money into account. Of course, all big decisions in life, require some leap of faith. The perfect data and the perfect conditions are never there. But at the same time there should be some analytical basis to them as well. There must be some expectations of a payoff for the government that will make it worth all the trouble that the people of India have been be put through.”

But one needs to gt hold of some numbers to judge the the demonetization exercise as a success failure or somewhere in between. Of the Rs 14 lakh crore worth of Rs 1,000 and Rs 500 notes declared illegal tender on the midnight of 8 November, Rs 11.55 lakh crore has found its way into bank deposits per statement put out by RBI . So it’s a fair guess that the major part of the remainder will also com into the system meaning that , the cash that will stay out may well be under Rs 2 lakh crore, which the Reserve Bank of India (RBI) can write off from its liabilities and hand over as dividend to the government. We only know this for sure after December 30. Also the time taken to push in new notes will take at least 4 more months (read more here). Hence in this case , we might well call the demonetization a failure owing to troubles created for common man.

Another argument made by supporters is the possibility of bank rates being reduced due to banks being flush with cash from this crisis. But, this may not be the case as rates affect not only the borrowers, but the savers as well . A crash in deposit rates will hurt senior citizens the most, as they rely on fixed interest instruments for their earnings. A crash in FDs also means people have to save more to earn the same return and this might not be what the government wants, due to lack of consumer spending accentuated by the crisis. Another dilemma rising from lower rates is the urge to lend without due diligence. With PSU banks reeling under bad loans , do we want another round of bad loans saddling the system? To be sure bankers have learnt the hard way seeing net worth of the banks sink and seeing the prospect that HDFC is of more value than entire PSU banks put together (ex-SBI). Banks will do well to take the treasury gains (due to fall in bond prices) instead of risking more bad loans by low due diligence

The biggest winners after demonetisation are e-wallets and electronic transactions. From card companies to mobile banking to e-wallets, everyone is reporting a surge in volumes. This part of the move towards a cashless society is already a success, but long-term success means there should be no reversal to the mean or a slide back towards cash once the situation eases. Psychology is key here. This writer assumes the cash shortage which is, at this moment natural due to lack of currency, may become artificial beyond 1st quarter of 2017. This is because the chances people will revert to cash once the circulation limps back to normal. Anecdotally this can be seen as small shopkeepers and vendors are again asking for cash as more notes are available. The fact that e-wallets aren’t that much popular with many in the lower income group doesn’t help the cause either.  The crisis would have been wasted if digital and non-cash payments are not speeded up. Organised sector wage payments should be shifted to cheque and electronic transfers, and the first priority must be to minimize cash in urban transactions, starting with the metros, going to the smaller cities, etc. It is only the rural sector that needs more leeway with cash, and not urban centers. One would also wager that the government , in order to push use of e-money, will keep the notes in circulation to a level just necessary to keep the wheels of the system running. To be sure , e-money has also its shortfalls like poor security and need for internet connection which , beyond urban areas is still a dream.

As R Jagganathan writes in his piece, “..another yardstick to measure success is the extent of GDP fall, and how soon the revival happens. A 0.5 per cent fall in GDP growth rate in 2016-17 is par for the course, but anything above that will be costly, as a 1 per cent fall means a Rs 1.5 lakh crore drop in output. But this measure will not be known for at least a year, as we also must calculate if there is a sharper rebound after April 2017, which will make up for the losses in the last two quarters of 2016-17”

One should also remember that despite privatization and new age banking, the rent-seeking behavior in the banking sector hasn’t really gone away. In fact the rot has only been exposed in open by reports of bank managers arrested for “managing ” exchange of new notes for old tender, back door operations by money launderers to push ill-gotten wealth into Jan-Dhan accounts, and the biggest scam of co-operative banks in Maharashtra used to as a conduit to turn black money into white. Such dark misdeeds bring into question the efficiency and utility of the government’s own machinery and the governments needs to be fleet footed in such cases. It  also needs to walk a thin line between law enforcement and tax terror.

The demonetization has to be complemented with tax reforms, law enforcement, and pushing of digital money on a war footing. Just focusing on one will lead to a lop sided result.

Five things to learn from the Trump-Clinton Debate

Today, Donald Trump stormed back into the presidential debate, and his motto was attack from the get go. Injured from the first debate, when Clinton came up trumps ( no pun intended), Trump had to let it rip , which he did. Both presidential candidates traded blows on each other from, Clinton raising the sex audio tapes to Trump raking her husband’s sexual philandering in the past . The debate was as aggressive in tenor and tone as one would have expected. But beyond the noise and hype one should take note of the following points that has shaped the presidential race this time around.

Trump is back and Clinton is defensive: Trump was seen mostly on the attack and many times Clinton had to admit that she couldn’t raise issues during the debate because of the mud being flung on her by Trump. Trump clobbered her with her personal scandal of deleting classified emails after a subpoena from the USA congress. All the democrat candidate had to reply was a defensive apology. Trump also took full advantage of the fact that Clinton represented incumbent government and spared no efforts in tearing into the government for legacy issues like medical insurance and her policy decisions in Syria. She was also castigated for the Iran nuclear deal in which USA promised aid worth 150 billion dollars and and a sizable component in cash for a recalcitrant Iran’s co-operation.Clinton already on the defensive, could only raise a 2005 tape where Trump made some misogynistic comments, for which he too apologized. In the end the deciding third debate will be held in Las Vegas on October,19.

America is still divided : Never has America been polarized on racial lines as has been the case in these polls. On one side we have Clinton  who espouses, old school administration attitude which sidelines white males, favors blacks (justifiably), and has a clandestinely soft attitude towards minorities like Muslims and Hispanics. On the other side we have Trump, who wants to revive the traditional white votebank, using jobs and a healthy smattering of Islamophobia, one which America steadfastly denies.It’s not very easy to unite the American masses, barring a blowout event like war or a depression. As R Jagganathan writes in his piece, “From the Tea Party to born-agains and neocons at the extreme Right of the Republican party to the Bernie Sanders-led Left of the Democratic party, American ideology is once again splintering. This time it is going beyond the normal Left-Right, Conservative-Liberal divisions of the past. The rise of Trump, who has drawn some votes both from the Left and Right, is an indication that even the two national parties are not able to bridge the gulf between different Americas. America is splintering beyond Red and Blue too”

Parallels between 2016-USA AND 2014-India:  One can’t help but notice uncanny similarities between USA presidential campaign of 2016 to India’s general elections held in 2014. One, we have on one side the ultimate insider in Clinton against the disrupter in Trump. This compares rather well with our case where Congress battled Modi Led BJP for leadership in the lower house of the parliament Two, Clinton wants to remain politically correct , wooing one section of the voters and ostensibly ignoring the old white bastion, and hence a reverse polarization is very much on the cards against her . This again is similar to the consolidation of the Hindu vote, also seen as a blowback against belligerent crony minoritarianism practiced by the Congress against the Hindu majority. Three, the incumbents have not exactly covered themselves in glory over handling of the economy and foreign policy decisions. This was one of the main reasons why people were simply fed up of a decade of alleged misrule and voted Modi in. Fourth, Clinton is the ultimate insider (being the wife of EX-USA President Bill Clinton) and the allegation of corruption will remain for the time to come. No amount of slick talking will make people realize that she would be different from her husband Bill. This is how Indians rejected Gandhis outright, relegating them to a mere 44 seats in parliament.

Media role in the polls: Media is always a player in any high power elections. This is no different this time around. A huge section of American media has been busy painting Trump as the devil incarnate. From raking past recordings and videos exposing his true predilections, it’s fairly obvious that the media has been relatively Trump-phobic than it is towards Clinton. It tends to catch Trump for the slightest of missteps and tends to whitewash democrat sins. What’s kosher on one side is untouchable  on the other . One cannot help but draw parallels to what the media did on their organized witch hunt against Modi at the height of poll fever in India.

Political correctness in the dustbin:  Finally this election has seen the shedding of political correctness in the run up to the presidential poll. No longer do we have, democrats preaching esoteric democratic values like liberty , equality and free speech, but see them openly pandering to various pressure groups in the polity.  We also do not have republicans preaching only right-wing economics on the fly, but have them expose America’s dirty little secrets of racism, anti- multiculturalism and amplify the FOMO (fear of missing out) among the white populace. The mud-slinging was clear during the debate when little policy was discussed , but candidates left no stone un-turned in washing each other’s dirty laundry in public. It’s as raucous of a campaign as it can get and its bound to get nastier.  Trump easily gives an opportunity to masses to vent their spleen against factors like  falling birth-rates among Whites, globalization, eroding work ethic, high indebtedness and a growing multiculturalism. As per this article in Swarajya,  “….this shows is that Americans are substantially bigoted, and possibly even more so than some Islamic countries. And the reason why Americans are unhappy with Trump may not be that he is bigoted, but that his bigotry is now showing up the underlying bigotry of many Americans that they were earlier able to conceal under layers of sophisticated language and political correctness. If the world’s most powerful country has 25 percent holding illiberal views that border on bigotry, we know that prejudice and racism are alive and kicking in the US of A.”

So the world’s oldest democracy has to devise new ways to hide its racist underbelly. It would be foolish to believe otherwise.

Why chance events shape our luck and our fate and why it’s better to accept it.

What’s the secret sauce of success? It’s a painful question to answer especially when people don’t want to listen and have their own predilections over what constitutes true success and also difficult to gulp when one’s going through a rough patch.

We’ve been through the routine too many times, our parents lamely suggesting hard-work is the source of success. We have peer pressure to do somethings or attend a course , just because everyone does it we follow the same. Then when some do succeed in the venture, we feel let down.

As Malcolm Gladwell point out in his book Outliers, ” We pretend that success is exclusively a matter of individual merit. But there ‘s nothing in any of the histories we’ve looked at so far to suggest things are that simple. These are stories, instead, about people who were given a special opportunity to work really hard and seized it, and who happened to come of age at a time when that extraordinary effort was rewarded by the rest of society. Their success was not just of their own making. It was a product of the world in which they grew up.”

In his book he points out several instances of talent being supported by extraordinary events of opportunity. There’s a certain luck or chance factor involved in any outcome one takes. To divorce randomness from these events would be tantamount intellectual dishonesty.  But humans like to be seen as rational even if they assign reasons for an event to be irrationally rational. The basic human tendency is to give credit to one’s talent for all the success achieved and not factoring luck in the sequence of events leading to the outcome. On the other hand, people are quick to blame bad luck for any events going against the tide and causing failure.

Let’s take the example of Robert de Nero, and how luck played an important role in his appearance in Francis Ford Coppola’s magnum opus , the Godfather.As Robert H Frank writes in Success and Luck-Good Fortune and the Myth of Meritocracy: ‘Studio executives…wanted to cast Robert Redford, Warren Beatty, or Ryan O’Neal to play Michael Corleone in Francis Ford Coppola’s film adaptation of Mario Puzo’s The Godfather. Coppola, however, wanted an unknown actor, someone who actually looked like a Sicilian.’

Writes Frank, “In Puzo’s novel, Vito Corleone was the central character. But Vito’s youngest son Michael is clearly the protagonist in Coppola’s adaptation. Pacino, who had previously appeared in only two minor films, thus landed what turned out be the most important role in what many critics have called the best film ever made. Those who believe that talent and hard work inevitably triumph might argue that because Pacino was relatively young at the time, his skills would have eventually made him successful even if he hadn’t landed the Michael Corleone role. But there are many thousands of highly talented actors who just never get the right opportunity to demonstrate their skill.”

What’s never discussed or admitted that people were indeed lucky. As Frank writes: “It is almost easy to create a narrative after the fact that portrays such outcomes as having been inevitable. Yet every event is the outcome off a complex interwoven sequence of steps, each of which depends on those preceding it. If any of those earlier steps had been different, the entire trajectory would almost surely be different, too.”

That’s the point. If just few standard qualities were enough like hard work and intelligence were enough we wouldn’t have hordes of people on unemployment exchanges nor would we have failed entrepreneurs. It’s a very important fact to understand that being at the right place at the right time and that circumstances also need to be conducive for success to be achieved. Coming to Indian e-commerce  story, we all must have heard about FlipKart and Snapdeal as stalwarts in e-commerce segment. But before them we had indiaplaza which was the first mover in this space and later lost its way and was shuttered down due to adverse circumstances.

As per this LiveMint story, “It is not so much the past as the present that bothers him. Where he is all by himself, doing whatever little he can because no one finds value in what he did at Indiaplaza. Because he is a failure. “It is a big problem,” Vaitheeswaran says. “I don’t think entrepreneurs ever fail. I think companies fail. We have to differentiate. India lacks that culture. Here, the entrepreneurs are closely associated as the face of their company, that the company’s success or failure is the success or failure of the entrepreneur. Entrepreneurs always succeed because the experience of founding a company, growing it to a certain stage, building products, technologies, building processes, getting your first customer, raising funds, building a brand… that’s skill, right? Those experiences are invaluable. If I was in Silicon Valley and something like this had happened, I would be overwhelmed by people looking to hire me. This is an important culture that’s lacking in India. Nine out of 10 companies fail, which means more start-ups close than succeed. Are all these people failing? Of course not, they are all succeeding.”

What India plaza encountered was impatience of investors who wanted quick return on their capital invested. This may be due to risk avoidance after the Lehman crisis. If investors in snapdeal and flipkart were to exhibit such capriciousness in their investment, we would have seen them being hauled over the coals for a cash-burn model. Sheer circumstances cause companies to flourish and some to shut shop.

Long story short, the examples can go on and on. It’s better we accept that there are extraordinary opportunities at work causing success apart from intelligence, diligence and business sense. Only then the picture will become clear.

 

 

 

 

Uber/Ola vs Kaali Peelis: Why this should matter to us

A lot of froth has been generated by way of strikes planned by Mumbai taximen union over the operations (allegedly illegal)of taxi aggregators, Ola and Uber. These strikes affect the maximum city very much, as the city typically relies on taxis (autos as well) , for their last mile connectivity to their offices, trains stations and bus stops. The basic demand of the taxi unions is to bring Ola/Uber under the garb of state regulations.

Aggregators basically work as ride connectors, they match riders and drivers. The fares are typically based on per km basis and distances determined by GPS locations, which nowadays are very accurate. This has made booking a cab a breeze and become very popular with consumers. The deal is sweetened by huge subsidies given by these operators to grab market share and log more rides on their system.  This has led to an erosion of revenues of the licensed taxi-operators, and also includes radio-taxi operators like Meru, Tab-cab, Easy cab etc.

This is the reason why the taxi unions are opposed to Uber/Ola.Since the consumers have more choice, they have moved en-masse to the newer age operators , thus ditching poor quality services of the incumbent service providers.They also oppose the concept of surge pricing which they themselves are accused of imposing on wary customers when they alight from railway stations, bus stops, airports etc.

As Raghuram Rajan and Luigi Zingales in their book Saving Capitalism from the Capitalists write “Those in power-the incumbents-prefer to stay in power. They feel threatened by the free markets.”

They further write, “The identity of the most dangerous incumbents depends on the country and the time period, but the part has been played at various times by the landed aristocracy, the owners and managers of large corporations, their financiers, and organised labour“(Bold emphasis mine)

In this case the incumbents (taxi unions) are clearly rattled by the shakedown in their bread butter markets, now want to slam these newbies by the stick of protectionist and monopolist laws designed to keep the market lop-sided and anti-consumer.

To be sure, there is some merit their objections. This is because in the absence of any specific laws governing, ride aggregators, companies like Ola and Uber,  operate by using taxis under the All India Permit (AIP). How this works is Uber/Ola just hire AIP taxis for ferrying customers from point to point. This was brilliant as this move prevents them (ride aggregators) from being under the purview of the archaic motor vehicles act.

Some state governments , buckling under the pressure from unionized taxi cartels (I’ll call then cartels, because they behave as such), have legislated laws to encircle such disruptors. For example in Karnataka,  the state RTO, has made some rules mandatory to be followed like installation of GPS, giving physical prints of bills and having a complaint registers, which is a bit strange as rides are tracked by both the rider’s well as drivers’ cellular phone and feedback mechanism is in-built into these apps already. As per news reports, Ola has been issued a license under the new guidelines in Bengaluru. But Maharashtra is planning to bring in legislation that basically fixes the fare charged by all taxis. This is the most insidious part of legislation , that handcuffs taxi operators into charging very high fixed fares, thus defeating the very purpose of affordability of semi-private modes of transport.

Ola and Uber essentially subsidize the drivers as well as consumers in order to grab market share. This meant offering lower than legislated fares. It’s this what has infuriated the cartels in metros. Using aggregators necessarily means using GPS guided trips and transparent fares, something the other side is loath to.

But while the cartels cozy up to the state governments, why isn’t the consumers voice heard? It’s because consumers aren’t enough of a vote bank and aren’t unionized as these cartels are. Just alight any of the major railway stations, and one is almost assaulted by rogue taxi drivers and makes the travel particularly frustrating. They always ask for inflated fares and often grease the palms of the railway cops so that they look the other way. Meanwhile the fleecing continues. The sight is most sordid at night where this hounding exacerbates and they almost drag you to their vehicles. For women and aged citizens, it’s a hellish experience.

The system is basically rigged in favor of the cartels. In Delhi, to where I frequently travel to by train, policemen are actually waiting at the entrance to stop and fine Ola/Uber cabs. This makes them reluctant to  take rides there (drivers don’t refuse rides as much now, but harassment remains unabated). Unlike cartel cabs/autos, private cabs are forced to park far away from the station and equally frustrates drivers and riders alike. In Mumbai, the loot goes one step further, even radio cabs , which hold state government licenses, are prevented to enter the station premises forcing people to just pay these rogue taxis their pretty penny or walk a kilometers dragging luggage to their waiting rides.

One might figure that it’s better to use prepaid taxis for rides as there is no wrangling involved for fares afterwards. But prepaid taxis stand for prepaid robbery. Once for a distance of 10 km from airport to home, I ended up paying close to 500/-. All because I took the prepaid taxi.

So much for convenience and safety.

Our airports fare no better, the prepaid taxis charge amazingly opaque fares, for lousy taxis which are more fit for the scrap yard. True one can hire a Meru or any radio taxi, but the funny part is the bill they generate is so bad, the customer can’t understand how the fare was calculated in the first place. Delhi flexes its protectionist muscles by charging ₹150/- just to enter the terminal premises ( this is for T3 terminal at IGI airport, not sure about the one at Mumbai,though). This is known as leveling the playing field.

One needs to understand the situation in Delhi is equally dire. This is because the city doesn’t have efficient taxis like Mumbai does, nor do they follow meters ever as is the case with the maximum city. Clearly the policy decisions need to involve more consumer activists as end-user pays for the service in the end.

Let’s make things clear, Uber/Ola make our lives very easy by making commute bearable and easy on the pocket. In fact, in some cases it’s cheaper to ride them than own a car (read more here)

Governments need to balance the need to regulate new age industries as well avoid stifling by giving into protectionist tendencies. This will pave the way how India commutes