The Economics of Household Labor and Pay Differences between Sexes

The Economist recently published a summary of recent study on division of household labor which reinforces a lot of what we already know.  The previous studies that it references are worth mentioning, and some of the other conclusions that it draws are probably new. Even in a developed country like America, women spend three times the time doing housework on an average day as men. The traditional economic explanation of this has been that since an average American woman earns 20% less than a man, the family earnings would be maximized if the lesser paid partner did the unpaid work at home.  There is some evidence to support this hypothesis. Women who earn more do less work at home. The recent study, however, has found alternate explanations for division of labor. It suggests that how much housework an average man does is proportional to how much he likes to do it.  For a man the time he spends on housework is not correlated to how his income compares to the average. For a woman unfortunately, her preferences play no role in the time she spends on household work.

On the question of the pay gap, you always wonder whether it is the cause or the effect. Do women do more housework because they earn less or do they earn less because spend more time and effort in managing the house (and consequently less time on activities that build value). That an equally educated woman earns less over her lifetime than a man is a reality true even for those with the best qualifications, and part of the explanation is logical. A women takes more breaks from her career, whether to support her spouse or to raise children. In fact, way back in 2005, I came across a study of female graduates of Harvard which found that as many as 40% of them took time off at some point in their lives. The post is here.

In 2009, New York Times reported a study done by Payscale. It found that adjusted for the type of jobs taken up by a female, industry, type of company and other factors, at least for jobs earnings less than $100,000 an year, the 20% pay gap between men and women disappeared. So the difference can be explained by career choices than discrimination, except at higher salaries.

This has always been an area of interest and the relevant sources are documented below. I have always believed that - if you control for other factors - how gender roles were played and household labor was split between parents is significant determinant of how much responsibility a man takes at home. One day, hopefully, I will find a study that explores that.

References:
1) 2012: The economist article, “The ironing lady”, is here.
2) 2012: The Research Paper, “The Role of Preferences and Opportunity Costs in Determining the Time Allocated to Housework”, is here.
3) 2009: The New York Times article, “Women Earn Less than Men, Especially at the Top,” is here.
4) 2004: My own post, “Work, Family, Personal Life: Why Not All Three,” about the conference and study at HBS is here.

Every great man has a secret .. and it's not a good one

We often idolize men who are successful and ascribe to them greatness which is a heavy burden. It is in this light that the rest of this piece needs to be read. My point, which I give three examples for, is that we are all human. If one avoids the baggage of expectations, it is easier to accept people without the need to be blinded by their greatness.

In his book on the life of Socrates, Paul Johnson, the historian, writes about Socrates' average looks and pleasant demeanor. Socrates is very well respected today for his contribution to ethics. Paul writes that all great men (and women) are difficult to live with. Something only their spouses know. Socrates never wrote anything himself and most writings from the period focus on the Greece while Plato focuses on his ideas and philosophy (or rather Plato’s interpretation of Socrates' ideas), so we will probably never find out for sure.

John F. Kennedy, the president whom America loves, had an affair with a nineteen year old intern. Saw the interview of the lady yesterday during a news magazine. The interviewer used pretty strong words to describe the relationship between a forty-five year old man in the position of power and a nineteen (how young that is ?) year old girl.

I am a great fan of Apple’s products. I use some religiously. Having said that and having eulogized the man who wanted to make – and actually made - a dent in the universe, elaboration is needed.

Steve Jobs, at one point in time, was not so favorably thought of by the FBI who had a file that recorded his drug use. Jobs' brash and unlikeable nature – especially in his early years – is well recorded in books. But this comment is sterner.

Several individuals questioned Mr. Jobs’s honesty stating that Mr. Jobs will twist the truth and distort reality in order to achieve his goals.  

Of course when you become Steve Jobs, your personal brand turns weaknesses into strengths and terms such as “reality distortion field” are coined. Other mentions in the FBI report – such as the fact that at least in the early part of his life Steve neglected his daughter and his girl friend - are corroborated in his recent biography.

I have great respect for Jobs, Socrates and Kennedy. But the gist of the story is that none of us is infallible.  We try but we are all human.  If someone appears faultless to you, it only means one thing, you don’t know them yet. On the other hand one of the first signs of knowing someone well is that you think almost everything about that person needs to be improved.

The article on Steve Jobs is here. Paul Johnson's book is called Socrates: A man for our times and is what I am reading right now .The then nineteen year old intern is now seventy eight and has written her story in a book.

Happiness : Do you earn to live or live to earn ?

The age old question! How important is money in our lives ? This what the recent coverage of the Facebook IPO reminded me of. A lot has been said about the IPO - the possible price per share (from ~$27 to $31) , the money various people will make from the founder, to the employees to their financial adviser - and how it compares with the other technology stocks.

A commentator on Bloomberg mentioned that Zuckerberg has never taken money out Facebook unlike the executives of few other technology companies that recently came up with IPOs. As you read the text of the Zuckerberg's letter to his investors you can't miss the fact that he believes in what he is doing. The letter is in part an attempt to build an ethos among the people associated with Facebook. 

Though there are a lot of ideas, the following few caught my attention:

...Simply put: we don’t build services to make money; we make money to build better services. 

... These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.

Since the man is worth billions, you need to put his statements in context before you start renouncing the too much (or the too little) that you have. I agree that money is important because in a social setting or a relationship it often becomes a proxy for power and authority. I have a friend who insisted on paying (though we always split the check and paid him back) whenever we went out because he believed it gave him the power whenever there was decision to be made, even if was simply about where to go.

But the undeniable fact is that money is the means not the end, and the two are different. In the end Zuckerberg knows what is most important for Facebook because it is most important for all of us.
  

There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future. 

 ...it starts small — with the relationship between two people.

 Personal relationships are the fundamental unit of our society. Relationships are how we discover new ideas, understand our world and ultimately derive long-term happiness.

While I write this I am reminded of a conversation I had with a friend. I was at a crossroad unable to decide. She helped me think rationally with the simple question, " What would make you happy ?"  I am grateful for the people who enrich my life. I realize that they are the end in my life, and not the means and the distinction is critical.

But there is more worth reading in the letter. The full text is here.

The Anatomy of Loneliness

I often try to analyze human behavior and its underlying causes. Had things turned out differently I would have been a psychology professional. Since I am not, I try to train my amateur psychologist brain in other ways. My recent readings include studies on Loneliness. Research from University of Cornell (on a side note if you see their way of putting it, you would be mistaken for assuming psychology is all math) and Chicago finds that homo sapiens, in spite of our claims to be rugged individualists, have evolved so as to be successful in social setups. Our brains have developed to meet the demands of social living – language, relationships, coordination, and social hierarchies. Our defenses – teeth, claws (or lack of them) are insufficient against most predators. 

In this context loneliness – previously described using terms such as depression, shyness or low social skills - is concluded to be ‘perceived’ or subjective (versus objective) social isolation. For example, one possible reason can be when an early childhood attachment disappears. Even though you may still have other friends, the perceived loss is hard to fill. Another possible scenario could be the feeling that you won’t fit in a group of people at a party or social event. Even worse is threat that you won’t fit in your community or family because you don’t abide by the norm. Human brain is wired to integrate with society and actual or perceived threats to that integration cause it to be stressed.

In fact the study claims that loneliness (or perceived social isolation) drives behaviors and feelings such as low social support, shyness, poor social skills, anger, anxiety, lower self esteem and bad mood.

What I like about psychology (and research such as this) is that it helps us understand our feelings and behaviors. Knowing this if you (or I) are feeling ‘subjective social isolation’ – I mean feeling lonely or a misfit – the solution is not to press the panic button or shut out the world, but to seek social support. After all, only fifty percent of loneliness is hereditary in nature, so the other fifty percent (which I count as significant) is in your control. You might also want to reconsider how important it is for you to fit in.

Warren Buffett's philanthropic pledge

Was reading Warren Buffett's philanthropic pledge in the latest Fortune and the following passage stood out.

My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. I've worked in an economy that rewards someone who saves the life of others on the battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into billions. In short, fate's distribution of long straws is wildly capricious.

Yes, I know it is great that Buffett and The Gates (Bill and Miranda) are asking wealthy Americans to pledge 50% of their wealth to charity. But for me, it is grave unfairness of the haunting truth of the above statement that needs attention. This, if anything, is what I hope to leave with you today.

Dealing with failures

Disappointments and failures – both professional and personal – are a part of anyone's life. How you deal with them shapes your life and that of others around you. People handle disappointments in a many ways ranging from inability to control their emotions with behavior such as stomping feet, shouting and throwing tantrums, to complete denial and building a shell around them so that failures can't be discussed. Both these extremes make life difficult – at work and home. This post analyses the consequences of your response to failures on your career. Response to failures can basically be of four kind

1. Aggressive - Lack of Self-Control, Shouting, Threats.
   
2. Sophisticated and shrewd blame game, Successfully putting the responsibility on co-workers, procedures etc
   
3. Remedial/Corrective – Finding where mistakes occurred and redoing things, correctly
   
4. Innovation & Abandon – Trying a completely new approach
   

I don't consider the silly blame game as a response. You come out looking even more idiotic and unconvincing. A particular response may have a very different consequence for you depending on your career level. For example, you can get away with option a if you are senior enough though it is highly likely that you have destroyed your team's morale. The table below captures the impact of these behaviors on your careers. I think most of behave in a certain way in a crisis because it has got to do with we are than what the issue is. Cognizance of our own behavior pattern is the first step in modifying it to something more appropriate.

Behavior/ Career Level		Aggressive			Blame-game	Remedial/Corrective	Innovative
Junior		Highly detrimental. Can even have immediate negative consequences.			Can be successful if well used. The key word here is sparingly, only when desperately needed. You can't afford to have a reputation for blaming.	Highly suited for repetitive jobs such as achieving the monthly sales targets	Mostly not welcome except for creative / non-repetitive jobs. Example – finding a new target segment. People want to know you can effectively follow directions and established norms.
Mid-Senior		Easier to get by than at junior level.			Not recommended. At this level people are looking at you to take responsibility.	Required as a part of managing others doing repetitive jobs	Needed. Welcomed more than at junior level. Be careful that innovation is not turning into escapism.
Executive		Though it appears that you can get by, there are huge disadvantages to behaving like this. It shows you not in control of a situation & can cause people to lose faith in your leadership			Since you have authority over & are responsible for everything, highly undesirable and ineffective	Needed. Shows that you are in control, and you can lead and teach	Required. Unless you have a different innovative idea for executing the company's vision, your subordinates won't have faith in your leadership.

 

We don't become different people in office. Most of us behave similarly in our personal life too, leading to same consequences. This understanding can help you & I become a better person.

Book Review : The Trillion Dollar Meltdown

I just finished Charles Morris's The Trillion Dollar Meltdown which was published in January 2008. Since the book is based on an area of professional interest, I think it deserves a detailed review and not just an update.

Morris' book was one of the first texts on financial crisis to come to the market. In less than 200 pages the book covers a huge breadth of topics. Starting from the precedents and history of the recessions during the Lyndon & Reagan presidencies, it goes on to talk about the previous market crashes caused by portfolio insurance & the failure of Long Term Capital Management. He describes the current crisis starting of course from the usual CDO's and derivatives, predatory lending practices including the NINJNA (No Income, No Job, No Asset) loans, the cascading effects of high leverage at hedge funds and other financial institutions and the roles of  the raters, insurers and government bond market. He reconfirms my view that loose monetary policy at the time of Alan Greenspan was one of the leading causes of the crises. (Read my previous post here). Morris strongly approves Paul Volker's handling of the problem in 80's. But what really impressed me about the book is that it covers to the global distribution of money, trade deficits &surpluses and also reserves in countries like China, Russia & in the middle-east. By including the power of sovereign wealth fund of these countries and the recent academic debate about China's savings rate & currency valuations, the authors covers the issue from both domestic & international angles. Any review of the book must take into account that Morris was forecasting the future & not analyzing events.

But there are some drawbacks of packing too much into so few pages and shipping the first book and at some places it misses depth. But for a bird's eye of how thing went wrong and where, The Trillion Dollar Meltdown is great book. In fact I definitely recommend it for any bookshelf. Coming from the other side of the table, Morris sees huge limitations of free markets in cleaning up the current mess. According to him the only immediate option America had was to deleverage (and hopefully in an orderly fashion or things would turn really bad). With the benefit of hindsight, here is a passage from the book

The recent woes of the dollar are important for our story because they effectively take the Fed off the board. As credit crunch works its way through banks and investment funds over the next year or so, there will be no soothing fountains of new dollars coming out of Washington. The days of a universal put to the Federal Reserve are finally over.

Clearly even the best of people did not anticipate how many dollars the Federal Reserve and the government would be willing to print. Here are author's views about the $800 TARP in an interview in October 2008.

Book Update: Right now am reading 'The World is Flat' and 'Eat, Love Pray'.

The Wharton India Economic Forum: Healthcare (India versus US)

On Saturday, March 27, 2010 I attended the 14th Wharton India Economic Forum. So I believe the event started in 1996 marking five years of liberalization of Indian economy. There was an impressive list of speakers. You had people from Private Equity, Information and Technology, Social Sector, Healthcare, and Education and Training. There also was panel of woman leaders talking about issues of glass ceiling at workplace.



In the morning, I attended the healthcare panel. I found the Sangita Reddy, (Director, Apollo Hospitals) had the most memorable insights. She pointed out the efficiency of health care services in India by comparing the back office & administrative costs in the two countries; 7 percent in India versus 25 percent in US. I am impressed that India has basically managed to keep the cost of a by-pass surgery stable for 27 years despite the high rate of inflation. She underscored her point by mentioning that Indian doctors were more willing to do a 'Beating Heart Surgery', a very complicated procedure that saves costs and has a greater probability of recovery. Apparently, 97 percent of heart surgeries are beating heart in India versus less than 10 percent in the US. You would think that a country as technologically advanced as the US would have adopted an advanced technique. This underscores the discussions about healthcare that I have with my friends, some of them healthcare professionals. They insist that in India doctors are more efficient and more willing to actually 'treat you'. My take on this has always been that a society with such a high instance of law-suits and 'do no harm' principle causes doctors to cover their backs first with multiple tests, before initiating any treatment. The inefficiency in the system is greater because the payment is made by a third party. Since the money appears to go from the insurance company's pocket, neither doctors nor patients are concerned about efficiency. Remember, your insurance premium is actually a 'sunk cost', money that you have spent anyway.



Bhargav Das Gupta, CEO and MD, ICICI Lombard talked about the new products to finance healthcare in India, especially for really poor people. The low penetration on insurance (less than 5%) is an opportunity for insurers, but the low awareness a huge challenge. Only yesterday I was reading how Indians do not care much about health insurance. There was the perennial subject of drugs patents and generics and branded drugs, and the long winded process to discovery of new drugs. What really stayed on with me was an interesting tit bit about ingenious water filters. Homi Khusrokhan, Advisor to Tata Healthcare explained how the Tata's successfully developed an extremely cheap water filter that removes 99.7% bacteria from water using burnt rice husk and nano silver, without power. On a personal note, I really liked Khusrokhan, the man had a wealth of experience with a really humble Lucknowi demeanor. The composition of the panel was extremely impressive. The organizers had ensured that there were representatives from delivery (Apollo), pharmaceutical (GSK and Excel life sciences) and the payers (Tata Healthcare, ICICI Lombard and GSK Venture), ensuring that all aspects of this complex issue are covered. I hope to write about other panels and speakers in my later posts. In the meantime you can have a look at the complete list of speakers & panel members here

Books Update: I am back to fiction for the time being. Finished 'Memoirs of Geisha' sometime back. Loved the portrayal and discovered few unknown aspects of the traditional Japanese culture

Canadian Impressions: February 2010

Recently, I was in Canada for a few days. It was my first visit ever to the country, and left me desiring for more. Canada may not appear foreign if you are an American, because you don't need a visa to travel there. But I did find Canada to be very different from USA. And, since I am comparing apples to apples - Toronto to New York - I think my impressions are representative. First, the Canadian winters. The average daytime temperatures are about 10 degrees lesser than those in the New York east coast area.

I landed there pretty early in the morning on a Sunday, 7 am, hoping to make the most of day (and also for some reasons beyond my control). We later walked the streets of Downtown Toronto scouting for breakfast. We moved from shop to shop looking at the operating hours. None of them would open before 10 am. By 9:30 am some Starbucks opened up. Though I was grateful, if you have been up since 3 o'clock in the morning, you want food by 9 am, not just a coffee with a snack. Lesson number one - Canadians are in no hurry to open their shops on a Sunday. Be prepared to wait till 10:30 am if you want a proper sit down breakfast. There weren't too many (rather any, when we started) people at the Younge Street - believed to longest in the world - even in the downtown area. Finally by midday few people started venturing out.

In a few hours you understand the reasons for the Canadian way of life. It was freezing. Further movement was subject to a hat and a pair of warm gloves. We finally gave up and had a juice and a pretty average Thai soup. The only thing great out the soup was the potion. I closed my day with a very early dinner. The biggest reason, almost all dining places closed by 6 pm. I returned back to the hotel by 6 pm to sleep for a good 14 hours. What better lesson in hibernation can you ever get.

Armed with the lessons of day 1, we begin day 2 in a relaxed Canadian way. Monday is the first day of the week and I noticed is the laid back and balanced Canadian life versus New York. The operating hours of a bank branch that I visited- 9:30 am to 4:30 in the evening. Compare it to 6:00 pm for a similar institution in New York. Or Indian public sector institutions, which work from 9:30 am to 5:30 pm. ICICI Bank, a private bank I was closely associated with as a part of my job in India, has its branches open from 8:30 am to 7 pm. Indian public sector banks which used to have their customer service hours from 9:30 am to 2:00 pm, have extended them as computerization has reduced the amount of manual work involved. However, the merit of timings become apparent after 5 pm when the winds become really chilly. You feel a strong desire to not go out unless you really have to. But a lot of eating and drinking places are open late on weekdays. I mean late by Canadian definition – 11 pm. We adapted to style of Canadian commerce and skipped our breakfast for an early lunch instead.

The rest of our stay passed nicely. Though we saw all around the Downtown, the Financial and the Theater districts, I decided against venturing too far out. I also tried this great place that serves vegetarian cuisine from around the world. We also met an old friend Karan, who is now settled in Toronto. Few other takeaways from the visit, Toronto isn't full of Indians as a lot of us think. I spotted fewer Indians than I usually do walking in Jersey and New York. Karan insists that it is the most cosmopolitan city in the world though I disagree. I believe the place has far fewer people of Asian – Chinese, Korean, and Japanese – origin too. The population is largely Caucasian White. I didn't visit the Greek, Chinese or Indian settlements around the city. But it does have food from all over the world, lots of Thai places, tea houses, Chinese restaurants, Sushi places and Pizza outlets. The public transport if good with Subway in the north to south and streets cars (buses or trams if you prefer) that run on rails in the east west direction.

Colder Toronto weather; higher transient population or the tougher corporate life in New York could all be possible explanations. But all of them lead to the conclusion that Toronto is more focused on family and having a relaxed balanced life as compared to New York. (Btw, Toronto is a more expensive city than New York.)

Google vs China: Lessons in good corporate communication

Right when I am in the middle of Googled by Ken Auletta and, fresh after reading how companies in China are improvising, expanding and acquiring to make the country a manufacturing super-hub, comes the Google China standoff. What better time? The first thought that comes to mind about this story is that it is unique. A company versus a government? There maybe a few cases involving Russia and Venezuela but, initiated publicly by the company? None that I can think of. Though a lot of my friends have mentioned that Google has a small share of the search market in China and has nothing to lose, I personally believe that the potential of lost business is huge considering that Google is now also entering the phone business. What is most interesting is how Google has garnered headlines and moral support all around. An example of really great corporate communication. Of course the real ramifications are even bigger if you realize that with the kind of data Google has about each one of us - our inboxes, preferences, blogs, read lists and what not - one wrong step could have been a disaster.

This post on google's blog explains the Google's new approach to China is amazingly well written. David Drummond, company Corporate Development and Chief Legal officer explains that the company faced a security breach and its intellectual property was stolen. That is nothing new for IT companies. They face these kinds of attempts regularly. The next few paragraphs take the story to completely different level. According to the post many other IT companies and inboxes of human rights activists were targeted. Google suddenly seems to be taking a stand on behalf of other companies and also supporting human rights. A security breach is successfully converted into an opportunity for moral high ground. China's bad reputation makes things easier. Grade B+

Secondly, Google takes special care to assure us that no information was hacked except for two accounts to ensure that you and I who use Gmail everyday don't feel unsafe while logging in into our inboxes next time. The company safeguards itself by mentioning that accounts of those supporting human rights activists in China might have been regularly accessed through malware. Yesterday evening when I logged in to my inbox, I also noticed that a red label on the top right hand corner. It explained my mail had reached me via the secure 'https' protocol. Grade B+ with a positive inclination

The last paragraph then establishes Google as reasonable and all for the good cause. No wonder the Wall Street Journal reporter links it with Google's motto of Do No Evil. The company is willing to discuss and negotiate with the Chinese government. It is no longer willing to censor search results at http://www.google.cn/. What could have been a privacy debacle for Google has been converted to a battle in support for privacy and human rights. Grade A.

What do you think about Google's handling of the situation?

Globalization & FDI: The winds of change

I have been interested in the phenomenon of Foreign Direct Investment for a while. Till a few years ago, FDI implied the flow of foreign funds into a developing country. The direction was almost taken to be granted and the thoughts of India investing in Europe or Americas didn't cross my kind. Money flowing into the economy was an important indicator of the country's standing and opinion in foreign markets. An important proxy indicator of the possibilities, untainted by government statements. The last ten years of growth have however bought us to a new ground; winds of FDI now clearly blow in both directions.

There is this interesting editorial in Financial Times that shows how the growth in emerging markets has affected the flow of FDI. The article points out that FDI arising out of BRIC nations, Indonesia and South Africa has risen from a mere $10bn in 2003 to $12bn in 2008. A growth of 1100% percent. I remember a headline from the WSJ marketplace front page section about a Chinese company (Sichuan Tenzhong) bidding for the GM Hummer division. The reporter had used the word 'Unknown' literally in the headline. I searched the first four columns and didn't find the name of the company mentioned anywhere.

Coming back to the FT article, it uses four recent examples from the automobile sector involving mergers and purchases by Chinese and Indian companies. Next important learning most of these FDI transactions are M&A transactions and not Greenfield projects. A comparatively easier route with ready access to talent and technology and also a much faster path to growth giving these companies an immediate foothold. To me it is also an indication of the speed of the changes to come.

For the companies in developed markets this therefore is a time of reckoning. Clearly countries like Indian and China are no longer just places to outsource for cheap manufacturing and talent. They are also potential competitors and partners, presenting a need to engage and keep a tab on. The virtues of the 'next billion customers' in growing populations of China and India has already been extolled enough.
I am reminded of the principle of the state of equilibrium. It might be a useful reminder for those in power both in the developing and emerging economies.

You can access the article written by the Matthew Slaughter, associate dean and professor of management at the Tuck School of Business, Dartmouth here

Book Update: Just finished Dan Brown's The Lost Symbol.

Movie Update: Avatar is in a class of its own. Despite its over the top second half, Three Idiots is thoroughly entertaining. Sherlock Homes is a well shot and acted period drama with an unconvincing Dan Brown style story

Why those who are too big to fail should be charged ? !

There has been ample debate about need for greater regulation of financial firms. Am sure with so many people employed with financial firms and so many other blaming their unemployment on the same firms, there are opinions on both sides. There are two points on which I have a definite thinking. The consumer protection laws and need for such a agency and the second, the subject of this post, that firms who are too big to fail should be asked to comtribute to 150 billion dollar fund.

The second point is a part of the bill being debated in the house to overhaul the regulation of financial sector. I think it makes perfect sense for such a fund and asking firms to contribute to it in relation to their size. The simple logic is this. So far it has been illustrated that too big is actually an insurance against failing. Because by now everyone knows if you are too big and 'interconnected', you will (have to) be bailed out by the government. To big is then actually an insurance in itself, leading to the moral hazard and temptation of, often, indulging in risky business practices. So like any other insurance, it makes sense that a premium be charged for it.

Update [ Jan 6, 2009] - On, a slightly different note, I think its important that I put down the name of the bill. The bill is called, "Wall Street Reform and Consumer Protection Act." No campaign speech that, a really name for a law. Yes, there is a lot in a name. My apologies to Shakespeare. But then he hadn't met the politicians of today

The huge difference in work-cultures

Yesterday, I was at the office of a non-profit I am involved with here in New York. I noticed something that made me think and compare the working styles and, the so called open door policies.


It so happened that a gentleman whom I recognize by face as the Executive Director, the senior-most person in the organization, walked over to a door in the hallway. Standing outside the room he asked, " Would you like to talk to me about that video shoot/press release (or something similar) right now." The lady inside the room mentioned that she was working on another project/assignment at that time. He responded with the equivalent of - Fine, we will do it at a later then. He later strolled over to my work-space, said hello, and inquired if he could ask a question. I must mention that we have never met formally, till today.


I tried my best to recall anything remotely similar to that in my five years of experience in India but couldn't. I have worked in highly unstructured software setups and fast growing private sector insurers and have had some really great bosses. But the notion of hierarchy, and your boss having the final say on your time is embedded in our work culture. I don't think any Indian could have ever responded in the way the lady or the gentleman did. Our culture where age and position imply authority, is partly to blame. The expectation of deference to your superiors' wishes built into Indian nature, is further strengthened by the fierce competition due to India's huge population. As a result most of us fast realize, consciously or sub-consciously, that "Yes Sir" is the safest and often the fastest, route to career growth.


It is pertinent to mention that the non-profit actually serves Asian clients, including South Asians. The question is, if we can do it here, why not back home?

Strategies in a Recession - Proctor & Gamble

Business school cases often consist of how companies adapt their strategies for different times. By that benchmark last one year has provided a life's worth of learning for managers. I have read and observed numerous instances of companies changing strategies to adapt to the consumer's spending habits and changing priorities - the new normal.

Lately, P&G, known for is investment in R&D and known to introduce a new product only when it was 30% better than an existing one, made a significant deviation in response to its falling sales. It introduced 'Tide Basic', a lower cost version of its Tide line of detergent. The product, at least initially, was offered for sale only at value chains. To distinguish it from the regular Tide products, the company has used yellow for packaging.

With rise in the savings rate of American households, while you can debate whether the move to cheaper store brands is due to the recession or has it been happening for a while, there is no doubt over the result. Consumers are moving to cheaper brands. P&G has taken he learning from this to evolve its strategy.

In the word's of the new CEO McDonald it is, "purpose-inspired growth" strategy of touching and improving more consumers' lives in more parts of the world…more completely." According to this HBR interpretation the company now plans to touch more lives with its emerging economy focus and bring on more affordable products. To me that implies that there is another organization that has realized the its growth drivers now lie in emerging markets and it needs to adapt its style ( and its product portfolio for the consumers). Even is the developed markets consumers are becoming extremely sensitive about how they spend and companies have to adapt their product portfolios.

Books Update - Five people you meet in Heaven (Mitch Albom). I am motivated to read the more popular, Tuesdays with Morrie

Predictably Irrational (Dan Ariely)

Credit Bubble in a Slum ?

Far away from the credit boom of USA from 2004 - 2007, both in distance and in time.

A front page article in the Wall Street Journal states that the micro-finance push maybe creating a credit bubble in India. What started as a social initiative, caught the eyes of investors due to higher returns. Micro-finance loans have interest loans to the tune of 24% - 39% and are generally given to women (more than 90%) who are supposed to be better repayers. Apparently the RBI (Reserve Bank of India) does not regulate interest rates in this market except for advising organizations not to charge too high rates.

Today the number of lenders offering micro-finance has jumped almost 400% from 50 in 2004 to more than 200 in 2008. NBFC (Non Banking Financial Companies) have entered the fray. The loaned amount has grown from less than 0.5 million to 2.4 million. As a result, atleast in some towns and villages there are too many lenders are chasing few good borrowers and - funds loaned for starting business are being used to buy TVs or spent on marriages. Apparently in some over-crowded markets - lending practices are lax; it is often difficult for lenders to cross-check with each other or to verify the utlisation of funds. I just hope the stories of Ramanagram are not being repreated across the country.

This is not to the say that the credit needs to Rural India are being met. Rural Indian economy has very few sources of funds and an even lesser understanding of financial products. I know this by virtue spending an year scaling my organization's distribution beyond metros. It will be really unfortunate if poor lending practices deprive the region and the people their chance for development.

The article published on August 13, 2009 written by Ketaki Gokhale is titled - A Global Surge in Tiny Loans Spurs Credit Bubble in a Slum. You can read it at the WSJ website, but a subscription is needed

The Talibanization of Pakistan - II

The concluding part of the the my article at desiclub.com explores the consequences of a talibanised state and the future of the country. Read it here

Lessons from Jim Rogers' life - a gift to us & US

Take a guess as to which country is being mentioned in the following paragraph.

The country X enjoyed a huge bubble in the _____. When it burst in _____, prices collapsed, sending the economy tumbling. Regrettably, the government and the 'central bank of the country X' kept trying to halt the natural, cleansing effects of this recession by propping up many of the companies in trouble. Just as a forest fire serves to clear out deadwood and underbrush so that the forest can renew itself, recessions help to ensure healthy future growth. In 'the country X' , the business that should have been liquidated became "zombie companies" surviving, albeit barely, on government's artificial support. Everything was Band-Aided with quick fixes. While this delayed a decline, it also postponed the country's recovery. A country can actually spend more money trying to stave of a recession than the recession might cost.

You probably think that I am talking about USA. However this is a passage describing 'the lost decade' of Japan by Jim Rogers. Though Jim mentions in passing that America followed the same route in 1970's, he might as well be presaging what may be coming ahead, considering the way the American debt & fiscal deficit has ballooned. To use a cliche, "History repeats itself." As Jim mentions, a country can spend more money trying to avoid a recession than the recession might itself cost. Sounds even more familiar. After all, only last week the Fed chairman Ben Bernanke pointed out that US needs to control is spending & deficits. Of course he did not talk about the fact the balance sheet of the fed itself has been increasing in size as it has been buying just about anything - mortgage backed securities, corporate debt and the T-Bills issued every few days by the US government.

But, lets come back to Jim Rogers, the guy who made enough money to retire at the age of 37. The book in question, " A Gift to My Children - A Father's Lesson for Life and Investing," is packed with knowledge and wisdom. In his own words,
the book is different from his earlier books in the sense that its about the larger lessons distilled from his experiences. Lessons about thinking for yourself, using common sense, learning history, philosophy and languages and making the world a part of your perspective. Lessons, which we all could use. In less than 100 pages Jim packs lessons that can use at all stages of your life and earlier you learn these lessons, the more you can get from them.

As a aside note, according to Jim, 21st century belongs to China. He does not like India and Russia as investment options. So much so that he has moved to Hongkong & is making sure that his two daughters know Mandarin.

Indian winner at Spelling Bee: A story without a happy ending

Last week, in a repeat of last year a child of Indian origin won the Spelling Bee, a contest among American school going children, yet again. Infact of the 11 children who made to the final, 8 were of Asian origin, of which definitely 6 and probably 7 were Indian.

Its easy to be tempted and say Indians or Asians are a smarter race and overlook the logical and more rational conclusion that most Indian & Asian children generally end up working far harder than their counterparts. Read my article Indian winner at Spelling Bee : A story without a happy ending published on a website for South East Asians

The Talibanization of Pakistan-I

Read my take on the past and the present of the Talibanization of Pakistan published here. The next article in this series will explore what future may mean for the country.

Book Update : Gone with the Wind (Margaret Mitchell). I had always wanted to read this one. A wonderfully written love story against the backdrop of the old south, the Civil War and the abolition of slavery. A tale of survival and determination. The perspective is slightly tainted, through the eyes of rich white landlords. Nevertheless, it does capture the pain and hardships war caused in the Southern states of America. Having read it my only regret is why didn't I read it earlier. Imminently inspiring & re-readable over and over again.

Are Sri Lankan Tamilians children of a lesser God Pakistanis?

Maybe they are. Sri Lankan Tamilians are children of a lesser God because their country does not share a border with Afganistan. The discrimination and the quiet are horrifying. UN wants greater aid for Pakistan's refugees where the military offtensive against the Taliban is less than a few week old and it ignores what has been happening in Sri Lanka for months now. Thousands, probably millions of civilians trapped in a narrow belt which the government has been shelling to oust the rebels. The Lankan government has banned international media while an unabated genocide continues. The best UN could do there was to express a sentinent over the high number of civilians killed. As if offering speeches over the matter will solve the problem. Countries like UK and Norway seem to have done better than the UN.

Though I am for humanitarian relief whereever there be a need, why such discrimination against Sri Lankans ? And why are Pakistani refugees get a better treatment ? Isn't it a reflection of the motivation of the money that the agency is giving out ?

The coverage : Sri Lanka warned on 'war crimes'
UN calls for massive Pakistani aid