Of cheap regional politics

Mood: Disillusioned

Indian politics has been plumbing new depths since the Congress has come to power at the center. One whole nation has become servile to a family. It is a return to our colonial days, and makes me hang my head in shame at the intelligence of the majority of our voting populace. Its interesting how power can create its own constitution. December 9th, Sonia Gandhi's birthday, is likely to be declared "Girl child day". The Congress party, including Prime Minister Manmohan Singh have begun to speak about how Rahul Gandhi is the future of the country's politics. If Manmohan Singh can make such silly remarks, there is very little one can expect from the other politicians in the party.It is quite fascinating how they have almost fashioned an appendix to the Indian constitution, by declaring that the power does not vest with the prime minister, but another body called the Chairperson of the UPA.

Karnataka politics has now set a new precedent in showing the country how treacherous our state politicians can be. Deve Gowda (of the Janata Dal (S)) seems to believe that his family is the second family of Indian politics, after the Gandhis, of course. First, they betrayed the Congress party in their search for power. Then, they took power in collaboration with the BJP in a power sharing agreement which promised the BJP their first government in South India after twenty months of JD(S) (mis-)rule. After their 20 months in power, the Gowdas pulled the carpet from under their feet and broke the alliance so that the BJP would not come to power. As soon as this occured, the BJP went to the press about how the Gowdas have betrayed them and are not worthy to form an alliance with. After a few days of talks, for some reason, they were offered support again by the same JD(S). Without displaying any self-respect, the BJP lunged at the opportunity and decided to join them to form government again. The Governor took his own time sitting on the papers, because he rightfully did not believe that Deve Gowda was not worthy of any trust. The BJP / JD(S) alliance began to parade their MLA's in front of the Governor first, and then in front of the President, to prove that they have the strength to form the Government. After this silly affair, the Governor granted them permission to form the Government in the state of Karnataka.

In a shocking turn of events, none of the members of the Gowda family attended the swearing-in ceremony of the BJP chief minister Yeddiyurappa, sparking off speculation that support might be withdrawn once again to the BJP Government. Within 8 days of forming Government, the Janata Dal (S) has officially withdrawn support to the BJP government in the state, ensuring that the Government has fallen and the state is most likely to go into polls. Deve Gowda has not only set a shocking precedent for politics in the country, but has virtually ensured that the country has become un-governable, by showing what politicians are capable of. While politicians in India have never been highly qualified as those in other parts of the world, values like trust and belief have always been high on their priority list. In one stroke, the bar for politicians has been set so low that it is now impossible to govern this country with the existing constitutional framework.

A neighboring state, and one famous for its good governance, Andhra Pradesh, offers similar such examples. Chandrababu Naidu has set precedents in good governance, by taking landmark pro-development stands. His power-policy, IT policy and infrastructure policy have shown that good governance can indeed pull up all economic and social indicators of a state. When such a man was voted out of power, I began to wonder if the electorate has any idea of what good governance is all about. Can a country appreciate long term policy, while it might go against the short-term interests of the people? The Congress government came into power, and YS Rajashekhar Reddy began a tenure of five years as the chief minister in 2004. YSR has always seemed to me like a classy man, while a little corrupt. I always appreciated the way he carried himself off as the leader of the opposition. He used to laugh and speak to Naidu when he was the chief minister, and take friendly digs at his Government. While this new Government was now a pro-poor government, the wheels of development chugged along comfortably with the framework that Naidu had set in place.

All of a sudden, Andhra Pradesh politics saw Chandrababu Naidu metamorphose from a respectable leader to a third rate opposition party leader. He began to do everything that he would have himself been ashamed of doing two-three years before. He began to criticize every state policy that he himself endorsed a year ago, and began to negate every pro-development stand that he had taken a few years ago. He began to go on a aam aadmi drive, and this turn has proved shocking for thousands of his admirers like myself from different parts of the country. Even more stunning has been his party's attitude towards governance. Regular riots, bandhs, protests, and sickening forms like "Sweeping marches" where armies of TDP workers sweep the streets wearing masks of the CM YS Rajashekhara Reddy. He has stormed into the State Assembly in a farmer's tractor and with stacks of dry paddy in his hands. He has accused the chief minister of being unable to raise the Minimum Support Price (MSP) for paddy on the lines of wheat, while he very well understands the MSP is a Central Government policy, not a state government policy. He has been disrupting proceedings of the state legislature, and not one useful bill has been passed in the current session of the state assembly. He seems to be veering around to the idea of bifurcating the state into two parts: Telengana and Andhra Pradesh, an idea he opposed with his life during the elections of 2004. The state ministers are busy fighting allegations from the TDP, and are left with very little time to focus on development. YS Rajashekhara Reddy, when in opposition, had never fallen this low. Like a good politician, he drank and made merry for four years, and went on pada-yatras(foot parades) for the last one year all over the state and won the election with a comfortable margin.

When even a great policy-maker like Chandrababu Naidu, touted as one of Asia's finest leaders, can fall down to this level, how can states in India continue to be governed?

Om Shanti Om

Om Shanti Om is a good movie, and I am saying that although I couldn't digest almost half of it. It was a movie made to entertain, and it does its job. Its been so long since I saw an Indian movie that entertained so much, while making so little sense. In three hours, it tells me why India is the flavor of the world these days. India has large dreams, extraordinary potential and some humor in everyday life.

If there is one thing I took back from the movie, its Shah Rukh Khan's drunken speech while receiving the filmfare award:

Itni Shidhath se maine tumhe paane ki koshish ki hai,
ki har zarre ne tumse milaane ki saazish ki hai;
Kehte hain agar kisi cheez ko dil se chaaho, tho poori kaaynaath use tumse milaane ki koshish mein lag jaati hai
Aap sab ne mujhe mere chaahat se mila diya, thanks, thanks very much.
I feel like the king of the world.

Aaj is baat kaa bhi yakeen ho gaya hai, ki hamaari filmon ki tarah, hamari zindagi mein bhi end tak sab kuch teek hi ho jaata hai. Happys endings!

Aur agar teek na ho, tho woh the end nahi. picture abhi baaki hai mere dost!

Here's the video:

What would your book be called?

If someone were writing a book about your life many years from now, what would it be called?

Mine would be titled, "The man who wanted too much, too fast".

Superstar

It is very difficult to measure what makes a superstar. It is also very difficult to take a call on who India's biggest superstar might be. I tried this:

A google search of the word Shahrukh Khan yields 2,270,000 results. A google search of Amitabh Bachchan yields 1,740,000 results. A search on Sachin Tendulkar yields 1,230,000 results.

If the number of pages written about a person indicates his popularity, is it fair to conclude that SRK is the biggest superstar of our times?

Energy for an Emerging India: The weblog

Across the world, there has been a strong correlation between energy availability and most socio-economic indicators. Viewed as the new powerhouse, India is looking to sustain growth rates of 9-10% over the next decade. However, in this pursuit, there is probably no issue of more concern than that of how we would acquire the energy to power India into the 21st century. The next five year plan is looking at adding over 72,000 MW of power, with a large chunk of that coming from domestic coal. Indian coal is predominantly low-grade, and highly polluting. From the example of China, we already know what happens when 50,000 MW of coal power gets commissioned. It can ruin the environment and have catastrophic implications on global warming.

India's ability to commission 70,000 MW of power by 2012 is questionable. Even Ultra-mega Power Projects (UMPPs) have got embroiled in controversy, and their plans have been postponed. While there is no dearth of funds, most of the companies in the power sector have full order books, and their ability to deliver still remains questionable. Meanwhile, renewable energy is catching up across the world, with India leading the innovation curve. We have about 7% of power coming from wind, a big achievement for a country the size of India. However, a large part of smallhydro plants and wind power plants thrive on government subsidies. One important question we will have to answer in our quest for energy security is: Can we afford to care for the environment in our path to development?

While energy is required to power our growth rates, it is also required to enlighten a large number of villages in India that do not have access to electricity. This could have ramifications on all social indicators for the country.

The journey looks arduous, but interesting nonetheless. It is important to have a responsible weblog that can focus on all developments in the energy sector, from a economic, social, political, environmental and public-policy perspective. For long, I have been toying with the idea of starting one such blog. The task is to look at trends emerging daily, and to document them, add concise comments, and understand the drivers behind energy for an emerging India.

If you know someone who might be interested in joining this small non-profit initiative, by writing small pieces or cull articles from the internet and post them daily, please let me know. Please pass on this information freely and revert to me. If you are keen on the sector and yet have no understanding of the sector, this is a great way to get started!

Update 1: You can reach me at shravansampath at yahoo dot com

Cross Subsidy: Google?

Non-Indians would not understand this term, but Indian readers of this blog would only be too familiar. Most Government organizations in India cross-subsidize their utilities, in order to service the poor at the cost of the rich. For example, electricity for industry is more expensive than that for the farmer in rural India (contrary to many other developed economies). The profits made from electricity to industry are passed on to the farmer. By doing this, they keep both parties. The industry does not have a choice, and the farmer has a vote. This applies to most government utilities, including water, healthcare, primary education, and so on. Even the Indian railways charges cheap fares for its second class non-AC, and extremely high rates for the AC coaches, to subsidize the poor traveling in second class. However, what is most important to note in this case, is that only government utilities are providing subsidy to the poor. No private player would do so, because he does not care enough. In other words, there is no incentive for a private player to offer subsidy to the poor at the cost of the rich. He would rather use a standard pricing formula for all customers.

All day, I've been thinking of an internet equivalent to cross-subdidy: Google has been offering its search functionality free to all its customers, and charging on all its other offerings, and making up for the loss of opportunity through contextual-advertising (adwords). It is an equivalent of subsidy, because in some sense, the user who only uses google search, and finds information, is the "poor man", or as we say in India, the aam aadmi. He does not have the resources to pay google for their service of finding information. Search has become so important to information and to existence, I think it is fair to call search a utility. Now the poor man cannot pay for the search, so the rich man pays by clicking on all the advertisements in the side of the page. In a very broad sense, one can say that the rich man is subsidizing the poor man's internet experience.

However, it is now important to understand why Google would want to offer one service free, and another charged, and link up the two? The answer has evolved in this new world where we look at advertisement as a collaborative and participative process. Google realizes the power of search in acquiring permission to the customer's attention. They now use this permission and sell advertising inventory and their other applications. This permission, in my opinion, is what constitutes brand Google. Google has ensured a superior and high quality search experience, and made a powerful image for itself in searchers.

Maybe that also explains Google's PE ratios.

This brings us to an important question: If the rich user can subsidize the poor user in a non-public-utility environment, is this sustainable? If it is, can more companies now enter developing markets across the world, and provide this value proposition to the Bottom-of-pyramid consumers?

Growing older

Today, I forgave a friend because we "went back a long way".

Once you are ready to say that, know that you are fast aging.

Business over land

It is clear that more products based start-ups are going to dominate the Indian landscape over the next few years. It is not difficult to see why that is so. Land has become so extraordinarily expensive, it has become impossible to look at a business that can occupy a substantial piece of land. If land can somehow be procured, most businesses get killed due to the lack of power and other basic utilities. For example, the tissueculture industry in Andhra Pradesh is almost dead now because of the high power tariffs, whereas it is thriving in Maharashtra where there are subsidies for tissueculture under the priority sector.

This is an interesting dilemma: Most of the old economy companies are now sitting on goldmines, because they had picked up land many years ago around which cities developed. Now, they find that they can sell the land at market value and the equipment as scrap, and earn a 5-6% risk-free return on the money, and still make more than what their previous business offered. Prima facie, this seems like a case of moving up the value chain. If a cement factory is shut down and a KPO is opened, there is more value added, and more profits per square foot of land. However, if this continues for too long in a country like India, it is very likely that the common man would begin to suffer. After all, it is the unemployed worker who worked in the cement factory. He is not being re-skilled to join the KPO. He just loses the job, and goes to work on contract at a construction site.

How do we solve this issue in a country like India, where the number of unskilled people will always exceed the number of skilled people?

One simplistic solution is as follows: In all Indian companies, the founders and employees must be given a share of the land on which the company is founded. This means that each employee has a share of land. So he can choose not to sell the land if he does not want to, or he can choose to play a spanner in the works and keep the cement factory. In the future, this could evolve into a system of "land options", where an employee can be promised a piece of land instead of stock in the company. This gives him something distinct that will always see appreciation.

How does this sound?

Islamic cars

Mecca cola was a drink created by an intelligent muslim businessman, who decided to capitalize on Islam and make it into a brand. He pitted it against the Coca-colas and the Pepsis of the world, and managed to hold his own.

Islam declares that taking a loan is sin. This makes most of modern business impossible. Banks operating in the middle east, Pakistan and Malaysia have hence adapted themselves to banking in such countries, by creating a concept known as Islamic banking. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called riba in Islamic discourse. In addition, Islamic law prohibits investing in businesses that are considered unlawful, or haraam (such as businesses that sell alcohol or pork, or businesses that produce media such as gossip columns or pornography, which are contrary to Islamic values). (Source: Wikipedia)

All these instances are examples of business adapting to the local tastes of the customers, because that is the best, and often easiest way to make money. In this light, this news is interesting:

Malaysian national carmaker Proton says it plans to team up with companies in Iran and Turkey to produce "Islamic cars" for the global market. The proposal for the Islamic car came from Iran.

Syed Zainal Abidin, executive for state-owned Proton says the cars will have a compass to determine the direction of Mecca for prayers and compartments for storing the Qur'an and headscarves.

A blog

is a manifestation of years of thoughts, opinions, feelings, emotions, sentiments, humor, anecdotes and experiences. Much like a human being itself.

But every blog is mortal, like every person is. But maybe that was the way it was meant to be, because in death, there is often more creativity than in life itself. Because death takes away the fundamentals of who you are, requiring you to define yourself all over again.

Does that mean this blog should die?

12 steps to be among the world's most influential thinkers

The list of top 50 business thinkers is out. It is headed by the iconic Ann Arbor guru and creator of pathbreaking concepts like "Core competence" (a term which is among the top 50 most misused and misunderstood terms on the planet, from Bhatinda to Boston) and "The bottom of the pyramid".

Unfortunately, I am not on this elite list this time around. While life might indeed be very long, I realize now that I need to take some drastic measures so I can get on this list in the next fifty years. In this, I thoroughly empathize with Scott Adams. Hence, I spent a significant amount of time thinking up a gameplan to make this possible. For the benefit of the planet, I now make this formula public. Go on. Get influential!

1. First, pick the most obvious theory you can think of. In one such brainstorming session, someone came up with the obvious theory: If you want to sell a product, go look for someone who has the money to buy your product, advertise hard, and sell the product. The path to influential thinking begins with picking the most obvious theory you can think of at that point in time

2. Second, take the theory you just thought of, and rip it apart, and bring it inside out. In this specific instance, I would wish to hypothesize, hence, that if you wish to market a product, go find a buyer who doesn't have money, is not exposed to mass media, and is most unlikely to buy your product

3. Now, spend some time in trying to think up a justification for what you might have just said. From the above theory, I am going to look at reasons why I am looking at the most improbable customer for my product. Maybe he is a difficult customer, but there are a large number of them, and that justifies the difficulty of the customer and the loss of margins therein?

4. Further, sit and Google up all the possible organizations in the world that might be obeying this business principle. Locate geographies where this might be possible.

In finance, one of the most importance principles is the theory of efficient markets. This theory states that the stock market "knows", and all available information is already processed and reflected in the stock price of the share. It basically states, that everything that needs to be known, is already known. If we can look at a strategic analogy to the Efficient markets theory, it would be something like this: all available business models for organizations in every industry in all geographies are already exploited and have been tried atleast once, either successfully or unsuccessfully. It is quite likely that I might get on the influential persons list by the "efficient business models" theory, but I created and quoted this theory for a different purpose. If I have created a wild theory that needs to be justified, my "efficient business models" theory states that you would always be able to find a company in some corner of the world which would justify that business strategy.

5. Now once I find this business model, I make a generalization, and quickly write a book about this theory. This book sells widely only for one reason: It has contradicted popular wisdom and has aroused the curiosity factor. The book begins to peak and enter the bestsellers list. At this point, I begin my world tour.

6. In this world tour, I network with all the CEOs who might have a Sunday afternoon free, and try convincing them of my theory. Again, as a corollary to the "efficient business models" theory, I can also come up with a "Efficient CEOs" theory. Basically, this states that I would always be able to find a CEO, in some corner of the world and some industry, who would appreciate my theory, if only out of courtesy and politeness. So now I have testimonials from CEOs telling me that I don't speak shit.

7. All this feedback gets incorporated in the updated version of my bestseller, and begins to circulate in the market. Now, even more CEOs begin to agree with me, since they know that there are other CEOs who are on my side.

8. Slowly, the market starts moving, and a large organization's CEO accepts that my theory is not crap, and concludes that this is the one theory he needs to implement to change his organization's future. So he sinks millions of dollars in developing a product and attacking useless markets in an irresponsible fashion, as prescribed by me in my book.

9. This large organization(lets call it BIM)'s CEO hires me as a consultant, because I am clearly the only person who knows how this will work. I go over, and propose supporting arguments and build a go-to-market business strategy

10. BIM implements this strategy after investing millions, and very soon realizes that it won't work. Now, it is a question of reputation, since I have already publicized this strategy, and by the financial theory of "good money after bad money", continue sinking money to make this strategy work. Zune, in my example, seems to be following this route. And, after sinking further millions into the project, it has to turn around, because of the sheer money invested and the brains that can now be associated with the project to turn the company around.

11. I take the above example as a successful instance of my theory, advertise it, and release version 3 of my book. I now buy a lifetime upgrade to first class by American Airlines for $1,000,000 dollars, and use it to roam all around the United States to convince them of this theory.

12. Finally, this theory acquires prominence, and other authors start citing my work.

The judging team of "Most influential people" takes a look at all this free press, and concludes that the work must indeed be monumental.

At this point, I come up with my next theory, and run it through the 12 steps again, and convince the judges that I am indeed influential.

Finally, I am nominated, judged and chosen to be among the top 50 influential thinkers in the world.

Thats it. Its all figured. I'll go start working on it now.

Diwali-best-wishes Differentiation

Diwali is celebrated for many religious reasons, and for further many more practical reasons. I shall not speak about the religious reasons, because I am sure that all three of this blog's readers would be quite familiar with them.

Foremost among the reasons to celebrate Diwali, is that it gives an opportunity to people to meet their family and friends and catch up. Further, it gives people a chance to show off their celebrations, new clothes and crackers. Diwali is particularly important for junior consultants, because it gives them an opportunity to send notes to every professional they know, because, as you know, in consulting, who you know is who you become.

Now the question is this: everyone sends an email to their entire address book or an SMS to their entire contact list. The question is, how do I, a young and fast-rising consultant, differentiate myself in this market which is SMS and spam dominated by fellow consultants?

It becomes very important to solve the issue of whom do I send my best wishes to. While this could pose a problem to most such consultants in the early staes of their career, I have devised a solution which can resolve this issue. I would create a two-by-two matrix, with x axis containing the importance level of the contact with respect to my career, and the y-axis containing my friendliness with him. So if he is in the first quadrant, he is neither important to my career, and is not a close friend either. I would not bother about such people.

If he was important to my career and close to me, I would definitely send him the best-wishes-SMS (BWS). If he is not important to my career but close to me, I would still need to send it to him, because, hey, we are people after all. If he is important to my career but not close to me, this is a tough one. I would not bother sending him a BWS, because relationships are not created or lost by sending a BWS.

Now let us add an element of complexity to this two-by-two diagram. Lets add a third dimension, which would be known as "strategic impact". It is so named for two reasons:
1. Most terms make business sense when preceded by the word "strategic"
2. This dimension would signify his level of impact on the sender. For example, a professor of mine who I am a big admirer of. He probably doesn't know that I exist, or doesn't care that much, but I need to wish him, because I really think he is one of the biggest influences in my life.

Now, after adding this dimension, I have the following 8 combinations available:
1. low-importance, low closeness, low strategic impact
2. Low-importance, low closeness, high strategic impact
3. Low-importance, high closeness, low strategic impact
4. Low-importance, high closeness, high strategic impact
5. High-importance, low closeness, low strategic impact
6. High-importance, low closeness, high strategic impact
7. High-importance, high closeness, low strategic impact
8. High-importance, high closeness, high strategic impact


Now, all you need to do is to decide who comes in which category, and send invites accordingly. If you are pleased with how I have resolved your biggest issue this holiday season with a smile, please send all donations through cash or card to the address in the profile page.

Another differentiating factor of Diwali, By the way, is that it is the best festival to greet on, because if you forget to greet them on the 8th, you wish them on the 9th and they believe you are wishing them on North-India's Diwali. If you forget to wish on the 9th, wish on the tenth and they still believe that it is north-east Diwali.


* All locations where the word he / his / him are written, are freely replacable with she / hers / her wherever applicable. Please note, though, that only when applicable.

** Conditions apply

Can't stop smiling

That was so brilliant.

Which other business can you alter fundamentally by selling the product free and making money on refills / service?

1. mobile phones, and make money on minutes - Done
2. computers, and make money on wimax network connectivity?
3. beauty products, and make money on applying and customizing them?
4. music, and make money on concerts, live performances - Done
5. Washing machines, and make money on detergent?
6. Television, and make money on the cable service?
7. The air-conditioner, and make money on the electricity?

How much wilder can you get?

By the way, Chris Anderson, of "The long tail" fame, is writing a whole book called "Free"

Free cars, and other alternate energy options

Usually, some products are sold to customers at a loss, and the manufacturer makes money from the subscription or refills. For example, HP printers. The company makes a loss for every printer sold, and covers up on the hugely-expensive cartriges. Similarly, the xbox: Every xbox accumulates losses for microsoft, and they make up for it by selling game titles. An extreme example of a loss-making sale of a product is the mobile phone, and the mobile phone company that gives these phones free, and covers up by charging for the minutes.

The electric car concept has been around for sometime, but this is by-far the most audacious attempt at trying to monetize this product. Imagine: An electric car being sold free to the customers, and money being made by the electric charging of the car. While this might seem like a difficult proposition at first sight, consider this: statistics show that the average European second-hand car costs less than the fuel used to run it for a year! Now it seems like a plausible idea. With crude oil prices hitting $100 per barrel, the running cost of a car is now becoming comparable with the cost price of the vehicle itself! Henry Ford would have never imagined this day would arrive, but trust me, this is the reason business is so exciting. An existing business can turn around its head when entrepreneurs enter the picture.

How would the "free" electric car or similar alternative-energy cars enter the Indian market? Look at it this way: Public-sector oil retailing companies are losing over 100 crore rupees per day, and this number is going to be around 70,000 crores in a year, because the Government cannot hike the prices of petrol. Rising fuel prices would eventually force the public sector oil giants to seek refuge in government subsidies, as this pricing formula becomes unsustainable.

Now, don't they look like prime candidates to do research on alternative technologies to drive cars? Can't they invest Rs.10,000 crores in this effort, if they know that it could reduce the oil burden on their head?

Making money today

I make a bit of spare money every month. I'm looking to invest in someplace in India, so I can see some quick multiplications. Where would you put your money?

I'd want to bet on the following:

1. Buy land in second rung / third rung towns in India. Know people to look after it, though
2. Holding onto a bit of cash, and waiting for the market to go on a blink to pump it in. Have friends in other geographies who would invest money when all these markets go down together. If you don't have such friends, give me a buzz.
3. Invest in alternate energy - Suzlon, hydropower companies, and so on. This cannot fail. There is no other future as I can see.
4. The market is overheated. I would stay away from it apart from the two options above
5. Buy into the SEZ story, in some manner or the other. I just don't know how yet.
6. Make a bet that the government will fall before December 2008, and that the March 2008 budget will be a populist disaster. Either in the commodities or the stock market.

Mail me. Lets put money in together.