Dieselgate

VW has been in the news for building in cheat software into their EA189 2.0 litre diesel engines to switch to emissions control modes only when the vehicle was in testing and to switch to NOX spewing mode in normal driving. This is not an oversight, but a clear intent to beat the law. What causes otherwise reputable companies to conspire in such ways?

I am going to go back to my favourite hypothesis. The beginning of the end is signalled when top management sets targets of growth in terms of size rather than profitability. The day VW management started to pander to top management megalomania to be bigger than Toyota, the pressure to sell more cars transformed people from Dr. Jekyll to Mr. Hyde.

A certain liquor baron started splurging money a few years ago with the objective of becoming the biggest player in the aviation industry; not the most profitable, but the biggest. We know how that story is fast becoming a riches-to-rags story.

Over-promise and under-deliver

The CD player in my German lemon failed today; the latest in a string of failures following the volume control, the touch pad and the navigation system.

Buyers should beware of companies who promise stuff like 'The Best or Nothing' or 'The Ultimate Something'.

It appears their marketing departments are writing cheques that their engineering can't cash.

But then, to be fair, the software engineers at some German firms have been rather busy with other priorities in the recent past.

Real Estate Correction

There has been some talk of an impending correction in the real-estate market in India. For the longest time, this has been wishful thinking on the part of people who find housing prices prohibitive. Now however, I am beginning to believe that there is something in the offing.

There are a couple of indicators that lead me to this conclusion.

If you have been paying any attention at all to hoardings and billboards in Indian cities, you will have noticed that almost all advertisements, until recently, were for real estate projects. This trend appears to be coming to an end. About 2 months ago, hoardings in Pune started sporting ads for stuff other than apartments. Even more telling perhaps, is that any ads for real estate now promise discounts rather than prestige. A builder-developer's holding power now appears to be a major contributor to the asking rate for an apartment in Pune; you can now find two apartments in developments within a stone's throw of each other selling at rates as widely different as Rs. 12000 per sqft and 18000 per sqft.

The other indicator is that one now hears of old bungalows on plot sizes in the 5000 sqft range becoming available. In the last couple of decades, private buyers almost never heard of these, for the builder-developers would lap them up, tear down the bungalow and put up an apartment building.
Now it appears that builders are not game anymore.

Real Estate and Education have been the last remaining bulwarks of the Licence Raj, and it appears that the real estate ramparts are falling. This is definitely welcome, for as I have said before in one of my posts, real estate prices in India are so warped that almost no business makes financial sense for the small and medium businessman in urban centers within the country after you factor in the cost of real estate. The politically connected have been manipulating the real estate market to park their wealth. No business venture can compete with parked money where a zero return on investment or even a small negative return is acceptable. Times are a-changing though. Once the market cracks, as it appears about ready to do, real estate will cease to be a safe haven for ill-gotten booty, and legitimate business ventures will have a chance once again.

Whatever it is that you are doing Mr. Jaitley and Mr.Rajan, it appears to be working. Full steam ahead.

Delegation's nemesis

I learned a hard lesson on delegation some days ago; and it was not in a work setting. I was dropping a dear one to the airport and this person wanted to do a last check to see if everything had been packed correctly, ticket, wallet, phone and other stuff.

As everything was yanked out of the neatly packed backpack onto the rear seat of the car, I could see that it was not going to make it back in. I voiced my opinion and also suggested how it should be done.

At this point, the other party gave me a lesson in delegation, saying, "The issue is that if any job is not done the way you would have done it yourself, you presume that it is not done right."

I have to admit that this is true. Even when I thought I was delegating, I was probably manoeuvring the process to be done like I would do it. Sometime last year, in the course of a project at work, I had realized that my way was clearly sub-optimal and someone else had to come in and clean up the mess I had created. Yet I did not learn; not as well as when I heard that sentence a few weeks ago.

Letting go is not easy. But it is a skill one would do well to imbibe.

Anger and guilt

I lost my cool at a traffic light today. A guy on a motorcycle pulled into the narrow gap between my new car and the car in the next lane. As I sat there getting nervous about the small gap between his handle bars and my door, the inevitable happened; he lost his balance and his handle bar dinged against my car leaving a micro-dent. I got out of the car, looked at the new dent and stared at him.

Instead of apologizing, which should have been the end of it, really; he smiled and said, "It is only a small dent." That is when I lost it.

I yanked his keys out of his ignition and told him to collect them from the nearest police station. I got back into my car, and as he sat there just staring at me, I rolled down the window and told him to ensure that he carried all his paperwork for the bike when he visited the police station as they would want to check every thing.

At this point he started to get apologetic, but did not, could not, apologize. With a couple of seconds to go on the traffic light timer, I tossed his keys out the window. He tried to catch them, but I had tossed them to fly past; just beyond his reach. I watched him in the rear-view mirror as I drove off, trying to bend over and pick up the keys.

I am not proud of my behaviour today; and I have been feeling guilty all afternoon. If I should chance upon him again, I would most likely apologize.

Epiphany for the day: Guilt is an almost certain side effect if you let your anger manifest into action.

Couple of misses on B School Campuses

I was at an informal alum meet in our city a few days ago and we got to chatting about the reunion we attended on campus in December last. About the people who showed up and about how most of the couples that got hitched on campus did not show.

One of the people present at our meeting last week mentioned something that I had never quite seen before. This person pointed out that couples on B School campuses miss out on a lot that the campus has to offer. Their strongest relationships are between themselves; they have often kept to themselves and have not really formed any strong networks on campus.

Opportunities lost.

On learning to be tactful

Fluency is defined as the ability to speak or write a particular (usually foreign) language easily and accurately. I would like to propose, that the definition needs to include the ability to think in that language. We have all noticed people who speak a language in a manner that gives away the fact that the language is not native to them. We can almost see them think in their mother-tongue and then hear the gears turn in their head as they translate their thoughts into the second language before they speak; usually with a lack of fluency.

Epiphany for the day: The same is true for tact. If we think in brutally honest terms, as people who take pride in calling a spade a spade are wont to do, and then translate our thoughts into more tactful words, our attempt at being tactful will be obviously contrived.

If we wish to learn to be tactful, it is important that we change our habit to think more politely.

Testing for drive

I have been thinking about how recruiters could look for evidence of drive in a candidate. I have heard of techniques such as Behavioural Interviews which ostensibly enable the panel to truly assess the candidate on chosen skills. A search for Behavioural Interviews on the internet however, throws up multiple sites which provide 'model' answers for a number of BI questions. In effect, such sites are showing the candidate how to game the system.

Some components of the CV are good indicators of drive, like consistently stellar academic performance: or having represented one's school or college at the state or national level in a sport or other competition such as debating. Such claims are not difficult to verify. I know of a classmate at B School who claimed to have been a student of classical music (vocal) and the interview panel actually asked him to perform for them during the interview. I had claimed a certain level in Karate and one of my interview panelists, a karate-ka himself, had no qualms about asking me to demonstrate a yoko-geri and a kage-geri.

The issue remains however that the majority of CVs claim above-average academic performance across school, undergrad and graduate school, but not national level sports tournaments or extra curricular achievements. If pursuit of excellence in not demonstrated on the CV, how then could a company get the candidate to demonstrate his or her drive to excel?

Food for thought.

What recruiters look for v/s what they test for

It would be a reasonable assumption that most recruiters are looking for people who are intelligent and driven. At Aspect Ratio we have a third criterion, 'fun to be with'.

Some companies look for other skills that are sector specific. Lehman Brothers looked for quantitative skills. Tata Motors at one time would recruit only Mechanical Engineers.

What is interesting however is all of them seem to have a very similar recruitment process. Most companies in the country, most of the world in fact, follow the hackneyed algo of Source CVs, filter CVs, first interview on the telephone, subsequent interviews in person, and finally extension of the job offer. Clearly, companies wish to meet a number of candidates and narrow down to the few that they believe would be a good fit. The process above is efficient from a filtering or funneling perspective; however, I am left wondering about its effectiveness.

After all, companies often hire people who do not end up doing very well at the company.  The only skill that an interview tests for is the ability to do well at interviews. Similarly, the only skill a good CGPA points to is the ability to do well on exams. This last is particularly bothersome in India, where coaching classes help students with the business of passing exams regardless of their understanding of the subject matter.

To compound matters further, the interview stage often devolves into a power game. The panel asks questions to which they know the answer and wish to test if the candidate does too. It is not surprising that under these circumstances the candidates feels tested and therefore stressed. How then, could a company make the interview more valuable for themselves and less stressful for the candidate?

A good starting point would be to ask questions that the panel does not have answers to either, or questions that could have multiple possible correct answers, and see how well the candidate can present his or her case. The interview is then not an examination given by the panel and taken by the candidate. It is a conversation about a topic that is hopefully interesting to both parties.

The next thing that the panel can do to equate the power equation is to let the candidate choose the topic of conversation; let the candidate lead the interview.

If the candidate could be given an opportunity to speak about a topic that s/he cares about, is excited about, then that represents the best chance a candidate can get to play to his or her strengths. If the area of strength presented is of no consequence to the job description at hand, for example if the MBA candidate applying for an analytics job chooses to speak about his interest in medieval folk dancing, the panel would be fair in deciding that there is not a good fit between the skills of the candidate and the job at hand.

If the only skill that an interview tests for is the ability to handle interviews, and the CGPA only points to the ability to do well on exams, then the recruiter would do well to extend this logic and design a recruitment process that tests for the ability to do the job itself. If the job description involves building forecasting models on spreadsheets, the panel could present the candidate with data sets of sales history and ask how many ways could there be to forecast the sales for the near future.

The quality of the conversation, in addition to the ability of the candidate to handle that spreadsheet, is likely to be a much better indicator of performance on the job than any number of unrelated puzzles and questions about economic theory. The quality of the conversation is also a good indicator of that elusive trait of 'being fun to be with'.

Recruitment Process Algo

It is the start of recruitment season at B Schools and Engineering schools again and we have been thinking about our process algorithm; more specifically the first filter in our process.

Some years ago, we made the decision that we would meet with everyone who applied and not make a shortlist on the basis of the CV alone. I realize now that while the two parts of that statement could be taken to imply the same thing four years ago, but they are not so today.

We would still not like to shortlist candidates based on CV alone. However, it is becoming increasingly difficult to allocate time to meet with every applicant; given the number of applications we receive on campuses and the pressure being put on us by placecoms to finish our process within a tight time frame.

As much as I hate to admit this, it appears we are learning for ourselves, the wisdom of 'industry-standard' recruitment processes. Some process designs just do not scale well.

Dashboard design

I was traveling from Hyderabad airport to Hi Tech city a few days ago in a cab, a Renault Logan. The car began to beep as the driver exceeded the speed limit. I looked at the dashboard and noticed that the needle was hovering between 20 and 30.

That cannot be right I thought to myself. The speed limit on the Outer Ring Road should be somewhere near 80 kmph.

Looking more closely at the dashboard, I realized I had been reading the tachometer marked x100 RPM. (Picture here) The speedometer was the other dial and it read 100 kmph.

Classic French design I suppose. Form-over-Function. I suspect some designer at Renault thought that two dials with similar looking numbers in steps of 10 looked better.

The Japanese will have the speedometer marked in double digits for kmph or mph and the tachometer marked in single digits with the legend showing x1000 RPM.

Interestingly, Mercedes Benz had the same issue until recently. The W126 S Class of the 1980s and 1990s had a similar dashboard design with the tachometer numbers in 10s with the legend x100 RPM. Google a picture of the Mercedes S Class (W126) instrument cluster or click here .

I wonder why automobile manufacturers are insistent on distracting you while you drive.

Here is another one. "Objects in mirror are closer than they appear." There you are, going 140 kmph on Indian roads trying to focus on the road ahead for cows, dogs, pigs, cycles, motorcycles, tractors, bullock carts and trucks coming at you on the wrong side of the road. And they want you to worry about optical illusions?

The other place

I remember watching an old episode of the Twilight zone called 'A nice place to visit'; you can watch an abridged version here or the complete version here.

The episode revolves around the death of a criminal who finds himself seemingly in heaven with all his wishes fulfilled. A lavish home, beautiful women, and guaranteed success at the casinos leading to all the wealth he desired. He suspects someone made a mistake but he is too shrewd to complain.

After a while however, the lack of challenge gets to him. He finally cannot stand it any more and tells his guardian angel that he does not belong here in heaven, and that he would like to go to 'the other place'.

"Heaven? You think you are in heaven?" says the guardian angel with a diabolical laugh, "This IS the other place."

The greatest curse one could inflict on a person would be to grant his every desire without giving him the benefit of working for it. There would be no joy of achievement. no meaning to life. No fulfillment in work. No work. period.

Isacc Asimov was prescient with his predictions of the future in 1964. He said that humanity's biggest challenge would not be the shortage of leisure but the shortage of meaningful work. In his own words, "The lucky few who can be involved in creative work of any sort will be the true elite of mankind... Indeed, the most somber speculation I can make about A.D. 2014 is that ina society of leisure, the most glorious word in the vocabulary will have become work."

The value of articulating your goals

I have been reading on the internet when I chanced upon an interesting statement by Tal-ben Shahar.

People who set and articulate goals for themselves do much better than people who do not. The arguments that he presented following this statement were illuminating. He focused more on the articulation of the goals than on the setting. The process of articulation adds tremendous clarity and a focus on achievement.

Looking back on my own life, I have to agree. I have held a number of goals as images in my mind, but have often been waylaid in my pursuit of those goals. A well-intention-ed but fuzzy idea to do well or to build a product or service that people might want has often been one's undoing.

The goals I have clearly articulated and communicated to dear ones have always been achieved; sometimes later than the desired or stated time line, but achieved nevertheless.

Most literature on achievement stresses the need to set goals, but not enough focus has been laid on the wisdom of spending effort on articulating those goals.

How much longer?

I have noticed a spate of advertisements for dating apps on TV lately. I wonder how long before the goon brigade of the moral police suddenly wakes up. Or do these things wait for opportunities of political mileage?

On Market Research

Tata Motors introduced their new MUV / SUV Crossover vehicle, the ARIA, at the Auto Expo in 2010 and launched it soon after. The Aria was aimed at the Toyota Innova, a 7-seater Multi-Utility Vehicle which has been selling about 4000-5000 units per month.

Interestingly, Tata Motors has been a strong player in the SUV segment with the Tata Sumo selling between 3000 - 4000 units per month between 1994 and 2005. The Sumo was followed by the Safari which went on to garner sales of about 2000 units per month in its day. These numbers were in addition to the Sumo units.

When the Tata Xover Concept was presented at the 2006 Geneva Auto Show, the platform was capable of being developed into a Multi Utility Vehicle (minivan) and a Sport Utility Vehicle (SUV). Tata Motors conducted customer interest clinics in India and the market research suggested that respondents considered the vehicle favourably against the Toyota Innova.

Tata Motors decided to develop the MUV version of the Xover and launched the Aria in 2010. Strangely, the Aria was launched with 4-wheel drive, which left most minivan prospects wondering why they should be paying more for a car that will be used for the school run and the office commute and the weekly grocery shopping. The van like shape of the Aria, on the other hand, left the off-road enthusiasts scratching their heads.

Sales volumes have been dismal. The Aria has not sold more than 40 units per month in the last 6 months and apart from the first few months after launch, has never sold more than double digits. These are all-India numbers.

Clearly, there is a big difference between what people say they will do when responding to a survey and what they will actually do when the time comes to pull out their cheque-books.

Tata Motors has now developed the SUV version of the Xover, the Hexa, expected to be launched in 2016. Given Tata Motors strength in the SUV space and the loyal following the Safari seems to have, I am willing to bet that the Hexa, which is really the same car as the Aria, save for a changed look at the front end, will sell far better than the minivan variant. If Tata had launched the Xover with an SUV look the first time round, rather than the minivan look, it might have been a runaway success.

I appreciate that hindsight is 20-20, but I am going to say this anyway. If Tata Motors had stayed true to what they stood for, i.e. SUVs rather than minivans, they are likely to have done a lot better with this product, market research notwithstanding. To make matters more confounding, Tata Motors has been enjoying the success of SUVs even with Land Rover; they know the SUV space, they own the space. What in the world takes a company 6 years to change the bonnet and front bumper on a competent 4x4 vehicle to make it look a more butch?

How a company can ruin its own market

In 'Wired to Care' Dev Patnaik narrates an interesting anecdote on how the coffee industry ruined their own long term prospects for short term benefit.

The coffee market in the United States had been growing every year in the post world war era. In 1953, a killer frost destroyed a large part of the Arabica bean crop and prices for the raw material skyrocketed. In a bid to keep costs under control Maxwell House considered blending the cheaper but bitter tasting Robusta beans with the Arabica beans - just a small percentage at first. They conducted extensive Market research and found that most consumers did not notice the difference in taste between coffee made from pure Arabica and the blended product. After these encouraging findings from Market Research, Maxwell House took the decision to blend Robusta beans into the coffee.

Every year, giving in to cost pressure, Maxwell House, and also Folgers and Hills Brothers, started to increase the percentage of Robusta in the blend. To give them credit, extensive market research was conducted at each stage to ascertain if the consumers could tell the difference between the previous blend and the new blend with even more Robusta. At each stage, consumers failed to notice the marginal difference.

A decade later, in 1964, demand for coffee in the United States dropped for the first time. Of course, the companies conducted more market research to find out of consumers were drinking less coffee, but regular coffee drinkers were consuming no less coffee The issue was that the average age of coffee drinkers was rising; meaning younger customers were not drinking coffee.

What had happened you see was that when younger consumers tasted coffee for the first time, now with a predominantly Robusta taste than Arabica, they could not imagine why their parents would drink this foul beverage.

So much for trusting Marketing Research.

Grass is always greener on the other side

In my post 'July Short' I had written that I wanted to be the client rather than the service provider.

I realized as I was driving my new car for yet another software update to fix yet another glitch, that I was on the client side of the transaction. It has been a less than satisfying experience.

Epiphany for the day: Keep expectations low, for marketers will promise 'the best or nothing' and deliver what is clearly not the best.

Wired to Care

I have started reading 'Wired to Care' by Dev Patnaik. The author presents a compelling case for empathy. One particular sentence in chapter 1 has stuck with me. 'If companies can learn to put themselves in the shoes of their prospective customers they will be able to spot opportunities.'

Perhaps this explains why most successful companies have grown out of startups which started to solve a problem that bothered the founders. Google was born when Larry Page was frustrated with the poor quality of search results on erstwhile search engines. Apple was born when Steve Wozniak was frustrated with the limited User Interface capabilities of the Altair. Harley Davidson does not refer to its customers as customers; it calls them riders, for so many members of their own team are riders themselves. Harley Davidson is able to create and maintain its cult status because they build what they would like and then nurture their paying riders to be part of the community.

This should be Marketing 101. But it is amazing how many companies start to toe the Wall Street line and start focusing on quarterly results rather than on cool problems to solve. Hewlett Packard used to be a company of the geeks by the geeks for the geeks, starting out manufacturing electronic calculators and then going on to build the best laser printers and inkjet printers. Then the Wall Street types moved in a recommended a merger with Compaq, also a great company in its day. Ever since then, HP has been struggling to build mediocre products and unreliable printers, slowly but surely conceding market share to companies like Canon.

The book is re-affirming my faith in the Parsi way of doing business. Do good work, do it long enough and eventually it will pay in gold. The book also helped me define 'good work'. Put yourself in the shoes of the customer and then do what is right for you.

Test Drives

A couple of days ago, I was invited to test drive a sports car. As test drives are wont to be, it was an intoxicating experience. BHP and Torque can be addictive.

The sales team succeeded with their objective. I was ready to pull out my cheque book and put down the booking amount. But ever since I bought the VW Polo after a short test drive, I have been working on building the discipline of counting to 10, in days, before I make a decision.

The thing with test drives you see, for someone enthusiastic about cars, is that you have already decided that you will like the car. The drive provides positive reinforcement for your beliefs.

I have realized that the best way to test drive a car you are considering buying is to use it for at least a week. We were considering buying the Toyota Corolla Altis and on a recent trip to the US, I rented the car for about 10 days. And here's the thing. After 10 days with the car, it seemed rather less inspiring than it did on a 20 minute test drive. With zoomcar launching self-drive car rentals in India, we can now do week long test drives in India too.

Of course, this is pure rational logic, and it does not always work with humans.

That explains it

I was driving to Mumbai on the expressway a few days ago and one of those questions hit me for the umpteenth time, you know the type that is never quite answered but isn't really important in life so you just let it go. 'Why is it that road tunnels have concrete arches at both ends, at both the mouths of the tunnel?'  This time, I decided I would not let it go so I called a friend, a civil engineer and asked him.

Him: "Ever tried to carve a tunnel into the little hillock you have built on the beach?"

Sometimes a question explains it best.

September Short

It is amusing to watch parents attempting to instill discipline among their children in public places such as restaurants. Parents seem to believe that kids can be embarrassed into behaving well under pressure of the public eye. The kids always win this game of who-blinks-first.

Interview Skills Part 5

In Part 3, I covered what we look for when we present a small business problem in the interview; namely the ability to structure and solve the problem and the ability to tackle business realities that the candidate has hopefully learned at B School.

In this post, I would like to cover one approach for the industry based case study interview. These are usually the favourites of Consulting companies. The problem is usually a form of,

"One of our clients, a Top-3 player in X industry wishes to grow rapidly within the next Y years. What would you recommend we tell them to do?"

OR

"Company B's share price has been dropping for 3 quarters in a row. Company B has been a very successful player in Industry C for the last couple of decades. The new CEO is concerned and has hired our firm to address this issue. How would you go about this project?"

OR

"Company J, a large player in Industry K, is exploring an opportunity in Industry P. How would you help evaluate this opportunity?"


In all of these, there are two or three core questions the candidate needs to address.

1. Is the primary issue a revenue side issue or a cost side issue?
2. What are the top 2 or 3 cost drivers within the industry?
3. What are the top 2 or 3 success metrics that the industry uses to track progress at a top level?

In sunrise industries, another question would be

4. Has there been disruptive innovation in the industry that is going to radically chance Industry attractiveness for the current incumbents. As an example, look at the impact of smartphones and fast broadband on the Personal Computer industry. Or the impact of mobile telephony on the Plain Old Telephone Systems run by public sector enterprises. Sometimes the disruption can happen across industries, like the impact of cheap bandwidth and video-conferencing technology on reducing air travel and therefore on the airline industry.

For example, in the airline industry worldwide, the top two elements of cost are
Leasing fees for the aircraft and labour costs. Fuel costs used to be a big issue until recently and the rising cost of oil threw a number of airlines into the red during the early part of this decade.

The single most tracked metric by airlines is RPKms / ASKms i.e. Revenue Passenger Kilometers divided by Available Seat Kilometers. This metric provides a compound measure of Revenue per seat X Distance X Occupancy. Notice that if an airline is filling up its seats and flying passengers long distances at a high rate per kilometer, then the revenue side should be strong.

If the airline is making losses inspite of strong RPKms/ASKms metric, then the candidate would do well to look at the cost structure. If the usual operating costs, i.e. lease rentals, salaries, fuel, airport charges are in control, then the candidate might want to look at interest burden which was accumulated in bad times. The approach then might be to look at some way of restructuring the debt.

In the Telecom industry, the 2 most tracked metrics on the revenue side are ARPU (Average Revenue per User) and AON (Age on Network), a measure of loyalty. Telecom companies love customers who are high ARPU and high AON. Newer entrants have to concentrate on getting volumes through newer less affluent customers. Consider the subscriber base of an older established player such as Airtel and contrast this with the subscriber base of a new player such as Uninor. The established player is possibly more concerned with retaining their Professional and CEO clients while the new entrant might be focused on adding students and newly employed.

The top 3 revenue drivers and the top 3 cost drivers are crucial starting points in tackling an industry focused case. Once the primary revenue and cost drivers have been discussed, moving to any disruptions in the industry would be the next step.

The quickest way to start preparation for this type of interview would be to start with an internet search for the industry's metrics. Then in your mind reverse engineer the metrics to figure out what they reveal.

Online updates for everything

I have had a Samsung Galaxy Note II for a couple of years now and every once in a while it displays an icon telling me to update the software. I have learned to ignore the icon, but at least once in the last couple of years the phone has pretty much forced me to do the update.

I noticed the same with my new car. It seems to need an update for the navigation system ever so often and if you ignore the recommendation, the system refuses to show you any maps or provide any directions until the update is done.

This is getting worrisome; for it means that providers of any equipment we buy can pretty much decide to shut it down when they see fit. I used to believe that when we buy a piece of equipment we purchase legal title to the equipment, but these days it seems like what we are buying is more along the lines of a user licence.

There have also been some rumours about  3G dongles manufactured by a certain Chinese manufacturer have been surreptitiously sending information back to the manufacturer in China; so much so that this manufacturer has been debarred from selling telephony equipment in the United States.

If you have read O Jerusalem, you will remember that the French had willing sold guns to the young Israel in the late 1940s but then refused to sell them ammunition to fight the Arab states. Israel then vowed to develop its own manufacture of defence equipment.

I wonder how the defence establishment in India is tackling this issue. What if France decides that we should not be using the new Rafale aircraft against a particular enemy? Can they communicate with the aircraft through a backdoor to shut down the avionics systems or prevent the engine from firing up? Can we be sure there are no latent trojans or viruses installed in the GPS or Navigation software that can be activated remotely? Perhaps the old analog avionics systems in Russian aircraft have advantages beyond simple maintenance.

Now if you will excuse me, I need to move my SIM card from my Android phone to this Mitsubishi M34i clamshell phone that I managed to find online.

Interview Skills Part 4

I am writing this post in response to a comment on InsideIIM.com on Part 2 of this series. The question was how can a candidate show positive attitude, humbleness, openness and a teamwork oriented attitude.

MBA students who are going into placement season just about now are not going to like my answer.

I am not sure one can 'show' or demonstrate any of these attributes if they are not truly present. These are developed over the years. At best, someone in the first year of an MBA program can start working on internalizing these across the next year. The question then becomes, "Given that I have the right attributes, how can I communicate this fact during the course of an interview?"

One of the pre-requisites to be able to demonstrate these attributes is excellent communication skills. And communication skills are not built easily or quickly. I have found a strong correlation between candidates' ability to hold an interesting conversation in an interview and how much they love reading. To be a little more specific, people who have grown up reading Enid Blyton, and Nancy Drew and Hardy Boys novels and then graduated to reading more adult fiction, non-fiction and business management books in more recent years, have been able to have more interesting conversations during the interview process. Our most disappointing experiences are with people who claim 'Reading' as a hobby on their CV, but are unable to substantiate this claim. When we ask them to tell us about the last couple of books they have read, they are unable to name the books and authors, much less speak to the content of the books. Once in a while, we meet someone who is not an avid reader, but loves watching BBC or CNN and has internalized a good communication style, but these have been outliers.

Given a base level of communication skills, the good candidate will find avenues to speak to his / her strengths without it seeming contrived or like delivering a memorized script. One way that interview panels check for a memorized 'strengths-and-weaknesses' script is to start with a question that clearly deflects from the programmed path that the interviewer presumes the interview will take. My personal favourite is to ask the candidate to tell me stuff about himself / herself that is NOT on their CV. Speaking about yourself should be far easier than speaking about any other topic of the interviewers choosing, yet the number of candidates that this simple question seems to trip is surprisingly large.

The best candidates will speak to their strengths in the course of a conversation. I have met a candidate who had read books by Alvin Toffler and we got chatting about those. This person had clearly enjoyed reading the books and could discuss a number of arguments presented by the author. I remember we were chatting for about 50 minutes, clearly exceeding the planned and scheduled 30 minutes. At one point, we found ourselves on opposite sides of the argument and I remember his words distinctly. He said, "I would like to respectfully disagree with you sir. I do believe that there are some things that have turned out in ways not quite in keeping with Mr.Toffler's predictions." He then proceeded to make his case with clear evidence. During the conversation, this candidate had clearly demonstrated diligence in that he had indeed read the books he claimed to have read, humility in the way he chose his words while disagreeing with me and an openness in the way he heard my side of the argument as he presented his case. With this particular candidate, the teamwork ethic was not proven during the course of the interview, but by then I was already sure that we were going to schedule one more interview.

To conclude, a candidate would do well to concentrate on improving communication skills in the time between now and interview season. The longer the duration available before the interview, the better the candidate can prepare; for unlike most subjects in our university examinations, communication skills cannot be learned in a week. For a person with great communication skills, it should not be difficult to speak to your strengths during the interview.

Arthakranti

A couple of weeks ago, I attended a seminar by Prof Bokil of Arthakranti.org where he presented an interesting perspective on the size and nature of corruption and the fueling of the parallel economy in the country. One of the startling take-aways for me was a new metric he presented: the ratio of the Per Capita Income in a country to the largest currency note in circulation in that country.

In most developed nations, that ratio is at or near 500:1  e.g. Per Capita Income of the USA is USD 54000 per annum, the largest currency note in circulation is USD 100.

For India, we have a nominal Per Capita Income of Rs 74 000 and our largest currency note in circulation is Rs 1000, a ratio of only 74:1

To compound matters further, Arthakranti claims, the quantum of currency notes in circulation as a percentage of  M1 money supply in the country is far higher in India than in other developed nations.In most other countries currency notes in circulation account for less than 1/5 of M1, whereas in India, currency notes account for more than 60% of M1.

Even more interesting is the proportion of value held in higher denomination currency notes.
33% of all value in currency notes is held in the Rs 1000 denomination, another 49% in Rs 500 and 13% in Rs 100 notes. The total % of value held in Rs 50, Rs 20, Rs 10 and Rs 5 notes is a grand total of 5%.  Sure enough, there is a parallel economy running in cash and this parallel economy is being fuelled by printing currency notes.

With the new government scheme encouraging people to open bank accounts seeing some success, perhaps the next move should be to stop printing Rs 500 and Rs 1000 notes, thus making it extremely inconvenient to transact in cash. You cannot carry sackfuls of Rs 50 notes to buy something.

Another more radical proposal from Arthakranti is to abolish all taxes in lieu of a Bank Transaction Tax of about 0.5%~1% charged to the recipients account, to be shared by Central, State and Local governments in a pre-decided ratio.

Arthakranti presented a number of 68 Lakh Crores as the total volume of money being moved in RTGS Transactions per month in India today. This page on the RBI website corroborates this number.

1% of this number would yield 68000 crores in tax every month ie. about 8 Lakh crores per annum.  This is about half of the union budget for 2013-2014.

So there you have it then - the solution to Black money in the country. Take away the incentive to evade taxes and take away the ability to transact in cash.

You can download the complete Arthakranti presentation at arthakranti.org/downloads

Interview Skills Part 3

There is somewhat of a fashion these days to ask candidates to solve puzzles during the job interview. I am of the opinion that the only skills that solving puzzles tests for is the ability to solve puzzles. We only ever ask candidates to solve a puzzle if they specifically mention that they enjoy solving puzzles on their resume; and that too, only to ascertain if they are making fair claims on the CV. Even when we do ask them to attempt a puzzle, we will choose one that has multiple possible solutions, and better still, can be attempted like a business problem.

One of my favourites is a modified version of a puzzle that Microsoft has used in the past as part of its recruitment process. As I write this piece, it occurred to me that I would have loved to have met a candidate who applied the WAC framework to this problem. It is unfortunate that there have been none.

The original question Microsoft supposedly used to ask was: How would you design a spice rack for a blind person?

We make it a little case to broaden the scope of the discussion.

I am the BU head of the plastics division of a large kitchenware company operating in India. I would like to believe there is a need to manufacture spice containers for the visually impaired. How would you help me design this product and market it?

Clearly, there are two parts to the question. First, design the product well and then second, build a business case for it. 

The most obvious starting point in designing the product is to print labels in braille on the spice bottles; and quite sadly, there are people who don’t even get this far.

For those who do recommend the braille labels, I admit that it is a good start, but ask them to provide a little more detail. Should the labels be on the lid of each bottle? Or on the wall of the bottle? Is there a more elegant solution? Can we make it faster for the visually impaired person to choose the correct container without having to meticulously pass his fingers over each label. If they have chosen to put the label on the wall of the bottles, then I ask what would happen if the bottles got placed with the label facing away from the user, facing the wall.

When they answer that, I ask if they are presuming to start with our standard bottles or thinking of designing an entirely new range of containers. If the choice is to go with new-containers, I present them with indicative costs of designing and manufacturing the dies and moulds and the variable cost of manufacturing each container. At this point, a good candidate would begin, without being prodded, to try and calculate break even volumes. The candidate then needs to ascertain if there is a sufficiently large market size. We have rigged the numbers such that the total number of visually impaired people in the country is barely enough to break even; i.e. barely enough to be able to sell the spice bottle set at a reasonable price and recover fixed costs within a reasonable time. Some candidates get to this point and say that the total market will just about deliver break even volume. We challenge them to think about whether all visually impaired people in the country would be willing and able to buy our product. 

At this point, the question we pose is, “How can we sell more units then?” Often, candidates are stumped here; for you cannot invent more visually impaired people to buy your product. The bright MBA candidate will read the same question as, “What can we do to broaden the appeal of this product?” 

The conversation can then get very interesting.

Interview Skills Part 2

Yesterday, I wrote about how the best interviews are those that leave both parties feeling that they have had an interesting, meaningful conversation. I thought I would continue the interview skills thread and write about some of the things that candidates might want to revise before they walk into an interview. 

When we recruit for our company, and even when I have been on the panel for admissions to business schools, what we look for are people who can apply what they have learned to solve problems. I therefore expect Electronics Engineers to be able to answer at least basic questions about electronics, or EnTC engineers to answer basic questions about telecommunications.

One of my pet peeves is an engineer unable to answer a simple question about say single bit memory registers, provides the rather sorry excuse that s/he does not remember because they studied this topic 3 years ago. I am amazed at how many engineers seem to believe that obtaining an MBA degree gives them the license to wash their mind clean of the engineering education they have had. An MBA job does not involve making only ‘globe’ statements on PowerPoint presentations. Companies with turnovers of billions of dollars are not quite naïve enough to let that happen. They are looking for people who can define the problem correctly, structure the approach to solving it and do the math, yes real number-work, to arrive at a reasonable solution.

I am going to list a few things here that a freshly minted MBA needs to be able to do in his or her sleep before walking into any interview. The following pointers are especially pertinent for case based interviews.

1.      Be able to approach the case with a structured framework. At my Business School we had a course called Written Analysis and Communication that suggested the following 6 step framework to approach business problems.

a.      Problem Definition: Define the Problem Statement in unambiguous terms.

b.      Identify the Objective: What are we trying to achieve? Higher Sales or higher profits?

c.      List all possible alternative courses of action that management could undertake

d.      Evaluate each course of action with respect to Objective and resources available.

e.      Eliminate un-viable alternatives for valid reasons. E.g

                                                    i.     Would take too much time

                                                   ii.     Would cost more money than we can allocate

                                                  iii.     Would require more management bandwidth than we can provide

                                                  iv.     Would only partially solve the problem

                                                   v.     Would not truly achieve the objective

                                                  vi.     Would presume that external factors that management has no control over fall into place.

                  f.      Recommend course(s) of action based on above analysis and perhaps Plan B

2.      Be able to model the business case, especially if it involves profitability or NPV and IRR on a spreadsheet and to be able to defend the assumptions and the answer. I have been disappointed time and again on how students from elite B-Schools are unable to model the problem on a spreadsheet, or are unable to interpret the number provided by MS Excel

3.      Be able to explain the concept of NPV and IRR to an uninitiated person. This means the ability to explain Present Value without using the words Present Value. Read up on WACC. Be able to decide whether a company should discount a new project in a business unrelated to its primary business by the WACC of the company or the WACC of the project; and to be able to defend that answer.

4.      Be able to correctly segregate Fixed Costs, Variable Costs, Cap-ex and Op-ex and apply them correctly when working on the case.

5.      Be able to deal with ambiguity. Most real life business problems are not like the questions at the end of each chapter in a Physics text book. What might be a seemingly obvious solution to the candidate has probably been tried by the company and has failed for some reason.

For analytics jobs, be able to work with basic statistical concepts. Be able to provide one real life example of where one could apply the Normal distribution or the Binomial or Poisson or Beta. Be able to solve probability based questions.

For Marketing jobs, be able to segment the market and make rational decisions on which segments the company should target. How would you ascertain demand? Questions like, "How many petrol pumps are there in Mumbai City" are not general knowledge or trivia questions. How you approach these allows the panel to assess how you are assessing demand and supply for petrol and diesel in a metropolis. You could start with asking them how many cars are in Mumbai city or if they ask you to guess that too, start with data you might have read recently like, "RTO overwhelmed with 1600 new vehicles registered every day"

Perhaps the most important thing that MBA candidates miss is that they need to be prepared to demonstrate that they accumulate knowledge; not format their hard drive after every degree. It is always impressive to see a good candidate do math in his or her head and move forward through the case. It is invigorating to watch an EnTC engineer work on a Telecom company case and also speak intelligently about CDMA and GSM. It is equally appalling to watch a computer science engineer struggle to compute how many bytes would be required to store a coloured image, 1024 x 768 pixels in size. (Hint: Ask if it needs to be stored in 256 colors (8 bit), or 24 bit 16M colors, or higher before you begin to compute.)

Companies hiring an engineer with an MBA degree are looking for someone who can still think like an engineer and solve problems like an engineer.  

... To be continued in Part 3

Interview skills

It is that time of the year again when we start visiting Engineering colleges and Business Schools for the pre-placement talks.

One of the things we work very hard to communicate to the student body, and with only limited success I am sad to say, is that students need to revisit how they approach job interviews.

On most campuses, students seem to think of the job interview as one more exam to survive or one more hurdle to overcome. They go into the interview chamber expecting to be asked some random questions to which they will either happen to know the answer and thus make it to the next round, or be unable to answer and therefore flunk out of the process.

Having been on the recruiter side of the table for a few years now, and I believe I speak for a large number of recruiters, I can confidently say that recruiters are not looking for candidates who have the answer to every question. What recruiters are looking for are people who demonstrate a certain 'aliveness' when it comes to handling situations or solving problems.

The best interviews from the recruiters' point of view, and that alone makes it sufficient to qualify as the best interviews from the candidates' point of view too, are those where the two parties have an interesting, engaging conversation.

Having said that, two cricket buffs could have a very interesting and engaging conversation about cricket and that has nothing to do with the candidate's suitability for the job. The sad fact is that recruiter bias dictates that people want to hire people like themselves, and hence the cricket buff interviewer is likely to hire the cricket buff candidate for a position that he is not at all suitable for. The point to be noted though is that the hiring decision, though imperfect, would still have been made on the basis of the interesting conversation.

Presuming, without admitting, that the recruiters are a little more diligent and therefore unwilling to hire cricket buffs with no other skills for say a sales job or a finance role, and are indeed seeking to gauge relevant skills during the half-hour interview, how could the candidate prepare for the job interview?

My solution might seem Machiavellian to some, but with that disclaimer in place, allow me to present it here.

The best way for a candidate to prepare for an interview is to figure out a way to gently steer the conversation during the interview to an area or topic of his or her comfort. The best way to take the conversation to such topic is to plan ahead on what questions would provide the best platform for the candidate to shine and then to seed such questions during the conversation.

Imagine for a minute that the candidate has come back from a fulfilling summer internship working at company ABC and that the candidate found the experience a great learning opportunity. Let us also presume that a chance to speak about the work done during the summer internship would show this candidate in very good light to the interview panel.

There are a number of ways to direct the conversation so that one could get to talk about the experience during the internship. Any open ended question is an opportunity to steer the conversation there. A few examples...

Q: Tell me a little bit about yourself.
A: Apart from what is on my CV, I would like to believe that I am a very curious person and that quality helped me tremendously during my summer internship at ABC Company.
Q: Tell me about your internship at ABC.

OR

Q: What was your favourite subject at B-School? (Or at engineering school)
A (B School): I really loved Marketing (or Finance or Operations) and a couple of cases we did helped me tremendously to understand the perspective that my summers guide was trying to bring to the marketing (or finance or operations ) initiatives at ABC. I learned as much from my summers guide as I did in class for that course.
B: (Engineering): We had a great prof for Database Management and her classes were very engaging. The stuff I learned in that course helped me do much better during my summer internship at ABC
Q: Tell me about your internship at ABC.

OR

Q: What do you think about the economic climate in the country this decade?
A: I truly believe India is the land of opportunity post 1991. I know they used to say this about the United States for the post-war (World War II) period, but I think the place is India right now. I used to think that some industries are sunset industries, but my experience during my summer internship at ABC co showed me that even that industry can offer so many opportunities for growth...
Q: Tell me about your internship at ABC.

OR

Q: Tell me about your hobbies.
A: I have played X Sport at inter school level and it has taught me the value of patience and perseverance. It was these qualities that helped me tremendously at my ABC stint during my summer internship.
Q: Tell me about your internship at ABC.


Notice that the answer to the first question has pretty much decided what the second question is going to be. Similarly, the answer to the second question can pretty much decide what the third question can be. For example.

Q: Tell me about your internship at ABC.
A: I worked in the Marketing / Operations / Finance department at ABC and there was one piece that I worked on with my guide that taught me to see the function in a completely new light. I used to think that this functions only involved XYZ, but my guide showed me how JKL is equally important
Q: Tell me more. OR
Q: How was JKL relevant?


If the interview panelists can go away from the interview realizing that the candidate was really passionate about learning during the internship, or better yet, if the panelists can go away thinking that they actually learned something new from the candidate, they are going to find it extremely difficult to pass this person over. If nothing else, making the short-list for the next round of interview is a reasonable expectation of outcome.

If you can come out of the interview conversation having left the panelists feeling that their batteries were recharged, you have had a great interview. Needless to say, this is far better than a scenario where, because the conversation is stunted or stifling, they feel the need to 'test' the candidate. Then of course, the interview is indeed one more exam to be passed or one more hurdle to be overcome. Even if one passes the exam or overcomes the hurdle, one would still be competing with the person who the panelists enjoyed conversing with.

No prizes for guessing which candidate makes it to the next round.