The insanity that fuels our news

Once in a way there comes a article that should go viral. This is one such article that opens your eyes to social psychology and how we need to question what is being tossed at us in the name of news.

http://www.livemint.com/Leisure/ZTOhjkqiEpbgnXCxsWdDfP/The-insanity-that-fuels-our-news.html

A must read and thank God that the freedom of the press allows it to hold a mirror to itself

Also. I haven't been too active on blogger since there seem to be visits but no comments. Do drop a comment to say hi, if you liked any post.

Designing your goals - Article for the day 16 Sept

While working in Incentive Compensation design (How to measure people's performance and pay them for it) we always faced the dilemma of relative pay or open ended pay. In relative pay people needed to be ranked and paid according to their ranking. Open ended pay was based on how you performed against your baseline performance. Most companies I know force rank people into a "Bell Curve" for grading so that they can control how much profit goes out in bonuses. But as this article describes, if you want amazing performance from your people with lower anxiety; make it about challenging themselves, rather than comparing them against others.

The way we design our working and learning environments can change people's motivation for achieving important tasks.

http://news.stanford.edu/news/2012/may/shape-achievement-goals-051012.html

P.S. The logic behind these posts can be found in this post

Cyclical Nature of business - Article of the day 11 Sept

"A housing slump in India" Sounds impossible? Not really. In fact I have been amazed at how everyone I talked to about real estate in the last two years believed in the never ending rise of housing prices. Even after pointing out to them that this was exactly what happened prior to the US housing bubble, they had enough reasons to believe that India was different. They talked about how India was different from the US in x,y,z ways. Pointing out that they were using the "decoupled" logic which the stock markets used but failed miserably, couldn't move them.

http://www.nytimes.com/2013/09/11/business/global/a-housing-slump-in-india.html?_r=0

This is the cyclical nature of business. What goes up, needs to come down. There will always be boom and bust cycles.

P.S. The logic behind these posts can be found in this post

Real-Life 'Iron Man' - Article for the day 28 August

I have written about Elon Musk in the past. However, this headline just merited a full post to itself. I mean who can resist a title like

Here's More Proof that Elon Musk Is a Real-Life 'Iron Man'

The next one that came up was

Tesla outsells Porsche, Jaguar, others in Calif

Interestingly these seem more like marketing campaigns. At sometimes you are comparing brands
The swoopy electric sedan outsold all models from other luxury brands Porsche, Volvo, Lincoln, Land Rover and Jaguar

and at other times specific models
With 4,714 new Teslas registered over the six months, it even topped some established conventional luxury models like Lexus GS, at 2,298, and Audi A6, at 1,619

I haven't done a lot of research but in a state like California which enjoys sunshine through out the year and the Toyota Prius is the best selling car, this doesn't seem like as big a win as it is being made out to be. It seems more like a case of keeping the company and its founder in the media to build awareness.

I guess, there is no point building the best product in the world, unless you know how to market it. Given the number of things that clamor for our attention on a daily basis, good products might not just sell themselves.

P.S. The logic behind these posts can be found in this post

Why MBA?

The most likely reason for you reaching this page is because you are the typical "Indian IT Male". You did well in school. So your family and friends convinced you to take up engineering as this was a "safe" career move. By the time you were close to your final year of engineering you heard about these "MBA" graduates who made a lot more money than what you were being offered through campus placements. So you decided to prepare for the CAT / XAT / SNAP / etc. The first attempt was unsuccessful, so you decided to take up a job while you prepared for it again the following year. Unfortunately most of the jobs in 2000 all revolved around IT and IT services. It didn't matter if you were a civil engineer, metallurgy engineer, mechanical engineer etc, you most likely ended up working in IT thanks to the booming IT sector and pay packages. 

A few unsuccessful attempts later you started to think let's do an MBA from ISB, Great Lakes or some US / European school. While reviewing the application form for these schools you then come across the dreaded question - Why MBA?

The brutally honest answer to this question is because you believe that MBA is a ticket to make more money. The equally brutal truth is that most B-schools would chuck your application right out the window if you were to write that in your essay. So then you go through the next few phases of the discovery process that I shall try to summarize here.

1) These are my qualifications / CV / Extracurriculars / Profile - Can I expect a call?

This is the first reaction of most people and completely understandable. Up until this point everything you obtained was based on your achievements. Admission from kindergarten to first standard is also based on your report card. Every time you moved schools your previous report card had to be shown. Admission to undergraduate school, your first / second / third jobs were all about what you had achieved in your past. Unfortunately for you, this is only a tiny tiny fraction of what a B school application is about as explained in this post

2) What now? - Well, get ready for a hell of a ride AND a lot of work!

This is probably the most frustrating phase that applicants go through. My advice is to have a very strong network of friends at this point of time. Given that everything is about to turn topsy-turvy a good friend circle helps. I kept a note book with different sections for the items below. But you could use an online document just as well.

2-1) What are your interests?

If tomorrow you were to get up with absolutely no family constraints and a very wealthy long lost uncle who has bequeathed you a fortune what would you do?

Well, this is exactly what we are dreaming about right? I am rich. I can do anything I want. I can travel the world, I can buy fancy cars, a private jet, a huge house, expensive gadgets. I can date the hottest models and get plenty of sex............. the list goes on. But what are you doing? Can you continue doing it for  another 40 to 60 years and not get bored? Be honest with yourself.

This is one of a bunch of tests used to find out what makes you happy. Some people have told me that they could end up painting the rest of their lives. Some wanted to open up restaurants and chat with the patrons. Some want to open up libraries and discuss the books with others. Some want their own private libraries. Some want to open day care centers since they love working with children. What keeps you ticking?

2-2) What do you see yourself doing?

Once you figure out your interests (items that make you happy), figure out how can you get there given your present constraints. For example, if you like to paint give yourself 2 hours every weekend for exclusively for painting. If you like to travel, decide to spend one or two weeks in a year traveling to places close by. 

2-3) Can B school really get you there?

Now this is where we come back to the "Why MBA?". You want to start your own company - Hmmm... So how many alumni from this school have actually started their own companies? You want to work in Private Equity - What PE companies come to the school? What kind of roles do they offer. What kind of prior experience do they look for?

2-4) You can't change careers / industries / functions so easily!!

Post your undergraduate degree you probably switched jobs easily. You also probably heard of some chap in IIM - x who moved into private equity and is earning Y lakhs per month! However, this is not true for B Schools targeted at people with experience. Given that the average work experience is about 4 to 5 years the companies coming for recruitment are not looking to take you as a fresher and train you. They are looking for people who have relevant work experience and can hit the ground running.

Reach out to the school, its alumni, scour websites and try to see if the school fits what you are looking for.

3) Holy s***. It costs what?

With an unfavourable exchange rate and increasing fees for schools all around the world, take a step back and look at your ability to pay. Poets and Quants has a post on how MBA costs have increased by 30% while graduate salaries have only increased by 10% over 10 years. 

4) Hmm...... It should pay off in the long run right?

Think again. Typically, your expenses increase as your income increases. Post B-school there is a house / car to buy. There is also typically a wedding in the family and aging parents / grandparents to look after. With these many expenses it really isn't easy to pay off that loan. If you end up getting married, there is a possibility that there will be a child on the way pretty soon. You will also need to save up for the child's education and your own retirement.

Another point to note is that most schools talk about their CTC figures. Not in hand salary. Knock 20% - 30% of the average number from the salary statistics. Knock another 20-30% off to tax. When you remove the EMI are you really getting more in hand than what you are getting right now?

Conclusion

Well, if this post has a take away, it is that you are probably more confused about your MBA than before. Well, that is the point of this post. To get you thinking. When you enter this league. You aren't going anywhere unless you are thinking.

Okay the real conclusion

Most of the people I have interacted with are smart folks who eventually want to start their own business that will change the world. They feel that B-school will open doors for them. While it definitely does open doors, it also closes some. Given the financial burden that it imposes, it reduces your ability to take risk. Also, you look at your post MBA salary as the minimum that you should be earning from your business in order for it to make sense. Also, it takes time and effort. Given the direction you want your life to take, the price to pay might be a heavy one.

P.S. This became a really long post, so I had to cut down some sections to the bare minimum idea. If you want me to expand my line of thinking on any of the sections, leave me a note in the comments. Thanks.

Death, Dying and choices in life - Article for the day 12 July

When you look back on your life what are the things that you value the most? How much of that did you do? A interesting compilation by a palliative care nurse. 

http://www.guardian.co.uk/lifeandstyle/2012/feb/01/top-five-regrets-of-the-dying

P.S. The logic behind these posts can be found in this post