Fiscal Deficit

A high fiscal deficit results in competition for funds, as borrowing by the government increases.More competition for funds means the following

• The interest rates rise
• Since the cost of funds increases , investment slows down
• Economic activity drops, leading to a depression
• Foreign inflows increase in the form of FII, resulting in appreciation of currency.Appreciation of currency is not good for exports.
• Foreign exchange volatility increses,  making the economic environment unstable
• Inflation increases hurting the poor the most.
• Since the govt borrows more than it earns, the credibility of the nation goes down.

All these are not good for the economy and that is why the FRBM act lays down the limits on fiscal deficit. A low fiscal deficit is healthy as credit is the lifeline of an economy, but too much of leverage is what is worrisome.The govt has , to my mind, now and in the past, concentrated on reducing fiscal deficit by increasing revenue, rather than by controlling expenditure.The largest govt expenditure is on account of subsidies, which in any case are misdirected. As a child , I was often told by my father, that the income can be perceived to be doubled by controlling the expenditure. As a govt servant, I know that there is a lot of scope for controlling wasteful expenditure.I urge the political leadership to take note of this, and force  the govt machinery to tighten its belt. They of course need to lead by example before doing that.

Pigeon Bombs

As per reports in a leading business daily, Ms Mayawati has instituted a Statue Protection Force(SPF) whose task is to protect the 12-13 odd statues of herself, and her mentor, spread across the state. For a state that has the dubious distinction of having a very low ratio of policemen per citizen, the ratio of SPF personnel per statue will be the highest in the world. Some consolation indeed! But how does the popular leader intend protecting the statues from the pigeons that are adept at doing what they do. UP probably needs a mini Air Force on gliders/microlights/powered balloons to scare away these birds, so that the indigenous bombs of theirs drop on the hapless citizens, rather than on the statues.

Rigor Cartis

Peter and Hull have spent considerable time studying incompetence, and are famous for the Peter  Principle, which is nothing but the 80:20 rule. It means that 20 % of the people do 80 % of the work or 20% of the inventory has 80 % of the value .They have talked about the managers or officers suffering from ‘Rigor Cartis’. This is a condition in which people suffer from an abnormal interest in the construction of organisational flow charts and the issues of that kind. They strongly believe that every scrap of paper or information should follow the chart, even at the cost of undue delays and waste of organisational resources. The ‘Rigor Cartis’ patient is actually a drag on efficiency. These kind of people are often found in government organisations where paper tigers abound. The people who suffer from this disease are the ones who are frantically busy drawing up reports and having meetings after meetings. They often ask for written proposals, but never have enough time to go through these reports. There is too much of this phenomenon in many organisations that I have seen, and decisions often take months, where it should normally be a matter of days.  Is any of you experiencing Déjà Vu? 

MAGGI DISPLAY INNOVATION

Which business is the retail in? Going by the performance measurement metrics, it is clear that they are in the business of real estate as the performance, as in real estate, is measured in ROI acheived per square ft.With so many FMCG brands jostling for space and customer attention, it is no wonder that the price for innovation was given to an Indian for Maggi display innovation.Let us see why?In retail the most important thing is to acheive visiblity at the display point.जो दिखता है वो बिकता है. The out of box thinking by this gentleman was the use of  a hanging basket for storing Maggi in the shop.No other brand in the shop could claim better visibilty, as the customer would be forced to notice the basket hanging in front of him. Even the customers not buying from the shop would notice the same. Secondly as the space used was thin air,ROI in the traditional terms of sales acheived per sq ft would be infinity, since denominator is zero. Sometimes simple ideas turn out to be game changers 

Brand Management

The new professor for brand management is an amazing guy. He had these insights to offer into human behaviour that impact the role of  a brand manager.

Watsonian First It is next to imposssible to dislodge the first experiences that you have in life. Our food habits are formed in our childhood, and are therefore difficult to dislodge. Similarly psychologists tells us that the basic nature of  a child that is formed in the initial years remains the same throughout the life, and is thus difficult to change. From the perspective of marketing , the brands that are the first to come out with a product are difficult to forget, so much so that their names that are proper nouns become a verb. Example, Xerox it, teflon coated. We all know that xerox is the name of a company and Teflon is a product from Du Pont. Innovation is the way to go to gain the first mover advantage.

RAM Problems Human mind has RAM problems, and is therefore an inadequate container.There are about 38 soap  brands with an advertising budget of more than 5 Cr, but on an average  a person is about to recall just 7-8 in an instant.Just as an inadequate container requires more frequent fillings, similarly for top of the mind brand recall, a Brand manager needs to take action that bombard the consumer with the image/symbols of the brand.Remember that all parts of the marketing mix, namely Product, Price , Place and Promotion communicate to the consumer. The most expensive being Promotion, less of it would be required if the other three are in order. Some of the companies solely survive on the strength of their product quality that they just do not have to advertise much. example Philips, IFB,Sony etc.

Why I don't Listen

Like all women ,my wife has often told me that I do not listen.Lately my daughter has started saying the same.Well, I do accept that I am a typical Piscean who is a dreamer, and very often my mind is wandering in the meadows,irrespective of my physical presence at a place.In many of the personality assessment exercises that I have done in the MBA course, the message comes out loud and clear that not only I do not listen, but I show signs of lack of assertiveness as well.On doing some self assessment, I realise that 'not listening' is more on account of inability to concentrate on the task at hand, rather than because of having pre-conceived notions on issues.I wish I had a remote that could pinch me every 10 minutes as a reminder.Since self awareness is the first step to change, I hope to improve.   

Gems from talk by sunilhanda@eklavya.org

• An entrepreneur should be very flexible and should have  a multifaceted personality. His behaviour with customers, suppliers and govt functionaries should be different
• To be successful, he should have exceptional domain knowledge.It means that you should know the business backwards.It is not essential that you should work in the same field in which you have knowledge,but it means that you should be ready to burn the midnight oil to gain such knowledge.
• Your partners in business should be people whom you trust, and should possess complementary skills
• Never acccept the stupid answer-'Nobody has done it before'
• Have the knowledege of both your supplier and his supplier's business
• An innovator is one who doesn't know that it can't be done.So press on.
• As long as you are hardworking,sincere and not ready to give up, you will never fail.Persistence is the key.
• If you are doing the donkey work even after being in the business for 4-5 years , it means that you are not doing it right.

Types of Intelligence

Prof Sunil Handa of IIMA gave  a talk on entrepreneurship today,and in the course of his talk he mentioned about the various types of intelligence as given by Gardner. I found this educative piece on the net and am putting it up here for the benefit of my friends.

Psychologist Howard Gardner has identified the following distinct types of intelligence in his Multiple Intelligences Theory ("MI Theory") in the book "Frames of Mind." They are listed here with respect to gifted / talented children.

1. Linguistic Children with this kind of intelligence enjoy writing, reading, telling stories or doing crossword puzzles.

2. Logical-Mathematical Children with lots of logical intelligence are interested in patterns, categories and relationships. They are drawn to arithmetic problems, strategy games and experiments.

3. Bodily-Kinesthetic These kids process knowledge through bodily sensations. They are often athletic, dancers or good at crafts such as sewing or woodworking.

4. Spatial These children think in images and pictures. They may be fascinated with mazes or jigsaw puzzles, or spend free time drawing, building with Leggos or daydreaming.

5. Musical Musical children are always singing or drumming to themselves. They are usually quite aware of sounds others may miss. These kids are often discriminating listeners.

6. Interpersonal Children who are leaders among their peers, who are good at communicating and who seem to understand others' feelings and motives possess interpersonal intelligence.

7. Intrapersonal These children may be shy. They are very aware of their own feelings and are self-motivated.

MI Theory teaches parents and educators to look for signs of innate precociousness in children and then to help develop them.When asked for advice on how parents could rear successful children, Gardner says that we should not try to make our children good at what we ourselves were good at, or what we ourselves were not good at. Gardner says that our job is to help our children become who they are supposed to be, not what we think they should be. Some parents find it difficult to follow this course

Culturally sensitive Marketing

Without a culturally correct interpretation of a country’s aesthetic values, a host of marketing problems can arise. Product styling must be aesthetically pleasing to be  successful, as must advertisement and package designs. Insensitivity to aesthetic values can offend, create a negative impression, and, in general render marketing efforts ineffective or even damaging. Strong symbolic meanings may be overlooked if one is not familiar with a culture’s aesthetic values. The Japanese for example consider the crane as being very lucky because it is said to live a thousand years; however the use of the number four should be avoided completely because the word or four, shi, is also the Japanese word for death. Thus teacups are sold in sets of five, not four, in Japan.

Patther Panchali

I happened to see Satyajit Ray''s 'Pathher Panchali' yesterday, and was almost moved to tears by what has been so nicely picturised by the great cinematographer.In one short film ,he was able to capture the abject poverty of the rural Bengali people, and their almost hopeless situation in life.Things are pretty much the same in any part of India, and the problems too are similar.This is despite India growing its GDP by almost 8 % every year. I guess it is the law of averages at work,with some people growing at a meteoric pace, while others showing a negative growth.And Robindranath Goes....Into that heaven of freedom ,let my country awake............!