MBA: Finishing School

“The greatest discovery of my generation is that a human being can alter his life by altering his attitudes of mind.”
– William James
In today’s world the titles like CXO, leader, associate, VP, AVP, manager are so much diluted that the business cards and the designations typed on them often reflect little meaning. Rarely people who just met in a professional environment (like an internal business meeting) have time to do a detail assessment of the person’s credentials. With start-up CEO in their teens, how does a person communicate their importance in a subtle way which does not make you pretentious but is a true reflection of one’s importance?
Two common strategies applied by executives today are: First, exquisite dress & accessories. Your watch, designer suit, car, vacation home are indicators of one’s stature and wealth. Some companies even enforce (informally) these practices on its sales representatives. If the sales representatives have expensive tastes, then they are probably achieving their targets consistently, which means that the company they are representing is doing well. The second strategy is use of wingman, a tactic widely promoted in all negotiation classes. The 2 or more associates would collaborate to create the right aura and achieve desired results. Often in the first five minutes of ice-breaking you would hear a lot of buzz-words and references to brands and celebrities to make sure that one gets the proper respect.
However material assets are getting increasingly commoditized and difficult to flaunt over a teleconference or email. References to famous business associates or renowned projects/companies are often difficult to relate to when interacting with someone from a different part of the globe.
The first lesson of any finishing school is that you are as valuable as you think you are. The world is full of sheep who rarely will question a lion who believes he belongs there. With the right packaging and attitude, anybody can occupy any chair that they cherish. The two-year MBA program is just to make sure that this aura is not shattered when you open your mouth.


Employer paid insurance

In India most employers have a generous life & health insurance cover for their employees. However is it good enough? Are employees over cautious when they purchase a separate personal cover? On one hand there are several government and manufacturing industry employees who don’t switch jobs because of the retirement benefits, medical and insurance cover provided by their employers, while there are so many fresh graduates who don’t pay any importance to these perks (if they even do exist).
The issues with employer insurance are:
1. It is not enough. An adequate cover should take take of the entire present value of the family’s obligations (debt, housing, kids education, medical, food etc.) less the accumulated (or inherited) assets. A single blanket cover is often not good enough.
2. What happens if you loose your employment status due to a a prolonged illness/disability which renders you unfit to continue to perform your official duties. Hence this privilege/perk of insurance is revoked?
3. It is not portable. i.e. the benefits cease to exist when you switch companies (voluntarily/ involuntarily) , your employment status changes from full time to part time etc.
4. It is not guaranteed. It is considered as a perk and the company could change the cover/suspend the policy at its whims. Even most reputed company often switches between insurance providers or the fine print terms/restrictions on the insurance. This puts your long term risk coverage goal at a risk.
Hence it is often advisable to supplement your employer paid insurance with a personal cover of term insurance. Also medical bills due to prolonged illness/critical care often ruins even the best planed finances. It is advisable to have a separate rider to cover for the situation where the breadwinner starts to drain the family’s equity.


Why breed

I was recently referred to the Voluntary Human Extinction Movement. Although bulk of the this website’s data is too radical even for me, they do make some interesting comments on the ridiculous rationalization and logic we sometimes have:

It is undeniable that human beings are a parasite on this earth. We waste resources and pollute the lands. However the table below had some interesting rationale for some of the common reasons which couples give for having a baby. I wonder is that is the reason why smart and intelligent people have lesser kids and are more likely to stop at one.

Reasons given
Real reasons
Suggested alternatives
I can’t help it, it’s a biological urge. Unexamined motivations. Institutions await those who can’t control their biological urges.
Want to give our parents grandchildren. Still seeking parental approval. Live your own life and encourage your parents to do the same.
I just love children. Out of touch with inner child, and with existing children. Adopt, step, and foster parenting.
Big Brother/Sister. Work with children, teach.
I have superior human genes. Doesn’t recognize an oxymoron.
Do great things with your genes, rather than expecting the next cultured batch to do it.
Need help on farm or in family business. Too cheap to hire help.
Child labor laws inconvenient.
Mechanization gives faster return on investment.
Want someone to care for me in my old age. Fear of aging.
Exploitative personality.
Save money and prepare for retirement. Be nice to people so they will visit you in the home. Build social support network.
Pregnancy and childbirth are life experiences. Life choices limited by social indoctrination. Rent pregnancy simulator. Choose different life experiences.
A good family is essential to career advancement and strong standing in the community. Social insecurity. Wants trophy children to improve social status. Rent children from talent agency on special occasions. Have white picket fence installed.
We want to create a life which embodies our love for each other. Ego, times two, minus imagination, equals three plus. Garden. Adopt a stream, trail, or hiway. Rescue animals. Protect & restore ecosystems to embody love.
I want my kids (who don’t exist yet) to have all the things I didn’t have. Unfulfilled childhood desires and fantasies. Deal with regrets & make best of life. Provide for existing children.
To carry on family name. Trying to please Dad.
Duped by bloodline superstition.
Create something enduring & give it family name. Donate blood to pass on bloodline.
Want to see a little me. Self-absorption. Lack of ego gratification. Order custom-made, life-like doll.
Create a gratifying life of your own.
My wife/husband wants a baby. Giving in out of fear of losing partner. Communicate true desires. Spouse may feel you’re the one who wants to breed. Rent baby simulator doll.
Want a child with our bloodline. Ego extension. Racial identity. Recognize value of people with different genetic makeups.
It’s a spiritual thing for me. Other reasons too easily refuted. Find truly spiritual experiences.
I’ve always wanted to have children, it’s what people do. Unquestioned cultural conditioning. Consider alternatives. Question expectations. Adopt.
To cement our relationship. Fear of failed marriage. Communicate to strengthen relationship. Attend retreats for bonding couples.
I love babies. Short-sighted view of reality. Babies soon turn into children, then adults. Infant care work is available. Life-like infant doll may help.
Being a mother is a woman’s highest calling. Beguiled into believing compliance is noble free choice. Motherhood, and fatherhood, may be achieved without breeding. Many children wait for good homes.
We’d like to try for a boy/girl this time. Ego extension. Gender identity insecurity. Dissatisfaction with existing offspring. Appreciate who you have, they might resent their sibling whose gender is preferred.
I just want to. Just wants to. Choosing to breed precludes most other things you’ll just want to do.
I want someone who will love me and not leave me. Fear of rejection. Unresolved relationship issues. Give love to get love. Accept change and deal with loss.
Our economy needs young workers to replace retired workers. Willing to sacrifice offspring to gods of National Economy. Automation reduces need for wage slaves. Consider rights of unconceived to stay that way.
The world needs more of us or we’ll be outnumbered. Elitism. Xenophobia. Eugenics easier to conceal than genocide. Convert others to your views so there’ll be one more of your kind and one less of Them.
We may as well, the planet is doomed anyway. Nihilistic natalism. Consider ethics of sentencing an innocent person to life, and death, in ecological collapse.
I’d like to achieve a sense of immortality. Fear of death and non-existence. Accept mortality. Spread memes not genes. Socrates’ heirs are not apparent, but his ideas linger strong.
My biological clock has gone off. Women’s normal heightened sexual desire in 30s & 40s difficult to accept in puritanical societies. Disarm that culturally-implanted mental time bomb. It’s okay to make love and not babies.
I don’t know. Never thought about it. Unthinking conformity. Think before you breed, and you might not.
I might regret not having had the experience later, when it’s too late. Fear of future worries and life passing too fast. We can’t experience everything. Far better to regret not breeding than to regret breeding
I do not want to deny my kids (who do not exist yet) the joy of existence. Ignoring lack of joy in existing children. Promote existence of joy rather than imagining joy in mere existence.
Procreation has traditionally been a source of personal empowerment for women. Feels powerless. Desires power and respect society appears to give to mothers and withholds from others. Mothers get more lip service than respect. Picking up family’s slack is not empowering. Seek self-defined sources of power.

Although the above statement has a tone of being elitist and politically incorrect. It does reflect the reality that there is a link between fertility and education levels/income.


OPEC & MBA simulation games

Even a casual meeting between 2-3 key executives of the same industry could lead into anti-trust and anti-cartel surveillance. Those who raise their product prices are charged with monopolies and restrictive trade practices, while those who reduce the prices are charged with anti-dumping laws. Microsoft actually paid fines for bundled software that it shipped for free.
The Saudi’s and a dozen Sheikhs of the worlds set the world prices of this trillion dollar oil industry. Furthermore they are being criticized and the political motivations questioned for not keeping it at inflated levels.
My MBA school (IIM Lucknow) had a 1 day devoted to OPEC simulations. The class was divided into 4 groups and all 4 groups had to collectively negotiate the selling price and production volume. Later on they were asked to go back to to their desk and execute a strategy that was either in compliance with the negotiations or cheat to maximize the self interest. Then we were asked to document our

  1. Did you calculate the fully collusive outcome? If so, how?
  2. Did you calculate the non-cooperative equilibrium outcome? If so, how?
  3. How did you formulate your bargaining position in the negotiations?
  4. Did you adhere to any agreements you made? If so, why?
  5. Did you cheat on any agreements you made? If so, why?
  6. If you were to advise someone in this position in the future, what advice would you offer for a successful strategy.

The idea of the class was noble. Simulate a real life scenario and teach students strategy, collective bargaining, game theory, business negotiations & how to prioritize between reputation, personal and collective gains. However the underlying assumption was OPEC is going to stay and it is a text-book example of countries that do not see eye to eye with each other successfully collaborating/conspiring for their own selfish gains.
But is life a game? Oil is the basis of energy, transportation, manufacturing, automotive, aerospace and so many other industries. There are more than a dozen countries who are solely able to exist because of the oil export revenues. Russia, Syria, Venezuela and even ISIS might collapse due to oil prices and not by military actions of the civilized world. Prior to 2002, oil traded between $20-40 per barrel (120 liter) and today after a crash it is trading at $44.
Isn’t it like the classic story of if you owe $100, then it is your problem, but if you owe $100mn then it is the bank’s problem


Indian Logic & education

This article in Hindu made me think.
1. I purchased Petrol at INR 67/- a liter approx $4/gallon, Diesel at $3.2/gallon while the rest of world is able to procure fuel at half my price
2. Oil distribution/marketing is not a monopoly. There are half a dozen companies some PSU, some indian private, one even multi-national giant and all of them are allowed to set their own independent prices. Yet the prices are the same in all fuel bunks?
I don’t know what convoluted logic applies, but we have created a miraculous scenario in which oil companies are perpetually bankrupt, government is unable to sustain fuel subsidy while the consumers end up paying twice as much?
One of my uncle had once quoted:
“School education is a very stabilizing powerful tool to mass breed the doctrines, beliefs and principals of the regime. However, there is no greater destructive force then college education for the lower echelons of the society. This is the reason why all dictators or quasi-democracies esp. around Gulf and Africa invest billions in primary education but will import college graduates at exorbitant sums.”
He had traveled to 40 odd countries and yet could not explain the simple logic how a country like India can skip primary education to invest in secondary education only and yet not have any revolution?


Oil Investment for Indians

In 2009, I invested a substantial amount in ONGC and Cairn, the only 2 oil production companies listed in Indian stock exchange. The oil price more than doubled but even after 2 years i made a measly 20-30% return. Not wanting to repeat my prior folly, I have embarked in a quest of how to gain in the event that Oil prices go up by 2017 (2 years from now)
1. Invest in India. No ways, I am not going to be at the whims and fancies of corrupt bureaucrats/ politicians , their fickle policies and administered price/subsidies
2. Invest in MCX commodity index. the lot size is 100 barrels and due to low margin requirements and leverage of Futures market, I could gain from an effective multi option/futures strategy. However they don’t have contracts with long term expiry and 90 days is too little a time for me. Also either party or the exchange could force a physical delivery or cancel the contract if they suspect speculative trading. WHAT AM I GOING TO DO WITH 100 Barrels, 12,000 Liter of crude oil?
3. CMX or the London commodity exchange. the lot size their is 1000 barrels. So it is an exposure of good $40,000/- USD per contract. Even after 10 years of experience, I don’t have that kind of gamble around money.
4. Hence I am left with the last option of opening and tdameritrade account and invest in blue chip oil companies that stand to gain tremendously with my opportunistic buy low and sell high strategy.
Couple of issues:
1. Account opening needs ITIN/SSN number which I don’t have. Also the account could get frozen and undergo tedious litigation if the documentation is not proper. I always fear the unknown beast.
2. If the Dollar loses its value, I stand to pay taxes on my US dollar gains but might not get any credit on my currency exchange losses. Also due to small sums and the generous dividends paid by the oil companies. I need to manage cash-flows and taxes on this multi year strategy.
3. I need to find a good instrument to back on. Look at the PE ratios and the not so significant difference between the 52 week high and today’s price. How can a commodity company whose unit sale price dipped by 60% without any offsetting increase in volume still command a double digit PE ratio? This is when the PE ratio is for last year and does not reflect the future profitability?

Name Last price Mkt cap 52wk high 52wk low EPS P/E
Royal Dutch Shell plc… 64.34 202.05B 88.13 62.11 5.09 12.64
Schlumberger Limited. 78.05 100.43B 118.76 76.73 5.32 14.66
Halliburton Company 38.54 32.66B 74.33 37.21 3.88 9.94
SEB Brent Crude Oil… 70.98 173.21 74.51
Baker Hughes Incorporate… 55.09 23.83B 75.64 47.51 2.96 18.61
BP plc (ADR) 36.05 109.61B 53.4825 34.88 2.98 12.11
Chevron Corporation 105.88 200.16B 135.1 100.15 10.86 9.75
Exxon Mobil Corporation 90.33 382.51B 104.76 86.19 7.95 11.36
Royal Dutch Shell plc… 62.93 202.05B 83.42 60.84 5.09 12.36

BTW do read this good report on US Oil industry


New year wishes

Source: Email forward
Making resolutions for the new year is a neat trap – you know you are going to break most of them, and feel terrible about it for the rest of the year!
Instead, I suggest you make a wish list. It is like a buffet spread-you can eat all or eat nothing-it depends on how hungry you are.
I have made a wish list. Which can provide the required magic to my life. It is like a beautiful buffet spread on a Sunday afternoon.
Starters: (pick any 2)

  1. I will try to get up early (you can accomplish 30 % more during 5 am to 10 am)
  2. I will exercise at least for 30 minutes 4 times a week (you have no choice on this)
  3. I will meditate /pray/ visualize positive things/do yoga for 30 minutes every day.

Main course (pick any 6)
1)  As soon as I step out of my door in the morning, I will behave as if I am on national television. My behavior will be impeccable.
2)  I will invest in best clothes I can afford-along with good shoes (It has been proved, that better dressed people earn 15 % more-all things being equal)
3)  At work, I shall do only things, which will increase my sales or reduce my costs. (Whatever you focus on-expands!)
4)  Will outsource everything, which is not my core competence. (Won’t waste time on improving my weakness)
5)  Will reduce my mobile bills by 30 %. (Mobile phones are the biggest time waster in corporate world)
6)  Will contact 3 customers every month, who have stopped doing business with me. (It is three times easier to convert old customers, than acquiring new once)
7)  Will personally talk to 20 % of my top customers every month. (They run my kitchen and will contribute 80 % to my sales)
8)    I will not call my employees on weekends or when they are on vacations. (They will respect me for that)
9)   I will at least take one risky decision, which I was always scared to take. (I don’t want to die of boredom-do you?)
10)  I will train my brain to think creatively every day. I will try to do different things to exercise my brain muscles- try new style & color of clothes; go to new restaurants, visit zoo; listen to different music; visit toy shop to observe children buying toys, be nice to my mother-in-law.
11)  I will do five things everyday, which will take me closer to my goals. (Make this as my screen saver)
12)  I will not forget to market myself every day.
Desert (pick all)

  1. I will take 2 vacations in a year.
  2. I will devote at least one day (Sunday) for family only. No business calls, no laptops. Does not matter, how big my business/position is.
  3. I will smile at everyone I meet. (Even to the liftman)
  4. I will hug my spouse everyday in multiples of three.
  5. I will watch one movie in a cinema hall every month (it is therapy for the soul)
  6. I will read at least 2 books in a year.
  7.    I will do one thing, which I was always fearful about.
  8. I will call two old friends, whom I have not spoken for years.
  9. I will do one thing, which makes me truly happy. Does not matter if my wife or children get mad at me.
  10. I have got only 52 weekends. I will not let anybody spoil them.