Let me explain. Like most other graduate programs in the US, B-schools also require applicants to get a set of letters of recommendation. Unlike other programs, though, these are not simple letters of recommendation. Rather than the recommender simply writing out one essay where he/she extols the virtue of the candidate he/she is recommending and requests the university to grant admission, here he/sh has to answer a bunch of questions that the university is asking for. These questions might range from the mundane sounding (I’m told there’s a catch, though) “How do you know the applicant?” to some high-sounding stuff like “What is your opinion of the leadership qualities of the applicant? How can that be improved?”. World limit for all questions put together comes to 1500 words.

So now, if someone comes to you asking for a recommendation, unless you are really invested in their careers you will not want to put the enthu of putting so much effort. If you like the candidate, you might be willing to put in some time into it, but you are likely to wholeheartedly produce four good essays for each school the applicant is applying (note that no two schools ask the same question) only if you feel really invested in the applicant’s career, the probability of which is really low.

By having such a complicated system of soliciting recommendations, the schools ensure that all candidates fall into one of two categories. Either they should have done so well in one of their jobs that their boss or client feels invested enough to spend a few hours of their time writing recommendations, or they should have the necessary people management skills to go to bosses and clients and professors to get them to write the recommendations. Of course, irrespective of how good your people management skills are , it is unlikely to get someone to spend so many hours on your recommendation letters. Still, the minimum you require is to convince them that you will write the recommendation yourself and they should rubber stamp it. No big deal, that.

This way, all applicants to US B-schools are people who have a knack of getting things done. The age at which application happens (mid to late twenties) also minimizes parental participation in the effort. Apart from the self-selection and filtration, the amount of time and effort required for application also helps weed out frivolous candidates (remember those that “wrote CAT just as a backup”?).

The importance of structured thinking, I explained, lay in the fact that not all problems that consulting firms pose have a definitive solution, and structure helps you hedge against not being able to generate a solution. In the worst case, if you follow this approach, you would have made a contribution to the client solely by putting a structure on their problem, and by enabling them to think better about similar problems that cropped up in the future. This is also the reason that consulting firms use the much-touted (and much-abused) frameworks – they are a good method of structuring the problem, I said.

I then went on to talk about how I’m not much of a structured thinker, and how I frauded my way in through that during my consulting interviews nearly six years back. On joining a consulting firm, I’d found myself thoroughly disillusioned and out of my depth, and finding that the job called for a completely different set of skills than what I possessed. The nature of problem solving, I found, was very different from the kind I’d been mostly exposed to, and enjoyed. I quit in a matter of months.

I went on to narrate a story from my B-school days. It was about the final exam of a second year course, and I’ve blogged about it. The question presented a business problem and asked us to find a solution for it. I thought for a bit, figured out the solution (with a bit of thinking it was obvious) and explained it two or three paragraphs. My friend had instead put a structure on the problem, and used all possible applicable frameworks in order to structure it. He has been working for a consulting firm since graduation, and I’m told he’s doing rather well. You know my story.

So we talked a bit more about problem solving approaches, and how I could possibly structure my business now that I’m an independent consultant (given that I’m not a particularly structured person). During the course of this conversation I happened to mention that most of my early problem solving was in terms of programming. And the wife jumped on this. “You are a mental math guy, aren’t you?”, she asked. I nodded, feeling happy inside about those days when I would do three-digit multiplications in my head while my classmates still struggled with “six in the mind, four in the hand” methods of doing addition. “And you’re an algorithms guy, always trying to find the easiest method to solve problems?”, she continued. Again I replied in the affirmative. “Then how the hell could you even think that you would do well in a job that requires structured thinking?”

She has a point there. Why didn’t I think of this earlier? The more pertinent question now is about how I’m going to structure my data modeling business since it’s clear that I won’t be able to pull off the classical consulting model.

Till very recently, this was a result of caste taboos. People would refuse to eat food that was prepared by someone by another caste, and that led to a delay in the growth of the restaurant industry. When people traveled (even on business, and you need to remember that in India even today, a lot of business happens due to caste networks), they would try and stay with a relative, or a friend who belonged to the same caste, and would eat in their house. When I was a kid, outstation holidays were mostly restricted to towns and cities where we had relatives, and in case we didn’t have any, durable foodstuff such as bread (from our “usual” Iyengar’s bakery), biscuits and fruits would be carried, so that we could avoid eating out.

Thanks to this cultural preference, and the taboos associated with eating out, we have turned out to be a “home food” society. Most people cook in their homes on a daily basis, or at least attempt to do so. In my mind, this is clearly inefficient. Back when I was in Gurgaon when I lived alone and would cook for myself, I discovered the beauty that is economies of scale in cooking food. The incremental time and effort in making (say) three liters of Sambar compared to making (say) half a liter was small, and consequently, every time I made sambar, I would make it in large quantities, and keep it in the fridge and repeatedly re-heat. While this may not be particularly healthy (the wife blames some of my lifestyle diseases to prolonged exposure to this unhealthy habit of eating stale food), there was little else I could do in order to achieve said economies of scale.

There is, however, a better method of ensuring economies of scale, and on a much larger scale – restaurants, and this is the practice followed in most places elsewhere in the world. Unfortunately, the taboo against eating out means that for most people, visits to restaurants are “treats”, and restaurants have adapted themselves to accommodate this. When people eat in order to treat themselves, their primary criterion is taste. When you eat something once in a while, you don’t really care about the calories or sugar or triglycerides it contains. Consequently, food in a large number of restaurants in India is tailored for this kind of an audience, and hence is not particularly healthy. The main complaint that people have against restaurant food – that it is not healthy, and that one cannot eat that every day, does have its merits, but has a background in the culture of eating out only for treats.

From a national efficiency standpoint, this needs to change. People are spending way too much time and effort in cooking their own meals. It is ok to cook once in a while, but spending an hour of your day every day in front of the stove is a colossal waste of time. The answer lies in good quality restaurants that serve food that is similar to “home-cooked” food, in terms of health factor and taste. If there is a good number of restaurants that start doing that, it will drive a number of people to stop cooking at home (the early adopters are likely to be DINK Yuppies).

In some ways, this reminds me of the Chennai auto-rickshaw problem that I’ve described here and here. Restaurants don’t want to give up on tasty food and go the “healthy way” because they’re not sure there’s enough of a demand for the latter. People are not willing to give up home food in favour of restaurants because the food is not healthy enough! Again, this needs a nudge. And you can see some efforts in this direction. Back when I was in IIMB, I remember having dinner once at this place called Bangliana, which served “traditional” Bengali food at a reasonable price (a Bong friend who accompanied me confirmed that the food was quite authentic and “homely”). In primarily immigrant-dominated localities (such as Koramangala), you see more such restaurants coming up, and that is a good thing. If only it can spread and we move to becoming a restaurant-based culture, precious man-hours (and woman-hours) are bound to be saved.

PS: If the provisions of the Food Security Bill imply that we move to a “ration” model again, it would mean a step backwards, where everyone would be forced to cook at home. Or maybe the act could be implemented differently.. Say you could partly pay at hotels using your “entitlement points”.. Anyway, that is an aside.

I must mention here that I was watching the broadcast on Start Cricket HD, but even the IPL was telecast on SetMax HD this year. And there was simply no comparison in terms of the quality of pictures. I don’t know if it has something to do with the nature of floodlights at the Gabba (maybe it does), but the pictures from the Big Bash were so significantly superior to that of the IPL (tough to explain this objectively, so you should watch and see for yourself). And then there was the commentary. Again, I don’t think any of the famed Channel Nine line-up was involved (the broadcast is by Fox Sports, and I didn’t hear any familiar voices), but the commentary was good while not being too intrusive. Again, there was no idiotic playing up of the sponsors (DLF maximums and the like), and then they had wired up Shane Warne as he thought aloud as he plotted Brendon McCullum’s dismissal.

There is something about the overall sound of the Big Bash telecast that the IPL misses out on. It probably has to do with the way they capture the crowd noise, but it does make one feel like one is in the stadium. Of course, I must mention here that of whatever bits of IPL I watched this year, I watched most of it on mute thanks to the insufferable commentary.

And then the ads. The IPL simply doesn’t seem to have figured out an effective ad model. They stuff the viewer with so many ads that there is little brand recall, and people mostly react to these brands with a sense of irritation. The Big Bash, on the other hand, seems to have figured out the model of fewer and shorter ad breaks, which will still keep people in their seats. I hope they are being compensated for it with higher revenue.

There is a lot that the IPL has to learn from the Big Bash. Hopefully the low TRPs of the last edition will mean that they will be open to innovation and improvement. I surely won’t mind watching the IPL if it is produced with the same quality as the Big Bash. Maybe I’m being too hopeful here..

In between these two jobs, I had done a “local” job, at an India-focused hedge fund based in India, which for the most part I quite liked until certain differences cropped up and grew. While doing that job, and while searching for a job while looking to exit it, one thing I was clear about was that I would never want to do an offhshored job again. Unfortunately, there came along an offer that I couldn’t resist, and so I ended up having not one but two experiences in offshored jobs.

Firstly (this was a bigger problem in the second job), I’m a morning person. I like to be in at work early in the morning, say at eight. And I like to be back home by the time the sun in down. In fact, for some reason I can’t fathom, I can’t work efficiently after the sun is down – irrespective of when I start, my productivity starts dipping quickly from 5 pm onwards. Huge problem. People say you can take calls from home and all that but that blurs the line between work and life, and ruins the latter. You are forced to stay in office even if you don’t have anything to do. Waste of time.

Then, there is the patronizing attitude of the “onshore” office. In both my offshored jobs, it turned out that an overwhelmingly large portion of the Bangalore offices actually consisted of employees who were there because even the stated reason for their existence in the firms was labour cost arbitrage. It was simple offshoring of not-particularly-skilled work to a cheaper location. I don’t know if this was a reason, but a lot of people in the “main” offices of both firms considered Bangalore to be a “back office”. And irrespective of the work people here had done, or their credentials, or record, there was always the possibility that the person in the foreign office assumed that the person in the Bangalore office existed solely because of labour cost arbitrage.

And then you would have visits by people from the onshore office. Every visitor who was marginally senior would be honoured by being asked to give a speech (without any particular topic) to the Bangalore office. In the first offshored company I worked for, people would actually be herded by the security guard to attend such speeches. The latter company was big enough to not force people to attend these talks, but these talks would be telecast big-brother style from television sets strategically placed all over the floors.

And these onshore office people would talk, quite patronisingly, about how Bangalore was great, and the people here were great, and they were doing great work. Very few of them would add actual value  by means of their lectures (some did, I must mention, talk concrete stuff). Organizing this lecture was a way for the senior “leaders” in the Bangalore office (most of whom had been transplanted from the firms’ onshore offices) to etch their names in the good books of the visitors, we reasoned.

Then there was the actual work. Turn-around time for any questions that you would ask the head office was really high, unless of course you adapted and did night shifts (which I’m incapable of). In the earlier offshored firm, there would be times when I would do nothing for two or three days altogether because the guy in the onshore office hadn’t replied! Colossal waste of billable time! Also, if your boss sat abroad, there would be that much less direction in whatever you did. In my second offshored job, there were maybe two occasions when I was on two-hour phone calls with my boss (in the onshore office), where he patiently explained to me how certain things worked and how they should be done. Those were excellent sessions, and made me feel really good. But only two of them over a two year-plus period? Apart from which, most one-to-one interaction with the boss was with respect to “global” stuff. Yeah a local boss can get on your nerves by creeping behind your back every half hour, but at least you get work done there, and can learn from the boss!

Then there is training. Because of the cost-arbitrage concept on which most offshored employees are hired, the quality of training programs in the offshore offices are abysmal. During my second offshored stint, I happened to attend one training program in Hong Kong, in common with people from onshore offices in the rest of Asia. None of the numerous training programs that I attended in the Bangalore office attained even a tenth of the quality of that program in Hong Kong. The nature of employees in Bangalore meant all programs had to start at an extremely basic level, so there was little value added.

I can go on, there is a lot more. But I’ll stop here, and let you tell me about your stories of working in an offshored environment. And I certainly won’t make the same mistake third time round – of working for an offshored entity.

When I was in high school, I remember being one of the few people in my class who drank coffee. Back then, it was before the coffee days of the world came up, and coffee was still seen as downmarket. Something that you would invariably order at the end of “tiffin” at the neighbourhood Sagar, or Darshini. Coffee was uncool, and had an “uncle” feel to it. It was what you got when you went visiting relatives, or when guests came home. In my family, a visit to a relative’s house would not be complete without at least four rounds of coffee, one as soon as you arrived, one just before “tiffin”/lunch, one after food and another one “for the road”. And my poor mother would miss out on all this.

For a strange reason I can’t fathom now, for a long time I used to prefer the coffee that my father made, a nasty “decanted” brew, made from finely ground coffee powder we got from “modren coffee works” in the Jayanagar Shopping Complex. Despite my grandmother’s exhortations that the coffee she made – from a steel filter using “pure” (i.e. without chicory) coffee beans sourced from India Coffee Works – was superior, I would tell her that it never measured up to my father’s coffee. It was only later on in life (maybe when I got to high school) that I started finding my father’s coffee disgusting (interestingly back then, his mother (i.e. my “other” grandmother) and siblings also made coffee the same horrible decanted way), and I convinced him that we should also start making coffee using a filter.

During the last few years that I lived with my parents (ok I didn’t really live with them, only visited them during (substantial) vacations), coffee had the aura of a “special dish” in our house. We would make coffee only if we had guests. My mother anyway hated the drink, and my father would have had his daily fix at work, so instead they made  tea at home, some four times a day, with plenty of sugar. If I protested, I would be asked to visit the nearest darshini (one abominable place called Anna Kuteera). I would grudgingly sip my tea.

So coming back to high school, it was uncool to drink coffee. It was “uncle” to do so, and with friends you only had pepsi (or coke or thums up or whatever). So I was mildly shocked when I found that some classmates in my “new” school (which I switched to in 11th standard, and which was decidedly upmarket compared to my earlier school) had gone out “for coffee”. And a few days later, I ended up accompanying some of them, once again “for coffee”. We all had the relatively inexpensive espresso (Rs. 10; cappuccino was Rs. 20) that day at Cafe Coffee Day (#youremember?) on Brigade Road. It was the first time in my life I had felt “cool” drinking coffee (yeah, back then I was a wannabe and all that).

Six years later, when I got admission into IIMB, my father decided that along with me he too should “go upmarket”. The day I got my admit, we went for coffee (!!) to the Jayanagar Cafe Coffee Day (my mother refused to accompany us since she found that they made chicken samosas there). Soon, I found that my father had started having some official meetings also in coffee shops, rather than in his office (where “office boys” would source coffee in flasks from Adigas a few doors away).

Another level up was when Kalmane Koffee opened an outlet at the forum, and another in Jayanagar. Now, we could sit in a coffee shop and have “real coffee” (I never took a fancy for the taste of cappuccino). It is indeed unfortunate that they haven’t managed to scale up the way CCD has. Though I must mention here that the only time I had a “personal interview” back when I was in the arranged marriage market, it took place at a Kalmane Koffee outlet. And I don’t know why just about everyone I go to that coffee shop with ends up ordering this coffee called Nelyani Gold (I stick to plain vanilla Filter Kaapi).

Some three years back, I had bought a Moka pot from a Coffee Day outlet (they have coffee powder stores apart from their cafes). For the last six months or so, I have abandoned my filter and have been exclusively using this pot to make my coffee. For a long time, I didn’t get good results, but this time I read up and instructed the person manning the counter at Annapurna Coffee Works close to my house to grind my beans extremely finely. Awesome coffee I get, now. Now, if only I can figure out how to froth the milk at home like those Cappuccino machines in Rome do…

Around the same time, friends in competing consulting firms also told me that their firms, too, were bullish on retail. Naturally so, for it was around the time when this whole idea of FDI in retail had come up. Unfortunately back then the UPA government wasn’t particularly keen on any reforms, and the idea died. The only good thing that happened in 2006 was that FDI in wholesale was upped from 51% to 100%. Unfortunately that doesn’t seem to have had much of an impact.

I’ve mentioned several times in the past that I’m not a fan of modern retail. I think the service there just sucks, that they are staffed by a bunch of imbeciles and the systems (both IT and otherwise) are designed so badly that it is more likely for the customer to come out of there disgusted rather than delighted. Where organized retail does trump unorganized retail is in their superior sourcing practices and supply chain systems.

In this context, I had predicted back then (no this wasn’t consulting advice I sold to a client) that the winning formula would be with the front end (basically retail) remaining with the kiranas, who would then be backed up by an efficient wholesaling channel that would do all that was required to put efficiencies into the channel. Unfortunately that doesn’t seem to have taken off. Metro Cash and Carry, the first multinational to set up a wholesale shop in India has been stuttering, with only about a dozen stores. Bharti-Walmart is supposed to be doing well, but very restricted in terms of geography.

There are two fundamental problems here. On one hand, there are several laws that prevent the development of an integrated supply chain system in the country. In several states, farmers are forced to sell produce to the APMC (agricultural produce marketing committee) yards, which have a virtual monopoly over procurement of produce. There are curbs on inter-state movement of goods to complicate things (octroi is all but gone, but ohter barriers remain). Then, there is the human element with existing vested interests in the “channel” trying to block entities such as Walmart-Bharti or Metro from functioning efficiently.

On the other hand, I guess organized wholesalers suffer from precisely the same problem that plagues organized retail today – that they don’t have an efficient salesforce and customer relationship strategy that can wean retailers away from the existing channels. The existing wholesalers offer retailers credit (Metro on the other hand is “cash and carry”), deliver goods to their shopfronts at regular intervals so that they can manage inventory effectively and come up with periodic sales promotions which the retailer prefers.

In the face of this barrier, the wholesaler would have to offer significant price discounts to the retailer for the latter to give up his existing set of wholesalers, and they don’t seem to be achieving that. This is perhaps the reason the strategy I thought would win has completely failed to take off.

Then you have the consultants. With the presence of retail specialists in practically all top management consulting firms in India, it would have been expected that by now they would have transferred the foreign “best practices” in retail to their Indian clients. Given that it hasn’t happened, it could mean two things. Either Indian retailers weren’t really interested in engaging their services (unlikely, given the networks these firms maintain), or (more likely) the consultants recommended cut and paste formulas from the west and those have failed.

If the latter is the case, then the Walmarts are not going to have it easy in India. If consultants, who are generally known to be smart and typically know the worldwide best practices, working with Indian organized retailers, who know the markets well, haven’t been able to crack the code for organized retail in India, one may not be too optimistic about how the foreign firms would fare.

PS: coming back to the current failure of foreign-owned wholesalers, the new regulations will mean that these wholesalers will have “captive” retailers to sell to. So you’ll have retailers who will actually have low costs in terms of purchase prices (inclusive of supply chain costs). But I’m not sure if they’ll crack the customer service bit which hardly any current existing organized retailers have cracked.

Cross posted at The INI Broad Mind. Also see my post on the broad mind on the politics of the recent cabinet decision about retail.

It is a similar case with travel agents. Vacation markets (flights, hotels, etc.) are nowhere as liquid as financial markets, and will never be. Sometimes, when you are booking holidays to a strange place, you know little about it, and hence commission a travel agent to find you a place to stay there. Given that you know little about that place, the agent can charge you hefty commissions, and make a nice spread. Of course, nowadays such opportunities are diminishing for agents, as you have websites such as Agoda which allow you to book hotels directly. Now, at one place you can compare the prices of different hotels, and have better information compared to what the agents traditionally offer you. The spread is on the downswing, I must think.

Then, don’t you think package tours are very similar to structured products? Structured products are nothing but a package of several risks packaged together. By acting as a counterparty on a structured product, a bank (even now ) can afford to charge fairly hefty fees. Structured products are illiquid,  and there is no publicly available “market price”, so it is easy for banks to make themselves good spreads on such products. However, all it takes to defeat this is an intelligent customer. All the customer needs to do is to try and understand the risks himself, and start “unbundling” them. Once he unbundles the risks, he can now trade each of them independently, on more liquid markets, and get a much better price than what bankers will offer him. The catch here is that he’ll need to put in that effort in unbundling.

It’s the same with package tours. Given the bundles, it is easy for the agents to make higher spreads. However, if you as a customer simply unbundle the package (hotels, transport, food, etc.), you can find out the price of each (available on sites like agoda and elsewhere) and find out for yourself the spread that the agent is making. And then you compare the agent’s premium with the “cost” of making all the bookings yourself and make an informed choice.

Apart from communication, among the greatest boons of the internet has to do with dismantling middleman monopolies. It is incredible how much use a little information can be of!

The reason winners don’t get too much footage is that firstly, they are widely distributed, and secondly they spent away all their money. Think about a stock or a CDO or a bond being a like a parcel that you play by passing the parcel. The only thing is that every time you receive the parcel, you make a payment, and then pass on the parcel after receiving a higher payment. Finally, when the whistle blows, one person has the parcel in his hand, and it explodes in his face, ruining him. We know enough about people like this. A large number of banks lost a lot of money holding parcels when the whistle blew. Some went bust, while others had to be bailed out by governments. We know enough of this story so I don’t need to repeat here.

What is interesting is about the winners. Every person who held the parcel for a small amount of time was a winner, albeit a small winner. There were several such winners, each of whom “won” a small amount of money, and spent it (remember that the asset bubble in the early noughties was responsible for increasing consumption among common people). This spending increased demand for various goods and services produced in several countries. This increasing demand led to greater investment in the production facilities of these goods and services. Apart from that, they also increased expectations of growth in demand of these goods.

The damage the crisis did on the way up was to skew expectations of growth in different sectors, thus skewing investment (both in terms of financial and human capital). The spending caused by “small wins” for consumers put in place unreasonable expectations, and by the time it was known that this increased demand came as a result of an asset bubble, a lot of capital had been committed. And this would create imbalances in the “real economy”.

Yes, the asset bubble of the last decade did produce winners. The winners begat more winners (people whose goods and services were bought). However the skewed expectations that the wins created were to cause damage in the longer term. Unfortunately, I don’t see this story being told adequately, when the financial crisis is being talked about. After all, the losers are more spectacular.

For example, for a long time we’ve been wanting to get rid of our dining table. The question is how do we dispose of it in order to maximize returns. I don’t know of any shops that buy used furniture, and there are search costs involved there. And then there is the cost of actually transporting the dining table (you realize it can’t be done by my car, right?) to the location of sale. And then haggling over the price. Given that it’s not made of particularly good wood (we know where to sell stuff made out of “good wood”) I don’t even know if what get by selling even covers the cost of selling it!

Worse, we got a bunch of new electric appliances (microwave, mixie, gas stove) as wedding gifts. The “normal” way of getting rid of old mixies or gas stoves is to give it “in exchange” so that we get a small discount for the new appliance we’re buying. When we get appliances as a gift, though, this avenue is lost. The old mixie and stove (and a couple of ancient table fans) decorated our attics and bred rats until we sold all of them for a grand total of five hundred rupees while buying a new saucepan! (I’d located that store and carried the stuff there with such great difficulty that I was willing to sell at any price).

Now there’s this ancient vacuum cleaner and old RO water filter out for disposal (the latter was disposed due to exorbitant maintenance costs). There’s a good chance that we’ll dispose of them by just dumping them on the road somewhere. Seriously. The selling costs are way too high. I know that in New York there’s this whole “industry”, where people leave old furniture and appliances on the roads in the middle of the night, and some other people take them away and salvage whatever profit they can get.

I thought of a business plan that gets unnecessary appliances and furniture from people (for a nominal fee; and by paying transport costs) and then sells it on to people who are actually willing to buy these things. The problem is that a lot of people actually dispose stuff as part of “exchange offers” so I don’t know how much volume this new business can get. But if someone manages to pull it off, I promise to donate all my useless stuff to them. Else, you’ll soon start finding unnecessary furniture and appliances scattered along KR Road in Bangalore.