Numbers and management

I learnt Opeations Research thrice. The first was when I had just finished school and was about to go to IIT. My father had just started on a part-time MBA, and his method of making sure he had learnt something properly was to try and teach it to me. And so, using some old textbook he had bought some twenty years earlier, he taught me how to solve the transportation problem. I had already learnt to solve 2-variable linear programming problems in school (so yes, I learnt OR 4 times then). And my father taught my how to solve 3-variable problems using the Simplex table.

I got quite good at it, but by not using it for the subsequent two years I forgot. And then I happened to take Operations Research as a minor at IIT. And so in my fifth semester I learnt the basics again. I was taught by the highly rated Prof. G Srinivasan. He lived up to his rating. Again, he taught us simplex, transportation and assignment problems, among other things. He showed us how to build and operate the simplex table. It was fun, and surprisingly (in hindsight) never once did I consider it to be laborious.

This time I didn’t forget. OR being my minor meant that I had OR-related courses in the following three semesters, and I liked it enough to even considering applying for a PhD in OR. Then I got cold feet and decided to do an MBA instead, and ended up at IIMB. And there I learnt OR for the fourth time.

The professor who taught us wasn’t particularly reputed, and she lived up to her not-so-particular-reputation. But there was a difference here. When we got to the LP part of the course (it was part of “Quantitative Methods 2”, which included regression and OR), I thought I would easily ace it, given my knowledge of simplex. Initially I was stunned to know that we wouldn’t be taught the simplex. “What do they teach in an OR course if they don’t teach Simplex”, I thought. Soon I would know why. Computer!

We were all asked to install this software called Lindo on our PCs, which would solve any linear programming problem you would throw at it, in multiple dimensions. We also discovered that Excel had the Solver plugin. With programs like these, what use of knowing the Simplex? Simplex was probably useful back in the day when readymade algorithms were not available. Also, IIT being a technical school might have seen value in teaching us the algorithm (though we always solved procedurally. I never remember writing down pseudocode for simplex). The business school would have none of it.

It didn’t matter how the problem was actually solved, as long as we knew how to use the solver. What was more important was the art of transforming a real-life problem into one that could be solved using Solver/Lindo. In terms of formulation, the problems we got in our assignments and exams were  tough – back in IIT when we solved manually such problems were out of bounds since Simplex would take too long on those.

I remember taking a few more quant electives at IIM. They were all the same – some theory would be taught where we knew something about the workings of some of the algorithms, but the focus was on applications. How do you formulate a business problem in a way in which you can use the particular technique? How do you decide what technique you use for what problem? These were some of the questions I learnt to answer through the course of my studies at IIM.

I once interviewed with a (now large) marketing analytics firm in Bangalore. They expected me to know how to measure “feelings” and other BS so I politely declined after one round. From what I understood, they had two kinds of people. First they had experienced marketers who would do the “business end” of the problem. Then they had stats/math grads who actually solved the problem. I think that is problematic. But as I have observed in a few other places, that is the norm.

You have tech guys doing absolutely tech stuff and reporting to business guys who know very little of the tech. Because of the business guy’s disinterest in tech, he is unlikely to get his hands dirty with the data. And is likely to take what the tech guy gives him at face value. As for the tech guy doing the data work, he is unlikely to really understand the business problem that he is solving, and so he invariably ends up solving a “tech problem”, which may or may not have business implications.

There are times when people ask me if I “know big data”. When I reply in the negative, they wonder (sometimes aloud) how I can call myself a data scientist. Then there are times when people ask me about a particular statistical technique. Again, it is extremely likely I answer in the negative, and extremely likely they wonder how I call myself a data scientist.

My answer is that if I deem a problem to be solvable by a particular technique, I can then simply read up on the technique! As long as you have the basics right, you don’t need to mug up all available techniques.

Currently I’m working (for a client) on a problem that requires me to cluster data (yes, I know that much stats to know that now the next step is to cluster). So this morning I decided to read up on some clustering algorithms. I’m amazed at the techniques that are out there. I hadn’t even heard of most of them. Then I read up on each of them and considered how well they would fit my data. After reading up, and taking another look at the data, I made what I think is an informed choice. And selected a technique which I think was appropriate. And I had no clue of the existence of the technique two hours before.

Given that I solve business problems using data, I make sure I use techniques that are appropriate to solve the business problem. I know of people who don’t even look at the data at hand and start implementing complex statistical techniques on them. In my last job (at a large investment bank), I know of one guy who suggested five methods  (supposedly popular statistical techniques – I had never heard of them; he had a PhD in statistics) to attack a particular problem, without having even seen the data! As far as he was concerned he was solving a technical problem.

Now that this post is turning out to be an advertisement for my consulting services, let me go all the way. Yes, I call myself a “management consultant and data scientist”. I’m both a business guy and a data guy. I don’t know complicated statistical techniques, but don’t see the need to know either – since I usually have the internet at hand while working. I solve business problems using data. The data is only an intermediary step. The problem definition is business-like. As is the solution. Data is only a means.

And for this, I have to thank the not-so-highly-reputed professor who taught me Operations Research for the fourth time – who taught me that it is not necessary to know Simplex (Excel can do it), as long as you can formulate the problem properly.

Sponsorship Cannibalism

Back in 2004 Shamanth, Bofi, Anshumani and I started the IIT Madras Open Quiz. In some ways it was a response to critics of IITM quizzing, who blamed our quizzes for being too long, too esoteric, too disorganized and the likes. It was also an effort to take IITM quizzing to a wider audience, for till then most quizzes that IITM hosted were limited to college participants only. An open quiz hosted by the institute, and organized professionally would go a long way in boosting the institute’s reputation in quizzing, we reasoned.

Shamanth had a way with the institute authorities and it wasn’t very difficult to convince them regarding the concept. We hit a roadblock, however, when we realized that organizing a “professionally organized” quiz was a big deal, and would cost a lot of money, which means we had to raise sponsorship. And this is where our troubles started.

The first bunch of people we approached to help with sponsorship were the Saarang (IITM Fest) sponsorship coordinators, who had so successfully raised tens of lakhs for the just-concluded Saarang. Raising the one lakh or so that we needed would be child’s play for them, we reasoned. However, it was not to be. While the coordinators themselves were quite polite and promised to help, we noticed that there was no effort in that direction. Later it transpired that the cultural secretaries and the core group (let’s call them the Cultural Committee for the purpose of this post)  had forbidden them from helping us out. Raising sponsorship for an additional event would cannibalize Saarang sponsorship, we were told.

When we needed volunteers to run the show, again we found that the Saarang “GA Coordinators” (GA = General Arrangements; these guys were brilliant at procuring and arranging for just about anything) had been forbidden from working with us. The Cultural Committee wanted to send out a strong signal that they did not encourage the institute holding any external “cultural” events that were outside of its domain. It was after much hostel-level bullying that we got one “GA guy” to do the arrangements for the quiz. As for the sponsorship, we tapped some institute budget, and the dean helped us out by tapping his contacts at TCS (for the next few years it was called the TCS IITM Open Quiz).

One reason the quiz flourished was that in the following couple of years, the organizers of the quiz had close links with the cultural committee – one of the quizmasters of the second and third editions of the quiz himself being a member of the said committee. This helped the quiz to get a “lucrative” date (October 2nd – national holidays are big days for quizzing in Chennai), and despite being organized by students, it became a much sought after event in South Indian quizzing circles. Trouble started again, however, after the link between the quizmasters and the cultural committee were broken.

The Cultural Committee once again started viewing this quiz as a threat to Saarang, and did their best to scuttle it. The quiz was moved around the calendar – thus losing its much-coveted October 2nd spot, and soon discontinued altogether. Despite significant protests from the external quizzing community and alumni, there was no sign of the quiz re-starting. Finally when the cultural committee accepted, it was under the condition that the quiz be a part of Saarang itself. After significant struggle, finally a bunch of enterprising volunteers organized the quiz this year after a long hiatus. It is not known how much support they received from the cultural people.

The point I’m trying to make is that when you have one lucrative product (in this case Saarang), it is in your interest to kill all products which could potentially be a competitor to this product, which explains the behaviour of the IITM Cultural Committee towards the Open Quiz. And it is the same point that explains why Test cricket in India is languishing, with bad scheduling (Tests against the West Indies started on Mondays), bad grounds, expensive tickets and the likes. The Board of Control for Cricket in India (BCCI) now has one marquee “product”, the Indian Premier League (IPL). The IPL is the biggest cash cow for the BCCI, and the board puts most of its efforts in generating sponsorship for that event. And as a side effect, it does its best to ensure that most of the premium sponsorship comes to the IPL, and thus the stepmotherly treatment of other “properties” including domestic cricket.

Last evening, I was wondering what it would take for the BCCI to make a big deal of the Ranji trophy, with national team members present, good television coverage and the kind of glamour we associate with the IPL. And then I realized this was wishful thinking, for the BCCI would never want to dilute the IPL brand. Have you heard of a tournament called the Syed Mushtaq Ali Trophy? It is the domestic inter-state T20 competition. A potential moneyspinner, you would think, if all national team members are available. But do you know that last year the final stages of this competition coincided with the World Cup? I’m not joking here.

I’m sure you can think of several other similar examples (Bennett Coleman and Company’s purchase and subsequent discontinuation of “Vijay Times” also comes to mind). And the one thing it implies is that it’s bad news for niches. For they will begin to be seen as competition for the “popular” brand which is probably owned by the same owners, and they will be discouraged.

 

Project Thirty, Hippies and Capitalism

After getting out of Goldman Sachs (phew, now that I’m out, I can “out” myself. Was majorly stifling working for a company that stressed so much on “reputation” and stuff) two months back, I’ve put myself on a fourteen month long scholarship which I’ve titled as “Project Thirty”. As the title suggests, this scholarship will last till the day I turn thirty, which is in a little more than a year. There is no fixed amount of scholarship, but the funds are to be drawn out of the considerable savings I made having been a fat cat banker for a little over two years.

During the period of the scholarship, I’m forbidden to take up full-time employment. I am, however, permitted to pursue other money-making opportunities (as long as they don’t end up in my taking up a full time job). I’m setting myself up as a freelance quant consultant (right now the biggest pain point is it’s tough to explain to people what exactly I can do for them), and if things go well, that should provide some good supplementary income. However, the intention of this break is not to just take a shot at entrepreneurship, or explore non-linear opportunities for making money. It is fundamentally to do all those things that I’ve always wanted to do but never got down to doing during the first ninety percent of my twenties.

The Eureka moment happened some three-four months back, when I was reading some article on the internet about life expectancy. It was around the same time that I read the famous Steve Jobs speech, and I started thinking about what I’ve achieved in life so far. IIT, check. IIM, check. Brand name employers, check. Beautiful and intelligent wife, check. Some sort of local fame, check. I would be lying if I were to complain that I haven’t had a good life. However, several gaps remain. Found my calling in life, no. Stuck around in a steady job for an extended period of time, no. Made lots of money, not really. Traveled the world, not really. Wrote a book, no. Played for a band, no. And so it goes on.

It was around that time that I realized that it is not so bad to have regrets in life when you are twenty nine (which I’ll be next week). Thirty is still not too old, and you are still reasonably fit, and able to do all those things you’ve already wanted to do. What is not okay is to have regrets in life when you are fifty, or sixty. There is only so much of life ahead of you to make amends, and it could already be too late to do some of those things that you’ve always wanted to do but never gotten down to doing.

Project Thirty is the result a culmination of a lot of things. These thoughts. The fact that I’ve never really been happy in any of the high-paying high-pressure jobs I’ve been through. Stress. That though I’ve been married for a year now (today’s my anniversary), we still don’t plan to “start a family” for a while which gives leeway in terms of finances. That I haven’t yet really “found myself” and need to make an effort to do so.

So far, though, two months on, it has had mixed results. On the minus side (let’s quickly put that away) there’s been a lot of NED. I think I end up wasting too much time doing nothing (ok I’m not sure I should call that a “waste” but still I don’t feel good at the end of it). Then, a lot of writing which I want to get published in the mainstream media is lying on the hard disk of my desktop, as I haven’t really mustered the confidence to reach out to editors and send these out. I’ve identified one client for my quant consulting shop, but again haven’t been confident enough to approach them.

On the plus side, though, I have got a lot of writing done. I have started learning to play the violin again, this time in Western Classical style, and so far I’ve been really enjoying it. I’m associated with a public policy think tank and am doing some work for it. I gave (what I think is  ) a rather well-received speech on auto rickshaw economics. For the first time in my life I set a quiz which didn’t receive much flak. Watched cricket and football. Traveled a bit (a week in Turkey). And overall I’ve had a lot of peace of mind.

So what are the hippies and capitalism doing in the title of this post? Essentially given my current situation I don’ get why hippies are anti-capitalist. Because capitalism is precisely the reason I’m able to afford a sort of “hippie life” (using Aadisht’s definition) currently. Had I been living in a communist country, under the “from each according to his abilities” paradigm, I wouldn’t have been allowed to take this time off!

On Running a Consulting Firm

So most of the consulting firms are run as partnerships (as you might have already figured out). There was an experiment in the late 90s where a then leading firm was bought over by an IT company, and that saw stagnation for the next few years until the consultants did a “management buy out” in order to rid themselves of the IT company’s controls. By then, though, valuable time was lost, and last I heard this company was severely lagging its peers in terms of reputation, among other things.

As I had mentioned in the earlier post, the rut sets in once partners reach “steady state”, where they have an established set of relationships that they milk to get more business. And as I mentioned, it’s hard to get out of this rut, until employees start leaving protesting the poor quality of work, and lack of opportunities to make it big. And that starts sending the firm into a downward spiral. So what is it that the firms must do, in order to keep themselves dynamic, and not get into this kind of a rut?

The answer is something that is practiced by most leading consulting firms. Every few months or a year, these firms add to the partnership pool, mostly by promoting from within their ranks. Once thus promoted, it is the new partner’s responsibility to expand and generate new business for the firm, and he is not able to piggyback on the relationships established by the established partners. And thus, in his process to expand and get himself established, he has an incentive to take more risks. And take on projects with long-out-of-the-money option kind of payoffs.

Regular promotions to the partnership level means that there is always a bunch of partners who are thus taking risks, and that keeps the firm dynamic. I don’t know how well this works in practice, but in theory at least, this helps firms from getting into stagnation. That this is the model followed by most leading management consulting firms indicates that this is probably an appropriate approach.

So, if you think your consulting partnership is stagnating, get in more partners. Promote. Or make way. And keep the group dynamic and a great place to work.

College Admissions

Why does the government require colleges in India to have “objective criteria” for admissions? I understand that such criteria are necessary for government-owned or run or aided colleges where there’s scope for rent seeking. But why is it that “private” colleges are also forced to adopt “objective criteria” such as board exam marks or entrance test scores for admission?

Abroad, and here, too for MBA admissions, admission is more “subjective”. While of course this has the scope to introduce bias, and is a fairly random process (though I’d argue that the JEE is also a fairly random process), won’t it reduce pressure on the overall student population, and bring in more diversity into colleges?

As a natural experiment I want to see a few state governments deregulating the admissions process for private colleges, making it possible for the colleges to choose their students based on whatever criterion. So what would happen? Of course, some seats would be “reserved” for those with big moneybags. Some more would be reserved for people who are well connected with the college management. But would it be rational for the college boards to “reserve” all the seats this way?

Maybe some colleges would take a short-term view and try to thus “cash out”. The cleverer ones will realize that they need to build up a reputation. So while some seats will be thus “reserved”, others will be used to attract what the college thinks are “good students”. Some might define “good students” to be those that got high marks in board exams. Others might pick students based on how far they can throw a cricket ball. The colleges have a wide variety of ways in which to make a name, and they’ll pick students accordingly.

The problem with such a measure is that there is a transient cost. A few batches of students might get screwed, since they wouldn’t have figured out the reputations of colleges (or maybe not – assuming colleges don’t change drastically from the way they are right now). But in a few years’ time, reputations of various sorts would have been built. Colleges would have figured out various business models. The willingness to pay of the collective population would ensure that reasonably priced “seats” are available.

And remember that I mentioned that a few states should implement this, with the others sticking to the current system of regulating admissions and fees and all such. In due course of time it’ll be known what works better. Rather, it’ll be known what the students prefer.

It’s crazy that colleges now require students to get “cent per cent” in their board exams as a prerequisite to admission. It’s crazy that hundreds of thousands of students all over India, every year, spend two years of their prime youth just preparing to get into a good college (nowadays the madness is spreading. A cousin-in-law is in 9th standard, and he’s already joined JEE coaching). On reflection, it’s crazy that I wasted all of my 12th standard simply mugging, for an exam that would admit me to a college that I knew little about. Madness, sheer madness.

The buffalo and the donkey

They are two much-abused animals but I think we can do well by adopting certain characteristics of them. The buffalo has a thick skin, and the donkey has the ability to kick (jaaDisi vadi as they say in Kannada), and I think these are qualities that one would do well to have in order to deal with society.

So there are people you care about and people you don’t care about. And then there are people you are forced to care about because people you care about care about them. And there are people you are forced to care about because people you care about care for people who care about them. And so forth. As you can see, in a few links (maybe a median of 6), you are forced to care about everyone on this planet because someone you care about cares for (someone who cares about)^n someone who cares about someone who cares about them…

So you need to put a stop to this somewhere, and that’s where a buffalo skin helps. It helps shield yourself from people who you don’t care about who might make snide remarks about you. After all, whatever you do, there are people who are bound to be negatively affected by that, and when they make snide remarks you are forced to care about that because of the chain I described above.

The donkey skills are good pre-empts. Once employed, they’ll stand you in good stead for a long time and make sure people won’t mess with you at all. But along with this it is also important that you have buffalo skills, else you will find that you have to employ donkey skills way too frequently and lose reputation. Sparing use of donkey skills is best, else it’ll dent your reputation severely and increase your need for buffalo skills beyond your means.

My father used to say that I was a good donkey. My mother used to say that I was a good buffalo. So I guess I’m not too badly placed when it comes to such animal instincts. Now if only…

Wasting Youth

Nowadays everyone seems to be preparing for JEE. It is almost as if it is a logical progression to join some JEE coaching factory once you are done with 10th standard. Yeah, the numbers were quite large in my time (~10 yrs back) itself. But they are humongous now, and it is not funny.

Yeah, awareness about IIT and people feeling good about themselves and wanting to go study at India’s best undergraduate institutions is great. It is brilliant. Fantastic. What is not so great, brilliant and fantastic is that tens of thousands of youth are wasting two years of their prime youth trying to mug for an entrance exam in which they stand little chance of doing well.

I just hope I’m not sounding condescending here, but it intrigues me that so many people who have very little chances of making it through the JEE slog so much for it. I think it is due toe the unhealthy equilibrium that has been reached with respect to the exam, which makes everyone waste so much time. Let me explain.

So over the years the JEE has got the reputation of being a “tough” exam. And over the years, maybe due to the way papers are structured or the way factories train people, people have figured out that hard work and extra hours of preparation helps. I could get into studsandfighters mode here but in line with my promise let me try and explain without invoking the framework. And you need to remember that the JEE uses “relative grading” – how well you have done is dependent on how badly others have done.

So if everyone has put in that much extra hard work, you are likely to lose out by not putting in that extra work. And so you increase your effort. And so does everyone else. Yeah this is a single iteration game but still looking at the competition and peer pressure eveyone is forced to raise their effort. Everyone is forced to, to quote the Director of my JEE factory, “work up to human limit”.

Yeah, a few hundred people every year manage to “crack” the system and get through without putting in that much effort. But then their numbers are small compared to the number of people who get admitted, so people who get through based on sheer hard work do tend to get noticed more, and spur other aspirants to work even harder. And so forth.

Yes, there is a problem with a system. Something is not right when a large proportion of youth in the country is wasting away two years of prime youth in preparing for some entrance exam. It is easy to see the fundamental problem – shortage of “really good quality” engineering colleges (I argue that this mad fight for IIT seats shows the gap between IITs and the next level of engineering colleges – at least in terms of public perception). But considering that as given I wonder what we could change. I wonder what we could do in order to save our youth.

As an aside, one thing I’ve noticed about several JEE aspirants is that they don’t give up. I don’t know if this is necessarily a good thing – to carry on with the mad fight even if you know that your chances of making it are remote. Yeah I’m sure there is peer pressure and status issues with respect to giving up. But then I suppose I would have a lot more respect for someone who would give up and enjoy life rather than continue the mad fight knowing fully well that his chances are remote.

Looking back, I do regret wasting those two years in mad JEE mugging. Ok I must admit I did have my share of fun back then but still looking back I would have definitely preferred to have not worked so hard back then. And of course I count myself lucky that I got through the JEE and my hard work in those two years wasn’t in vain.