This IPL has been an ad fest. All this while, ads were shown only between overs, drinks breaks and when wickets fell. This time, they’re playing them in between deliveries (took a great deal of self control to refrain from using the word balls); and not just as the fast bowler walks back to take his run-up, even the spinners are not spared. So for the viewers, it’s not just the flurry of ads that is irksome, it’s the fact that most of these ads are pathetic means that one needs a greater degree of tolerance to put up with them. Watch the Tata Docomo ad, where the guy dumps his girlfriend and walks out with this other chik, if you aren’t convinced. Here’s an open appeal to Mr. Ratan Tata to fire the ad agency, and the VP of marketing of Tata Docomo. Shoddy stuff. The Zoozoo ads too are average at best.
But like Sherlock says in the movie, one can still make order out of chaos. I’ve tried to capture some of the emerging trends in the market place that advertisers are seeing this IPL time and playing to the tunes accordingly.
1) A bit of Tiger for everyone: Aircel started the ‘There are only 1411 left’ campaign, and several folks are now jumping on this boat. A couple of the Vodafone’s zoozoo ads feature the zoozoos’ accidental misadventures with the wild cat. Though not directly featuring the tiger, one of Airtel’s direct cable connection ads shows a cheetah running across and encourages people to watch wild life shows on TV.
2) Nimboo pani: Summer is about to set in, and it’s time for the soft drink makers to up the campaigns. But there are visibly three companies pitching for consumers to drink lemon flavored soft drinks. My guess is that lemon drinks don’t enjoy a high market share in India. And with the colas coming under fire every now and then, companies are looking to back themselves up by creating a larger market for nimbu paani. Minute Maid, Nimbuuuz and 7UP Lemon are at it, with the first two showcasing their product as being no different from freshly cut lime mixed in water.
3) AC for India: Keeping with the theme of summer, this is the perfect time for fan and air conditioner companies to get to work. Havells is excited like never before about its fans and safe-switches for hand held air dryers. But what interested me more were the air-conditioners. Amongst others, Samsung, Voltas and Godrej have been repetitively screening their ads with a heavy emphasis on the fact that their ACs are ‘made for India’. The reason ACs haven’t penetrated household markets in India is primarily due to the fear people have of a high electricity bill that might result therefore. So most people who would like to have an AC at home never buy one due to this fear. If you look at these three ads again, it’s not surprising to find that the central idea is that of ACs that consume less power.
4) Mobile phones for rural markets: It was only after reading a story in last month’s edition of Forbes could I understand the cause for the sudden influx of small time mobile phone makers challenging the Nokias, Sonys and Samsungs. Have you ever stopped and wondered the same thing? Until a few months back who had even heard of mobile phones from Micromax, Maxx, Lemon, Lava, Inq, Spice and Videocon? As much as we see mobile communication all around us, a great part of the rural market still remains untouched. The same is true for dual-sim mobiles for urban crowds. My guess is that most of these new players want a share of both these pies. This has really woken up the established players to start looking at their options. Understand the Samsung Guru mobile ad featuring Aamir Khan from this perspective, and it should make sense.
5) Gojiyo.com: A last observation is the launch of Godrej’s virtual reality portal gojiyo.com. The advertisement displays two subtle yet remarkable trends in the economy. Number one, the Indian youth is ready to accept or at least try a hand at virtual reality; something that Second Life despite all its success in the west could not make a dent in the Indian market. A name like Second Life is very niche, compared to a more mass appealing name like gojiyo. The second observation, in my opinion is to be considered with more weight than the first. It basically says that you still need to advertise a website on television. Since the internet penetration in India in still low, companies still need to go to the television crowds to preview a teaser of their websites. This shouldn’t really come as a surprise if you also observed that the number of ads for television sets is noticeably high this IPL.
This article is not an ad feature, and opinions mentioned here are solely mine. Brand names have been taken out of free-will, and I have kept away from providing back-links to any of them.
If you liked this article, you might also want to read this.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Monday, March 22, 2010
Thursday, February 4, 2010
Houston, we have a solution
The United States National Academy of Engineering (NAE) has put out the top 14 engineering challenges for the 21st century.
http://www.engineeringchallenges.org/
Close to two weeks back, Dr. Charles Vest, President Emeritus of the Massachusetts Institute of Technology was speaking at the Faculty Hall of the main building at IISc, Bangalore. He is currently the President of the NAE. The topic of the lecture was ‘Engineering Education in the 21st century'. What caught all of us by surprise at the very outset of his talk was the statement that he made, which said “the world is actually getting better.” This was a refreshing change from the common handout that the world has taken a nightmare pill. The world is actually getting better.
Part of this talk covered the 14 greatest challenges you saw above, and how solving them could render a great impact to tens of millions of lives around the world. However, a cursory glance at the list will tell you that there are many other challenges that are equally important if not more, but haven’t made it to the list. For example, the issues of recycling the world’s waste or space exploration don’t feature on that list. But the 14 we have here are big enough to keep our heads and hands occupied for the next 100 years.
I’ve been spending time over the last few weeks meeting with people in academia, government and industries trying to gleam an understanding of where technology, especially enabling ones like nanotech (which I hold rather dear to me) are moving us towards. Invariably in each of these discussions, the topic gets derailed from the technology per se, to the fact that the world is beating inroads to the Indo-China region; and how everybody wants to be a part of the growth story. In my discussion earlier today with Ms. Indira Samarasekara, President of the University of Alberta, Edmonton, Canada, it became abundantly clear that policy makers and influencers of tomorrow will need to root themselves in one particular 'center of gravity' of a technology/science/engineering issue, and bring forth an economical or societal or legal understanding of the same problem.
This points out to two steps the Indian government ought to consider. Firstly, the issue of Brain Drain that so famously filled debate topics during the 90’s is now not on the radar. And as Dr. Vest pointed out in his talk too, we’re now on our way to Brain Circulation from Brain Drain. This is but a passing phase where we should in all eventuality end up talking about Brain Integration. I can’t get a grip on the third phrase yet. However, brain circulation seems like a logical extension of a globalized world. I can now grow, harvest and sell my ideas to the world while living in my own country, thanks to so many other enabling technologies that could require an entirely new post to talk about.
Secondly, we’re looking at integrating the micro-technologies of info, bio and nano and bridge the gap on to the macro systems like energy, healthcare, defense and so on. India has a huge slice of this pie, and we’re only getting started. That will call on technocrats to draw on multi-disciplinary skills. We need more programmes at the masters level at Indian science and engineering institutes to implement this.
There’s never really been a better time to live and grow in this country. Houston, we have a solution!
http://www.engineeringchallenges.org/
Close to two weeks back, Dr. Charles Vest, President Emeritus of the Massachusetts Institute of Technology was speaking at the Faculty Hall of the main building at IISc, Bangalore. He is currently the President of the NAE. The topic of the lecture was ‘Engineering Education in the 21st century'. What caught all of us by surprise at the very outset of his talk was the statement that he made, which said “the world is actually getting better.” This was a refreshing change from the common handout that the world has taken a nightmare pill. The world is actually getting better.
Part of this talk covered the 14 greatest challenges you saw above, and how solving them could render a great impact to tens of millions of lives around the world. However, a cursory glance at the list will tell you that there are many other challenges that are equally important if not more, but haven’t made it to the list. For example, the issues of recycling the world’s waste or space exploration don’t feature on that list. But the 14 we have here are big enough to keep our heads and hands occupied for the next 100 years.
I’ve been spending time over the last few weeks meeting with people in academia, government and industries trying to gleam an understanding of where technology, especially enabling ones like nanotech (which I hold rather dear to me) are moving us towards. Invariably in each of these discussions, the topic gets derailed from the technology per se, to the fact that the world is beating inroads to the Indo-China region; and how everybody wants to be a part of the growth story. In my discussion earlier today with Ms. Indira Samarasekara, President of the University of Alberta, Edmonton, Canada, it became abundantly clear that policy makers and influencers of tomorrow will need to root themselves in one particular 'center of gravity' of a technology/science/engineering issue, and bring forth an economical or societal or legal understanding of the same problem.
This points out to two steps the Indian government ought to consider. Firstly, the issue of Brain Drain that so famously filled debate topics during the 90’s is now not on the radar. And as Dr. Vest pointed out in his talk too, we’re now on our way to Brain Circulation from Brain Drain. This is but a passing phase where we should in all eventuality end up talking about Brain Integration. I can’t get a grip on the third phrase yet. However, brain circulation seems like a logical extension of a globalized world. I can now grow, harvest and sell my ideas to the world while living in my own country, thanks to so many other enabling technologies that could require an entirely new post to talk about.
Secondly, we’re looking at integrating the micro-technologies of info, bio and nano and bridge the gap on to the macro systems like energy, healthcare, defense and so on. India has a huge slice of this pie, and we’re only getting started. That will call on technocrats to draw on multi-disciplinary skills. We need more programmes at the masters level at Indian science and engineering institutes to implement this.
There’s never really been a better time to live and grow in this country. Houston, we have a solution!
Wednesday, March 4, 2009
There was recession in Heaven
Let the scientists figure out how and why dreams occur. I am here to experience them; some will be good, most will not make sense and the odd one or two will send me looking for the water bottle at 3 am. It’s the dreams that have absolutely no logic to the sequence in which they unfold that are the most interesting ones; and I’m sure it’s the same with most people.
I had this one particular dream, back in 2003, which I found so hilarious I began laughing in my sleep and consequentially woke up. It was one of those no-brainer nonsense jokes, but I guess the punch line at the end of the dream was too good that even today, 6 years hence I can recount every detail as it unfolded.
The scene is set in the prayer hall of my school. There isn’t much lighting around in the hall but for what’s filtering through the windows on a cloudy December morning. There’s a stage and I’m standing on it. The hall is empty and spacious with the big wooden door on my far right. There are framed photos of freedom fighters on the walls on my left hand side. At the entrance to the hall near this door is a tripod stand supporting a black coloured board with holes (the kind you would find at the entrances of reception halls with yellow and white letters stuck in it announcing the event details). I see my Head Mistress and my two best friends Satya and Anoop standing in front of the board reading what’s displayed on it. Curious to see it for myself, I get off the stage and walk towards them. As I get around to facing the board, I call out to my friends. They can’t hear me, for they aren’t responding.
Here’s what I see on the board – in big white letters is the word ‘Prayer’. Following this, in smaller letters are four lines of English poetry; the first three ending with commas and the last one with a full stop. I don’t remember what the lines were, but interestingly after the four lines, I see something else. In tiny yellow it says ‘Rs 81’. That’s right, Rupees Eighty One. Anoop is reading out the lines on the board with my Head Mistress and my other friend Satya nodding along approvingly. I’m a mute spectator to all of this. All the while, I’m standing there thinking “What is the ‘Rs 81’ doing there at the bottom? What does it mean?” Soon enough, Anoop completes reading the ‘Prayer’ and looks towards the teacher. She asks him in her bossy commanding voice “What do you think of this prayer?” Without a moment’s hesitation, he replies “It’s good. But why did you have to pay 81 Rupees for this English prayer? You could have bought a cheaper Hindi Prayer for 25 bucks.”
I woke up with spurts of laughter that morning. I’m still trying to figure out what the 81 Rupees was for. Maybe even God wasn’t spared of the 2003 market downturn, and He had to resort to selling copyrights of His prayers to lesser mortals like us. For the record, my school prayer was Gajananam, bhoothaganadhi sevitham ....
I had this one particular dream, back in 2003, which I found so hilarious I began laughing in my sleep and consequentially woke up. It was one of those no-brainer nonsense jokes, but I guess the punch line at the end of the dream was too good that even today, 6 years hence I can recount every detail as it unfolded.
The scene is set in the prayer hall of my school. There isn’t much lighting around in the hall but for what’s filtering through the windows on a cloudy December morning. There’s a stage and I’m standing on it. The hall is empty and spacious with the big wooden door on my far right. There are framed photos of freedom fighters on the walls on my left hand side. At the entrance to the hall near this door is a tripod stand supporting a black coloured board with holes (the kind you would find at the entrances of reception halls with yellow and white letters stuck in it announcing the event details). I see my Head Mistress and my two best friends Satya and Anoop standing in front of the board reading what’s displayed on it. Curious to see it for myself, I get off the stage and walk towards them. As I get around to facing the board, I call out to my friends. They can’t hear me, for they aren’t responding.
Here’s what I see on the board – in big white letters is the word ‘Prayer’. Following this, in smaller letters are four lines of English poetry; the first three ending with commas and the last one with a full stop. I don’t remember what the lines were, but interestingly after the four lines, I see something else. In tiny yellow it says ‘Rs 81’. That’s right, Rupees Eighty One. Anoop is reading out the lines on the board with my Head Mistress and my other friend Satya nodding along approvingly. I’m a mute spectator to all of this. All the while, I’m standing there thinking “What is the ‘Rs 81’ doing there at the bottom? What does it mean?” Soon enough, Anoop completes reading the ‘Prayer’ and looks towards the teacher. She asks him in her bossy commanding voice “What do you think of this prayer?” Without a moment’s hesitation, he replies “It’s good. But why did you have to pay 81 Rupees for this English prayer? You could have bought a cheaper Hindi Prayer for 25 bucks.”
I woke up with spurts of laughter that morning. I’m still trying to figure out what the 81 Rupees was for. Maybe even God wasn’t spared of the 2003 market downturn, and He had to resort to selling copyrights of His prayers to lesser mortals like us. For the record, my school prayer was Gajananam, bhoothaganadhi sevitham ....
Wednesday, February 4, 2009
Well Well
Looks like someone seconds my opinion:
http://economictimes.indiatimes.com/Opinion/Davos_goes_nowhere/articleshow/4072530.cms
Happy Day
http://economictimes.indiatimes.com/Opinion/Davos_goes_nowhere/articleshow/4072530.cms
Happy Day
Wednesday, January 28, 2009
WEF kicks off
The 5-day World Economic Forum (WEF) kicks off this evening in Davos, Switzerland. The event is expected to draw 2,500 participants from 96 countries. Participants from around the world include:
• 250 public figures, including 41 heads of state or government, 60 ministers, 30 heads or senior officials of international organizations and 10 ambassadors
• More than 510 participants from civil society, including 50 heads or representatives of non-governmental organizations, 225 media leaders, 215 leaders from academic institutions and think tanks, 10 religious leaders of different faiths and 10 trade union leaders. [Source: www.weforum.org]
The co-chairs of this year’s meet, as in every other year, is a handful of some of the world’s most influential names: Kofi Annan, Stephen Green of HSBC Holdings, Anand Mahindra of Mahindra and Mahindra, Rupert Murdoch of News Corp, Maria Ramos (Transnet Ltd., South Africa), Jeroen van der Veer (Chief o Royal Dutch Shell) and Werner Wenning of Bayer, Germany.
Russian Prime Minister Vladimir Putin is expected to pitch Russia’s Economic Vision at the opening address (00:15, IST) that is expected to set the tone of the debate over the course of the forum. Union Minister of Commerce and Industry Kamal Nath is leading the Indian congregation.
It will be interesting to note how Klaus Schwab’s stage will shape up discussions (and solutions, hopefully). With all the doom and gloom expected for much of 2009, this could very well be a place for the top brass to put matters into perspective. As it is already being said, this is the most important edition of the WEF in forty years.
A familiar face at WEF, Bill Gates, seems absent. The Obama administration is sending only one senior adviser. Another section to watch out this WEF: The Young Global Leaders.
• 250 public figures, including 41 heads of state or government, 60 ministers, 30 heads or senior officials of international organizations and 10 ambassadors
• More than 510 participants from civil society, including 50 heads or representatives of non-governmental organizations, 225 media leaders, 215 leaders from academic institutions and think tanks, 10 religious leaders of different faiths and 10 trade union leaders. [Source: www.weforum.org]
The co-chairs of this year’s meet, as in every other year, is a handful of some of the world’s most influential names: Kofi Annan, Stephen Green of HSBC Holdings, Anand Mahindra of Mahindra and Mahindra, Rupert Murdoch of News Corp, Maria Ramos (Transnet Ltd., South Africa), Jeroen van der Veer (Chief o Royal Dutch Shell) and Werner Wenning of Bayer, Germany.
Russian Prime Minister Vladimir Putin is expected to pitch Russia’s Economic Vision at the opening address (00:15, IST) that is expected to set the tone of the debate over the course of the forum. Union Minister of Commerce and Industry Kamal Nath is leading the Indian congregation.
It will be interesting to note how Klaus Schwab’s stage will shape up discussions (and solutions, hopefully). With all the doom and gloom expected for much of 2009, this could very well be a place for the top brass to put matters into perspective. As it is already being said, this is the most important edition of the WEF in forty years.
A familiar face at WEF, Bill Gates, seems absent. The Obama administration is sending only one senior adviser. Another section to watch out this WEF: The Young Global Leaders.
Friday, July 18, 2008
House hunted
Many of my age group are just stepping into the The Great Indian Workforce. Housing for young kids like us is a real challenge. We are, as I see, not yet there to make a down payment and pick up a property to pay EMIs yet. We make good money to pay some reasonable rent. We are picky and choosy about whom we live with. We want to live independently and 'live it our way'. Food is important, but not as much as unwinding after a tiring week's work. For some of us, our private space is far more necessary than saving on those couple of thousands.
As I've been house hunting in Chennai for about 3 days now, I see that rentals have gone through the roof here for no apparent reason. Most of the houses that are now flying off the shelf didn't have takers a year ago, or maybe even 8 months ago. In 2007, houses that cost 2K are going for a bargain rent of 5k today. All this despite the fact the starting incomes have actually dipped. Work out the economics and it will show you that the situation is bizarre.
I responded to an ad for a single BHK house in Central Chennai (close to my work place in Nandanam). When I did end up at the location, I found the house to be well located, as in the approach road being tidy (which is a rarity here; no offence). The owner was a courteous gentleman who woke up from a relaxing siesta to show me the house. It was a cute little thing just right for a single person. I loved it. I could 'see' myself 'living' there. The house was 7 minutes walk to my office. It had a little hall, a cute little kitchen to fix the dishes and a small room. "Perfect!" I thought for a minute and decided to take it. I paid the owner a token of Rs 101 and told him I would arrange for the advance in 2 days time for which the gentleman kindly consented.
I came to my aunt' place with a sense of achievement. My first real estate deal was just finalised; it was a rental one, but a deal is a deal! I called on my mom to tell her that I had booked the place. Later in the evening as I sat discussing the place with my aunt, something hit me.
The house I was going to be living in had no windows. Not one. It dawned on me that I'd be spending the next couple of years in a box. And I don't plan to befriend Claustrophobia.
This morning, I called the owner and cancelled. At least, you want good cross ventilation in the house you live in. Coming to think of it, when the owner opened the door of the house for me to see, it was pitch dark as a burrow at 3 in the afternoon. As he turned on the lights, the darkness went out of the door along with my common sense.
In case your hunting for houses, I would suggest you to go with a prepared checklist of things your looking for in it. It makes life easier.
As I've been house hunting in Chennai for about 3 days now, I see that rentals have gone through the roof here for no apparent reason. Most of the houses that are now flying off the shelf didn't have takers a year ago, or maybe even 8 months ago. In 2007, houses that cost 2K are going for a bargain rent of 5k today. All this despite the fact the starting incomes have actually dipped. Work out the economics and it will show you that the situation is bizarre.
I responded to an ad for a single BHK house in Central Chennai (close to my work place in Nandanam). When I did end up at the location, I found the house to be well located, as in the approach road being tidy (which is a rarity here; no offence). The owner was a courteous gentleman who woke up from a relaxing siesta to show me the house. It was a cute little thing just right for a single person. I loved it. I could 'see' myself 'living' there. The house was 7 minutes walk to my office. It had a little hall, a cute little kitchen to fix the dishes and a small room. "Perfect!" I thought for a minute and decided to take it. I paid the owner a token of Rs 101 and told him I would arrange for the advance in 2 days time for which the gentleman kindly consented.
I came to my aunt' place with a sense of achievement. My first real estate deal was just finalised; it was a rental one, but a deal is a deal! I called on my mom to tell her that I had booked the place. Later in the evening as I sat discussing the place with my aunt, something hit me.
The house I was going to be living in had no windows. Not one. It dawned on me that I'd be spending the next couple of years in a box. And I don't plan to befriend Claustrophobia.
This morning, I called the owner and cancelled. At least, you want good cross ventilation in the house you live in. Coming to think of it, when the owner opened the door of the house for me to see, it was pitch dark as a burrow at 3 in the afternoon. As he turned on the lights, the darkness went out of the door along with my common sense.
In case your hunting for houses, I would suggest you to go with a prepared checklist of things your looking for in it. It makes life easier.
Wednesday, June 25, 2008
The Price Sensitive Indian Consumer
Week before last, within 2 hours of the Congress announcing a hike in fuel prices, 4 filling stations inside a circle of one km around Malleswaram circle were packed with cars and bikes lining up in huge numbers to get their tanks full. My friend was one amongst them, having filled in 11 liters of petrol into his bike. At five bucks a ltr, he saved around 55 to 60 bucks. The guys with the cars must have done a little more.
This is a classic example of the price sensitive Indian consumer. Every Sunday, Big Bazaar runs a 5% off sale on their products, and they're forced to bring in cops to manage the crowd. The telecoms sector is probably the best example of price sensitivity. The Indian telecoms market is said to be the most competitive in the world. Now, that's a little bizarre, given a couple of things: an incredibly huge consumer base, just 7 to 8 operators and low market penetration compared to a lot of other markets. But in this business, pricing is king and all else can come later. Brand consciousness is unknown. People are ready to chuck their sim card if there's another operator offering local calls at 20 paise lesser per minute.
The same is true for the airline biz. Airline search engines thrive on the price sensitivity factor. Ever wondered why yatra.com has the words 'lowest fare' very conspicuously displayed on its page? The vast majority of the flying population doesn't care which airline is taking them, as long as they're getting the best price.
Over the years, we've built up price-sensetiveness into our DNA. But with the yo! generation seeing some pretty heavy numbers on their pay checks, branding might just be the next answer on the drawing boards of several corporations. If pricing were still to remain the detrimental factor, companies might as well replace their MBAs with monkeys.
This is a classic example of the price sensitive Indian consumer. Every Sunday, Big Bazaar runs a 5% off sale on their products, and they're forced to bring in cops to manage the crowd. The telecoms sector is probably the best example of price sensitivity. The Indian telecoms market is said to be the most competitive in the world. Now, that's a little bizarre, given a couple of things: an incredibly huge consumer base, just 7 to 8 operators and low market penetration compared to a lot of other markets. But in this business, pricing is king and all else can come later. Brand consciousness is unknown. People are ready to chuck their sim card if there's another operator offering local calls at 20 paise lesser per minute.
The same is true for the airline biz. Airline search engines thrive on the price sensitivity factor. Ever wondered why yatra.com has the words 'lowest fare' very conspicuously displayed on its page? The vast majority of the flying population doesn't care which airline is taking them, as long as they're getting the best price.
Over the years, we've built up price-sensetiveness into our DNA. But with the yo! generation seeing some pretty heavy numbers on their pay checks, branding might just be the next answer on the drawing boards of several corporations. If pricing were still to remain the detrimental factor, companies might as well replace their MBAs with monkeys.
Tuesday, February 26, 2008
Brain gain
I have been glued to this one book for the last couple of days. It's called The Tipping Point, written by Malcolm Gladwell. Most of us have probably come across the title while flipping through book reviews, or seen it on sidewalks (a pity that they give Landmark a run for its money). Malcolm Gladwell does a wonderful job in explaining why major trend changes often times happen within small time frames, as with the case of the sudden rise in popularity of the Hush Puppies footwear brand in the USA in the mid-90's. Keeping it short, Hush Puppies was a brand whose popularity was headed south. Sales were down to 30,000 pairs a year in 1994. But by late 1995- early 96, the brand had resurrected and sales were going through the roof at astronomical 430,000 pairs a year. Astronomical, considering the fact that all those tables turned inside a short span of 2-3 years.
I am still midway through the book. But somewhere along the way I couldn't help but to pause and think about the whole shift in trend in India w.r.t to immigration. The great Indian Dream of the 80's and 90's was so well woven into the public mindset: get a good education, go to 'foreign', get a job (the dollar was fetching 50 bucks back then), live frugally, save up, come home, get married and run back with her and lead a life of apparent significance in Uncle Sam's or Bob' s house. While in middle school, I remember participating in debates where an oft repeated topic was that of Brain drain: boon or bane, so to state. Writers, statesmen, industrialists and academics wrote and debated on this issue at length. Somehow, everyone was focused on fixing 'Brain drain'. In a doctor's tongue, brain drain itself wasn't the problem. It was the symptom of the problem. And the problem was economic growth. We were seeing ridiculous growth rates of 3 and 4 percent all through the 90's. For a developing economy, 3 percent could get us as far as the neighbour's compound. And for those who wanted to leapfrog on to the fast track, India was just not the vehicle. In retrospect, the government back then could have done little to keep these men and women from boarding flights to greener pastures.
And what has heppened now? Inside a short 4 to 5 years, post 2002-03, everything has been reversed. The same people who ran away are now coming back. Youngsters, like you and me, have realised that the go to US-drive a second hand Ford-stay there forever isn't such a good deal to get rich after all. The dollar's losing ground to the rupee. And 9% for India is like 'duh!'. KV Kamath, MD of ICICI Bank believes that the next 20 years (at least) will see India growing. Will there be fluctuations ahead? Of course. But will we stop moving ahead? Of course not.
If you happen to be typically in your early twenties, here's a wise thing to do. Get an education. Stay in India. Find a suitable employer (they are easier to find than you might think). But besides working 9 to 5, build a business part time. You might think, why? The answer very simply is that if there is anyway that you can participate and claim a slice of the Indian growth story, it is by owning a business and creating investments. To create strong investments requires knowledge of the business domain. Renowned personal finance guru Robert Kiyosaki talks about how employees investments' and those of business men are greatly different. You would want to get the best of both worlds, I presume. Work-build a business-invest in India should ideally be your mantra for the forthcoming years in your career. Does that mean the plan of going abroad as in the 80's and 90's is redundant? In all the probability, the answer is yes. But we won't have another debate on Brain gain:boon or bane.
I am still midway through the book. But somewhere along the way I couldn't help but to pause and think about the whole shift in trend in India w.r.t to immigration. The great Indian Dream of the 80's and 90's was so well woven into the public mindset: get a good education, go to 'foreign', get a job (the dollar was fetching 50 bucks back then), live frugally, save up, come home, get married and run back with her and lead a life of apparent significance in Uncle Sam's or Bob' s house. While in middle school, I remember participating in debates where an oft repeated topic was that of Brain drain: boon or bane, so to state. Writers, statesmen, industrialists and academics wrote and debated on this issue at length. Somehow, everyone was focused on fixing 'Brain drain'. In a doctor's tongue, brain drain itself wasn't the problem. It was the symptom of the problem. And the problem was economic growth. We were seeing ridiculous growth rates of 3 and 4 percent all through the 90's. For a developing economy, 3 percent could get us as far as the neighbour's compound. And for those who wanted to leapfrog on to the fast track, India was just not the vehicle. In retrospect, the government back then could have done little to keep these men and women from boarding flights to greener pastures.
And what has heppened now? Inside a short 4 to 5 years, post 2002-03, everything has been reversed. The same people who ran away are now coming back. Youngsters, like you and me, have realised that the go to US-drive a second hand Ford-stay there forever isn't such a good deal to get rich after all. The dollar's losing ground to the rupee. And 9% for India is like 'duh!'. KV Kamath, MD of ICICI Bank believes that the next 20 years (at least) will see India growing. Will there be fluctuations ahead? Of course. But will we stop moving ahead? Of course not.
If you happen to be typically in your early twenties, here's a wise thing to do. Get an education. Stay in India. Find a suitable employer (they are easier to find than you might think). But besides working 9 to 5, build a business part time. You might think, why? The answer very simply is that if there is anyway that you can participate and claim a slice of the Indian growth story, it is by owning a business and creating investments. To create strong investments requires knowledge of the business domain. Renowned personal finance guru Robert Kiyosaki talks about how employees investments' and those of business men are greatly different. You would want to get the best of both worlds, I presume. Work-build a business-invest in India should ideally be your mantra for the forthcoming years in your career. Does that mean the plan of going abroad as in the 80's and 90's is redundant? In all the probability, the answer is yes. But we won't have another debate on Brain gain:boon or bane.
Monday, September 3, 2007
CONVERGENCE
I noticed it first when Pratik bought a Pim-Pom lollipop from Uncle ji's dukan. This was a simple and non-threatening dollop of flavoured sugar enclosing a chewing gum, both supported on a thin stick (if you haven't tried the Pim-pom, go do that). This lollipop is testimonial to a whole new wave of societal change that we are at the outset of experiencing. The change that I'm referring to is convergence.
In a layman's language, convergence is the combination of multiple unrelated fields to solve a common purpose. The case of Pimpom can be analysed thus: there are people who like lollipops; and there are people who like chewing gums. If the two products can be combined to give one single product, the target group of customers is simply a little less than the union of the 2 sets of initial customers. Hence, for the manufacturers of Pimpom, the customer base has risen all of a sudden just by placing the gum at the centre of the lollipop.
On a slightly advanced level, convergence shows up with the rise of the Prosumer. Since Adam Smith, economics has always been studied treating the producer and the consumer as separate entities driving the market system. With the onset of the information age (thereby driving the digital revolution and forcing in the cyber world), convergence of the producer and the consumer is starting to show up across various layers of society. In the near future, it will become essential for us to 'produce' a part of what we are to 'consume'. Take the whole concept of a self-service restaurant. A conventional restaurant might make the best noodles in town. But the noodles is not really is the product the restauranter is selling. The restaurant is not in the noodles business; it is in the service business. The guy who makes the noodles and the guy who serves them at the table and gives you the check at the end of the meal are both 'producers' of the service which is being 'consumed' by you and me, the customers.
In a self service restaurant, the definition of service becomes slightly skewed. True, the guy inside still makes the noodles. But the customer is required to walk up to the counter and pick up his order. Effectively, a part of the service production is shifted back to the consumer. As a result the cost that he incur es on the noodles should be lesser than if he were served. Similarly, across every field of the economy today, we see the rise of the prosumer happening. It is only a matter of time before we stop talking about 'production' and 'consumption' as separate terms and start talking of a new converged activity called 'prosumption'. Will supply-demand economics apply to prosumtion? Yes. And no. However, we will need the laws of economics altered to fit this evolving mould.
In academia, our universities run degrees in sciences (BSc), arts (BA), engineering (B.Tech/BE), commerce (B.Com), architecture (B.Arch) and many others. These are field specific. It is expected that an individual completing a B.Com degree will go on to become a banker or a CA and serve his base of clients in that domain. Reading the problem backwards, it is expected that a client(consumer) will go to the banker(producer) for fulfilling his financial services. Or in other words, the consumer is being domain specific and expects the banker to do nothing more than fill out his loan application or manage his assets. But the prosumer of tomorrow is not that domain specific. He would walk up to one single person and expect the latter to fill out his loan application, take his pulse rate and help him find a copy of Don Quixote off the book shelf. This would immediately imply that the latter would have to be educated in multiple disciplines. And this is something that the education system will have to evolve out of need. In the future, we might see a student specialising in accountancy, bio-sciences, literature and cooking - all covered under one degree. We just don't know what we would call such a person. Maybe the degree would be a B.ConS, as in Bachelors in Converging Studies!
In a layman's language, convergence is the combination of multiple unrelated fields to solve a common purpose. The case of Pimpom can be analysed thus: there are people who like lollipops; and there are people who like chewing gums. If the two products can be combined to give one single product, the target group of customers is simply a little less than the union of the 2 sets of initial customers. Hence, for the manufacturers of Pimpom, the customer base has risen all of a sudden just by placing the gum at the centre of the lollipop.
On a slightly advanced level, convergence shows up with the rise of the Prosumer. Since Adam Smith, economics has always been studied treating the producer and the consumer as separate entities driving the market system. With the onset of the information age (thereby driving the digital revolution and forcing in the cyber world), convergence of the producer and the consumer is starting to show up across various layers of society. In the near future, it will become essential for us to 'produce' a part of what we are to 'consume'. Take the whole concept of a self-service restaurant. A conventional restaurant might make the best noodles in town. But the noodles is not really is the product the restauranter is selling. The restaurant is not in the noodles business; it is in the service business. The guy who makes the noodles and the guy who serves them at the table and gives you the check at the end of the meal are both 'producers' of the service which is being 'consumed' by you and me, the customers.
In a self service restaurant, the definition of service becomes slightly skewed. True, the guy inside still makes the noodles. But the customer is required to walk up to the counter and pick up his order. Effectively, a part of the service production is shifted back to the consumer. As a result the cost that he incur es on the noodles should be lesser than if he were served. Similarly, across every field of the economy today, we see the rise of the prosumer happening. It is only a matter of time before we stop talking about 'production' and 'consumption' as separate terms and start talking of a new converged activity called 'prosumption'. Will supply-demand economics apply to prosumtion? Yes. And no. However, we will need the laws of economics altered to fit this evolving mould.
In academia, our universities run degrees in sciences (BSc), arts (BA), engineering (B.Tech/BE), commerce (B.Com), architecture (B.Arch) and many others. These are field specific. It is expected that an individual completing a B.Com degree will go on to become a banker or a CA and serve his base of clients in that domain. Reading the problem backwards, it is expected that a client(consumer) will go to the banker(producer) for fulfilling his financial services. Or in other words, the consumer is being domain specific and expects the banker to do nothing more than fill out his loan application or manage his assets. But the prosumer of tomorrow is not that domain specific. He would walk up to one single person and expect the latter to fill out his loan application, take his pulse rate and help him find a copy of Don Quixote off the book shelf. This would immediately imply that the latter would have to be educated in multiple disciplines. And this is something that the education system will have to evolve out of need. In the future, we might see a student specialising in accountancy, bio-sciences, literature and cooking - all covered under one degree. We just don't know what we would call such a person. Maybe the degree would be a B.ConS, as in Bachelors in Converging Studies!
Tuesday, August 21, 2007
Understanding Incomes
A sound financial health stems out of knowing the types of incomes and understanding their underlying fundamentals. Every rupee earned falls into one of two income types: active income and passive income. Active income is that for which a person is directly trading his time for. All salaried and self-employed professionals work for active income. When an individual reports to work, he exchanges his time for a certain amount of money as determined by his pay. This is also called earned income. Passive income on the other hand does not require a person's physical presence, but instead arises out of owning tangible assets like property, shares and bank savings or intangible assets (intellectual property). Rental income, dividends, interest on FD’s, royalty money from sales of books or records qualifies as passive income amongst others.
A word that comes with active income is 'instant gratification'. When a person jumps jobs for a higher pay, he sells his time for a higher price to his new employer. The biggest drawback that comes with earned income is that when a person stops working, his income stops. However, this is not true for passive income where the accompanying emotion is 'delayed gratification'. Traditionally, passive income takes time to build up and grows with the growth of the underlying asset class. But since this can take time, the underlying requirement is patience while developing a stream of passive income. The leverage factor is virtually unlimited for a person building passive income, whereas there is very little leverage for a person working for active income as the amount of time in each of our hands is limited.
In today's volatile economy, it is all the more essential for an individual to diversify his income from more than one income stream. Companies today are diversifying beyond their core businesses. If these giant corporations are thinking in terms of diversification, it becomes almost mandatory for a person to diversify his income streams as well. Relying on any one particular source of income is almost too big a risk for a common individual to take. The good news here is that every time active income flows in, there is a choice: either to expense it out directly; or convert it into an asset that can provide passive income at a later date. For instance, if a salaried person were to invest a portion of his income in a well chosen mutual fund on a regular basis, over a period of time he would find this asset block big enough to provide him a separate stream of income. This secondary income would be his passive income that comes in independent of his active income. Active income can be converted into passive income if nurtured and grown carefully.
Every individual can calculate his financial well being by working out his wealth ratio. Wealth ratio is the sum total of active income and passive income divided by a person's total expenses. A wealth ratio of greater than 1 says that an individual's financial situation is sustainable and looks healthy. A ratio of less than 1 indicates living beyond one's means. Another crucial factor is to ensure that passive income is at least as much as the active income. This indicates that if due to any unforeseen incident, an individual is unable to work; his lifestyle is still maintained by the passive income.
With this understanding, it is a matter of choice between having an active income and a passive life, or a passive income and an active life.
A word that comes with active income is 'instant gratification'. When a person jumps jobs for a higher pay, he sells his time for a higher price to his new employer. The biggest drawback that comes with earned income is that when a person stops working, his income stops. However, this is not true for passive income where the accompanying emotion is 'delayed gratification'. Traditionally, passive income takes time to build up and grows with the growth of the underlying asset class. But since this can take time, the underlying requirement is patience while developing a stream of passive income. The leverage factor is virtually unlimited for a person building passive income, whereas there is very little leverage for a person working for active income as the amount of time in each of our hands is limited.
In today's volatile economy, it is all the more essential for an individual to diversify his income from more than one income stream. Companies today are diversifying beyond their core businesses. If these giant corporations are thinking in terms of diversification, it becomes almost mandatory for a person to diversify his income streams as well. Relying on any one particular source of income is almost too big a risk for a common individual to take. The good news here is that every time active income flows in, there is a choice: either to expense it out directly; or convert it into an asset that can provide passive income at a later date. For instance, if a salaried person were to invest a portion of his income in a well chosen mutual fund on a regular basis, over a period of time he would find this asset block big enough to provide him a separate stream of income. This secondary income would be his passive income that comes in independent of his active income. Active income can be converted into passive income if nurtured and grown carefully.
Every individual can calculate his financial well being by working out his wealth ratio. Wealth ratio is the sum total of active income and passive income divided by a person's total expenses. A wealth ratio of greater than 1 says that an individual's financial situation is sustainable and looks healthy. A ratio of less than 1 indicates living beyond one's means. Another crucial factor is to ensure that passive income is at least as much as the active income. This indicates that if due to any unforeseen incident, an individual is unable to work; his lifestyle is still maintained by the passive income.
With this understanding, it is a matter of choice between having an active income and a passive life, or a passive income and an active life.
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