Visa Break

Visa Break:

"AT LAST, a piece of good news for foreign students studying in the United States: The State Department has announced that lengthy procedures to obtain security clearances for science and engineering students will become shorter, and the clearances will last longer. According to foreign student organizations, troubles with these clearance procedures were the main cause of unpredictable delays -- sometimes lasting months -- that foreign students encountered while trying to return to this country following trips abroad. In some cases, the requirements forced students to leave in the middle of their courses or prevented professors from returning in the middle of the year."

Higher education

The Economist Writes :

Higher education is now international in a way it has not been since the heyday of Europe's great medieval universities—and on a vastly greater scale. Numbers studying abroad were statistically negligible only two decades ago, says Andreas Schleicher, of the Organisation for Economic Co-operation and Development (OECD), a Paris-based think-tank. Now growth is soaring: 2m university students—approaching 2% of the world's total of 100m, according to the International Finance Corporation—were studying outside their home country in 2003. Since the late 1990s the higher-education market has been growing by 7% a year. Annual fee income alone is now an estimated $30 billion. Private, profit-seeking institutions are still a minority, but almost all universities are beginning to compete for talent and money. That is breeding independence of government, both financially and psychologically; inexorably, the state's role is shrinking.

The two big trends, of internationalisation and competition, feed each other. The more that universities tailor their offers to foreign students, the more attractive they become. And the more that students hop between countries, the more their choices count rather than the wishes of a particular government.

The No-time Networking Plan

Keith Ferrazzi in the Inc magz blog :

If you're stressed-out because you can't fit in any time for "networking," my advice to you is the following: Don't. That's right. Don't even try to squeeze in extra time. Instead, focus on meeting people more often during the things you already have to do. This way, you can relax and let that "networking time" come to you.

Before each of your daily activities, just ask yourself, "Could this be an opportunity to meet someone new?" That's what my friend Stever did when he used to work out at the Harvard Business School gym. And he got more clients for his coaching practice there than from anywhere else.

The greatest thing about this little networking plan is that it requires no (extra) time at all. It does, however, require a little bit of guts. And the more guts you have, the more you'll meet success. Try it; it will pay off!

Social and Environmental Technologies Inventors Challenge

Mitra over at Natural Innovation writes about the SET Challenge.

The SET competition, is a prize for a business plan for a new social or environmental technology. The idea is to bring together innovators with business students to look at how to commercialise technologies.

I think this is a great idea, as many innovations never get off the ground because of the lack of business skills of the inventors.

This is the first year of the prize, with full plans due March 31st 2005.

See www.set-info.com for more info.

Mitra is a volunteer advisor to the competition. If you want to check it out, click here.

If anybody has any ideas which can be submitted here, if it is ok, I would like to hear them out and see if I can contribute anything. The deadline : March 15th 2005.

Any MBAs out there who will be interested in this?

Guest Workers for Australia

Australia, a country of nations, is always careful about letting people enter the country, be it for a visit, for education or for work and immigration. Australia has a carefully developed immigration program in the last 50 years. One of the main reasons of immigration has been to plug labour shortages.

Now the department of immigration is considering the idea of guest or temporary workers from other countries. They believe that this is a idea worth considering and is the best way to plug the labour shortages.

The Sydney Morning Herald has more on this :

The Government is exploring dumping a century-old ban on the importation of temporary labour to accept foreign "guest workers" to plug Australia's growing labour shortages.

Days after the Prime Minister, John Howard, acknowledged that Australia was "running out of workers", the Immigration Minister, Amanda Vanstone, has revealed she is considering the guest worker option.

Proposals to develop a guest worker category for labour-starved rural industries are already being developed by the influential National Farmers Federation, as part of several measures to overcome shortages.

According to a fierce opponent of the idea, the Australian Workers' Union, the Immigration Department this week began sounding out unions on the issue.

Senator Vanstone said yesterday she was "very interested" in the guest worker idea but it would depend on there being guarantees about their award wages, proper accommodation and repatriation to their home countries.

Several Pacific countries, including Papua New Guinea, the Solomon Islands and Nauru, have urged Australia to allow their citizens to work temporarily in Australia to generate incomes for their struggling economies.

Her comments have been hailed by a Mildura-based development group, which is seeking to import about 2000 guest workers from China over the next five years to fill chronic vacancies in the fruit-growing region.

Senator Vanstone's disclosure drew warnings from migration expert Bob Birrell that Australia would be "entering murky waters", given the unsavoury treatment of Kanaka indentured workers from the Pacific islands at the turn of last century, and other countries' experiences with guest workers.

Professor Birrell, the director of the Centre for Population and Urban Research, said the experience of Germany - which had millions of guest workers until the 1970s, then found they did not want to return home - should be remembered by Australia.

The main issue for Australia will be the ability to repatriate the workers back to their home countries and also making sure that the temporary workers are not exploited. The later could be easy for Australia, the former is the main challenge.

Addicted to Google

How many of you use Google and its associated services in a day or week. Here's mine.

Google the search engine is almost a compulsory daily use. Anywhere between 10-20 searches a day and sometimes more. Gmail is another service. The first site I open after I open Firefox. Then, I use Blogger for blogging. I use Picassa for managing my photos. Today Hello started working behind firewalls and proxy's. I am using Hello now for my Photo Blog. I use Google Desktop for most of my searches on my computer unless it is music or PDFs for which I use Yahoo (X1). I use Google Adsense on my blogs. I use Google Groups and the Usenet through Google Groups.

I am sure those in North America would love the new Google Maps. Froogle is one service I use the least, may be because I am located in India.

Google Images Search, Scholar and other services of Google can be clubbed under Google searches.

The only missing link is the Google Browser, Google IM and the Google Virtual Internet Drive (a Gmail Drive is currently available) along with some Notepad like service and with PIM tools. Complete this and then there will be very few aspects of your online life which is not connected to Google.

Slowly Google is becoming the next Microsoft in terms of its dominance in this connected world.

The MBA Curriculum : Game Theory

Fast Company in its latest issue covers Game Theory or the lack of Game Theory in Business.

What is Game Theory?

Avinash Dixit and Barry Nalebuff, authors of Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life, [suggested to me by my previous boss, Rajesh Jain, as the best book for new readers on Game Theory] provide the definition which is the most easy to understand. I can say this because for writing this post I searched through a number of definitions including Wikipedia but was not successful in finding a simple definition.

Game theory is the science of strategy. It attempts to determine mathematically and logically the actions that "players" should take to secure the best outcomes for themselves in a wide array of "games." The games it studies range from chess to child rearing and from tennis to takeovers. But the games all share the common feature of interdependence. That is, the outcome for each participant depends upon the choices (strategies) of all.

I have yet to understand Game Theory, but whatever I have seen of it I am convinced that it is one of the compulsory 'mental models' in your tool kit.

Avinash Dixit and Barry Nalebuff on the essence of Game Theory:

Games are fundamentally different from decisions made in a neutral environment. To illustrate the point, think of the difference between the decisions of a lumberjack and those of a general. When the lumberjack decides how to chop wood, he does not expect the wood to fight back; his environment is neutral. But when the general tries to cut down the enemy's army, he must anticipate and overcome resistance to his plans. Like the general, a game player must recognize his interaction with other intelligent and purposive people. His own choice must allow for both conflict and for possibilities for cooperation.

The essence of a game is the interdependence of player strategies. There are two distinct types of strategic interdependence: sequential and simultaneous. In the former the players move in sequence, each aware of the others' previous actions. In the latter the players act at the same time, each ignorant of the others' actions.

Fast Company says that "Game theory is the fun-sounding branch of economics introduced in the 1940s by Hungarian genius John von Neumann and developed in the 1950s by Princeton's John Nash, subject of the 2001 Oscar-winning film A Beautiful Mind." A lot of people in world were introduced to the idea of Game Theory after the release of the book and movie, A Beautiful Mind, further showing the importance of the medium like popular fiction and entertaining, oscar winning movies.

Over to Fast Company :

Over the years, the status of game theory -- which describes the interactions of self-interested parties such as poker players and deal makers -- soared, and its insights were applied to fields as far-reaching as evolution, auctions, even counterterrorism. Playing along, we here at the CDU decided to find out just how much court time game theory gets in the big game of business. After all, it has been taught to almost every one of the some 2.5 million MBAs and economists in the United States alone. Surely, we thought, it would be a slam dunk to turn up dozens of examples of game theory applied in the real world.

Adopting our usual rigorous methodology, we set the following parameters. To count, an example must:

1. be an actual business situation where somebody used the insights of game theory;
2. have occurred within the past five years; and
3. involve real, live, actual companies -- not governments, nonprofit organizations, or Russell Crowe.

First, we scoured the literature. We selected a relevant portfolio of 40 publications and submitted our queries. We tried again. And again. And we found . . . nothing. There were plenty of mentions of government spectrum auctions, and A Beautiful Mind came up hundreds of times. Not quite what we had in mind.

Perhaps, we thought, the media just doesn't get it. Undaunted, we assembled a panel of 30 respected game theorists around the world, and we sent them a survey asking, "Can you think of any examples of real, live companies that have consciously applied game-theoretical concepts to a real business problem?"

The response was . . . a deafening chorus of head scratching.

"The short answer is, I don't know," said David Levine of UCLA. "Let me think about this," replied MIT's Muhamet Yildiz.

Others on our expert panel, while not offering up any actual, you know, examples, were willing to speculate on why they couldn't. Traditional game theory "prescribes a lot of advice that does not actually seem to work," admitted Paul Bartha of the University of British Columbia. Why not? Maybe because "the sorts of situations that would allow the application of formal methods are so simple that people can understand them without much help," suggested the University of Minnesota's Andy McLennan.

Does that mean game theory is just, um, common sense? "Game theory gives you a nice systematic way to think about strategy, but it's not magic," agreed Hal Varian, an economist at the University of California at Berkeley and coauthor of the bestselling Information Rules (Harvard Business School Press, 1999). Or, as MIT's David McAdams put it, "Game theory is really a frame of mind and, once you have it, you see it everywhere."

Everywhere, perhaps, and nowhere.

In the end, none of our experts had a concrete example. But many offered the same advice: "Ask Preston McAfee" -- an economist at the California Institute of Technology and perhaps the country's foremost working game theorist (he designed that government spectrum auction). He was more encouraging: "There are lots of examples," he emailed, agreeing to an interview.

We reached the professor in his office at Caltech. "So," we asked, "what are all these examples of game theory applied to real life?" There was a silence on the line. "Well," he said, "a lot of companies hired game theorists to prepare for those spectrum auctions." Okay -- but what about nongovernment auction situations? "I don't know of any companies that employ pure game theorists -- but maybe they're keeping it quiet."

Very, very quiet.

This is indeed shocking that there was no example in the business world where Game Theory was used except government auctions in the last five years. It does show a paucity of the use of this branch of Mathematics.

Atanu Dey once told me this about the Prisoner's Dilemma, arguably, one of the most famous "game" in Game theory. I had trouble in understand and relating the prisoner's dilemma (not much improved still) and Atanu suggested that "fundamental concepts take sometime to understand. You need to train yourself to see them in various places. And once that becomes a habit you can see them everywhere, well almost."

I am not sure if the MBA Curriculum's currently use Game Theory or not, one thing is sure I am going to update my mental model with it.

Further Reading :

• The book, Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life by Avinash Dixit and Barry Nalebuff.


• A good Intro article by the same authors in Econ Library.


• Good set of links from the Math Forum.


• GameTheory.net - A resource for educators and students.

Google India Zeitgeist

I wrote about the Zeitgeist in January mentioning that it was every marketing person's dream.

The Google has a International Ziegeist for many countries. The countries covered are :

Australia, Brazil, Canada, China, Denmark, Finland, France, Germany, Italy, Japan, Korea, The Netherlands, Norway, Spain, Sweden, United Kingdom

India was missing. Now the gap has been filled. Kalpana Behra from Google India posts on the Google blog that we now have a Google India Zeitgeist. Great!

Popular Queries for January 2005

1. tsunami

2. indian railways

3. sania mirza

4. trisha

5. aishwarya rai

6. anara gupta

7. ignou

8. bollywood

9. ndtv

10. australian open

It will be interesting to watch this.

Deeshaa Network in The Feature

Howard Rheingold, author of Smart Mobs, writes a regular column in the Feature. His latest article is about the use of Mobile phone technology for farmers in the developing world.

Interesting part of the article is that Howard has mentioned the Deeshaa Network. Thank you Howard.

Deeshaa Network uses the same Drupal software that the Howard Dean campaign used so effectively as a groupblog and information portal dedicated to "bring about greater participation in the economic development of India by providing a platform to collaborate and cooperate."

In my previous role as the Project Manager in Deeshaa Ventures I had hit upon the idea of using the yahoo groups to start the Deeshaa Network to create a community around the project RISC. This community has grown in the past year to ~300 members with people like Kevin Werbach from The Wharton School as members.

My partner-in-crime in BPODigest.com, India's first Interactive vortal on the outsourcing industry, Ram Dhan, then helped me convert this group into the Deeshaa Network using the Drupal open source technology. Ram Dhan also hosts the network for free!

Its a good motivation to have been mentioned my Howard in the article.

The Goldilocks Economy

Goldilocks economy (GOHL.dee.lawks i.CON.uh.mee) n. An economy that is not so overheated that it causes inflation, and not so cool that it causes a recession. [Word Spy]

The Sydney Morning Herald reports that Australia's Goldilock years will be over if urgent steps are not taken.

Australia will have to get used to years of stunted growth and higher interest rates as the economy hits the limits of its productive capacity, the Reserve Bank governor, Ian Macfarlane, has warned.

Mr Macfarlane's alert foreshadows the end of Australia's dream run as the so-called "Goldilocks economy" - one that is neither too hot nor too cold, economists say.

In a blunt message to the Federal Government, Mr Macfarlane told a parliamentary committee in Sydney yesterday that sweeping reforms were needed to reinvigorate the economy.

He called for tax and policy measures to boost business investment, increase the supply of skilled workers and improve productivity in an attempt to raise the speed limits of future growth.

Mr Macfarlane's agenda included debate on increasing immigration, reforming welfare and scrapping tax breaks that had diverted a huge proportion of investment away from productive businesses into housing.

"GDP is also starting to slow under the constraints imposed by capacity limitations," he said. "I think we will have to get used to seeing GDP growth rates starting with the numbers 2 or 3 rather than 3 or 4 for a time."

These constraints on capacity were impairing growth and putting upward pressure on wages and prices, Mr Macfarlane said. "We are hearing more reports of businesses finding difficulty in hiring suitable labour and having to pay more for material inputs."

If the government does not follow the suggested changes then the fabled Australian stable economy may go for a toss.

Explanation on the FDI

Foreign Direct Investment acts as an 'attractive' index for comparing emerging countries. It is important in this scenario to understand the meaning and uses of FDI better.

One of the glaring marketing mistakes that India has been consistently making is the calculation of FDI. It is basic knowledge that if need to compare two numbers we also need to compute them using the same principles; Or else we are comparing apples with oranges. Strange as this may sound that is what is happenning in the FDI calculation between India and China. We have been comparing two different numbers between of FDi with India and China. Apart from this, we also need to remove "noise numbers" like round-tripping to get an accurate picture of the FDI inflows into China.

China has been consistently receiving higher FDI than India as per common knowledge. This is a myth. If we look at the definition of FDI as per IMF and compare the computation of FDI by China and India we find that India is not far behind.

Nirumpam Bajpai and Nandidate Dasguta explained this definitional differences between India and China in this May, 2004 article.

India's FDI figures are underestimated because of the exclusion of certain components that are included by other countries, which go by the IMF's definition.

As a rough approximation, we make the necessary adjustments in China's FDI statistics, that is, by excluding data under several heads that China includes in its FDI, but do not strictly fall under the purview of FDI. These heads include: The round-tripping of funds from Hong Kong, Taiwan, and Macao into mainland China; inter-company debt transactions; short and long-term loans; financial leasing; trade credits; grants; bonds; non-cash acquisition of equity (tangible and intangible components such as technology fee, brand name, etc.); investment made by foreign venture capital investors; earnings data of indirectly-held FDI enterprises; control premium; non-competition fee; and imported equipment. Having excluded data under these heads, net FDI inflows into China reduce from roughly $40.7 billion to $20.3 billion in 2000.

Read the entire article to better understand the difference. The Times of India recently reported on similar lines comparing Indian FDI with China using Chinese FDI computation methods.

India is set to attract record foreign direct investment, narrowly defined, of $15 billion this fiscal, at least thrice the annual flows in post-reform years. Our FII flows are close to $10 billion, and with remittances set to cross $20 billion, our total foreign investment flows in 2004-05, defined in Chinese terms, will end up at about $50 billion. This is pretty close to China's $60 billion inflows, whereas till only the other day our FDI flows seemed a fraction of China's.

Apart from this glaring definitional difference there is the problem of round-tripping and counting reivested earnings from foreign companies.

What is Round Tripping?

Round-tripping FDI refers to the domestic capital that has fled the home country and then flows back in the form of foreign direct investment.

A recent paper, Round-Tripping Foreign Direct Investment in the People’s Republic of China: Scale, Causes and Implications, by Geng Xiao estimates that 40% of the FDI into China is due to round tripping.

Foreign Direct Investment in China, an article on tdctrade.com explains the FDI phenomenon in China.

There have always been doubts about China's economic and financial statistics ranging from GDP growth to FDI inflows. With respect to its FDI inflows of USD52.7bn in 2002, some argue that it overstated China's ability to attract foreign investment. There are two major issues. The first is about reinvested earnings by foreign affiliates in China. Some believe they should not be included in FDI calculation.

UNCTAD statistics show that in 2000-2001, foreign affiliates' reinvested earnings accounted for 1/3 of all China's FDI inflows. Foreign affiliates contribute to 23% of China's industrial production, 18% of tax incomes and 48% of total exports, commanding an important presence in China's economy. Although reinvested earnings originate from China, as long as they are invested instead of flowing out of the country, they should be counted as new FDI inflows based on international practice.

Democracies do very well over the long term.

The India or China debate has been increasing for sometime now. Strangely, in the past week I have read three articles where India rather than China has come under focus. William Pesek Jr. writes in bloomberg, then Tarun Khanna from HBS and now Malcolm Maiden in the Sydney Morning Herald from the Australian perspective.

I see three trends. One, there has been a large influx of FDI into China in the last decade, many times the size of India. Now it is the time for India to receive it. Second, the growth in China is decelerating for various reasons. Third, India is starting to show more openess and stability in the reform process.

All the three articles look at India from the perspective of missing the boat. Lets check out the Australian perspective.

In October 2003, Goldman Sachs economists Dominic Wilson and Roopa Purushothaman released research that should have changed forever the way Australia saw India.

Their report, Dreaming with BRICs: The Path to 2050, predicted that within 40 years, the economies of Brazil, Russia, India and China - the BRICs - would be larger than the US, Germany, Japan, Britain, France and Italy combined. China would overtake the US as the world's largest economy and India would be third, outpacing all other industrialised nations.

Australia is uniquely positioned to hitch a ride with the two BRICs on its doorstep, as an investor and a supplier of commodities that will fuel their transformation. But while its economic and political relationship with China has flowered, relations with India are growing more hesitantly.

Expanding demand in India for raw materials has helped push two-way trade between the nations from $3 billion to $5.8 billion in the past two years, and Australia is the eighth-biggest direct investor in India, at a rate of more than $1 billion a year. Australian groups including Telstra have outsourced information technology and call-centre work to India's burgeoning service sector, and others including AMP and ANZ have invested directly. Qantas last year resumed direct flights to India that were cancelled in 2001, and groups as large as BHP Billiton and as small as the Unibic biscuit maker are considering investing.

Still, Australia remains a bit player in India's huge domestic economy, which is being attacked much more aggressively by companies from other countries and regions, including South Korea, Singapore and Europe. The Prime Minister, John Howard, raised Australia's profile when he visited India in 2000, bureaucrats say, but three planned trips to Australia by former Indian prime minister Atal Bihari Vajpayee were cancelled for domestic reasons, most recently the snap election in May last year in which his BJP lost power to a coalition led by the Congress Party.

It is 18 years since an Indian prime minister visited Australia, which India's Finance Minister, Palaniappan Chidambaram, says is due to domestic considerations - "the mechanics of getting there and back" and "no reflection of a lack of interest". But a well-placed India specialist in Australia's Government says it is "a challenge to engage India's attention", as India's political and economic ambitions are global in scale and aimed mainly at big northern hemisphere economies.

What is also clear, however, is that Australia's attention has been much more squarely focused on China. Two-way trade in goods and services ran to $27.1 billion in 2003-04, more than four times the Australia-India trade flow. China is already Australia's No.3 trading partner, No.2 export market and No.3 source of imports. India is our No.7 merchandise export market and No.13 trading partner, and the infatuation with China is no bilateral aberration. Global foreign investment into India tripled in the first seven months of 2004 and will top $US6 billion ($7.8 billion) in the year, but that is only about a 10th of the amount flowing into China.

The world's biggest and arguably most diverse democracy has other characteristics that should make it a more natural fit with Australia than China - including widespread use of the English language and a well-developed legal system.

But for outsiders, it presents an intricate and often contradictory picture. Great regional variation underlies the annual 6 per cent economic growth rate, for example. Growth is twice the national average along the coast and in the southern states, where software companies and IT outsourcing are booming. Software exports have risen from $US128 million in 1991 to $US12 billion. Growth is much slower in the northern interior states, such as Bihar.

Asia's new business giants

Tarun Khanna from the Harvard Business School writes about the emerging Asian giants, India and China, and why the developed countries need to understand them.

I had written in the past couple of days about the need in the MBA Curriculum to add India and China as part of the course. This article by Tarun Khanna only reinforces that.

Two differences distinguish multinationals from China and India, at least compared with their closest neighbours from Korea and Taiwan, and, to a lesser extent, other southern and east Asian economies. First, the companies from China and India are based in very large countries (both in geographical and population terms). This means that some companies have had a chance to bide their time behind protectionist walls, sometimes wasting resources but, on other occasions, building capabilities to compete globally. It also means that the better managed of these companies have domestic cashflows that enable them to do battle with developed-world multinationals arriving in their own (emerging market) backyards.

Second, these large countries bristle with self-confidence. China and India, like Brazil, see themselves as leaders of the developing world. China’s explosion on the world stage is well known, and India’s star is rising. Yashwant Sinha, a former finance and foreign minister of India, told me about a comment by Venezuela’s president, Hugo Chávez, earlier this year. “India’s position in the developing world is rather like the leading football player in the leading football team in Latin America,” he said.

The greater awareness of the outside world also means that a model “from the developing world, for the developing world” is becoming more feasible. A generation ago, Indians, for example, were isolated from many areas of commercial activity elsewhere. Now Indian companies such as Apollo Hospitals and Bajaj Motor have begun to cater to the needs of the Middle East, east Africa and parts of south-east Asia, evolving from a model in which much of the entrepreneurial activity in these countries was fuelled by Indian migrant labour and managers.

China, too, has evolved from trading with overseas Chinese communities in its sphere of influence to developing companies to catering to the needs of the region and farther afield. It is not uncommon to find China’s politicians paving the way for economic activity by Chinese firms in central Asia, Africa and Latin America.

The differences between Chinese and Indian multinationals have several implications for managers in the west. Consider just two. First, if they nurture a business model that capitalizes on low-cost talent, they must realize that there is an indigenous capitalist class – especially in India – that does this well already; that is, they must identify some value added over and above just tapping into talent. Where they prevail, and where the local entrepreneurs do, is likely to be a sector-specific story. This is much less of an issue in China, though even here Motorola and Nokia’s besting by scrappy local Ningbo Bird has surely put the western world on notice.

Second, shareholders of western firms will realize that they can invest directly in Indian companies rather than entrust their funds to US and European companies to then finance operations in India. That is, given the soft market infrastructure in India – especially property rights and access to capital – foreign portfolio investment is more of a viable substitute to foreign direct investment than it might be in China.

Transaction costs and Osmania University

I was introduced to the economic term "Transaction Costs" by Atanu Dey. Atanu wrote sometime back about his experience in Mumbai in buying a refrigerator. He then expounded the idea of transaction costs from that.

Today, I spent a better part of a rather sunny and hot day in Hyderabad trying to submit the examination form for my wife, who is writing her Masters in Maths exams.

The experience reminded me of 'transaction costs' and how it is hurting the entire Indian economy.

So What exactly is a transaction cost?

The time and money spent trying to exchange financial assets, goods, or services.
Source Link

That is the simplistic explanation. Wikipedia explains it better.

In economics and related disciplines, a transaction cost is a cost incurred in making an economic exchange. For example, most people, when buying or selling a stock, must pay a commission to their broker; that commission is a transaction cost of doing the stock deal. Or consider buying a banana from a store; to purchase the banana, your costs will be not only the price of the banana itself, but also the energy and effort it requires to travel from your house to the store and back, and the time waiting in line, and the effort of the paying itself; the costs above and beyond the cost of the banana are the transaction costs. When rationally evaluating a potential transaction, it is important not to neglect transaction costs that might prove significant.

The "costs above and beyond the cost of the banana are the transaction costs". This is very important to understand. Let me explain that with my experience today.

My task was simplistic. I had to submit the examination form for the Masters in Maths examination for my wife. She is studying at the Center for Distance Education, Osmania University. Osmania University is one of the biggest universities in India in terms of the number of students enrolled. The university follows a peculiar program where the various courses available in the university is "outsourced" to other education institutions which follow the guidelines of the university. "Franchising" can be a better term. The degree is granted by the university however, nobody really studies in the university. You go to colleges, the educational institutions located in various concrete buildings trying to 'educate' the masses.

Consider that for the city of Hyderabad and a large part of the state of Andhra Pradesh Osmania University is the only university. There is the Hyderabad Central University which acts like the traditional US university and hence not many students pass from it. I digress. The reason I digressed was to show the importance of the University. Hyderabad has a population of over 6 million and has one university. Adelaide has a population of 1.2 million and has 3 universities. The bigger difference though is that all the students study in the university campus.

Now the Osmania Univ started a distance education division catering to the multitude of education hopefuls who have planned to study while working. Great!

Now the procedure for paying the examination fees.

If you cannot find information on this notice board you can use the services of the enquiry window.

The first part of the program is to know the cost of the form, the dispensing "window", the method of payment. You need to ask at the enquiry counter. (image below)

The enquiry counter is a masterpiece of design engineering. A window with many steel bars acts as the gateway of information for thousands of people. There are no bars for guiding people to stand in a line nor is there discipline among the students. After you crowd over the counter and find the information you find another counter which is to the left of this window (counter no. 4) and ask for the form.

The cost of the form is Rs. 20. The payment method, through a demand draft (DD). No cash. No credit card and of course, no cheque. For the princely sum of Rs. 20, you may 'transaction charges' of Rs. 20 to the bank to get the DD. To help the students, there is the following information provided everywhere.

For some crazy reason this confusing information is provided. Since the Osmania Univ has this peculiar habit of not accepting cash for the services it renders, everything has to be payed through a demand draft or payorder. Some guy figured out that he can provide a service by buying the DDs before and selling. This board is supposed to warn the students against buying from that. I do not know how it makes sense!

The sad part was that a large number of the students interpreted this information as "DDs from other banks not accepted". There is a resident State Bank of Hyderabad branch in the premises, hence the confusion. Hundreds of students wasted thousands of hours today to buy the DD from only one branch. Sadly nobody explained this to them.

After you spend a large part of your time buying a DDs for the form, examination fees etc from a nationalized bank (no private banks please). You then need to wait till the lunch recess is over and then stand in queue to submit the form.

The payment queue has an amazing design and planning to help make it easier to submit the application.

Ok. This is the end. Now coming to the real point. I spent almost 4 hours in the hot sun today to submit one application. So has some hundreds of other students. These various exercises that we undertook to complete this task are the "entire transaction costs". If you add all these small costs and multiply it by the thousands of students and again multiplying this for every exam in every university in India then you suddenly start to realize the economic loss.

Add to all this, since this is a distance education center a large number of the students were working. Imagine the loss of losing half day of your work for this. There is no choice as there are no evening services for them.

This is important. We can also add the agony, emotional pain, physical pain, time spent, opportunity costs to the 'money cost' of the process to get the 'entire transaction costs'.

The university on their part could have done many many things.

• Accept cash.
• Provide clear signs and directions.
• Collect examination fees as part of course fees.
• Start flexible timings along with working on Saturdays and Sundays.
• Design payment systems better.
• Understand work flow and implement it.
• Think!

Sadly, monopolists are tough to change especially when they are government nominated.

If this is the state of the education provider imagine the state of the education provided.

The MBA Curriculum : India Inc.

I wrote a couple of days back about China Inc. and how it is important to understand China.

One thing is sure, we all need to face China and its companies in many difference aspects. The best way to prepare the future leaders of the global world is to 'understanding china" and helping them prepare to work in, work with and work against Chinese companies.

Hence, understanding China should be part of the MBA Curriculum.

What about India? I mentioned that Since I have lived all my life in India I have a fairly decent idea of India. What about others who need to understand India? Before that is there a reason to believe that India needs to be understood and is a possible economic world force to worry about.

William Pesek Jr., writing in Bloomberg, certainly thinks so.

The biggest industrialized nations haven't exactly said India will play second fiddle to China; they invited Asia's No. 4 and No. 2 economies to their Feb. 4 meeting. Yet the G-7's almost linear focus on China and its currency policy leave little doubt about which one it's betting on. Ditto for the policy-making elite attending this year's World Economic Forum in Davos, Switzerland.

The future size of the Chinese and Indian economies isn't just an academic issue. Their trajectories will say much about the migration of capital. As Chinese and Indian bond and stock markets grow along with gross domestic product, G-7 members may have a harder time remaining on investors' radar screens.

Yet G-7 ministers should think twice before downplaying India's potential relative to China's. Investors, too.

Yet Daniel Lian, Singapore-based economist at Morgan Stanley, can think of at least two reasons not to count India out. One, the world has a dismal record of predicting the next economic mega- trend. Two, India could spring a few significant surprises that haven't entered the calculations of global investors.

Enter India, which has a measure of economic and political stability it will take China years to develop. India, for all its warts, isn't preoccupied by such risks. Its troubles include a massive national debt, high poverty, an inefficient and bureaucratic government and dodgy infrastructure. Yet India's progress in creating a living, breathing economy is more impressive than China's. It has an entrepreneurial spirit that produced Infosys Technologies Ltd., Dr. Reddy's Laboratories Ltd. and Wipro Ltd.

India's markets are also far more developed. China, for example, doesn't have much of a bond market, while India does. Indian companies have big head start and a significant advantage when it comes to raising capital in the debt markets. What China must build from scratch, India already has up and running.

A big push into export-oriented manufacturing also is underway in India. While China is clearly ahead on that count, India's efforts could pay important dividends in the area of poverty reduction. It's a means of creating jobs for those without the skills to enter India's software and call-center industries.

Also, Lian says, the West ultimately could favor India over China. Reasons include India's well-established Western-style democracy, the belief it's better equipped to protect intellectual property rights and the view of China a geopolitical competitor.

So in case you are not thinking about India you better start doing it now. You do not want to miss the boat, do you?

How to Read a Business Book?

Rajesh Jain points me to this post by the Slacker Manager on how to read a business book?

So what kind of idea does he wants to present here?

I'll be focusing strictly on that space that falls between studying for tests and reading for pleasure.

This is one of the most important kind of reading. You are not pressed for results and at the same time you are reading because you like to read and understand the ideas and concepts.

The first question is What Should you read?

The Slacker manager points us to the Amazon.com where you can check out the purchasing circles where you can browse by companies or wishlists. You need to find your way through and also train Amazons' algorithm to understand your preferences.

He then suggests checking out the FC Book club, the technorati book page, Allconsuming.net and OnFocus. He also suggests 800 CEO read which I like too. You should check out their reader page, blog, excerpts blog and recommendations. All of these are great places to start focusing on finding the book to read.

Now that you have selected the book to read, the next step is to Make a place in your space

This is simple, but important. Establish places to read that are comfortable and have the appropriate accoutrements. You'll need your book, of course, but you'll also want ample lighting and a stable writing surface. You'll want your writing tools close at hand. It doesn't really matter where your space is, or how many spaces you have. You just need to identify them, or at least identify what they are. Maybe you've got a long train commute--perfect found time for reading! Maybe you have a nice chair in the living room--just the place to sneak away for a quick reading session. Speaking of sessions, Sanders advises keeping reading sessions to about 30 minutes. I don't really hit the wall after 30 minutes and you might not either. Regardless, pay attention to when you start losing attention. At that point, put the book away and do something else for a change.

Then we need to work the book rather than read the book. He suggests tagging and clipping for that.

Active readers read, but they also engage the book by marking it up, annotating and summarizing. In order to become an active reader, you'll need to get over any reservations you have about writing in your books. Regardless of whether you get hardbacks or paperbacks, mark 'em up.

Let's take a look at what the end result is, so you have an idea where you're going here. When you're finished reading your book, you'll have various passages underlined (tagged) throughout the book. Each tag may or may not have notes in the margin next to it, but each tag will definitely have an entry in your "index" at the back of the book. These entries are the "clippings" for each of the tags. You'll have used the blank pages at the back of the book to make a note of the page number and the main idea behind each bit you tagged. At the front of the book, on the blank pages, you will have a brief outline of the whole book. When all is said and done, you'll have a document that you can refer to time and time again, and quickly find relevant passages when needed by using the outline and the index.

That's the big idea. Now you'll need to come up with your own system of annotations, symbols and markup. I learned briefhand in high school, and still use it sporadically. There are plenty of shorthand-like systems out there if you're interested.

Recruiting the Best

Rajesh points to Joels' post on Recruiting the Best.

It's because of this phenomenon—the fact that many of the great people are never on the job market—that we are so aggressive about hiring summer interns. This may be the last time these kids ever show up on the open market.

I believe in something similar in the MBA market. If you are good and have made the right networking moves and know your passion you may not be in job market after all for a long time and campus placements are a plus (not the only choice).

The MBA Curriculum : China Inc.

One important aspect of deciding on a MBA in Australia was the international experience, the ability to meet and connect with students from many countries in the world. This is skewed towards Asia which is good in a way. I am from Asia (India) and the various high growth economies in Asia along with China (the leader of the pack) is the emerging geography of choice in the world.

One of the good aspects of UniSA is that they also have a Chinese MBA in Adelaide. This would mean that I can get the chance to interact with various Chinese students and understand their culture, history and make some connections to the country.

The Goldman Sachs BRIC report says that China will be the largest economy in the world by 2050 and India along with Brazil and Russia will be not far behind. Interestingly, Russia, China and India are all in the same geographical area. There are commonalities too. All of them have a large "bottom of the pyramid" market. They are in various stages of development in the industry, services, export, financial markets, the currency markets and education sector.

Since I have lived all my life in India I have a fairly decent idea of India. Other students and B-Schools are already making their presence felt in India. The challenge will be Russia and China. I would start off with China as my choice. China has shown amazing dynamism in shaping its economy and managing the transition from a largely agrarian economy to a Industrialized nation and in a few years will be challenging Indias' position in the services arena.

Like the mandatory requirement of learning Chinese culture history and the mandarin language in the Great Lakes Institute of Management in Chennai, India I have decided to equip myself with understanding China. History and Culture will be from books, interactions with Chinese students in Australia. Information on News, economics and development will be from the Internet. I am in process of selecting the news sites, the blogs to read, magazines etc to understand China(If the readers have any suggestions I would love to hear them). The third aspect is learning Mandarin.

There are three parts of this story. One, the ability to understand and work in China ; Second, the ability to understand and work with Chinese companies and individuals; Third, the ability to understand and work against or compete with Chinese companies. All of these skills are important to work in the new globalized economy. Yes, we need to add the ability to interpret the Chinese government signals and the 'fudged' statistics to understand the future direction of the country.

One thing is sure, we all need to face China and its companies in many difference aspects. The best way to prepare the future leaders of the global world is to 'understanding china" and helping them prepare to work in, work with and work against Chinese companies.

Broadband2 in Australia

Internet access is vital for me. I use the cable system for access in Hyderabad, India where I get speeds of 100 kpbs for Rs. 500(~A$14) a month. This is decent speed and the best part is that there is no download limit which is very important for a power user like myself.ٍ

SlashDot informs me that iiNET has started a new broadband service in Australia which can provide speeds upto 8MBps (8000k) way above what we are used in India. iiNET provides the at low costs and has a decent size limits on their plans. If you take the broadband connection with the iiPhone then you can get double the download limits along with a reduced combined cost for the phone and internet access.

The one think which I liked about the broadband access is the idea of "shaping". This happens when you reach your download limits and the speeds are automatically cut to 64k without any additional rentals. The other good part of the plan is the idea of providing off-peak and peak separate download limits. I can do normal browsing in the morning and work on my downloads in the off-peak time (12AM-8AM).

India is getting its share of broadband service providers but "shaping" is not part of the deal yet. Whoever starts this in India will be able to get a good lead ahead till the time others imitate.

There are a lot of providers in Adelaide too (the city where I am going to for my study) for broadband access. iiNet, however, has not yet arrived. Whirlpool says that due to the wholesaler AD NAP South Australia has the best plans for broadband in Australia.

Installation costs are high for broadband connections. Escape Net in SA provides broadband service at a competitive price with decent download limits. The problem is of installation and modem costs. Unless you lock in for a period of 18-24 months you will have to cough up more than A$300 for this.

I will need a good broadband connection along with a phone. Now the point is do I need a home fixed phone and a mobile phone or only one of them. This will depend on the kind of connection I would prefer.

Will provide an update when I select the plans in Adelaide.

Meeting Deadlines

Knowledge @ Emory brings a good collection of articles from the events and professors at Emory University and mostly from the Goizueta Business School.

Giuseppe (Joe) Labianca at Goizueta Business School together with Henry Moon has researched on the concept of time as perceived by people and how that understanding is important in project planning and meeting deadlines.


The ultimate goal of this type of research, suggests Labianca, is to provide team leaders with a better understanding of how starting times and ending times might influence both individual and group processes and outputs. Managers, adds Labianca, need to recognize that we are all synchronized with these temporal milestones, and must therefore consider the clock in project planning. “As mentioned, I saw this in my own work behavior. If somebody said, ‘Do this project and you’ve got a week,’ and I got it at an atypical time, I didn’t get to work immediately,” says Labianca. “That’s what you kept seeing with the folks in our experiments. They were lost in time. If management is going to give people something at an atypical time, they should provide them with some kind of visual temporal map, like a PERT diagram, to plan out how much time to spend on various phases. I would venture to guess that even with such a map that there might still be some kind of phenomena happening that would lead the employees to pace themselves poorly.”


When I was managing the various financial services projects in ADP India for investment banks like Goldman Sachs and Bank of America one thing which was very important was to meet deadlines and follow strict quality guidelines.

If I had know about this piece of work before I would have behaved differently.

In the course of our day we have different stress periods. Some parts of the day are filled with work and other parts are mostly calm. The periods after lunch or dinner (in the case of night shifts) is where people work slower. Then we need to account for holidays, weekends, personal days like birthday, anniversaries, company parties etc.

I should have included these patterns in my project planning which would help my team members to complete the projects better and also sync it with their body clocks, moods, physiology, mental make up and help in the increase in performance of the individuals and the entire group.

This is an important work. I am sure the paper, “When Is an Hour Not Sixty Minutes? Deadlines, Temporal Schemas, and Individual and Task Group Performance.” when published in the Academy of Management Journal will be widely read and used.

Where do Great Ideas come from?

Everybody has their pet "processes" and "activities" for getting ideas. This could range from showers to coffee to "late in the night" to driving etc.

Dave Pollard points to a survey by Idea Champions where they provide a list of 36 questions to answer and find out where you can get your best ideas.

Dave takes this one step forward and provides a process to create bar graphs of your most important creative idea generating activities and the actual time that you spend on these activities. Dave as usual does a great job.

If you look at it, he has used just some simple excel sheet techniques coupled with his problem solving power to provide this answer. Check out his process to help you find out your creative solving activities and where you need to spend more time and less time.

Gmail A/C Giveaway

I have 50 gmail account invites. Anyone who needs an invite mail me : anantula+aussiemba [at] gmail DOT com

Networking your placement!

A job, a career....There are differences between the two but at this point in time lets restrict ourselves to a great job.

Before we go further lets look at this scenario.

You just completed your MBA (from a top college) and you are the end of your placement week and still without a job. A lot of your peers have been placed, but you are nowhere. You start to think that there is something odd about it. The problem could be that my peers are better, or the college placements cell flunked, or there are not enough jobs in the market.

Yes, it could be all of this or more. Lets cut back to the start of the MBA course. You joined the MBA course with full earnest, did well to complete the acads, had a good time partying, met a lot of good students and now as the year is ending you are waiting for the placements season (this is where we started!) to complete and you will have 3-4 offers to select from.

As we already know, that was not how it turned out. Now, this is what happened rather did not happen. You did not network. You did not think about the kind of industry you would work with, you did not meet with the people in that industry, you did not write a blog or take part in some community portal within the industry, you did not attend conferences in the process. In short, you did not start conversations.

Expecting that you would get jobs on the campus is not a bad idea at all, in fact a lot of stundets see this as a right to a MBA program. They are right and they wrong.

One, there will be lot of jobs in the campus placement program however, you may be a little different from the mainstream and "that company" may not come where you could fit in.

Second, there is the difference between a big company job and a great job.

A large number of people think that working in big and well established companies means a good job. But is that true? Is working with a big or large company equal to a great job? Probably not. A lot of times a great job and a large company do not go together.

A lot of small companies are more innovative, more exciting and work on cutting edge stuff than large companies. Atleast it is easier to do exciting work in a small company than a large company. Now, how many small companies would come to the campus and recruit you. Think about that.

If that is not the case, how do the companies find you or how do you find those kind of companies?

Seth Godin writes about the process of getting a great job.

He says :

Let's start with one assumption that has changed in just a generation:

It turns out that 100% of all job growth is now coming from small (under 500 person) companies. In fact, the big companies are shedding jobs, not adding them.

That wasn't true for our parents. It's true for us.

Also true: more likely than not, the best jobs, the most interesting jobs and the most secure jobs happen in small organizations.

SO: first conclusion: fitting in to get a job for the big guy is a bad strategy for everyone.

Well, if it's the jobs at little companies that we want, what's wrong with the current system?

In my experience, little companies are rarely so organized that they know just what slot to fill, what to call that slot and who to hire for that slot. In all the fast-growing companies I've encountered, a new job is just that... new. More often than not, companies bump into someone cool and find a job for them. Or, even more likely, they see someone really cool at ANOTHER company, wish they had that person and invent a job that they hope someone like that will fill.

Implicit in this reasoning is this: it's the Purple Cow that will fill this job beautifully. Not some automaton who will follow orders, but someone remarkable who will ask great questions and make magical things happen.

Why not print this blog out, attach it to a letter (not a resume not a resume not a resume!!!) and send it off to the place that needs you? If two or three or ten people did it, it might not matter, but if thousands of people started auctioning off their skills in the way it ought to be done (recognizing that you, not the factory, is where the value is) it could become a movement.

As Seth points out, if you are a purple cow (remarkable) and if you want that remarkable job then you should not follow the normal process of getting a job. Get innovative, be remarkable, find a remarkable job and do something remarkable.