Mat Ridley in his seminal article “Humans: Why They Triumphed” has put forward an interesting argument that the dramatic progress of Homo sapiens in the recent past is not primarily on account of the increasing size of brain or dramatic increase in human intelligence. But, it has been achieved by the collective intelligence of the society arising out of continuous exchange of ideas. We have managed to build on what others have built. Sir Isaac Newton also expressed this view when he said “If I have seen further, it is only by standing on the shoulders of giants”
The progress in commutation and in communication has enlarged opportunities for people of different culture and experience to contact each other and to exchange their ideas. This has further accelerated the rate of progress. As Mr Ridley expressed brilliantly “The process of cumulative innovation that has doubled life span, cut child mortality by three-quarters and multiplied per capita income nine fold - world-wide - in little more than a century, is driven by ideas having sex”
Books, Radio, TV and even internet (web 1.0) while helping to distribute thoughts and ideas across very long distance, enabled mostly one way interaction; sort of broadcast. Email brought about fast and cheap two way communication and it exploded opportunities for human collaboration.
The recent innovation in Information technology (web 2.0 also supported by progress in mobile technologies) has brought about dramatic changes in communication by making it “two-way” enabling seamless collaboration.
Very often these tools for two-way collaboration like face book, twitter, wiki and blogs are seen by many as either as geeky or as non-serious pastime, juvenile indulgence or even waste of time. Therefore many companies and organisations prohibit access to such tools as they see these as risky distractions.
As these tools are seen as such distractions, the senior management is not giving due attention to how these concepts can alter the way we work and alter the way we collaborate. With so little interest (or so high ignorance), we are unable to harness the power of these tools.
The study by American Sociologist Mark S. Granovetter on the Strength of weak ties is quite relevant in this context. According to this study, for most people their network friends with whom they enjoy strong relationship is quite small, limited and almost culturally and intellectually incestuous in nature. Therefore it is the weak ties between groups enable us to collaborate with a more divergent set of people.
It is in this area that collaboration tools like blogs, wikis and social networks offer powerful, intuitive and convenient means. It can help us to build larger network of strong ties and build and maintain a larger network of weak ties. Wikis help in collaborative developments, Face book kind of tools helps to keep the links with a large number of friends.
Many organisations have woken up to these challenges and have established innovative ways of harnessing the power of this collaboration. The book published by Andrew McAfee, Principle Research Scientist at MIT’s Center for digital business titled Enterprise 2.0, the new collaborative tools for your organisations provides excellent insights to why and how on these tools and it is worth reading. I have drawn on the insights from this book to write this post.
At present this is relatively a new concept and not widely adopted. Therefore, those who can exploit this early will be able to build significant competitive advantage. Once this idea gets commoditized and becomes the norm for most of the players, the extent of competitive differentiation possible with this may come down.
‘If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.’ — George Bernard Shaw
Monday, July 26, 2010
Tuesday, July 20, 2010
Of being “True and Fair”
When an audit firm undertakes audit of financial performance of a company, the seasoned partner attempts to make a judgement on how well the financial statement represents the financial health of the company and the financial integrity of the management. Some years ago he made this judgement not based on compliance to a set of rules and standards but also on a variety of factors which, based on his experience, helped him to make a true and fair judgement.
There have been many instances of compromises to the spirit of the audit and many unscrupulous managers and auditors connived to hide information and to defraud the shareholders and or the government. This kind of degeneration forced the profession to come up with more and more standards and rules. The pendulum swung the other way with auditors focussing primarily on compliance to rules. The management learned the trick of demonstrating technical compliance and auditors were happy to play along.
The perils attached to this are now getting evident and there is a serious discussion among the accounting professionals that there is a need to find a balance. A sensible balance of using both rules and principles to judge whether the statements are indeed ‘true and fair’ with focus shifting more to principles.
Similar swings have also been witnessed in a variety of areas which require checks and balances. We moved to rule based regulation and we are now swinging back to principle based regulation. As the UK Financial Services Authority has portrayed “Principle based regulation – focussing on the outcomes that matters”.
Even the perception regarding the role of company board is undergoing a change. Its primary role is not only to protect the interests of the absent shareholders, but also to act as a guide and a sounding board for setting the strategic direction of the company.
Such shifts in disciplining methods are not just in the governance models of corporate and regulators. We see it in educational institutions and even family lives. In earlier era the parenting role included strict discipline of rules, timetables and targets; there was friendship and authority. The schools also followed almost regimental structures. Then there has been shift where the role of the teacher and even that of the parents have become primarily advisory in nature. This shift is quite predominant in western cultures. The safeguards that were built to restrict parental abuse and cruel treatment by teachers are now being misused. We see similar ideas being propounded in India too.
The society in now paying the price and there is a great deal of concern on the falling standards of education and falling standards of discipline and value system. I found the thought expressed by Michael R LeGualt in his book ‘Think” relevant in this context. “It seems clear that in setting out to be mainly the child’s friend or self esteem coach a parent is surrendering his or her most important role in shaping child’s values and character-that of mentor, guide and authority”
Such pendulum swings remind us of the need for strengthening the values right from the childhood and the need for a balanced approach instead of carrying any solution or idea to its ridiculous extent. This will be possible only if we have regulators and legislatures who have the vision to build clean institutions and the courage to stand up for what they believe is right. This is often available only in ‘limited edition’. When we see such leadership, it is our role to support them.
“Character is doing the right thing when nobody's looking. There are too many people who think that the only thing that's right is to get by, and the only thing that's wrong is to get caught.” ~J.C. Watts
There have been many instances of compromises to the spirit of the audit and many unscrupulous managers and auditors connived to hide information and to defraud the shareholders and or the government. This kind of degeneration forced the profession to come up with more and more standards and rules. The pendulum swung the other way with auditors focussing primarily on compliance to rules. The management learned the trick of demonstrating technical compliance and auditors were happy to play along.
The perils attached to this are now getting evident and there is a serious discussion among the accounting professionals that there is a need to find a balance. A sensible balance of using both rules and principles to judge whether the statements are indeed ‘true and fair’ with focus shifting more to principles.
Similar swings have also been witnessed in a variety of areas which require checks and balances. We moved to rule based regulation and we are now swinging back to principle based regulation. As the UK Financial Services Authority has portrayed “Principle based regulation – focussing on the outcomes that matters”.
Even the perception regarding the role of company board is undergoing a change. Its primary role is not only to protect the interests of the absent shareholders, but also to act as a guide and a sounding board for setting the strategic direction of the company.
Such shifts in disciplining methods are not just in the governance models of corporate and regulators. We see it in educational institutions and even family lives. In earlier era the parenting role included strict discipline of rules, timetables and targets; there was friendship and authority. The schools also followed almost regimental structures. Then there has been shift where the role of the teacher and even that of the parents have become primarily advisory in nature. This shift is quite predominant in western cultures. The safeguards that were built to restrict parental abuse and cruel treatment by teachers are now being misused. We see similar ideas being propounded in India too.
The society in now paying the price and there is a great deal of concern on the falling standards of education and falling standards of discipline and value system. I found the thought expressed by Michael R LeGualt in his book ‘Think” relevant in this context. “It seems clear that in setting out to be mainly the child’s friend or self esteem coach a parent is surrendering his or her most important role in shaping child’s values and character-that of mentor, guide and authority”
Such pendulum swings remind us of the need for strengthening the values right from the childhood and the need for a balanced approach instead of carrying any solution or idea to its ridiculous extent. This will be possible only if we have regulators and legislatures who have the vision to build clean institutions and the courage to stand up for what they believe is right. This is often available only in ‘limited edition’. When we see such leadership, it is our role to support them.
“Character is doing the right thing when nobody's looking. There are too many people who think that the only thing that's right is to get by, and the only thing that's wrong is to get caught.” ~J.C. Watts
Monday, July 12, 2010
Octopus Paul and his run of luck
Octopus Paul has added an additional element of excitement to the football mania that the world cup has unleashed. Even though I am not such an enthusiast of football, I still ask how Paul’s prediction has fared. It has added another topic of conversation, another exciting piece of trivia.
Do I believe that there is something divine or mystical about Paul? No, I don’t. Is there anything special about Paul? Yes he is one lucky fellow who has managed to get four out of six predictions in the Euro cup 2008. In this world cup the eight out of eight correct he has managed had a probability of success of 1/ 256. Now we have parrot Mani and the Indian Louse and many more in this game.
Not as lucky as the guy who gets a first price in lottery with few million contestants or even the boy who tops in IIT entrance exams with a million aspirants.
If he was a human being, there would have been books written by him and or on him about his theories on how to predict successful football teams.
He would be a bigger hit if he could repeat his luck in capital market. In fact we often see some lucky players who have run up such lucky streaks for some time and many of them have surely written their books.
This is true of most of what happens in our life. The number of variables that affect most of the outcomes, (whether it is in picking a stock, or in diagnosing an ailment or in choosing a job option) in long term or short term is way too large and complex for anyone to master.
What we can do when we specialise in a field, or work on a project is to get a better idea of the factors that may have a very high probability and or high impact on the outcome and then proceed.
Ceteris Paribas (everything else being equal), the success of one person from a pool of equally capable individual, is just plain luck. So when we improve our skill and knowledge, we improve the probability for a favourable outcome; almost like loading a dice.
On the reverse, when we lose in spite of the excellent preparation we have made or the skills we posses, it could be just being plain unlucky.
The religious minded will ascribe this as the wish of god or fate.
I am not questioning the existence of god, but reminding that even god would want us to be prepared and to exercise our choice (“It is for me to choose”) and not put the blame on him!
We can’t do anything about the genes we are born with or the environment we are born into. But, we can try to improve the probability of successful outcomes by enhancing our expertise, network and resources.
“Luck Favours the Prepared” Louis Pasteur
Do I believe that there is something divine or mystical about Paul? No, I don’t. Is there anything special about Paul? Yes he is one lucky fellow who has managed to get four out of six predictions in the Euro cup 2008. In this world cup the eight out of eight correct he has managed had a probability of success of 1/ 256. Now we have parrot Mani and the Indian Louse and many more in this game.
Not as lucky as the guy who gets a first price in lottery with few million contestants or even the boy who tops in IIT entrance exams with a million aspirants.
If he was a human being, there would have been books written by him and or on him about his theories on how to predict successful football teams.
He would be a bigger hit if he could repeat his luck in capital market. In fact we often see some lucky players who have run up such lucky streaks for some time and many of them have surely written their books.
This is true of most of what happens in our life. The number of variables that affect most of the outcomes, (whether it is in picking a stock, or in diagnosing an ailment or in choosing a job option) in long term or short term is way too large and complex for anyone to master.
What we can do when we specialise in a field, or work on a project is to get a better idea of the factors that may have a very high probability and or high impact on the outcome and then proceed.
Ceteris Paribas (everything else being equal), the success of one person from a pool of equally capable individual, is just plain luck. So when we improve our skill and knowledge, we improve the probability for a favourable outcome; almost like loading a dice.
On the reverse, when we lose in spite of the excellent preparation we have made or the skills we posses, it could be just being plain unlucky.
The religious minded will ascribe this as the wish of god or fate.
I am not questioning the existence of god, but reminding that even god would want us to be prepared and to exercise our choice (“It is for me to choose”) and not put the blame on him!
We can’t do anything about the genes we are born with or the environment we are born into. But, we can try to improve the probability of successful outcomes by enhancing our expertise, network and resources.
“Luck Favours the Prepared” Louis Pasteur
Monday, July 5, 2010
Sleeping with the enemy
Human beings are social animals. We have friends and we have enemies. They are nothing but two sides of the same coin; often changing from one form to another based on context or on situation.
What drives our enmity to somebody? The two key factors that influence this are Desire and Pride. Desire on one extreme could be the greed for more and more and on the other extreme it could be the need for self preservation, protection of what we hold precious or demanding what is due. Similarly, pride on one extreme could be the bloated ego or on the other extreme could be defending our dignity.
When we have a conflict with another person about something we desire, or when he hurts our pride in some fashion he becomes our enemy.
The degree of conflict or the stakes associated in this conflict will also determine the intensity of our hostility. If we are fighting for a large material benefit or preservation of our dignity and honour we may even fight harder.
Enmity is also contextual and situational. When Sachin and Jayasurya are playing for India and Sri Lanka they are competing and they are enemies during the game. But when they are playing for Mumbai Indians they are friends. May be in private life they would be friends. Similarly, if I am working with one Mutual Fund, I will be fighting and in competition with other Mutual Funds; maybe I will even try a few tricks to make my competition look not good enough. But when all the mutual funds are fighting with the insurance industry or we are lobbying with the regulator, we are all friends. Mukesh and Anil Ambani may have been fighting with each other to further the interest of their companies and also their personal pride.
That is why sometime the enemy of our enemy becomes our friend. Remember the famous quote from Mr Bush, the past president of America. “You are either my friend or my enemy”.
It is also person dependent. Some people are more tolerant about desire and conflicts associated with it; some people are more accommodating about hurt to their ego so long as there is a material benefit.
When we deal with people, whether in business or in friendship, we need to develop a skill to assess how they would react if and when there is a conflict with respect to either their desire or their pride. We need to also be sensitive to how the reaction would differ as per the situation, the people present or the stakes involved.
If the other person is very greedy, he may use any means to get what he wants or on the other hand we may be able to buy him at a price. If the other person is very proud and hot-headed, it may not be a good idea to needle his pride.
We have to also factor in how powerful, the person with whom we have a conflict is. The more powerful we are, in relation with the other person, we have a better handle. But we need to keep in mind, that the power is determined by not just what he possess or what his position is; but, also by what he perceives that he has to lose. That is why one suicide bomber, can inflict more damage than a battalion of regular soldiers.
“In a war, just or unjust, in the end nobody wins”
What drives our enmity to somebody? The two key factors that influence this are Desire and Pride. Desire on one extreme could be the greed for more and more and on the other extreme it could be the need for self preservation, protection of what we hold precious or demanding what is due. Similarly, pride on one extreme could be the bloated ego or on the other extreme could be defending our dignity.
When we have a conflict with another person about something we desire, or when he hurts our pride in some fashion he becomes our enemy.
The degree of conflict or the stakes associated in this conflict will also determine the intensity of our hostility. If we are fighting for a large material benefit or preservation of our dignity and honour we may even fight harder.
Enmity is also contextual and situational. When Sachin and Jayasurya are playing for India and Sri Lanka they are competing and they are enemies during the game. But when they are playing for Mumbai Indians they are friends. May be in private life they would be friends. Similarly, if I am working with one Mutual Fund, I will be fighting and in competition with other Mutual Funds; maybe I will even try a few tricks to make my competition look not good enough. But when all the mutual funds are fighting with the insurance industry or we are lobbying with the regulator, we are all friends. Mukesh and Anil Ambani may have been fighting with each other to further the interest of their companies and also their personal pride.
That is why sometime the enemy of our enemy becomes our friend. Remember the famous quote from Mr Bush, the past president of America. “You are either my friend or my enemy”.
It is also person dependent. Some people are more tolerant about desire and conflicts associated with it; some people are more accommodating about hurt to their ego so long as there is a material benefit.
When we deal with people, whether in business or in friendship, we need to develop a skill to assess how they would react if and when there is a conflict with respect to either their desire or their pride. We need to also be sensitive to how the reaction would differ as per the situation, the people present or the stakes involved.
If the other person is very greedy, he may use any means to get what he wants or on the other hand we may be able to buy him at a price. If the other person is very proud and hot-headed, it may not be a good idea to needle his pride.
We have to also factor in how powerful, the person with whom we have a conflict is. The more powerful we are, in relation with the other person, we have a better handle. But we need to keep in mind, that the power is determined by not just what he possess or what his position is; but, also by what he perceives that he has to lose. That is why one suicide bomber, can inflict more damage than a battalion of regular soldiers.
“In a war, just or unjust, in the end nobody wins”
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