Back To Work - Book Review

I’m a huge fan of Bill Clinton. I came to US around the time of his presidency and loved to watch the country prosper under his leadership. Despite his personal weaknesses, I believe he is a great leader and truly wishes to do good for people (all people) not only in the US but around the world. He started his own charity - Clinton Global Initiative (CGI) – which has become a global driving force in doing good for the poor around the world. Hence, I have been waiting eagerly for his next book to publish. After reading My Life and Giving, I couldn’t wait to hear his thoughts on putting our country back on track. And once I got it, I dropped the other reading material and got directly to it … 

 It shouldn't come as a surprise to the readers of this blog that I will side with President Clinton on speaking on behalf of the 99% rather than the 1% (in the Occupy Wall-Street lingo). The bottom-line is that the Radical-Republicans (RR) have taken the whole republican party hostage and are unwilling to give the people of this country what they deserve – a meaningful way of making a living. Their agenda seem to be fairly straightforward – let the rich get even more richer and push the middle class further into poverty. And, they use all their power, through advertising and sponsoring talking heads in the media to confuse and misguide the population. This fact is captured by Clinton in this book, where, he writes - during one of the town hall meeting with a congresswoman, someone shouted – “I want government messing with my Medicare”. In addition, another example occurred during one of the earlier republican debates - where Ron Paul (I think) sort of indicated that the freedom is all about a poor uninsured patient to die rather than government proving care and some folks applauded him for this thought. The RR have gone to the point where they would prefer a law-abiding US citizen to die rather than providing Obamacare for all. Have we reached to that level where the segregation is so strong that we don’t care about people dying as long as a few's needs are fulfilled? I hope not. 

I don’t prescribe to the philosophy that people should be handed charity either. I don’t think most democrats want this either. I like Republican Party’s core ideals of keeping the spending low and regulations to a minimal level. However, I would not mind if the government is financing plans for the people that are not as fortunate as I am! I would willingly contribute to that as well. Almost all religions teach this kind of compassion – I don’t know how RR can be highly religious and be this calloused (about poor and needy) at the same time. Also, I do believe that some form of government is definitely required. The current economic meltdown was due to NOT ENOUGH government oversight; where overleveraging of the investment banks went unchecked. Clinton compares all the countries out there that have no government whatsoever and the one that has adequate governments – and he concludes that the one that have some form of government social structure are the happiest and most content people in the world. Don’t we want to be happy?

So, now that we know that most future economic recoveries (from any future recessions) will be jobless since only a handful of people in the US can do design/development and the manufacturing is completely outsourced, where would most of people in our country get jobs? 

In his new book, Clinton gives great ideas for TRUE American Recovery (an honest buck for an honest hour of work) rather than 10% of people hoarding 90% of the profit. He gives lots of ideas on reinventing this American dream through leadership in Clean energy and biotechnology. Some level of tax increase for all and government-sponsored jobs to take us through the recession will be necessary. 

As Clinton states, President Obama is the right leader for the current times. Last thing we need is another clone of “W” to take us into yet another deeper recession while decimating our environment. Please vote for President Obama to keep our country on the path to compassionate recovery. 

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Indian Leaders Ruining a Good Thing

Much has been discussed about the slowing down of the Indian economic engine and when/where the next phase of growth might come from. Oil/gas, retail, infrastructure, healthcare, defense, aviation, etc. Needless to say, the lure and potential of the Indian market is as vast as the mighty Himalayas! After the initial spate of economic reforms which were kicked-off 20 years ago, Manmohan Singh’s government has struggled to rally the political leaders to agree on anything substantive when it comes to opening other sectors of the Indian market.

Let’s start with the latest example – the Indian political parties shooting down the Retail industry reforms proposed by the ruling Congress government. The reforms would have opened up the sector to precious foreign direct investments (FDI) at a time when the sector as well as the country need them most. This is what you get when you have a coalition government made up of a band-aided, hotch-potch of political parties. What politician/party would want to risk bringing to the floor a no-confidence motion when they can comfortably continue milking government coffers until the next general elections, which are still a couple of years away? Like they say – No need to shake the delicately balanced apple cart! Manmohan Singh and the ruling Congress party would rather see the country’s economic progress continue its steady decline than show strong political will to introduce the much needed regulatory and market changes.

Let me also introduce another point that really doesn’t need any introduction – the rampant corruption that has been prevailing under the Singh-Gandhi government. Political activists have been trying hard to rally the masses and get some meaningful laws institutionalized but the ruling Congress party has brought the full might of their political unwillingness to thwart any people movement that might open investigations into their financial largesse. I guess one should be expecting much from a setup that is made up of cronies and thugs at every level of administration. Yes there are a few good men and women, but they are outnumbered 1:1000.

So as you can see, nothing can be done using a bottoms-up approach (i.e. led by people) or a top-down approach (i.e. led by leaders). Yes, the situation seems pretty hopeless and bleak, especially considering that the current government and its allies will continue to wield power for at least another 2 years. Here is my forecast given the current state of affairs –

1. Economic growth will drop to 2-3% in the next couple of years
2. The housing bubble will burst
3. FDI will continue to decline
4. Rupee will continue its decline
5. India will be replaced with Indonesia in the BRIC acronym

Times like these expose the kinks in a democratic setup and the weaknesses of a publically-elected leadership that lacks qualification, imagination, and balls. I will eagerly await the next Indian general elections and hope that in the interim, the current leaders do not inflict any more damaging decisions on a delicately poised nation and economy.

Questions for You:

1. Do you think this is a hopeless situation and nothing can be done until the next general elections?
2. Which sector(s) would you pick/prioritize for sparking India's next wave of economic reform and growth?

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Specialized Commodities

What do Starbucks and Apple have in common? Both of them are championing strategies that turn commodity-like products into an experience.

Coffee is abundantly available but nothing like sipping a brewed-to-order Grande Cappuccino in a cup stamped with a crown-wearing-queen. Who wants to be noticed, let along drink, at a McDonalds sipping a McLatte or at a Dunkin Donuts joint sipping their coffee. Granted Starbucks sources their beans from some real exotic places but that makes for a real small part of the price. What drives the price is the overall experience that brings together elements of exclusivity, aroma, style, emotion, and maybe, just maybe, taste.

Let’s now consider Apple. Music players, tablets, and computers are all abundantly available. But there is something about an Apple product that makes you go – “I’ve got to have that!”. Who wants to be noticed holding a boring and dull Samsung or HTC or Amazon or B&N product? None of those will give you the coolness, hipness, creativeness, or classiness like that iPod, iPad, or iMac! An Apple product immediately transforms you from a dry and dull person into one who is in with the times, is going places, and is ready to conquer the world.

I will give you one more example, which is close to my home (Northern Virginia). This one is a grocery store chain by the name of Wegmans. Boy does my family love to spend time here! People of all ages want to come here and hang out. Do you remember the last time you were at a grocery store and you just wanted to hang out? Wegmans is unlike any other grocery store because they have approached the store design, layout, inventory, and ambience with a purpose of transforming the act of grocery shopping from an errand to an experience. The strategic lighting, the samples and tastings, the choo-choo train running on an overhanging rail, the kids area where you can leave the little ones, the sprawling wine and cheese selections, etc. When I am at Wegmans, I am like a kid in a candy store. I want more and I do not want to leave!

Bottom line – It’s the experience that matters and savvy firms have internalized this important lesson. How often do you see a Starbucks ad? Can’t remember the last time I saw an Apple or a Wegmans ad? As a firm, the idea is to spend upfront, not after the fact. Spend the money to design the best product available in the market, at just the right price, and then you don’t have to spend a dime on marketing to existing customers. This strategy renders the competition meaningless and helps you create a “Category of 1”.

Be sure to look up the Kazira article on “Blue Ocean Strategy” for more ideas/insights on this topic. If you liked what you just read, please support Kazira by sharing it with your network (click on Share It link below). Thanks!

Can US Manufacture an iPhone?

I honestly think that answering the above question is what it boils down to and that is what it will eventually take to get the US economy back on track. The US economy has gotten crowded and consumed with services as the manufacturing activities have gotten traded away to emerging markets over the last few decades.

Why can’t we build the iPhone right here in the US? We are great in designing and spec-ing out the product (i.e. disruptive innovation) but when it comes to manufacturing stuff, especially electronics, the economics just do not make sense and the numbers simply do not add up. As a result, the iconic American inventions are contributing significantly to the US trade deficit with the rest of the world. Can’t think of the last time I saw “Made in America” stamped at the back of an electronic product!

Back to the iPhone – Check out the table below. The number that stands out is $8 - It only takes $8 worth of labor to produce an iPhone and this constitutes a measly 5% of the total costs for manufacturing the device. The other 95% is consumed by the parts/materials that go into the device. I am not an expert in economics of labor or materials but let’s consider a hypothetical scenario where the iPhone (16GB version) is assembled in the US. I am guessing the labors costs will double or triple to say $24. In order to keeps the total costs to <$200, the materials will need to be sourced for $176. I think it can be done. With increased automation and productivity levels, these materials/parts can be manufactured right here in US. Or they can be procured for prices far less than listed, just get WalMart to do it for you. Needless to say, I am making a number of assumptions here, one of them being the availability of skilled engineers to setup/manage such hi-tech factories. But given the current talent supply glut in US, I think my "skilled labor" assumption will hold good when put to test.

Unless US gets the manufacturing mojo back and the trade equation in order, the current economic morass will continue to linger for a long, long time. Manufacturing hi-tech consumer products on a large scale offers opportunities that are highly differentiable and defendable in the long run.

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International Etiquettes – Kiss, Bow or Shake Hands

Typing this blog sitting in the business lounge at Zurich airport. Every time I take a trip outside the US, it reminds me of how different our lives are compared to the rest of the world. As you very well know, each country has its own flavor of culture, tradition, belief systems and method of operation. There’s a bunch of things that we almost take for granted within the US. Those things do turn out to be a BIG DEAL in the rest of the world. This fact becomes apparent when I have to pay for the each packet of ketchup with my food at Burger King in Switzerland! Or when I order coffee anywhere in Europe and I only get 1/4th the size of coffee at my (dearest) Starbucks – and that too after paying more money. Further, some of explicit images and videos displayed in very public places really amaze the {blip} out of me. And when we complain, we get labeled as the Arrogant Americans!!! Go figure ;-)

Anyways, this blog is not about the personal or social difference between us and the rest of the world, it is more to do with - How to deal with it in the best way possible when you go out of the country to do business. Be it sales or procurement, the rest of the world works very differently than the US. Fortunately, my work has taken me to Bolivia, France, Germany, India, Japan, Switzerland, and United Kingdom. And in my line of work, I have interfaced with folks from various other countries. And I must say, each of these countries have a different flavor of dealing with business. One small example is - Its very important to exchange business cards in Japan and India. Your business card provides a measure of your place in the pecking order. Exchanging the business cards is a very elaborate and important process and should be taken seriously. There are several websites and books such as “Kiss, Bow, Or Shake Hands” that offer a great deal of help in understading details of statistics and methods of doing business in each country. Following are a few generic “must do” from me – 

1. Always dress formal. Informal dressing is catching up around the world but when traveling oversees, always dress formal. 
2. Never take anyone for granted – never assume an importance from one’s appearances. The person may look fairly ordinary but may hold a very important position. Respect all – treat everyone, as you want treated yourself.
3. Never discuss political environment or political ideas in a different country. You just never know, what political ideology that they may be holding or be sensitive to; and may end up jeopardizing your deal. 
4. Never criticize a country in front their countryman. Everyone is proud of their country and do not wish to hear about things that are not working. Praise positives and ignore the negatives. 
5. Never conduct business in your language thinking that the other side does not understand. People are multi-linguals and do put an air of not understanding your English at all but they just may have a team member there listening to your sidebar. Also, one may use the lack of understanding of ones language as a pretense to think things over. 
6. As far as greeting goes, just raise hand and say Good Morning and Good Evenings. Do not go too much into the cultural intrigues and start kissing an Arab for greeting and all. 
7. Read about the country before you go – be aware of the sensitivities to the historical facts – don’t ask the Germans how the environment was under Adolf Hitler and all. And just do not give a Thumbs Up sign anywhere in the Arab world. 
8. In a lot of cultures, saving face means a world. So, folks may appear distant in a meeting.. but this may just mean that that some cultures may put a face on the meeting that will do all the talking; but that does not mean that others are not listening or understanding. 

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