The economy has been limping along with occasional glimpse of recovery. Government continues to pump money into the system and the Fed has kept the borrowing rates super low. With the presidential elections on the cards, there are plenty of ideas and accusations being thrown around by Obama and the Republican candidates on how each one plans to put America back in the leader spot. Everybody continues to blame Europe’s economic morass and China’s unfair policies for our mess, rather than looking inside the system that is broken on what I consider to be the 3 most fundamental dimensions of any society – education, healthcare, and jobs. Our scores on each of these dimensions continue to trail the leading economies of the world.

The number of American kids graduating in STEM disciplines – both at undergraduate and graduate level - continues to decline. The immigration policies continue to push away the smart foreign kids who come to US for higher education and excel academically. Healthcare costs continue to rise at a steady 8-10% clip YoY. Although the quality of outcomes and access is improving, that is coming at a disproportionally high cost which is something that is not sustainable in the long run. Finally, the jobs situation is gloomy – although the unemployment numbers are on the decline, there are a bunch of “employable” people who have just decided to sit this one out. With the steady stream of unemployment checks and food stamps, who wants to rough it out there in this market where you are competing with 20-50 candidates per job opening. That is assuming you have the skills to cut it in this digital and automated economy!

Back to Clint’s half-time analogy – I just think this one is going to last longer than the usual 15 minutes (i.e. whatever that translates into years). Let’s not forget that the emerging markets are facing their own set of challenges and making the necessary adjustments. We need to think in relative terms, not absolute. I feel a lot more is needed than what is being done and proposed by the policy makers. Unfortunately, there are no referees or linesmen in this game to blow the whistle and remind the players that half-time is over. You get to decide when you are rested and ready to get back on the field.

What did you think of the Chrysler ad? How long do you think this half-time is going to last? If you liked what you just read, please support Kazira by sharing it with your network (click on Share It link below). Thanks!

I recently learned of this project management tool while reading the book called “Thinking Fast and Slow” (Review to follow on this blog soon). The concept of Project Pre-Mortem is for the project leader to encourage the team members to find all various ways the project could fail. Sort of like performing postmortem on a dead-body to find the root cause of the demise; but only prior to project start. I thought it to be a very radical idea. 

Having seen many projects fail miserably, I was always intrigued in terms of "Where did we go wrong in planning?” and “What could we do to make the future projects successful?” Nassim Taleb (in his book Black Swan) has pretty much convinced me that there’s NO WAY of developing a fail-proof project plan. Its impossible to account for all the factors that can cause any project to fail. This does not mean that one should not plan whatsoever, of course. The key, in my mind, is to account for all the issues that one can think of beforehand (that comes with experience). This method is another tool in a Project Lead’s arsenal. 

What the Project Lead Needs to do: Before launching of the project, when all the planning sessions are over, the project lead must invite all the key members of his/her team and ask the following question: “Lets take a hypothetical scenario. We are reaching towards the end of our project, and the project FAILED MISERABLY. Take 5-10 minutes to jot down why each of you think the project could have failed.”

What this exercise will do is to make the team members think of all worst-case scenarios and weakest links on the project. The project lead can then take the necessary steps right from the get-go to eliminate as many causes of failures as possible. This exercise also tries to eliminate the optimistic group-thinking that pervades most teams can cause some members to agree to the most popular position/plan in the room – despite their doubts. 

Would love to hear your feedback on this. I’m fairly excited to implement this concept on my next project. If you liked what you just read, please support Kazira by sharing it with your network (click on Share It link below). Thanks.

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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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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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!

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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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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As I sat through this hour long interview, there were a number of things David mentioned that struck a chord with me. So let me share them with you -

1. Humility as a Leadership value – For David, this is the most important value a leader must possess. This value differentiates a boss from a leader. Treating people the way you would like to be treated always pays rich dividends in life.
2. The US Economy is Contracting – The unemployment numbers have stayed stubbornly high and are showing no signs of relenting any time soon. The new normal for unemployment may be more like 7%, instead of 4% that has been the traditional figure considered by various economists. Even for the sectors that are coming back, firms are focusing on productivity improvements (i.e. automation, process improvement, LEAN, etc.) rather than hiring to meet new/future demands.
3. Emerging Verticals - The verticals with the most potential in the future are Healthcare, Energy, and Food. Whereas the first sector is plagued with complication, waste, and rising costs, the other two are challenged due to limited supply and rising demand. Future entrepreneurs are best off solving problems in these sectors.
4. Submerging Markets - All developed markets can be tagged as “Submerging” markets (as opposed to Emerging markets) and US is one. Its struggling on all macro-economic fronts due to its long reliance on services (most of which are non-tradable) and entitlements.
5. Philanthropy is not just about Money – People can and should contribute to the society in ways that are most meaningful to them. It does not have to be money - How about ideas, time, effort, advice, etc.? David seemed to have most interest in education and arts. He has not signed the Buffet-Gates Billionaire pact.
6. Follow your Passions - Do what you are passionate about because that will motivate you to work more on it and get better at it and eventually, be the best at it. Mediocrity is not fun place to be!

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Now this was a 5 pm train and one would think that people would want to unwind, relax, nap, etc. after a long, hectic day in one of the busiest cities in the world. How about people making conversation with their fellow passengers? But wait, that would be considered “anti-social” in today’s world where the predominantly acceptable way of socializing is via Facebook or Text Messaging. And another thing, a conversation usually requires 2 people and so if you are in the mood for small talk, chances are that your neighboring passenger is busy typing away on their preferred device! You might just feel peer-pressured into pulling out your own digital device so that people do not look at you funny and mentally label you as good-for-nothing. Isn’t it funny that the very same people who do not have time to talk are the ones who have the nerve to form crazy perceptions about others who they have never met?

It almost feels like a “Reverse Network Effect” – the more people in the cabin (i.e. network), the more people want to engage with their digital devices and the less they want to talk to you. I honestly think it is a perception thing here where people feel that if they aren’t hooked onto their devices, they are missing out on all kinds of productivity, information, knowledge, entertainment, etc. It is also that peer-pressure thing I mentioned earlier where you believe that people think you are smarter and savvier if you are on your device and not talking to them. The fact that you are on your device may actually, ironically, trigger a conversation with a fellow device-monger. Hmmmm …. Wow …. Looks like we came back a whole circle!

I guess this is going to be the new normal where people are going to be wired into their devices, all the time, and the only acceptable and non-intrusive way to socialize with them is going to be via an online social network. You will need to track them down digitally and then make a humbling pitch to them, hoping they will be intrigued and would want to connect with you.

I have talked about the social implications of the various digital technologies a number of times on my blog and how it is changing human behavior, whether it is for good or bad. I feel the pendulum has swung all the way in the favor of the online world and eventually we will see it settle somewhere halfway between online-offline. Until that time, you and I will just have to find what best works for us individually and make do with that.

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You see, majority of the services that are produced, by design, are consumed locally and have a limited ability to scale. On the other hand, goods produced locally can also be offered to customers abroad, i.e. they can be exported globally and have a significant ability to scale. This is the very basis for the pitch for re-visiting the manufacturing sector. The fall in manufacturing activities relative to the services sector has led to the trade imbalance which is one of the major, if not the major cause of economic distress in the US. By some estimates, the US manufacturing sector has been cut by half over the past two decades!

Here is the million dollar question - How are we going to be able to build anything at a competitive price point and at the desired quality given our high operating cost structures? Innovation is not a problem. Marketing is not a problem. Product Development is not a problem. HOWEVER, mass production of goods is a problem. Why? Because firms enter the market to make money and our high labor costs do not allow firms to be profitable.

Here are 6 Strategies that manufacturing firms ought to consider in order to cut operating costs as well as raise revenues (i.e. prices) –

1. Product rationalization – Product proliferation is one of the biggest cash guzzlers at firms. That is how things at the big-3 US auto makers got out of hands. Too many products complicate matters by creating a glut of raw material and finished goods inventory, and hoarding precious capital. The key is to find the sweet spot – just enough quantity and variety in the product portfolio such that it makes life easy for everybody, from the employees and suppliers to the customers.
2. Going small – Consider the current economic times and outlook when sizing and pricing products and services. People are being price sensitive and are trading down. The likes of P&G and Coke are introducing smaller soap bars and soda cans respectively. Build sizes that can be priced at what consumers can afford to buy.
3. Union re-negotiation – If you have worker’s unions, consider talking to them and working out salaries and benefits that are appropriate in order to keep the firm in business. Nobody wins when greed takes charge. High compensation levels (including those of executives) will lead to higher prices which will certainly lead to loss of customers and markets.
4. Manufacturing automation – Consider making investments in process automation and/or functional outsourcing. Both of these can lead to some significant, ongoing reduction in operating costs as well as time to market and drastically enhance productivity and quality levels.
5. Quality proposition – Consider making quality a key part of your strategy and market positioning. Believe it or not, customers are a pretty good judge of product quality and that usually has a high correlation with their loyalty towards your brand. Whether it’s the paint job or the rough edges, cutting corners will not get you too far. A little investment in quality and reliability can go a long way in generating repeat business.
6. Made-In-America appeal – There is a nationalistic sentiment of sorts in the air and people are starting to realize the benefits of buying locally produced goods and services. A compelling story accompanying your product can generate the necessary winds needed to sail your boat. Along with all the other strategies mentioned here, you need to get in-tune with this consumer emotion and use it to your advantage.

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