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Friday, April 30, 2004

Offshoring Services: Which Are the World's Top Locations -- and Why? Via Knowledge@wharton

Kearney's 2004 index study underscores the fact that countries to which white collar jobs are being offshored offer a range of attractions besides low-cost labor, creating a complex decision-making process for companies selecting offshore locations. Countries such as India and China, with large populations, offer an abundance of educated workers. But at the other end of the spectrum, "small, highly developed economies like Singapore, New Zealand and Ireland offer excellent infrastructure, education systems and business-friendly low-risk environments," the study says. Surprisingly, the report says Singapore is more competitive than India or Malaysia when it comes to high-end requirements. He points to Singapore's superior telecommunications and IT infrastructure, transparent financial markets, clean legal regime, and the availability of a strong pool of middle and senior management personnel. "Singapore also has tremendous risk mitigation management and containing expertise," he says. All of these can substantially offset Singapore's higher wage levels, he feels.Malaysia is a surprise at No. 3 in the Kearney index. Its population of 22 million people does not allow it to compete with India and China's scale advantages, but there are other factors that work in its favor, the study says. "Low costs, particularly for infrastructure, the most attractive business environment among emerging markets, and high levels of global integration helped Malaysia reach the number three spot in this year's index." Malaysia's government is also promoting the IT and services sector. All that, the authors say, will make Malaysia "one of the strongest competitors to India's BPO dominance in the next five years."China may trail India in BPO experience and qualifications, but its cost advantages and large educated labor pool are big strengths. China also is emerging as a growing offshore destination for Japanese and Korean companies, and it attracts U.S. and other multinationals "because of talented work force," India too has worked on its competitive strengths. "India has extended a significant lead through its continuing cost advantages and its increasing market maturity,". Overall a well researched report.

Ebiz strikes again via Bweek

The Internet has rewritten the rules for books, music, and travel. Which industries are next? Here are six : In the first wave of disruption, Amazon, Expedia, and others rewrote the rules for books, music, and air travel. Now the Web is poised to remake at least six more major industries: jewelry, bill payments, telecom, hotels, real estate, and softwareAs e-biz strikes again, key questions arise: Why these industries? And why now? In the first round of Net disruption, the online players were selling commodities: books, music, or stock trades. Customers didn't need to see, squeeze, or sniff the stuff -- all they cared about was price. Today's Net upstarts are pulling together more complex information and boiling it down so consumers can become smarter purchasers of a broader array of products and services. In real estate, for instance, zipRealty and others have learned how to use software to show potential home buyers photos and floor plans for scores of potential houses. Because that reduces the agent's work, zipRealty can save consumers 20% to 25% off standard commissions. In the jewelry biz, Blue Nile offers loads of educational information on diamonds so lovestruck men feel comfortable buying gems based on a collection of independent ratings on color, cut, clarity, and carat size.Broadband has been instrumental in the Net's advance, too. A critical mass of people around the world now have high-speed Net access, including 27 million U.S. households. That means consumers can handle the huge loads of information dished up by the second wave of online players. Lickety-split Net links let them browse through dozens of photos of hotel rooms, check out a variety of gold necklaces, or take virtual tours of scores of homes for sale. Speedy Net connections also have made it easier for programmers around the world to cooperate in developing new open-source software, which is changing the economics of the $200 billion software market.The industries under assault have other more subtle characteristics in common, as well. Several, including jewelry and hotels, have long supply chains with many middlemen, each of whom takes a cut of the profits, driving up retail prices.The power of the net is going to be felt much more in the days to come..

Wednesday, April 28, 2004

Waking Up a Sleeping Company - Authentic Leadership Via HBSWK

One of the greatest challenges for the values-centered culture is to produce top performance and succeed in the market against "win at any cost" competitors. Values are only one part of an organization's culture; the other half is its operating norms—the way in which day-to-day business is conducted. Practicing solid values does not guarantee results unless a passionate commitment to performance standards is incorporated into the organization's norms writes Bill George in his latest book - "Authentic Leadership" Goerge Bill writes, "The company's (Medtronic) long history of success had led to a soft underbelly that manifested itself in a lack of discipline. The company was extremely values-centered, but its internal norms of consensus decision making, conflict avoidance, and lack of personal accountability all undermined the company's performance. For all its strengths, it was my impression that Medtronic's culture was too Minnesota Nice. I realized that these aspects of Medtronic's culture had to change if we were going to be an effective competitor and realize our vision of being the global leader in medical technology.The challenge we faced was changing a successful culture without diminishing its positive attributes. Cultural change is never an easy task, and far more cultural change efforts ultimately fail than succeed. Transforming a healthy culture is even more difficult than changing an unhealthy one. Many people will not understand why change is necessary when the company has been successful. The leader has to be patient, communicative, and diligent in insisting on changes at all levels, or the organization—like the proverbial willow tree—will snap back to its previous mode of operation as soon as the pressure is off. Bill concludes by saying,"The extraordinary results achieved by Medtronic in the past fifteen years shows that an organization can be both values-centered and performance-driven. The key is aligning the organization's values and performance objectives. Working in complementary fashion, practicing values and driving for performance reinforce each other and enable the creation of a great company." Extremely well written and backed by solid performance of the company - this is compulsary reading for all managers.

Tuesday, April 27, 2004

Next Wave Of Advances In Tech Will 'Surprise Us,' Gates Predicts

Bill Gates, who foresaw a revolution in computing and built a business empire on his vision, scoffs at notions the software field is mature.To take the industry to the next level, he says, technology must get better. Web services software and standards must improve so that disparate computers and programs can share and update information as they get it. Speech recognition and online search need to be more precise. Gates says,"There are so many exciting and challenging problems to tackle - from natural language processing to navigating large amounts of digital information - and the way we solve them will help technology further improve our lives". Technology will never lose its ability to surprise humanity, software breakthroughs will make computing vastly more powerful and intuitive in a few short years and for the current generation, technology is like oxygen to them, and the ways they're using it will define how we build computers and write software in the future.

RFID /EPC - Managing the transition - 2004-2007 Via Line56

This paper from ATKearney says that while the vision of RFID is compelling, the transition from today's practice to the EPC enabled future will be challenging Initial economises are not always favourable and shall ultimately depned on dramtic improvements in hardware and software and tag costs. Governing standards for these are not still established. Many teachnical issues related to these need to be resolved. Consumer privacy,methods for sharing data are still grey areas and therefore the paper argues that 2004-2005 would be a period of trials and pilots.The combination of WI-FI and RFID are going to create a huge impact after 2005. Very well written paper - Must read for all interested in RFID.

Technology and Show Business Kiss and Make Up via NYTIMES

HP, Apple, Microsoft are all offering new solutions to the entertainment industry. From a time of standoff between technology and entertainment companies,the current emerging trend is different. With growth slowing in both entertainment and technology, players on both sides started to accept an uncomfortable reality: they simply could not afford to go on fighting. The ability to deliver movies and music over the Internet in a pirate-proof format could mean big money for movie and record companies, which have long complained about the expenses of manufacturing and distributing their wares.We are seeing the emergence of beautiful new friendship. Joint ventures, strategic alliances and photo opportunities materialize every week, as tech companies jostle for position in the entertainment world, and producers enjoy the courtship.The benefits to consumers are just beginning to show. While downloading music onto an iPod or a similar music player is commonplace, Microsoft, Hewlett-Packard and others are pushing for a completely digitized home. Their vision starts with a central media player used for personal computing, downloading movies and television and listening to music. This courtship and marriage has the potential to change the landscape of entertainment industry.

Monday, April 26, 2004

Irrepressible, Is thy name -Steve Jobs,Oh, Yeah, He Also Sells Computers Via NYTimes

In just two and a half years, Mr. Jobs, Apple's chief executive, has managed to take a well-designed hand-held gadget, add software connecting it to Macintoshes and Windows-based personal computers and convince the recording industry that he has found an elegant solution for ending its nightmare of digital piracy. In doing so, he has shifted the emphasis of Apple from what made it famous - hip, even lovable computers - to what he hopes will keep it relevant and profitable in the future: products for a digital way of lifeApple's growth may no longer be defined by its PC market share, now a declining sliver of the PC industry, but instead by Mr. Jobs's ability to create consumer markets."Both Bill Gates and Steve Jobs arrived with the idea of digitizing the world, but Gates has lost his way," said George F. Colony, the chief executive of Forrester Research, a computer industry consulting firm. "Despite all of his warts, Jobs has kept the dream alive, whether it's movies, music or photos. I call him the digitizer."People who know Mr. Jobs well say he disdains strategic thinking as it is practiced by large corporations. Several people who have worked with him describe his business approach as "instinctual."Two striking figures in Apple's most recent quarterly financial results, announced on April 14, underscore Mr. Jobs's new approach. In the last three months, Apple sold 807,000 iPods, surpassing for the first time the number of Macintosh computers it sold (749,000). At the same time, revenue for products other than Macintoshes reached 39 percent of the total of $1.91 billion for the quarter, more than double the percentage two years ago. Irrepresible - is thy name, "Steve Jobs"?

Chinese economy - Headed For A Crisis? Via Bweek

China's economy is overheated, its banks are shaky, and hot money continues to pour in. Can the new leaders rein in a runaway financial system?Scenes of prosperity, scorching expansion, commodity shortages, and speculative froth in the Chinese economy: In Beijing, local authorities are driving an unprecedented stadium-construction boom to prepare for the 2008 Olympic Games, an historic shot for the country to strut its stuff and showcase its economic ascendancy before a global audience. The capital city is spending $30 billion-plus on new subways, road construction, and glittering stadiums.In some thriving coastal cities, 2004 is shaping up to be the year of the brownout, as construction of new factories and housing fuels ever greater demand for electricity. China's State Grid Corp. forecasts an electricity gap of some 30 million kilowatts this year. Power rationing has become a fact of life in Shanghai and in smaller towns in the provinces of Zhejiang and Anhui in the booming Yangtze River Delta. Because the yuan is fixed at a cheap rate of 8.27 to the dollar and the government so far has not let it appreciate, the Chinese are spending more and more to import increasingly dear raw materials, which mainland manufacturers turn into products to sell abroad at low prices. In other words, China is paying more and getting less in return. The result: China actually ran a first-quarter trade deficit of $8.43 billion.The system is clearly out of whack. Yes, China is regarded as a country with first-world manufacturing prowess, the planet's workshop. But that industrial might is hitched to a broken, third-world financial system. When the heat turns up, things can get ugly.The authorities are clearly getting nervous. Beijing has raised bank-reserve requirements for the second time in eight months, and a sell-off in Chinese bonds has been accelerating.For all of its glittering skylines, emerging space program, and love affair with cell phones and the Net, China is still burdened with a backward financial system that can't tell a good risk from a bad one -- and often doesn't seem to care. "There is no such thing as efficient capital allocation in China," says Carl E. Walter, chief operating officer for J.P. Morgan Chase & Co. (JPM ) in China.Very scary and looks to be precarioussly perched - but China has always managed to baffle the world in the past and this gives them enormous confidence that things can be managed. Also the stakes are high for the big economic powers and any collapse can have severe impact for them as well - the hope is that this would ensure that they rally behind china and support it when the need arises.

Software: The Subscription Pricing Model

Some industry analysts predict subscription-based licensing models are about to break into widespread acceptance as alternatives to perpetual licenses, the status quo in the software industry. Research firm IDC last month predicted "dramatic shifts" in software business models as a growing number of customers shop for more flexible licensing options. "Vendors that can't accommodate these models will eventually be at a competitive disadvantage," predicts IDC analyst Amy Mizoras KonaryIDC estimates a quarter of all software sales today are tied to subscription licenses, so the transition is already in gear.The trend is gaining so much momentum that Merrill Lynch software analysts have come up with a new method of assessing and valuing software companies, one that takes into account the growth in deferred revenue that results when vendors move in this direction. The brokerage firm has devised a formula, called the Merrill Lynch On-Demand Index, for measuring the performance of software companies using metrics that go beyond the standard stock-price-to-earnings or stock-price-to-sales gauges.The trend toward subscription contracts is being driven in part by customers' dissatisfaction with the old way of deal making. Perpetual licenses can entail large up-front costs and annual maintenance fees that can reach 20% of a contract's initial value. Fewer than 20% of users surveyed by IDC say they're taking full advantage of the software they licensed.

Sunday, April 25, 2004

Ricardo Semler - Set them free via cioinsight

Ricardo semler is known for his very unconventional views of managing enterprises -His book Maverick: The Success Story Behind the World's Most Unusual Workplace, became an international bestseller (it's more Rocky than The Firm), and laid out his unorthodox, if strikingly commonsense approaches—no dress code, voluntary meetings, mandatory vacation time. In the last decade how has he fared? Semco's revenues have jumped from $35 million to $212 million in the last six years, and the firm grew from several hundred employees to 3,000—with employee turnover of about 1 percent. The privately held firm has eight businesses, or, says Semler, "nine, depending on the week," having expanded into outsourcing management (for four of Brazil's five biggest banks), to environmental site remediation and engineering risk management Upon semler's health setback, Semler determined to balance his work and personal life more carefully, and to do the same for his employees—all while improving Semco's fortunes. To his great relief, he discovered he didn't have to reconcile these two goals: The more freedom he gave his staff to set their own schedules, the more versatile, productive and loyal they became, and the better Semco performed.His new book, "The Seven-Day Weekend: Changing the Way Work Works" is due out in May.

Don't laugh at gilded butterflies - The economist about innovation

Rather than chasing wonder new products, big companies should focus on making lots of small improvements The article says,"important business trend: blockbuster new products are harder and harder to come by, and big companies can do much better if they focus on making lots of small things better."Even in relatively zippy businesses like pharmaceuticals, genuinely new products are fewer and further between. Spending on pharmaceutical R&D has doubled over the past decade, but the number of new drugs approved each year by America's Food and Drug Administration (the industry's key regulatory hurdle) has halved."Disruptive innovation”—simpler, cheaper and more convenient products that seriously upset the status quo—can herald the rapid downfall of well-established and successful businesses.Operational Innovation talked about by Michael Hammer and Strategic innovation coined by Christopher Trimble and Vijay Govindarajan are other relevant approaches recommended for corporate innovation. In the increasingly globalised world, corporate innovation is an essential weapon for survival, leave alone leadership and dominance.

Saturday, April 24, 2004

The New Factory Floor, and Tomorrow's via Bweek

Manufacturers know that to survive is to change. And the changes they're making are sweeping now and will soon be revolutionary.With America's worst industrial recession since World War II drawing to an end, it's increasingly clear that the future of manufacturing won't look much like its past. However painful the transformation, the U.S. factory sector is continuing a decades-old evolution away from labor-intensive activities measured more often by scale than precision.Those manufacturers still standing are concentrating on ever-higher-quality products and processes, even if that means tearing up long-standing business practices and shedding workers to survive. And in the wings awaits a new generation of molecular manufacturers -- which have more in common with chipmakers than carmakers -- aiming to create self-assembling machines on a nanoscale. A focus on quality in the near term helps fuel innovation down the road.It's clear that the manufacturing recovery is finally out of the starting box, and this time the recovery has legs. Though the article may not be high on details and may even appear a little suferficial, the trends noted herein are really worth deliberating.

The Toll of a New Machine Via FC

It started with ATMs. Then gas stations. Now self-service kiosks are taking over airports and invading McDonald's restaurants. Is this the face of the jobless recovery? Or will automation make service better for workers and customers alike?Crudely put, the work that required 100 people in 2000 requires just 89 people today in the US.Employment has actually grown in other service businesses that have been automated. At the dawn of the self-service banking age in 1985, for example, the United States had 60,000 automated teller machines and 485,000 bank tellers. In 2002, the United States had 352,000 ATMs--and 527,000 bank tellers. ATMs notwithstanding, banks do a lot more than they used to and have a lot more branches than they used to.each Kinetics self-check-in machine, at an initial cost of between $6,000 and $10,000, takes the place of two-and-a-half ticket agents, because the machine is available (at least) from 6 a.m. to 9 p.m., seven days a week--or about the number of hours that many agents would work. But that both understates and overstates the machines' impact.Kinetics has installed 3,800 self-check-in machines for airlines--but 9,500 ticket agents have not lost their jobs.Here's the double-reverse flip of productivity improvement: The kiosks have increased sales at McDonald's so much that the owners have had to add two more employees in each store.The final surprise is that customers who use the kiosks spend more money. A very interesting article.

Google - Challenging times ahead Via Bweek

All around the world, Web-surfing humanity has found its way to Google's bare-bones Web site and picked up the simple formula, pecking out a few words and hitting enter. Google has blazed a new path of learning and turned its search engine into the keys to knowledge. Its massive banks of servers process more than 3,000 searches every second of the day. Now, much of Silicon Valley waits eagerly for the miracle company to translate its soaring popularity into a mountain of cash."Google has proved a better mousetrap matters," says Microsoft Corp. CEO Steven A. Ballmer. Yahoo, Microsoft are leading the assault on Google. But google, as a company still operates under freewheeling management, a vestige of its peaceful prosperity as a private company. Under a ruling triumvirate, no one exec has clear control. Competitors are attempting to outflank Google and turn search into a ubiquitous feature, a commodity. To defend its market, Google must come up with a better model, one that establishes its search engine as a central platform for computing. This pushes Google to extend from its slender specialized base and venture into many of the same broad services the giants offer. To keep the big powers from feasting on its specialty, Google must stretch and become a sprawling power of its own. The search market is undeegoing huge chnage.In time, search engines will feast on every bit of personal information we're willing to share, and serve up links that fit our tastes and locales -- maybe even fine-tuning them according to the time of day. It's a market headed for dramatic growth and change. Interesting developments lay ahead.

Thursday, April 22, 2004

How big can walmart grow? Via Economist

The world's biggest retailer is defying its critics by continuing to grow vigorouslyHow big can Wal-Mart grow? With $256 billion in sales in the year to January 31st, the firm is already the world's biggest company by that measure. Its nearest retailing rival, a French supermarket chain called Carrefour, is less than half Wal-Mart's size. In America, Wal-Mart manages nearly 3,000 giant discount stores and hypermarket “supercentres”.Eight out of ten American households shop at Wal-Mart at least once a year. Worldwide, more than 100m customers visit Wal-Mart stores every week.The mathematics of big numbers suggests that Wal-Mart's growth must slow. Amazingly, the opposite appears to be happening. In America this year, Wal-Mart intends to open some 50 new discount stores and more than 220 new supercentres, some of which will be existing stores moving to new locations. Overseas, it plans another 140 or so new stores, including relocations. This adds up to some 50m square feet of new space—even more than many of its rivals operate in total.According to A.T. Kearney, Wal-Mart's three-biggest sources of cost advantage are low corporate overheads, the efficiencies of its supply-chain and, above all, its low labour costs. A newly hired “associate”, as Wal-Mart calls its employees, could earn as little as $8 an hour, some 20-30% less than unionised workers at rival supermarkets.with an employee turnover rate of 44%, the firm has to hire an astonishing 600,000 people every year simply to stay at its current size. As the company grows and employs yet more people, that task will become even more difficult, suggesting that Wal-Mart will want to push turnover lower still. That might put pressure on costs, as workers gain tenure, pay rises and better benefits. Touch challenges, but walmart ha always managed to stay on top of such things.

Wednesday, April 21, 2004

Google and Akamai: Cult of Secrecy vs. Kingdom of Openness Via Technology Review

The king of search is tapping into what may be the largest grid of computers on the planet. And it remains extraordinarily secretive about its core technologies—perhaps because it senses a potential competitor in dotcom era flameout Akamai.“Google always reports much, much lower numbers than are true." Whenever somebody from Google puts together a new presentation, he explained, the PR department vets the talk and hacks down the numbers. Originally, he said, the slide with the numbers said that 1,000 queries/sec was the “minimum” rate, not the peak. “We have 10,000-plus servers. That’s plus a lot.”Just as Google’s search engine comes back instantly and seemingly effortlessly with a response to any query that you throw it, hiding the true difficulty of the task from users, the company also wants its competitors kept in the dark about the difficulty of the problem. After all, if Google publicized how many pages it has indexed and how many computers it has in its data centers around the world, search competitors like Yahoo!, Teoma, and Mooter would know how much capital they had to raise in order to have a hope of displacing the king at the top of the hill.Akamai, in contrast is keen that all technical details are known to the public in a very direct way -To be fair, there are important differences between Google and Akamai—differences that assure that Google won’t be breaking into Akamai’s business anytime soon, nor Akamai moving into Google’s. Both companies have developed infrastructure for running massively parallel systems, but the applications that they are running on top of those systems is different. Google’s primary application is a search engine. Akamai, by contrast, has developed a system for delivering Web pages, streaming media, and a variety of other standard Internet protocols.

Tuesday, April 20, 2004

States Tackle Outsourcing Via Foxnews

Many states in the US are moving to ensure that more workers and businesses are homegrown thereby putting brakes on outsourcingLisa Langsdorf pointed out this link to me. My views are as under:
A wave of protectionism is evident in the USA .The USA continues to subsidise its farmers, depressing the price of commodities for Third World exporters, and this has held up the proposed Free Trade Area of the Americas. Is neo-protectionism a serious threat for global trade for countries like India? I suspect not.But do not interpret this as a fundamental change in American attitudes to trade. The election will pass, the job crisis is fading, and the rhetoric will change. The current outsourcing companies based out of India are not concerned - they point out that state contracts are less than 1% of their business. They are also hopeful that post elections these things would change.

Gearing up for Grid

Financial advisers at Charles Schwab will notice a substantial improvement in their real-time retirement planning tool. That's because retirement-scenario calculations that used to take many minutes to compute are now completed in seconds thanks to a change in the way the firm has designed its computing infrastructureDaniel Powers, vice president of grid computing strategy at IBM Corporation, agrees that grid computing is ripe for financial-services firms. That's because financial services is an industry that has a tremendous number of applications to run in a high-performance computing environment. Moreover, he notes, online brokers deploy a large number of servers. "When you look at the utilization characteristics of servers, it's up and down. There's a tremendous amount of unused capacity. There's a really good opportunity to mix the computing environment to fit different parts of the business." To summarise, grid computing advantage shall be :
-Running several trade scenarios in parallel, enabling more sophisticated analysis in a shorter timeframe.
-Working in a heterogeneous environment and taking advantage of different operating systems and hardware.
-Adding processing power quickly and easily.
-Using the grid infrastructure for a variety of analytical functions.
-Scheduling jobs and restarting operations more easily.
-Better use of resources.

The Secret of Dramatic Change at BP by Howard Gardner

some of BP's decline can be blamed on ill-adapted conditions within the company. BP had a huge and poorly disciplined employment force scattered all over the world. Nor was the company sufficiently strategic; for example, much effort was spent digging for oil in the Netherlands, though mega-rival Shell was much more likely to succeed on its home soil. Neither highly positioned managers nor ordinary workers were held accountable for their achievements and lapses, let alone their specific contributions to profitability. In crude behaviorist terms, there were few rewards (or positive reinforcements) for outstanding performance and few penalties (or negative reinforcements) for failure. Far too much of the company's business was focused on oil, though the extent of world reserves was unknown and the possibility of seizure by nationalistic leaders (or followers) was ever present. Perhaps most disturbingly, there were no plans for dealing with such destabilizing situations. BP stood at considerable risk of becoming an industrial dinosaur, going the way of once-dominant companies like Westinghouse, American Motors, and Montgomery Ward.
Howard gardner suggests the following in general for a massive change :search for the resonance and stamp out the resistance. Consider three such entrenched views—each familiar to anyone who has worked in any organization—and the ways in which these views might profitably be reformulated:

Early representation: Bigger is always better.
Better representation: It all depends. Sometimes small is beautiful. Assets of scale are often at odds with flexibility, comfort, innovation. The behemoths of one era may well become the dinosaurs of the next.
Early representation: It you don't like your situation, scream, quit, or do both.
Better representation: All niches have pros and cons. If you act shrewdly, you may be able to improve your situation, not only benefiting yourself but also improving the atmosphere for others. It is also important to listen to what others are saying because you might not grasp the whole picture.
Early representation: I've done it this way so long that I know it is right.
Better representation: There is merit in tried-and-true practices, but sometimes—and particularly at a time of rapid change—such practices can become dysfunctional. Items of inferior quality that are less expensively made sometimes dislodge quality products. Keep an open mind, be willing to experiment, blend the best of the old and the new.

India's unique approach to development is preparing it to overtake China in the economic-growth race Via FEER

By Dan Fineman
Far Eastern Economic Review
Issue cover-dated April 15, 2004

Shiv pointed out a very thought provoking article about India's potential and expected growth that appeared in last week's Far Eastern Economic Review:-

Eye-popping 10.4% GDP growth in the quarter ending in December has excited hopes that India will become the next China, but expectations need to climb even further. India now looks better than China. India's growth model promises more stable,sustainable expansion and bigger returns for investors than China or other adherents of the East Asian development strategy have delivered. Eventually, India should overtake China in growth and per-capita output. Superior corporate performance explains much of India's recent success. According to JPMorgan, listed Indian firms deliver a higher return on equity (RoE) than comparable companies in Hong Kong, Singapore, Korea, Taiwan, Japan and Malaysia or Hong Kong-listed Chinese firms. Remarkably, Indian firms combine high RoEs with Asia's lowest debt-to-equity ratios. Large equity bases enhance stability but depress RoE, making Indian profitability all the more impressive. India's economic growth has rewarded investors unusually richly by Asian standards. Because the East Asian model generates growth without commensurate profits, the region's stockmarkets badly lag GDP. From 1990-2002, nominal GDP growth exceeded the increase in developing East Asia's stock indexes (excluding China, which lacked a sizeable stock exchange in 1990) by an average of 236 percentage points. Backed by superior corporate profitability, India's gap was just 96 percentage points. Only Hong Kong performed better.

In contrast to China and other high-growth economies, the state has played almost no role in India's recent growth. Governments in Japan, Korea, Singapore and China support favoured industries with tax breaks, directed lending and hidden subsidies. In India, the state has displayed almost no preference for any particular sector. The government poses an equally heavy burden on all firms. It has aided industry of late by demanding less, not by showering businesses with favours. Privatization and deregulation, not an intrusive industrial policy, represent the state's biggest contribution to growth. DOMESTIC DEMAND : India requires less onerous thrift of its population. National savings in the high-growth countries regularly topped 40% of GDP in the 1990s, and China's savings rate reached 44% last year. India's more modest 20%-25% rate allows workers to enjoy more of the fruits of their labour and replaces fickle export demand with steady consumption as a growth driver. More modest savings have fuelled less destabilizing over-investment. In the "Tiger" economies, investment typically exceeded 40% of GDP in the fat years, while China last year invested at a 42% rate. In India, the figure fluctuates between just 20% and 25%, in line with savings.

Freed from state direction, the Indian economy has developed a happy but unusual structure. In China, Korea and Japan, government policies push manufacturing to the forefront. The service sector remains underdeveloped in most of East Asia. In India computer programming, back-office outsourcing and call centres flourish, in part because official policy did not divert capital to manufacturers. India's burgeoning service sector makes the economy unique among emerging markets. No other country at
India's level of development boasts a globally competitive service industry, apart from tourism and money laundering. All this should sound familiar. Low investment and savings rates, an even-handed government and highly profitable corporates are also hallmarks of the United States economy. India's approach follows the successful American model, not the failed Japanese example.

India's development model might never reproduce the multi-year, double-digit GDP expansion the Tigers and China registered in their peak years. Hypercharged investment fuelled by underpriced capital propelled those growth spurts. Lower investment and savings rates could limit India's expansion.But India's model should prove more sustainable than the typical East Asian strategy adopted by China. India is developing more efficient corporates, healthier banks, more robust service industries and a bigger consumption base. China has won the sprint. India is training for the marathon.

Fiorina: Bring on broadcast's digital revolution

Hewlett-Packard CEO Carly Fiorina says,"Broadcasters must embrace digital technology before they're left behind"We have entered an era in which every process and all content is going from analog, static and physical to digital, mobile and virtual, based on the shifts in the creation, production and distribution of broadcast programming.What happens when a teacher wants to tap your digital archive to order the best TV and film documentaries on the Civil War for her American history class?" she asked. "Many of these answers will come not just through new economic models but through the use of new technology." Very relevant thought as we have seen a dramatic transformation in the home digital entertainment segment in a big way in the last 18-24 months.

Monday, April 19, 2004

Intel's Telecom Weapon: WiMax Via Bweek

Sean Moloney says this wireless technology will surprise critics: "I'm just looking forward to proving people wrong"In the past three years, Intel has become one of the prime backers of some innovative, high-speed wireless technologies -- including Wi-Fi and WiMax -- that promise to reshape the telecommunications industry. While Wi-Fi can cover a few hundred feet, WiMax has a range of up to 25 to 30 miles. That makes it an alternative to traditional broadband technologies, which use phone and cable pipes.The next wave of personal productivity at work is about mobility, with people wanting to get access anywhere. During the next 5 to 10 years, industry after industry will turn to wireless. People use their notebooks 30% more once they're on wireless. It's pushing people to take their computers everywhere.

Sunday, April 18, 2004

Wal-Mart’s Mega-Growth Continues, But Is its Image Getting a Bit Tarnished? Via Knowledge@wharton

Wal-Mart’s appearance for the third time in a row at the top of the Fortune 500 list of largest U.S. companies would seem to confirm what many have long suspected: This retailing behemoth is all-powerful and unstoppable With 259 billion usd in annual sales, walmart rerpresents a stunning 2.3% of U.S. gross domestic product, walmart accounts for 10% of US imports from china.In 2003, the average American spent $761 in Wal-Mart stores, which accounts for 32% of all disposable diapers sold through mass market stores, 30% of all photographic film, 26% of toothpaste and 21% of pain remedies, according to published reports. Retail Forward, a consulting company in Columbus, Ohio, predicts that by 2007 Wal-Mart will control 35% of the supermarket and grocery store sales in the United States and 25% of the pharmacy and drug store sales. Having grown too big, walmart is very careful to avoid getting into Microsoft like situations on monopoly.There is a sense that Microsoft is squelching innovation and charging significantly higher prices than they should. This is why Microsoft is on the Justice Department’s radar and Wal-Mart is not … As long as prices are falling it would be hard for the Justice Department to argue that they are abusing market power and heft. It’s important not to lose sight of the fact that a lot of people benefit from Wal-Mart.

How Adobe plans to keep beating Microsoft Via Knowledge@wharton

Adobe Systems is on a roll these days, just had the most profitable quarter in its history. Adobe is always seen as a company with the edge to innovate and retain its turf by rolling out superior, reliable and relevant product. Bruce chizen, Adobe's President & CEO discusses past challenges, future plans and competitive strategy against rivals such as Microsoft. Another point to note is that Adobe is one of the early embracers of Offshoring and points out in this interview that the company makes more than 55% of revenue outside the US.

The Tao of Tech By Cynthia L. Webb

Reading the technology sector's tea leaves these days is a lesson in Taoist philosophy -- every positive development is inevitably offset by an equal, negative force. Call it the yin and yang of technology. A funny but interesting view about recent reportings on IT recovery.

Saturday, April 17, 2004

Outsourcing? Get In Sync Via Optimizemag

Corporate self-examination helps management select the right outsourcing partner and anticipate both the benefits and drawbacks of transformational outsourcing Outsourcing isn't what it used to be. A few bold leaders are going far beyond the conventional cost and resource savings benefits; they're using outsourcing to deliberately transform entire enterprises. While these transformations are generally successful at improving business processes, they can occasionally bring unanticipated results that may alter a company's initial outsourcing objectives. The article outlines an appraoch to maximize offshoring benefits to look at outsourcing for transformational benefits, like rapid growth, corporate turnaround etc. A well targetted appraoch towards outsourcing can provide rich dividends.

Can Amazon Unplug Google? by John Battelle Via Business 2.0

The online retailer is planning to change the way we navigate the Web.By overlaying what you're looking for onto what you've already found -- and, ultimately, what you've consumed -- A9 aims for the holy grail of search and e-commerce. While others have tried to create personalized interfaces, none has worked so far. Users don't like to answer questionnaires about what they like and what they don't; often they lie. But Amazon already knows who you are -- or at least, what you buy. With A9, the company can factor in what you browse and search for as well. In truth, Amazon and Google are speeding from two ends toward a very fertile middle ground where commerce and search meet. When they get there, they'll have formidable company -- AOL, eBay (EBAY), Microsoft (MSFT), and Yahoo, to name a few. Udi Manber, Amazon's chief algorithms officer and Yahoo's former chief scientist says, "In general, the main problem of search is very simple: Too often people do not get the results they need. Solving that is hard. We cannot read people's minds, but we can do much better anticipating their needs and making the process much easier for them."

Friday, April 16, 2004

The Common Sense of a Giant Via FC

In a soon-to-be-published biography and remembrance of the late Marvin Bower, the high priest of McKinsey & Co., there's a wonderful memo that should be tacked on the wall of every leader everywhereThe Bower memo :
First, we admire people who work hard. We dislike passengers who don't pull their weight in the boat.
We admire people with first-class brains, because you cannot run a great (organization) without brainy people.
We admire people who avoid politics -- office politics, I mean.
We despise toadied who suck up to their bosses; they are generally the same people who bully their subordinates.
We admire the great professionals, the craftsmen who do their jobs with superlative excellence. We notice that these people always respect the professional expertise of their colleagues in other departments.
We admire people who hire subordinates who are good enough to succeed them. We pity people who are so insecure that they feel compelled to hire inferior specimens as their subordinates.
We admire people who build up and develop their subordinates, because this is the only way we can promote from within the ranks. We detest having to go outside to fill important jobs, and I look forward to the day when that will never be necessary.
We admire people who practice delegation. The more you delegate, the more responsibility will be loaded upon you.
We admire kindly people with gentle manners who treat other people as human beings -- particularly the people who sell things to us. We abhor quarrelsome people. We abhor people who wage paper warfare. We abhor buck passers and people who don't tell the truth.
We admire well-organized people who keep their offices ship-shape, and deliver their work on time.
We admire people who are good citizens in their communities -- people who work for their local hospitals, their church, the PTA, the Community Chest, and so on. In this connection, I am proud of the example set by some of my colleagues during the year.

Alaska is Melting. Can Kyoto Save It? Via MIT Technology Journal

Treaties that mandate emissions reductions aren’t the ultimate solution. R&D on efficiency technologies isMuch of Alaska is built on frozen ground called permafrost, a soil condition that results when the yearly temperature averages below freezing. But across most of the state, that criterion is just barely met, by a few degrees Celsius. Alaska lives on the edge of a phase change. A small bit of warming can make a big difference. And that’s why many Alaskans, along with plenty of outside researchers and environmentalists, are concerned about global warming and the strategies proposed to limit its rise. Even if the United States signed international treaties designed to limit climate change, they’re starting to realize, that might not be enough to keep the state from softening. The author, Richard A. Muller, a 1982 MacArthur Fellow, is a physics professor at the University of California, Berkeley, where he teaches a course called “Physics for Future Presidents.” says,with energy efficiency, rather than dreading the ecological consequences of economic growth, we can have the joy of sharing it with the rest of the world.

China, India,US,manufacturing and outsourcing - economic interweave.

As job magnet, China sits far behind India Jim Chen writes,"Both India and China are top destinations in the trend in offshore job dislocation. But whereas India may easily play host to an American company’s large-scale call center, where receptionists are trained to speak English without an Indian accent, China is more of a destination for American manufacturing jobs.China and India both have a large pool of well-educated young workers and low wages. For obvious historical reasons, however, the spread of English in China is not as widespread as in India. More Indians than Chinese have climbed to the top levels of the American corporate ladder and are more influential in deciding where to outsource the labor-intensive functions of their companies.Consequently, linguistic and cultural disadvantages situate China many years behind India. Interesting..

Thursday, April 15, 2004

Cap Gemini Aims for Arrogance-Free Consultancy!! says its CEO

Clients are fed up with "arrogant" consulting firms, admits Paul Hermelin, the chief executive at IT services provider Cap Gemini SA.Hermelin, who was unveiling the re-branding of the Paris-based company as Capgemini, said: "There is a real fatigue about the arrogance of consulting firms. We told clients to beware of Y2K, and they are still waiting for something to happen. We told them not to miss the Internet wave and they spent a lot of money. There is a need for a more modest approach. Consultancies need to be more credible."Joe Thomas, who has been given responsibility for implementing a new code of working guidelines at the company to encourage a more collaborative approach of working with clients, said: "We have not done a good enough job in asking the client what are their key areas of priority. Clients get frustrated when consultants think that they do not have anything to bring to the table, when the consultancy should be looking to leverage what the client has already invested in." Reality is sinking in with high profile consulting companies.

Amazon launches A9 search engine

The much awaited Amazon's search engine has been launched - beta version is thrown open A9 combines the power of Google, Alexa and Amazon.

Tuesday, April 13, 2004

Changing Minds: The Art and Science of Changing Our Own Mind and Other People's Minds by Howard Gardner

Insights into One of the Greatest Mysteries of Human Behavior.Eminent Harvard psychologist Howard Gardner, whose work has revolutionized our beliefs about intelligence, creativity, and leadership, offers an original framework for understanding exactly what happens during the course of changing a mind—and how to influence that process.Gardner, a psychologist and professor at Harvard, examines the factors involved in changing minds on significant issues, in politics, science, business and art. He identifies seven key elements, including reason, research and real world events, that are part of the decision-making process. Certain facets are more heavily weighted in some fields than others: "leaders of large groups often rely on the appreciable resources at their disposal but are buoyed or undercut by real world events," says Gardner (Frames of Mind), who believes this explains why a politician or a CEO will disregard advice in the face of larger issues and popular perceptions. To prove his theories, Gardner analyzes the behavior of several individuals including President Bush, Britain's Margaret Thatcher and Tony Blair, and South Africa's Nelson Mandela. Gardner doesn't limit his examination to politicians because he also believes that artists, writers, musicians and teachers can change people's minds. While the discussions and real-life examples are intriguing and do clarify Gardner's theories, the book doesn't fully deliver on its promise. An excellent book - must read for all managers and leaders of current age.

Should We Brace Ourselves for Another Era of M&A Value Destruction? by Jim Heskett Via HBSWK

Research tells us that the short-term value in an acquisition accrues primarily to shareholders of acquired companies. On the other hand, short-term value is more often destroyed than created for shareholders of acquiring organizations. There are conflicting conclusions about whether mergers and acquisitions contribute directly to long-term value for the surviving organizationWhat is generally agreed upon is that perhaps as many as two-thirds of all acquirers fail to achieve the benefits planned at the outset of an acquisition. In part, this is thought to be due to the fact that too many acquirers are more concerned about size and top-line growth than value creation. Others approach an acquisition like a conquering hoard, focusing on the numbers while remaining insensitive to the qualities and needs of the human resources being acquired. The article agrues through a structured well thought out approach mergers can meet stated objectives of merger initiatives.