• The biggest enemy of future success is past success. When you succeed, you feel that you must be doing something right for it to happen. But when the parameters for success changes, doing the same things may or may not continue to lead to success.
• We invested in uncompromising integrity that helped us take difficult stands in some of the most difficult business situations.
• Routines represent our own zones of comfort. There is a sense of predictability about them. They have structured our time and even our thought in a certain way. While routines are useful, do not let them enslave you. Deliberately break out of them from time to time.
• Life's battle does not always go to the person who is stronger and faster. The person who wins is the person who thinks he can.
• Always keep in mind that it is only the test of fire that makes fine steel.
• As you get bigger, you have to learn to delegate. It’s also an excellent way to get staff involved in the company’s operations.
• As an advisor, I can say what I want. If I were a politician, I would constantly have to compromise, and I'm incapable of doing that.
• Character is one factor that will guide all our actions and decisions.
• It requires courage to keep dreaming. And that is when dreams are most needed -- not when everything is going right, but when just about everything is going wrong.
• You cannot fire a missile from a canoe. Unless you build a strong network of people with complementary skills, you will be restricted by your own limitations.
• Playing to win is not the same as cutting corners. When you play to win, you stretch yourself to your maximum and use all your potential. It also helps you to concentrate your energy on what you can influence instead of getting bogged down with the worry of what you cannot change. Do your best and leave the rest.
• Everyone feels the fear of unknown. Courage is not the absence of fear but the ability to manage fear without getting paralyzed. Feel the fear, but move on regardless.
• In our way of working, we attach a great deal of importance to humility and honesty. With respect for human values, we promise to serve our customers with integrity.
• Guard against complacency all the time. Complacency makes you blind to the early signals from the environment that something is going wrong.
• If you are always in the company of cynics, you will soon find yourself becoming like them. A cynic knows all the reasons why something cannot be done.
• Take your time to decide what your core values are. Once you do, do not compromise on them for any reason. Integrity is one such value.
• Nobody can make us feel inferior without our consent.
• Change descends on every one equally; it is just that some realise it faster. Some changes are sudden but many others are gradual. While sudden changes get attention because they are dramatic, it is the gradual changes that are ignored till it is too late. You must have all heard of story of the frog in boiling water. If the temperature of the water is suddenly increased, the frog realises it and jumps out of the water. But if the temperature is very slowly increased, one degree at a time, the frog does not realise it till it boils to death. You must develop your own early warning system, which warns you of changes and calls your attention to it. In the case of change, being forewarned is being forearmed.
• Spend time with people who have a 'can-do' approach. Choose your advisors and mentors correctly.
• We need an open mind to look at things in a different way and allow new inputs to come in. Otherwise, there is a real danger of becoming complacent or even downright arrogant.
• We must remember that succeeding in a changing world is beyond just surviving. It is our responsibility to create and contribute something to the world that has given us so much.
• We believe the combination of excellence in operations and strong execution of our strategy is critical to achieve our vision. We will continue to focus on both in future as well.
• Constantly ask yourself what new skills and competencies will be needed. Begin working on them before it becomes necessary and you will have a natural advantage.
• If you do not take enough risks, you may also be losing out on many opportunities. Think through but take the plunge. If some things do go wrong, learn from them.
• I came across this interesting story some time ago: One day a farmer's donkey fell down into a well. The animal cried piteously for hours as the farmer tried to figure out what to do. Finally he decided the animal was old and the well needed to be covered up anyway, it just wasn't worth it to retrieve the donkey. He invited all his neighbours to come over and help him. They all grabbed a shovel and begin to shovel dirt into the well. At first, the donkey realised what was happening and cried horribly. Then, to everyone's amazement he quietened down. A few shovel loads later, the farmer finally looked down the well and was astonished at what he saw. With every shovel of dirt that fell on his back, the donkey was doing some thing amazing. He would shake it off and take a step up. As the farmer's neighbours continued to shovel dirt on top of the animal, he would shake it off and take a step up. Pretty soon, everyone was amazed as the donkey stepped up over the edge of the well and trotted off! Life is going to shovel dirt on you, all kinds of dirt. The trick is to not to get bogged down by it. We can get out of the deepest wells by not stopping. And by never giving up! Shake it off and take a step up.
• Some people follow the beaten path. Few take the road less travelled. Yet others choose to create their own path.
• Managing change has a lot to go with our own attitude towards it. It is proverbial half-full or half-empty glass approach. For every problem that change represents, there is an opportunity lurking in disguise somewhere. It is up to you to spot it before someone else does.
• If you succeed 90 percent of the time, you are doing fine. If you are succeeding all the time, you should ask yourself if you are taking enough risks.
• As a country we are on the threshold of a unique opportunity. To manage this opportunity, we need to understand what will drive the changes in the future and how we need to manage them.
• If you set high standards for yourself, you strive to meet standards and hence remain modest.
• The greatest benefit of your education lies not only in what you have learnt, but also in working how to learn. Formal education is the beginning of the journey of learning. In the world of tomorrow, only those individuals and organisations will succeed who have mastered the art of rapid and on-going learning.
• Pessimism is contagious, but then so is enthusiasm. In fact, reasonable optimism can be an amazing force multiplier.
• We must remember that many have contributed to our success, including our parents and others from our society. All of us have a responsibility to utilise our potential for making our nation a better place for others, who may not be as well endowed as us, or as fortunate in having the opportunities that we have got.
• To be able to gain the respect of the diverse spectrum in our country, better than being called just a wealthy person or a successful businessman. I have managed to gain respect of everybody that is the biggest accomplishment. All this, only because of hard work and by overcoming peer competition by working harder.
• Excellence is not so much a battle you fight with others, but a battle you fight with yourself, by constantly raising the bar and stretching yourself and your team. This is the best and the most satisfying and challenging part about excellence.
• Delegating authority and responsibility speeds things up and gets decisions made faster. It empowers people more, and it allows them to further empower those who report to them, because their jobs have suddenly become much more responsible.
• You don't demolish a cash-cow business. You just simultaneously try to build the business of tomorrow, which really differentiates you.
• I don't think customer relationships are really owned. The customer is a remarkably selfish person: He takes the relationship to where the execution is in his favour.
• Any position of power or wealth means an enormous responsibility of trusteeship. The higher the share price goes, the higher becomes the expectation from investors, on the company, to perform. If the price rises to unrealistic levels, it will lead to unrealistic expectations.
• I think the most important reason for our success is that very early in our quest into globalisation, we invested in people -- and we have done that consistently and particularly in the service business. People are the key to success or extraordinary success.
• Our experience as a company is that if your top management is not global, they tend to collect people who are of the same kin. It is the most difficult transformation. If you are a smaller company, a less of an international brand name, it's not easy to get the best globally as your top management. It takes time and it takes a lot of nurturing.
• There is one thing that constantly determines success. Some call it leadership. But, to my mind, it is the single-minded pursuit of excellence.
• Exercise, be active and not lead a sedentary life. A certain physical activity should be maintained -- walk, skip or jog -- along with a good food diet. That is the only way to de-stress.
• The advantage of building teams focussed on quality is that the teaming culture eventually spreads to the rest of the organisation and teaming becomes a way of life.
• Success requires no explanation and failure permits none. But you need to respect yourself enough so that your self-confidence remains intact whether you succeed or fail.
• Progress is defined by the changing nature of issues that a society considers topical. We have made the transition from concern for just basic literacy to improvement of the quality of education. We need to progress from a compulsion to mass-produce stereotypes to creating independent thinkers and active learners. We have to create the right balance between our diverse subcultures and create an education system that caters to the need of every one of them.
• Most people wait for something to go wrong before they think of change. It is like going to the doctor for a check up only when you are seriously sick or thinking of maintaining your vehicle only when it breaks down.
• We should question the customer. Too often we just follow instructions. If we have a point of view that is different, we should question the customer's instructions and say, "We think what you are asking us to do is wrong; it would be better to do it another way." If we have to fight to make ourselves heard, we should do that because customers won't want product problems to come back three weeks or months or years later.
• We cannot be the best in everything we do. We must define what we are or would like to be best at and what someone else can do better.
• No successful company should be taken for granted. A company to survive in this competitive world should change the rules of the game, be it its business model, technology, delivery model, supply chain that significantly affect the ongoing change of the company.
Sunday, December 14, 2008
Saturday, November 8, 2008
Sunday, October 5, 2008
Good One liners...
[1] Regular naps prevent old age, especially if you take them while driving.
[2] Having one child makes you a parent; having two you are a referee.
[3] Marriage is a relationship in which one person is always right and the other is the husband!
[4] I believe we should all pay our tax with a smile. I tried - but they wanted
cash
[5] A child's greatest period of growth is the month after you've purchased new school uniforms.
[6] Don't feel bad. A lot of people have no talent
[7] Don't marry the person you want to live with, marry the one you cannot live without, but whatever you do, you'll regret it later.
[8] You can't buy love, but you pay heavily for it
[9] Bad officials are elected by good citizens who do not vote.
[10] Laziness is nothing more than the habit of resting before you get tired.
[11] Marriage is give and take. You'd better give it to her or she'll take it anyway.
[12] My wife and I always compromise. I admit I'm wrong and she agrees with me.
[13] Those who can't laugh at themselves leave the job to others.
[14] Ladies first. Pretty ladies sooner.
[15] A successful marriage requires falling in love many times, always with the same person.
[16] You're getting old when you enjoy remembering things more than doing them.
[17] It doesn't matter how often a married man changes his job, he still ends up with the same boss.
[18] Real friends are the ones who survive transitions between address books.
[19] Saving is the best thing. Especially when your parents have done it for you.
[20] Wise men talk because they have something to say; fools talk because they have to say something
[21] They call our language the mother tongue because the father seldom gets to speak!
[2] Having one child makes you a parent; having two you are a referee.
[3] Marriage is a relationship in which one person is always right and the other is the husband!
[4] I believe we should all pay our tax with a smile. I tried - but they wanted
cash
[5] A child's greatest period of growth is the month after you've purchased new school uniforms.
[6] Don't feel bad. A lot of people have no talent
[7] Don't marry the person you want to live with, marry the one you cannot live without, but whatever you do, you'll regret it later.
[8] You can't buy love, but you pay heavily for it
[9] Bad officials are elected by good citizens who do not vote.
[10] Laziness is nothing more than the habit of resting before you get tired.
[11] Marriage is give and take. You'd better give it to her or she'll take it anyway.
[12] My wife and I always compromise. I admit I'm wrong and she agrees with me.
[13] Those who can't laugh at themselves leave the job to others.
[14] Ladies first. Pretty ladies sooner.
[15] A successful marriage requires falling in love many times, always with the same person.
[16] You're getting old when you enjoy remembering things more than doing them.
[17] It doesn't matter how often a married man changes his job, he still ends up with the same boss.
[18] Real friends are the ones who survive transitions between address books.
[19] Saving is the best thing. Especially when your parents have done it for you.
[20] Wise men talk because they have something to say; fools talk because they have to say something
[21] They call our language the mother tongue because the father seldom gets to speak!
Saturday, October 4, 2008
A Leader Should Know How to Manage Failure (Former President of India APJ Abdul Kalam at Wharton India Economic forum, Philadelphia, March 22, 2008)
Question: Could you give an example, from your own experience, of how leaders should manage failure?
Kalam: Let me tell you about my experience. In 1973 I became the project director of India's satellite launch vehicle program, commonly called the SLV-3. Our goal was to put India's "Rohini" satellite into orbit by 1980. I was given funds and human resources -- but was told clearly that by 1980 we had to launch the satellite into space. Thousands of people worked together in scientific and technical teams towards that goal.
By 1979 -- I think the month was August -- we thought we were ready. As the project director, I went to the control center for the launch. At four minutes before the satellite launch, the computer began to go through the checklist of items that needed to be checked. One minute later, the computer program put the launch on hold; the display showed that some control components were not in order. My experts -- I had four or five of them with me -- told me not to worry; they had done their calculations and there was enough reserve fuel. So I bypassed the computer, switched to manual mode, and launched the rocket. In the first stage, everything worked fine. In the second stage, a problem developed. Instead of the satellite going into orbit, the whole rocket system plunged into the Bay of Bengal.
It was a big failure.
That day, the chairman of the Indian Space Research Organization, Prof.Satish Dhawan, had called a press conference. The launch was at 7:00 am, and the press conference -- where journalists from around the world were present -- was at 7:45 am at ISRO's satellite launch range in Sriharikota [in Andhra Pradesh in southern India]. Prof. Dhawan, the leader of the organization, conducted the press conference himself. He took responsibility for the failure -- he said that the team had worked very hard, but that it needed more technological support. He assured the media that in another year, the team would definitely succeed. Now, I was the project director, and it was my failure, but instead, he took responsibility for the failure as chairman of the organization.
The next year, in July 1980, we tried again to launch the satellite -- and this time we succeeded. The whole nation was jubilant. Again, there was a press conference. Prof. Dhawan called me aside and told me, "You conduct the press conference today."
I learned a very important lesson that day. When failure occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience.
Kalam: Let me tell you about my experience. In 1973 I became the project director of India's satellite launch vehicle program, commonly called the SLV-3. Our goal was to put India's "Rohini" satellite into orbit by 1980. I was given funds and human resources -- but was told clearly that by 1980 we had to launch the satellite into space. Thousands of people worked together in scientific and technical teams towards that goal.
By 1979 -- I think the month was August -- we thought we were ready. As the project director, I went to the control center for the launch. At four minutes before the satellite launch, the computer began to go through the checklist of items that needed to be checked. One minute later, the computer program put the launch on hold; the display showed that some control components were not in order. My experts -- I had four or five of them with me -- told me not to worry; they had done their calculations and there was enough reserve fuel. So I bypassed the computer, switched to manual mode, and launched the rocket. In the first stage, everything worked fine. In the second stage, a problem developed. Instead of the satellite going into orbit, the whole rocket system plunged into the Bay of Bengal.
It was a big failure.
That day, the chairman of the Indian Space Research Organization, Prof.Satish Dhawan, had called a press conference. The launch was at 7:00 am, and the press conference -- where journalists from around the world were present -- was at 7:45 am at ISRO's satellite launch range in Sriharikota [in Andhra Pradesh in southern India]. Prof. Dhawan, the leader of the organization, conducted the press conference himself. He took responsibility for the failure -- he said that the team had worked very hard, but that it needed more technological support. He assured the media that in another year, the team would definitely succeed. Now, I was the project director, and it was my failure, but instead, he took responsibility for the failure as chairman of the organization.
The next year, in July 1980, we tried again to launch the satellite -- and this time we succeeded. The whole nation was jubilant. Again, there was a press conference. Prof. Dhawan called me aside and told me, "You conduct the press conference today."
I learned a very important lesson that day. When failure occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience.
Things That Money Can't Buy
1. Family and friends
The greenbacks won't bring you any closer to your family if you are far too busy earning them. Nor will they guarantee your family understands you at all. (Mummy's cooking is a sub-group in this 'things you can't buy anywhere' list.)
There are exceptions to this. You might just pay off irritating in-laws to stay out of your hair, or order a hit on them. But in the normal course...
With friends, it works the same way, only more so. If your wealth draws them, they aren't real. If they don't stay, or your life has no place for them, you are on your own. With real friends, you've almost got it made.
2. Home
Get married, start a family, have kids. Will they grow up into fine people? Have you got the hang of father/motherhood? Is your home really your castle, a cocoon of comfort? Or is it just a house with people in it? The card really stops here.
3. Happiness
Alright, cliched, but it gets truer as the years pass. There is always something missing whether you are on the beach at Algarve or adding the newest antique wood furniture to your collection. If you can't get at the root of it, everything you can get is merely a narcotic.
4. Peace
Here is the big one, ever since they started asking smart questions to beauty contestants. The small peace is inside your head and that is elusive enough to come by, for which you have antacids and Ketorol, which only push it away for another day. Also think world peace and other big matters. What if they nuke the city? Kidding.
5. Immortality
If you can make it for three decades on top of the Forbes list, that is a measure of fame. But to be truly immortal requires other things, other ways of striving. Ever wondered how some dirt-poor hardscrabble guys have instant recall value centuries afterwards? And literal immortality is yet several pages farther in human civilisation's sci-fi book. Best you can do is get a ticket on Sir Richard Branson's space taxi.
6. Respect
You can smirk at the poor ants down below on the street, but they will pull faces behind your back if you are the sort who is perpetually asking for it. Dignity is the most fragile of public possessions. And God help you if they know about the skeletons in your closet or that you were called Stinky as a kid. This is one asset you really need to work on all the time to earn...
7. Talent
Another cliched, misused, misunderstood word, like creativity, and maybe no one knows what it is anymore, but you are either born with it or not. No way you can get a bill of sale on this one. What you do with it is of course your business. History has been very frequently marked with astonishing examples of creativity outdoing... well, money and everything else. Possibly the best example is Lenoardo da Vinci and a certain portrait of a woman. He took 16 years to paint it, did not bother to name it, packed it with himself wherever he travelled in Europe, refused to sell it to kings and counts. It was ultimately sold by his assistant after he died. Someone down the line decided to call it the Mona Lisa [Images].
At the other end of the example is Vincent Van Gogh. All that talent and he sold just one painting of the nearly thousand he made, struggling with poverty all along. Didn't make a difference either way: in 1990, his Portrait of Dr Gachet went under the hammer for a current equivalent of $ 136.1 million, making it the fourth most expensive painting ever sold.
8. Health
Sure healthcare costs being the way they are, you need all the money you can lay your hands on when it comes to facing the bills and pills and the doctor scaring you with a dozen different possible diseases you have never heard about. But, viewed sanely, a good efficient treatment is not that much of a substitute for a good healthy life. Isn't it better not to need healthcare in the first place?
9. Love
It matters, that little empty feeling when you are sitting with a Sauvignon Blanc (for choice) on your balcony on a Saturday evening and twenty sober thoughts in your head, and no one to tell them to. That feeling of intense loneliness can neither be bought off, papered over or told to keep quiet and leave the room. Someone says, "Money can't buy love, but with all the other things it can, I'll give love a miss." Your call. You still have the Sauvignon Blanc...
10. Character
In case it matters. It is a sneaky creature, goes by other strange names like virtue and righteousness and at one time, if we remember reading correctly, a certain generation used to call it "true wealth". We don't really know whether it is around in these times but if you are looking to have it, it has to come from within. Or some such thing...
11. Vision and mission of your life
The old age by W W Ziege goes like this: 'Nothing can stop the man with the right mental attitude and nothing on earth can help the man with wrong mental attitude'.
Without vision and mission you are like a jet without a flight plan or maybe a brain surgeon operating with a blindfold on. Lasting self mastery and excellence will only come about when you set precise goals and have a clear vision and mission plan in place.
Clear goals are foundation of success and if you do not set clear cut goals then it would be like a ship moving through deep seas without a course. And alas these are not a commodity which can be bought!
12. Networking and building nurtured relationships
You are the centre of your own universe. Where your universe intersects or overlaps someone else's, your lines cross that person's universe. If you could draw a map of the entire universe, you'd have a mesh or a web. Staying in touch and focusing on action is not only important for our evolution but is also a vital need to meet the larger challenges facing us today.
When we join hands with other people and share our dreams, aspirations, concerns and dreams not only do we find inner strength in this kinship but also practical help and ideas to carry out joint initiatives effectively. Remember, together each achieves more.
This is something that has to be cultivated and is not something that can be bought overhand.
13. Values
The highest good in human beings is their own self. This is the love, awareness and bliss of our inner most divine being. Everything worthwhile in life is an expression of this divinity. All that we value is the hidden quest for this divine source: Jack Welch in his book Winning.
Everything we do is based consciously or unconsciously on our values, attitudes and or conceptions of what is good and desirable. They are our inherent notions of what ought to be. Thus values are set of behaviours: specific, nitty-gritty and so descriptive they leave little to imagination.
People must be able to use them as marching orders because they are the how of the mission, the means to the end: Winning. And if u guessed it right folks values is not something which you can buy but what is nurtured by your traditional roots.
14. Personal development
There goes an old age saying: 'A little bit of something is better than plenty of nothing'.
The challenge is to use your energy to cut through and go beyond all your fears, your weaknesses, your insecurities and doubts and bring about a change in your lives. Making things happen and anything thought of and considered useful must finally be converted into inspired action.
Aptly put by a Chinese thinker: 'Even a journey of a thousand miles begins with one logical step' and that is development of self.
Everyone aims at self development and this is something which, again, cannot be bought. One has to build personal development as a way of life by organising the day effectively, identify transferable skills and personal competence and improve the overall quality of working.
15. Genius
It's like tooth extraction of a cavity-filled tooth. As a dentist removes the cavity-filled tooth you must get rid of your weaknesses and focus on your strengths and bring out the genius in you by realising what is your liking and your passion.
Genius in you is built by keeping a focus and bringing about daily improvements thus striving to build a genius through sustained efforts.
16. Mentor and guide
Mentoring is a relationship between openness, freedom and confidence. It is a protected relationship in which learning and experimentation can occur, potential skills can be developed, and in which results can be measured in terms of competencies gained.
Mentoring comes in by developing a special relationship which is based on mutual trust and dependence for learning and growing to upgrade your knowledge and skills.
17. Team spirit
'See the world for yourself. Have faith in the way things are. Love the world as yourself, then you can care for all things': Tao Te Ching.
Existence is one whole symphony of working together joyfully similar to thousands of species of plant and animals found in a rain forest. Team spirit brings about a sense of belonging and helps us realise the truth that each achieves more.
This spirit has to be developed with mutual benefits to all and incorporates a deeper understanding, a sense of commitment and compatibility by dissolving ego and individual differences. Rabindranath Tagore rightly said: 'There is no such thing as absolute isolation in existence and the only way of attaining truth is through interpenetrating our being into all our objects.'
All this cannot be bought but developed and nurtured through constant interactions. Guides / gurus cannot be bought by money. You need to find a friend, a philosopher and guide with whom you can develop an understanding for future guidance for help in your career, your profession. You cannot force anybody to become your mentor but develop a mutual trust and understanding over time.
18. Humility
The state of being humble .Getting rid of the feeling of pride, ego and being self obsessed. Let others also express themselves. Do not try to superimpose our views on others every time. One has to cultivate humility and, I bet, money cannot buy humility.
19. Developing efficiency
Follow the POLCA mantra: Planning, organising, leading, controlling and taking action. All this cannot be bought with money but it's a discipline in one's life which has to be incorporated in to become efficient and successful.
20. Adaptability and acceptability
Changed conditions induce an almost indefinite amount of fluctuating variability, by which the whole organisation is rendered in some degree of plastic: Charles Darwin. Hence it's your capacity to react and adjust to new and changing situations that will help you achieve your aims. The innate nature of human adaptability can be seen in the way infants adjust physically, socially and emotionally to their new world from the time they are born.
Constant reinforcements of our adaptability to differing situations make it a habit and frame an acceptable behaviour towards the society. This is something that comes naturally and money cannot buy.
The greenbacks won't bring you any closer to your family if you are far too busy earning them. Nor will they guarantee your family understands you at all. (Mummy's cooking is a sub-group in this 'things you can't buy anywhere' list.)
There are exceptions to this. You might just pay off irritating in-laws to stay out of your hair, or order a hit on them. But in the normal course...
With friends, it works the same way, only more so. If your wealth draws them, they aren't real. If they don't stay, or your life has no place for them, you are on your own. With real friends, you've almost got it made.
2. Home
Get married, start a family, have kids. Will they grow up into fine people? Have you got the hang of father/motherhood? Is your home really your castle, a cocoon of comfort? Or is it just a house with people in it? The card really stops here.
3. Happiness
Alright, cliched, but it gets truer as the years pass. There is always something missing whether you are on the beach at Algarve or adding the newest antique wood furniture to your collection. If you can't get at the root of it, everything you can get is merely a narcotic.
4. Peace
Here is the big one, ever since they started asking smart questions to beauty contestants. The small peace is inside your head and that is elusive enough to come by, for which you have antacids and Ketorol, which only push it away for another day. Also think world peace and other big matters. What if they nuke the city? Kidding.
5. Immortality
If you can make it for three decades on top of the Forbes list, that is a measure of fame. But to be truly immortal requires other things, other ways of striving. Ever wondered how some dirt-poor hardscrabble guys have instant recall value centuries afterwards? And literal immortality is yet several pages farther in human civilisation's sci-fi book. Best you can do is get a ticket on Sir Richard Branson's space taxi.
6. Respect
You can smirk at the poor ants down below on the street, but they will pull faces behind your back if you are the sort who is perpetually asking for it. Dignity is the most fragile of public possessions. And God help you if they know about the skeletons in your closet or that you were called Stinky as a kid. This is one asset you really need to work on all the time to earn...
7. Talent
Another cliched, misused, misunderstood word, like creativity, and maybe no one knows what it is anymore, but you are either born with it or not. No way you can get a bill of sale on this one. What you do with it is of course your business. History has been very frequently marked with astonishing examples of creativity outdoing... well, money and everything else. Possibly the best example is Lenoardo da Vinci and a certain portrait of a woman. He took 16 years to paint it, did not bother to name it, packed it with himself wherever he travelled in Europe, refused to sell it to kings and counts. It was ultimately sold by his assistant after he died. Someone down the line decided to call it the Mona Lisa [Images].
At the other end of the example is Vincent Van Gogh. All that talent and he sold just one painting of the nearly thousand he made, struggling with poverty all along. Didn't make a difference either way: in 1990, his Portrait of Dr Gachet went under the hammer for a current equivalent of $ 136.1 million, making it the fourth most expensive painting ever sold.
8. Health
Sure healthcare costs being the way they are, you need all the money you can lay your hands on when it comes to facing the bills and pills and the doctor scaring you with a dozen different possible diseases you have never heard about. But, viewed sanely, a good efficient treatment is not that much of a substitute for a good healthy life. Isn't it better not to need healthcare in the first place?
9. Love
It matters, that little empty feeling when you are sitting with a Sauvignon Blanc (for choice) on your balcony on a Saturday evening and twenty sober thoughts in your head, and no one to tell them to. That feeling of intense loneliness can neither be bought off, papered over or told to keep quiet and leave the room. Someone says, "Money can't buy love, but with all the other things it can, I'll give love a miss." Your call. You still have the Sauvignon Blanc...
10. Character
In case it matters. It is a sneaky creature, goes by other strange names like virtue and righteousness and at one time, if we remember reading correctly, a certain generation used to call it "true wealth". We don't really know whether it is around in these times but if you are looking to have it, it has to come from within. Or some such thing...
11. Vision and mission of your life
The old age by W W Ziege goes like this: 'Nothing can stop the man with the right mental attitude and nothing on earth can help the man with wrong mental attitude'.
Without vision and mission you are like a jet without a flight plan or maybe a brain surgeon operating with a blindfold on. Lasting self mastery and excellence will only come about when you set precise goals and have a clear vision and mission plan in place.
Clear goals are foundation of success and if you do not set clear cut goals then it would be like a ship moving through deep seas without a course. And alas these are not a commodity which can be bought!
12. Networking and building nurtured relationships
You are the centre of your own universe. Where your universe intersects or overlaps someone else's, your lines cross that person's universe. If you could draw a map of the entire universe, you'd have a mesh or a web. Staying in touch and focusing on action is not only important for our evolution but is also a vital need to meet the larger challenges facing us today.
When we join hands with other people and share our dreams, aspirations, concerns and dreams not only do we find inner strength in this kinship but also practical help and ideas to carry out joint initiatives effectively. Remember, together each achieves more.
This is something that has to be cultivated and is not something that can be bought overhand.
13. Values
The highest good in human beings is their own self. This is the love, awareness and bliss of our inner most divine being. Everything worthwhile in life is an expression of this divinity. All that we value is the hidden quest for this divine source: Jack Welch in his book Winning.
Everything we do is based consciously or unconsciously on our values, attitudes and or conceptions of what is good and desirable. They are our inherent notions of what ought to be. Thus values are set of behaviours: specific, nitty-gritty and so descriptive they leave little to imagination.
People must be able to use them as marching orders because they are the how of the mission, the means to the end: Winning. And if u guessed it right folks values is not something which you can buy but what is nurtured by your traditional roots.
14. Personal development
There goes an old age saying: 'A little bit of something is better than plenty of nothing'.
The challenge is to use your energy to cut through and go beyond all your fears, your weaknesses, your insecurities and doubts and bring about a change in your lives. Making things happen and anything thought of and considered useful must finally be converted into inspired action.
Aptly put by a Chinese thinker: 'Even a journey of a thousand miles begins with one logical step' and that is development of self.
Everyone aims at self development and this is something which, again, cannot be bought. One has to build personal development as a way of life by organising the day effectively, identify transferable skills and personal competence and improve the overall quality of working.
15. Genius
It's like tooth extraction of a cavity-filled tooth. As a dentist removes the cavity-filled tooth you must get rid of your weaknesses and focus on your strengths and bring out the genius in you by realising what is your liking and your passion.
Genius in you is built by keeping a focus and bringing about daily improvements thus striving to build a genius through sustained efforts.
16. Mentor and guide
Mentoring is a relationship between openness, freedom and confidence. It is a protected relationship in which learning and experimentation can occur, potential skills can be developed, and in which results can be measured in terms of competencies gained.
Mentoring comes in by developing a special relationship which is based on mutual trust and dependence for learning and growing to upgrade your knowledge and skills.
17. Team spirit
'See the world for yourself. Have faith in the way things are. Love the world as yourself, then you can care for all things': Tao Te Ching.
Existence is one whole symphony of working together joyfully similar to thousands of species of plant and animals found in a rain forest. Team spirit brings about a sense of belonging and helps us realise the truth that each achieves more.
This spirit has to be developed with mutual benefits to all and incorporates a deeper understanding, a sense of commitment and compatibility by dissolving ego and individual differences. Rabindranath Tagore rightly said: 'There is no such thing as absolute isolation in existence and the only way of attaining truth is through interpenetrating our being into all our objects.'
All this cannot be bought but developed and nurtured through constant interactions. Guides / gurus cannot be bought by money. You need to find a friend, a philosopher and guide with whom you can develop an understanding for future guidance for help in your career, your profession. You cannot force anybody to become your mentor but develop a mutual trust and understanding over time.
18. Humility
The state of being humble .Getting rid of the feeling of pride, ego and being self obsessed. Let others also express themselves. Do not try to superimpose our views on others every time. One has to cultivate humility and, I bet, money cannot buy humility.
19. Developing efficiency
Follow the POLCA mantra: Planning, organising, leading, controlling and taking action. All this cannot be bought with money but it's a discipline in one's life which has to be incorporated in to become efficient and successful.
20. Adaptability and acceptability
Changed conditions induce an almost indefinite amount of fluctuating variability, by which the whole organisation is rendered in some degree of plastic: Charles Darwin. Hence it's your capacity to react and adjust to new and changing situations that will help you achieve your aims. The innate nature of human adaptability can be seen in the way infants adjust physically, socially and emotionally to their new world from the time they are born.
Constant reinforcements of our adaptability to differing situations make it a habit and frame an acceptable behaviour towards the society. This is something that comes naturally and money cannot buy.
Friday, September 26, 2008
Peter Drucker's mantras for success
# Efficiency is doing better what is already being done.
# The productivity of work is not the responsibility of the worker but of the manager.
# Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.
# No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organised in such a way as to be able to get along under a leadership composed of average human beings.
# The most important thing in communication is to hear what isn't being said.
# Rank does not confer privilege or give power. It imposes responsibility.
# Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.
# All one has to do is to learn to say 'no' if an activity contributes nothing.
# What is the first duty -- and the continuing responsibility -- of the business manager? To strive for the best possible economic results from the resources currently employed or available.
# People do not know that you cannot successfully innovate in an existing organisation unless you systematically abandon. As long as you eliminate, you'll eat again. But if you stop eliminating, you don't last long.
# Leaders shouldn't attach moral significance to their ideas: Do that, and you can't compromise.
# The only things that evolve by themselves in an organisation are disorder, friction, and malperformance.
# One cannot buy, rent or hire more time. The supply of time is totally inelastic. No matter how high the demand, the supply will not go up. There is no price for it. Time is totally perishable and cannot be stored. Yesterday's time is gone forever, and will never come back. Time is always in short supply. There is no substitute for time. Everything requires time. All work takes place in, and uses up time. Yet most people take for granted this unique, irreplaceable and necessary resource.
# The really important things are said over cocktails and are never done.
# Doing the right thing is more important than doing the thing right.
# Concentration is the key to economic results. No other principles of effectiveness is violated as constantly today as the basic principle of concentration.
# Long range planning does not deal with future decisions, but with the future of present decisions.
# Leadership is not magnetic personality -- that can just as well be a glib tongue. It is not 'making friends and influencing people' -- that is flattery. Leadership is lifting a person's vision to high sights, the raising of a person's performance to a higher standard, the building of a personality beyond its normal limitations.
# What gets measured, gets managed.
# No decision has been made unless carrying it out in specific steps has become someone's work assignment and responsibility.
# Whenever you see a successful business, someone once made a courageous decision.
# Meetings are a symptom of bad organisation. The fewer meetings the better.
# The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
# Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you've got.
# Objectives are not fate; they are direction. They are not commands; they are commitments. They do not determine the future; they are means to mobilise the resources and energies of the business for the making of the future.
# Any organisation develops people: It has no choice. It either helps them grow or stunts them.
# Don't take on things you don't believe in and that you yourself are not good at. Learn to say no.
# If you can't establish clear career priorities by yourself, use friends and business acquaintances as a sounding board. They will want to help. Ask them to help you determine your 'first things' and 'second things.' Or seek an outside coach or advisor to help you focus. Because if you don't know what your 'first things' are, you simply can't do them FIRST.
# Teaching is the only major occupation of man for which we have not yet developed tools that make an average person capable of competence and performance. In teaching we rely on the naturals', the ones who somehow know how to teach.
# Don't travel too much. Organise your travel. It is important that you see people and that you are seen by people maybe once or twice a year. Otherwise, don't travel. Make them come to see you.
# The leaders who work most effectively, it seems to me, never say 'I'. And that's not because they have trained themselves not to say 'I'. They don't think 'I'. They think 'we'; they think 'team'. They understand their job to be to make the team function. They accept responsibility and don't sidestep it, but 'we' gets the credit... This is what creates trust, what enables you to get the task done.
# Too many leaders try to do a little bit of 25 things and get nothing done. They are very popular because they always say yes. But they get nothing done.
# Efficiency is doing things right; effectiveness is doing the right things.
# The purpose of business is to create and keep a customer.
# Again, let's start out discussing what not to do. Don't try to be somebody else. By now you have your style. This is how you get things done.
# Leaders communicate in the sense that people around them know what they are trying to do. They are purpose driven -- yes, mission driven. They know how to establish a mission.
# I tell all my clients that it is absolutely imperative that they spend a few weeks each year outside their own business and actively working in the marketplace, or in a university lab in the case of technical people. The best way is for the chief executive officer to take the place of a salesman twice a year for two weeks.
# Few top executives can even imagine the hatred, contempt and fury that has been created -- not primarily among blue-collar workers who never had an exalted opinion of the 'bosses' -- but among their middle management and professional people.
# When you are the chief executive, you're the prisoner of your organisation. The moment you're in the office, everybody comes to you and wants something, and it is useless to lock the door. They'll break in. So, you have to get outside the office. But still, that isn't travelling. That's being at home or having a secret office elsewhere. When you're alone, in your secret office, ask the question, 'What needs to be done?' Develop your priorities and don't have more than two. I don't know anybody who can do three things at the same time and do them well. Do one task at a time or two tasks at a time. That's it. OK, two works better for most. Most people need the change of pace. But, when you are finished with two jobs or reach the point where it's futile, make the list again. Don't go back to priority three. At that point, it's obsolete.
# We suffer from over-choice: 67 varieties of toothpaste, 487 styles of shoes, 186 brands of cell phones with 137 telephone companies. We demand more variety than we could possibly need or want; and as a result, we get lost in options, opportunities, and choices. There are 87 varieties of lawyers, and 75 specialties inside medicine. The world of work can be a confusing landscape.
# That people even in well paid jobs choose ever earlier retirement is a severe indictment of our organisations -- not just business, but government service, the universities. These people don't find their jobs interesting.
# A critical question for leaders is: 'When do you stop pouring resources into things that have achieved their purpose?'
# Morale in an organisation does not mean that 'people get along together'; the test is performance not conformance.
# An employer has no business with a man's personality. Employment is a specific contract calling for a specific performance... Any attempt to go beyond that is usurpation. It is immoral as well as an illegal intrusion of privacy. It is abuse of power. An employee owes no 'loyalty,' he owes no 'love' and no 'attitudes' -- he owes performance and nothing else.
# Ideas are somewhat like babies -- they are born small, immature, and shapeless. They are promise rather than fulfillment. In the innovative company, executives do not say, 'This is a damn-fool idea.' Instead they ask, 'What would be needed to make this embryonic, half-baked, foolish idea into something that makes sense, that is an opportunity for us?'
# Innovation is the specific instrument of entrepreneurship... the act that endows resources with a new capacity to create wealth.
# Once a year ask the boss, 'What do I or my people do that helps you to do your job?' and 'What do I or my people do that hampers you?'
# Great leaders find out whether they picked the truly important things to do. I've seen a great many people who are exceedingly good at execution, but exceedingly poor at picking the important things. They are magnificent at getting the unimportant things done. They have an impressive record of achievement on trivial matters.
# How does one display integrity? 'By asking, especially when taking on office: What is the foremost need of the institution and therefore my first task and duty?'
# Ask yourself: What major change in the economy, market or knowledge would enable our company to conduct business the way we really would like to do it, the way we would really obtain economic results?
# Ask yourself: What would happen if this were not done at all?
# So much of what we call management consists in making it difficult for people to work.
# The subordinate's job is not to reform or re-educate the boss, not to make him conform to what the business schools or the management book say bosses should be like. It is to enable a particular boss to perform as a unique individual.
# Effective leaders check their performance. They write down, �What do I hope to achieve if I take on this assignment?' They put away their goals for six months and then come back and check their performance against goals. This way, they find out what they do well and what they do poorly.
# The individual is the central, rarest, most precious capital resource of our society.
# The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product.
# The computer is a moron.
# Successful leaders make sure that they succeed! They are not afraid of strength in others.
# The CEO needs to ask of his associates, 'What are you focusing on?' Ask your associates, 'You put this on top of your priority list -- why?' The reason may be the right one, but it may also be that this associate of yours is a salesman who persuades you that his priorities are correct when they are not.
# Free enterprise cannot be justified as being good for business. It can be justified only as being good for society.
# Executives owe it to the organisation and to their fellow workers not to tolerate nonperforming individuals in important jobs.
# A manager is responsible for the application and performance of knowledge.
# Accept the fact that we have to treat almost anybody as a volunteer.
# Business, that's easily defined -- it's other people's money.
# Few companies that installed computers to reduce the employment of clerks have realised their expectations... They now need more and more expensive clerks even though they call them 'operators' or 'programmers.'
# What's absolutely unforgivable is the financial benefit top management people get for laying off people. There is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it.
# Management is doing things right; leadership is doing the right things.
# A man should never be appointed into a managerial position if his vision focuses on people's weaknesses rather than on their strengths.
# Start with what is right rather than what is acceptable.
# Performing organisations enjoy what they're doing.
# The productivity of work is not the responsibility of the worker but of the manager.
# Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.
# No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organised in such a way as to be able to get along under a leadership composed of average human beings.
# The most important thing in communication is to hear what isn't being said.
# Rank does not confer privilege or give power. It imposes responsibility.
# Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.
# All one has to do is to learn to say 'no' if an activity contributes nothing.
# What is the first duty -- and the continuing responsibility -- of the business manager? To strive for the best possible economic results from the resources currently employed or available.
# People do not know that you cannot successfully innovate in an existing organisation unless you systematically abandon. As long as you eliminate, you'll eat again. But if you stop eliminating, you don't last long.
# Leaders shouldn't attach moral significance to their ideas: Do that, and you can't compromise.
# The only things that evolve by themselves in an organisation are disorder, friction, and malperformance.
# One cannot buy, rent or hire more time. The supply of time is totally inelastic. No matter how high the demand, the supply will not go up. There is no price for it. Time is totally perishable and cannot be stored. Yesterday's time is gone forever, and will never come back. Time is always in short supply. There is no substitute for time. Everything requires time. All work takes place in, and uses up time. Yet most people take for granted this unique, irreplaceable and necessary resource.
# The really important things are said over cocktails and are never done.
# Doing the right thing is more important than doing the thing right.
# Concentration is the key to economic results. No other principles of effectiveness is violated as constantly today as the basic principle of concentration.
# Long range planning does not deal with future decisions, but with the future of present decisions.
# Leadership is not magnetic personality -- that can just as well be a glib tongue. It is not 'making friends and influencing people' -- that is flattery. Leadership is lifting a person's vision to high sights, the raising of a person's performance to a higher standard, the building of a personality beyond its normal limitations.
# What gets measured, gets managed.
# No decision has been made unless carrying it out in specific steps has become someone's work assignment and responsibility.
# Whenever you see a successful business, someone once made a courageous decision.
# Meetings are a symptom of bad organisation. The fewer meetings the better.
# The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
# Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you've got.
# Objectives are not fate; they are direction. They are not commands; they are commitments. They do not determine the future; they are means to mobilise the resources and energies of the business for the making of the future.
# Any organisation develops people: It has no choice. It either helps them grow or stunts them.
# Don't take on things you don't believe in and that you yourself are not good at. Learn to say no.
# If you can't establish clear career priorities by yourself, use friends and business acquaintances as a sounding board. They will want to help. Ask them to help you determine your 'first things' and 'second things.' Or seek an outside coach or advisor to help you focus. Because if you don't know what your 'first things' are, you simply can't do them FIRST.
# Teaching is the only major occupation of man for which we have not yet developed tools that make an average person capable of competence and performance. In teaching we rely on the naturals', the ones who somehow know how to teach.
# Don't travel too much. Organise your travel. It is important that you see people and that you are seen by people maybe once or twice a year. Otherwise, don't travel. Make them come to see you.
# The leaders who work most effectively, it seems to me, never say 'I'. And that's not because they have trained themselves not to say 'I'. They don't think 'I'. They think 'we'; they think 'team'. They understand their job to be to make the team function. They accept responsibility and don't sidestep it, but 'we' gets the credit... This is what creates trust, what enables you to get the task done.
# Too many leaders try to do a little bit of 25 things and get nothing done. They are very popular because they always say yes. But they get nothing done.
# Efficiency is doing things right; effectiveness is doing the right things.
# The purpose of business is to create and keep a customer.
# Again, let's start out discussing what not to do. Don't try to be somebody else. By now you have your style. This is how you get things done.
# Leaders communicate in the sense that people around them know what they are trying to do. They are purpose driven -- yes, mission driven. They know how to establish a mission.
# I tell all my clients that it is absolutely imperative that they spend a few weeks each year outside their own business and actively working in the marketplace, or in a university lab in the case of technical people. The best way is for the chief executive officer to take the place of a salesman twice a year for two weeks.
# Few top executives can even imagine the hatred, contempt and fury that has been created -- not primarily among blue-collar workers who never had an exalted opinion of the 'bosses' -- but among their middle management and professional people.
# When you are the chief executive, you're the prisoner of your organisation. The moment you're in the office, everybody comes to you and wants something, and it is useless to lock the door. They'll break in. So, you have to get outside the office. But still, that isn't travelling. That's being at home or having a secret office elsewhere. When you're alone, in your secret office, ask the question, 'What needs to be done?' Develop your priorities and don't have more than two. I don't know anybody who can do three things at the same time and do them well. Do one task at a time or two tasks at a time. That's it. OK, two works better for most. Most people need the change of pace. But, when you are finished with two jobs or reach the point where it's futile, make the list again. Don't go back to priority three. At that point, it's obsolete.
# We suffer from over-choice: 67 varieties of toothpaste, 487 styles of shoes, 186 brands of cell phones with 137 telephone companies. We demand more variety than we could possibly need or want; and as a result, we get lost in options, opportunities, and choices. There are 87 varieties of lawyers, and 75 specialties inside medicine. The world of work can be a confusing landscape.
# That people even in well paid jobs choose ever earlier retirement is a severe indictment of our organisations -- not just business, but government service, the universities. These people don't find their jobs interesting.
# A critical question for leaders is: 'When do you stop pouring resources into things that have achieved their purpose?'
# Morale in an organisation does not mean that 'people get along together'; the test is performance not conformance.
# An employer has no business with a man's personality. Employment is a specific contract calling for a specific performance... Any attempt to go beyond that is usurpation. It is immoral as well as an illegal intrusion of privacy. It is abuse of power. An employee owes no 'loyalty,' he owes no 'love' and no 'attitudes' -- he owes performance and nothing else.
# Ideas are somewhat like babies -- they are born small, immature, and shapeless. They are promise rather than fulfillment. In the innovative company, executives do not say, 'This is a damn-fool idea.' Instead they ask, 'What would be needed to make this embryonic, half-baked, foolish idea into something that makes sense, that is an opportunity for us?'
# Innovation is the specific instrument of entrepreneurship... the act that endows resources with a new capacity to create wealth.
# Once a year ask the boss, 'What do I or my people do that helps you to do your job?' and 'What do I or my people do that hampers you?'
# Great leaders find out whether they picked the truly important things to do. I've seen a great many people who are exceedingly good at execution, but exceedingly poor at picking the important things. They are magnificent at getting the unimportant things done. They have an impressive record of achievement on trivial matters.
# How does one display integrity? 'By asking, especially when taking on office: What is the foremost need of the institution and therefore my first task and duty?'
# Ask yourself: What major change in the economy, market or knowledge would enable our company to conduct business the way we really would like to do it, the way we would really obtain economic results?
# Ask yourself: What would happen if this were not done at all?
# So much of what we call management consists in making it difficult for people to work.
# The subordinate's job is not to reform or re-educate the boss, not to make him conform to what the business schools or the management book say bosses should be like. It is to enable a particular boss to perform as a unique individual.
# Effective leaders check their performance. They write down, �What do I hope to achieve if I take on this assignment?' They put away their goals for six months and then come back and check their performance against goals. This way, they find out what they do well and what they do poorly.
# The individual is the central, rarest, most precious capital resource of our society.
# The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product.
# The computer is a moron.
# Successful leaders make sure that they succeed! They are not afraid of strength in others.
# The CEO needs to ask of his associates, 'What are you focusing on?' Ask your associates, 'You put this on top of your priority list -- why?' The reason may be the right one, but it may also be that this associate of yours is a salesman who persuades you that his priorities are correct when they are not.
# Free enterprise cannot be justified as being good for business. It can be justified only as being good for society.
# Executives owe it to the organisation and to their fellow workers not to tolerate nonperforming individuals in important jobs.
# A manager is responsible for the application and performance of knowledge.
# Accept the fact that we have to treat almost anybody as a volunteer.
# Business, that's easily defined -- it's other people's money.
# Few companies that installed computers to reduce the employment of clerks have realised their expectations... They now need more and more expensive clerks even though they call them 'operators' or 'programmers.'
# What's absolutely unforgivable is the financial benefit top management people get for laying off people. There is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it.
# Management is doing things right; leadership is doing the right things.
# A man should never be appointed into a managerial position if his vision focuses on people's weaknesses rather than on their strengths.
# Start with what is right rather than what is acceptable.
# Performing organisations enjoy what they're doing.
What is subprime crisis? How it caused financial mayhem?
The current upheaval in the global financial markets has caused more mayhem in a fortnight than the world has seen in its entire economic history.
Although there are many reasons responsible for bringing the world to the doorstep of financial doom, the main cause of this financial disaster is said to be the �sub-prime loan.'
So what is this sub-prime loan? And why has it caused global panic? If it is related to the American housing sector, why should it affect Indian and other markets?
A sub-prime loan
Sub-prime mortgage loans (or housing loans or junk loans) are very risky. But since profits are high where the risk is high, a lot of lenders get into this business to try and make a quick buck.
Sub-prime loans are dicey as they are given to people with unstable incomes or low creditworthiness. These individuals are not financially sound enough to be given a loan when judged under the strict standards that should normally be followed by a bank or lending institution.
However, there's more to it. Let us simplify this issue to understand better how sub-prime loans work and how they brought the world down to its knees.
It all begins with an American wanting to live the famed American dream.
So he seeks a housing loan to give shape to his dream home. But there is a slight problem. He doesn't have good credit rating. This means that he is unable to clear all the stringent conditions that a bank imposes on an individual before it sanctions a loan.
Since his credit is not good enough, no bank will give him a home loan as there is a fear that the chances of a default by him are high. Banks don't like customers who default on their payments.
But lo!, before the American dream can fade away, there enters a second American -- usually a robust financial institution -- who has good credit rating and is willing to take on some amount of risk.
Given his good credit rating, the bank is willing to give the second American a loan. The bank gives the loan at a certain rate of interest.
The second American then divides this loan into a lot of small portions and gives them out as home loans to lots of other Americans -- like the first American -- who do not have a great credit rating and to whom the bank would not have given a home loan in the first place.
The second American gives out these loans at a rate of interest that is much higher rate than the rate at which he borrowed money from the bank. This higher rate is referred to as the sub-prime rate and this home loan market is referred to as the sub-prime home loan market.
Also by giving out a home loan to lots of individuals, the second American is trying to hedge his bets. He feels that even if a few of his borrowers default, his overall position would not be affected much, and he will end up making a neat profit.
Now if this home loan market is sub-prime, what is prime? The prime home loan market refers to individuals who have good credit ratings and to whom the banks lend directly.
Now let's get back to the sub-prime market. The institution giving out loans in the sub-prime market does not stop here. It does not wait for the principal and the interest on the sub-prime home loans to be repaid, so that it can repay its loan to the bank (the prime lender), which has given it the loan.
So what does the institution do?
It goes ahead and 'securitises' these loans. Securitisation means converting these home loans into financial securities, which promise to pay a certain rate of interest. These financial securities are then sold to big institutional investors.
Many investment banks (or institutions like the 'second American' in our story) sold complicated securities that were backed by debt which was very risky.
And how are these investors repaid? The interest and the principal that is repaid by the sub-prime borrowers through equated monthly installments (EMIs) is passed onto these institutional investors.
The institution giving out the sub-prime loans takes the money that it gets by selling the financial securities and passes it on to the bank he had taken the loan from, thereby repaying the loan. And everybody lives happily ever after. Or so it would have seemed.
The sub-prime home loans were given out as floating rate home loans. A floating rate home loan as the name suggests is not fixed. As interest rates go up, the interest rate on floating rate home loans also go up. As interest rates to be paid on floating rate home loans go up, the EMIs that need to be paid to service these loans go up as well.
With US interest rising, the EMIs too increased. Higher EMIs hit the sub-prime borrowers hard. A lot of them in the first place had unstable incomes and poor credit rating.
They, thus, defaulted. Once more and more sub-prime borrowers started defaulting, payments to the institutional investors who had bought the financial securities stopped, leading to huge losses.
The problem primarily began with the United States keeping its interest rates very low for a very long time, thus encouraging Americans to go in for housing loans, or mortgages. Lower interest rates led to buyers wanting to take on bigger loans, and thus bigger and better homes.
But life was fine. With the American economy doing well at that time and housing prices soaring on the back of huge demand for real estate and bigger and better homes, financial institutions saw a mouthwatering opportunity in the mortgage market.
In their zeal to make a quick buck, these institutions relaxed the strict regulatory procedures before extending housing loans to people with unstable jobs and weak credit standing.
Few controls were put in place to handle the situation in case the housing 'bubble' burst. And when the US economy began to slow down, the house of cards began to fall.
The crisis began with the bursting of the United States housing bubble.
A slowing US economy, high interest rates, unrealistic real estate prices, high inflation and rising oil tags together led to a fall in stock markets, growth stagnation, job losses, lack of consumer spending, a virtual halt to new jobs, and foreclosures and defaults.
Sub-prime homeowners began to default as they could no longer afford to pay their EMIs. A deluge of such defaults inundated these institutions and banks, wiping out their net worth. Their mortgage-backed securities were almost worthless as real estate prices crashed.
The moment it was found out that these institutions had failed to manage the risk, panic spread. Investors realised that they could hardly put any value on the securities that these institutions were selling. This caused many a Wall Street pillar to crumble.
As defaults kept rising, these institutions could not service their loans that they had taken from banks. So they turned to other financial firms to help them out, but after a while these firms too stopped extending credit realizing that the collateral backing this credit would soon lose value in the falling real estate market.
Now burdened with tons of debt and no money to pay it back, the back of these financial entities broke, leading to the current meltdown.
The problem worsened because institutions giving out sub-prime home loans could easily securitise it. Once an institution securitises a loan, it does not remain on the books of the institution.
Hence that institution does not take the risk of the loan going bad. The risk is passed onto the investors who buy the financial securities issued for securitising the home loan.
Another advantage of securitisation, which has now become a disadvantage, is that money keeps coming in.
Once an institution securitises the first lot of home loans and repays the bank it has borrowed from, it can borrow again to give out loans. The bank having been repaid and made its money does not have any inhibitions in lending out money again.
Given the fact that institutions giving out the loan did not take the risk, their incentive was in just giving out the loan. Whether the individual taking the home loan had the capacity to repay the loan or not, wasn't their problem.
Thus proper due diligence to give out the home loan was not done and loans were extended to individuals who are more likely to default.
Other than this, greater the amount of loan that the institution gave out, greater was the amount it could securitise and, hence, greater the amount of money it could earn.
After borrowers started defaulting, it came to light that institutions giving out loans in the sub-prime market had been inflating the incomes of borrowers, so that they could give out greater amount of home loans.
By giving out greater amounts of home loan, they were able to securitise more, issue more financial securities and earn more money. Quite a vicious cycle, eh?
And so the story continued, till the day borrowers stop repaying. Investors who bought the financial securities could be serviced.
Well, that still does not explain, why stock markets in India, fell? Here's why. . .
Institutional investors who had invested in securitised paper from the sub-prime home loan market in the US, saw their investments turning into losses. Most big investors have a certain fixed proportion of their total investments invested in various parts of the world. So...
Once investments in the US turned bad, more money had to be invested in the US, to maintain that fixed proportion.
In order to invest more money in the US, money had to come in from somewhere. To make up their losses in the sub-prime market in the United States, they went out to sell their investments in emerging markets like India where their investments have been doing well.
So these big institutional investors, to make good of their losses in the sub-prime market, began to sell their investments in India and other markets around the world. Since the amount of selling in the market is much higher than the amount of buying, the Sensex began to tumble.
The flight of capital from the Indian markets also led to a fall in the value of the rupee against the US dollar.
Any other reason, apart from sub-prime crisis?
Of course! Sub-prime crisis alone could not have caused such mayhem, although it is to blame for the beginning of the end.
This crisis is spreading from sub-prime to prime mortgages, home equity loans, to commercial real estate, to unsecured consumer credit (credit cards, student loans, auto loans), to leveraged loans that financed reckless debt-laden leveraged buy outs, to municipal bonds, to industrial and commercial loans, to corporate bonds, to the derivative markets whose risk are indeterminate, etc.
It has been a total systemic failure that has its roots in the US real estate and the sub-prime loan market.
Note: Some analysts say that the worst might not be over. . .
Although there are many reasons responsible for bringing the world to the doorstep of financial doom, the main cause of this financial disaster is said to be the �sub-prime loan.'
So what is this sub-prime loan? And why has it caused global panic? If it is related to the American housing sector, why should it affect Indian and other markets?
A sub-prime loan
Sub-prime mortgage loans (or housing loans or junk loans) are very risky. But since profits are high where the risk is high, a lot of lenders get into this business to try and make a quick buck.
Sub-prime loans are dicey as they are given to people with unstable incomes or low creditworthiness. These individuals are not financially sound enough to be given a loan when judged under the strict standards that should normally be followed by a bank or lending institution.
However, there's more to it. Let us simplify this issue to understand better how sub-prime loans work and how they brought the world down to its knees.
It all begins with an American wanting to live the famed American dream.
So he seeks a housing loan to give shape to his dream home. But there is a slight problem. He doesn't have good credit rating. This means that he is unable to clear all the stringent conditions that a bank imposes on an individual before it sanctions a loan.
Since his credit is not good enough, no bank will give him a home loan as there is a fear that the chances of a default by him are high. Banks don't like customers who default on their payments.
But lo!, before the American dream can fade away, there enters a second American -- usually a robust financial institution -- who has good credit rating and is willing to take on some amount of risk.
Given his good credit rating, the bank is willing to give the second American a loan. The bank gives the loan at a certain rate of interest.
The second American then divides this loan into a lot of small portions and gives them out as home loans to lots of other Americans -- like the first American -- who do not have a great credit rating and to whom the bank would not have given a home loan in the first place.
The second American gives out these loans at a rate of interest that is much higher rate than the rate at which he borrowed money from the bank. This higher rate is referred to as the sub-prime rate and this home loan market is referred to as the sub-prime home loan market.
Also by giving out a home loan to lots of individuals, the second American is trying to hedge his bets. He feels that even if a few of his borrowers default, his overall position would not be affected much, and he will end up making a neat profit.
Now if this home loan market is sub-prime, what is prime? The prime home loan market refers to individuals who have good credit ratings and to whom the banks lend directly.
Now let's get back to the sub-prime market. The institution giving out loans in the sub-prime market does not stop here. It does not wait for the principal and the interest on the sub-prime home loans to be repaid, so that it can repay its loan to the bank (the prime lender), which has given it the loan.
So what does the institution do?
It goes ahead and 'securitises' these loans. Securitisation means converting these home loans into financial securities, which promise to pay a certain rate of interest. These financial securities are then sold to big institutional investors.
Many investment banks (or institutions like the 'second American' in our story) sold complicated securities that were backed by debt which was very risky.
And how are these investors repaid? The interest and the principal that is repaid by the sub-prime borrowers through equated monthly installments (EMIs) is passed onto these institutional investors.
The institution giving out the sub-prime loans takes the money that it gets by selling the financial securities and passes it on to the bank he had taken the loan from, thereby repaying the loan. And everybody lives happily ever after. Or so it would have seemed.
The sub-prime home loans were given out as floating rate home loans. A floating rate home loan as the name suggests is not fixed. As interest rates go up, the interest rate on floating rate home loans also go up. As interest rates to be paid on floating rate home loans go up, the EMIs that need to be paid to service these loans go up as well.
With US interest rising, the EMIs too increased. Higher EMIs hit the sub-prime borrowers hard. A lot of them in the first place had unstable incomes and poor credit rating.
They, thus, defaulted. Once more and more sub-prime borrowers started defaulting, payments to the institutional investors who had bought the financial securities stopped, leading to huge losses.
The problem primarily began with the United States keeping its interest rates very low for a very long time, thus encouraging Americans to go in for housing loans, or mortgages. Lower interest rates led to buyers wanting to take on bigger loans, and thus bigger and better homes.
But life was fine. With the American economy doing well at that time and housing prices soaring on the back of huge demand for real estate and bigger and better homes, financial institutions saw a mouthwatering opportunity in the mortgage market.
In their zeal to make a quick buck, these institutions relaxed the strict regulatory procedures before extending housing loans to people with unstable jobs and weak credit standing.
Few controls were put in place to handle the situation in case the housing 'bubble' burst. And when the US economy began to slow down, the house of cards began to fall.
The crisis began with the bursting of the United States housing bubble.
A slowing US economy, high interest rates, unrealistic real estate prices, high inflation and rising oil tags together led to a fall in stock markets, growth stagnation, job losses, lack of consumer spending, a virtual halt to new jobs, and foreclosures and defaults.
Sub-prime homeowners began to default as they could no longer afford to pay their EMIs. A deluge of such defaults inundated these institutions and banks, wiping out their net worth. Their mortgage-backed securities were almost worthless as real estate prices crashed.
The moment it was found out that these institutions had failed to manage the risk, panic spread. Investors realised that they could hardly put any value on the securities that these institutions were selling. This caused many a Wall Street pillar to crumble.
As defaults kept rising, these institutions could not service their loans that they had taken from banks. So they turned to other financial firms to help them out, but after a while these firms too stopped extending credit realizing that the collateral backing this credit would soon lose value in the falling real estate market.
Now burdened with tons of debt and no money to pay it back, the back of these financial entities broke, leading to the current meltdown.
The problem worsened because institutions giving out sub-prime home loans could easily securitise it. Once an institution securitises a loan, it does not remain on the books of the institution.
Hence that institution does not take the risk of the loan going bad. The risk is passed onto the investors who buy the financial securities issued for securitising the home loan.
Another advantage of securitisation, which has now become a disadvantage, is that money keeps coming in.
Once an institution securitises the first lot of home loans and repays the bank it has borrowed from, it can borrow again to give out loans. The bank having been repaid and made its money does not have any inhibitions in lending out money again.
Given the fact that institutions giving out the loan did not take the risk, their incentive was in just giving out the loan. Whether the individual taking the home loan had the capacity to repay the loan or not, wasn't their problem.
Thus proper due diligence to give out the home loan was not done and loans were extended to individuals who are more likely to default.
Other than this, greater the amount of loan that the institution gave out, greater was the amount it could securitise and, hence, greater the amount of money it could earn.
After borrowers started defaulting, it came to light that institutions giving out loans in the sub-prime market had been inflating the incomes of borrowers, so that they could give out greater amount of home loans.
By giving out greater amounts of home loan, they were able to securitise more, issue more financial securities and earn more money. Quite a vicious cycle, eh?
And so the story continued, till the day borrowers stop repaying. Investors who bought the financial securities could be serviced.
Well, that still does not explain, why stock markets in India, fell? Here's why. . .
Institutional investors who had invested in securitised paper from the sub-prime home loan market in the US, saw their investments turning into losses. Most big investors have a certain fixed proportion of their total investments invested in various parts of the world. So...
Once investments in the US turned bad, more money had to be invested in the US, to maintain that fixed proportion.
In order to invest more money in the US, money had to come in from somewhere. To make up their losses in the sub-prime market in the United States, they went out to sell their investments in emerging markets like India where their investments have been doing well.
So these big institutional investors, to make good of their losses in the sub-prime market, began to sell their investments in India and other markets around the world. Since the amount of selling in the market is much higher than the amount of buying, the Sensex began to tumble.
The flight of capital from the Indian markets also led to a fall in the value of the rupee against the US dollar.
Any other reason, apart from sub-prime crisis?
Of course! Sub-prime crisis alone could not have caused such mayhem, although it is to blame for the beginning of the end.
This crisis is spreading from sub-prime to prime mortgages, home equity loans, to commercial real estate, to unsecured consumer credit (credit cards, student loans, auto loans), to leveraged loans that financed reckless debt-laden leveraged buy outs, to municipal bonds, to industrial and commercial loans, to corporate bonds, to the derivative markets whose risk are indeterminate, etc.
It has been a total systemic failure that has its roots in the US real estate and the sub-prime loan market.
Note: Some analysts say that the worst might not be over. . .
Monday, September 15, 2008
WHY EMPLOYEES LEAVE ORGANISATIONS ? - By Azim Premji
Every company faces the problem of people leaving the company for better pay or profile.
Early this year, Mark, a senior software designer, got an offer from a prestigious international firm to work in its India operations developing specialized software. He was thrilled by the offer.
He had heard a lot about the CEO. The salary was great. The company had all the right systems in place employee-friendly human resources (HR) policies, a spanking new office,and the very best technology,even a canteen that served superb food.
Twice Mark was sent abroad for training. "My learning curve is the sharpest it's ever been," he said soon after he joined.
Last week, less than eight months after he joined, Mark walked out of the job.
Why did this talented employee leave ?
Arun quit for the same reason that drives many good people away.
The answer lies in one of the largest studies undertaken by the Gallup Organization. The study surveyed over a million employees and 80,000 managers and was published in a book called "First Break All The Rules". It came up with this surprising finding:
If you're losing good people, look to their immediate boss ..Immediate boss is the reason people stay and thrive in an organization. And he 's the reason why people leave. When people leave they take knowledge,experience and contacts with them, straight to the competition.
"People leave managers not companies," write the authors Marcus Buckingham and Curt Coffman.
Mostly manager drives people away?
HR experts say that of all the abuses, employees find humiliation the most intolerable. The first time, an employee may not leave,but a thought has been planted. The second time, that thought gets strengthened. The third time, he looks for another job.
When people cannot retort openly in anger, they do so by passive aggression. By digging their heels in and slowing down. By doing only what they are told to do and no more. By omitting to give the boss crucial information. Dev says: "If you work for a jerk, you basically want to get him into trouble. You don 't have your heart and soul in the job."
Different managers can stress out employees in different ways - by being too controlling, too suspicious,too pushy, too critical, but they forget that workers are not fixed assets, they are free agents. When this goes on too long, an employee will quit - often over a trivial issue.
Talented men leave. Dead wood doesn't.
Early this year, Mark, a senior software designer, got an offer from a prestigious international firm to work in its India operations developing specialized software. He was thrilled by the offer.
He had heard a lot about the CEO. The salary was great. The company had all the right systems in place employee-friendly human resources (HR) policies, a spanking new office,and the very best technology,even a canteen that served superb food.
Twice Mark was sent abroad for training. "My learning curve is the sharpest it's ever been," he said soon after he joined.
Last week, less than eight months after he joined, Mark walked out of the job.
Why did this talented employee leave ?
Arun quit for the same reason that drives many good people away.
The answer lies in one of the largest studies undertaken by the Gallup Organization. The study surveyed over a million employees and 80,000 managers and was published in a book called "First Break All The Rules". It came up with this surprising finding:
If you're losing good people, look to their immediate boss ..Immediate boss is the reason people stay and thrive in an organization. And he 's the reason why people leave. When people leave they take knowledge,experience and contacts with them, straight to the competition.
"People leave managers not companies," write the authors Marcus Buckingham and Curt Coffman.
Mostly manager drives people away?
HR experts say that of all the abuses, employees find humiliation the most intolerable. The first time, an employee may not leave,but a thought has been planted. The second time, that thought gets strengthened. The third time, he looks for another job.
When people cannot retort openly in anger, they do so by passive aggression. By digging their heels in and slowing down. By doing only what they are told to do and no more. By omitting to give the boss crucial information. Dev says: "If you work for a jerk, you basically want to get him into trouble. You don 't have your heart and soul in the job."
Different managers can stress out employees in different ways - by being too controlling, too suspicious,too pushy, too critical, but they forget that workers are not fixed assets, they are free agents. When this goes on too long, an employee will quit - often over a trivial issue.
Talented men leave. Dead wood doesn't.
Subscribe to:
Posts (Atom)