Risk & Consumer Behaviour

A lot is being written these days about the "global credit crunch". A result of financiers' ability to create complicated financial assets out of consumer debt and trade debt as an asset on the global market. The advantages of doing this were that risky consumer debt instead of lying on banks' books could be sold as a rent providing asset on the global market and would therefore spread the risk across the entire financial food chain.

So what happened? Where did it all go wrong? Well, frankly, if you minimise your risk, what usually happens? You end up taking more and more of it. And this is exactly what happened in the mortgage market. Since the risk of mortgage takers defaulting was supposed to get passed around the world as a rent providing asset, the original mortgage provider had no qualms in offering more and more risky mortgage since it was not going to be on his books anyways. It ended up being an orgy of mortgage being doled out with people with no income proofs being offered loans for houses. The most safe form of lending backed by a person's own dwelling became more risky than the personal loan being offered around. Whats more, it was available at much lower interest rates than personal loans. A crisis which was waiting to happen...

A blog a month...

Have been really indisciplined about writing on the blog. Hopefully should be able to correct it a bit this month. So what all has happened since the last time I wrote here.

Well, India won the T20 world cup, lost a ODI series to Australia, won the solitary T20 against them and the leftists finally lived up to their tag of being the appendix of India. A useless piece of evolutionary history which has lingered well beyond its time, is of no constructive use to the body but boy...what a racket it causes if inflamed!!

Another strange quirk of India's destiny - why do leaders who are basically divisive at heart simply refuse to die - harkishen singh surjeet, VP singh etc etc. These guys just live on and on. The ones who die are the dynamic varieties - Pramod Mahajan, Rajesh Pilot, Madhavrao Scindia..

Another cross the country bears...

How Retailers can survive?

Much has been written and said about how organised retail is not the right way forward for India's retailing community.

For the uninitiated, India has 12 million retail stores with retail providing the second largest number of jobs in the country after agriculture. Organised retail is expected to drive down costs, manage supply chain better, develop economies of scale and therefore would drive out the small retailer.

A lot of what is being said just might happen. But the great bit missing in news headlines is that the small retailer can survive. There is evidence of this in developed markets as well. The small retailer is not being driven out. He is just being moved up the value chain. So instead of selling packed food, he moves upto running a small takeaway. From running a stationery shop, he moves to running a courier/photostate shop. Get the picture?

The consulting business...Job or career

Having worked primarily in operational roles in my career, I shifted to consulting over two years ago. So how are the two different and what are the advantages/disadvantages of each of these two very different role profiles over the other.

Business decisions, and I mean all business decisions, are about developing a method to answer two basic questions

1. What business to do?
2. How to go about doing it?

To my mind, an operational role helps you answer the second question, while a consultant role should ideally help you develop a perspective to answer the first.

A consultant role however, usually keeps you miles away from any execution/implementation of strategy. And god is usually found in those details...

Life in London....

So having completed a whole six months in London today, I feel obliged to write a bit about life in London...A caveat for all those reading is that my views about London are relative. And relative to the quality of life in India.

First thoughts - Its completely unfair for such a tiny nation to possess so much beauty, both natural and man-made, across its landscape. Every building around town is an architectural marvel. For brits reading it, coming from an Indian, believe me when I say that. Every building across London is an architectural marvel. A clear proof of that is that in all snapshots of India which you see on TV, you are shown a few landmarks - the India gate, the Gateway of India, the Parliament, Victoria memorial, The Taj Mahal etc etc. A selection of colonial landmarks shown as India while the dirt is kept away from the cameras. Similar snapshots of London would show you the streets and roads of London along with the customary buildings. And that is the point. The streets and roads of London are as much a landmark of this country as Westminster abbey.

Public services are efficient. The tube staff are helpful, the London bobbies make you feel safe and the system generally makes you feel at ease. Private services in contrast are lousy, restaurant staff are unfriendly, bank staff are always irritable. This is the exact opposite of what you get to see in India. No private corporation looking at starting its Indian operation soon, should carry this English attitude over. The Indian consumer will annihilate you. Are you listening vodafone...

The countryside is really pretty. Its like a natural golf course all over the place. Self maintained and exotic looking. Temperate weather really does produce a lovely picture. Now that brings us to the weather. Its what I call indecisive nature. The weather just can't seem to make up its mind on how it wants the day to be!! Sunny and cloudless in the morning; cloudy, dark and damp in the afternoon and cold in the evening. For God's sake, make up your mind for atleast one whole day!! And during the summers, the sun literally does not set on the British empire - its usually bright and sunny till around 8 in the night

So how are the people here? Well friendly, nice, prim and proper. They are mostly willing to help you out provided helping you does not make things uncomfortable for them. My first experience of something I had heard a lot about but never experienced in person - The classic British stiff upper lip. Its all about being prim and proper...

More about them in the next couple of articles....

Describing India...

Came across a few punchlines which I feel, capture the essence of India -

1. Functional anarchy
2. Chaotic democracy
3. Lumbering elephant
4. 21st century mind, 19th century body

I found "functional anarchy" really interesting...