Big believer in Growth

I'm a big believer in growth. Life is not about achievement, it's about learning and growth, and developing qualities like compassion, patience, perseverance, love, and joy, and so forth. And so if that is the case, then I think our goals should include something which stretches us.

As you begin to take action toward the fulfillment of your goals and dreams, you must realize that not every action will be perfect. Not every action will produce the desired result. Not every action will work. Making mistakes, getting it almost right, and experimenting to see what happens are all part of the process of eventually getting it right.

Jack Canfield

Budgeting and the arrogance of bureaucracy after 2,063 years?

 

“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.”

— Cicero, 55 BC

Helpless India looks on…… and waits for the Home minister’s usual spiel!

Its more of anger and frustration that pushes me to write this post. I am sure that a major part of the country is today looking on with helplessness as we see the terrorist attacks in Mumbai unfold and the death toll goes to 87 with another 185 plus injured.

We will again have our Home Minister come out and give us his usual spiel on how he will let us know as soon as he finds out more about the attacks (as he was sleeping throughout the night and could not be briefed on the same). We will also have the usual noises from the rest of the polity. However, as this time the attacks are on the elite hotels and foreigners staying therein, maybe, there will be greater pressure on the government to come out of its slumber and act!

Tourism advisories are sure to come out from most countries abroad which will effect the tourism industry. In any case what locus standi does India have to call off the cricket tour to Pakistan when its own Financial Capital is under attack!

Slowdown....lets jump the competition!

What I have said many a time, and strongly believe in, tough times are the best times to jump the competition and rapidly expand your marketshare. This the time when your marketing dollar (or rupee) gets you a getter bang for the buck as everybosy else goes into a huddle. Some interesting surveys have been done and reported here in this article.

Crisis, a word when written in the chinese alphabet, represents both Danger and Opportunity.

Darrell Rigby, head of Bain's global retail practice and Steve Ellis, Bain's worldwide managing director, said: "The tumultuous events of the past few weeks have battered financial markets and created uncertainty that companies will be reckoning with for months. But in the turbulence lies opportunity.

"Like dangerous curves on a racetrack, economic downturns create more opportunities for companies to move from the middle of the pack into leadership positions than any other time in business.

"Unlike straightaways, where leaders can thrive on raw power alone, steep curves require strategic finesse. That often results in dramatic differences in performance as leaders steer out of the curve."

Another characteristic of companies that do well from a downturn, say the two Bain executives, is: "They make bargain acquisitions to build up their core, even when it means taking calculated financial risks. As markets improve, they are well-positioned to accelerate." The latest example: Bank of America's planned acquisition of Merrill Lynch, which may turn out to be "the strategic opportunity of a lifetime," says Ken Lewis, Bank of America's CEO.

So are we all ready to take the plunge!

4 Secrets of the Successfully Self-Employed

Sometimes one comes across an article which immediately strikes a cord as it is on a topic which is being discussed somewhere in your life at that very moment – at work or at home with the family.

One such short note is by Marc and Angel and, I think, it is most relevant for all the young professionals who are now setting up practices in their professionals fields. Once this concept of Time and Money is clear to them then at least they will be in a position to set goals which would help them plan their life. Enjoy.

#1 – We Only Have 2 Products: Time and Knowledge

No matter how you make a living or who you think you work for, you only work for one person, yourself.  Likewise, you only have 2 products to sell, your time and your knowledge.  Here are a few example scenarios:

• Migrant Farmer – Sells hours of his/her life to pick fruit or vegetables for a farmer in exchange for money.  A perfect example of trading hours for dollars.
• Doctor – Sells hours of his/her life to perform medical treatments based on the knowledge stored in his/her brain.  A perfect example of trading hours and knowledge for dollars.
• Best-Selling Author – Spends time crafting a book based on his/her knowledge or intellectual capacity and then sells the book (knowledge) many times over.  A perfect example of trading knowledge for dollars.  The key benefit here is residual, passive income.

In almost all cases of the self-employed, the small business owner is taking information out of his or her brain and spending the necessary time to convert it into a product of value.  This concept confuses some people, and to others it seems obvious.  The bottom line is that customers pay you for your time and knowledge.  Success is achieved by properly crafting the two into one convenient bundle that can be sold many times over (think of products vs. services).

What knowledge do you have in your brain that provides value to others?  How can you extract this information and sell it?

#2 – The Implementation of Knowledge is Power

Knowledge alone is not power!  The implementation of knowledge is power.  Knowledge is simply a commodity; it’s a product like any other that has the potential to be sold.  How knowledge is organized, packaged, presented, shared, and received by others is what makes knowledge so powerful.

Knowledge is useless unless it’s effectively shared with others.  Your ability to educate others in a way that allows them to effectively apply the instruction is what makes knowledge an asset… something worth buying.

#3 – Time is More Valuable than Money

One of the most important points to understand is the fact that there are two basic forms of currency, money and time.  Of the two, time is the most valuable, for it cannot be replenished.  A surplus of time, and the unfettered liberty to do with it as you choose, is the true measure of success.

Your time must be extracted from the formula of making money.  No matter how skilled you are at transferring your knowledge to others, if you are paid on an hours for dollars basis, your ability to expand your business will eventually plateau.  You will run out of time.

The successfully self-employed have made this realization and concentrate the majority of their time and effort on the single greatest secret of self-employment: generating passive income.  Passive income is achieved by applying what you know into a package that can be designed and built once, and then repeatedly sold over and over again.  Finding a unique way to promote and sell this knowlege is the key.

Passive Income Examples: Useful books and guides, time saving computer applications, etc.

#4 – Success is About Knowing What You Want

Self-employed success is not the byproduct of working your way up from the ground up.  It’s based on knowing what you want, understanding your abilities and implementing them diligently to achieve your goals.  There are plenty of people who get laid-off from their 9 to 5 day job and end up making millions in a few short years of self-employment.

Take a look at some of the success stories around you that emerged from nowhere.  These success stories were not initiated by people paying their dues to someone else’s initiatives.  These success stories revolve strictly around perception and choice.  The people in these stories know their capabilities, what they’re doing, and what they want.  Once people make this realization, and the conscious choice to act on it, the possibilities for success are limitless.
Photo by: TeeJe

What's the Secret of your Success?

An excellant summation by Micheal Hyatt. We all have heard of (and experienced) what a positive attitude can help achieve, however, in today's times I would add another trait - curiosity, as I believe that in a Knowledge economy unless you have an inquisitive nature and are constantly seeking answers or trying to look into the future you would lag behind. This is what Mr Hyatt has to say on what he considers is the single most important trait -responsiveness.

As a CEO, I get asked this a lot. And, I'm always a little embarrassed by it. For the most part, I get the question from people who are in their twenties. They want to know “the secret path to the top.”

This past weekend, I received an email from one of my readers. He started, “I have an MBA, but I must have missed the course on Fast-Tracking My Career. If you had to boil it down to one thing, Mr. Hyatt, what would you recommend to a young, aspiring person such as myself?”

I'm not sure I could boil it down to one thing. Life isn’t usually that simple. But if I really, really had to boil it down to one thing, I would say this: responsiveness.

So many people I meet are unresponsive. They don’t return their phone calls promptly. They don’t answer their emails quickly. They don’t complete their assignments on time. They promise to do something and never follow through. They have to be reminded, prodded, and nagged. This behavior creates work for everyone else and eats into their own productivity. Sadly, they seem oblivious to it.

When I was a kid, we used to play “Tag.” The objective was simple: keep from becoming “It.” If someone tagged you (touched you), you became “it” until you tagged someone else. Whoever was “it” when the game ended, lost.

Business is very similar. People “tag” us in countless ways every day. They place calls. They send emails. They mention something to us in a meeting. Suddenly, we are “it.” And, just like the game, if you stay “it” too long, you lose. The only winning strategy is to respond quickly and make someone else “it.”

Reality is that we live in an “instant world.” People want instant results. They don’t want to wait. And if they have to wait on you, their frustration and resentment grows. They begin to see you as an obstacle to getting their work done. If that happens, it will begin to impact your reputation. Pretty soon people start saying, “I can never get a timely response from him,” or “When I send her an email, I feel like it goes into a black hole,” or worse, your colleagues just roll their eyes and sigh at the mention of your name.

Yet, these are the very people who will push you up or pull you down. You cannot succeed without the support of your peers and subordinates. (Go back and re-read that sentence again.)

As I was making my way to the top, my former boss, Sam Moore, used to ask everyone I worked with, “What’s it like to work with Mike?” “How’s he really doing?” “Do you think he could take on more responsibility?” In responding to him, all they had was their experience with me. If I hadn’t been responsive to them, how do you think they would have responded to his questions? “More responsibility? Are you kidding me? He can’t handle what he has now!” It wouldn’t take too many candid responses like that to tank my career.

And yet this happens to people all the time. I can’t tell you how many meetings I have sat in where people are complaining about someone else’s work habits. “He always waits until the last minute.” “She never plans ahead.” “I can never get him to respond to my emails.” You may think that the people who are making these comments are too far down the food chain to matter. I can assure you they aren’t. They have a way of bubbling to the top where the decisions about your career are made.

The truth is, you are building your reputation—your brand—one response at a time. People are shaping their view of you by how you respond to them. If you are slow, they assume you are incompetent and over your head. If you respond quickly, they assume you are competent and on top of your work. Their perception, whether you realize it or not, will determine how fast your career advances and how high you go. You can’t afford to be unresponsive. It is a career-killer.

My basic rule is this: respond immediately unless there is a good reason to wait. Obviously, this isn’t always possible, especially since I spend so much time in meetings. Nevertheless, I rarely let messages sit longer than a day. Twenty-four hours is the outside edge. If you can’t respond now, then at least acknowledge that you have received the message: “I received your message. I don’t have time to give it the attention it deserves right now, but you can expect to hear from me before the end of the day tomorrow.”

The great thing about being responsive is that it will quickly differentiate you from your peers. People love doing business with responsive people. Nothing will advance your career faster than this.

Warren Buffet on Value

 

Price is what you Pay, Value is what you Get

                                                                                 Warren Buffet

AESC Member Search Firms Form Alliance

One has been talking (and writing) about the evolution of new
business models for the past year or so primarily because of my
exposure to similar trends in the CA profession, where due to the
exponential growth seen by clients it is increasingly becoming
untenable for smaller boutique firms to effectively service their
client's needs (sometimes on account of their lack of geographical
reach/size and at times due to paucity of management/domain
bandwidth). In view of the same, the said professional service firms are adopting new and innovative strategies to overcome their size/expertise limitation and one of the models being increasingly adopted is the formation of an "Alliance of Firms" which operates under one brand globally but firm retains its independent identity too.

I had shared my experience in this regard with some TPRs and some of them had shown preliminary interest in the said model. In the meantime I have come across this "press release" and I would solicit the views and interest of all the members on whether they too feel there is potential in creating such an alliance and what could be the key stumbling blocks/ road blocks in actually creating an alliance of this nature. I am sure others would have had some experiences (or would have heard some war stories) in this regard and it would benefit everybody in case they shared these with the other readers.

As Peter F Drucker pointed out:

"Business once grew by one of two ways: grass roots up, or by
acquisition. Today businesses grow through alliances - all kinds of
dangerous alliance, joint ventures, and customer partnering, which by the way, very few people understand."

Although Mr Drucker is no longer with us in this world, his words of wisdom continue to provide deep insight into this continuously
evolving business paradigm.

Looking forward to all inputs.

Dangerous Alliances - Peter F Drucker

"Business once grew by one of two ways: grass roots up, or by acquisition. Today businesses grow through alliances - all kinds of dangerous alliance, joint ventures, and customer partnering, which by the way, very few people understand."

Although Mr Drucker is no longer with us in this world, his words of wisdom continue to provide deep insight into this continuously evolving business paradigm. 

Selling your Business

I guess all entrepreneurs have an emotional attachment to their business which prevents them from even contemplating selling the same until circumstances force them to. This is typically true of Indian Entrepreneurs.

Just yesterday I was in meeting where it was established that even though one of the business units of the family was making continuous losses, and there seems to be no way out, still the promoter who had started the same and nurtured it over the years was continuing to cross subsidise the same instead of looking to exit. There are many such similar situations where the promoter’s emotions have prevented the right solution being adopted.

This led me to try and pen down what are the top 5 errors that most entrepreneurs make while trying to divest their existing business.

1. In todays world the only thing constant is change. As such it is most important to decide right at the beginning of a venture as to when you would like to make an exit. It is like the stock market, you invest in a share with a certain return in mind and then stick to the plan or you might end up loosing your shirt. In any case, even in case one has not decided this in advance, one should try and give it enough lead time or else one will not do justice to the exit strategy and end up loosing in the final deal. Further, in most cases the Buyer would want the existing management to continue for a specified period so as to achieve a smooth transition and that time should be also be factored in by the Seller.

2. Selling a business is not like selling Real Estate, although, today, even selling real estate has become complex. Businesses are of various types and shapes and consist of elements which can have a different meaning for different people. As such it is advisable to take the assistance of someone who has handled such transactions and not try to do it yourself. In most cases you will come out ahead by getting a better price. I remember in one of the transactions that I was involved in from the buyers side, one was able to bring down the valuation by more than 50%. The impact ran into millions of dollars.

3. Competition drives up the price. As such it is of utmost importance to try and have more than one buyer or else you end up loosing by not getting the right price. This is true of every transaction in any sphere of life. This too can be achieved by taking the assistance of Investment Bankers/ Management Consultants who specialise in such deal making. It will be well worth the effort.

4. Identifying the right buyer is another important aspect which needs considerable attention. Typically a Strategic Buyer would see a strategic fit with their current line of business and be agreeable to pay a greater price as compared to a Financial Buyer who is primarily looking at it as a specific period investment and would like to see returns by way of Dividends and Appreciation in value over a defined period before exiting. they would not normally interfere with the management of the company except to ensure proper financial discipline and control. A Strategic Buyer would see longterm value as the acquisition would strengthen and add synergies to its main business.

5. Although I have touched upon this in an earlier point, however, I have found that most SME sector entrepreneurs do not know how to project their key strengths / assets that could influence value substantially. You need to identify all your value drivers, both tangible and intangible, more so in case you are in the Services Industry. These could be the credentials of the management, the brand recognition, unique process or process maturity, intellectual property etc.


In the end it is best to remember the Biblical saying “Where there is no vision, the people perish”

Manufacturing Sector – A loosing Battle ?

In the past few months I have had the occasion to work on a couple of assignments looking for HR cum IR professionals for top manufacturing companies in India. I must confess the whole exercise has clearly made me realise the truth in the GDP numbers – that the Service Sector now truly constitutes 51% of the Indian Economy and Manufacturing only 26%. The workforce has also consequently re-aligned and their preference has shifted to the Service Sector (which also paying more !). It has become increasingly difficult to find professionals for leading institutes who are still in the manufacturing sector. XLRI, whose name includes “labour”, seems to turn out graduates who are forsaking the manufacturing sector for the Service Sector. Very few are wanting to get down to the shop floor and ‘dirty’ their hands. At the end of the day, I think, it is a matter of disparity in compensation packages which is resulting in this mismatch.

I guess this is a challenge the Business Heads (alongwith their Strategic HR Heads) need to urgently tackle or else it is going to be a downhill battle.

Great Customer Service - through Ownership

WOW ! This experience, related by Jeff Blackman, really makes me envious and has got me thinking as to how one can implement a program to inculcate this ‘ownership’ feeling and consequently such excellent customer service qualities in ones organization. It should definitely be easier to implement in a smaller business organization.

The Ritz Rules!

Who consistently delivers great service?

That's an easy one. The Ritz Carlton. I've never had a bad experience at a Ritz. And if something unexpectedly goes awry, they fix it. Fast!

Three months ago, I stayed at The Ritz in Orlando. The Ritz does little things right. Like at check-in, they offer you a glass of fresh lemonade. (I've noticed that other hotels are implementing a similar service strategy, by offering at check-in, glasses of i.e., champagne, juice or bottled water.)

And when I asked where the elevator was, Dena at the front desk didn't merely point toward the elevator, she personally escorted me there.

Later, at 6:00 p.m., I called room service. The phone was cheerfully answered by Gloria. She took my order and then said, "Mr. Blackman, please let me recap, to make sure I've got it right." (Confirmation now, often eliminates problems later.) I then asked, "Gloria, would it be possible to have dinner arrive at 7:00 p.m., since I'm leaving now to run in the fitness center?" She replied, "Absolutely! We'll see you at 7. Enjoy your run!"

At exactly 7:00 p.m. I returned. I was there, but dinner wasn't. At 7:11 I called Gloria and said, "I'm lonely!" She immediately apologized and said a rush would be placed on my order. At 7:22 there was a knock at the door. It was Rupert from room service. He said, "Mr. Blackman, Gloria and I once again apologize that your dinner has arrived late. Tonight, your meal is compliments of the Ritz."

Whoa! Cool! (Especially since the bill would have been over $350! Chicken nuggets ain't a bargain at the Ritz! Just kidding!)

I thanked Rupert for his gracious hospitality with a generous tip. I also gave him a tip for Gloria. He was surprised, but grateful.

Then, I called Gloria to express my thanks. I said, "Gloria, that was very thoughtful of you to comp my dinner." To which she said something remarkable. It was only a one-word response, but it was unforgettable. She replied,
"Ownership." (Meaning, even if it wasn't her fault, she still owned the problem. And, the solution. She didn't assign blame. She delivered satisfaction.)

I asked, "Gloria, is that your word or are you trained to say that?" Her response, "Mr. Blackman, it's simply part of our Ritz ethics and commitment to our customers." Yikes! I wanted to know where I could buy her books!

Lessons to learn and things to consider:
• What little things are you doing that'll yield BIG results?
• How can you improve your customer's experience?
• How many moments of magic or touch-points do you have with a customer?
What subtleties will elevate their value?
• How do you get others to talk about you and your business with phrases
that begin with:
o You're not gonna believe...
o Wait till you hear what happened to me...
o Have I told you about the time...

Jobless Growth in todays Globalised World

Commenting on “Jobless Growth” The Finance Minister, Mr P Chidambaram, had this to say in his Budget Speech this year.

“In the last Budget, I had rejected the idea of jobless growth. As I unfold the vision of the UPA Government, Hon’ble Members will note that the central theme that runs through the various schemes and programmes is creation of jobs. Assured irrigation facilities to an additional 1 crore hectares of land over a period of five years will generate employment for an additional 1 crore people at the rate 1 person per hectare. The food processing industry is growing at a rate which generates 2.5 lakh jobs every year. The textile sector alone has the potential to create 1.2 crore jobs over the next 5 years. The information technology (IT) industry is expected to offer an additional 70 lakh jobs by 2009. Construction industry is also expected to throw up lakhs of jobs. Sectors with potential for generating employment will receive the highest attention of the Government.” This is what is called “reform with a human face”.

It is all very well to reject the idea of jobless growth, however, the ground realities need to be factored in. As per news reports, Mr Juan Somavia, director-general, International Labour Organisation (ILO), has said that the growing gap between wealth generation and job creation is becoming a serious threat to international security, development and democracy and needs to be addressed urgently. Further, the ILO chief said at the ILO’s 93rd International Labour Conference “This global jobs crisis is the most pressing political issue of our time,”. Illustrating the contrast between a healthy global growth rate of 5 pct and a disappointing expansion in employment of only 1.7 pct in 2004, Mr Somavia said, “World output increased by nearly $4 trillion, yet global unemployment was reduced by only 500,000.” The imbalance between globalisation and growth and job creation was illustrated by the fact that about 1.4 billion people are unemployed or considered working poor, with almost half the world’s labour force living on less than $2 per day.

In todays increasingly globalised world job growth is very much dependent upon external factors within each sector and cannot just be controlled by launching schemes within the national borders.

In the face of such challenges can India’s political and bureaucratic establishment rise up to the occasion and come up with innovative policies for the upliftment of the working class. We have to wait and see.

Strategic Alliances Part II

Strategies for the Small...

Having said this, the salvation of those third-party call centers that do not have sufficient working capital, lies in:

• Getting over the mindset of waiting for inbound support work and immediately taking on outbound telemarketing work for which there is no shortage. Essentially, they need to ensure that they keep the right kind of sales staff with good communications skills so as to achieve a reasonable sales per hour (SPH). This will make the center viable, or
• Entering into a build, operate, transfer (BOT) contract with a foreign customer so that they can transfer the whole unit to the outsourcing party after the completion of a pre-defined period, say in two to three years. Thereafter, the learnings from the BOT can be used to set up another venture.

... And for the Big

In case the call center firm has deep pockets, it can:

• Set up a marketing office in the US and start working on customer acquisition—this can be a long and strenuous process and cost a tidy sum
• Make a strategic investment in a call center outsourcing or service bureau in the US/UK so as to acquire the latter’s customers and migrate the processes offshore. This too can take time and considerable amount of financial resources
• Embark upon a plan to enter into a strategic alliance, maybe even a joint venture, with some outsourcing provider or end-user client in the US or Europe which helps them gain the customer relationships of the foreign partner as well as its knowledge of successful management and delivery of processes.

On a consulting assignment in the US and Europe, and met a number of companies there in the SME sector. There is tremendous immediate interest in the US in offshore outsourcing, and although Europe is a bit slow on offtake, there too is an active interest in exploring the possibility of going offshore with support services. In sum and substance, due to the enticing value proposition, the business opportunity is very much there and it’s just a matter of adopting the right strategy to tap it.

All in the Alliance

Before we go any further it is important to understand what a ‘strategic alliance’ is.

Strategic is something that ties up with the strategic plan/vision, and is relatively long-term—focusing on long-term goals and justifying a commitment of resources. Strategic also means that it’s not tactical in intent.

Alliance constitutes an interdependent activity with an emphasis on cooperation and collaboration that requires resource commitments from more than one company and often requires continuing parent/owner support.

A strategic alliance can take various shapes—it may or may not entail equity investments, and may or may not maintain independence, multi-product/service, or a full life cycle.

An increasing number of global organizations are finding that a strategic alliance is a fast and flexible way of accessing complementary resources and skills that reside in other companies and an organization’s ability to enter into and effectively manage strategic alliances can provide a sustainable competitive advantage to it.

For a successful alliance it is very important to ensure that the top management acts as the champion and has full commitment to the alliance. But before that, it should be committed to the process and allocate the time required to enter into a successful relationship. It should show the ability to internally communicate the mission/rationale for the alliance, have the ability to obtain, and later ensure, the continued maintenance of the internal team’s commitment, and last but not the least, stay closely involved with the post-closing implementation stages.

Although a detailed roadmap for structuring an alliance is beyond the scope of this article, it is important that a well laid-out process is followed. It all starts with, first, getting internal approval from the owners/top management/stakeholders and conducting a due diligence for the possible conflicts and overlaps. After identifying the probable alliance partner, it is important to check upon its track record, the tenure of its existence, and its financial health over the period of existence so as to be assured of its stability. Initially, it is also better to establish the partner’s exact fit and determine whether it would complement the activities of the call center and help gain a foothold in both onsite and offshore spaces. One also needs to identify areas of conflict and competition as these could even lead to a collapse of the alliance later. Finally, it is very important to ensure that the alliance is equally important and strategic for the alliance partner as well, or else all the efforts will go waste.

For a successful negotiation it is critical that extensive meetings are held internally to identify major issues in advance, establish achievable targets, prepare business openings and even identify the deal breakers.

Once an alliance is in place, it is important to manage the same and ensure that all tasks have owners and deadlines, that the team takes out the time and allocates enough time to focus on overseeing the alliance. Even though alliances cannot be said to be risk-free, if managed well, they offer a very good option to other expensive, time consuming and less efficient options. Today, ‘alliance management’ is increasingly being considered as a ‘competency’ and can deliver rich rewards for an organization that effectively leverages the same.

What Could Bring Globalization Down?

Here's an interesting interview of Harvard professor Niall Ferguson by Cynthia Churchwell. With our reliance on Offshore Outsourcing revnues going up day by day, and our economy rapidly integrating into the World Economy, a reversal of globalisation could mean bad news for India and its citizens.

Cynthia Churchwell: What drew you to seek historical parallels with our current state of globalization?

Niall Ferguson: I am an historian who has long been preoccupied by the similarities between our own time and the pre-1914 period. That the years 1880–1914 were the "first age of globalization" is now quite a widely accepted idea among economic historians. The data on trade, capital flows, and migration certainly bear that out.

Q: When was the first age of globalization? Do you see the sinking of the Lusitania in 1915 as a benchmark for the beginning of the end of this first age of globalization?

A: To be absolutely precise about dating, I'd say it was from the moment the transatlantic cable was laid, which was in 1866, until the cutting of the cables to Germany, after war broke out in 1914. The Lusitania (which was sunk on May 7, 1915) is simply a good symbol for the end of this first age because so much had previously depended on safe navigation between New York and Europe.

Q: You suggest that "The possibility is as real today as it was in 1915 that globalization, like the Lusitania, could be sunk." What do you mean by "sinking globalization"?

A: I mean that we could just as easily find ourselves swept into economic "de-globalization" by an international political crisis as our great-grandfathers were in 1914. Like the Lusitania, globalization could be sunk by great-power conflict.

Q: What are the five major points you identify as contributing to the impending decline in the globalization of our present-day economy?

A: I don't say it's impending. I just say it's possible. Like the outbreak of the First World War, a crisis of globalization today is a low-probability worst-case scenario. The key causes of the 1914 crisis were:

The overstretch of the hegemonic empire (Britain).
The escalation of rivalry between great powers (Britain and Germany in particular, but also Germany and Russia).
The destabilization of the alliance system (unreliability of Austria in German eyes, of Britain in French eyes).
The existence of a rogue regime sponsoring terror (Serbia).
The rise of a revolutionary organization hostile to global capitalism (Bolshevism).

To see my point, just change the words in parenthesis to:

(the United States)
(the United States and China)
(unreliability of the Europeans in American eyes, unreliability of the Americans in Japanese, South Korean, and Taiwanese eyes)
(Syria, Iran, etc.)
(Al Qaeda)

Q: Are there any actions or events that could accelerate or forestall another decline of globalization? Which ones do you believe to be the most significant?

We could find ourselves swept into economic "de-globalization" by an international political crisis as our great-grandfathers were in 1914.

A: It would be a very good idea if the United States were to act now to avert the danger of a clash with China over the future of Taiwan. There is a real danger that Taiwan could be what Belgium was in 1914: the small state over which two great powers went to war without either quite meaning to.

Q: Do you think globalization will continue to come and go in waves?

A: I am not sure waves are the right natural-world image here. I would prefer to think of events such as forest fires or earthquakes—sudden crises arising from the advent of what scientists call "criticality."

Q: What other business-related research currently interests you?

A: I am writing a book about the banker Siegmund Warburg, who was a key proponent of globalization after 1945 and deserves much of the credit for the emergence of the Eurobond market, among other things. More generally, I am continuing to do research on the international bond market before and after the First World War.

'Phone calls will be free by 2015'

Voice over IP will force traditional telephone companies to stop charging for voice calls and ensure emergency services update their use of technology, according to Skype CEO Niklas Zennström.

Speaking at the VON Europe 2005 conference today in Stockholm, Zennström said the fact telephony has morphed from a network to a software application "is a game changer".
One rule of the game it changes is economics. Given that VoIP applications such as Skype have no customer acquisition costs and no real cost for calls, "we cannot charge for phone calls in the future," Zennström said.

This means phone companies will have to change their business models, Zennström said: "If you fast forward 10 years, all [telcos'] revenue will come from internet access and none from voice minutes or line rental." Telcos will need to change their phone lines to broadband lines but they will not go out of business, according to the Skype boss. "They will always be competitive because they are the ones that have the cables," he said.

Zennström cited BT and TeliaSonera as two European phone companies which are already looking to move to all-IP networks.

James Enck, European telecom analyst at Daiwa Securities, agreed the telcos are finally facing the IP telephony threat. "The period of incumbent complacency is over," he said. While two years ago telcos did not appear concerned about VoIP, "there is now a sense of urgency and openness and a sense of crisis that wasn't there before", Enck said.

Zennström also turned the tables on both US and European regulators who aim to require IP telephony providers to give customers access to emergency services and to provide the emergency services suppliers with a location for the caller - something that's essentially impossible on IP networks.

He proposed that along with ensuring VoIP companies offer access to 999, regulators should make sure emergency services can receive communications not only from the phone but also via text messages and email. "Let's make sure we're enabling emergency services on all devices," he said.

Skype is working with emergency services organisations to come up with such a solution, Zennström explained, and emphasised the need to develop a way to map geographical locations over IP networks. "It's important as an industry we take initiative on this so politicians don't force legacy rules onto us," he said.

While Skype now has 150,000 new users a day and 1.4 million paying customers for its SkypeOut service - and hopes to increase those numbers further through its new affiliate programme - many believe it's still a company in search of a realistic business model.
Zennström stressed he's happy with the model they have, though. "We don't need to charge a lot," he said, because they have such low costs. When looking at Skype's average revenue per user, the company doesn't compare itself to Vodafone or BT but to Google and Yahoo!. "We're in the nickel and dime business. A few nickels, a few dimes but a lot of users."
Zennström also confirmed the company is developing Skype for mobile operating systems such as embedded Linux, Symbian and Windows Mobile but said no release dates are available at this time.

Alliances: The Right Choice

'Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat' —Sun Tzu

Having interacted with a number of call centres in India and abroad, it has become clear to me that a strategic alliance is the most likely route to success for the third-party outsourcing call centers in India.

Most of the third-party call centers set up over the past few years were established by entrepreneurs who had been sold the dream by equipment/solution vendors—whose primary aim was to essentially sell their solution/equipment—that one had to just set up the call center and inbound business would come pouring in. There could be nothing farther from truth.

Why?

One, more than 90 percent of the business being done by third-party call centers is ‘outbound’ or ‘telemarketing’ and not ‘inbound’. Many of the call center entrepreneurs were not even aware that they would essentially become telemarketers, or else they would not have taken the plunge. Two, most of the entrants to this field were not from the services industry and opted for the route more as a diversification from their existing manufacturing activity where they were seeing a stagnation. By not being from a similar industry they did not appreciate the need to develop a customer acquisition strategy. So they faltered, soon after commencing their services. Their ‘delivery capability’ fell woefully short, mainly because they did not focus on this aspect of the business and took it for granted.

Dreams are now turning sour very fast and are seeing a major consolidation happening. The smaller players, who did not conceptualize the project well and did not take care of the working capital needs at the start, assuming that the business and cash inflows would start rolling from the first month, will either end up being taken over by larger players or just down their shutters. So what are the options?

At this juncture, it is important to understand that the adoption of a strategic perspective on outsourcing is today regarded as one of the most useful and important business methodologies, giving organizations world over the opportunity to liberate their full potential for profitability, efficiency and cost-effectiveness, and allowing them maximum flexibility in terms of retaining and broadening their customer base. Most of the organizations in the developed world have fully understood and adopted this approach towards business, resulting in a phenomenal growth in outsourcing (it’s a $600-billion segment), which is now increasingly leading to ‘offshore outsourcing’ primarily because of its enticing ‘value’ proposition (price/performance)—India’s delivery capabilities have now been validated over the years. To be cont .........

Services Export Promotion Council (SEPC) gets off the ground

Last year, in August, the government unveiled a five-year Foreign Trade Policy aimed at doubling India’s share of global merchandise trade by 2009 with the thrust on employment generation in semi-urban and rural areas through enhanced export-oriented activities.

The Foreign Trade Policy (2004-09), unveiled by the Commerce and Industry Minister, contained a host of new packages and schemes pertaining to agriculture, services and bio-technology export besides some rationalisation measures to reduce transaction costs. Amongst these was an exclusive Services Export Promotion Council (SEPC) that would be set up in order to map opportunities in key services in major markets and develop strategic market access programmes, including brand building in coordination with players in specific sectors and recognised nodal bodies of the services industry.

Mr Kamal Nath had said that the government would promote the establishment of common facility centres for use by home-based service providers, particularly in areas such as engineering and architectural design, multi-media operations and software developers in state and district-level towns.

In pursuance of the same the Commerce Ministry has now taken the first step towards operationalising the Services Export Promotion Council (SEPC) by appointing Mr L.B. Singhal as its Executive Director. Mr Singhal is currently the Director-General of the Export Promotion Council for EoUs and SEZs and will hold the additional responsibility of ED at SEPC.

When contacted, Mr Singhal told Business Line that the SEPC would be registered as a society under the Societies Registration Act. The council would formulate policies and work out strategies to enhance exports of all major services. "The SEPC would cover all major services including entertainment, health, tourism, education, hospital, consultancy, legal and accountancy services," he said. The council would cover all the 160-odd services notified by the World Trade Organisation except that of computer software services and hotels, which have separate export promotion councils.

Since services account for about 50 per cent of the country's gross domestic product, an export promotion council for this sector was first proposed in the five-year Foreign Trade Policy 2004-09, announced in August last year.

The Commerce Minister had set up an inter-ministerial taskforce headed by the Director-General of Foreign Trade, Mr K.T. Chacko, to work out the modalities for setting up the SEPC including its scope of work and composition. The taskforce has submitted its report.
Meanwhile, a Parliamentary Standing Committee on Commerce has recommended that the Directorate-General of Commercial Intelligence and Statistics (DGCI&S) should strive to compile data on export of services also.

In its report tabled in Parliament recently, the Committee highlighted that compilation of data on export of services would enable grant of help under the Assistance to States for Infrastructure Development for Exports (ASIDE) scheme on the basis of their performance in the export of services. Currently, the data compiled by the DGCI&S do not capture services exports and only reports on foreign trade in goods. The allocation of assistance under the ASIDE scheme was based on export of goods alone and export of services was not taken into account.

Note: With inputs from The Hindu Business Line

“Networking & Capacity Building”

Vinay Talwar’s Beat

A couple of days ago I attended a Seminar organised by the Institute Of Chartered Accountants of India on “Networking & Capacity Building”. I had more gone there for the heck of it and to also see what the CA community is doing wrt ‘Networking’.

I must say that I was pleasantly surprised to find around 400 attendees for a topic that I thought was alien to this staid profession. One of the speakers turned out to be an old friend of mine, Vinod Jain, who has been very active in the affairs of the Institute and has played an active role in the Regional Council as well as the Central Council. Vinod made a very powerful presentation on the various aspects of Networking & Capacity Building and most of all on the “need” for the same. I feel the most important take away for me, and for most of the participants that I spoke to, was for us to get out of the thought process of the past ( ekla chalo re ) and the urgency to adopt this collaborative approach for ‘survival’ let alone growth. Vinod’s story telling style, he gave an excellent example from Mahabharat, aptly got the message home to the participants.

Amal Ganguly, who retired as the head of PwC in 2003 was the Guest of Honour and he did a good job of answering the doubts and queries of the participating CAs. His clear message wrt partnerships and their longterm survival was – forget this ‘goodwill’ business and the only claim that an exiting partner should have should be to his/ her share of ‘Capital’ and nothing else, only then will partnerships thrive and survive !

Roy, Dy Secretary of the Institute, took the participants through the various provisions of the Guidelines framed by the Institute wrt Networking as well Mergers & Demergers between its members.

Having been in business for most of my active working life, for once, I came away with the impression that the Institute of Chartered Accountants is taking a proactive interest in furthering the cause of their members by helping them keep pace with the times. With the GATS discussions rapidly moving forward this topic has assumed much greater importance. I am sure there are a number of issues that still need to be thrashed out, both legal and cultural, but as it is said – a job well begun is half done.