The fate of perception
The last decade has been an eye opener to everyone who has been watching. No country in the world has the muscle to bully America, but a group of people managed to plan an attack from some remote and unconnected cave in Afghanistan. I had heard Iranians say that Sadam Hussain would be brought down by people who once were his allies, how true have those words proven to be. The dream job for most MBAs in finance was a position at Lehman Brothers. A company whose core competency was its ability to manage money has succumbed to bankruptcy. A black man has become the president of a country where about a century back, blacks were not even allowed to vote. The world’s managers were given the example of Toyota when someone spoke about quality and process. Today the company has one of the most serious quality related concerns in the corporate history. Accenture used Tiger woods to make people believe in its integrity, perhaps Tiger woods was more in line with Arthur Anderson and not Accenture. Most text books had given up hope on communism, but ironically the fastest growing economy in the world is a communist country. Most of us have seen the sea rise only in movies and now the people of the earth know how it looks like in reality. The tradition of being professionally dressed to achieve success is not followed at Google. Recession has proved that the world is flat. Preferences have changed from situational comedies to reality shows. The most feared religion in the world is the fastest growing one and same sex relationships have been recognized in one of the oldest cultures in the world – India.
What we believe to a norm is in reality a perception. Most studies including those in sciences like physics are based on assumptions that over a period of time are challenged. What we think is reality whether assumed or proven are not what we think of them to be. It is very important for us to realize that the world moves in the most mysterious way and all we can do with our ability to predict the future is reduce the probability of luck. We wrongly believe that a probability of 0.00000000000000000001 is unlikely. Making judgments about people, companies, countries and the world is a great mistake, but the biggest mistake a man can make is to live without judgement.
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Automating, Informating and Strategizing
Automating deals with technological implementations that help organisation complete a task or set of tasks in lesser amount of time, with maximum ease and with minimal error. An example of this system is the work flow management system at Pindar Graphics in USA (http://www.pindar.com). This is a system that I helped develop. Pindar Graphics manages the publishing and printing work associated with Yellow Book USA (a large yellow page directory publisher). Clipper, an ad work flow management system, assigns about 5000 advertising tasks every day to artist in USA, England, India and Philippines. The system automatically finds the next available advertising request in a queue from the sales office and assigns it to an artist who has the requisite skill level in terms complexity, language, and time constraints. Prior to the systems’ implementation the average sales to proof time for an advertisement for 21 days. This system helped reduce this time to an average of 5 days. The system cost about USD 3 million, and was able increase the productivity by 400%.
Usage of technology that helps in learning and improving is termed as informating, a term explained by Zuboff (Shoshana Zuboff, 1988). Organisations use a suite of applications and systems that help in informating and in turn act as a vehicle for organisational learning (Jessup et al., 2008). Decision Support Systems, Sales Force Automation and Compensation Analysis systems are examples of informating systems. A system that I quite frequently interacted with was my appraisal and job allocation system at Wipro Technologies. The system integrated with the leave management system, online time sheet and quality management system to measure my productivity not only in quantitative terms but also in qualitative terms. The system then fed a computed rating to the appraisal system and thereby helped my supervisors to grade me based on information about my productivity. The system used techniques such as trend analysis and bench marking and informed the supervisor if a subordinate has shown a consistent improvement in his ability to manage tasks and teams, and also compared this performance to the subordinates’ peers in the department.
Information systems that assist in enabling a firm to sustain or build its competitive advantage over rivals fall in the category of systems used for strategizing. Enterprise Resource Planning applications, Customer Relationship Management systems and Human Resource Management systems are some examples of systems that are compositions of multiple small applications that integrate across vertical and horizontal structure of an organisation and help senior level management make key decisions and take key actions on the further course of a company. These systems automate extensively a number of processes and activities. They help in informating and decision making. In addition, they have wide spread across the organisation and help in streamlining, standardising and strategizing a large number of processes and working practices and policies. A system of this nature that I helped develop was the Customer Relation Management system called ICE (Intelligent Customer Engine) at Yellow Book USA. The system interfaced with actors such as sales executives, advertisers and artists and helped manage customer experiences, customer instructions and synchronisation of marketing, sales and operations.
The Concept of Religion
The concept of religion has been something incorporated with the history of mankind. Its presence can be seen as far as one can look back to the beginning of civilization. It has shaped the structure of our societies and the laws we follow. Perhaps one can even attribute the survival of many cultures and races to the gods they followed. While there seems to be such a powerful influence of the concept on the current world, there also seems to be a sudden change in its representation. Whether this is natural or not is something historians can ponder upon. If one looks back into history one can find that no particular religion has flourished unchanged for more than a few thousand years. The older the religion the more factions and the more myths cloud its reality. Today with the major religions of the world facing major issues, I perhaps think it is the right time for the young and the future to discuss and debate on this ever important subject.
In the present day most religions have problems. Christianity is being questioned of its authenticity, its beginning and the manipulations it has concurred through history. Islam faces the dilemmas with its interpretation of its concepts like jihad and its underpinning of human rights. Hinduism perhaps is one of the most divided religions with distinctions made based on caste, region, language and deity which have led to its dilution and it having varied religions in one religion. Jews have been the subject of hatred for many religions and face threats from all sides. Paresis are at the cross roads of extinction and metamorphism due to their non-acceptance of change and its closed ness to the idea of conversion. The list seems to go on with each religion having their minor and major issues. If this was not enough to warrant a struggle for survival of the concept of god, the modern world and the independence it has given to man has led to a rift between the believer and the non-believer. The non-believer has many reasons not to believe. He questions the presence of a god who supposedly knows about the past and the future and still punishes humans for their sins which he knows they would commit. The believers say that god gives man free will to decide between good and bad. But the non-believer says that if there is a free will then the decision taken on behave of the human cannot be known to god, otherwise it is like a robot whose programmer knows about the wrong decision it will take and still lets it decide just to punish it later, which does not make sense. The believer says that there are things which are beyond our understanding; things like wireless communication which would have been laughed upon or even criticized a few centuries ago are facts of the present day; then perhaps the questions the unbelievers ask might be answered someday. The argument seems to be unending but then everything can be debated but it’s wise to take one side of the coin.
Science has been a supporter and debater of the concept of god. Science proves that human beings have an extraordinary mind. They perhaps might have created the concept for their survival. It has also been proven that most religions have taken birth in chaos. When the societies get wild and out of control then its leaders or the intellectual few form a religion that induces discipline and culture into its followers. Think of a world without the concept of marriage, family, respect, truth and goodness. It would be a jungle where the fittest would survive. It would not be bad to rape or to kill. Any natural thing would be natural to follow in spite of it being detrimental to our existence in the long run. Scientific study of animal communities has found that there exists a pattern of society in ants, bees and even the bigger mammals like lions and elephants. It is s not something they do based on intellect but something they do for survival. If creatures with comparatively inferior brains could follow rules and form societies, why would humans not have done so for their survival? History is a proof that religion is a better enforcer of law than any other force.
Paranormal science gives evidence of reasons behind the supernatural believes. It has been proven that human mind hallucinates in fear leading to its vision of ghosts. It has been proven that sciences like telepathy and telekinesis which can make people see and control things out side their bodies is possible. Evidence of extra sensory propulsions which can make people communicate through their minds is also a topic of research. Being possessed has been translated into multiple personality disorder syndrome in science. With science slowly and gradually answering every fact of religion it makes religion a scientific topic. This generally is not what the clergy would agree with. They seem to put religion beyond science and the scientists do the opposite. It would be justified to say that if god exists, he has made the earth and the universe on basis of logic which in other wise is science. Science and religion do not compete but its more like science helps reason out religion. If religion says truth should be spoken then science says that if the world follows the false it would perish.
Today religion is being blamed for most of the world’s problems. The fundamentalist interpretation of the concept of jihad in Islam has been a reason for a lot of bloodshed. The split between Jews and Muslims has led to decades of struggle in Palestine. The division between various sects of the same religion has been the trouble maker in Pakistan, India, Middle East, Africa and Europe. If one looks back in history one would find little difference between present day and the past. Wars have always been fought either to conquer territory or to spread religion. Each religion preaches that its growth is the most important task bestowed on its followers.
It seems that everything man adopted for survival threatens his existence today. The concept of god, the invention of money, and the idea of territory have been and are the primary reasons of all battles on the planet. Though battles always disguise themselves in different cloaks such as liberation, revenge and defense, the bottom line is that their always tends to be at least a faction in the battle that deals with religion. For instance take the recent war on terrorism. It was meant to be a war to liberate Iraqis from the dictatorship of Saddam but that was a war of just a few months. It has now become a war between Islamic jihadist and the modern disbeliever. The Muslim east blames the west to be interfering in their affairs and the west blames the east of being inhuman in their laws. So one can say based on facts that the real problem is not the religion but the difference in religions that is the cause of all this trouble.
On analysis of any religion one would find two aspects that dwell in any religion, namely the concept of god and the concept of law. Most religions can be divided as to being monotheistic or polytheistic, that means they either have one god or many gods. The laws in the religion govern its rituals, festivals and traditions. Some practices have been as violent as sati (practice of killing the wife on death of husband), human sacrifice, slavery, injustice to women etc while some festivals have been to build up morals and bonds like Ramadan, Holi and Christmas. Though each ritual, festival and tradition is knitted from a fabric of happenings and beliefs, the fact remains that they have had a strong influence on the image of a religion. The basic goal of any religion has been the advancement of its society. Any religion differing from this goal has met with fatal end.
The concept of god is a unique concept. For people with more knowledge of the sciences and histories it is tough to believe that there is a super natural power that influences people in such unbelievable ways. Questions prop like why should perhaps god create humans? Why should he deliver his message through books and men that could reach only limited people who understood them, when his own creations are capable of doing so using internet, fax, phone and video? Why should he test us when he needs no experiments to conclude? Why should he proclaim one sex, or one caste, or one race or one empire to be superior to others when to him everyone is equal? Why should he make religion so complex that we have levels in clergy and still create people with fewer privileges to learn his religion? Would not a human with power of god have done better management? The answers to these questions either lead to more questions or more arguments. As humans each of us has a different set of opinions which arise due to our surroundings and our histories. To one of us a religion may answer all our doubts while to another of us it might be the source of all his questions. The former would criticize the latter as to be living in the dark and the latter would criticize the former to be ancient. But what everyone would agree with is on the concept of goodness. Every mature human being distinguishes right from wrong irrespective of his believe or disbelieve. Religion does so in script but its essence is present in every human’s mind. Religions survive only if they are good and spread goodness. It is so because goodness is not a want but a necessity for life on a large scale. If one tries to be bad to survive and everyone does the same then it would not be long when everyone perishes.
Well then we come to the most important question of all. Is it necessary at all to be an ardent follower of a religion when we already know what it takes to have a successful society and know that the distinction of right and wrong is a natural knowledge? We know that countries that have no influence of religion in their laws like the American constitution, or French republic do as well or at times better people management than countries that have them. Is it right to believe our ancestors who believed in god or is right to believe the people who disbelieve in almighty theory? It has been seen that following religion keeps people satisfied while disbelievers are often stressed with questions. While the believers have a more stringent fabric of a monotonous life around them, the disbelievers have more freedom in life style. The enforcement of law by religion makes better and safer environments while it also makes people feel subjected to restrictions towards normal life in a free world. Each person in this world has again his own decision to make as to what he prefers. What can be one solution to this entire dilemma around religion is to make it a concept that is personal to its follower. It has not been proven to be bad to be religious and neither has it been proven to be wrong to be unreligious. The conflict starts when the disbeliever tries to force the believer and vice versa to change their concepts. Like love religion cannot be spread or stopped by force….it needs a choice made independent of any fiction and force.
What I have tried to portray in this essay may be an idea already known to you. It may be something you agree or disagree with. But I would suggest that you pen down your opinion and spread it around. Opinions when spread in a peaceful suggestive way have proven to be better form of means to reach better conclusions than when they take the form of a force. Conclusions based on facts derived from opinions and events are what make people believe in any concept and its not words restated or declared baselessly that do so. This essay just draws an outline of the concept of religion but if it can arouse a need on your part to investigate the details of the concept it would have served its purpose.
RIA and the Internet
I would have preferred to call it LRRIA (Lightweight Rapid Rich Internet Application) but Adobe (who coined the word) preferred calling it Rich Internet Application. Today most techies relate to FLASH and its sister Flex when they talk about RIAs. But this concept is as old as the browser itself. When Netscape (or even Mosaic) first came up with a solution for the common man to use the Internet, they did so with usability and richness in mind. Though at that time, richness was limited to jus text and images. This perhaps explains why porn became such a big hit on the Internet. Another concept that started becoming popular in the nineties and is still majorly used is the chat engine. Chat engine is a rich application that allows people to exchange images, web cam streams and lots more. Chat is perhaps the most basic application of the chat engine. But one should give Macromedia the credit of adding the shine to Internet applications in form of Flash (or you could also honor Shockwave). Though it looks awesome, its popularity is limited to smaller sized websites and online games. Most of the popular sites prefer using technologies like Ajax, a strong yet simple technology that adds richness (mainly in form of interaction). The World Wide Web for some reason has been skeptic about using technologies that come in black boxes. They are happier with open source or at times are willing to pay for transparent source. Today the web is in its Web 2.0 – Web 3.0 transition from the users’ perspective. But technically its user interface is getting transformed by various new and jazzy technologies like Flash, Silverlight, FX from Adobe, Microsoft, Sun and the like. The corporations that run huge websites have slowly started trusting these beasts… because these beasts in course of their wars have also started showing of all their strengths and weaknesses (which previously were closed up in a black box). The demand for richer applications has been prevalent from the days of the Applet and ActiveX, but the real stir has been in form of web 2.0. Web 2.0 user is a lot more sophisticated and demanding than a static web 1.0 user. The former demands sharing of information and not just receiving of the same. In the future one is going to see more specific job sites and social networking sites. One would start giving specifications for their cloths using a rich tailor made GUI for a cloths retailer. One would perhaps decide his hairstyle online before he visits an automated hair salon (a hair-do booth) with no people inside. May be I am pushing it, but that is what has happened… the internet has helped mankind push the boundaries of thinking. You say no… then you are free to walk up to your granny and tell her that you can post a message stating that you need a girl to get married to… and within a few hours you would have replies and interests pouring in from the entire country, or even the entire world– she might gaze in amazement (in case she is not used to the net).
There is a huge demand from media companies for better and secure technologies that would allow them to show case multi-dimensional movies on the net. Advertisers are looking at more engaging two way advertisements and colleges are trying to reduce the cost of infrastructure by having lectures and sessions transferred to the internet. These are the basic needs but there is a huge list of more specific RIA requirements. Like a lot of people want a customizable and intelligent avatar of themselves, Flower boutiques want a medium of transferring the smell of their flowers to the buyer; all this is only going to keep the fight for the ultimate RIA on for a now and years to come.
As marketers and people responsible for what people will use tomorrow, it’s our job to make use of this new paradigm in an efficient way, shunning away from it is not going to help build a better future. If you think this is the matrix, well, you are already living in it!
Debt v/s Equity in the context of a start up venture
Debt v/s Equity in the context of a start-up venture
New ventures are generally very capital hungry. Looking at the diagram above, it is obvious that the new companies or startups demand more money in terms of investment to return ratio than large organizations.
Another way to look at this is to map the profit against the product sales figures for the various product life cycles that would be associated with the company.
As seen in the diagram above. The initial stages of a company growth are times when the company does not make any profit. On the contrary, it’s a period of loss. Most of the capital invested in the business goes into promotion, setup and development. It is only on a repeated sale and a critical volume level that a company starts making money. Again it is important for a business, old or new to keep its products pretty new with help of innovation or expansion.
Hence based on this analysis, it is obvious that startups require a significant amount of money and this money would generally take a while for the company to recoup. Debt and Equity are the two main sources of financing for a startup. Debt does not involve ownership and risk sharing but has a fixed return expectation. Whereas Equity is willing to take a share of the risk with the expectation of proportional returns. A popular way to decide the mix between equity and debt is called the WACC. The Weighted Average Cost of Capital helps determine the expected return rate on the investment by taking into account both Equity and Debt. Knowing that Equity is associated with higher returns and debt with lower, the objective here is to find the right balance between Equity and Debt that results in a lower WACC.
The WACC equation is the cost of each capital component multiplied by its proportional weight and then summing:
Where: Re = cost of equity, Rd = cost of debt, E = market value of the firm’s equity, D = market value of the firm’s debt, V = E + D, E/V = percentage of financing that is equity, D/V = percentage of financing that is debt, Tc = corporate tax rate
If the after tax cost of debt, is much lower than the return expected from company assets, then the entrepreneur should choose to take as much as debt as he needs. The word needs here is very important. Debt is associated to risk. Most entrepreneurs would tend to finance their business plans with venture capital as it reduces the burden of raising initial capital to pay the interest components of debt. Going by statists 9/10 business ideas do not survive more than 9 months. Hence most entrepreneurs should be wary of the fact that they might get bankrupt paying on loans.
Venture capital is generally good bet in a dynamic environment. Most venture capitalist look for long term rewards at high proportion of return and willing to live with a high risk business idea that has negative returns in the initial few years.
So based on the success probability and the ability of an entrepreneur to recoup the lost investment, he should decide between debt and equity.
Some basic differences between debt and equity:
| Debt | Equity |
| Has to be repaid | Is considered as ownership and hence does not belong to the entrepreneur but the share holder |
| Sufficient cash flow is required to repay debt installments. | No repayments are required. But shareholder requires share of the profit either as share price or dividend. |
| Collateral assets require. | No collateral required. |
| Debt providers are conservative. They look for low risk with respect to their investment. | Equity providers are aggressive. They can accept risk, but are more particular about upside rewards. |
| Interest payments are tax deductible. | Dividend payments are not tax deductible. |
| Debt has no impact on company ownership. | Equity requires shared control of the company and share holders with significant percentage of entire equity need to be placed n the board. |
| Debt allows leverage of company profits. | Shareholders share the company profits. |
What should an entrepreneur do in such a dilemma? Well there are three practices commonly seen to be followed by startups.
1. The entrepreneur finds venture capitalist, willing to share a lower proportion of the profits for a higher investment. How does this work. Well some business ideas are just presented extremely well. For instance the entrepreneur convinces the investor about at the almost 100% probability of the success of his business idea. Then he also manages to build interest in his idea and there develops a competition between investors as to who should sponsor the idea. In such case the entrepreneur can get a good deal. The venture capitalist are happy if the investment can reap returns at a rate higher than what the conventional banking system can give and has lower risk than the stock market.
2. The entrepreneur finds insurance for the debt that he selects. A low interest rate debt is selected with an additional charge of insurance. Just like how one buys a car on loan with insurance, the insurance provider covers the losses attached to failure of business and debt provider is willing finance at lower rates due to this insurance. In an unfortunate case of failure, the entrepreneur has lower liability and the losses are covered by insurance. This approach again depends on the bankability of the business idea. Such ventures are generally based on the fact that a lot of the startup investment can be sold and the failure rate of such investments is generally pretty low.
3. The third approach deals with the idea of credit. Some business starts with almost no initial investment. The entrepreneurs get a fixed amount of stock from suppliers and promises payment or return of goods in a fixed amount of time. Much a like a distributor.
Salman’s New Blog
Having been involved in multiple fields like marketing, technology and media, I think its time for me to spread new thoughts that carry insights and reasons that are intended to elevate society though positive innovation.
Salman Raza
Intelectual Impulse 