Zen and the Art of Strategy

Ufff! It has been one boring week at work here... All I have had to do is to wait for people to meet me so that I can get my project going once more. Here the people are willing to talk to me, but only when they get time, which is rarer than my getting my full 8 hours of sleep at IIMA. In the meanwhile I keep thinking of ways to pass time.

One common way of doing that is introspection. I have learnt many new things during my summer stint here and the free time I get allows me the opportunity to reflect on my experiences here. I want to put them down, but am unable to assemble a cogent paragraph now. Maybe my philosopher's block will be removed soon in another entry.

Another excellent way of passing time is for me to read books once I get back to the hostel. I am currently reading a book called "Alexander the Great's Art of Strategy" by Partha Bose (formerly of McKinsey and Co.)... a very interesting read...however the author does sort of spoil the excellent historical parallels he draws and the effect he creates by summarising key learnings from each chapter towards its end. Overall, though, It is well researched, well written and offers some memorable and interesting insights into the minds of various characters from history and politics. As always, the foundation of a good strategy is a clarity in terms of goals and the key to good execution of a strategy lies in thinking through the pros and cons of the decisions and, like a good chess player, playing out the consequences of each decision under various circumstances in order to achieve the desired effect during execution.

Talking about decisions, if there is one thing that is absolutely critical for arriving at an 'informed' decision, it is the avaiability of relevant and reliable information. Often we are faced with either an overload or a sickening lack of information. But in today's world, the former case is more common. This is where a clarity of goals helps bring clarity of thought, which is so crucial to separate the chaff of data from the wheat of useful information. I have mentioned clarity of thought in some earlier posts as well, I guess, but probably this context is different. There are interesting parallels between the strategies of Alexander and Lord Hanuman in the Ramayana-Sundara Kanda. Both people had admirable clarity of thought. Both had amazing presence of mind and the ability to convert thought into action and the enviable ability to foresee what exactly the enemy would do/feel. A difference, however, lies in the fact that Alexander had to communicate his ideas to his army and commanders whereas Lord Hanuman had no such requirement. hmmm...this has set in train an interesting line of thought. Maybe there can be more on this topic soon.

Another thing with the information that floats around so freely is that very few people actually bother to assimiliate it and use it to their advantage. The differing abilities to assimilate leads to what is now famously known as "asymmetry of information". Often, exploiting asymmetry of information is often the very basis of modern commercial existence. Joseph Stiglitz's pioneering work in this area has often led me to ponder on the dynamics of information flows. Not that I have read his works directly (yet), but I have come across his references in so many contexts that I have come to form a deep admiration for his work. Information asymmetry crops up in the oddest of places and converts life into one eternal search for more information. More importantly, the communication process of humans is often so inefficient that it is one hell of a fight to extract information through conversation/questioning.

Take the role of a consultant, for instance. He has to approach the client with an open mind and needs to figure out what the client wants purely through skilful questioning. The problem arises when the client is not able to assess the extent of knowledge possessed by the client and vice versa. Each party sets out with a set of assumptions about the other's state of knowledge. Often, overcoming the barrier created by the initial assumptions is the key to a successful engagement. There are probably millions of instances of such assumptions caused due to asymmetry of information, but I can think of only one now... be sure that I will blog my next interesting instance of information asymmetry faithfully :-).

Enough for now, rest in next

Ranga

Diversified portfolios and principles of Human Resource Management

I have been meaning to write for a long time now. But all I have been able to do is to get a few draft headlines. I keep thinking I will come back to them but that time never seems to come. Anyway, here is one thing I am itching to write about.

We were talking about valuations of companies in our Finance II class. The issue was whether a merger would increase the value of companies if there were no synergies to be had. One student recalled an earlier lecture where Ajay Pandey said that in an efficient market, people will not pay more for a diversified company because they can themselves hold a diversified portfolio anyway. Of course, this discussion assumed the absence of synergies. This discussion sort of set me thinking on tangential lines. Human Resources is one of my better favoured areas of study (ask anyone in my class and they can tell you :-)) and I applied this theory to principles of human resource management to come up with an interesting analogy.

When we receive our initial undergraduate education, we are trained to be specialists in our respective fields. Be it computer engineering or medicine or accountancy, the narrowness with which we deal with our respective areas of study is astounding. Once we go into organisations as specialists, we are valued for the specialisation that we bring in.

Then there are these people who decide to go in for doing a post graduate degree in management. This is where things become interesting. When we exit b-school and go out into the job market, expectations of the recruiters change dramatically. Of course, we are initially expected to work in the areas of our touted specialisation ( or, if the companies aren't that smart at sensing our aptitudes, for some area where they deem fit to put us in). If the companies think they need a different specialisation they will hire a different person. In that sense the HR process resembles efficient markets. But later, we are valued for the synergies we bring to the workplace; synergies in terms of our ability to integrate knowledge from various functional areas, synergies in terms of being able to get along with people and so on... This value is much harder to estimate and often companies spend a huge amount of resources trying to get the right person for the right job.

However, there is no denying the fact that, early on in one's career, be it as a techie or as a management student, the recruitment market behaves as if it expects little synergies from diversifying our initial portfolio of knowledge. But later, those very synergies become crucial for managerial success and significantly influence the money and respect we get. Basically, time can improve synergies depending on the extent of integration we achieve within ourselves. This again is a function of our willingness and ability to learn.

On a more personal note, I would like to achieve the abovementioned synergies as quickly as possible. But I wonder whether the job market would value me for that...

Bloggin' off
Sitan