Monday, March 27, 2017

Are Humans Irrelevant?

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Soon after the financial meltdown of 2008, and the collapse of hundreds of companies, I suggested that a recession might be the best time to invest in people – impart new skills, new ways of approaching problems, and new algorithms for value creation.

A recent article by Gary Burnison of global HR firm Korn Ferry forces me to revisit the topic.

A significant number of CEOs seem to believe that humans are increasingly becoming irrelevant.

Burnison notes:

“More than two-thirds (67%) of 800 CEOs of large corporations believe that technology will create more value in the future than people.

Nearly half think that robotics, AI, and automation will make people largely irrelevant” in the future of work.

In a rank order of an organization’s top five assets, humans didn’t make the list at all: technology, innovation, product/service, brand, and real estate were the top five assets listed.”

At the turn of the century, mobile phones were not as ubiquitous as they are today.

A decade before that, the World Wide Web was still in its infancy.

We are thus made to believe that tectonic changes in just over two decades have rendered humans irrelevant.
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Surprisingly, the most brilliant minds seem to suggest the same.
And of course, those trying to disrupt the status-quo:
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I beg to disagree.

It is easy to see the hype. Indeed the fear, that technology induces in people. Sure, robots can perform repetitive tasks much faster than humans. AI tools and expert systems enable large databases to locate critical information faster than humans.

It is pertinent to ask: who creates the technology? What drives innovation – humans or robots? How will new products and services be developed? Will someone please give an example of AI creating a blockbuster brand?.

You may think it is just a coincidence.

IBM has announced that remote working is a thing of the past. Marketing people are the latest target. They can no longer work from home or a location of their choice. All marketing people are required to be physically present in one of six locations across the US.

Of course one can argue that the decision is irrational. It is particularly ironic, coming as it does from the company that created Watson. The company has overlooked the human costs of re-locating thousands of employees and families. It may yet be one more example of big blue’s erroneous decisions.

Let’s face it.

Organizations make all kinds of decisions in a turbulent environment - mostly based on intuition, gut feeling – not hard data, or analysis.

Michelle Paluso, IBM’s Chief Marketing Officer, writes:

There is only one recipe I know for success, particularly when we are in as much of a battle with Microsoft and the West Coast companies as we are, and that is by bringing great people with the right skills, give them the right tools, give them a mission, make sure they can analyze their results, put them in really creative inspiring locations and set them free. “

It is amazing that someone in a leadership position in 2017 is talking about “the only one recipe for success.”

However, the move shows that humans do matter – even for companies that focus on automation.

It is fair to say that practically every company today is a tech company – the degree may vary. In fact, it is easy to argue that any company that fails to embrace technology is irrelevant.

Burnison does provide valuable insights into the future of work:

Significant proportions of the workforce will be self-sourced – not outsourced or insourced. It is possible to think of talented individuals working for a dozen companies or more.

More and more people will work into their 70s.

Knowledge will determine one’s lifetime value.

I will add a couple of thoughts:

Organizations will be forced to be more humane in their interactions – this may be the only differentiator going into the future.

Individuals, organizations, and societies that look beyond themselves with compassion and empathy will succeed much more than those that look at the bottom line alone.

Evolutionary, self-correcting mechanisms will lead humanity to an egalitarian future.
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What do you think?

Wednesday, March 8, 2017

What is Your Builder Personality Type?

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So much has been written about leadership and entrepreneurship that one wonders whether anything new is possible.
Apparently, yes.
In their forthcoming book, Chris Kuenne and John Danner identify four distinct entrepreneur personality types. More importantly, they try to establish relationships between personality types and business success (or failure). The authors have used a patented analytic methodology (Personality Based Clustering) to arrive at their conclusions.
Drivers – are entrepreneurs who could just not be anything else. They are passionate about products/services and the markets/segments they serve. They have an intense focus on product/service characteristics and will not settle for anything but the best. Drivers do not like the complexity of launching new ventures, and assume that “the rest of the world will eventually catch up with their wisdom.”
Steve Jobs is a near-perfect example of a driver. His attention to aesthetic design and impeccable performance is at the heart of Apple’s success as the most valuable company in the world.
At the other end, Ken Olsen of Digital Equipment Corporation was a driver too. He and his board were so obsessed with engineering precision that they completely overlooked the rapid technological changes around them. As a result, a once-mighty company whose VAX series of minicomputers was unrivaled went into oblivion before being acquired by Compaq.
Explorers – are problem solvers. They think big and are willing to follow up on their dreams. Mark Zuckerberg is an explorer. “By giving people the power to share, we’re making the world more transparent.” It is not surprising that Facebook has nearly 2 billion monthly active users. On the other hand, consider Iridium, the global satellite phone company backed by Motorola, the first company to reach the 6-Sigma level in quality. The Iridium experiment can be classified as an explorer too. The ambition was as high as they come – to provide connectivity anywhere in the world. All the forecasts and assumptions proved wrong, and the experiment ended very quickly as one of the 20 largest bankruptcies in US history.
Crusaders – are entrepreneurs with a cause. Larry Page and Sergey Brin are crusaders. Google’s mission is to organize the world’s information and make it universally accessible and useful. From zero to a market cap of 587 Billion in 20 years – what more can investors ask? Paul Polman of Unilever is another crusader who has become the poster boy for responsible capitalism. Nicholas Negroponte, the founder of One Laptop Per Child (OLPC) is a crusader too. But his much-touted $100 laptop failed to take off, leave alone reaching its desired objective. Among the many criticisms that the project has been subject to, the most important are its US-Centric approach to finding solutions, the similarity to asking people to eat cakes when they cannot afford bread, and the centralized, top-down organizational structure. Thus, a great idea quickly turned into a very controversial project. In any case, one can indeed buy a basic laptop for $75 or less, thanks to the economies of scale concept.
Captains – are obsessed with teams and collaboration. They find ways to identify reciprocal and complementary talents within the team to accomplish their mission. In that sense, captains are less individualistic than the other three types. Hewlett and Packard who pioneered “Managing By Walking Around” are examples of captains. In the contemporary scenario, Jack Ma of Alibaba whose slogan is “customers first, employees second, and shareholders third” is the classic example of a captain. At the other end, Kay Whitmore just blew it at Kodak, despite heading a company that invented the photographic film, the first digital camera, and the first mega-pixel camera.
It is obvious that each personality type has its fair share of strengths and weaknesses. The authors emphasize the need for diversity – to find “polar complements” – whose differences in perspective could lead to better solutions compared to unitary approaches.

To pre-order: Chris Kuenne and John Danner: Built for Growth: How Builder Personality Shapes Your Business, Your Team, and Your Ability to Win; Harvard Business Review Press (June 6, 2017); ISBN 1633692760.
To find out your personality type: HTTP://

Friday, February 10, 2017

How to Build a Business That Lasts a Hundred Years?

Indeed, why should one even think of building a business that survives for a hundred years?

Look at the Exhibit below.
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Whereas human lifespans have increased over the last 50 years and today the average longevity in the developed world is close to 80 years, corporate longevity has been shrinking steadily. Over the same period, corporate lifespans have shrunk from over 60 years to less than 20 years, and are projected to shrink further in the next decade.

Another key marker to look at is the five-year mortality risk for corporations. From less than 10% fifty years back, today the five-year mortality risk is 33% in many sectors.
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Therefore, we can no longer cast aside the need to look at building blocks for corporations that will outlive the founders and be a legacy for future generations.

Of course, management gurus and thinkers have provided us with many frameworks, business models, and templates for sustainability.

So, what is new?

Martin Reeves of the Boston Consulting Group has an interesting model that is as refreshing as it is counter-intuitive.

The model is the human immune system. The immune system that has evolved over anthropological time periods has some distinct characteristics.
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Redundancy – the human system has multiple redundancies. If one layer fails, there is another to take over. As a simple example, nature has provided us with two lungs and two kidneys. From a clinical perspective, one each would be just fine. When you look at a highly complex system like the brain, you will find that an average person utilizes only a fraction of the cognitive capacity.

Most of you would have traveled in a Boeing 747 or an Airbus 340 – two aircraft having an impeccable safety record. Both have four engines. Technically, both can fly with two engines. Pilots undergoing training in a simulator are trained to fly the plane on one engine under certain conditions. The apparent redundancy reduces the probability of total failure to a very small figure.

In contrast, the Dreamliner or the 787 which has larger windows, two engines, and a lot less redundancy to enhance efficiency, has had to face numerous problems and to date has not been able to address them fully. In 2016, the Federal Aviation Administration ordered fixes on General Electric engines used on some Boeing 787 Dreamliners calling the measure “an urgent safety issue.” Yes, the plane can fly on one engine. The fact remains that the 787 is yet to find a place among the safest planes to fly.

Modularity – conventional wisdom treats the human body as a closed system. However, breakthroughs in stem cells and genetic engineering are bringing us ever closer to treat the human body as a modular system. Cornelis Vlasman and his team have shown through their prototype OSCAR that living organisms can be “built.” OSCAR is the size of a human hand and consists of clickable modules grown from human cells. A modular approach in stem-cell technology could see breakthroughs in the treatment of dementia and Alzheimer’s in the next few years. Cells taken from a living brain can be “grown” in a lab and re-planted to take on the role previously played by diseased cells.

Modularity in economic and organizational design ensures adaptability and evolution to meet changing demands. A modular architecture specifies the interfaces between functions or processes or components or even industry structures either as strategic intent or as an emergent outcome so that one can build a large range of component variations into the system without having to make changes in the functions or processes and without having to change the interfaces.

We can see modularity all around us – from computer components to automobile subsystems to the units that make up a modern kitchen. We insulate organizational process in a way that autonomously creates inter-dependencies. We create functional silos that inevitably lead to personal fiefdoms.

Organizations with modularity are increasingly abandoning hierarchies for “roles” and interchangeable functions. In fact, the rapid rise of Japan as an economic superpower had much do with the concept of job rotation. Even today, Japanese corporations exhibit modular characteristics more than their counterparts in the OECD countries.

Diversity – 98% of our DNA structures are the same. With the 2% that are different, each of the seven billion people on this planet is unique. As complex as the universe is, we have within each of us an equally diverse and complex set of subsystems. If we want to look for diversity in all its myriad forms, we need to look no further than the human system.

Thomson Reuters reported in September 2016 that based on an analysis of the practices of over 5,000 companies worldwide, diverse companies (not necessarily diversified companies) create more innovative products, happier customers, and better financial returns. The study found companies that consciously embraced the concept of a diverse workforce consistently outperforming their peers.

The report could not have come at a more appropriate moment for search giant Google and its parent company Alphabet. The world’s most valuable company which handles trillions of queries every year and accounts for 80% of all Internet searches could not make the cut when it came to diversity (Source: Fortune). 71% of the company’s employees are male, 57% of U.S. employees are white, and men hold the vast majority of technology and leadership position (Source: Fortune and Company Domain information). A mere 2.4% are black, 1.8% are mixed race, and less than 1% are “other.”

The company is reinventing itself in correcting this shortcoming. Proctor & Gamble, Cisco, Microsoft, and Johnson & Johnson all make it to the top 25. Time will tell whether Google and Alphabet can catch up. Many are skeptical because the initiative to improve diversity has not come from the leadership.

Prudence – the human system clearly outperforms any other system when it comes to resource optimization. The speed with which the central nervous system rushes impulses, messages, and resources (oxygen, blood, antibodies) to a part where they are needed the most is beyond imagination.

Organizations that consistently beat the odds show the same level of prudence. How has Southwest been able to ride the severe storms that have driven many large players out of business? You will see the single-minded pursuit of prudence (cost leadership), modularity (having only one type of aircraft), and embeddedness (service is deep rooted in the organization’s culture).
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There you are. If you wish your organization to be around for a hundred years or more, just think of the human system. Implement the principles of redundancy, diversity, modularity, adaptation, prudence, and embeddedness.

You can watch Martin Reeves’ TED talk here:

Thursday, January 26, 2017

An Unequal World

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Eight men own the same wealth as the 3.6 billion people who constitute the poorest half of people on this planet.

A year ago, using similar data, 9 billionaires owned the same wealth as the poorest half of the planet.

At the rate the super-rich is growing, the world may have its first trillionaire in 25 years.

What is a trillion anyway?

Well, assuming you spend a million dollars every day, you would have to be around for 2738 years to spend one trillion.

In 25 years, the incomes of the rich have risen 182 times as much as the incomes of the poorest.

If current trends continue, we would have to wait 170 years for women to earn the same as men.

Meanwhile, 1 in 10 people on this planet still lives on less than $2 a day.

A woman working 12 hours a day six days a week in a South Asian country earns less than $1 per hour. The CEO of the company that sells the finished product earns over $200 million a year.

Just allow these figures to sink in for a moment.

Business magazines are fond of publishing lists. They gloat over the youngest billionaires, and come out with meaningless data – 30 under 30 and so on.

The notion that the richest are self-made is one of the biggest myths of our time. Over half of today’s billionaires inherited their wealth. The other half have accumulated wealth through businesses and industries where corruption, nepotism, tax evasion, and inversion are rampant. As noted in a recent article (, "fake it till you make it" is the new mantra in Silicon Valley - supposed to be the epicenter of unicorns.
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As a contrast, consider MONDRAGON, a leading Spanish business group with over 74,000 employees, 12 billion Euros in revenue, 261 businesses, 15 technology centers, offices in 41 countries, sales in 150 countries and assets of over 25 billion Euros.

Employees completely own the group.

The ratio of the highest paid employee’s income to that of the lowest paid is a healthy 9 to 1.

The ratio of CEO salary to the median income in the U.S. is 431 to 1.

Of course, you can interpret the data with “alternative facts” and show the ratio to be an egalitarian 4 to 1.

Or face reality, as ugly as one can imagine.

Corporations can do practically anything and get away with it.

Please remember no one had to go to jail for the financial meltdown of 2007.

The law is supposed to be the same for everyone. Has anyone been punished for the financial meltdown of 2007? Or the emission scandal at Volkswagen? Or the spurious claims at Mitsubishi? Or the oil spill in the Gulf of Mexico (BP)? Or the blatant wrongdoings at Wells Fargo? Or the data breaches and alleged cover-ups at Yahoo?

On the contrary, Yahoo’s CEO is likely to walk away with over $140 million if the merger with Verizon is complete. The reason? Yahoo’s clawback provisions are too weak to be enforced. Wells Fargo allowed the top executive allegedly responsible for the mess to walk away with $125 million.

10,000 miles away, in India, the largest democracy in the world, despite the innumerable scandals that have rocked the country, no politician or top bureaucrat has been punished in 70 years of independence.

India’s millionaires – the top 1% - have 45% of the country’s wealth.

One person accounted for 11% of the income tax collected in the country last year.

India’s population is 1.3 billion.

Ideally, the percentage of wealth in the hands of millionaires should be less than 30%. If the rich have more than 40% of the wealth, there is no space for a significant middle class. Japan, ranked as the most “equal” country in the world has just 22% of the wealth controlled by millionaires. Doing quite well are New Zealand (26%) and Norway (27%).

Look at the issue from another perspective.

Today, the world’s population is 7.4 billion. 60% of the population is on one continent – Asia. In fact, two countries – China and India – account for 37% of the world’s population. The second largest continent by area – Africa – has a population of 1.2 billion or about 15%. The demographics are changing.

Projections vary. If we assume that the growth in population will follow a middle path, the world population by 2100 is estimated to be 10 billion. Of course, none of us may be around. Here is the frightening statistic. Almost half of the 2100 population will be on one continent – Africa. Give some thought to the implications.

You are probably tired. And rightly so.

Think for a moment. How long can this farce continue? When will the bubble burst? It has already burst in some countries. It is likely to burst in the next year or two in much more. The consequences will not be pleasant for anyone.

What, if any, is the solution?

For a start, we need governments that work for all, not just the 1%. We have documented evidence of the 1% influencing the outcome of elections in several countries. We also have evidence of the 1% getting tax breaks in other countries. In the guise of democracy, we end up having are governments of a few, by a few, and for a few.

It is high time that governments started cooperating with each other on critical issues. The race to be the least taxed nation or to be a tax haven or to have secrecy laws must stop. The race may apparently show some winners, but the ultimate loser will be humanity itself.

Governments should also seek to reward entities that work for society’s and employees’ well-being rather than the well-being of shareholders alone.

As I have pointed out earlier in my posts, the real keys to development are education and health. The countries that come out one top (Unfortunately, the U.S. does not) on happiness indicators year after year are also the ones that have near 100% literacy and robust healthcare for all.

Amidst all the gloom, a tiny sliver of light appeared in December 2016.

The 2016 Global Forum assembled in Rome. The leaders of some of the largest corporations committed to making a difference to the societies they serve.

His Holiness Pope Francis asked the leaders to remember the human faces they were impacting rather than just revenues and profits.

Asking leaders who are constantly challenged to produce results to focus on the human side of their transactions is indeed counter-intuitive.

Providing a level playing field, equal opportunities, and a genuine concern for those left behind in our quest for success and development is an imperative.

The alternative is a world that nobody wants to imagine.

Data sources:





Tuesday, January 17, 2017

The Paradox of Choice

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One of the key elements of democracies is competition. One of the key outcomes of competition is choice. Choice is supposed to afford the freedom that is at the heart of rational decision making. Or that is what Economics 101 would tell you.
Now consider this. The average grocery store offers some 300 varieties of salad dressings. Are you sure that the one you had today, or yesterday, or last week, was indeed the best? How do you know? Have you tried all the 300?
Or assume you want to build a stereo system that will provide you with endless hours of bliss. A well-stocked electronic components store can, in theory, allow you to build seven million varieties of stereo systems. How would you determine that the components that you choose would indeed provide the best possible sound?
Choice is a fascinating subject to explore. In his book, The Paradox of Choice, Barry Schwartz argued that more choices lead to more stress and thus are less helpful in making decisions. His work builds on the pioneering research of Columbia Business School Professor Sheena Iyengar, who has consistently questioned the notion that more choices make better decisions and suggests that on many occasions, fewer choices make better decisions. As you would expect, mainstream economists term this “hogwash.” People who welcome new ways of thinking based on well-established research principles acknowledge that choice has limits. The essence of the paradox of choice is that more options lead to fewer actions. Fewer options lead to more actions.
A profound but painful finding of Professor Iyengar’s research relates to choices that parents must make when faced with the challenge of when and if to remove a prematurely born baby from life support. Just imagine the trauma involved with the decision. Without life support, the baby will die in a matter of hours. With life support, the baby will survive but in a vegetative state. In some countries, such as France, the decision is made by the doctor. In the U.S., the decision must be made by the parents. Research suggests that the negative emotions, frustration, and a sense of guilt persist in American parents even a year after the event. In France, parents appear to come to terms with reality sooner and get on with life. Therefore, the inevitable question that arises is whether the availability of “choice” makes American parents better off or worse off in such a daunting situation.
Research also suggests that the very notion of choice is context-specific. On a lighter note, a Japanese waiter refuses to provide sugar with green tea because, in Japan, you do not drink green tea with sugar. When the matter escalates to the manager, the latter politely says that they do not have sugar. Change the order to coffee, magic happens. You get the coffee along with two packets of sugar!.
Similarly, for the citizens of the East European countries transitioning from socialism to a free-market economy, seven different beverages offered do not represent choice. For them, all the seven are “soda.” Offer them the beverages, along with a variety of fruit juices, and water, and then they perceive the offering as three choices – soda, fruit juice, and water. When experts cannot distinguish between beverages that are close substitutes in a blind test, why do companies keep offering more and more choices?
The plethora of choices available in health insurance can confound even the most rational person. How are ordinary people supposed to make decisions from a complex set of choices with so much fine print that one can make neither head nor tail out of any of them?

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An unintended consequence of a proliferation of choice is visible in match-making sites. One particular site boasts of over a million profiles. It is quite hilarious. Every male seeks a beautiful, tall, slim, well-educated, preferably employed female from a “respectable” family. Every female has similar requirements with some words getting substituted – for example, the prospective young man better is employed in an MNC, and located in the western hemisphere. Nobody is really good enough, and one is always worried that one might be missing out on something. In fact, social media has a new term for this” “FOMO” – Fear of Missing Out.
Or consider democracy as a process. The Indian state of Uttar Pradesh has elections for the state legislature scheduled in February 2017. Please remember that if the state were to be an independent entity, it would be the 7th largest country in the world. Many constituencies have as many as 45 candidates in the fray. Does this choice lead to better decision-making on the part of voters? (More than half the electorate are illiterate; I do not link intelligence and literacy; However, one would be stretching the limits of logic by insisting that people having no knowledge of the candidates or their antecedents and vote based on a visual symbol will make the wisest choice).
When one looks at all the evidence for and against choice, one is still none the wiser for it. As one scholar writes, “offering lots of extra choices seems to make no important difference either way.” The argument of many economists is this: “If the too-much-choice effect were true, producers and marketers would be simplifying the decision process for consumers by limiting the number of choices. A visit to any store reveals a proliferation of choices, not a reduction. Therefore the effect can’t be true.”
We can find examples in the real world where reducing choice has led to increased sales in a variety of industries. The interesting point to note is that practically in every case, the reduction of choice was made as a cost cutting measure, not a vehicle for generating more sales.
Professor Iyengar’s work suggests that when employees have many alternatives to retirement plans, fewer employees participate. When only a few options are available, more employees take advantage. A similar phenomenon is visible in health care. By passing up on the opportunity, employees lose the matching employer’s contribution. How does one explain this paradox?
For economists, the concept of choice overload is logically impossible. For ordinary people, choice overload is a reality. You have over 200 TV channels. That is an abundance of choice. Are you sure you are watching the most relevant or the most interesting or the most inspiring program?

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Choice has its uses but only up to a point. Beyond that, more choice may lead to a decision paralysis. A real challenge for all of us is to find that middle ground – the so-called “sweet spot.” The middle ground is one in which we can make better and wiser decisions. Psychology has many phenomena where one can indeed have too much of a good thing. That is true of choice as well.
How to find that sweet spot? Your guess is as good as mine.

Friday, January 6, 2017

The End of a Flat World?

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Thomas Friedman wrote his best-selling book on a flat world in 2005. The caption below the title said "A Brief History of the Twenty-first Century." The book was a tour-de-force of the convergence of technology and communications, and the disappearance of physical borders. Given the instant fame and publicity that the book received, no one asked how one could write history looking forward.

Just over a decade later, as we enter another year, the theory has come full circle. Today, more than ever before, we can say with certainty that the world is not flat, not just in the physical sense, but even as a metaphor.

Of course, there were skeptics then as there are proponents today. Imagining that we live in a world where the factors of production have free mobility gives us a rare degree of comfort. Imagining otherwise can be worrying.

Assume for a moment that the proposal to slash corporate taxes in the USA to 15% becomes a reality. That would make the USA the least taxed nation in the world by a long shot. Who would want to invest in other countries or resort to inversion as a strategy? And what if other countries, as a natural defense mechanism, also slash taxes?

Or consider for a moment the avowed path to a growth trajectory of 3.5 - 4.0%. Indeed, throughout the period of the 1950s to the turn of the century, this was the average growth rate of the OECD countries. The growth had two components - moderate tax rates that contributed between 1.5% and 2.0% to growth, and a growing work force that contributed in equal measure. Today, the first component is possible with a drastic reduction in tax rates. Sadly, the second component is missing. We have reached the limits of what can be achieved through people. The changing demographics and the fact that the numbers available for employment just don't add up means that it is not possible to increase growth by more than 0.3% through the work force. So how does one reach the magical figure of 3.5 or 4.0%? Who cares for such details?

Outsourcing and offshoring are on their way out. This was a flawed business model in the first place. It managed to create, by a strange mix of circumstances and chance, a few billionaires and many millionaires. It also very effectively amplified the inequities in social structures and the relentless pursuit of wealth as the only indicator of success. When 1% of the world's population owns over 50% of assets, do you still feel comfortable?

The slowdown in the tech sector is visible. The growth of unicorns has clearly plateaued off. Major companies have been "re-valued" down. New rounds of funding can be had only with stringent conditions and many companies are simply pulling their shutters down. Don't take my word for it. Read the letter that the CEO of a major software company wrote to all employees on New Year's Day.

One of the fundamental premises on which modern societies have been built is the notion that democracy represents the best opportunity for the full potential of a society to be reached. Yet, you will be surprised by the results of a massive survey conducted in 50 democracies. With the exception of Switzerland and the Scandinavian countries, the young people in the other democracies seem to suggest that powerful, authoritarian leaders are the answer to many of our problems. Not surprisingly, the older people still seem to consider democracy to be the best option.

The rise of nationalism and protectionism is there for everyone to see. However, the fault lines are not where you would expect them. In fact, contrary to popular perception, the region that appears well prepared is Europe. Quietly, almost unobserved, Europe has brought its debt level as a percentage of GDP from 170% to 120% in less than a decade. Therefore, if there is one region that one can bet upon, it is Europe!

Changing demographics, the slowdown in population growth and the consequent pressures on the work force, a significant reduction in migration, a noticeable fall in both foreign direct investment and foreign institutional investment all point to a gradual swing to mercantilism, protectionism, success as a zero-sum game, and the rise of leaders who are perceived to be decisive and powerful, and you have all the ingredients necessary for de-globalization.

Add to this formidable cocktail a sting in the tail. Economists rarely agree on anything. There is general consensus though that too much debt can be problematic for any country. As a rule of thumb, a dollar of debt is supposed to lead to a dollar increase in GDP. This has held for most countries. At its peak of sustained double-digit growth, it held even for China. As the inevitable consequences of a centrally controlled economy started taking its toll, in the first decade of this century, China raised two dollars of debt to achieve a one dollar growth in GDP. Today, China's debt for each dollar of GDP is over four dollars. With an economy that is less than half that of the US, China has more debt than the US. The question is not if, but only when this bubble is going to burst.

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The resultant tremors across the world will render the recession of 2007-08 look like a walk in the park.

Still think it is a flat world? Alternative constructs are most welcome.

Thursday, December 22, 2016

The Overview Effect

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The Overview Effect is a cognitive shift in awareness reported by some astronauts and cosmonauts during their spaceflight.

As Edgar Mitchell of Apollo 14 has said: "You develop an instant global consciousness, a people orientation, an intense dissatisfaction with the state of the world, and a compulsion to do something about it. From out there on the moon, international politics look so petty."

Viewed from the moon, or even from space, about 300 miles above the earth's surface, our planet takes on a new perspective. Largely blue, borderless, and hanging like a fragile sphere with the infinite space in the background, with a paper-thin atmosphere that nurtures life - just think about it, in an universe comprised of millions of galaxies, billions of stars, countless planets, an unknown number of black holes, this planet of ours is the only one known so far that has life on it.

As Stephen Hawking has said so profoundly: "The solar system is not even a speck in the universe."

Astronauts have said that looking from space, one suddenly forgets all the myriad differences, the squabbles, the jostling for power and pelf, and the mindless games that people play, and one feels the need, indeed an intense desire, to unify people and to protect and preserve this beautiful blue dot.

The Overview Effect is named after the Overview Institute founded by Frank White who says: "There are no borders or boundaries on our planet except those that we create in our minds or through our behaviors."

There is enough empirical evidence to suggest that as individuals, those who want to do good far outnumber those who want to harm others. Experts have projected that the population on earth would reach 10 billion by the year 2100. Nearly half of this would be in one continent - Africa, currently perhaps the most neglected of continents. Can you imagine our planet with almost half the people being in some way disconnected from the rest?

In this season of joy, of hope, of kindness, of truth and righteousness, of compassion, of caring for the less privileged, let us pause for a moment and think how we can do good in any way we can.

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