Mark Twain On India

Here are some excerpts from Mark Twain’s travelogue, Following the Equator:

"This is indeed India; the land of dreams and romance, of fabulous wealth and fabulous poverty, of splendor and rags, of palaces and hovels, of famine and pestilence… The country of a thousand nations and a hundred tongues, of a thousand religions and two million gods. It is the cradle of the human race, birthplace of human speech, mother of history, grandmother of legend, great-grandmother of tradition… The one sole country under the sun that is endowed with an imperishable interest for alien prince and alien peasant, for lettered and ignorant, for wise and fool, for rich and poor, for bond and free. The one land that all men desire to see, and having seen once, by even a glimpse, would not give that glimpse for the shows of all the rest of the globe combined… Its marvels are its own; the patents cannot be infringed; imitations are not possible."

Winning

A couple of months back, I finished reading a book called “Winning” by Jack Welch. I found this book very useful and extremely informative. I suggest you to read this. It would be worth the effort and time.

Here is the gist of some important points adapted from that book. I hope to incite enough enthusiasm in you that you “hog” on to it right away. No, I am not publicizing the book for Mr. Welch. I want well-educated co-workers around me. :-)

What leaders do?
1) Leaders relentlessly upgrade their teams, using every encounter as an opportunity to evaluate, coach, and build self-confidence.
2) Leaders make sure people not only see the vision, but also live and breathe it.
3) Leaders get into everyone's skin, exuding positive energy and optimism.
4) Leaders establish trust with candor, transparency, and credit.
5) Leaders have the courage to make unpopular decisions and gut calls.
6) Leaders probe and push with a curiosity that borders on skepticism, making sure their questions are answered with action.
7) Leaders inspire risk taking and learning by setting the examples.
8) Leaders celebrate.

The Art of Persuasion

Jay A. Conger believes that contrary to popular belief, persuasion is NOT the same as selling an idea or convincing opponents to see things your way. It is instead a process of learning from others and negotiating a shared solution.

So, persuasion consists of four essential elements:
1) establishing credibility
2) framing to find common ground
3) providing vivid evidence, and
4) connecting emotionally

Credibility grows out of two sources: expertise and relationships. But, even, if a persuader’s credibility is high, his position must make sense – even more, it must appeal – to the audience. Therefore, a persuader must frame his position to illuminate its benefits to everyone who will feel its impact.

Persuasion then becomes a matter of presenting evidence – but not just ordinary charts and spreadsheets. The most effective persuaders use vivid – even over-the-top-stories, metaphors, and examples to make their positions come alive.

Finally, good persuaders have the ability to accurately sense and respond to their audience’s emotional state. Sometimes, that means they have to suppress their own emotions; at other times, they must intensify them.

Work today gets done in an environment where people don’t just ask – “what should I do?” They now ask – “why should I do it?” In this kind of environment, the art of persuasion is highly required to get things done.

At times, persuasion is commonly perceived as just another form of manipulation – devious and to be avoided. Certainly, persuasion can be used in selling and deal-clinching situations, and it can be misused to manipulate people. But, exercised constructively and to its full potential, persuasion supersedes sales and is quite the opposite of deception.

Dialogue happens before and during the persuasion process. Before the process begins, effective persuaders use dialogue to learn more about their audience’s opinions, concerns, and perspectives. During the process, dialogue continues to be a form of learning, but it is also the beginning of the negotiation stage. You invite people to discuss, even debate, the merits of your position, and then to offer honest feedback and suggest alternative solutions. That may sound like a slow way to achieve your goal, but effective persuasion is about testing and revising ideas in concert with your colleagues’ concerns and needs. In fact, the best persuaders not only listen to others, but also incorporate their perspectives into a shared solution. Persuasion often demands compromise.

Four ways not to persuade:
1) Don’t attempt to make your case with an upfront, hard sell.
2) Don’t resist compromise.
3) Don’t think persuasion lies only in presenting great arguments.
4) Don’t assume persuasion is a one-shot effort.

Six Dangerous Myths About Pay

In the “Harvard Business Review on Managing People”, an article by Jeffrey Pfeffer states that businesspeople are adopting wrongheaded notions about how to pay people and why. In particular businesspeople are under six dangerous myths about pay. Here, I present you my understandings of that research paper.

Myth #1: Labor rates are the same as labor costs.
Myth #2: Cutting labor rates will lower labor costs.
Myth #3: Labor costs represent a large portion of a company’s total costs.
Myth #4: Keeping labor costs low creates a substantial competitive edge.
Myth #5: Individual incentive pay improves performance.
Myth #6: People work primarily for the money.

Explanation of Myth #1 and Myth #2: A labor rate is total salary paid to the labor force divided by total time worked by them. But, labor costs take productivity into account, besides the total amount paid to the labor force. Thus, labor rates and labor costs are different. For example, consider two companies X and Y that are in the same business and produce the same products.

Case 1: Company X pays $10 per-hour to 100 employees for producing Z units of a product in 50 hours.

So, Labor Rate = (total salary paid to the labor force)/ (total time worked) = $(10*100*50)/ (50 hours) = $1000/hour
Labor Cost = $50000

Case 2: Company Y pays $15 per-hour to 100 employees for producing Z units of the same product as Y does in 30 hours.

So, Labor Rate = (total salary paid to the labor force)/ (total time worked) =
$(15*100*30)/ (30 hours) = $1500/hour
Labor Cost = $45000

Now, see, although Labor Rate at company Y, $1500/hour, is higher than the Labor Rate at company X, $1000/hour, but, still, Labor Cost at Y, $45000, is lower than the Labor Cost at X, $50000.

How is this possible? This is possible simply because of higher productivity demonstrated at company Y than that at company X. The labor force at Y finished the same job in lesser number of hours than did the labor force at X, keeping the quality of work the same. And, this theory of productivity is true in, almost, all the fields of businesses.

Case #1 and Case #2, mentioned above, also explain Myth #2 – just by lowering the labor rate, it’s not possible to reduce the labor cost. Productivity is something that should not be overlooked. In order to remain competitive in the market, a company cannot afford to live with these two myths.

Explanation of Myth #3: Managers who mix up labor rates and labor costs also tend to accept Myth #3 that labor costs are a significant portion of total costs. Sometimes, that’s true. It is, for example, at Accounting and Consulting firms. But, the ratio of labor costs to total costs varies widely in different industries and companies. And even where it is true, it’s not as important as many managers believe. One of the reasons why the confusion over costs and rates persists is that labor rates are a convenient target for managers who want to make an impact. Labor rates are highly visible, and it’s easy to compare the rates you pay with those paid by competitors or with those paid in other parts of the world. Moreover, labor rates often appear to be a company’s most malleable financial variable. It seems a lot quicker and easier to cut wages than to control costs in other ways, like reconfiguring manufacturing processes, changing corporate culture, or altering product design.

Explanation of Myth #4: Those who swallow this myth may neglect other more effective ways of competing strategies, such as through quality, service, delivery, and innovation. In reality, low labor costs are a slippery way to compete and perhaps the least sustainable competitive advantage there is.

Explanation of Myth #5: Individual incentive pay has been shown to undermine teamwork, encourage employees to focus on the short term, and lead people to link compensation to political skills and ingratiating personalities rather than to performance. Instead of individual incentive pay companies should opt for group-oriented compensation system. Some people might refute group-oriented pay-system on the basis that it induces “free riding” attitude in the team members. But, this is incorrect, because individuals do not make decisions about how much effort to expend in a social vacuum. Moreover, employees are influenced by peer pressure and the social relations they have with their workmates. Plus, sometimes, individual pay schemes go so far as to affect customers. For example, salespeople might piss the customers off by pestering them to buy the services or products that they are selling - in order to meet their targets. Another good reason is that in the typical individual-based merit pay system, the boss works with a raise budget that’s some percentage of the total salary budget for the unit. It’s inherently a zero-sum process: the more I get in my raise, the less is left for my colleagues. So, the worse my workmates perform, the happier I am because I know I will look better by comparison. This discourages people from sharing best practices and learning from other employees.

Explanation of Myth #6: People do work for money – but they work even more for meaning in their lives. In fact, they work to have fun. Companies that ignore this fact are essentially bribing their employees and will pay the price in a lack of loyalty and commitment.

Pygmalion Effect

In the popular book, "Harvard Business Review on Managing People," one of the articles is by J.Sterling Livingston, who presents "Pygmalion in Management." I present you the gist of that article. Moreover, I encourage you to read the complete article on your own in order to gain more insights.

The way managers treat their subordinates is subtly influenced by what they expect of them. If managers’ expectations are high, productivity is likely to be excellent. If their expectations are low, productivity is likely to be poor. It is as though there were a law that caused subordinates’ performance to rise or fall to meet managers’ expectations.

Cases available from scientific research now reveal:
1) What managers expect of their subordinates and the way they treat them largely determines their performance and career progress.
2) A unique characteristic of superior managers is the ability to create high performance expectations that subordinates fulfill.
3) Less effective managers fail to develop similar expectations, and as a consequence, the productivity of their subordinates suffers.
4) Subordinates, more often that not, appear to do what they believe they are expected to do.

Pygmalion effect is also noticed in the healing professions, where a physician’s or psychiatrist’s expectations can have a formidable influence on a patient’s physical or mental health. For instance, the havoc of a doctor’s pessimistic prognosis has often been observed. Again, it is well known that the efficacy of a new drug or a new treatment can be greatly influenced by the physician’s expectations – a result referred to by the medical profession as a “placebo effect.”

When an employee is treated by her manager as a super-person, she tries to live up to that image, and does what she knows a super-employee is expected to do. But, when an employee, with poor productivity records, is treated by her manager as not having “any chance” of success, this negative expectation also becomes a managerial self-fulfilling prophecy.

It is virtually impossible for a manager to mask her low expectations of her subordinates because the message usually is communicated unintentionally, without conscious action on her part. Indeed, managers often communicate most when they believe they are communicating the least - for example, the silent treatment communicates negative feelings even more effectively, at times, than a tongue-lashing does. Indifferent and noncommittal treatment, more often than not, is the kind of treatment that communicates low expectations and leads to poor performance.

In general, managers are more effective in communicating low expectations to their subordinates than in communicating high expectations to them, even though most managers believe exactly the opposite. Clearly, the way managers treat subordinates, not the way they organize them, is the key to high expectations and high productivity.

Managerial expectations must pass the test of reality before they can be translated into performance. Subordinates will not be motivated to reach high levels of productivity unless they consider the boss’s high expectations realistic and achievable. If they are encouraged to strive for unattainable goals, they eventually give up trying and settle for results that are lower than they are capable of achieving. In short, “dangling the carrot just beyond the donkey’s reach,” endorsed by many managers, is NOT a good motivational device.

The degree of motivation and efforts rises until the expectancy of success reaches 50%, and then begins to fall even though the expectancy of success continues to increase. No motivation or response is aroused when the goal is perceived as being either virtually certain or virtually impossible to attain.

What accounts for the difference between superior managers, who create high performance expectations that their subordinates fulfill, and weaker managers, who create low performance expectations that their subordinates fulfill too?
The answer, in part, seems to be that superior mangers have greater confidence than the weaker managers have in their own abilities to develop the talents of their subordinates. Contrary to what might be assumed, the high expectations of superior managers are based primarily on what they think about themselves – about their own ability to select, train, and motivate their subordinates. What managers believe about themselves subtly influences what they believe about their subordinates, what they expect of them, and how they treat them. If they have confidence in their abilities to develop and stimulate them to high levels of performance, they will expect much of them and will treat them with confidence that their expectations will be met. But, if they have doubts about their abilities to stimulate them, they will expect less of them and will treat them with less confidence.

Initial corporate expectations for performance (with real responsibility) mold subsequent expectations and behavior. Thus, initial bosses of new college hires must be the best in the organization. Unfortunately, however, most companies practice exactly the opposite. Although most top executives have not yet diagnosed the problem, industry’s greatest challenge by far is to rectify the underdevelopment, underutilization, and inefficient management and use of its most valuable resource – its young managerial and professional talent. According to me, the underlying causes of high attrition are underdevelopment and underutilization of a work force that has high career aspirations. Moreover, a “generation gap” between bosses and subordinates is another significant cause of breakdown. Many managers resent the abstract, academic language, and narrow rationalization characteristically used by recent graduates.

Industry has not developed effective first-line managers fast enough to meet its needs. As a consequence, many companies are under developing their most valuable resource – talented young men and women. They are incurring heavy attrition costs and contributing to the negative attitudes young people often have about careers in business.

The challenge is clear: to speed the development of managers who will treat subordinates in ways that lead to high performance and career satisfaction. Managers not only shape the expectations and productivity of their subordinates, but also influence their attitudes toward their jobs and themselves. If managers are unskilled, they leave scars on the careers of young people, cut deeply into their self-esteem, and distort their image of themselves as human beings. But, if they are skillful and have high expectations, subordinates’ self-confidence will grow, their capabilities will develop, and their productivity will be high. More often than one realizes, the manager is Pygmalion.

Two Dimensions, Four Cultures

In the popular book, “Harvard Business Review on Managing People”, one of the articles - is by Rob Goffee and Gareth Jones - presents a matrix for understanding organizational culture, and what holds the modern company together. I present you the gist of that article. Moreover, I encourage you to read the complete article on your own in order to gain more insights.

Sociability is a measure of sincere friendliness among members of a community.

Solidarity is a measure of community’s ability to pursue shared objectives quickly and effectively, regardless of personal ties.

Note: None of these cultures is “the best.” In fact each is appropriate for different business environments.

Networked Organization:

Networked organizations are characterized not by a lack of hierarchy but by a profusion of ways to get around it. Few organizations start their life cycle in the networked quadrant. Sociability is built up over time. It follows that many organizations migrate to networked organization from other quadrants.

Characteristics:
1) People frequently stop to talk in the hallways.
2) People wander into one another’s offices with no purpose but to say hello.
3) Lunch is an event in which groups often go out and dine together.
4) Many of these organizations celebrate birthdays, field softball teams, and hold parties to honor an employee’s long service or retirement.
5) Employees act like family, attending one another’s weddings, and anniversary parties.
6) Friends or cliques of friends make sure that decisions about issues are made before meetings are held to discuss them.
7) People move from one position to another without “required” training.
8) Employees are hired without going through official channels in the human resources department.

Advantages:
1) Informality can lend flexibility to an organization and be a healthy way of cutting through the bureaucracy.
2) The ability to collect and selectively disseminate soft information.
3) The ability to acquire sponsors or allies in the company who will speak on their behalf both formally and informally.

Disadvantages:
1) The low level of solidarity means the managers often have trouble getting functions or operating companies to cooperate.
2) A networked organization is usually so political that individuals and cliques spend much of their time pursuing personal agendas.
3) It becomes hard for colleagues to agree on priorities and for managers to enforce them.
4) Employees often contest performance measures, procedures, rules, and systems.

How to improve?
1) Learn to overcome the negatives of sociability, such as cliques, gossip, and low productivity.
2) Focus on increased creativity and commitment.
3) Move individuals regularly between functions, businesses, and countries in order to limit excessive local identification and help them develop a wider strategic view of the organization.
4) Later on, these individuals often become the primary managers of the networked organization’s political processes, and they keep them healthy.


Mercenary Organization:

Characteristics:
1) Low on hallway hobnobbing and high on data-laden memos.
2) Almost all communication in a mercenary organization is focused on business matters.
3) Individual interests coincide with corporate objectives, and those objectives are often linked to a crystal clear perception of the “enemy” and the steps to beat it.
4) Ability to respond quickly and cohesively to a perceived opportunity or threat in the marketplace.
5) Priorities are decided swiftly – generally by senior management – and enforced throughout the organization with little debate.
6) A clear separation of work and social life. Interestingly, these cultures often consist of people whose work life takes priority over their private life.
7) Members of this kind of business community rarely fraternize outside the office, and if they do, it is at business functions.
8) Because of the absence of the personal ties, mercenary organizations are generally intolerant of poor performance.
9) They are rarely bastions of loyalty because people stay with high-solidarity companies as long as their personal needs are met, and then they move on.

Advantages:
1) Because of focused activities, many mercenary organizations are very productive.
2) Unhindered by friendships, employees are not reluctant to compete, further enhancing performance as standards get pushed ever higher.

Disadvantages:
1) Employees busy chasing specific targets are often disinclined to cooperate, share information, or exchange new or creative ideas.
2) Cooperation between units with different goals is even less likely.


Fragmented Organization:

People in fragmented organizations often work with their doors shut or at home.

Characteristics:
1) Employees show a low consciousness of organizational membership. They often believe that they work for themselves or they identify with occupational groups.
2) Employees don’t like to wear the name of the company on their T-shirts.
3) Employees engage in none of the extracurricular rites and rituals that characterize high-sociability cultures, considering them a waste of time.
4) People work with their doors shut or, in many cases, at home, going to the office only to collect mails or make long-distance calls.
5) Employees are generally secretive about their projects and progress with co-workers, offering information only when asked point-blank.
6) In extreme cases, members of fragmented organizations have such low levels of sociability that they attempt to sabotage the work of their “colleagues” through gossip, rumor, or overt criticism delivered to higher-ups in the organization.
7) This culture also has low levels of solidarity: its members rarely agree about organizational objectives, critical success factors, and performance standards.
8) Any social behavior that is discretionary is unlikely to take place.

Advantages-cum-disadvantages:
1) This kind of environment is attractive to individuals who prefer to work alone or to keep their work and personal lives entirely separate.
2) This culture functions well in manufacturing concerns that rely heavily on the outsourcing of piecework.
3) This culture may succeed in professional organizations, such as Consulting and Law Firms, in which highly trained individuals have idiosyncratic work styles.
4) This culture can also work for companies that have become virtual: employees work either at home or on the road, reporting in to a central base mainly by electronic means.


Communal Organization:

A communal culture can evolve at any stage of a company’s life cycle. This culture is most prevalent at start-ups. Many managers see the communal organization as the ideal.

Characteristics:
1) In communal organizations, everything feels in sync.
2) Employees possess a high, sometimes exaggerated, consciousness of organizational identity and membership.
3) Organizational life is punctuated by social events that take on a strong ritual significance.
4) An equitable share of risks and rewards among employees.
5) Communal organizations place an extremely high value on fairness and justice.
6) Solidarity also shows itself clearly when it comes to company goals and values.
7) Finally, in communal organizations, employees are very clear about the competition. They know which companies threaten theirs.


Advantages:
1) Ideal.
2) Once this culture is achieved and sustained, corporate life becomes very productive.
3) Very useful for an organization where innovation requires elaborate and extensive teamwork across functions and perhaps locations.
4) Very useful for an organization where there are real synergies among organizational subunits and real opportunities for learning.
5) Very useful for an organization where the business environment is dynamic and complex, such as in IT, telecommunications, and pharmaceuticals, because in these industries, organizations interface with their environment through multiple connections involving technology, customers, the government, competition, and research institutes. Communal culture aids in the synthesis of information from all the sources.

Disadvantages:
1) Employees may withdraw their cooperation the moment they become unable to identify shared advantage.
2) Communal culture may be an inappropriate and unattainable ideal in many business contexts. The reason is that many businesses that achieve the communal form find it hard to sustain. Communal culture works mostly for religious, political, and civic organizations.
3) High levels of sociability and solidarity are often formed around particular founders or leaders whose departure may weaken either or both forms of social relationship.
4) The high-sociability, half of the communal culture, is often antithetical to what goes on inside an organization during periods of growth, diversification, or internalization.
5) The sincere geniality of sociability doesn’t usually coexist – it cannot – with solidarity’s dispassionate, sometimes ruthless focus on achievement of goals. When the two do coexist, it is often in religious or volunteer groups.


To increase sociability, Managers can take the following steps:
1) Promote the sharing of ideas, interests, and emotions by recruiting compatible people – people who naturally seem likely to become friends.
2) Increase social interaction among employees by arranging casual gatherings inside and outside the office, such as parties, excursions, and book club.
3) Reduce formality amongst employees.
4) Limit hierarchical differences.
5) Act like a friend yourself, and set example for geniality and kindness by caring for those in trouble.


To build solidarity, Managers can take the following steps:
1) Develop awareness of competitors through briefings, newsletters, videos, memos, or E-mails.
2) Create a sense of urgency.
3) Stimulate the will to win.
4) Encourage commitment to shared corporate goals.

How come McKinsey does what it does?

I think that McKinsey is the super elite class of intellectuals, undoubtedly. So, I have targetted McKinsey for this blog of mine. The following points are presented by the McKinsey-ites themselves in the book, "The McKinsey Mind." I am just trying to put the gist of that book. It's a great book to go through. The book teaches you a lot of things. I am in love with the book. Thus, this blog is meant to honour the book, "The McKinsey Mind."

McKinsey’s ways of doing things:

1) Be more descriptive than prescriptive.

2) You must structure your presentation so that it communicates your ideas clearly and concisely and generates buy-in. The structure type of your presentation should be based on inductive-reasoning - wherein the presentation starts with the conclusion - rather than deductive-reasoning - wherein the conclusion comes at the end of the presentation.

3) The client must be kept informed, involved, and inspired by both the problem-solving process and the solution.

4) The organization for which you work must institute a process of iteration that leads to continual improvements.

5) Feel free to be MECE - Mutually Exclusive, Collectively Exhaustive. The concept of MECE means separating your problem into distinct, non-overlapping issues while making sure that no issues relevant to your problem have been overlooked.

6) Don’t re-invent the wheel.

7) The most common structure tools are: logic tree, issue tree, and decision tree. These tools should be used from the top-to-bottom point of view.

8) Generate your initial hypothesis by drawing conclusion based on the limited facts that you know about the problem at hand without doing a lot of additional research.

9) For your brainstorming sessions to succeed, you should follow these rules:

a) There are no bad ideas.
b) There are no dumb questions.
c) Be prepared to “kill your babies.”
d) Know when to say when.
e) Get it down on paper.

10) An initial hypothesis will save you time and will make your decision making more effective by forcing you to focus only on those issues that can prove or disprove it. This is especially helpful for those, who have trouble focusing and prioritizing.

11) Since you should form your hypothesis at the start of the problem-solving process, you have to rely less on facts and more on instinct or intuition. Take what you know about the problem at hand, combine it with your gut feelings on the issue, and think about what the most likely answers are. This gives you a good starting point.

12) You should do the QDT (Quick and Dirty Test) of your hypothesis. The QDT means: what assumptions are you making the need to be true in order for your hypothesis to be true? If any of these assumptions is false, then the hypothesis is false.

13) An issue tree is the evolved cousin of the logic tree. Issue trees bridge the gap between structures and hypotheses. By creating an issue tree, you lay out the issues and sub-issues in a visual progression.

14) Intuition and data complement each other.

15) Pluck the low-hanging fruit - try to do all the easy tasks as early as possible.

16) Always do back-of-the-envelope analysis in order to perform a sanity check.

17) Bear in mind that your initial hypothesis is a living document, and it feeds off your analysis.

18) Always do strategic data gathering.

19) It is difficult to run an effective Knowledgement Management System without access to the un-codified knowledge in other people’s heads.

20) Internal knowledge creation involves disseminating information to employees through discussions or documents.

21) Data themselves are mute. So, it's your job to make data speak for themselves.

22) Consulting is not just about research and analysis; it’s research, analysis, and insight development.

23) Consulting is not only about analysis; it’s about insights.

24) Data without intuition are merely raw information, and intuition without data is just guesswork.

25) You must make sure the solution fits your client.

26) Always consider outside forces – competitors, suppliers, customers, regulators – that might nullify the effects of your strategy.

27) Stripped to its essence, presentation is selling.

28) Presentation is the “killer skill”. A successful presentation bridges the gap between you – the presenter – and your audience.

29) If you have a well-structured MECE hypothesis, then you will have a well-structured MECE presentation.

30) Pre-wire everything - avoid giving surprises. Tell them what you are going to tell them, tell them, and tell them what you told them.Feedback is a double-edged sword.

I have tried to capture the 30 essential points from the book, "The McKinsey Mind." If you want to get into the details, I advise you to go through the book yourself. I assure you that the juice would be worth the squeeze.