Employee turnover isn’t just a managerial challenge. The resulting disruption, hiring and training costs along with decreased productivity and customer satisfaction affect the bottom line. But what can you do to reduce turnover? Conventional wisdom suggests money and managers have significant influence on if employees stay or go – but is one more important than the other? “Once you know how compensation, management and other factors affect employee attrition, you can decide how much to invest in each – which gets to the challenge and options for managers,” says Brad Staats, Associate Professor of Operations at University of North Carolina Kenan-Flagler Business School. To understand turnover, Staats and Seyed Morteza Emadi, Assistant Professor of Operations at UNC Kenan-Flagler, built a model that captures both the firm’s decision to terminate a worker’s employment (involuntary attrition) and a worker’s decision to leave (voluntary attrition). Their model not only answers the money vs. manager question – it also suggests ways to predict and reduce turnover. They share their findings in “A Structural Estimation Approach to Agent Attrition.” Modeling Attrition Using data from an Indian business process management (BPM) company, Staats and Emadi built a statistical model. They collected individual demographics, salary and employment data for 3,680 workers in a single BPM contact center in India over five years, and compiled macroeconomic data about the Indian economy during the same period. Then they used the data to build a structural model that looks at how factors – such as salary, who an employee’s manager is, and non-monetary work conditions – affect both voluntary and involuntary turnover. The framework not only yields a robust, predictive model, but also can be used to examine policy changes and how individuals would respond to them. BPM companies provide back-office support – handling functions such as data entry, technical support or customer service for other firms. The market for such services was worth about $186 billion in 2015, and India accounted for 38% of that market — more than $70 billion. No matter what industry you work in, chances are you’ve dealt with an Indian BPM at some point, such as calling your credit card company or seeking tech support. For workers, hours can be long and providing customer service can be stressful. Turnover in the industry is high — 50 to 75% annually for Indian BPMs. For these companies – and the clients depending on them – reducing turnover promises considerable economic benefit. What Matters Most? Emadi and Staats found that the two most important factors in whether employees stayed in their jobs were salary and who their managers were. Pay had a relatively small effect – and managers made a much larger impact. “Conventional wisdom says you don’t leave your job – you leave your managers,” Staats says. “In this context, managers are a really significant driver.” Supervisors have a strong impact on whether employees stay. Based on their data, if all employees were managed by the best supervisor, voluntary turnover would be reduced by more than 30%. On the other hand, employees’ sensitivity to salary was low. Their model showed that a 30% increase in salary would decrease voluntary exits by just 2.5%. “It’s easy to pull the salary lever,” Staats says. “We show the easy answer isn’t the right answer. Instead, company leaders should think about how to reinvest in your people.” In addition, tenure changed workers’ behavior in important ways. Over time, their sensitivity to salary increased, but their willingness to stay for non-salary factors went down. And their long-term focus decreased even more. This all has implications for how to structure interventions to reduce turnover, say Emadi and Staats. Their data also suggests some factors that distinguish managers with the lowest voluntary attrition. They have, for example, higher rates of involuntary attrition by their workers — meaning they are more likely to terminate employment than average managers. That’s not surprising, Staats says. It suggests those managers are attuned to making sure all of their employees are pulling their weight. If you’re doing a good job yourself, then not having to prop up underperforming co-workers might make your work environment more attractive. But does any of this matter if you don’t operate a BPM company in India? The answer is yes. Emadi’s and Staats’ model can be generalized to any workplace and they welcome the opportunity to run their model with data from more companies. Plug your company data into it and you should get a better understanding of what drives attrition for your employees. “Part of our excitement about this project is that it creates a framework to take a comprehensive approach,” Staats says. Employment at an Indian BPM isn’t the same as working at an investment bank or one of those West Coast tech firms known for their lavish perks, but Staats suspects the results for those or other firms would be similar. “Anecdotally, there’s nothing I see here that I haven’t seen in companies that espouse how wonderful their working environments are,” he says. Many people can earn a basic income regardless of where they work, he says, so other factors – such as interactions with a manager – become more important. “Our work provides managers with a framework to develop a better understanding of their own attrition process, perform policy experiments – from pulling the salary lever to changing supervisors – and then make strategic decisions that could translate to profits or losses for the firm,” says Staats. “From an operational perspective, it moves us being concerned just about product and consumer operations to managing people as one of the most important resources we have.” This article originally appeared in the R.O.I. Research Magazine published by UNC Kenan-Flagler. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Editor’s Note: This is the second of a series on Formula 1 (F1) Racing. While the first part touched upon the manpower and the tech involved, here I will talk about its economics. The Economics of Formula One Management The contracts, distribution, and commercial management of rights and licenses of the F1 circuit is controlled by London-based Formula One Management Limited. The company provides media distribution and promotion services to the FIA F1 World Championship. Let us look at its revenues and expenses. Revenues F1 is the 9th highest revenue generating professional league in the world, with a top-line close to $1.83bn in 2017. Formula One Management Limited (FOM) primarily has 3 sources of revenue: 1. Race Promotion: This is the fee paid by the race organizers at every venue across the world. They are driven by predesigned contracts and increase by a few percentage points each year. As per Forbes, organizers pay an average of $31.5 million annually to host a race . These are medium to long-term contracts ranging from 5-10 plus years. Teams also must pay an amount per season to enter the next season, along with a base price of $0.5m plus. In addition to that, teams need to shell out $5,161 for every point scored, whereas Constructors Champions have to pay $6,194 per point. Race promotions contribute to almost 30-35% of the revenue. 2. Broadcasting: There are close to 100 broadcasters of F1 globally, in almost all languages. Rights may be given for an entire-season or part-season. These contracts are also escalated yearly by some percentage. Contract length varies from 3-6 years. Broadcasting contributes to another 30-35% of the revenue. 3. Advertising and Sponsorship: Global and Official Sponsorship deals with Emirates and Rolex (as of 2018, worth c. $200 million over 5 years each), Heineken (till 2023, worth $250 million), Tata Communications, DHL, Pirelli, Mercedes AMG, Amazon Web Services (AWS) and Johnnie Walker bring in the major chunk of ad revenue – through trackside advertisements, race-specific title sponsorships and official supplier deals. These are mostly multiyear deals, lasting at least 3 or more years. Advertising and sponsorships contribute around 15% of the revenues for F1. 4. Others: These include introduction and registration of new teams, hospitality, freight, TV production, licensing etc. These back close to 20% of the revenues. Now Speaking of Costs 1. To F1 Constructors: FOM distributes a major portion of the revenue it receives amongst the teams in 9 monthly payments. This works as a royalty to remain in the sport and constitutes a good percentage of funding for the teams. 2. Others: Running costs, administrative costs, organizing events etc. The biggest teams have the deepest pockets. They also spend the most on technological developments to pit against their rivals. Teams incur huge costs, sometimes much more than they can raise as revenue from FOM. The Economics of Formula One Teams Now let’s move on to the operations of the individual teams. Revenues 1. Share from FOM: F1 teams receive payments from FOM every year as a share of the revenue generated annually. In 2018, FOM distributed $940 million, i.e. 68% of the underlying revenue to the 10 qualifying teams. However, the distribution is not equal. Here is the breakdown of money distributed to each team: Source: Autosport *Force India is now known as Racing Point Force India Amt1: Payments based on classification over two of the past three years Amt2: Payment based on end of season finishing in constructor’s championship LST: Long- Standing Team Bonus Bonus: Constructor’s Championship Bonus Each team gets $36 million as a part of participation in two of the past three seasons. Haas were excluded because this was their first completed season in F1. Every team gets a proportion of payment depending on their finish in the Constructor’s Championship. Ferrari received the most money from FOM - $180m in total; which included a long-standing bonus of $68 million, exclusively given to them. Mercedes, the Constructor’s Champions of 2016, received a $35 million bonus for achieving its target of winning two championships. Red Bull Racing received a bonus of $35 million (other) for signing the current bi-lateral agreement. Williams received a heritage bonus (other) of $10 million. 2. Sponsorships: Another source of revenue for the teams is sponsorships. Every car has a list of sponsors. The revenue from each depends on different contract lengths, and where the brand is placed on the car. For example, a sponsor would have to pay more if their brand is placed on the rear wing, as compared to the sides or near the driver seat. Ferrari reportedly gets $220 million from sponsorships alone. This amount is much smaller for midfield teams, which unlike Ferrari, Mercedes, Red Bull Racing or McLaren are not big brand names commercially. 3. Engine and Parts Sales: Manufacturing teams such as Ferrari, Mercedes and Renault always receive payments for supplying engines and parts to other teams. E.g. Ferrari received close to $60 million from engine leases alone in 2016. (Ferrari supplied engines to 3 teams in 2016; each engine lease is c. $20 million per year) . 4. Merchandise Sales: Mercedes, Red Bull Racing and Ferrari have considerable merchandise sales from clothing, accessories etc. that adds to their topline as well. Costs 1. Building Costs: The major cost incurred by teams is for building the car. An F1 car is different not only in terms of the engine, but also aerodynamically. Official figures are never revealed for how much a car costs, but an average estimate is given below: Source: WTF1 So, one F1 car costs close to $8 million on an average. This cost goes up for the bigger teams as they have more resources and capital to invest in the development of the car and its tech over time. Remember, this is just an estimated cost of building a car at the start of the season, any damage means new parts, some tracks demand change in aerodynamics - hence new front wings are needed sometimes. And in case, the car suffers a crash, the chassis or the entire car has to be rebuilt. 2. Other costs for Formula1 teams include: Driver salaries ranging from c. $61 million/year (Sebastian Vettel, Ferrari) to $150,000/year (Sergey Sirotkin, Williams). Year round research and development of performance and development of the car. Logistics - Transporting driver homes, cars, spares, technological equipment across the world. Personnel Salaries - Engineers, team crew, and administrative salaries. F1 racing is an expensive business; spending as much as what these teams do, barely earning a fraction of the same amount, but continuing to stay in the game for years is no small feat. In the next article, I will explore how Formula One teams have sustained their positions so far and how Liberty Media (F1 Group’s owner) would be F1’s Ride or Die. Stay tuned. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Editor’s Note: This article is the first of a series on Formula1 (F1) Racing. In the coming weeks, this column will attempt to understand F1 – the game, its regulations, management and the underlying economics. For many, F1 is just where the fastest car wins. However, the astounding man-hours, the technology, and the money that goes into building an F1 car is staggering. How staggering? For starters, it costs around $8 million apiece. Each car is fitted with over 200 sensors and over a kilometer of wiring. Impressed? With the last F1 Grand Prix of the year scheduled to unleash by this month-end, I will try to breakdown how F1 operates, hoping that you’d be fascinated enough to tune into the upcoming race. Facts F1 is the highest level in single seat racing. The first official championship points’ contested F1 race was held at Silverstone, UK in 1950. Today, each racing team, known as ‘constructors’ has 2 cars on the grid with 2 drivers each, and additional 1-2 reserve drivers. At present, there are 10 racing teams, which means 20 racing drivers who compete in 21 races over the world. The above figures are specific to 2018. It may change depending on next year’s revised race calendar. There are 2 championships to be won – ‘The Driver’s Championship’ and ‘The Constructor’s Championship’. Each driver is rewarded a point based on the position he finishes at: 25 for the driver who finishes first and 1 for the driver who finishes last. Every constructor receives the same points as the driver. The driver and the team with the greatest number of points at the end of the Championship are declared the winners. All competitive racing divisions, single seat (Formula1, Formula2, Formula3000, GP2 etc.) and double seat (World Endurance Championship, World Rally Championship etc.) are governed by Federation Internationale de l’Automobile (FIA). Can Anyone Build a Fast Car and Win? Not really. The FIA strongly controls regulations around a car that can be raced. In fact, The “Formula” in F1 refers to the stringent set of rules to which participating cars must comply. The idea is to ensure a level playing field much like in boxing, where you can’t field a flyweight vs a heavyweight. Every car is identical in terms of its dimensions (length and width of the car, the front and rear wings, tires, etc.), the engine and its specifics, the electronics. So much so that the fuel and tires to be used are also predefined. Since 2014, the V6-hybrid engines are being used. The Power unit (i.e. the engine) consists of 6 elements – the Internal Combustion Engine (ICE), Motor Generator Unit-Heat (MGU-H), Motor Generator Unit Kinetic (MGU-K), Energy Store (ES), Turbocharger (TC), and Control Electronics (CE). These engines use a clever technology called the Energy Recovery System (ERS) which recovers and redeploys the car’s heat energy from the exhaust and brakes, that would have otherwise gone waste. This energy is used during a lap as per the driver’s discretion and can give up to an additional 160 horsepower to the driver. More details about the Power unit and ERS can be found here. How is The ‘Formula’ Enforced? FIA attaches a seal to each element within the Power unit before the race to ensure no parts can be rebuilt or replaced. Each driver is permitted to use three Internal Combustion Engines (ICE), Motor Generator Unit-Heat (MGU-H) and Turbocharger (TC) and two Energy Store (ES), Control Electronics (CE) and Motor Generator Unit- Kinetic MGU-K per season. Any additional unit used over the pre-specified number results in a 10-place starting grid penalty for the current race (If changed during the race weekend, before the race) or in the next race (If changed after the previous race weekend). Technical Rules The ICE must be 1.6L in capacity, and rev-limited to 15,000RPM (Revolutions per minute). Fuel flow to the engine is limited to 100 kilograms/hour, to ensure every car has the same supply of fuel. The use of any device, other than the engine and one MGU-K, to propel the car is not permitted. Additional technical and sporting regulations can be found here Constructors can design and use every component of the car by themselves (called works team or factory team) or buy it from another team or supplier. Currently there are only 3 works teams on the F1 grid – Mercedes, Scuderia Ferrari and Renault. Williams and Racing Point Force India buy their engines from Mercedes (The latter also buys gearboxes from Mercedes). They develop the rest of the car in-house. Haas buys the suspension, gearbox, engine, hydraulics and all electronic components from Ferrari. Sauber has a similar agreement like Racing Point Force India of purchasing engines and gearboxes from Ferrari. McLaren and Red Bull Racing buy engines from Renault, and Scuderia Toro Rosso buy engines from Honda, in an exclusive deal. Red Bull Racing will shift to Honda engines from 2019. Formula One, in 2017, also launched its eSports Series that will allow gamers and fans to compete for the title of ‘Formula1 eSports Series World Champion’. This not only popularizes the sport further but taps on a new avenue for in-game sponsorship and revenue. The economics of the game get even more interesting. Stay tuned for that and more. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
You’ve heard the stories about young workers who take risky, low-paying jobs at high-tech startups and then strike it rich when the companies go public. You’ve also heard about the people who make their careers in startups – working at young companies until they run out of capital, get acquired or go public. But what role do these workers play in nurturing new companies? Successful Initial Public Offerings (IPOs) might be critical in creating the next wave of startup workers who then help fuel the creation new businesses, technological innovation and economic growth, according to research by Paige Ouimet, Associate Professor of Finance at University of North Carolina Kenan-Flagler Business School. Ouimet, Tania Babina of Columbia University and Rebecca Zarutskie of the Federal Reserve Board looked at 800 computer and biotech startups and their employees from 1992 to 2006. They teased out patterns in employment mobility based on whether the firms had successful IPOs and share their findings in “Going Entrepreneurial? IPOs and New Firm Creation.” Their study adds to the research on how startups are formed and what role they play in new company creation, says Ouimet. “This is one more piece of the pie,” she says. “Probably one of the most important components of a startup are the employees. There shouldn’t be an assumption that all startups can get the employees they want.” Secure Data The researchers tapped into state unemployment insurance data collected by the US Census Bureau. Getting access to the data took about four years, required FBI background checks and could only be used in a windowless room in a secure facility. Federal government officials reviewed their research to ensure they released no confidential information. The rich dataset – covering 25 states – includes information about employees’ salaries, age, race, gender, education and place of birth. Perhaps most importantly, the data also identified employers. When the researchers cross-referenced the employer data with other databases of IPOs and entrepreneurial firms, they could track startup employees from one job to the next, following successful and unsuccessful IPOs. Recycling Workers Their findings lend credence to the notion that startup workers are recycled from successful IPOs back into new ventures. Using an econometric technique they isolated a successful IPO’s impact from the impact of factors associated with successfully completing an IPO – such as firm quality. They found a successful IPO leads to 17.5% more of the pre-IPO workers leaving the firm and joining a startup in the following three years – an important change compared to a baseline rate of departures to startups of just under 5%. Because an employee can change jobs for many reasons, the researchers explored three, non-mutually exclusive explanations for why workers from companies that successfully went public are more likely to leave. Certification Shock: Thanks to the successful IPO, employees are perceived as better performers. This effect, if it exists, would likely be reduced for firms that received venture capital funding (and the press and prestige that goes with it) earlier. Ouimet found no evidence for this “certification shock.” Culture Change: After a successful IPO, changes to a company’s work environment can make it a less desirable employer. Since CEO turnover can affect company culture, the researchers used a CEO leaving within two years of the IPO as a proxy for culture change. The data didn’t support a link between CEO change and employees leaving, suggesting it wasn’t a decisive factor. Wealth Shock: Thanks to a successful IPO, employees are richer and can afford to take the greater financial risk associated with a lower-paying startup job. In this case, researchers did find a significant effect – but only for male employees. Gender Differences Ouimet couldn’t say with certainty why there was a gender difference, but she speculated several factors could be at play. First, the sample data had twice as many male employees as female employees. With a smaller number of women, there’s simply more statistical noise with which to contend. Second, Ouimet points out that it’s common for women in their 30s to leave the workforce, at least for a while, to start families. Third, there might be a difference in the kinds of jobs male and female employees had, which in turn could influence their job opportunities with new startups. Why It Matters The wealth shock is compelling, but Ouimet points out many factors can be in play when people change jobs. “We only find evidence for the wealth shock,” she says. “It doesn’t mean that the other two mechanisms aren’t there.” So does all this matter to anyone who’s not a startup employee or a startup hiring manager? Yes, says Ouimet. There’s ample evidence that startups – young companies seeking to grow fast – contribute substantially to economic and employment growth. Understanding what factors influence that growth is valuable. Ouimet’s study suggests that the slower pace of IPOs in the early 2000s might have hurt startups. After making a number of assumptions, she and her colleagues roughly estimated that the decline in startups explains about 8.2% of the missing employment in high-tech startups in the decade that followed. The bottom line: Successful IPOs produce employees who help the next wave of new tech companies. A downturn in IPOs could depress the startup economy. This article originally appeared in the R.O.I. Research Magazine published by UNC Kenan-Flagler. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Amazon’s speculated bid for Fox’s 22 regional sports networks has more than what meets the eye As per several press reports, Amazon is bidding for Fox’s 22 regional sports assets in an attempt to bolster up its live sports presence. As such it serves as a meaningful statement of intent from Amazon as it tries to cement its content portfolio further especially on Prime video platform. Fox’s sports assets are up for sale largely resulting from the regulatory nuances associated with the momentous $71.3bn Disney-Fox merger earlier in the year. The Disney-Fox transaction was cleared by the US Justice Department conditional on Disney agreeing to offload Fox’s 22 regional sports networks. The reason being, Disney which already owns ESPN and its family of sports networks, if acquired Fox’s 22 regional sports networks “would likely result in higher prices for cable sports programming” for pay-TV operators and subsequently for consumers. In that context, Disney ought to sell Fox’s 22 regional sports networks paving the way for the likes of Amazon and other private equity firms to pick these assets up. Apollo Global Management, KKR, and Blackstone along with Sinclair Broadcast Group, and Tegna are also speculated to be involved in the bidding process. The regional sports networks up for grabs carry live games from a wide-range of professional leagues including Major League Baseball, the National Basketball Association and the National Hockey League and can be viewed as rather meaningful strategic assets. However, Amazon’s interest in the aforementioned assets, in my view, is directly aimed at enhancing the value proposition embedded in its Prime Membership and is perhaps central to Amazon’s entire growth strategy. As Amazon continues to use content as a pull to strengthen its entire ecosystem whilst also trying to deflect customers towards the more sizeable e-commerce business, live sports could be yet another key growth driver with the possibility of meaningful long-term traction. Amazon not entirely new to the world of sports… Amazon has already ventured into live sports through a streaming partnership with US-based National Football League (NFL) for Thursday Night Football. The deal was initially penned in for 10 games for the 2017 season and got renewed in 2018 for 2018-2019 season for 11 games underlining Amazon’s sporting intentions. Furthermore, inroads into distributing select games from the highly watched English Premier League (EPL) further substantiates Amazon's ambitions within the sporting arena. Notable Strategic Differentiator? Live sports form a clear contrast between Amazon and Netflix’s video platforms and their growth strategy. In that context, Amazon’s latest push hardly comes as a surprise. Netflix on the other hand appears to be maintaining its focus on scripted content and is reportedly closing in on purchasing ABQ studios in New Mexico which would be its first purchase of a studio complex. Furthermore, Apple’s recent multi-year deal with independent production studio A24 underlines Apple’s push into original content. With several Tech and Media players fighting for eye balls, we are perhaps amidst one of the most dynamic and robust Media landscapes in recent times where live sports could probably step up as a notable strategic differentiator. ‘New Fox’ also perhaps in the running to buy back the 22 regional sports networks to enhance its new value proposition and cement its competitive positioning Fox News, Fox Sports and its TV stations were not part of the Disney-Fox transaction. In that context, the ‘New Fox’ potentially also views these sports assets as key to uplift the value proposition that it has to offer. Consequently, one would expect 'New Fox' to enter into the bidding game to buy-back the networks, albeit up against bidders with deep coffers. Thereby, Amazon’s interest in these networks (along with other financial investors) could drive a meaningful uptick in purchase price if it turns into an elaborate competitive bidding game. From Disney’s perspective while a competitive bidding environment bodes well in order to fetch lofty valuations, it is also a case of strengthening Amazon’s sporting presence which could potentially drive an upswing in the overall pricing environment surrounding sports rights, especially given that other tech giants such as Google, Facebook, Twitter, Apple also appear to be hovering around the media sector largely trying to leverage synergies in global distribution. In the Indian context, Hotstar, appears to be well ahead in its live-sports offering and its Disney ownership adds an interesting angle; However, Amazon’s deeper push into sports poses key questions. With a wide-ranging portfolio of sporting assets at play, Hotstar appears to be well ahead in terms of positioning itself as a sports-centric over-the-top distribution platform in India. Given its Disney/Fox ownership, there are clearly some ESPN-Hotstar synergies to exploit which might be worthwhile to keep track of. However, given Hotstar’s meaningful reliance on Star India’s ownership of sports content rights, Amazon’s deeper push into live-sports further heightens Hotstar’s risk-profile, in my view. This is because: i) If Amazon pushes forward with bidding for IPL rights after 2022 or for that matter chases any sporting rights that Hotstar has built its value proposition on, there could be a material dilution in Hotstar’s value proposition. At the very least, more competitive bidding environment could at least hike up the cost of programming for Hotstar or Star India. ii) If other tech players, such as Facebook, Twitter, Apple, Google etc also penetrate further into the Indian live sports streaming marketplace, Hotstar could quickly find itself fighting for sports rights against well-resourced behemoths. This paints an optically somewhat obscure picture on Hotstar’s risk profile, exacerbated by Hotstar's lofty reliance on third-party content. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Jack Ma and his friends were once googling for beer when he realised that it was difficult to find Chinese beer on the internet. It prompted him to create a home page in Chinese. Within five hours of posting the page, he received five emails from various countries, including US and Germany. The power of Internet surprised him - one which he harnessed towards building Alibaba, a Chinese giant specializing in e-commerce, retail, Internet, AI and technology. On 17 December 1903, the Wright brothers, with no formal training in engineering, defied gravity with their manned airplane flights, ushering in the era of flight. After observing how apples always fell straight to the ground, Isaac Newton spent several years working on the mathematics showing that the force of gravity decreased as the inverse square of the distance. If we closely look at similar moments of breakthrough, insight and innovation in life or in business, one characteristic stands out. Curiosity is at the core of all of them. They did not start out with an end goal in mind. They were just curious. Once piqued, they kept exploring things which intrigued them, which I call “explorative curiosity”. Often these were unrelated topics. In the end, the pieces that came together, bore fruit. You could say that curiosity connected the dots. In today’s VUCA (Volatile, Uncertain, Complex and Ambiguous) environment, where nobody knows what might be around the corner and what the next big thing could be, curiosity is a key quality leaders and corporations need to have to stay ahead of the curve. Curiosity knits the lattice. Louis Mobley, founder of the IBM Executive School in 1956, says curious people share one trait: an inexhaustible curiosity on everything from “NATO to Plato.” The more they learned, the more connections they saw… from history, psychology, philosophy, science, literature, and poetry that produced their greatest creative business insights. What we might dismiss as irrelevant and therefore uninteresting, a genius like Steve Jobs sees as pieces in an unfolding interwoven jigsaw puzzle. Pieces to be continually sifted until the piece that fits the problem finally emerges.” In the world of business, the Jack Mas and the Steve Jobs cobbled together bits of information they had chased and pieced them all together to create breakthroughs. Executives agree on the importance of curiosity. In a 2015 PwC survey of more than 1,000 CEOs, a number of them cited “curiosity” and “open-mindedness” as leadership traits that are becoming increasingly critical in these challenging times. Curious leaders are more open to new experiences, more tolerant of ambiguity and are more likely to nurture curiosity in their organisations. Yet, curiosity is lacking and not given due attention. According to MERCK's 2016 State of Curiosity Report, while 80% of workers agree that curious colleagues are most likely to bring ideas to life, only 20% of workers actually self-identify as being curious. Most companies will argue that they have programmes to encourage innovation or funds for innovation projects. However, it is not enough to rely on programmes or funds if curiosity has not been aroused and awakened in the team. A lot has been written on innovation, but not much on curiosity. Curiosity has to start from the top. Leaders lead by example. This critical capability - leadership curiosity - comprises three key components: self-curiosity, interpersonal curiosity and environmental curiosity. It starts with the self-curiosity - a desire, even obsession, to find out more. At 13, Jack Ma woke up at give 5am, walked to Shangri-La hotel to chat with tourists and take them sightseeing. That was how he learnt to speak English. He did this for nine years; learning along the way, Western ways of doing things. When Steve Jobs started studying calligraphy and the practice of Zen Buddhism, he had no idea it would lead to the design simplicity of Apple computers. He was only being curious. Personal curiosity is crucial to success because a naturally curious person is more likely to learn from mistakes, try new things, explore new ideas, engage more deeply, be more adaptable, take risks and embrace change. In today’s digital age and Industry 4.0, where technological change is happening at an unprecedented speed and scale, and where disruptions and black swans abound, personal curiosity is critical in closing the gap between the human capability to change and the exponential change in technology. A leader must also be curious about others. This interpersonal curiosity is the desire to learn about other people, including their life experiences, their thoughts and motives. When you are curious about what your customer's experience with your products or services, you develop greater empathy and a deeper understanding of your customer experience. You learn how to improve your product or service, understand what value needs to be created to get the customers’ needs met more effectively, and even find new ways to connect with the customers in today’s digital age. When you are curious about your colleagues, you will engage with them at a deeper level, and this could build stronger trust and collaboration. Unfortunately, what often happens to leaders once they’ve attained a position of leadership is that, they may feel the need to project confident expertise. They are afraid of being seen as ignorant or incompetent. A truly curious leader is humble enough to acknowledge that they don’t have all the answers. Eric Schmidt, CEO of Google, says: “We run this company on questions, not answers.” The Director-General of BBC goes to every meeting with employees and starts with the question: “What is one thing I could do to make things better for you?” Hal Gregersen, Executive Director at MIT Leadership Centre, says leaders have to learn to ask questions. When the leader is curious and starts asking questions, others will take the cue and follow suit. Curiosity begets curiosity. A truly curious leader is curious about the environment and ecosystem in which the company operates. Being curious about the business environment drives learning and innovation. Lack of curiosity about the business environment may lead to organisational stasis, stagnation, and even decline. Staying curious about new trends or new ideas that are at the edge or periphery, or being curious about weak signals that are not yet clear or coherent in an industry helps you seek out new blue oceans of growth opportunities. An example of an exceptionally curious leader is the late Mr Lee Kuan Yew of Singapore, who embodies all three components of leadership curiosity. Mr Heng Swee Keat, his former Principal Private Secretary shares that the Mr Lee had a red box which: “carried a wide range of items. It could be communications with foreign leaders, observations about the financial crisis, instructions for the Istana grounds staff, or even questions about some trees he had seen on the expressway. Mr Lee was well-known for keeping extremely alert to everything he saw and heard around him - when he noticed something wrong, like an ailing raintree, a note in the red box would follow. We could never anticipate what Mr Lee would raise - it could be anything that was happening in Singapore or the world. But we could be sure of this: it would always be about how events could affect Singapore and Singaporeans, and how we had to stay a step ahead. Inside the red box was always something about how we could create a better life for all.” According to Kishore Mahbubani (retired Dean, Lee Kuan Yew School of Public Policy, NUS), among the founding fathers of Singapore, Mr Lee Kuan Yew, Dr Goh Keng Swee and Mr S. Rajaratnam, all three shared an “incessant curiosity”; they always had questions to ask. For country, corporation or self, being curious may be the only source of competitive advantage. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
US stocks have given back all of their 2018 gains; Several developed and emerging stock markets are already in bear-market territory; US/China trade tensions have eased, a ‘No’ deal Brexit is priced in; An opportunity to re-balance global portfolios is high. The recent shakeout in US stocks has acted as a wake-up call for investors. However, a look beyond the US finds equity markets that are far less buoyant despite no significant tightening of monetary conditions. In fact a number of emerging markets, especially some which loosely peg themselves to the US$, have reacted more violently to Federal Reserve tightening than companies in the US. I have discussed this in a previous article. In the wake of the Financial crisis, European lacklustre growth saw interest rates lowered to a much greater degree than in the US. Shorter maturity German Bund yields have remained negative for a protracted period (7yr currently -0.05%) and Swiss Confederation bonds have plumbed negative yields never seen before (10yr currently -0.17%, but off their July 2016 lows of -0.65%). Japan, whose stock market peaked in 1989, remains in an interest rate wilderness (although a possible end to yield curve control may have injected some life into the market recently). The BoJ balance-sheet is bloated, yet officials are still gorging on a diet of QQE policy. China, the second great engine of world GDP growth, continues to moderate its rate of expansion as it transitions away from primary industry and towards a more balanced, consumer-centric economic trajectory. From a peak of 14% in 2007 the rate has slowed to 6.5% and is forecast to decline further: Source: Trading Economics, National Bureau of Statistics of China 2018 has not been kind to emerging market stocks either. The MSCI Emerging Markets (MSCIEF) is down 27% from its January peak of 1279, but it has been in a technical bear market since 2008. The all-time high was recorded in November 2007 at 1345. A star in this murky firmament is the Brazilian Bovespa Index made new all- me high of 89,820 this week. Source: Trading Economics, OTC/CFD The German DAX Index, which made an all-time high of 13,597 in January, lurched through the 10,880 level last week. It is now officially in a bear-market making a low of 10,782. 10yr German Bund yields have also reacted to the threat to growth, falling from 58bp in early October to test 22bp yesterday; they are down from 81bp in February. The recent weakness in stocks and flight to quality in Bunds may have been reinforced by excessively expansionary Italian budget proposals and the continuing sorry saga of Brexit negotiations. A ‘No’ deal on Brexit will hit German exporters hard. Here is the DAX Index over the last year: Source: Trading Economics, OTC/CFD I believe the recent decoupling in the correlation between the US and other stock markets is likely to reverse if the US stock market breaks lower. Ironically, China, President Trump’s nemesis, may manage to avoid the contagion. They have a command economy model and control the levers of state by government at and through currency reserve management. The RMB is still subject to stringent currency controls. The recent G20 meeting heralded a détente in the US/China trade war; ‘A deal to discuss a deal,’ as one of my fellow commentators put it on Monday. If China manages to avoid the worst ravages of a developed market downturn, it will support its near neighbours. Vietnam should certainly benefit, especially since Chinese policy continues to favour re- balancing towards domestic consumption. Other countries such as Malaysia, should also weather the coming downturn. Twin-deficit countries such as India, which has high levels of exports to the EU, and Indonesia, which has higher levels of foreign currency debt, may fare less well. Evidence of China’s capacity to consume is revealed in recent internet sales data (remember China has more than 748 million internet users versus the US with 245 million). The chart below shows the growth of web-sales on Singles Day (11th November) which is China’s equivalent of Cyber Monday in the US: Source: Digital Commerce, Alibaba Group China has some way to go before it can challenge the US for the title of ‘consumer of last resort’ but the official policy of re-balancing the Chinese economy towards domestic consumption appears to be working. Here is a comparison with the other major internet sales days: Source: Digital Commerce, Adobe Digital Insights, company reports, Internet Retailer Conclusion and Investment Opportunity Emerging market equities are traditionally more volatile than those of developed markets, hence the, arguably fallacious argument for having a reduced weighting, however, those emerging market countries which are blessed with good demographics and higher structural rates of economic growth should perform more strongly in the long run. A global slowdown may not be entirely priced into equity markets yet, but fear of US protectionist trade policies and a disappointing or protracted resolution to the Brexit question probably are. In financial markets the expression ‘buy the rumour sell that fact’ is often quoted. From a technical perspective, I remain patient, awaiting confirmation, but a re-balancing of stock exposure, from the US to a carefully selected group of emerging markets, is beginning to look increasingly a attractive from a value perspective. (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Understanding the Economy is an exercise in data. Ground realities are measured and tracked through numbers, which are adjusted and combined with other pieces of data to derive more numbers. A few layers later, we arrive at Metrics whose trends inform our view on the state of the Economy. These Metrics are everywhere in the News. However, most people struggle to understand their composition and meaning. With that in mind, I have decided to share a brief overview on a few of Metrics, that you have probably heard of, but not always sure of their implications. Side note: With the Central Statistics Office (CSO) recalibrating, and in a way downgrading, GDP growth figures for the 2006-2012 UPA era, the opposition triggers a no holds barred attack on the incumbent government. Deeming this as an adequate signal on the increasingly confrontational relationship of economics with politics, I thought it is worthwhile to start with the much-cited GDP . The Gross Domestic Product or GDP An almost abused term – GDP is the total market value of all goods and services produced in a country for a given period. That is the definition. GDP doesn’t necessarily have to be for a country, it can be for a bigger region i.e. a combination of countries like the European Union, or a smaller one like a state – basically bound by the scope of its measurement. The GDP is supposed to be representative of a country’s income or economic health and is hence an extremely important and a heavily cited Metric. Usually expressed in Dollars, the number on a stand-alone basis makes little sense. It is much more useful when compared vs. other countries to get a notion of how big one’s economy is. The comparisons can be refined by adding layers. In its raw form, the GDP figure usually cited is the nominal GDP i.e. it doesn’t consider differences in cost of living or inflation between countries. This difference can be accounted for by taking adjusted numbers - termed as GDP at Purchasing Power Parity (PPP) for the former and Real GDP for the latter. The idea for PPP being that considering GDP is a proxy for the country’s economic health/income, it should be measured relative to its cost of living. By that logic, India’s Nominal GDP is 6th largest in the world, but in PPP terms it is 3rd largest. Real GDP in contrast doesn’t add any fundamental changes, but rather adjusts for inflationary effects. The rationale being that in an inflationary environment, the Nominal GDP gets artificially increased due to rising prices of goods and services and hence that effect needs to be stripped off. Real GDP, as the name sounds, is supposed to be a more Real indicator of economic health. More interesting than GDP is the idea of tracking GDP growth (in percentage terms). Low GDP countries normally demonstrate a higher rate of growth, one reason being that their growth rates are calculated on a much smaller base. This base effect is extremely important to understand the context to the numbers. For instance, we often tend to compare ourselves with China while commenting that India has a comparable GDP growth rate. It is true both India and China demonstrate a 7-8% annual increase in GDP. But in India, the percentage increase is on a base of $2.6tr whereas for China it is on a base of $12.24tr. A 7% annual increase for India would be $182bn, but for China would be $857bn! Its good to keep this context while comparing GDP growth rates and before patting oneself on the back. How is GDP calculated? Unless you’re an economist or statistician, that question is not important. There are different ways – factor cost, production method, income method, expenditure method etc. Each method has its pros and cons i.e. it is not exactly a science. As said earlier, the GDP number on a stand-alone basis does not make any sense. It needs to be compared. When comparing, you do need to ask if the numbers being compared are calculated on a consistent basis. Comparing Real GDP with Nominal GDP is wrong! Comparing Nominal GDP with GDP at PPP is wrong! Are the figures in the same currency? Measured during the same period? Did the basis behind calculation change over a period? That brings us to what has lately been happening in India. In 2015, the method for calculating India’s GDP was changed from the factor cost method to the expenditure (at market prices) method. Another modification was to switch the "base year" from 2004/05 to 2011/12. Switching the base year broadly means to update the sectoral allocation (i.e. Services, Agriculture, Industry etc.), this making it more "representative" of the current economy. This new methodology was applied to numbers from 2012/13 onwards (i.e. representing a bit of the UPA tenure but the entire NDA tenure). The older series (i.e. 2006-2012 or representing entirely the UPA tenure) was not updated. Now figures for the UPA tenure (2006-2012) have been updated as well, making the comparison more "like for like." Why the Fuss? Well, "experimental" estimates were released for 2004-2012 (again entirely UPA tenure) which showed them on average better than the NDA tenure which followed. But the CSO's latest numbers reverses that story. The rest is just politics. Shifting gears to Economics, to understand the 2015 change in detail, click this link. To really understand the technical nuances of how GDP is calculated, go to a university! This will be a recurring column published every Friday under the title: “How to Make Sense of the Indian Economy”. 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Rising bond yields may already have tempered economic growth; Global stocks are in a corrective phase but not a bear-market; With oil prices under pressure inflation expectations have moderated. The first self-righting vessel was a life-boat, designed in 1789. It needed to be able to weather the most extreme conditions and its eventual introduction (in the 1840’s) transformed the business of rescue at sea forever. The current level of debt, especially in the developed economies, seems to be acting rather like a self-righting ship. As economic growth accelerates and labour markets tighten, central banks gradually tighten monetary conditions in expectation of inflation. As short-term rates increase, bond yields follow, but, unlike the pattern seen in the higher interest rate era of the 1970’s and 1980’s, the effect of higher bond yields quickly leads to a tempering of credit demand. Some commentators will rightly observe that this phenomenon has always existed, but, at the risk of saying this time it’s different, the level at which higher bond yields act as a break on credit expansion are much lower today in most developed markets. When in Doubt, Look to Japan For central bankers, Japan is the petri dish in which all unconventional monetary policies are tested. Even today, QQE – Quantitative and Qualitative Easing – is only seriously being undertaken in Japan. The Qualitative element, involving the provision of permanent capital by the Bank of Japan (BoJ) through their purchases of common stocks (at present, still, indirectly via ETFs), remains avant garde even by the unorthodox standards of our times. Recently the BoJ has hinted that it may abandon another of its unconventional monetary policies – yield curve control. This is the operation whereby the bank maintains rates for 10yr maturity JGBs in a range of between zero and 10 basis point – the range is implied rather than disclosed – by the purchase of a large percentage of all new Japanese Treasury issuance, they also intervene in the secondary market. During the past two decades, any attempt, on the part of the BoJ, to reverse monetary easing has prompted a rise in the value of the Yen and a downturn in economic growth, this time, however, might be different – did I use that most dangerous of terms again? It is a long time since Japanese banks were able to function in a normal manner, by which I mean borrowing short and lending long. The yield curve is almost flat and any JGBs with maturities shorter than 10 years tend to trade with negative yields in the secondary market. Japanese banks were not heavily involved in the boom of the mid-2000’s and therefore weathered the 2008 crisis relatively well. Investing abroad has been challenging due to the continuous rise in the value of the Yen, but during the last few years the Japanese currency has begun to trade in a broad range rather than appreciating inexorably. In the non-financial sector, a number of heavily indebted companies continue to limp on, living beyond their useful life on a debt-fuelled last hurrah. Elsewhere, however, Japan has a number of world class companies trading at reasonable multiples to earnings. If the BoJ allows rates to rise the zombie corporations will finally exit the gene pool and new entrepreneurs will be able to fill the gap created in the marketplace more cheaply and to the benefit of the beleaguered Japanese consumer. My optimism about a sea-change at the BoJ may well prove misplaced. Forsaking an inflation target and offering Japanese savers positive real-interest rates is an heretically old-fashioned idea. Whilst for Japan, total debt consists mainly of government obligations, for the rest of the developed world, the distribution is broader. Corporate and consumer borrowing forms a much larger share of the total sum. Given the historically low level of interest rates in most developed economies today, even a moderate rise in interest rates has an immediate impact. Whereas, in the 1990’s, an increase from 5% to 10% mortgage rates represented a doubling payments by the mortgagee, today a move from 2% to 4% has the same impact. The US Stock Market as Bellwether for Global Growth Last month US stocks suffered a sharp correction. The rise had been driven by technology and it was fears of a slowdown in the technology sector that precipitated the rout. Part of the concern also related to US T-Bonds as they breached 3% yields – a level German Bund investors can only dream of. Elsewhere stock markets have been in corrective (0 – 20%) or bear-market (20% or more) territory for some time. I wrote about this decoupling in Divergent – The Breakdown of Stock Market Correlations, Temp or Perm? Now the divergence might be about to reverse. US stocks have yet to correct, whilst China and its vassals have already reacted to the change in global growth expectations. Globally, stocks have performed well for almost a decade: Source: MSCI and Yardeni The next decade may see a prolonged period of range trading. After 10 years, during which momentum investing has paid handsomely, value investing may be the way to navigate the next. Along with stocks, oil prices have fallen, despite geopolitical tensions. The Baker Hughes rig count reached 888 this week, the highest since early 2015. With WTI still above $60/bbl, the number of active rigs is likely to continue growing. US 10yr bond yields have already moderated (down to 3.06% versus their high of 3.26%) and stocks have regained some composure after the sudden repricing of last month. The ship has self-righted for the present but the forecast remains turbulent. Originally Published in In the Long Run (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Despite US tariffs, China’s September trade balance with the US reached a record high; A number of China’s Asian neighbours have seen a deceleration in growth; The Shanghai Composite has fallen more than 50% since 2015, the PE ratio is 7.2; Government bond yields have eased and the currency is lower against a rising US Dollar. During 2018 Chinese financial markets have been on the move. 10yr bond yields rose from all-time lows throughout 2017 but have since declined: Source: Trading Economics, PRC Ministry of Finance Despite this easing of monetary conditions the negative impact US tariffs, continues to weigh on the Chinese stock market: Source: Trading Economics, OTC, CFD Despite being a leader in frontier technologies such as e-commerce (China has 733mn internet users compared with 391mn in India, 413mn in the EU and a mere 246mn in the US) the recent decline in tech giants Alibaba (BABA) and Tencent (TCEHY) have added to financial market woes. However, as the chart above shows, Chinese stocks have been in a bear-market since 2015. Some of its Asian neighbours have followed a similar trajectory as their economies have slowed in response to a strengthening US Dollar and US trade policy. The notionally pegged Chinese currency has also weakened against the US Dollar, testing it lowest levels in almost a decade: Source: Trading Economics Meanwhile, President Xi has now announced plans to rebalance China’s economy towards consumption, turning it into an importing superpower. Surely something has to give. The IMF expects Chinese GDP to grow at 6.6% in 2018. They continue to point to signs of economic progress: The country now accounts for one-third of global growth. Over 800 million people have been lifted out of poverty and the country has achieved upper middle-income status. China’s per capita GDP continues to converge to that of the United States, albeit at a more moderate pace in the last few years. The authors go on to predict that the country may become the world’s largest economy by 2030. However, there are headwinds: Despite the sharp rebound in nominal GDP and industrial profits, total nonfinancial sector debt still rose significantly faster than nominal GDP growth in 2017. While the corporate debt to GDP ratio has stabilized, government and especially household debt is rising, driven by continued strong off-budget investment spending and a rapid increase in mortgage and consumer loans. It is debt that concerns Carnegie Endowment’s Michael Pettis – Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers – as the title suggests he envisages three paths to adjustment. Raise investment. Beijing can engineer an increase in public-sector investment. In theory, private-sector investment can also be expanded, but in practice Chinese private-sector actors have been reluctant to increase investment, and it is hard to imagine that they would do so now in response to a forced contraction in China’s current account surplus. Reduce savings by letting unemployment rise. Given that the contraction in China’s current account surplus is likely to be driven by a drop in exports, Beijing can allow unemployment to rise, which would automatically reduce the country’s savings rate. Reduce savings by allowing debt to rise. Beijing can increase consumption by engineering a surge in consumer debt. A rising consumption share, of course, would mean a declining savings share. Reduce savings by boosting Chinese household consumption. Beijing can boost the consumption share by increasing the share of GDP retained by ordinary Chinese households, those most likely to consume a large share of their increased income. Obviously, this would mean reducing the share of some low-consuming group—the rich, private businesses, state-owned enterprises (SOEs), or central or local governments. Although fiscal stimulus appears to be rebounding it is a short-term solution. There have been many example of non-productive public investment: as a longer-term policy, this route is untenable: If Beijing does not rein in credit growth in time, it will be forced to do so once debt levels reach the point at which debt can no longer rise fast enough to maintain the country’s targeted economic growth rate. This adjustment can happen quickly, in the form of a debt crisis. Or (what I think is far more likely, at least for now) it can happen slowly, in the form of what is subsequently called a lost decade (or decades) of slow growth, similar to what Japan experienced after 1990. Increased unemployment is a dangerous route to take, debt levels are already stretched, which leaves wealth transfers to the private sector. A forced contraction in China’s current account surplus must be counteracted by either an increase in unemployment, an increase in the debt, or wealth transfers to Chines consumers (rather than savers). Looking ahead Chinese growth is likely to slow. Here is Focus Economics – China Economic Outlook for October: China Economic Outlook Available data suggests that economic growth decelerated in the third quarter, mainly due to lackluster infrastructure investment and negative spillovers from financial deleveraging. Surprisingly, export growth remained robust in Q3 despite the ongoing trade war between China and the United States. The September PMI survey, however, revealed that external demand is softening, which suggests export figures are likely to worsen in the next few months. In response, the government has reverted to old tactics, boosting lending and increasing fiscal stimulus. Although these initiatives are effective in supporting the economy in the short-term, they threaten the effort made in previous years to reshape the country’s economic model and allow the country to avoid the “middle income trap”. China Economic Growth Looking ahead, economic growth is expected to decelerate. This reflects China’s more mature economic cycle and the impact of previous economic reforms, as well as the tit-for-tat trade war with the United States and the cooling housing market. However, a looser fiscal stance and a more accommodative monetary policy should cushion the slowdown. FocusEconomics panelists see the economy growing 6.3% in 2019, which is unchanged from last month’s forecast. In 2020 the economy is seen expanding 6.1%. Countering this view Peterson Economics – Who Thinks China’s Growth Is Slowing? suggests that China may be holding up much better than imagined: A widespread consensus has developed around the view that China’s economic growth is slowing and that the leadership in Beijing will have no choice but to capitulate in the tariff war with President Donald Trump to avoid a further slowdown. Leading US news organizations (here and here) have sounded this theme as a kind of late summer siren song to lull people into thinking that Trump’s confrontational approach is bound to succeed at some point. The reality is that, as has been the case for the last few years, the case for China’s imminent economic difficulties is overblown. The most widely cited piece of evidence for the new conventional wisdom, for example, is that fixed asset investment is slowing dramatically. Unfortunately, this assessment is based on a monthly data series released by China’s National Bureau of Statistics (NBS), which is currently revising the method used to calculate fixed asset investment. The method that was used so far involved considerable double counting, which the authorities are paring back. The slowing growth of this metric, thus, tells us nothing, and assessments based on existing data are no longer meaningful. There are three sources of growth in any economy: consumption, investment, and net exports. The problem is that data on China’s fixed asset investment, which include the value of sales of land and other assets, have increasingly overstated the expansion of the economy’s productive capacity. Nonetheless, financial analysts and others have relied on this series because it is the only high-frequency data available on investment. China’s data on gross domestic capital formation, which accurately measures the expansion of productive capacity, are available only on an annual basis and with a lag of five months. According to NBS data, fixed asset investment grew by only 5.5 percent in the first seven months of 2018, the lowest in decades. In the first half of the year (January to June), fixed asset investment grew by 6 percent. But the price index for fixed asset investment rose by 5.7 percent, implying that real investment barely grew. This, however, is inconsistent with the more reliable NBS data, which show the expansion of capital formation, properly measured, accounted for about one-third of the 6.8 percent of China’s GDP growth. When the NBS releases final data for 2018 (probably in about nine months), we are likely to learn that the growth of capital formation, properly measured, exceeded the growth of fixed asset investment, just as it did in 2017. The full article is in three parts; part 2 takes a closer look at domestic consumption and part 3 charts the steady rise in imports. Conclusions and Investment Opportunities According to analysis from Star Capital (28-9-2018) the PE ratio for Chinese Stocks was just 7.2 times – the second cheapest of the 40 stock markets they monitor – although its CAPE ratio was a more exalted 15.7. Since June 2015 the Shanghai Composite Index have fallen by 53%, peak to trough, whilst since January it has retraced 32% to its low last month. The downtrend has yet to reverse, but, as the second chart above shows, we are testing a support line taken from the lows of 2005 and 2014. The PBoC Q2 2018 Monetary Policy Report revealed a moderation in the rate of growth of loans to households to 18.8%, other areas of lending continue to expand rapidly. M2 growth has been steady at around 8%. I believe they will allow interest rates to remain unchanged at 4.35%, or reduce them should the need arise. Last month PBoC foreign exchange reserves fell slightly (-$34bn) but they remain above $3tr: enough to moderate the RMBs decline. China’s real broad effective exchange rate (trade-weighted) is still in a broad, multi-year uptrend due to its soft peg to the US$. Here is the chart since 2006: Source: Federal Reserve Bank of St Louis I expect China to reach a trade deal with the US within the next year. The recent slowdown in growth rate of debt formation by households will reverse: and the Shanghai Composite Index will form a base. The RMB may weaken further as the US continues to raise interest rates. Provided the US stock market maintains its nerve, an opportunity to buy Chinese stocks may emerge in the next few months. It may not yet be time to buy but there is little benefit in remaining short. Originally Published in In the Long Run (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
The battle between a country’s government and its Central Bank is neither new nor unique. Though the ongoing spat between the Reserve Bank of India (India’s Central Bank or RBI) and the government can boast of multiple drivers, the most recent and by appearances a perennial bone of contention is the former’s adoption of Flexible Inflation Targeting (or FIT) as its monetary policy framework. What is FIT? Through an agreement signed between the RBI and Government of India as at February 20th, 2015, RBI decided to adopt a ‘modern monetary policy framework’ with the objective to ‘primarily maintain price stability, while keeping in mind the objective of growth.’ [Listen in from 11:58 onwards to learn more on Central Bank's obsession with Inflation] Thus, price stability became an overarching objective of monetary policy, moving other factors to the background. The said price stability is to be achieved by keeping track of, forecasting, and controlling inflation, meaning that if the percentage change in monthly Consumer Price Index or CPI (headline) year-on-year was outside or expected to be outside a specific range of numbers (the “Target”) for a certain duration, it gives RBI a justification to decrease or increase short-term interest rates. No other consideration is to have an equivalent weight. Inflation must be granted precedence. The agreed upon Target range at present stands at four (4) percent with a band of +/- 2 percent for three consecutive quarters. So, What is the Problem? The proponents of FIT argue that it gives a clear goal for policy setting, and over time helps in establishing the credibility of the Central Bank while managing and anchoring price and policy expectations of the public. A quantifiable target reduces the chances of monetary policy being steered for political purposes. Both high inflation and low inflation hurts. While the former eats through real rates of return i.e. the borrowed interest rate minus inflation; the latter is an indicator of either over supply or low demand. Hence it makes a lot of sense to keep it under leash. However, the outcome of using monetary policy to control inflation often depends on how the said price instability has originated in the first place. When inflation is demand driven i.e. the demand gets too hot for sustainable supply, the FIT approach works well as hawkish monetary policy then becomes a lever to control consumption spend. However, when inflation is supply driven i.e. the supply is artificially low (either due to low productivity, lack of investment, hoarding, supply shocks caused by inadequate monsoons, oil price hikes etc.) but the demand is ‘business as usual’, FIT would be less effective as it would rather lower investment appetite, thereby risking supply to pushed down further down. Warwick J. McKibbin, a Senior Fellow at Brookings, a think tank says, Falling productivity would cause both a rise in input costs and a fall in output. An inflation targeting Central Bank would tighten monetary policy as input costs rose but in doing so would reduce real GDP in the economy. Thus, monetary policy would lead to a worse outcome for the real economy than caused by the shock alone. Most governments, especially in emerging markets where supply shocks are common, are hence apprehensive of FIT. Plus, there is a natural tendency to blame lack of growth on tighter monetary policy, taking attention away from larger structural issues where fiscal intervention is needed. Businesses also tend to oppose FIT, linking higher rates to a lower investment appetite which may be a disingenuous claim. Raghuram Rajan, ex-RBI Governor who pushed for FIT, in his book I do What I do elaborates, I have yet to meet an industrialist who does not want lower rates, whatever the level of rates. But will a lower policy interest rate today give him more incentive to invest? Answering his rhetoric himself, he claims “even if [RBI cuts] policy rates, we don’t believe banks, who are paying higher deposit rates, will cut their lending rates. The reason is that the depositor, given her high inflationary expectations, will not settle for less than the rates banks are paying her. Inflation is placing a floor on deposit rates, and thus on lending rates.” Conclusion What you may wonder, is the solution? A popular alternate suggested by many has been to track the growth in Nominal GDP (NGDP targeting), instead of inflation. NGDP growth is basically the sum of inflation and real GDP growth. The idea here is that in supply shock driven inflation, though the inflation component of NGDP would go up, the real GDP component would go down. Whilst a FIT regime would drive up rates to control inflation but be at the risk of pushing real GDP down further, a NGDP target would be a more holistic measure in that situation, warranting a less dramatic response. Optically it literally combines the objective of price stability and growth. It would however widen the mandate and accountability of the Central Bank, as per a view shared by The Economist, while it was pushing for a NGDP target framework for the US Federal Reserve (Fed): A Central bank with an explicit NGDP level target would have faced (appropriately) intense pressure to do much more much sooner than one with the Fed's present, vague focus on an inflation target as a means to broader macroeconomic stability. This will be a recurring column published every Friday under the title: “How to Make Sense of the Indian Economy”. 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A Brexit deal is still no closer, but trade will not cease even if the March deadline passes; In the short-term, UK and EU economic growth will suffer; Medium-term new arrangements will hold back capital investment; Long-term, there are a host of opportunities, in time they will eclipse the threats. N.B. In a departure from the my usual format, this Macro Letter is the transcript of a speech I gave earlier this week at the UK law firm, Collyer Bristow; Thomas Carlisle may have dubbed Economics ‘the dismal science,’ but I remain an optimist. Setting aside the vexed question of whether Brexit will be hard, soft or stalled, the impact on financial services (and, indeed, the majority of UK trade in goods and services) will be dramatic. Financial markets (and businesses in general) loathe uncertainty. Ever since the referendum result, investment decisions have been postponed or cancelled. When investment is being made, it is generally tentative and defensive. Exporters and importers alike are striving to develop alternative strategies to maintain and protect their franchises. As a long-term economic commentator, I try to look beyond the immediate impact of events, since near-term expectations are usually reflected in the valuation of an asset or currency. Brexit, however, is a particular challenge, not only due to near-term uncertainty but because policy decisions taken now and in the wake of the March 2019 deadline could set the UK economy on an unusually wide array of possible trajectories. Near-term To begin an analysis of the impact post-Brexit on financial services, there are several near-term threats; here is a selection: House Prices Earlier this month Mark Carney, the Governor of the Bank of England, warned Cabinet Ministers that a ‘no-deal’ on Brexit could see house prices decline by as much as one third and a rapid rise in defaults. The subsequent impact on financial institutions balance sheets and the inevitable curtailment of bank lending could be severe. Jacob Rees-Mogg even dubbed him, ‘The High Priest of Project Fear.’ Passporting Assuming no deal is agreed, the access which financial services providers in the UK have had to the EU27 will not be available after March 2019. Many existing contracts and licensing agreements will need to be rewritten. Regulatory Equivalence Divergence between the regulatory regime in the UK and Europe remains a distinct risk. The types of legal issues surrounding, for example, ISDA Master agreements (Deutsche Bank AG v Comune di Savona) will inevitably become more widespread. Systemic Risks to the Euro The ECB is vocal in its mission to maintain control over the clearing and settlement of Euro denominated transactions. Many financial services activities which currently take place in the UK may need to be transferred to another EU country. In the near-term, these types of factors will reduce trade and economic growth, both in the UK and, to a lesser degree, in Europe. In May 2017 I wrote an essay entitled ‘Hard Brexit Maths – Walking Away’ in which I estimated the negative impact a no-deal Brexit would have on the EU. The UK’s NIESR estimated the bill for a Hard Brexit to the UK at EUR66bn/annum. I guesstimated the cost of Hard Brexit to the EU at EUR 62bn/annum. Both forecasts will probably prove inaccurate. The reduced free movement of workers from the EU is another significant factor. It will lead to a rise in a toxic combination of skill shortages (due to new immigration controls) and unemployment, as companies are forced to conserve capital to weather the inevitable economic slowdown. There are, however, several near-term opportunities, here is a small selection: Sterling Weakness The currency has already weakened. Whilst this may be inflationary it makes UK exports more competitive. Whether the UK can take advantage of currency weakness remains to be seen, history is not on our side in this respect. A US Boom Aided by a lavish tax cut, the US economy is growing faster than at any-time since the financial crisis, underpinning its currency. Its trade deficit is growing despite tariff barriers. US Trade Policy The Trump administration appears to have focused its ire on trade surplus countries, of which Germany is the largest European example. The UK is not under the White House microscope to the same degree. Seizing the opportunity presented by these financial and geopolitical shifts is easier to speak of than to grasp. Nonetheless, just this month Absa Bank of South Africa (recently spun-off from Barclays) announced plans to open a London office to capitalise on post-Brexit opportunities connected with the fast-growing economies of Africa. Medium-term The medium-term risks will mostly be borne out of inertia. Until the shape of Brexit is clear, decisions will continue to be postponed. Once Brexit occurs there will be inevitable technical problems, stemming from systems issues and new procedures. Growth will slow further, business operating costs will need to be cut, employment in financial services (and elsewhere) will decline at exactly the moment when greater investment should be undertaken. But, new trade deals will be negotiated, not just with Europe and the US, but also with the countries of the British Commonwealth, notably (but not just) India. Many of these countries are among the fastest growing economies in the world, often imbued with benign demographics. Here is a rapidly expanding working age population in need of capital investment and financial services. Ruth Lea, Chief Economist at Arbuthnot Latham has commentated on this subject at length during the last two years. In April she wrote: Commonwealth countries, taken together, have buoyant economic prospects and their share of global output continues to increase (especially in PPP terms). The EU28 share, in contrast continues to decline. UK exports to the top eight Commonwealth countries rose by over 31% between 2006 and 2016, but total exports rose by 40%. And the share of UK exports going to the top eight Commonwealth countries fell from 7.5% in 2006 to 7.0% in 2016… There is little doubt that Commonwealth countries have the potential to be significant growth markets for the UK’s exports, given their favourable growth prospects and demographics. This is all the more likely given the probability of trade deals with individual Commonwealth countries after Brexit. Long-term David Riccardo defined the law of comparative advantage just over two hundred years ago. Perhaps one of the best examples of the continuance of the phenomenon is Switzerland, which has seen its currency appreciate against the US$ by approximately 3% per year, every year since fiat currencies were freed from their shackles after the collapse of the Bretton Woods agreement in 1971. Here is a chart of the US$/CHF exchange rate over the period: Source: fxtop.com The Swiss turned to pharmaceuticals and other value-added businesses. The success of this strategy, despite a constantly appreciating currency, has spawned an entire industrial region – the Rhone-Alp economic area, which incorporates German, French, Italian and Austrian companies bordering Switzerland. This region is among the most economically productive in the EU. The UK has an opportunity, post-Brexit, to focus on economic growth. As a trading nation, we should concentrate our efforts on re-forging links with the fast-growing countries of the Commonwealth, where the advantages of a common language and legal system favour the UK over other developed nations. An example of this opportunity is in education. We have a world class reputation for education and training. Combine this redoubtable capability with the abundance of new technologies, which permit the delivery of content globally via the internet, and we can provide the full gamut of instruction, ranging from primary to tertiary and professional via a combination of video content, on-line examination and tailored digital collateral. A recent MOOC (Mass Open On-line Course) in which I enrolled, attracted students from across the world. The course was dedicated to finance and among the students with whom I interacted was a Masi tribesman from Kenya who hoped to develop micro-finance solutions for the local farming community. The world is our veritable oyster. Conclusion – The Bigger Picture The economies of the developed world are growing more slowly than those of developing nations. Providing goods and services to the fastest growing economies makes economic sense. Many of the largest companies listed on the UK stock market have been oriented to take advantage of this dynamic for decades. Brexit is proving to be cathartic, we should embrace change; the sooner the better. The Austrian economist, Joseph Schumpter, described the cycle of economic development as including a period of ‘creative destruction’. Brexit could be an extreme version of this process. The patterns of trade which have developed since the end of WW2 have been concerned with promoting cohesion between European nations, but, as Hyman Minsky famously noted, ‘stability creates the seeds of instability.’ I believe the political polarisation seen in Europe and elsewhere is a reaction against the success of the global financial and economic system and the institutions and alliances created to insure its success. We are entering an era of change and Brexit is but one personification of a growing trend. Technology has shrunk the world, empowered the individual and (in the process) undermined the influence of nation states and international institutions. Individual freedom is ascendant but with freedom comes responsibility. One of the greatest challenges facing the UK and other developed nations, in the long run, is the provision of pensions and health insurance to an increasingly ageing population. Many of the financial products required by these ageing consumers are ones in which the UK is a world leader. The developing world is rapidly growing richer too. Their citizens will require these self-same products and services. Brexit is an opportunity to look forward rather than back. If we embrace change we will thrive, if not change will occur regardless. Post-Brexit there will be considerable pain but, if we manage to learn from history, there can also be long-term gain. Originally Published in In the Long Run (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
We like to talk Business and Finance. Figured we should do it for a living. Join us as we chat on three of this week's key stories.
In the midst of a series on exercise, I shall, in this article, shift gears to discuss the appropriate diet when one is exercising regularly - a recurrent question asked by many. It goes without saying that the calorie and nutrient requirement varies from sedentary individuals to athletes. Calorie Requirement Let us begin with the question of optimum calorie requirements. There are standard calculations for normal adults, depending on age, lean mass, and body structure. Calories are added for different activity levels, based on the stress of the activity and the frequency. Using these, it is easy to arrive at a figure. The difficult part, however, is to stick to it. It is notoriously challenging to estimate burnt calories while exercising, or those consumed while eating. A more objective measure is to assess the physical response: Are you achieving your goals? Are you gaining or losing weight, losing fat, gaining strength, or whatever else your goal is? We shall discuss these next week. The calories needed are based on one’s body weight, exercise schedule and the need to gain/lose/maintain body weight. To calculate the daily requirement, we shall study two components: Basal Metabolic Rate (BMR) Energy Spent on Exercise Basal Metabolic Rate (BMR) BMR can be calculated most accurately using the Harris-Benedict equation: Males: 66.5 + (13.75 X W) + (5.003 X H) - (6.775 X A) Females: 65.1 + (9.563 X W) + (1.850 X H) - (4.676 X A) where, W is weight in kg, H is the height in cm, and A is age in years. However, if it sounds too formidable, we can use simpler equations: Males: BMR = Weight in pounds X 11 (1 kg = 2.2 pounds-lbs) Females: BMR = Weight in pounds X 10 If you have access to a body composition machine, or can make the effort to calculate your lean mass, (details later) the equation changes to: Males: Lean mass in lbs X 12.5 Females: Lean mass in lbs X 11 Energy Spent on Exercise The calories burnt while exercising can be calculated depending upon the time spent on an exercise and how strenuous it is - mild, moderate or severe. Various calculators are available online or as apps (HealthifyMe, Cronometer are two such apps) which can guide you regarding the calorie content of foods consumed and the caloric expense of different exercises. Note that we are here ignoring the calories burnt during NEAT and EPOC (discussed earlier), and also the differential effects of different foods (proteins and fats consume more calories in their digestion than carbs), which are harder to calculate. For practical purposes, it's best to see how the body responds to the schedule. If the set goals are being met, continue with the schedule. However, if one is gaining fat, reduce the total calorie intake, and if one is losing muscle, increase the calorie intake. Macronutrient Requirements Proteins The macronutrient requirements come next. Good quality protein is important during exercise. For low to moderate exercise levels 1-1.5 g/kg daily, while heavy trainees need 2 g/kg or more, depending upon their goals (these people are generally professionals, and should seek specific guidance). This means that most exercising adults would do well to consume at least 100 g of good quality protein daily. Good sources of proteins are eggs, meats, nuts, seeds, milk and milk products, legumes, etc. Serious athletes who cannot complete their protein quota, can consider whey or albumin protein powders, keeping in mind the extra expense involved. Carbohydrates Carbohydrates are tricky. If the aim is to lose fat, they should be curtailed to about 40% of the total calories consumed daily. If the aim is muscle/strength gain, higher consumption is desirable, especially on the day of a heavy workout. Whole grains and complex carbs are to be preferred over refined carbs and added sugars. Fats Fats are used to complete the quota of calories that remain. Fat consumption (as long as it isn't fried foods) doesn’t directly correlate with body fat gain across a vast range, and healthy fats should be part of everyone’s diet. These have been discussed earlier. As an example, a 30-year female with weight 55 kg, who wishes to maintain weight but increase her fitness levels will need 1,210 cal as BMR, say 300 cal for exercise requirements - depending upon the level of exercise, and an extra meal pre or post-workout which we don’t count (to cover up for NEAT and EPOC). This means about 1,500 to 1,600 cal daily and one extra meal on the day of the workout. A 35 year male weighing 80 kg, aiming to lose fat and gain some muscle will need 1,900 calories as BMR, say 300-500 cal for exercise and an extra meal on the day of workout, minus say 200-300 cal for fat loss. This comes to about 2,200 cal per day and an extra workout meal. The caloric content of nutrients is as follows: proteins and carbs 4 cal/g and fats 9 cal/g. So, we keep 400-500 calories for proteins as a start. The carbs can be 40-60% of total calories as required, based upon your goals as discussed above. The rest is consumed as healthy fats. For strenuous exercise, it's good to consume a lot of fruits and vegetables daily, and consideration can be given to taking some multi-vitamin supplements in addition. What is more important is getting weekly measurements of total weight and ideally lean mass, using Bodpod machines or body fat measurements with callipers, to judge the response to the schedule. If it is going in the desired direction, the same can be continued and assessed weekly. If not, calories can be increased or decreased as per requirements. However, there is no need to be obsessive about these measurements, as occasional “cheat meals” and missed workouts tend to balance out if one exercises regularly and watches one’s measurements weekly. We shall discuss more about tailoring diet according to one’s goals next week. Stay tuned. This is a recurring column published every Sunday under the title: A Guide to Exercise. 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Having previously discussed the four guiding principles of High Intensity Interval Training (or HIIT) and why HIIT is perhaps the ultimate resistance training routine, this week I will elaborate on how these principles can be effectively applied on specific exercises such as running, kettle bells, free weights etc. Running/High Intensity Aerobic Exercise For specific running goals and techniques, one should consult a coach. However, if the goal is fitness, leg strength and fat loss, a simple running schedule is also helpful. The options are running outdoors (on a track or roadside), on a treadmill, a cross trainer or on a stationary bike. The system here is somewhat different from weight training. It is advisable to perform 4-8 bursts of the exercise, involving an all-out effort for 30 seconds at a time, followed by 3-4 minutes of rest or slow walking.Thus one essentially exercises for 2-4 minutes in a total workout time of 18-36 minutes (including recovery periods). This workout can done on 3 non-consecutive days every week. One can check improvement in one’s fitness every 2-3 months or so. It is also possible to change the routine at this stage. One can either change from road-running to a cross-trainer or vice versa. Alternatively, one can start doing slower, longer runs one day a week if the target is to one day run a marathon. However, running a marathon requires specific training for endurance running, for which coaching is recommended. Kettle Bells Dubbed the “gym in the palm of one’s hand”, these can be used for exercising literally every muscle in the body in a very short time period. The swing is a wonderful starting exercise for fat loss, leg and back strength, which will satisfy most goals of a trainee. The clean comes next, followed by the snatch - the greatest test of power with endurance. Strength building exercises include the press (overhead press), goblet squat and the Turkish get-up. (Videos to all exercises mentioned have been embedded as links the first time they appear in the article.) The same principles may be applied as discussed previously - one set of the exercise carried to fatigue. While the strength move like the press can be performed to complete fatigue, care has to be taken while performing the power moves (especially swing, clean and snatch). Here, carrying on to total fatigue is not advisable, as it can lead to injury. The set must be stopped as one senses that the form of the exercise is failing. Further, these moves require specific training; though there are several videos, articles and books available, learning from an expert is the most advisable in order to avoid injuries, especially with the swing and the snatch. Kettle bell workouts can be performed stand alone (only the swing, the swing and the press, the clean and press, or the Turkish get-up and the snatch, for instance). They can also be combined with body weight exercises like push-ups, pull-ups and dips. A workout of 10-15 minutes is enough to leave even the fittest of athletes gasping for breath. Free Weights Traditionally, HIIT was used for free weights and machines. With free weights, the emphasis is on performing one work set each with 3-5 exercises, stressing the whole body. These are: Barbell rows Bench press The Press (or overhead press) Back Squat Dead lift. Even as all these exercises are full body exercises, they do stress some select muscles more than the others. A young fit adult can do all five of these in one workout session, a senior athlete (> 40 years) can divide them into two or more, as needed. If only three exercises can be performed per workout, they can be an upper body (bench press or the press) followed by barbell rows and a lower body exercise (squat or dead lift). If only two, one can skip the rows while performing a press and the squat/dead lift. Another option is BP/Squat in one workout and the press/dead lift in the next workout, alternating these as one goes along. Another back option that works exceedingly well (if one wishes to avoid barbell rows) is the pull-up - a wonderful upper body and abdominal exercise. Once an exercise is decided upon, one should perform 1-3 warm up sets of the exercise before going on to the work set, which as mentioned earlier is performed to positive failure in 12-20 reps, lasting 45-90 seconds. If one feels that one can go beyond 90 seconds and without feeling fatigue, this could probably mean that the weight has been underestimated. Here one can increase the weight by 5-10% in the next workout (the weight can be reduced likewise, if one can’t complete at least 8 reps of the exercise). Another important issue is that of the cadence - the time taken to complete a rep. While both fast and slow reps have advantages, slow reps (2-4 seconds in both the positive and negative component of the movement) work best for both strength gains and safety. Adequate recovery time (2-4 minutes) is allowed between exercises, till the whole schedule is completed. This should be followed by active stretching and cool down for muscles relaxation. Warm up and cool down are important for everyone; with the importance increasing significantly as one grows older. Senior athletes must take care to spend 5-10 minutes on warm up and 10 minutes on cool down to avoid cramps. Adequate hydration cannot be overemphasised. Consumption of 2-3 litres of water per day is recommended, especially during summers. Machine-based Exercises Here again, the focus is on whole body exercise, the chief options being: Seated row Chest press Pulldown Overhead press Leg press These can also be performed all on one day, or in different workouts depending upon the age and physical condition of the athlete. Here, the advantage is that one can slow down both components of the movement (positive and negative) as per inclination as the weights are better controlled for better strength gain. The chances of injury are also diminished. However, the effort required to maintain the weight in the required arc is not performed here (as needed with free weights). In this respect, free weights are superior. Rest periods are similarly guided by the level of fatigue and general fitness levels, as above. A very important concept is to decide on the frequency of the workouts (typical intervals are 4-14 days). A young fit 50-55 kg female may be comfortable doing this regime twice a week; a healthy male weighing 80 kg will probably need a full week’s rest for complete recovery. As both gain in strength, the inter-workout intervals will tend to increase further, as there is no benefit of exercising if one hasn't recovered completely. This is the major advantage of HIIT - an exhausting workout lasting 30-45 minutes once a week or less, granting the greatest bang for the buck. Bodyweight Exercises Though commonly HIIT is performed with weights, machines or while using the treadmill/cross trainer, body-weight based protocols are also available. The staple are the push-up, the pull-up, the dip, the squat, the burpee, mountain climbers and star jumps. Here, circuits are more commonly used, for instance, all these exercises (5-7 of them) are performed for 10-20 seconds each without rest in between the exercises - these constitute one set lasting 60-90 seconds. After a brief rest period (30 to 60 seconds), one can repeat the same set several times (5-8 times). These take hardly 15-20 minutes for the whole workout but leave one exhausted. If one lacks space and equipment, these are the perfect tools for building a strong and healthy body; however, the recovery is faster than with weights so the frequency has to be greater (2-3 times a week). Another popular protocol is the Tabata protocol - 20 second exercise followed by 10 seconds rest, for a total of 8-12 such circuits. Similar circuits can be performed with free weights and machines as well. Discussing all possible variants is beyond the scope of this article. The same routine can be continued for 6-12 weeks. These can be modified depending upon the results achieved. Hence, maintaining a written record of every workout briefly (for comparison) is a great investment of your recovery time. After 6-12 weeks, taking a break from exercise for a week or so, if required, is a reasonable option before starting a new routine. In summary, HIIT can be incorporated in our workouts in any way we like exercising. It can work with running, treadmill or cross-trainer, as well as with free weights, machines and body weights. Kettle bells are another versatile tool for the same purpose. This is a recurring column published every Sunday under the title: A Guide to Exercise. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Having previously discussed why High Intensity Interval Training (or HIIT) is perhaps the ultimate resistance training routine, we shall now review its basic principles and commonly deployed protocols. Before we go further, just a reminder - HIIT is not a specific exercise in itself. It is rather a broader principle driven training routine, which can be applied in a variety of ways: stand-alone or as a combination of aerobic exercises; free weights; kettle bells; machine based or bodyweight exercises. Would advise you to read this article to familiarize yourself with its physiology before reading on. Now with that behind us, let us start where it all starts. The Four Guiding Principles of HIIT Intensity Duration Progression Frequency We’ll look at Intensity, Duration, and Progression in the purview of resistance training, and Frequency from the perspective of a broader routine, but parallels can be found across exercises as would be elaborated through future articles. Intensity The underlying idea is to exhaust all possible muscle fibers being exercised. There are 3 broad types of muscle fibers: Slow twitch fibers: which have more endurance, which fatigue slowly, but recover fast (recovery in about 90 seconds). Fast-twitch fibers: which are more powerful, which fatigue quickly, and recover slowly (4-10 days for complete recovery) Intermediate-twitch fibers: a large group falling in between a. and b. The ideal exercise should engage all types of muscle fibers sequentially and exhaust them. The quantum of load is important here. If the load is too light, some slow-twitch fibers would recover by the time the fast twitch fibers come into play. Conversely, if the load is too high, the fast-twitch fibers would get exhausted before the slow twitch have been stressed, deeming the exercise as "over" in only 2-3 reps. Hence, moderately heavy stress must be placed on the exercising muscles; which means about 50-60% of the *1 rep max. The aim is to do 12-20 reps of the exercise in one intense, all-consuming set (with the broader acceptable range being 8-25 reps). *1 rep max is the maximum weight that can be lifted in one rep, say 100 kg on the bench press (for example). 50-60% of 1 rep max would hence imply (for the aforementioned example) as lifting 60 kg, which can perhaps last till 15 reps. So a 60 kg lift for 15 reps becomes the load for the work set (defined later). The penultimate rep should take all of one’s strength and willpower, with the last rep being barely possible with the entire reserves of one’s body and mind. This is what is meant by intensity, which when accurately deployed gives the desired results. The set would end only when there is complete muscle failure, at least positive failure (meaning complete inability to lift the weight), though an ideal regimen often involves negative failure (lowering the weight under control). But only try this if you have a trained spotter, not if you’re exercising alone. Duration Duration has two aspects to it. First, the duration of the set which should be between 45-90 seconds for best results (range 30-150 seconds). Second would be the duration of the workout, which may last a maximum of 45 minutes, though ideally this should be under 30 minutes. After 45 minutes, the body’s testosterone starts falling and cortisol rises, so the returns start diminishing. Aim to do only 1 work set per exercise, to failure. Since this is meant to be an exhausting set, any further stress on the muscle can perhaps result in injury, without any gain. Progression A progressive increase in either the load or the number of reps is essential. This means that from one workout to another, there must be progress in the work performed – either the load should increase, or the same load be lifted for more reps, or perhaps the previous load and reps should be aimed to be finished in lesser time. After one has determined the optimal recovery time (range 4-14 days) for the body, it is possible to continuously progress for months (and ideally years), provided you are committed and eat well. Case study in Progression: Say you’re able to perform 15-18 reps of the exercise comfortably. For the next round your load may be enhanced by 2.5 kg or 5 lbs for upper body exercise and double that for squat and dead lift, depending on the weights you use. After a few months, you will reach a plateau depending on your initial fitness and strength; the higher one's fitness is at the time of starting, the earlier one is likely to plateau. Now would be the time to slow down but attain definite gains - increase by one rep per week till one can again perform 12-15 reps with a higher weight, say 70 kg for the athlete in the above example. This is likely to result in a substantial gain in 6-12 months, and is a highly achievable goal. After this, one can change the exercise a bit: for instance start incline press instead of the bench press, or change to dumb bell press or body weight training (difficult push-up variants, dips etc. ) for a few weeks. You have to exercise regularly, while changing the routine a bit, but stressing the same muscle groups, in order to achieve the best results. A truly Zen concept, as Danny Kavadlo says. Frequency Frequency is dependent on the type of exercise being performed. The hallmark of HIIT is to allow complete recovery before the next workout. Typically, aerobic exercises such as running can be done thrice a week, while weights should be lifted at most once a week. Generally, it is better for people who start exercising late (after 30), to begin slowly, possibly consult a physician before kicking-off in case one is otherwise used to being sedentary. Learn all the exercises gradually to build a reservoir of strength and endurance, before graduating to HIIT. Next week, I will elaborate on applying the principles of HIIT on specific exercises such as running, kettle bells, free weights etc. Stay tuned! This is a recurring column published every Sunday under the title: A Guide to Exercise. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
On his maiden-trip to India this month, Jack Dorsey - Twitter’s Co-Founder and CEO, claimed that the real task for Twitter is to identify content that misleads people into taking an action. However, the little blue bird is still unclear about how it plans to identify “intent” behind tweets. The use of social media in propagating fake news endangers the very information we consume, as 'tweeting' now situates itself influentially within the ambit of news reportage. Twitter’s monthly active users have grown to over 330mn worldwide in 2018 - India ranking amongst the top 10 countries with the largest Twitter audience. A study that surveyed over 4,700 Twitter users online reveals that 9 out of 10 people use Twitter for news and the majority does so on a daily basis; even for breaking news.These users follow journalists, media houses and key influencers (a.k.a Twitterati) among others. While some ‘search’ for news on the platform, others feed on ‘Trending Topics’ by scrolling through feeds that are presented to them. Traditional media is constantly playing catch-up with the ever-growing social media platforms, which seem to be doing the former’s job quicker than them. Be it a discussion on the ongoing tussle between the Government and the Central Bank of the country, a crusade that travelled from US to expose hostile work-environments in Indian industries, or a running commentary on India’s latest feat in a world championship, Twitter users and the like typically have a ‘#’ ready, making it a trendy source of news and ‘statements’. Like in case of the 2014 General Elections, when Bhartiya Janta Party’s victory was announced by Narendra Modi himself, becoming India’s most shared tweet on the platform and other media at that time. While Twitter allows individuals to become information channels, overcoming the barriers of media ownership and control, it also puts a question mark on the dependability of news sources that have been traditionally used in print and broadcast industries. Talking theoretically, use of Twitter as a news source allows consumers to design their own ‘information diet’, ruling out the agenda-setting effect of news organizations. However, a debate on Recency vs. Relevancy lingers. A primary reason why people and news organizations prefer to use social networks like Twitter to break news might be the platform’s immediacy and user-ability to track developments in real time. ‘Trending Topics’ (TTs), often used as sieves for ‘newsworthy’ content, are updated every 10-15 minutes, luring the general user to come back to the platform for latest info that is collected on the basis of usage of keywords in TTs solely by number. However, with TTs sprouting within minutes, the churn rate of news stories on Twitter is very high. Therefore, a consumer who visits the site twice or three times a day will receive different content at all times. Reliance on social media websites for news by traditional media brings ‘recent’ issues into the limelight, risking an information-overload and making the audience wonder – why is this news? The kind of importance given to ‘recency’ deludes the consumer of what may be more relevant to them. Hence, users might end up missing ‘news’ and information merely because of their browsing habits. Twitter - A Two-Step Flow Model Twitter as a model encapsulates the theory of Two-Step Flow of Communication, which had earlier lost its luster due to the lack of empirical data. The theory dates back to 1944, when an American-Austrian sociologist, Paul Lazarsfeld, devised the Two-Step Flow Model by studying the election of Franklin D. Roosevelt in 1940 to determine voting patterns in context to media coverage of candidates. It rejects an earlier theory of Hypodermic Needle Model of communication flow, which suggested that media ‘injects’ messages into a passive audience, based on observations of media effects of Nazi propaganda. Lazarsfeld’s model states that information flows from mass media to ‘opinion leaders’ before moving down to ‘followers’ or users of that media. Two Step Flow of Communication These opinion leaders are the people who pay close attention to news and mass media – celebrities, activists, politicians, etc.– and can sway public opinion about an issue, given their social and personal influence. They pass on information to their follower base using their opinion/understanding of it. Twitter works along similar lines, with ‘verified’ users making statements about news directly to the public. This model is not only a channel of communication, but also gives weight to the fact that the audience is an active participant in the communication process and that they are more likely to be influenced by other people than the mass media. Twitter as a medium and source of news thereby accentuates the role that influencers/opinion leaders play in today’s social sphere, with traditional media treating tweets as verified press releases, unknowingly enhancing their credibility. Important examples of two-step flow model are influencer-driven projects like Al Gore’s The Climate Project and Narendra Modi’s Swachh Bharat Abhiyan, for which digital opinion leaders were recruited to create awareness and further education about respective causes. Twitter enabled these campaigns to bypass the conventional path of dissemination and engage with their audience directly, while traditional media began feeding off the platform to be party to what was ‘trending’. Reporting vs. Advocating While Twitter rids the agenda-setting effect of media in reporting of breaking news, it also helps broadcast information that comes through opinion leaders. However, one may or may not be able to draw a line between fair reportage and opinionated information about news stories. Usage of certain words in updates and headlines may also extend bias to one side of a story, leading to distortion of the message. That said, are we then more susceptible to political propaganda? A study conducted by scientists at MIT revealed that misinformation spread through Twitter infiltrates further and faster into the social network, usually outperforming accurate reports. The study discovered that a false story, which is more ‘novel’, is likely to reach over 1,500 people six times quicker than a true story does. More so, fake news about politics usually performs better than all other subjects. At what point then do we, as consumers, know that a tweet has impeded the lines between reporting of events and advocating for a cause or even propaganda and fake news? Today’s mediascape, which largely comprises of the social network, is one where every user is a reader, consumer, writer and publisher. As India enters a vulnerable phase with upcoming state and general elections, one ought to keep an eye out for what may be crusading as ‘news’ and what really holds weight. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Another news week just passed us by, and brings us closer to election season, starting with Chattisgarh, Madhya Pradesh, and Rajasthan not too far ahead, and then the 2019 Lok Sabha elections. Political parties across the spectrum are organizing themselves for what is certain to be a tough and divisive fight. Which brings us to today’s topic - where do political parties get the money to campaign? It is useful to ask some basic questions to put the issue in perspective - Who can donate to political parties? How are these donations made? Do citizens have a right to know how much political parties make and from whom? Do political parties need to declare how they spend this money? Is there a limit on how much each party can spend during elections? Who Can Donate to Political Parties? Anybody from an individual to a corporate can donate to political parties. In addition, there are freebies given by the state in the form of airtime on state channels, and free printouts of electoral rolls. How Can These Donations Be Made? There are primarily two modes - cash and non-cash. The disadvantage of cash is that it is hard to trace (we will get to that part in a bit). Budget 2018 added a new mode of non-cash transfer called electoral bonds - which essentially means you can go to a few selected banks, deposit money, buy a bond and then put it in the account of the political party of your choice. More details in the sections below. How Do We Know How Much Money a Political Party Makes and From Where? Here is the truly interesting part. The law governing all things elections is the Representation of People’s Act 1951 (amended multiple times since then.) Section 29C of the Act states that cash donations to political parties of any amount are allowed, but any amount above Rs. 20,000 has to be reported with the source of the donation. This was easy enough to circumvent - cash donations were merely split into buckets of Rs. 19,999 and voila - zero transparency. In Budget 2018 however, the maximum amount of cash that could be received (anonymously or otherwise) was reduced to Rs. 2,000. How much will this help? Do we underestimate the capacity of political parties to indulge in creative accounting and show multiple donations of Rs. 1,999 rather than Rs. 19,999? Here are some numbers, which put the problem of anonymous donations into perspective. “Total income of the National Parties from known donors Rs. 589.38 crore, which is 37.8% of the total income of the 7 National parties during FY 2016-17.” A staggering 72.2% of donations to political parties is from unknown sources. Read this part again and think about how it affects how political parties can represent the electorate’s interests. We simply do not know who the people or companies are behind the money. This leaves open multiple possibilities of the democratic process being subverted. Is this money from corporates? How does this conflict of interest translate to policy making? So many more questions. Unsurprisingly the party in power has 3 times the income of the next biggest rival, according to an NDTV report on breakdown of incomes by political parties. Oh also, these donations are Income tax exempt, and nothing stops parties from not reporting the amount of money coming into their coffers. So Did Budget 2018 Do Anything to Fix This? Apart from reducing the maximum amount of cash donations to Rs. 2,000, there was another big announcement - a new type of financial instrument called electoral bonds. A donor buys electoral bonds from specified banks, and deposits it in the accounts of the political parties they want to donate to. The donors have to declare in their accounts the amount of political bonds they have purchased, and the political parties have to declare the amount they have received via this route. The names of the donors are not revealed, which theoretically is still less than ideal. The only clear advantage is that the donations are made through tracked channels rather than via cash. This is now being used by large donors - Data shows that 99.9% of electoral bonds bought so far are worth Rs. 10 lakh or 1 crore. From the frying pan into the fire? Do Citizens Have a Right to Know How Much Political Parties Make And From Whom? Yes, on the first part and no on the second part - as demonstrated above. What is clear, however, is that politicians will go to any extent to protect their sources of cash. Do you remember the recent noise about NGOs receiving foreign funding? In theory, any money from abroad is suspect because the intentions behind it are not clear (I’m stretching this argument). So shouldn’t our political parties, representatives of the people, sworn by the Constitution to govern and protect us, be measured by the same yardstick? Of course not. In Budget 2018, another provision was passed which exempted donations from foreign sources to political parties from scrutiny. The law that governs funding from foreign sources to NGOs and political parties is the same - the Foreign Contribution Regulation Act (FCRA). In fact, the Delhi High Court in 2015 had held that donations by Vedanta plc. (a UK based conglomerate) to the BJP and Congress were illegal because they violated the FCRA. According to an article in The Hindu, "Through Finance Bill 2016 passed earlier, the BJP government had amended the FCRA to make it easier for parties to accept foreign funds. Now, it has amended it further to do away with the scope for scrutiny of a political parties’ funding since 1976. The retrospective amendment will help BJP and Congress escape the fallout of a 2014 Delhi High Court judgement that held both guilty of violating the FCRA. The FCRA was passed in 1976. It defined a company — Indian or foreign — registered abroad or with subsidiaries abroad as a foreign firm. It was later repealed and replaced with the FCRA, 2010. The BJP government, through the Finance Act, 2016, had also changed the definition of a foreign company by saying a firm with less than 50% of share capital held by a foreign entity would no longer be a foreign source any more. This amendment also came into effect retrospectively from September 2010. Before the change approved last week, foreign funds received by a political party before September 26, 2010, when the FCRA was enacted, were open to scrutiny. Once Clause 233 in the Finance Act 2016 was passed, BJP and Congress simultaneously withdrew appeals in the Supreme Court against a Delhi High Court verdict that held them in violation of the law on foreign funding.” In sum, foreign funding was illegal according to law. Funding from Vedanta was challenged in the High Court, which ruled that it was illegal. Government amended law to ensure that no foreign funding to political parties from 1976 can be questioned in a court of law. Congress and BJP withdrew their appeals to the 2014 High Court judgment. Oh and here’s the kicker - all of these amendments were passed without debate in the highest law making body in the country. Without. Debate. Read the above section again. Weep. Thankfully, there is a PIL in the Supreme Court protesting this. Is There a Limit On How Much Each Candidate Can Spend During Elections? Yes, there is. Rule 90 of the Conduct of Election Rules 1961 specifies limits on spending, and directs candidates to declare their spend (Rs. 70 lakh for each parliamentary constituency). Easier said than done, since there are no mechanisms to monitor in place, and even then it is very difficult to trace expenses to a particular candidate. So Now What? Do you remember how we are now required to link our Aadhaar cards with our PAN numbers and how that is Step 1 towards killing black money and corruption in the system? Should we now wonder why the same standards of probity are not applied to our lawmakers - those we elect to safeguard our interests? If every penny of our hard earned money is accountable, why is it different for political parties? How can we trust our politicians if we are not sure in whose interest they are acting? This has been mentally taxing to write, and I’m sure if you’ve reached here you’re at least mildly pissed (hopefully really angry). That is good. Stay mad. Remember this when somebody tries to convince you about one party vs. the other. Make sure you ask these tough questions. Most of all remember this over the next year, make sure you have election identity cards, and make sure you vote. Until next time. You can subscribe to my weekly letter series titled "Policy & Governance for Dummies" by clicking here. View the letter archive by clicking here. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Everyone has blind spots and weaknesses. By identifying and addressing your own challenges, you can accelerate your career, writes Carter Cast. Have you ever wondered why some careers flourish, while others stall? ‘Career derailment’ occurs when an individual previously deemed to have strong potential is fired, demoted or plateaus below expected levels of success. According to statistics, somewhere between 30 and 67% of leaders involuntarily derail at some point in their career. Not surprisingly, career derailment carries high costs: The direct and indirect cost to organizations can be more than 20 times the derailed employees’ salaries. Given the stakes involved for individuals and organizations alike, I recently set out to pinpoint the major causes of career derailment. In this article I will share key findings from the research, lay out the behaviours that can stall a career and offer remedies to help people avoid derailment. Career Derailment 101 First and foremost, career derailment does not indicate a lack of managerial talent. Instead, it often afflicts talented managers who are either unaware of a debilitating weakness or interpersonal blind spot — or are arrogant enough to believe that the rules don’t apply to them. As part of my research, I conducted extensive interviews with three leadership consulting firms: the Centre for Creative Leadership, the Korn Ferry Institute and the Hay Group. All three indicated that organizations prefer to focus on the positive and don’t even like to discuss peoples’ negative qualities. The problem is, these personal weaknesses often override an individual’s strengths. Following are five major career derailers that every leader should be aware of. Derailer 1: Interpersonal Issues Researchers agree that this is the most prevalent and damaging derailer. Stuart Kaplan, the former global Chief Operating Officer of Korn Ferry’s leadership and talent consulting practice (now Director of Organizational Development at Google) put it this way: As you progress [in your career], your relationships with others are more important than your knowledge of and relationship with data. This need kicks in as you move into middle and upper management. It’s a mindset change. You have to let go of having the answer and embrace the relational world. It becomes less about competencies and more about trust. To examine this derailer more closely, I broke it down into two categories: relational issues and dark-side personality dimensions. On the relational front, Korn Ferry analyzed a tremendous amount of data from its 360-degree feedback instrument and found a total of 19 negative behavioural characteristics that reliably correlate to job performance flame-out. Ten of them are related specifically to relational issues. The five most common are, in descending order: defensiveness; lack of composure under stress; insensitivity to others’ feelings; excess ambition; and arrogance. Defensiveness leads the way in terms of career damage because it often suppresses one’s ability to learn and develop. Looking at the second category, dark-side personality dimensions involve dysfunctional dispositions that are associated with failure as a manager. Psychologists Joyce and Robert Hogan have conducted extensive research on derailment resulting from personal factors and created an inventory assessment tool that managers can take to test for these dimensions. David Dotlich and Peter Cairo put the Hogans’ model into practice with their own tool, the CDR International Derailment Report, which they have administered to thousands of managers and executives. In doing so they have confirmed the accuracy of the Hogans’ dimensions. In Why CEOs Fail, they write: Many leaders sabotage themselves, albeit unconsciously. We’ve found all leaders are vulnerable to 11 derailers— deeply ingrained personality traits that affect their leadership style and actions. Odds are that you possess at least one of these traits. Dotlich and Cairo’s 11 derailers are as follows: Arrogance: You’re right and everybody else is wrong. Melodrama: You always grab the centre of attention. Volatility: Your mood swings drive business swings. Excessive caution: The next decision you make may be your first. Habitual distrust: You focus on the negatives. Aloofness: You disengage and disconnect. Mischievousness: Rules are made to be broken. Eccentricity: It’s fun to be different just for the sake of it. Passive resistance: Your silence is misinterpreted as agreement. Perfectionism: Get the little things right even if the big things go wrong. Eagerness to please: Winning the popularity contest matters most. According to Dotlich and Cairo, most managers possess at least two or three of these derailers. This statistic might seem alarming, but it needn’t be. The unknown enemy is the most fearsome. By understanding our own derailment propensities, we can address them and mitigate their potential to cause trouble. Derailer 2: Difficulty Building and Leading Teams People who suffer from this derailer tend to do at least one — and sometimes all — of the following: They over-manage Those who over-manage don’t empower their team members and are over-controlling and meddling. As a result, team members find their efforts thwarted and can lose their sense of autonomy and their desire to take the initiative. Those who over-manage are also poor delegators. Because they were often effective individual contributors, they tend to revert to that behaviour and try to do the work themselves. They fail to build and lead the team These leaders don’t communicate business priorities or provide the necessary strategic context for assignments, so their team members fail to understand how their work fits within the overall strategy of the team, the department or the organization. They also find it difficult to resolve interpersonal, resource-allocation or workflow/process-related problems within the team in a timely manner, reducing its effectiveness, and they do a poor job of developing the functional and managerial skills of their direct reports. They don’t manage the team’s context Managing team members one-on-one isn’t the same as managing a team. Managing a team means also managing the team’s context, which entails: 1) Scanning the competitive environment and making adjustments to strategy based on an on-going assessment 2) Lobbying for and securing resources for the team 3) Ensuring strategic and project alignment with other internal functions 4) Ensuring that team objectives, goals and key performance indicators (KPIs) are clear — and are met Derailer 3: Difficulty Adapting to Change Almost two-thirds of managers who have derailed were described as being ‘unable to change or adapt’. As people rise through organizations and business situations become more complex, adaptability becomes increasingly important. With additional responsibility, more constituencies and political nuances must be managed. As my colleague, Kellogg Professor Kevin Murnane puts it: As you progress, you need to move from the technical to the interpersonal and from certainty to ambiguity. This derailer can be triggered by three things: Changing circumstances The most common reason for derailment here is that a person gets promoted into a new position and doesn’t have the requisite skills or hasn’t taken the time to understand the job requirements — and continues to act and behave in the same manner as before being promoted. A common issue after promotion is the difficulty of making the mental transition from being a ‘technical manager’ to a ‘general manager’ and moving from ‘me’ to ‘we’. Some people also have great difficulty understanding and accepting fundamental shifts in the macro environment and making the necessary adjustments. Over-dependence on an advocate Another common reason for derailment within this category is over-dependence on a previous boss or advocate. People frequently struggle when they lose their old boss and gain a new one who has a different agenda and management style. Personality traits These include not seeking input or being unable to take direction from others; being fearful of change (especially of appearing inept); having narrow interests; lacking curiosity; and preferring the status quo, even when faced with new challenges that necessitate a change in approach. Derailer 4: Lack of Strategic Orientation This derailer can be broken into three components: Over-dependence on one skill This means relying on the same skill or small set of skills to get any job done and not recognizing the importance of a broadened skill set, and it often comes with a bias for one’s functional area of expertise. The old adage, ‘If all you have is a hammer, everything looks like a nail’ comes to mind. For example, a Chief Financial Officer trying to pin a return on investment to all projects, even those that are exploratory or conceptual; or an enterprise sales manager saying, ‘Selling is selling; I don’t need to understand how our new client software portal works’. In the book Potential — For What?, the Hay Group lists such narrowness as a critical derailer: “A narrow and short-sighted emphasis on immediate results and/or technical expertise — this is the opposite of lateral thinking and taking a broader view.” All things change, and one of the requirements for higher-level management and career fulfilment is broadness and diversity. Being non-strategic This often takes three forms: 1) Being a whirlwind of execution and not pulling back to examine and understand the strategic context surrounding the work. Given the propensity for this, when I worked at Walmart.com I frequently urged my team to remember to ‘zoom in’ or ‘pull back’; 2) Being too technically oriented, overly concerned with project details, getting mired in the tactics of the business and losing touch with its over-arching objective; and 3) Lacking a holistic understanding of how the pieces of the business fit together — not grasping the value chain, the process or activities by which a company adds consumer/customer value. Having a key skill deficiency This issue concerns not having a key skill necessary to be successful in a position. Some of the causal factors for this are: counting backwards to retirement and not taking on new challenges or learning new skills; younger managers suffering from general inexperience; lacking technical or functional skills; being new to the job or function and also not being interested in self-development. Derailer 5: Poor Follow-Through This last derailer is an insidious one. When managers cannot be counted on to deliver on commitments, they lose their personal credibility and co-workers slowly but surely back away and avoid working with them. Following are five reasons for poor follow-through: Poor planning and organizational skills People suffering from this derailer are often disorganized and are not detail oriented, which can lead to unmet commitments. Trouble prioritizing work Effective managers are able to differentiate high-impact work from busy work and prioritize their time accordingly. They use various heuristics to prioritize, plan and execute their work. An affliction from which ineffective managers suffer is what I call ‘working in response mode,’ wherein they allow interruption after interruption to impede their progress on important projects by responding, like Pavlov’s dogs, every time a text or email message comes in over the transom. Being a pleaser People who have trouble delivering on promises are often pleasers who never say ‘no’ to a request for fear of disappointing their co-workers. As a result, they over-commit and under-deliver. Not understanding due process In my experience, managers who execute poorly often lack an understanding of the due process required inside their business unit or company. They tend to have a naive or inadequate understanding of the action steps, the work flow, the functional and cross-functional dependencies, and the necessary stakeholder approvals required to complete an initiative inside their company. As a result, they assume they can accomplish activities or projects in an unrealistic time frame. Suffering from grandiosity People who suffer from grandiosity often are creative, curious, highly conceptual people who are spirited and full of big ideas. When this trait goes into overdrive, however, their strengths can become weaknesses. They become enamoured of their game-changing, high-concept ideas and are distracted from following through on the mundane tasks or projects for which they are accountable. Derailment Remedies All positive change — whether becoming a better leader, learning to be more adaptable, thinking less narrowly or improving follow-through skills — begins with self-awareness. This trait is mission critical. A lack of self-awareness is the single best indicator of an individual’s impending derailment. For those who want to improve their self-awareness and proactively tend to their blind spots, I recommend the following. Seek 360-degree feedback from co-workers. A handful of organizations do a fine job of administering, interpreting and coaching managers and executives through some type of multi-source assessment. I urge everyone — regardless of level — to go through this type of assessment process. Gain a deeper understanding of your blind spots and self-defeating behaviours. Although none of us likes the prospect of hearing about, examining and addressing our areas of personal vulnerability, there is no better way to improve our performance. The Hogan Personality Inventory and the Hogan Development Survey offer a rich set of tools to understand bright-side and darkside personality traits. Gain a deeper understanding of your ‘strengths in overdrive’. Do you know the circumstances in which you overuse your strengths? Let’s say one of your strengths is ‘determination’: You are widely known as a person who works hard and doesn’t stop until the job has been successfully completed. Think of what happens when that strength goes into overdrive — when you offer too much of it. Perhaps your determination turns into pushiness. Then think about the challenge behaviour — the balancing behaviour you’re leaving out. So with ‘pushiness’ you might be missing ‘patience’ or ‘deliberation’. Given your determination, do you have a bias against people who demonstrate great patience and are deliberate? Perhaps you tend to associate these traits with being ‘lazy’ or ‘slow-moving’. The key here is to examine the flip side of your biggest strengths. By doing so, you can uncover behavioural areas that may be holding you back. Seek coaching and counsel, especially during times of transition. When I interviewed Smruti Rajagopalan, an organizational design and talent management Consultant at the Hay Group, she stressed the importance of self-awareness and self-management during times of change. Behaviour is a function of a person in a situation, she explained, and blind spots often act as derailers because they cause individuals to misjudge situations and their approach to emerging challenges. This is particularly true during times of change: A new job or assignment, new boss or other wildcard thrown into the mix can heighten derailment risks. Difficulty adapting to changing circumstances — especially a job change involving a new assignment or a promotion — can often derail promising careers. People perform well when there is a match between their capabilities and the requirements of their job. When that match gets out of balance, they struggle. While working with both middle and senior level managers attending the Kellogg School’s continuing education program, I have asked hundreds of program participants, ‘When you were promoted or transferred into a new assignment, how many of you had a clear understanding of the skills required and the success factors of your new job?’ Only 10 to 20 per cent of people raise their hands. Then I’ve called on people who did raise their hands, asking them how they went about understanding the job requirements and success factors of their new job and trying to create a smooth transition into their new role. They have all reported taking one or all of the following actions: First, taking the time to be crystal clear on what their new boss wanted, asking essentially, ‘What will I have accomplished in two or three years to make you say I did a great job in this role?’ From that conversation, they made a list of the three to five key deliverables and then worked with their boss to establish key performance indicators for each. Their goal was to be crystal clear on what success looked like. Second, if the new boss wasn’t able to provide clear direction, they developed their own goals and objectives, with clear success metrics and then ran them by him/her to ensure alignment. Third, they sought advice from other employees who had gone through the same or similar transitions, asking about challenges in the transition and what to watch out for. What did they learn? What caught them off-guard? Which other departments, functional groups and resources were critical to their success? What three pieces of advice would they offer? Then, in the early stages of a job transition, they checked in with the boss on a regular basis — weekly or bi-weekly — to make sure they were aligned on what was important to accomplish and make sure they received ongoing feedback. Be empathetic and compassionate — and stay humble. One of the best ways to avoid derailment is to be ‘other oriented’ by practising empathy and compassion. When you find yourself in a charged situation with a peer, ask yourself, ‘Why might this person be resisting my proposal?’ ‘What are her objectives, and how might I help her achieve them while still adhering to my own goals?’ Above all, practise humility. Staying humble is important because the leading cause of interpersonal issues is arrogance. Embrace the shift from managing self to managing others. Making the shift from being a ‘doer’ to managing through others is an enormous transition that is not always easy. When we’re good at something, we like to keep doing it. We see the tangible progress and receive the rewards, so we’re naturally reluctant to change our approach. In Becoming a Manager, Linda Hill discusses the importance of the mindset shift that occurs in this transition from being a specialist to an orchestrator. She writes that this shift literally involves a transformation of identity. To be successful, managers must not only learn their job requirements but also cultivate self-reflection in order to motivate others. In Closing Your career is not a foot race. It is long. No one — you included — will remember if you reached vice president by age 35 or age 39. So, take the time to get really good at something; that’s your bargaining chip, your career leverage. And by all means, take a lateral move if it’s in a critical path area that’s important to understand. Always remember: You will only go as far as your blind spots allow. Do whatever you can to increase your self-awareness and reduce the career-limiting effects of blind spots. The fact is, each and every one of us has derailment propensities. To understand them is to empower ourselves to manage past them. The best news of all: By identifying and addressing your own issues and challenges, you can accelerate your career. Carter Cast is the Clinical Professor of Innovation and Entrepreneurship at the Kellogg School of Management, a venture partner at Pritzker Group Venture Capital and author of The Right (and Wrong) Stuff: How Brilliant Careers are Made — and Unmade (PublicAffairs, 2018). He is the former CEO of Walmart.com and has held senior management positions at PepsiCo and Electronic Arts. This article originally appeared in Rotman Management, published by the University of Toronto’s Rotman School of Management. For more, or to subscribe: www.rotmanmagazine.ca (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
We like to talk Business and Finance. Figured we should do it for a living. One week in and Spotify faces its first Contender. Macro themes otherwise dominate: How JioSaavn Makes Music Streaming an Open Game Earlier this year, Reliance Jio acquired Saavan. The two are now integrating to launch JioSaavn app - a music streaming platform. We talk about how this integration could change the dynamics of the India music streaming landscape, which awaits the advent of Spotify. The GDP Back-series Conundrum, Q1 Numbers and More With the announcement of the GDP data for Q2 and the Central Statistics Office (CSO) recently recalibrating, and in a way downgrading the GDP growth figures for the 2006-2012 UPA era, the economic metric has witnessed a lot of backlash. We attempt to understand the re-calculation of the back series and the following redux in growth. Qatar Exiting OPEC and Does it Really Matter? News of Qatar leaving the OPEC has been a moving piece of narrative through the week. We discuss what impact this move could have on global geopolitics. Cherry on Top: How WhatsApp Payments Makes the Likes of Paytm etc. Nervous? We speak about how entry of WhatsApp payments will impact the payments space in India. On a related note, do check out: Spotify's entry into India (listen in from 0.55-5.23): https://audioboom.com/posts/7102074-high-end-let-go-thin-ice India's New GDP Series: Understanding The Reduced Growth Rate Under the UPA Govt: https://transfin.in/india-gdp-back-series-reduced-growth-rate-upa-nda Qatar Exiting OPEC & Understanding the Causes and Plausible Implications to Global Crude Oil: https://transfin.in/qatar-opec-exit-impact-on-global-crude-oil-focus-on-natural-gas (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
The Central Statistics Office (CSO) recently recalibrated, and in a way downgraded the GDP growth figures for the 2006-2012 UPA era. This was followed by an unprecedented, yet explicable upheaval from the opposition, dubbed as a political conspiracy to discredit the previous government's work ahead of the general elections next year. Using 2011-12 as the base year instead of 2004-05, the CSO estimated that India's GDP grew by 8.5% in FY10-11 and not by double digit 10.3% as previously estimated. Before we delve into the nuances of a changed base year and the re-calibration methodology, would highly recommend you go through the basics of the very important but much abused metric here. It is rather common for GDP data to be rebased from time to time. However, the CSO made more fundamental changes in 2015 (“rebasing”; and a move to “market prices”), resulting in a boost to the numbers. First, the Ministry of Statistics and Programme Implementation (MOPSI) updated the base year from 2004-05 to 2011-12. Why? GDP is typically measured by reference to the prices and structure of the economy during a particular year – called the base year. Over time the said base year becomes less and less representative of the economy, due to evolution of new methodologies and data sources, new classifications of industry and products, international standards etc. Hence the base year for GDP calculations is updated at regular intervals. [Listen in from 9:40 onwards to learn more on GDP back-series conundrum] In India, for instance, base year changes have happened in 1961, 1971, 1981, 1994, 2000, 2005, and 2012. But, never has a such a debate been incited. Another change brought about by MOSPI was to revise the method used to measure the output. According to the new methodology, the GDP will now to be measured by referring to the Gross Value Added (GVA) at market prices, rather than at factor cost. Under the factor cost method, the GDP constituted of the total value of goods and services produced within the country during a year. Note the focus on value at production. Factor cost did not account for the value at which goods and services entered the market i.e. what the Government earned in the form of taxes. The new GDP calculation uses the market price methodology, which hence includes what the government would earn through indirect taxes like sales tax and excise duty; while deducting subsidies. The updates conducted in 2015 were applied only to figures from 2012/13 onwards i.e. representing a bit of UPA's tenure, but a largely NDA-led period. Figures from 2006 to 2012, also known as the ‘back-series data’ (largely a UPA-led period) were not updated, barring the efforts of the Mundle Committee. In August 2018, the Sudipto Mundle Committee on Real Sector Statistics applied the 2015 changes to figures for 2004-2012. The data released had in fact shown a 30-50 basis points increase in GDP growth figures vs. previously known figures. For instance, as per the Mundle Committee, the GDP grew by 10.8% in 2010-11 vs. the previously known 9.6%. This brought some cheer to the opposition. The numbers did bring some cheer to the Opposition although the government was quick to declare them as "experimental.” Finally now, the CSO has released the “final” recalculated back-series data going all the way back to 1994-95. This release in contrast showed that India's GDP grew by 8.5% in 2010-11 and not at 10.3% as previously claimed by the Mundle Committee. The Opposition has triggered a no holds barred attack. Similarly, the 9.3% growth rate each in 2005-06 and 2006-07 were lowered to 7.9% and 8.1% respectively, while 9.8% as earlier estimated for 2007-08 is now 7.7%. This downgrade has invoked a furor against the govt. The recalculation, on paper, should allow for a like-for-like comparison for the first time. The downgrade though does warrant attention. What factors have driven the reduction for the back-series? The new GDP computational method decreased the share of wholesale and retail trade (WRT) in GDP, which is directly dependent on employment data, by about 5 ppt (from 16% in the 2004-05 series to 11% for the 2011-12 series). Inflation (as measured by the GDP deflator) between 2005 to 2012 has also been corrected. The deflator is a weighted combination of the WPI and CPI inflation indices. The two increased at a CAGR rate of 6.4 and 7.9% respectively between FY05 and FY12. The old GDP deflator had an average inflation rate of 6.7%. Common criticism has been that this is nothing but technical sophistry being used as an excuse to depress GDP numbers during the UPA era in the run up to the 2019 elections. There are accusations against the government for tweaking GDP figures based on political considerations. Critics claim that the back-series data contradicts / conflicts with other economic metrics for the years in question i.e. tax revenues, credit growth, trade performance etc. One must remember though that GDP is a composite and complex metric, not necessarily having a linear / straight-forward correlation with these metrics. More communication and transparency by the CSO, including a comprehensive disclosure of its methodology, procedures, and adjustments would be most welcome to dispel accusations of institutional compromise. Otherwise in these polarized times, a consensus on this issue appears to be a pipe dream. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
In yet another important development on the Brexit front, the 27 Member States of the European Union (EU) on Sunday approved the UK’s Draft Withdrawal Agreement pushed by British PM Theresa May setting the terms under which the UK would leave the EU by March 2019. The British Parliament is set to vote on the Brexit deal on 12th of December. There are a number of scenarios which could play out including, worst-case, a No Deal Brexit. Trade: A No Deal Brexit could mean the UK would have to adopt WTO trade terms with the EU. This would mean a rise in costs of imports due to additional external tariffs which would come into force. EU exports to Britain would face a trade-weighted average tariff of around 5.7%. Conversely, goods being exported from Britain into EU would face tariffs of 4.3%. [Listen in from 17:00 onwards to learn more on the potential consequences of a No Brexit Deal] Many sectors are expected to be adversely affected, especially auto, pharma, fisheries etc. A No Deal Brexit would have diverse consequences, for instance, with restricted mobility across borders, manufacturers could move their operations to the EU in order to avoid delays in components coming from across the border. Units of Toyota, Nissan and Honda in Britain depend on supply chains which go across the country and the EU. More than 50% of the fish caught by British boats end up elsewhere in the EU. Any anomaly in the export mechanism could prove to be fateful for British fishermen. Trade deals outside EU would also be affected. Countries with free-trade agreements currently account for only 16% of British exports by value. Most deals currently benefit from being negotiated through the Union. A No Deal agreement would result in the lapse of these deals. EU Passporting: In case of a No Deal Brexit, banks and other financial services firms will lose their “passports” that allow them to serve clients in any EU country. This would mean that these firms currently operating out of London will have to shift their base to other EU countries. The end of British passporting could call into question the £26trn derivatives market. Obligations and Subsidies: While the British government would no longer have to pay the annual obligations worth £13bn to EU and a £39bn “divorce-settlement”, it would lose out on some EU subsidies. For instance, the Common Agricultural Policy alone gives £3bn to farmers. International Borders: No agreement on the Irish Border issue shall put to test the Good Friday Agreement. No Rules: A No Deal could mean lapse of multiple legal obligations and definitions with the EU. This could potentially leave Britain with no rules to govern the trade in immigration control, aviation, financial-contract clearing, radioactive materials, international electricity markets, medicines regulation and more. With over 1.3 million Britons residing in EU countries and around 3.7 million Europeans living in Britain, a No Deal would push their rights to live and work into uncertainty. The Brexit, a highly-criticized and censured deal across political spectrums has divided the British politics and the citizenry. While some want to remain inside the bloc, some others want to retain close ties even post-Brexit. Yet another group wants a more decisive break, even if it comes at economic costs. To quote Luxembourg’s Foreign Minister Jean Asselborn, “Any deal is better than no deal.” Click here for a deeper dive on the proposed Brexit Deal. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
British Prime Minister Theresa May gained her Cabinet's approval for a Brexit deal last Wednesday, technically moving the battle away from the Government to the Parliament. May’s government however remains starkly divided on the 'draft withdrawal agreement', which encapsulates her proposal defining the shape and form of Brexit, at least from the UK’s perspective. Dominic Raab, the Brexit Minister and Esther McVey, her Work and Pensions Secretary have resigned. So, have several of her junior Ministers. MPs are openly declaring their opposition to the agreement. [Listen in from 17:00 onwards to learn more on the potential consequences of a No Deal Brexit] With the deal now due to hit the British Parliament for approval (where May lacks a lower house majority) before being presented to EU leaders for further negotiations and seek consent of all 27 Member States – there is no dearth of roadblocks! Considering the draft agreement represents at least a specific proposal to structure the Brexit deal, we thought it may be worthwhile to try better understanding this key covenant, irrespective of its chances to go through unscathed. The deal assumes a “transition period” till December 2020. Both UK and the EU (excl. UK of course) would aim to forge a trade agreement 6 months before the end of the transition period to drive future movement of goods and services. If a trade agreement is not reached by then, the UK-EU could jointly extend the “transition period” or otherwise kick-off the “backstop plan”. The backstop plan is the most controversial part of this agreement due to its conditionality on the Northern Ireland/Republic of Ireland border. Due to the turbulent history between Northern Ireland (part of the UK) and Republic of Ireland (an Independent country and an EU Member State), the idea of a backstop plan was accepted to avoid a hard border between the two. The main pillar of this plan is that the whole of UK would continue to stay in a customs union in case a trade deal is not finalized by the end of the transition period, implying the UK may continue to be a part of the European Single Market even post transition. This is obviously against the very “principal” of Brexit. Moreover, the UK won’t be free to withdraw from the customs union without the consent of the EU. Thirdly, the UK won’t be allowed to pursue any free-trade deals with third party countries till it remains part of the customs union. Last, the UK would be required to comply with all “level playing field” commitments (i.e. employment, environment standards, competition requirements etc.) of the EU as part of its customs union, without having any say in them. London’s financial centre would only enjoy a basic level of access to EU’s markets. London would have access to EU’s markets akin to the US or Japan, based on the principal of “equivalence”. This would be a much-diluted level vs. what Britain enjoys at present. Free movement of people will be curtailed. Though EU citizens and their families would be able to live and work in the UK (and vice versa) until the end of the transition period, conditionalities would be applicable for those who come later. There is not much clarity on those who take up residence after the transition except a separate non-binding political declaration which mentions potential arrangements for temporary entry for ‘business purposes’, short-term visits etc. Zoom out: Some form of a residence document or visa would be needed by citizens of EU who move to the UK after December 2020 (and vice-versa). (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
Amazon is reportedly bidding for Fox’s 22 regional sports assets, in effect attempting to deepen its live-sporting footprint and augment the overall value proposition associated with its Prime Membership. As per press reports, Amazon is attempting to bolster up it sports presence by bidding on Fox’s 22 regional sports channels which are now up for sale resulting from the regulatory nuances associated with the high-profile Disney-Fox merger. As such , Amazon's interest in the aforementioned assets is perhaps aimed to enhance the value proposition embedded in its Prime Membership - central to Amazon's entire strategy playbook. These sports networks are up for sale largely due to the regulatory requirement arising from Disney’s acquisition of Fox wherein Disney ought to offload Fox’s 22 regional sports networks. ‘New Fox’ is also perhaps in the running to buy back the 22 regional sports network to enhance its new value proposition and cement its competitive positioning: Fox News, Fox Sports and its TV stations were not part of the Disney-Fox transaction. In that context, the ‘New Fox’ potentially views these sports assets as key to uplift the value proposition that it has to offer. Consequently, one would expect 'New Fox' to enter into the bidding game to buy-back the networks, albeit up against bidders with deep coffers. In that context, Amazon’s interest in these networks (along with other financial investors) could drive a meaningful uptick in purchase price if this turns into an elaborate competitive bidding game. [Listen in from 10:30 onwards to learn more on the potential rationale behind Amazon's bid for Fox's Sports Assets] Amazon not entirely new to the world of sports – has distribution partnership deals with National Football League for Thursday Night Football and also for select games in English Premier League (EPL). Amazon has already ventured into live sports through streaming partnership with US-based National Football League (NFL) for Thursday Night Football. Furthermore, inroads into distributing selected games from the highly watched English Premier League (EPL) further substantiates Amazon's ambitions within the sporting arena. In the Indian context, Hotstar, appears to be well ahead in its live-sports offering and its Disney ownership adds an interesting angle; However, Amazon’s deeper push into sports perhaps heightens Hotstar’s risk profile further. With a wide-ranging portfolio of sporting assets at play, Hotstar appears to be well ahead in terms of positioning itself as a sports-centric over-the-top distribution platform in India. Given its Disney/Fox ownership, there is clearly some ESPN-Hotstar synergies to garner which might be worthwhile to keep track of. However, given Hotstar’s meaningful reliance on Star India’s ownership of sports content rights, Amazon’s deeper push into live-sports further heightens Hotstar’s risk-profile. For a deeper dive into this topic, click here. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)
In the backdrop of recent public fallout between the Reserve Bank of India (RBI) and the Government, with a scare around a potential resignation by Governor Urjit Patel with Section 7 being invoked, the Central Bank’s Board met on Monday to discuss certain areas of contention. In a marathon meeting lasting over 9-hours, RBI deliberated on topics ranging from its own capital policy, relaxation of the Prompt Corrective Action (PCA) framework for ailing banks, a special liquidity window for Non-Banking Financial Companies (NBFCs), to lending norms for Micro, Small and Medium Enterprises (MSME) sector. Here are the updates from the meeting. The Ask: Assess the level of reserves held by the RBI, handing over the additional share of 'surplus' to the government for more efficient use. The Decision: Constitute an expert committee (whose members would be jointly decided by the Government and the RBI) to examine RBI’s Economic Capital Framework (ECF). The Ask: Relaxation of the PCA framework for 11 public-sector banks (PSBs) wherein ailing banks face restrictions on distributing dividends, remitting profits, lending etc. The Decision: The Board for Financial Supervision (BFS) to review the terms under PCA on December 6th. To consider easing some parameters such as relaxation of net NPA ratio requirement of below 10%. To consider bringing certain banks out of PCA if recent financial performance has improved. The Ask: Easing of lending norms to Micro, Small and Medium Enterprises (MSME) sector. The Decision: Consider a restructuring scheme for stressed MSME loans with notional amount up to INR25cr. The Ask: Ease alignment of capital norms for Banks. The Decision: Banks allowed to maintain capital adequacy requirement (CRAR) of 9%. RBI extended the transition period to allow maintenance of capital conservation buffer (CCB) of 0.625% by one year till March 2020. The extension is expected to free up $300bn of capital. In another statement on Monday, the RBI announced that it will conduct open market operations on November 22 to inject INR8,000cr through purchase of government securities. Moody Consensus? While constituting an expert committee to review RBI’s ECF, any decision taken will not be applied retrospectively i.e. alternate treatment/release of prior reserves is off limits. Even as the RBI was seemingly open to considering a debt rehash for MSME borrowers, it was rather dogged on the point of relaxing liquidity for Non-Banking Financial Companies. This topic is still under discussion. In conclusion, there appears to be a certain notion of truce. The next board meeting to be held on December 14 will discuss items related to liquidity in non-banking financial companies (NBFCs) and ‘governance in the RBI’. (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)