Reimagining “the Office”

One of the most debated apolitical questions about the post COVID-19 scenario is whether the institution called “the office” will ever be restored to its former glory.

The 1980 Prediction

Four decades ago, Alvin Toffler pointing to the then emergent changes lamented in his 1980 book, The Third Wave:

“Though work has grown more abstract and less concrete, the actual offices in which this work is being done are actually modeled directly after Second [industrial] Wave factories”

He predicted the “death of the secretary” based on the growing penetration of the predecessors of personal computers, the word-processors. He talked of the embryonic advances in the telecommunication technologies that “instead of moving papers, […] moves electronic pulses“. But then, he made a revelation that for most of us, who see the idea of work-from-home as a 2020 invention, may be a bit startling …

“All told, it means that fully 35 to 50 percent of the entire work force in this advanced manufacturing center [reference to Western Electric and Hewlett-Packard] can even now do most, if not all, their work at home …”

And, mind well, Alvin Toffler’s observations pre-dated the advent and all-pervasive spread of the Internet and mobile technologies! The book quotes Wall Street Journal to point out that many companies including United Airlines and McDonald were already allowing some of their executives to work from home. This was the beginning of telecommuting:

the key question is: when will the cost of installing and operating telecommunications equipment fall below the present cost of commuting“.

Impediments

However, in spite of the progress in telecommunications as well as the mobile technologies (Toffler did not predict mobile eco-system), work-from-home has been quite languid in its proliferation. Toffler was directionally correct but the work-from-home “revolution” that he talked about never materialized … at least not until COVID-19 forced the issue!

There were many impediments:

  1. Though, telecommunications made rapid advances, it was not easy to profitably build the “last mile connectivity”, especially in a vast county with diverse terrain like US. Lack of robust last mile network along with ever-growing demand on the bandwidth due to increased digitization, necessitated assembling all workforce in a well-connected better equipped centralized workplace, i.e. the office. In last decade, however, last mile has passed the “tipping point” in most metropolitan areas and their suburbs.
  2. Maintaining security of one’s digital data – a field that was still emerging – was not easy for a dispersed workforce. Not that data is completely hack- proof today but this problem was addressed by another computing revolution. People refer it by the name of the “cloud”! Most of the data that corporate world deals with is already stored in remote data centers; i.e. the cloud. Cloud is cheaper, scalable, and safer! Many of our applications are now offered via the cloud as Software as a Service (SaaS). A centralized workplace has become more or less redundant for the safekeeping of our business data.
  3. Humans don’t just read the spoken or the written language. We read a lot more from each other’s gestures and facial expressions. These visual clues provide context to the words we hear or see. This requires us to be together in-person when transacting business. Easy-to-use video conferencing tools have created an alternative to in-person meetings to achieve this.
  4. Last but by no means the least, human creativity is oftentimes greatly enhanced by cross-pollination of ideas and impromptu collaboration, which undoubtedly is greatly nurtured by in-person interactions. Well before emergence of the modern office, salons provided similar assembly that fostered discourse leading to significant social, political, artistic, and scientific advances during Enlightenment (1685-1815). Not all offices necessarily promoted creativity. In fact, during the early part of the twentieth century, offices and hierarchical organizations were often accused of killing or suppressing the creativity. But, some offices, famously purported in the TV serial, Mad Men, did became centers of creative excellence. In those cases, offices did play as important a role as universities in helping newcomers climb the steep learning curves.
Salon of ladies by A. Bosse

The Renewed Alarm

The Economist published an article titled “Death of the Office” in its June/July 2020 edition. While its title screams of the imminent demise of the august institution that “delineates much of our lives“, it concludes with a bit of an ambiguous tone:

No Skype chat can replicate what Heatherwick calls the “chemistry of the unexpected” that you get in person. Offices may not fill the pages of poetry anthologies but, says Kellaway, they “can be as moving as anywhere on Earth. Because what moves us is not sitting at our computer, it’s the relationship that we have with people”.

Mid-May of this year, the Financial Times published the chronology of the “Rise and Fall of Office”. Similar to the Economist, FT too traces the origin of the institute to the 1731 East India Company workplace that had “300 clerks, notaries and accountants scribbling figures into vast leather-bound ledgers,” FT quoted writer William Dalrymple. FT’s historical account is one of the most informative accounts of the lifespan of this institution… from its colonial origin to its rise during 20th century alongside the rise of mega corporations to its struggle to survive in recent times (see quote below).

Silicon Valley has pioneered campuses that conspire to keep young employees from leaving. While others try to make home more like the office, the Valley has made the office more like home — dress down, bring your dog.

FT concludes that work-from-home “may fail to foster the flexible collaboration on which the knowledge economy relies” and that “We will go back to the office, but not as often“.

The Epiphany

In 2020, the entire office-going humanity was forced to experience a completely alien reality for an extended period spanning multiple months. For the first time ever since the birth of the Office, all the office-goers all over the globe had to abandon their designated stations for not weeks but for many months!

This, indeed, was a tectonic shift for a reason that is often overlooked and understated. In the past, when catastrophes such as wars or pandemics hit, mankind had to choose between the fire of mass death on one hand or the frying pan of a grinding halt to the economic activity. We never really had a middle option to continue “work” and yet remain locked in our safe habitats. All of a sudden, mankind woke up to the technological progress it had made unbeknownst to itself! Technology had finally advanced and converged to a point where it was now completely possible for most of the working population to remain at home and still keep the wheels of economy spinning.

The Office Reimagined

Agreed that we all survived much of 2020 using video conferencing instead of the air travel, study table (or at times, the dining table) instead of the office desk, and virtual happy hours instead of after office hours chats over beer. But, does that mean we are all at last ready to kill this 200-year old beast called “the office”?

Yes, if viewed in the traditional sense. In fact, 2020 has landed a solid punch on the jaws of this aging institute and has already left it on the floor gasping for air. But can we really declare it dead? Probably not. More likely, the office will morph into a hub that connects many different home offices, a place where the knowledge-workers, if and when they seek in-person interactions, can gather to create and exchange ideas, make deals, and break bread. It will again move back to be an “ideation commons” – a meeting place where we gather to do what humans innately conditioned to do – to socialize. The rest can happen from home … in fact, more efficiently!

I see the future office to be small, open, and flexible with a lots of “huddle areas” built around a central cafeteria where people can plug in their laptops, share screens, and exchange ideas. These offices will not be hierarchical with the window offices for the office dignitaries, corner office for the Big Boss, and small nameless cubicles for the upstarts. With people only selectively using them as gathering grounds, such an earmarked hierarchical architecture would be a huge waste! Instead, there would be many nameless workplaces of different sizes and shapes that one or more visiting employees can “rent” as per their needs and entitlement. A 3-2 or 2-3 work-week format can work for the most where 3 or 2 days one can choose to work-from-home and remaining workdays can be coordinated with colleagues as the “office days”. Finally, society will achieve a much better work-life balance that it had lost ever since the beginning of the traditional office era.

This will be the beginning of the “salon office” era that may lead the mankind to a new enlightenment period!

The Story – Part I

When I first read about McKinsey‘s watershed 7S Framework, I felt that it is missing something crucial. The framework lists Structure, Strategy, Systems, Skills, Style, Staff and Shared Values as the 7 S’s behind the organizational effectiveness of a business. But what brings them together is that missing 8th “S” – the Story!

Stories come in different shapes and colors. Take an example of the Story we have heard so many times about one of the most iconic businesses of our times – Apple! Apple’s story narrative points us to its “Founder’s Vision”.  Think for a moment … how else can we distinguish Apple from other mobile device companies without mentioning Steve Job’s vision? Another successful Global business, IKEA, also uses a similar “Founder’s Vision” story. Read the story narrated on their website:

The IKEA story begins in 1926 when founder Ingvar Kamprad is born in Småland in southern Sweden. He is raised on ‘Elmtaryd’, a farm near the small village of Agunnaryd. Even as a young boy Ingvar knows he wants to develop a business …

There are many other kinds of stories that mythify the very existence of an organization. Amazon uses “customer-paradise” story, Walmart too narrates similar “customer-paradise” story: “What started small, with a single discount store and the simple idea of selling more for less, has grown over the last 50 years into the largest retailer in the world”. And then, there are “innovation” stories. Tesla states “Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars”.

Story & Shared Values

McKinsey puts “Shared Values” at the core of an organization. Shared Values represent corporate culture and work ethics. It is one of the 4 “soft” elements of the 7-S model (Skills, Style, Staff being the other three). An article describes it as follows:

Shared values are the pinnacle of the [7-S] model and therefore in any organisation. They form the underpinning culture, strategy, effectiveness and performance, linking to every other element in this framework. They link all that is of the organisation: how people behave, the structure, its systems and so on.

Indeed, Shared Values should form core of any organization. History has many instances when value-driven rebel armies have won battles against better equipped salaried armies of the monarchies. However, in spite of all the virtues of Shared Values, in my career I have seen more “salaried” organizations than “value-driven” ones. One of the major obstacles in instituting a value-driven organization is defining core values that the entire organization will relate to. It is just not enough for a bunch of C-level executives to drum up a list of values and slap them on the organization. Employees have their own perceptive filters. Dry and emotionless list of Shared Values is like a desirable yet bitter medicine that is hard to swallow for most of the employees.

Lending Emotions to the Values

That is where Story becomes important! Story provides that colorful and flavorful emotional cover to the otherwise dry and tasteless list of corporate values. It lends theses values a meaning. Human mind is shaped to learn through stories from childhood. In every sphere of human existence, we narrate and hear many Stories; be it politics, religion, or family.  Weaving Values in interesting stories makes their ingestion easy. Many a times, Stories give Values a human face making it easy for the employees to relate their own lives to them.

Values become relevant to employees through – the missing 8th element of the Organizational Effectiveness Model – the Story!

My next blog “Story -2” will tell you more about the storytelling and the role of the Believers. Stay tuned …

Hiring, Firing, and Everything In Between!

We live in a capitalist society that prioritizes collective efficiency (often, short term measurement of it) over individual wellbeing. One can argue endlessly where this unbridled capitalism stands on the scale of morality. But, the fact remains that it has survived its alternatives and we are living in a reality defined by it.

In this context, the biggest moral dilemma that a corporate entrepreneur faces is while deciding to lay off one or more of his or her colleagues. Every entrepreneur who has taken such decisions knows how traumatic they are – not just for the affected employee but also for the organization and the entrepreneur.

At times, these terminations may be prompted by macro economic trends that are beyond control of the entrepreneur. But often, the need to bid adieu to a team-member arises when his or her inefficiencies affect the overall team-performance negatively. I have seen that in such cases, the moral dilemma surrounding the firing decision is relatively low. In a way, doesn’t the inefficiencies of the fired team-member justify the action taken?

That is where the entrepreneur needs to step back a little and think: “Wasn’t it me (or my organization) who hired this individual at the first place”? When an entrepreneur hires an employee, he or she enters into a unwritten moral compact with the employee, in addition to a written formal offer or an employment agreement. Even though, the written agreement is an “employment at will” agreement, the unwritten one, in fact, states the following:

“We select you to be part of our team after careful scrutiny and would do the best you would expect from us, to make you a successful member of our team.”

When an entrepreneur comes to a stage where it seems imperative to ask someone to leave the team, he or she needs to revisit not only the obligations as per the written employment contract but also as per the unwritten compact. The review of moral obligations in the unwritten compact will (and should) raise at least 3 fundamental questions:

1. Who is accountable for the insufficient scrutiny at the time of recruitment?Did we define the job appropriately? Did we do a good job at testing the candidates for their fit regarding skills, culture, personal ambitions and organizational set up? 

2. How much organizational energy was spent on onboarding and training? How well did we define the processes that a new employee will need to deal with? Did we impart enough training on and off the job so that the new employee will be adequately tooled to deliver expected performance?

3. Did we periodically and regularly inspect the employee’s output and offer required feedback for him or her to improve performance and course-correct wherever needed?  Indeed, you cannot expect what you do not inspect. When you noticed that things aren’t going the right way, did you ask yourself as to why the anomalies were not noticed earlier? Were you sleeping at the wheel?

It is easy in a capitalist economy to fire an employee but if you do not address above issues, you may have caused considerable trauma – for the employee, the organization, and for yourself; but would not have addressed the decease that is at the root of the symptoms of organization’s inefficiencies.  Addressing these issues positively, on the other hand, will remove the contradictions between morality and business. Sadly, this does not happen in most of the cases.

AmazonCare Prime?

Social anxiety over a possible Amazon’s entry had gradually built up over last few months and with an announcement that lacks much details, speculation on exactly how Amazon, Buffett, and JPM alliance would “disrupt” the ever-broken American healthcare has peaked.

I recently heard many ideas in a meeting of Biotech executives. Some felt that the disruption will come from Amazon’s phenomenal logistic prowess powered by its Alexa front end. Someone mentioned how Amazon will merge wellness with healthcare to reduce costs through prevention. Some felt that Amazon’s disruption will leverage Buffett’s “15 minutes can save you …” Geico’s network. Though, I do not see how an auto-insurer’s network can be repurposed to run a health-insurance business, what can and probably will be leveraged is Warren Buffett’s Gen Re that provides “tailor-made reinsurance programs that help [one] achieve [one’s] life/health risk management objectives”. Certain estimates from EBRI place those insured by the large employers (1,000 or more employees) to be around 30 million. Some of these employers are self-insured and get themselves re-insured. But again, addressing just this population alone won’t bring about the disruption that public debate is anticipating.

To put the total US healthcare market in perspective, in 2010 out of total non-elderly population,

  • 156 million received insurance through their employers
  • 19 million purchased their own insurance
  • 45 million received Medicaid.

Thus, about 180 million non-elderly people buy insurance every year from the “third party payer”. Currently, these people are served by an intertwined network of the pharmaceutical supply chain (that controls the product flow) and the value chain (that controls the money flow). Understanding this network is really the key to decrypt what part of healthcare industry is, in fact, ripe for a disruptive play.

Money in the healthcare value chain comes out of the pockets of the pool of insured people. This insurance is, in fact, just a “subscription” service for medicines. Good part of any subscription model is that it gives the consumers a predictable payment plan and protects them from uneven occurrences of health emergencies. On the other hand, it makes consumers pay a fixed amount irrespective of how much value they actually receive. In recent years, subscribers to this service has been pained by higher costs – for monthly subscription as well as additional payments termed as “out of pocket”.

Premiums paid by consumers are then shared by (a) the pharmacy – who sell the medicines, (b) the insurance companies – who sell the “subscription plan” to the employees, (c) the PBMs (who administer the value flow), (d) the wholesalers (who administer the product flow of medicines to the pharmacies and hospitals), and lastly (e) the manufacturers (who develop and produce the medicines).

So, there are at least 3 intermediaries that stand between the consumers and manufacturers – one collecting the fee, one managing the product flow, and one managing the money flows – in the present-day healthcare supply-value-chain. And, that’s where the Amazon-trio can disrupt the current state of the industry. They can combine all three roles! The insured will pay “AmazonCare Prime” a monthly subscription and get the healthcare they want … medicines can get delivered to their door or can be picked up from the Amazon lockers. AmazonCare Prime in turn would procure these medicines directly from the manufacturers or eventually might even manufacture high volume medicines themselves!

AmazonCare Prime, of course, will have to manage the value flow to pay for multitudes of medical services, too. Amazon is already a master in the logistics of products delivery – physical as well as digital (e.g. movies, books). Though little known, Amazon services does provide a platform to sell personal services, only time will tell how it will manage the complex field of healthcare services. Perhaps, we may see some acquisitions in that area. Surely, this is an area the Amazon-trio would want to test out as they rollout the offering to their employee base.

In theory, Amazon has most of the ducks in a row to seize this opportunity to disrupt healthcare industry. What remains to be seen is (a) will it have a corporate will to go full length to win the war and not just engage in non-consequential battles, and (b) if indeed Amazon decides to invest its energies in this industry, how much of the disrupted value gets passed on to the non-intermediaries; i.e. consumers and manufacturers and how much is swallowed by Amazon!!!

The Communication Challenge 


What is the single most important factor that can make or doom a human endeavor? If you pose this question to ten management experts, you would perhaps get eleven answers. Passion … skills … capital … team … so on and so forth. But, one key factor that is quite often forgotten is – the communication. 

In the day and age of the abundance of communication tools and devices, it is ironic that we have lost our ability to communicate effectively. I was born in India at a time when only few of our neighbors possessed a landline. Exchange of snail mails to and from an International location used to take a month! Now we have “instantaneous” global communication through emails, texting, video chats, microblogs, cell phones. Why then are we increasingly lost during our conversations? Why do our interactions appear to move in circles most of the times? Why do we get into a cacophony of incoherent messages and misunderstandings more often now than ever? Here are a few reasons that come to my mind …

The curse of abundance: We, the humans, value scarcity. Our resource wastage increases exponentially with the availability. That is true about communication, too! Not convinced? Just look at your work email inbox. 

Business users send and receive on average 121 emails a day in 2014, and this is expected to grow to 140 emails a day by 2018. – Email Statistics Report, 2014-2018

I regularly get 100+ work emails every day … some of them have embedded email-chains that the sender expects me to read through! If spend only 3 minutes on each of these emails to read, understand, and respond, I will spend 5 hours of my workday just doing that! And, does this deluge of messages improve our communication with colleagues and partners? … hell, no!!! 

When communication cycles were longer and more difficult, we paid more attention to the “messaging” part of it. We followed some generally accepted structures and protocols. Caught in the obsession of quick turnaround cycles of communication, we have lost site of the “messaging” itself! We rarely spend time to step into the recipient’s shoes to understand what he or she would make out of our message. That often results in a sparring of senseless words and killing of the very essence of the communication! 

Lack of underlying trust: We, as a society, have become more and more untrusting of each other. Handshake agreements are rare, if not extinct. As our trust in each other declines, the need to over-communicate increases. Communication can be used as a tool to play blame games, if it comes to that! On the other hand, our untrusting predisposition makes us poor recipients of the communication. All the over-communication falls on deaf ears! 

Unclear channels: Indeed, social and organizational hierarchies are useful to channel our messaging appropriately. However, in the age of matrix organization and dotted reporting lines, people are often confused who the right recipient of the message should be. The increasing tendency to cc’ing every “Tom, Dick, and Harry” in the organization indicates the same confusion. Every organization needs to step back once in a while and define the data flow in the organization to reduce these communication cobwebs!

Perhaps, we are still in the adolescence stage of the new-age instantaneous communication and are in process of figuring out the best practices to use these new tools. After all, it has been only two decades since we began using these electronic messaging tools!

So, let us work towards shaping new standards and protocols that would revive messaging and calm down the cacophony of over-communication! Here are a few things that I make an effort to follow:

  1. Speak before you write: it’s far easier to communicate orally and availability of an indirect feedback such as facial gestures or voice inflections helps in a more wholesome communication.
  2. Build trust before communicating: a simple thing as explaining the context of why you are communicating helps the recipient be more receptive. Don’t just rattle out your messsge without creating a receptive audience!
  3. Emphasize the common cause: make sure that you do share a common cause with the recipient … don’t just include people in the loop without a clear common cause. And then, emphasize that cause when you communicate. 
  4. Write full sentences and use proper greetings and salutations: no, it’s not just a Victorian tradition. It is also a mark of respect! If you don’t show respect towards the recipient of your message, why should he or she show respect to your messsge? I had a colleague who would write emails without bothering to begin with my name or even capitalizing any words! Really? You are so busy that you can’t write a proper sentence? Well, I am busy too, to read it!

Happy communicating!!!

How To Survive and Turn The Change To Your Advantage?


Change is constant, yet frightful … especially, if it is seismic. A seismic change occurs when the world, as we know it, alters fundamentally. This shocks us, as more often than not, such change is thrust upon us unexpectedly. In personal lives, it may occur by sudden turn of events such as death of a parent, a job layoff, or even a promotion! In the lifecycle of a business, it can be caused by competition triggered by a new enabling technology (e.g. E- retailing or mobile cab-hailing  services) or an M&A activity or political head (or tail) winds such as globalization or nationalism. 

I have struggled through my life to understand how best to face seismic change. I don’t claim to have found the elixir that can prevent death by change, but can surely share a few strategies that helped me. Here they are …

1. Don’t be in denial – Human mind tends to shut itself down when faced with discomfort. It turns delusional and assume that no change has happened even when change is self-evident. Many great economic and stock market crashes occurred only because we, as a society, have failed to see the obvious realities unfolding all around us. Wall Street kept playing the Mortgage Backed Securities game even when it was clear that borrowers were unable to pay for these mortgages and that led to the infamous global financial meltdown of 2008! This delusional behavior is true about our own lives, too. You see change happening all around you, yet you behave as if nothing has changed. That is a sure recipe for pain!

2. Be open to the possibility that the change might be  good (if you can sustain initial pain) – If you believe that the change could possibly be a positive thing, you can open your minds to locate the bright spots. Remember, perception shapes the reality around you and if you perceive the change to be negative, it will turn out to be negative. Have an open mind and ask if everything that is resulting from the change is worse than the old state of affairs? 

3. The (post-change) future is not perfect but remember, neither was the (pre-change) past perfect!  I have often fallen victim to the anti-change bias that makes you focus on the imperfections in the changed environment while being completely blind towards imperfections that existed prior to the change. This bias makes having open mind towards change even more difficult. 

4. You can influence change only if you are part of it – Not only can change be good but in fact, you can actually influence the change in a positive way; however seismic the change might be. Of course, you have to first be the participant in the process of change to influence it! Change is inherently a fluid, not a rigid, process. Perhaps, there would a way you could use this fluidity to influence the direction or the shape of change. Even during the desperate days under Hitler’s Nazi regime, Oskar Schindler managed to keep humanity alive by using the elements within the changed environment. Changes we face cannot possibly be so bad!

Once again, you cannot avoid change but you can surely survive it. You can even be a winner in the new environment, if you can successfully navigate the change! 

1-2-3 of the Business Math: Are you smarter than a 5th Grader? 


Business math can be intriguing and we, the insecure finance knowledge-hoarders, are to be blamed! We love to see that “what the heck is an En-Pee-Vee and an I-r-rh???” question written all over your faces during conversations … a sure way to establish the finance department supremacy! No more!!! Let us start the count-down from 3 to 1 and get a grip on all the business math concepts you may need to know …

Are you smarter than a 5th GraderHere is a secret … If you learned compound interest formula in the middle-school, you already know most of the business math! 

Just for an easy grasp during our conversation below, let us agree to attach “+” sign to all inflows and “-” sign to all outflows. Also, I’ll mention all the “finance-speak” in bold italic.

 Count 3: Discounting is reverse of compounding. 

Compounding flows from left to right on the timeline (from the present to the future) and makes numbers grow, discounting flows from right to left (from the future to the present) and shrinks the numbers! 

An investment of -$100 grows to +$121 in 2 years at a compound rate of 10% p.a. ($100 [*10% = + $10] = $110  [*10% = + $11] = $121). Thus, the value of your $100 (let’s call it the Present Value) grows to $121 in the future. Your finance colleagues read the same facts backward when they want to travel from future value (FV) to the present value (PV). They say that +$121 received after 2 years has a present value of $100 if discounted at a discount rate of 10% p.a.! 

There you go … that’s all that is to the discounting (or as they say, the time value of moneyhow value of money changes from its future value to the present value)!  

The middle-school compounding formula is: Present Value x [(1+Interest Rate)^number of periods]

The discounting formula is (you perhaps already guessed and guessed it right): Future Value / [(1+discount Rate)^number of periods]

Count 2:  Now, let’s solve a riddle! Adam & Eve live in the city of Eden. Normally, an investment in the city of Eden yields 10% return per year. One day, Eve approaches Adam with a project that will pay Adam +$121 at the end of two years provided he invests -$105 today.  Will Adam say “yea” or “nay”? 

Unlike the (in)famous “apple” question, Adam in this case will surely should scream “No Way”! He  did learn compounding from his father (Father?) and hence knows about discounting, too. The Present Value of $121 that Eve has promised to give him after 2 years is +$100 since money normally grows in the city of Eden at 10% a year. Why on the earth will Adam invest anything more than $100???  Agreeing to Eve’s proposal to invest -$105 will leave a $5 hole in Adam’s pocket! In other words falling for Eve’s proposition would generate a negative Net Present Value of $5.

When Present Value of promised cash flow(s) in future is less than your investment today, you have a negative Net Present Value. That shows that you are better off of investing your cash in the “market” rather than getting lured by any of the Eve’s propositions! 

Count 1: Now let us narrate the same story with one more twist … I invest -$100 today and get $121 after two years. At what rate will I need to discount my future value of $121 to get exactly zero (0) Net Present Value? “What a dumb question”, you might be thinking! Of course, 10%!!!  Well then. If you were a finance professional, you would say that the Internal Rate of Retun or IRR of the project (to invest -$100 today and get $121 after two years) is 10%. 

IRR is simply the discount (or interest) rate that will equate the present value and the future value of an investment proposal.

I think, now you know enough to alert your finance colleagues to pay more attention to what you have to say and all that because you ARE smarter than a fifth grader!

How Complex Is the Simple? 

A recent article about the Turing Machine described how Alan Turing imagined a “simple” hypothetical machine that could compute any number in the universe that can possibly be computed. This was the very conception of the the modern day algorithms and computers as well as the futuristic Artificial Intelligence.

… And, (did I read it right?) it was a simple idea!

The same can be said about the famous equation of relativity E = mc^2. It is a “simple” expression of one of the most complex concepts of many centuries.

What is this twisted relationship between the complex and the simple? What’s the secret of distilling complexity in a lasting simplicity? This, indeed, is a million dollar question that dictates the differentiation between the mediocrity and the excellence.

Undoubtedly, simpliciy wins the audience and winning the mindshare of your audience is essential for you to share in their economics! Apple destroyed competition (and effortlessly reached into our pockets) by creating iPod and iPhone that “could be operated by a 2-year old child”. My alma mater, the famous entrepreneurship B-school, Babson College, tought us to put together a 3-slide/ 3-minute pitch of our entrepreneurial ideas. We often started with 18-25 slides and took most of us several hours to come up with the final 3 slides that appropriately described our new mousetraps. It surely pays to be simple, but it ain’t easy!

So here are a few tricks that I have found useful to achieve the elucuve simplicity in messaging …

  1. Think big & broad, ignore decimal points. Ignore everything that is beyond the materiality boundaries. 80-20 rule tells us that we can eliminate 80% of the facts from any narrative without compromising its value. So far, in my 3 decades of career, I have not come across any exception to this rule! Back-of-the-envelope (BOEN), Round-number Story, and bullet-point termsheets are some of my most favorite tools to distill the “20” from the “100”!
  2. Do not attempt to address too many issues or solve too many problems in one go. Our desire to find “theory of everything” kills the simplicity. Even while writing a blog, I have to resist an urge to give expression to every thought that crosses my mind or else I will loose you … my audience!
  3. Use steps! We use steps everyday; at home, in the office, or in public places. We do so without giving much thought as to what gives steps their utility value. Steps combine 2 functional features: the “climb” and the “platform”. Platform allows us to get a firm foothold before moving on to the next climb. Steps help us move up without getting exhausted. Similarly, step-at-a-time approach to problem-solving and messaging helps us progress without the intellectual exhaustion.
  4. Refine & Rehearse: never forget that the key to getting your ideas and thoughts across to the audience successfully involves knowing their limitations. Your audience may have low attention span, may be short on time, or may not be technically nuanced. Understanding the perceptual constraints of the audience helps us make our thoughts audible”. But that may not be adequate. I have found it extremely important to rehearse the presentation of my simplified message before actually pitching it to the real audience or else, the clutter in my mind derails the simplicity again!

Distilling complex thoughts into a simple message is important – not just for an investor presentation or a research paper publication; but also in everyday business life that requires today’s executives to read and write numerous emails every waking hour!

Keep It Simple Stupid!

The Art of Trade-offs


In business, much like in our personal lives, having choice is good but not easy … especially when the choice is between two or more alternatives that seem equally desirable!  Successful businessmen have an uncanny ability to crack this code and decide what they don’t want to do with the limited available resources. I call it the art of trade-offs

My economist dad would often talk about one of the most elegant definition of economics – the 1932 definition by Lionel Robinson: 

“Economics is the science, which studies the human behavior as a relationship between ends and scarce means which have alternative uses”. 

Thus, economic choices involve giving up some of our “ends” so that available “scarce means” can be focused towards more important priorities. In an article in Harvard Business Review about strategy, Michael Porter says, 

“trade-offs are frightening and making no choice is sometimes preferred to risking blame for bad choices”

All of us possess multiple aspirations – some of these aspirations arise from personal vision, thought, and analysis. But many others are driven by our desire to copy others who seem to be successful! In the same article on strategy, Porter says, “Companies imitate one another in some type of a herd behavior … each assuming rivals know something they do not”. 

Our aspirations draw actions from within our blissfully unaware brain, almost like how a magnet draws metal objects to it. It is as if our logical brain is rendered helpless! We act on all of our aspirations, whether or not those action make the best use of the scares means at our disposal! Successful business managers, however, don’t let such fatal attractions fool them. They give up some of their aspirations in favor of the ones that they feel have more chances of succeeding. In my earlier blog “Does an Idea come from a vacuum“, I had observed that five elements that transform an idea into reality are: Passion, Focus, Observation, Belief, and Association. Good trade-offs bring the much needed element of focus to an entrepreneur’s actions and enables optimal use of limited resources to maximize the gains. 

Organizing

Have you ever wondered why military personnel are trained to march in perfect unision?

The Greek and the Roman armies did not defeat the barbarians by the strength of their numbers. They did so by organizing their troops in winning battle formations. Ancient Indian epic of Mahabharata too refers to the key role played by the battle formations in the win or loss of an army. Military (and business) formations strive to achieve one objective – to create a singular unit from many individuals, behaving like one personality. Good organization does not dissolve individualities but seeks to perfectly synchronize diverse individual personas such that the combination becomes one bigger and more powerful entity. No wonder, organizing is one of the most critical aspects of building any successful mission. 

During my executive career, I have witnessed a wide spectrum of organizing tactics – right from the use of fear (of punishment and public admonishment) on one end to the use of open trust-based management-by-objectives on the other. And, all of them can succeed or fail, depending on how you define success and failure. Irrespective of what the organizing tactics might be, it involves controlling the “shakespearean”emotions of the team members and its impact on the organizational behavior. Emotions are horses that drive the chariots of our lives. But, in an organization that needs to be pulled my many horses, one needs to place blinkers on these horses so that all pull in one direction. Controlling individual emotions to create a unison , a unified organizational behavior, is the most critical element in organizing your business – whatever be your management style! 

Out of many human emotions, the ones that matter most in a business environment are: Pride, Insecurity, Bias, and Greed. These emtions act like the active chemical agents on a person’s organizational behavioral traits of Integrity, Transparency, Proficiency, and Malleability. This 4×4 Matrix of key emotions and behavioral traits influences the alchemy called organizing. 

Over or under prevalence of any of the 4 emotions can result in some of the wheels of your organizational cart spinning at a different speeds than the rest! For example, a team member with a bloated ego will outwardly put up a good show of integrity but that integrity will, at best, be self-serving. On the other hand, a team member with low personal pride too can harm an organization, as such person is not likely to have moral courage to be transparent and outspoken about brewing issues within the organization. A member with high insecurity will never take risks resulting in lost opportunities whereas one with no insecurity may lead the organization into many a accidents due to reckless decisions. A positive bias typically creates undesirable sycophancy while a negative bias rules out any kind of integrity. Malleability is another important behavioral trait necessary to forge a solid organization. Your building blocks should be flexible enough to enable efficient building but obviously, you do not want these building blocks to be “too mushy”! Persons with too low an ego or high insecurity tend to be so mushy that they cannot support any structure while ones with negative biases or high ego are so rigid that they become an overhead for the organization!


It is the leadership’s job to create a well-synchronized unit from diverse personalities by tuning and tempering team-members’ emotions such that the resulting organizational behavior is conducive to growth and prosperity for all. Efficient recruiting, continuous training, 360 degree reviews, exit interviews can all help the leaders in this endeavor. Every corporate leader needs to be vigilant about this 4×4 Organizational Behavior Matrix of [Pride, Insecurity, Bias, and Greed] x [Integrity, Transparency, Proficiency, and Malleability].