How technology creates the fear of missing out(FOMO)

How many times did you

•  take a selfie/photo to post on Facebook/Instagram instead of enjoying the moment
• Check your mobile phone to see notifications
• Get disturbed by your smartphone beeps
• Pay more attention to the online world than office world
• Keep scrolling down into the 'infinite' scroll
• Stop at the top few choices presented to you on Google Search, Zomato
• Feel the need to ratify your investment decision on moneycontrol?
• Stalk long lost friends and see the list of exotic places they had gone(and feel envy)

If you have ticked the box on any of these, welcome to the world of FOMO. While I was reading online on mental models, this one caught my attention, and I came across a really superb article below which highlights the problem with false choices, social media driven ADD etc. 

https://medium.com/swlh/how-technology-hijacks-peoples-minds-from-a-magician-and-google-s-design-ethicist-56d62ef5edf3#.kg0xgfdxa

To avoid FOMO which may drive impulsive decisions, one should restrict social media( OK maybe not delete your accounts but track them only once a week, with the comment that anything urgent would be checked weekly). 

What is your signature worth-some musings as a professional

Recently, I was reading a book by Parag Saigaonkar wherein the below passage struck me-it relates to the author being asked to certify homework completion of his son, and his asking to see the homework before certifying. The author muses that

Reflecting on this incident, I realized that I do sign off on a lot of other things as well, especially at work – one of the responsibilities I have as a principal in the firm. As a firm signatory, I have the ‘privilege’ of signing a lot of important documents …… at least they look impressive. What does it mean to lend my signature to business-critical documents? What weight does my signature bear? What are the consequences of not reading in detail every legal word? What value do I put on my signature?

SAIGAONKAR, PARAG. THE PERFECT STORM (Kindle Locations 1682-1685). Westland. Kindle Edition.

As finance professionals, whether it is signing an audit report, letter of representation, approving an expense, greenlighting a project etc, we often need to rely extensively on work done by others.  For this, we need to ensure we are through in every aspect and review the critical points, to avoid devaluing our signature. 
At the same time, we should remember our role as internal consultants and not be bureaucratic in holding up decisions because we want to tick all the boxes all the time. 

As Vaibhav Manek puts it in his BCAS presentation on 'Aligning Human Capital-people as strategic assets'
http://www.bcasonline.org/files/res_material/resfiles/PPT-Aligning%20HumanCapital_%20VaibhavManek.pdf

1. “We exist because of our clients; The customer is not an interruption of our work; he’s the purpose of it”- Mahatma Gandhi 
2. Professionals must have “a connect” with the client • To win a client’s confidence, give him the chance to talk to you, person to person, about his needs and his expectations • Make it easy and comfortable for the clients to share his secrets • 
3. Professionals must adapt a mindset of joint problem solving, instead of trying to win or prevail
4. People with different views must learn from each other
5.  Make effective decisions, conform to an execution framework, focus on priorities, have a growth orientation, think with a solution mindset and multitask between production and management. 
6. Technically brilliant people should be respectful to their peers and must share their knowledge and expertise 
7. Sharing of ones’ knowledge is critical to have the team come up to terms with the thought process of the team leader 
8. Team members must have a constant quest for learning and upgrading themselves

Points 3-8 are especially relevant to facilitating smooth reviews of work. Works should be done diligently as per approved checklists with self review, and once done this way, review would be smooth. Yet, one should not lose alertness and be blindsided by a black swan.

How to review an Excel spreadsheet aka spreadsheet auditing

Anyone who has installed a spreadsheet software like Excel/Open Office can create a spreadsheet. but reviewing one is much more challenging. One needs technical expertise on the subject matter, but also an ability to review/audit the spreadsheet, which depends on diligence/knowledge of Excel audit tools etc. Having searched this topic for a hour today, I give below my insights on the same based on referenced links, and my own experience. Surprisingly, there is little focussed training on this, both in professional firms or in organizations where it is presumed that people will pick it up on the job.

1. Keep data/constants separately, at one place for ease in updation, and document the assumptions/link to source file. 
2. Build in checks(like period y-o-y changes), constraints etc to ensure arithmetic accuracy, sanity check on reasonableness etc.
3. Use relative references and constant file naming conventions/file structure conventions, so that updating links possible using 'Edit Links' option. 
4. If any manual changes made to formula cells, shade that cell for identification or else identify it separately. Otherwise, excel has an option to identify cell not simillar to its surrounding cells, that may help you identify cells where formulas have been edited different to that copied across range.
5. Ensure the Excel is ready for printing, and for copying in presentation. This means, in addition to segregating data from algorithms, placing meaningful column and row labels in each portion of the spreadsheet, and not just what the preparer understands.
6. Develop "Summary'/'Analytical Tab'  to synthesize the results of all key assumptions and analytical results, concurrent with the ongoing analysis, so that only key findings and results will be presented or communicate

The power of counterfactual thinking in business

'What if'. This powerful question forms the base of counterfactual thinking, where you try to imagine what might have happened under a different scenario/circumstance. It is not intellectual heroism to do so, but rather those who want to illustrate improvements, compare things under changed circumstances etc would find this sort of thinking very useful. The below business situations illustrate the importance of

1. Stress analysis/scenario analysis:-'What if' analysis tries to model the effect of stress testing and analysis. That is counterfactual analysis
2. Proforma financial statements in prospectus for past data:- As IFAC puts it,  Pro forma financial information included in an issuer’s prospectus illustrates the impact of a proposed acquisition, equity or debt issuance, or other transactions on the issuer’s historical financial information as if such event or transaction had occurred at an earlier selected date.  This is nothing but counterfactual thinking.
3. 'Improvements' after consulting assignments:-When consultants claim to have implemented projects resulting in savings of XXX, these amounts are often counter factual.
4. Opportunity Costs/Benefits:- For example, Delhi International Airport(DIAL) had taken interest free Refundable Security Deposit (RSD) from the lessees/shop owners. For purpose of setting tariffs under cost-plus rate of return regulation by AERA, they stated that the RDSs have an opportunity cost and hence the Authority should provide a reasonable return on the same because if  DIAL  had  not used these deposits for the project, then  additional  funds would have been raised through equity or debt, on which the Authority would have provided a return. This is nothing but counterfactual thinking. 
5. Avoidable costs:- Suppose an activity had not have been carried out(if deemed wasteful/unnecessary/imprudent), then what would have been the costs saved? Regulators do not generally permit such inefficient/non regulated activity related costs. For example, the  primary  activity  of the  airport  is to  provide  aeronautical  services and the users  should bear  the  cost of these.  Where,  however,  the  presence  of  non-aeronautical  activities  has  generated  an additional  requirement   for  space  or  facilities,  which  would  otherwise  not have been  needed,  the  resulting  otherwise avoidable  costs  should  be regarded in full as non-aeronautical.

The Abilene paradox proves Silence is not golden-and its implications

The Abilene Paradox was first described by Professor Jerry Harvey, from the George Washington University. He described a leisure trip which he and his wife and parents made in Texas in July, in his parents’ un-airconditioned old Buick to a town called Abilene. It was a trip they had all agreed to – or at least not disagreed with – but, as it later turned out, none of them had wanted to go on. “Here we were, four reasonably sensible people who, of our own volition, had just taken a 106-mile trip across a godforsaken desert in a furnace-like temperature through a cloud-like dust storm to eat unpalatable food at a hole-in-the-wall cafeteria in Abilene, when none of us had really wanted to go”.

Hence, the Abilene Paradox describes the situation where everyone goes along with something, mistakenly assuming that others’ people’s silence implies that they agree. And the (erroneous) feeling to be the only one who disagrees makes a person shut up as well, all the way to Abilene. In short, silence is not golden, and does not always imply assent. Some practical implications of this

1. Teachers often stress that no question is a dumb question. This is partly to avoid the Abilene paradox where students often have a common doubt but the silence of other students stops them from asking, as they mistakenly think that they are the odd man out. 
2. In a contract(unless by tacit actions), silence does not imply acceptance. That is an old maxim of English contract law(and I think in other juridictions also), subject to certain carveouts to cover assenting to deception etc. 
3. Many decisions often need a certain affirmative vote-for example in the World Trade Organization(WTO), rejecting an expert panel discussion needs a majority General body vote. And corporate law(often needing charter etc) often imposes a quorum for making certain important decisions, be it at the Board level or the shareholder meeting level, to ensure that those who are silent are also made to attend(atleast in part)
4. Great investors and managers often make their team speakup, to ensure that contrary opinions are not sidelined due to groupthink/awe.
5. Good communicators often restate for understanding, to ensure that understanding gaps are ironed out and not hidden behind the wall of silence. In fact, lack of response/questioning often indicates communication gap/disinterest. 

I could go on and on, but I think that principle needs more attention and application.

Learning about the real facts of life online

A side effect of surfing online is that you stumble across plenty of interesting stuff. But thanks to the surfeit of PR material masquerading as content, it is sometimes difficult to get the true picture. Below are some useful resources I found in that regard.

1. IIM tips/NIT tips/ CA tips-a new fad has sprung up on Facebook where groups are made ending with 'tips' that give tongue in cheek one liners about anything under the sun, right from IIMs to Gujjus. This community is growing by the day, and chances are you will get information on any profession/aspect of life on that soon
2. Memes:- Many sites have memes which are again one liners, mostly on communities but often on other things as well. Sites like tumblr are a classic example of this.
3. Jokes: They say there is no smoke without fire. Hence, even the 'racy' jokes have a factum of truth, and can be very illuminating on the profession
4. Glassdoor:-This is often more reliable than Vault Guides in my view, because people can safely state even negative aspects online, which is not possible always in standard publications.
5. Quotable Quotes:-Sites like brainyquotes have a very rich collection of quotes online, and most are quite insightful
6. Classics:- Thanks to Project Gutenburg and other sites, one can read classics online for free(even the Kindle Store has free classics for Kindle). They say that the past repeats itself, so reading classic novels can give deja-vu when those situations are unfolding around you.
7. Anonymous blogs:-For example, a famous finance blog-the Eipcurean Dealmaker has an anonymous writer who frankly writes about the industry, unafraid of the consequences on his day-job. This is a luxury which only anonymity confers.  (http://epicureandealmaker.blogspot.com/)
8. Comment section on certain sites:-Often, the comments section is entire spam as in Rediff and TOI, but on more reputed forums like Economist/HBR/FT, the quality is comments is great and often surpasses the result of the post itself. And many commentors supplement their views with real life examples.
   

We overrate 'new' things in the wrong ways

After the death of Steve Jobs, I've lost count of the leaders/writers who praised his innovative nature. In the Indian context, while doing that, some also trashed the innovativeness of us Indians. If we define innovativeness to mean churning our new products/variants frequently, then yes one may not be innovative. But the way I understand innovation, is merely an improved way of doing things(improved by resource consumption/functionality) and not necessarily just design/art work. And what may be innovation for the early adopter, may not be so for Joe Citizen, whose needs are limited. For example. one may not need to throw out the old smart phone for the iphone4, if that does not give any more relevant functions for that user. Of course, being seen with that brand is a different psychological  push which I don't address

There is even a logical fallacy around this(http://www.nizkor.org/features/fallacies/appeal-to-novelty.html), titled appeal to novelty, which is explained well below.

Appeal to Novelty is a fallacy that occurs when it is assumed that something is better or correct simply because it is new. This sort of "reasoning" has the following form:

1. X is new.
2. Therefore X is correct or better.

This sort of "reasoning" is fallacious because the novelty or newness of something does not automatically make it correct or better than something older.This sort of "reasoning" is appealing for many reasons. First, "western culture" includes a very powerful committment to the notion that new things must be better than old things. Second, the notion of progress (which seems to have come, in part, from the notion of evolution) implies that newer things will be superior to older things. Third, media advertising often sends the message that newer must be better. Because of these three factors (and others) people often accept that a new thing (idea, product, concept, etc.) must be better because it is new. Hence, Novelty is a somewhat common fallacy, escpecially in advertising.The age of thing does not, in general, have any bearing on its quality or correctness (in this context), except of course food quality etc.

In my view, in fields like economics, law and philosophy, old is gold for sure! After all, people read classics for a reason, and not just to give publishers money. They are rich of ideas and philosophy, and if anything is eternal, that is. Given that the focus today is on self managing teams and human beings(as opposed to technology only), the old lessons assume much more importance. Of course, we should not swing to the other extreme and accept 'time tested' things due to Appeal To Tradition. Blindly doing that would discount survivorship bias, institutionalized prejudice etc. For instance, anyone using Tintin comics to support racism  is committing this fallacy.

Burning issues remain that way because people don't delve into data

Recently, I presented a business plan to set up a chain of rural warehouses for storing post harvest produce. Amongst the 4 member jury, 2 of them had no prior experience in the agriculture sector(investing/operations) etc, and this showed in the slightly naive questions they asked. While my team's rigorous ground work helped, it opened my eyes to the fact that people often do not seek out publicly available data on the internet, and prefer to rely on the sensational and biased media reporting. This is why several burning issues/misconceptions prevail on the net. Some of them are below

• Human rights violations by police/armed forces:-Activists are prompt to critique the 'rampant' human rights violations under AFSPA and other laws, but forget that the members of police/army are often drawn from the same poor classes whom they oppress. Also, the numbers are not analyzed(how many incidents vs overall scale of violence) etc
• Agricultural input subsidy:-Lobbies commission exquisite reports about how agriculture needs subsidized electricity, seeds, fertilizer, higher MSP, cheap loans etc. What is not highlighted is who gets the lion's share of these(not small farmers), and whether these are effective or not(Prof Anil Gupta cites evidence that non sustainable farming is costly AND a failure).
• Actual volumes/outcomes:-India has good patent laws, but very few design registrations(even though at Rs 100/design it is the cheapest IP). Similarly, the number of beneficiaries of certain schemes are quite low. It is easy to understand spending trends, but not that easy to search for outcomes. But how many of us bother to do that?
•  Election result analysis:-With a wealth of data about voter turnouts, victory margins, constituency trends, election expenditure etc, there is scope for an entire website devoted to analyzing in an user friendly way(dashboards, drill down, export to Excel) election data. But this is not done, and often the only time it happens is the day post elections. Thankfully, papers like TOI are giving this wide coverage and hopefully election analysis will soon go way past the number of seats won/vote share.
• Ticking timebombs like budget deficits:-As an equity research analyst would know under the mosaic theory, weaving together numbers from different perspectives gives a good view to avoid '7 wise men of Hindustan' type of tunnel vision. Unfortunately, only consultants/investment bankers do such narratives, and in the public discourse space, this is not done. 
• Reservations:-Few issues match this in the public divide, vitiated debate and lack of data/research. there is no way to settle this issue one way or the other. But unfortunately, worthwhile data/stats are tucked away in obscure sociological research. and are not part of the public debate sphere. 

The Way forward:-Google Scholar gives access to otherwise unreachable data, and the same is true for Wikileaks/Google Public Data explorer. It is now the public duty to delve into data, atleast for data one is interested in, and then share the results with the public via open source platforms like updating Wikipedia entries, editing Wikibooks or publishing on blogs. 

Where familiarity breeds contempt-the case of IT engineers

At the outset, let me clarify my immense respect for those engineers/other graduates who have helped India's ITES companies become world beater. As someone said, success is not an accident, and the ITES industry success is due to excellent skills in management, control, quality, knowledge management etc. While these functions are often siloed, the professionals working in those companies, if having done the work sincerely, do pickup those skills especially disciplined approach, domain expertise etc.

Then why is the apparent bias against them, when it comes to MBA admissions? Read any interview of the Admissions Director/faculty of Bschools, and they all stress on the need for diversity. Now, diversity can be viewed through many lenses(education, gender, experience)-but it is usually boiled down to rejecting male engineers who have worked in ITES. Granted that they make up a large chunk of the applicant pool, but it may be too much of a logical stress to argue that consequentially they think alike, and so should be weaned out.

I must confess to an initial bias that engineers in ITES switching to MBA, were self selecting themselves out of the rat race there, and so 'were not the cream'. This is true for freshers(especially IIT/NITians) where the 'creme de lae' often study abroad or pick up plum jobs post engineering. However, despite that, the ITES guys and IIT/NIT freshers often 'kick ass' the collective derrieres of the others. Is this a reflection of their quality or indictment of the education system is hard to say, but needs some thinking.

Still, I conclude this rant by stating that before passing value judgements on a 'typical' IT guy turned MBA aspirant's CV, we should understand the person's work domain(support/coding/sales..), client work(which sectors), work appraisals(awards, promotions) and quality(say 1yr+). It is difficult because appreciation letters are dime a dozen,something like some army medals/service awards in the USA. But that does not deprive us of the responsibility of taking the time to understand the 80:20 rule to shortlist CVs etc.

Chemical pesticides, antivirus software, education and medicines-conflicts of interest galore

While analyzing the business models of the chemicals, pharma and technology industries, I began to connect the dots and notice some interesting common threads, some of which I explore in this post.

Chemical pesticides are needed if the seeds are inherently weak or are not able to cope naturally against their pests. Agribusiness companies often produce both the seeds and pesticides, thus sparking an inherent conflict. Better seeds resistant to pests need less pesticides, which affects the business performance of that division. And pesticides ARE likely to be more profitable, because they cannot be reused/recycled unlike seeds(as Bt terminator gene is not widely used in India). of course, there are likely to be be Chinese walls as well as specialized seeds and pesticides companies which will keep a healthy competition-but care should be taken that consolidation sprees does not destroy that.

Similarly, writing robust code slowens the time to market and reduces the demand for anti virus. Why not kill two birds with one stone by leaving known errors, which you can then solve with your proprietary anti virus? A few techie friends of mine accuse microsoft of this.

And while pharma companies do not(yet) sell food, they do sell nutritional supplements of doubtful efficacy. And given the low awareness even among medical professionals of the interaction effects of drugs, cocktails of drugs may cause resistance and other unknown effects, thus boosting the demand for new drugs to combat that issue as well!

Some Indian education majors like NIIT, Educomp, Everonn, EdServ, Manipal Group etc are present/entering into both school/college education and also coaching/tutorials. This begs the question-which segment will be canibalized? Will a good school remove the need for tutorials or vice versa?

In all the above, the risk is greater when conglomerates take over independent and competing businesses. Therefore, having independent focussed players cuts the risk for consumers.

Are we are slowly losing our ability to think?

During a discussion with my IIM-A strategy Prof Sunil Sharma, in the context of dependence on spoon feeding, he mentioned a very interesting point that we are slowly losing our ability to think. That got me thinking, on several recent events.

• During the Lopkal bill debate on campus and even outside, I'm sure that less than 10%(even that is generous) people commenting on the issue would have read the bill and its competing versions, to form their own opinions. Yet, everyone and his uncle was commenting and liking Facebook status messages, and demonizing those who did not agree.
• When asked to submit comment papers/letters on economic, legal, taxation and even public interest matters, the number of individual comment letters are quite few. This is sadly true even for professionals who do not take time out to critically analyze draft documents relating to THEIR work. 
• The reading habit is dying, in favour of short spurts of concentrated entertainment.
• During lectures at IIM-A and elsewhere, few people put in meaningful class participation. And even fewer have the temerity to seek clarification/question a Prof or a student presenter. This is true even for public seminars/talks/conferences.

Taken together, this trend is not an encouraging one. Thinking critically is not just for analysts, journalists or others but is for everyone, if they want to avoid being classes as sheeple.