Moved to

I finally moved to my own personal domain ->

Long time in the making, but atlast neverthless.

A long winding explanation of the story on the new website.

So long

Kindly change your RSS feeders – power up that feedreader and plug in the new details. Thanks again. God bless.


Framework for Increased Profits – An Understanding

This post was a long time coming. Better late than never though.

Inspite of all the jargon that floats around the Web and Business schools today, there were, are and will be three fundamental drivers to increased profits in any company (considering it is a for-profit company) – product/service.

1) Increase Revenues

2) Decrease Costs

3) Improved Customer experience

The framework below explains my understanding of these three fit in any business –

The framework is what it should be – a 10000 feet level view. But what does this mean operationally and how exactly would this framework add value. To explain this, I would choose an example I am familiar with – Cards (Credit cards, Debit cards, Prepaid – you name it!), although similar explanations can be given for a product company like Gillette or Intel or a service company like Google or Walmart.

Some of the financial drivers (Increase Revenue, Decrease costs) for a Credit Card are (for some reason, I am not able to paste an excel sheet, had to convert it into an image!!)

In this day of multiple but same products across companies, engaging the customer has become the key to increased profitability and sustainability. Not only engaging the customer, every effort of business has to be geared towards engaging the customer in a way to increase their spend either by influencing them through Marketing or through various Customer experience initiatives.

An example, Credit cards again –

Although there are a million other variables for the profitability of a company like people management (employees), operations, logistics, legal and compliance issues – these three basic rules must be followed for even an iota of sustainability and future profitability for the company.

P.S – I had a doubt while writing this post. Isn’t the entire post just common sense? Should we have a ‘framework’ for it? But then, even the Big Bang theory was common sense, ain’t it? Unless there is a clear understanding of what drives a business at a strategic level and subsequently convert these strategic goals into operational goals across teams, we would not be able to nail down onto a problem of decreased profitability or even a loss. A framework is a necessary evil to achieve this focus.

The Three Foundational Rules of Business

Over the past 5 years, I have read and talked about different business models, different businesses and different marketing tactics and strategies. Market planning, Campaign execution, Market research, Value proposition – we all heard these terms, and more often than not think they are just jargon – unnecessary to the actual business. Considering the abuse that these terms have had to go through, I wouldn’t disagree with much of your views. However, all these steps are very important if you want to be successful in a business – self-owned or employed by someone else. People don’t seem to agree – they are of the opinion that as long as money comes in, all these jazzy terms can take a rest. I would go further and say that there are three fundamental equations (and building blocks), if taken care of would encompass all the other jazzy terms. They are –

1) Demand vs Supply

2) Cost vs Benefit (or Revenue)

3) Risk vs Return

1) Supply and Demand: From a pin to a diamond, all businesses are based on this fundamental equation. Sometimes the demand exists (like groceries), sometimes the demand is made artificial (like diamonds) and sometimes demand is created (like the iPod or the erstwhile Walkman). Every successful business exploits the demand which has not been satisfied and sustains it according to changing needs.

2) Cost vs Benefit (or Revenue): Benefit and Revenue are interchangeable terms (unless you get into science and call Benefit as psychological and Revenue as material). Every business (or entrepreneur) weighs cost and revenue and as long as revenue exceeds costs, the business is profitable and sustainable. The cost and revenue per item would necessarily give a view of the business – in case of cars, the margin of profit is normal, in case of rare goods, the margin of profit is excessive and in case of some products like the Xbox, the revenue per item exceeds cost per item only after sale of x number of items (due to a concept called ‘economies of scale’).

3) Risk vs Return: The most diciest of all equations. More often than not, greater risk might imply greater return – but not necessarily so. There are some options to hedge, so that return can be disproportionate to the risk involved. However, it all depends on the business one wants to run.

As I said earlier, when we read all the marketing and salesy terms, we think it is commonsense – it is the revenue that matters, all these concepts are only for a consultant. Revenue does indeed matter – but the steps involved in say Kotler’s Marketing Management (one of the best books for Marketing, ever!) steer you in a direction where you can structure and benefit from increased revenues and reduced costs. However, the essential check is this – as long as you can break any of the management terms into these three fundamental rules, as long as you understand how those terms influence these three fundamental rules – usage/implementation of those terms are not only sufficient in today’s world but absolutely necessary.
If you can use those terms without understanding the implications to the three rules, well, you can call yourself a management consultant right there 🙂

P.S: What;s up with these terms like ‘Long Tail’ and ‘Permission Marketing’? If my memory serves me right, there was some concept called ‘Niche marketing’ (in Kotler, of course) that I read which exactly reflected ‘Long tail‘ concepts – or is it the other way round? 😉 Ditto with ‘Permission Marketing‘ – same concepts as ‘Direct Marketing’ (although Direct Mktg of late has been abused). Even more surprising, people write a whole volume on simple concepts such as these – and the blinding surprise of all, they go on to become best-sellers! Can we institute a Nobel prize for the reinvention of the wheel please??

Customer service at Retailers – Ideas!

Sometimes, I just don’t understand retailers. When I say retailers, I mean from the big-brother Walmart to the Best Buys of the world to the Clothing retailers – everyone. These retailers invest money aplenty on database marketing, mailing prospects, run various analytics to understand consumer behavior, build brand loyalty – in fact, they do everything right to bring the customer right into their store.

And then, they fail to capitalize on it.

There are four fundamental ways to generate revenue in any profitable business –

1) Bring in new customers

2) Retain existing customers

3) Increase the money-spent-per-visit by each customer (jargonese calls it wallet-share)

4) Work out a way to generate repeat business with minimal marketing expense

Most of the retailers are brilliant in getting new customers to their store. In fact, with their usual muscle power in branding, marketing and IT spend, they are able to figure out profitable vis-à-vis non-profitable customers. They have done and succeeded where other businesses usually fail – bringing the customer to their store.

What do they do subsequently: treat customers poorly! The past has repeatedly proved that the essence of retaining customers and generating profitable businesses is Excellent Customer Service. Period. Yet, we see long lines at the counter, poor product knowledge from the customer service representative, undifferentiated product lines with no additional insights and hence, overall a bad customer experience.

In the world of Wi-fis and pervasive internet, there are a multitude of options which the retailers can follow to retain customers. Leveraging technology at the right moment (in front of the customer) will prove to be a leap of faith to the customers streaming in, and hence generating more business. Two ideas which cross my mind immediately –

1) Long lines at retailers – How about utilizing hand-held price scanners by service representatives? Whenever there is a chance of a long line developing in store, the store reps can scan the products for their prices and generate a bill right then and there. The same bill can be presented at the counter in case of cash/paid via debit or credit cards at the self check out counters/wave mobile/card in contactless payment scenarios (which by the way would increasingly be the next big thing in retail business).

RFID is definitely an option for such scenarios, but over the years, RFID has proven to be an excellent tracking tool in supply chain, but hardly customer-friendly. I would rather keep a watch on it than implement it hastily.

2) Product knowledge – With the range of products streaming into the market, it is extremely difficult to train store reps to be knowledgeable on each and every product. Moreover, the customer would want to know how other buyers felt after buying the product. One option is that the customer comes prepared, armed with the product name and the feedback through his/her readings on the Internet. However, this rarely happens – or rather, it happens only in case of high value products like laptops etc. How about setting up kiosks where the product tag can be scanned and the system generates output of the entire product, including customer reviews posted on every website? In the world of Web 2.0 (and I cringe as I say that!) mash-ups are not that difficult – in fact, they are close to being a commodity. Setting up kiosks like this along with decently knowledgeable store reps to push the customer into actually purchasing the product would definitely be a winning proposition.

Tools – A VVIP Bookmark!

One of the interesting fallouts of some mindless browsing is that you come across a few tools which are brilliant. One of the very important lessons I have learnt in my life on the Net is to always bookmark when you come across some good stuff on the Net – because there is such huge junk out there, quality just doesn’t get noticed frequently – and the probability of finding that good stuff back is always going to be tough.


How many times have you found asking yourself ‘wish I had a list of all important tools on some link’, but never bothered to maintain the link inspite of coming across a few good tools? I have done it so many times – however, better late than never – the following are probably some of the tools (in no particular order) (and all of them free :)) that would help at some point or another. If you have not learnt your lesson already, this is the time to learn – bookmark this blog post immediately :).


1) Omnidrive is a universal storage platform that keeps your files in one place on the web instead of many places on your desktop and devices. Omnidrive users enjoy all the benefits of web storage without losing the interfaces and performance of conventional local storage. High performance and minimal latency. 1GB is offered under the free version (it would cost $70 for a 10GB version). I guess 1GB suits my purpose very well. (Why do I need a 1GB online storage when I have a USB drive of 4GB which is portable? Ohh boy! Ask me – if you want to send a mammoth file across to your friend/colleague in a different continent and immediately – your email wouldn’t support it – and then you start looking for such storage online – like I used to do :).


2) How about a scenario where you start doubting the purpose of life (just kidding!) when you do not have a word -> pdf converter installed on your PC? What if, you can’t install any software on your PC (because of restricted permissions), yet you need to convert word/image -> pdf (happened with my friend recently). Online PDF Converter convert MS Office, Images, Web Pages, Vector Graphic Formats, CHM and HLP files to PDF. They also have tools for PDF -> Word/Excel. Check it out. Pretty good stuff for free, eh?


3) Editing a photograph – Hmm, I was tired of the features in MS Paint (or lack of them) and secondly, I wanted to do some photo-editing quickly – not wanting to use heavy software like Paintshop etc. Is there a online tool to solve the problem? Yup. Pixenate is an online photo editor. It has a bunch of features. The best part is – Simply upload your photo, edit it, and either save to disk or upload to Flickr. No need to register, just upload an run! Isn’t that cool?


4) Polls on the Web/Surveys etc – A tiring phenomena; lots of spam etc etc.! I understand, I understand – but if thrust upon by your supervisor to create a poll out of nowhere, what do I do? 🙂 I google and find a tool. Zoho Polls is an online tool to create polls online and let others vote. 100% free. Create the poll in 3 easy steps and view the results in a decent enough GUI format.
Other tools under the same category are –
Bravenet‘s got a whole list of online tools for the web, one of them the ability to create a form and the result is sent via e-mail (which by the way is increasingly an important feature for me).
Freedback offers a free alternative as well.


5) Now to one of my favorites. Slightly old on the market, but never mind – very important. How about this statement – “Please register. We will send the confirmation email to the address given’. Increasingly irritating, because the need usually is to use that service once and not let the junk destroy the sanctity of your mail box. Yes, you can create one email for ‘junk’ like this apart from the one for personal emails. But frankly, why do you want to? How about temporary email addresses? Use the, or spambox online services. They offer you to get a temporary e-mail address – completely free and no registration required. Just enter the e-mail address of your choice and it will show you the e-mails sent to that address. Perfect for temporary e-mails and you don’t really care about the privacy, do you? – you just want that e-mail without giving out your real one or register for a new e-mail account.


6) Music – This had to be the creamer. I was tired of downloading/searching the right kind of music. The complex 3-D matrix of my taste, artist and mood was too much for my harddrive to take :). Anything available online – free and legal? You bet! – Finetune – Awesome interface and player. More control over the music than other services like Pandora and full tracks available unlike (which by the way are not bad services at all).


Hmm…lots of tools, eh? Let me know if you come across any other interesting tools under any category absolutely. Would love to know them. I would also post new tools/technologies I come across as and when under the Technology category.

Global Economic Overview – and its impact on India!

Finance, Economy and Stockmarkets – Probably the only subject which can hold any audience for an hour atleast. It’s all about money, honey – as someone said earlier. Easily one of my favorite topics (don’t ask how I ended up in Consulting…that’s another story) – I guess for my first subject-specific blog – it couldn’t have got any better.


My view of the market as a whole in the world now is slightly bearish. Although in the ensuing discussion, I would put forth my viewpoints which probably would point to the market being extremely bearish (rather than slightly and never mind the sentiment on the Indian Stock Market which is hitting new highs every week) – I am also confident that some market would beat the world index by a positive margin.


1) Sub-prime crisis – I guess by now, every Tom, Dick and Harry would have heard this term a million-times over – understanding the issue either completely, partially or nothing at all. Definitions aside (lending to parties who do not satisfy the criteria of the three Cs – credit, capacity and collateral completely), I think there is a serious chance that US might slump into a recession. I would be the first one to agree to the fact that the US is resilient to certain shocks (Great Depression in 1929, Savings and Loan Crisis in 1986), but couple the fact of this crisis with the depreciating dollar and its appreciating exponential budget deficit (not to talk of the costs of wars in Iraq and Aghanistan) make the situation a little tough even for the the biggest economy of the world to handle.


Impact on India – What does a US economy slowdown mean to India? (and probably China as well) – US is the biggest consumer of goods – and although basic consumption might not take a hit, purchasing power will and with that happening, demand for extraneous goods would fall dramatically impacting India’s as well as China’s economy. The biggest gainer from the US economy in the past has been the IT sector – but this slowdown would essentially mean that IT budgets in US companies would be cut, projects put on hold till the economy (and/or the company) is back on track. There is a contrarian view – which indicates more work being outsourced to India due to cost pressures. However, my view on this is slightly negative and even if that happens, revenues would start flowing only 12-24 months hence and not immediately. (Couple this with the depreciating dollar vis-a-vis rupee, I know where my increment is going…it is going the dollar way 😦 ).


2) Increase in LIBOR rate – LIBOR is European’s standard lending rate (London Interbank Offered Rate) defined by the ECB (known in India as PLR (Prime Lending Rate) defined by the RBI). LIBOR has been increased (partly as a fallout of subprime which also has hit the European markets) from 5.3% to 6.3%. So, why should the market be bearish on this fact? Let me turn to India to answer that question.


Impact on India – As of March 31, 2007, Indian companies had borrowed nearly 72,000 cr. ECBs (External Commercial Borrowings), and between April and June, a further Rs. 34,000 cr. was added. This is a net of Rs. 106,000 cr…approx $24 billion. LIBOR has been increased by 1%, which essentially means an additional interest burden of $240 million a year…approx 1000 crores. Let me further delve deeper and look at some companies who have been heavy borrowers in the ECB market. Tata steel (for its steep ECB loan to acquire Corus), ICICI Bank (when I last read ET, they had borrowed around $12 billion in the last two years in ECBs), Reliance Industries, Reliance Communications, Bharti Airtel and probably many many more. As per my knowledge, except for Reliance, all other companies have booked forex gains gained against the dollar. Watch out for the hit on their bottomline (or is it their bottom on the line? 🙂 ) in the coming quarters.


3) Fallout of the Yen-carry trade – Yen-carry trade, for the uninitiated involves borrowing money from Japan at very low rates (actually, it is close to 0%) and investing the money in markets like India and China where the safest bonds yield around 8-9% annually. Although simplistically, the margin seems too huge – taking into account various currency conversions, administrative costs etc., the margins are razor thin and money is made only through huge volumes. Since international mutual funds, hedge funds had the capability, they raised huge amounts of money in Japan and invested in emerging markets like India and China. So, what would happen if Japan increases its lending rate by 1% – simply put, the funds who have raised this money have to close shop unless they pay off the borrowed amount almost immediately.


Impact on India – As soon as Japan raises the lending rate, fund houses would not be able to sustain their investment and hence would do a massive sell-off to pay back Japan. In this sell-off, the major markets affected would be India and China (since that is where majority of the yen-carry money has been invested) – resulting in a huge spiral of the Sensex – and bearish sentiment for a long time to come.


4) Depegging of Dirham to Dollar – (This information was passed on by a friend of mine staying in Dubai. The resulting analysis of this speculation is the following joint effort) – The authorities in the Middle East are seriously considering depegging of Dirham to the Dollar (The logic behind this is quite voluminous – however, simply put – because their currency is linked to the dollar, their economics have to follow US economics. So, even though there is an inflationary environment in the Middle East currently, since the Fed is cutting interest rates, Middle East also has to – which might compound the problem of inflation). However, our take on this is that although depegging might not happen, they might revalue their dirham – which essentially means from 1 Dirham = 3.26 Dollars currently, they might probably have to bring it to 3 dollars.


Impact on India – Although the decision to revalue the currency is internal to the Middle East, the revaluation would hit oil exporters margins – and they would cover it up by increasing the oil prices (partially ignoring OPEC’s pricing policy and politics) – directly impacting the world economy – which already is reeling under heavy oil prices. Couple with the fact of approaching elections (which essentially means domestic oil prices would not be increased) – the Indian budget is going to take a massive hit.


Investment tip: Sit on cash, invest spare cash in Gold.

My Other Blog!

Let me just cut the crap of beating around the bush of starting another blog and get straight to the point –

The personal blog has been up for long and I wanted to start off an official blog where I can collate my thoughts around my field of work (banking consulting), technology, stockmarkets, social media and web 2.0. This may or may not include lucid analysis (just to indicate that the name of the blog might just be a paradox) but certainly would include informed views, tackling both sides of a coin (whatever that means 🙂 ).