Book Review: Confessions of an Economic Hit Man

I just bought a new book named "Confessions of a Economic Hit Man" by John Perkins. 

This book explains great secret stories of world's biggest fraud done by famous people across the globe. 

Economic Hit Man are highly paid professionals who cheat countries around the globe out of trillions of dollars. Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex and murder. They play a game as old as Empire but one that has taken on terrifying dimensions during this time of globalization.

John Perkins should know - he was an economic hit man for an international consulting firm that worked to convince poorer countries to accept enormous development loans - and to make sure that such projects were contracted to U.S. companies. Once these countries were saddled with huge debts, the American government would request their 'pound of flesh' in flavours including access to natural resources, military cooperation and political support.

Confessions of an Economic Hit Man is the story of one man's experiences inside the intrigue, greed corruption and little known government and corporate activities that the U.S. have been involved in since World War II. The message is clear, unless these clandestine activities are stopped, they will have dire consequences for our future.

You can buy this book via this link - http://www.homeshop18.com

Book Review: The Black Swan (Nassim Nicholas Taleb)

It’s been some time since my last book review, so today I’ve decided to share my impressions of the latest book on probability by the ”financial dissident” Nassim Nicholas Taleb. If you still haven’t read his previous book — Fooled by Randomness (see my review here) — I strongly urge you to do so, even if you aren’t into trading. His latest book —The Black Swan — became a major bestseller and is a very important book, both for traders and for everyone else who works with the randomness.

The main idea of the book is that we can’t avoid the Black Swans (the rare events that are unpredictable in their nature) but we can try to decrease the amount of ”bad” Black Swans in our life and increase the amount of ”good” Black Swans — first, by admitting that our knowledge is very limited and by stopping to act like we can forecast rare events and, second, by choosing the life strategies, in which our potential success would be scalable and could surpass the potential failure. Other than that, the book offers the following important theses:

• What we don’t know can be more important than what we think we know.
• We live partly in Extremistan and partly in Mediocristan. Rare events are very important (and are unpredictable) in Extremistan. Rare events have little impact in Mediocristan and they usually can be predicted.
• Financial analysts, experts, strategists, portfolio managers generally don’t posses much knowledge about the reality of their profession, but for some reason general public listens to their opinions. Taleb sates that it’s completely unjustified.
• Bell curve (“the Great Intellectual Fraud”), although is a viable model in Mediocristan is a fallacy in Extremistan.
• Modern world becomes more of Extremistan and less of Mediocristan.
• Our minds are bound to search and unite different facts and reasons — that’s the problem of the narrative fallacy.
• Pure probabilities don’t exist in Extremistan, they are properties of the artificial models — such as casinos and the study problems.
• Fractal models of probabilities can’t predict the impact of the Black Swan, but they can give a slight hint, making a Black Swan Gray.
• In Extremistan, metaphorically speaking, if you don’t chase the train, you don’t get frustrated by missing the train — if you don’t rely on the appearance or the lack of the Black Swans your state of mind won’t be disturbed by them.

Although I liked Taleb’s previous book (Fooled by Randomness) more, this one also deserves attention and was very interesting despite the small amount of the new ideas compared to his previous work. I’d like to point out the following advantages:

• Interesting read due to the literary style of the author. I can imagine how boring could the book on such topic be if it would have been written by some “professor”.
• Deeper understanding of the rare unpredictable events compared to Fooled by Randomness.
• More practical advices. They are more of ideas than advices but still can be quite helpful.
• A book with praises to both Popper and Mandelbrot in it? I buy it :)! (Yeah, that’s quite subjective.)

But to add some negative to this rather positive review, I’d want to mention that I liked Fooled by Randomness more than this one. Maybe that’s because the first book on a topic leaves a strong impression, or perhaps because of a rather bad translation (I couldn’t find The Black Swan in English here). Anyway, let’s list some disadvantages:

• As it was the case with Taleb’s previous book, the structure of the book is quite bad, there is still a lot of subject jumping even inside the sub-chapters.
• Nassim Taleb is a genius but his style is quite heavily ridden with snobbery of an erudite and an intellectual.
• There were many things, about which I’d disagree with the author and which needed further discussion, but they don’t eliminate the importance of the main problem of the book.

To sum it all up, if you still haven’t read Fooled by Randomness, go, read it. If you liked it and want more, read The Black Swan. If you didn’t like it, then there’s no reason for you to read The Black Swan. But, apart from the direct usefulness of Taleb’s books, there’s always a big portion of aesthetic pleasure in reading his books. So, if you are looking for something to read, you can always stop by The Black Swan and combine the useful with the pleasant.

Book Review : Competitive Strategy by Michael E. Porter

Michael Porter is Professor at the Institute of Strategy and Competitiveness at Harvard Business School and a recognised authority on competition and competitive strategy.  His book Competitive Strategy was first published in 1980 and quickly became required reading on many business studies and MBA programmes around the world.

The book was clearly written to be a text book as it provides a very structured and somewhat clinical description of the subject, rather than the more narrative approach preferred by authors targeting a broader audience.  Nevertheless, it is an important work that does have a place on the bookshelves of practitioners as well as academics.

The book states that its objective is; “to provide a comprehensive framework of analytical techniques to help organisations analyse their industry as a whole and to predict their own future evolution, understand their competitors and to translate this analysis into a competitive strategy for their business.”

The book is organised in three parts.  In Part 1, the book presents a comprehensive framework for analysing the structure of an industry and its competition.

In Part 2, Porter shows how the analysis from Part 1 can be used to develop a competitive strategy.  In this section he places a great deal of emphasis on how that strategy should be adapted to suit the circumstances of a particular industry.  A strength of the book is therefore its recognitions that there are no “one-size-fits-all” routes to success and that successful strategies are based on the thorough analysis of a large number of variables.

In the final part of the book Porter considers some of the major strategic decisions organisations are likely to face, such as whether to increase capacity, enter new markets or vertically integrate.  Given the somewhat generic nature of the rest of the book, this section may at first sight see rather specific.  However, the point I believe Porter is making is that change is inevitable and the strategies he describes are ones that organisations will inevitably have to consider at some point in their development as markets mature and as they attempt to react to or our-manoeuvre their competitors.

Although widely regarded as a seminal work, the book has been frequently criticised for being too static in its analysis, implying that markets do not change, a criticism Porter dismisses as a misunderstanding.  While I accept Porter’s point, it is easy to see how a book that is so detailed in its analysis can be viewed as ignoring the dynamics of an increasing pace of change; after all, not many companies will have either the time or resource to conduct the sort of in-depth analysis that Porter advocates before making important decisions in today’s markets.  However, this does not make the analysis any less worthwhile, it simply emphasises the need for business leaders to be constantly in touch and well informed.

Finally to the difficult question – would I recommend the book?

I would certainly recommend it to anyone who is working on writing a strategic plan as it provides a useful check-list of the subjects to cover.  But for someone with a more general interest in marketing or business strategy, I would recommend “Dealing With Darwin” by Geoffery Moore in preference to this book, as Moor provides an eminently more readable description of the dynamics of strategic planning - Porter provides more of a check-list.

Click here if you would like to purchase a copy of this book.


* Author: Deepak Bhatt is a Strategic Management Consultant based at Ahmedabad, India. To know more about him, you may visit www.managementthinker.com 

The Innovator's Dilemma by Clayton M. Christensen

This book demonstrates how great managers in top-performing companies can lead their companies into financial disaster even while adhering to what were considered best practices during the late twentieth century.  Throughout the book, Dr. Christensen draws insights from his observations of three industries (data storage, earth moving equipment, and steel production) in which the disruptive technologies resulted in lost market share for established firms that were unwilling adopt new standards.

Dr. Christensen provides a framework for managers to recognize disruptive technologies and he performs a case study of electric car technology to communicate how managers should react to the dual threat and opportunity presented by disruptive technologies.  This landmark book deserves credit for reshaping strategic thinking on how and when to adopt and market new standards for products (and services) in every industry.

According to Dr. Christensen, established firms typically focus their energies on sustaining technology research and development and thus make incremental improvements to existing technologies that comply with the standards and specifications specified by the market.  Working under such constraints naturally imposes limitations on the direction of these R&D efforts resulting in gradual improvements that bear little risk of market rejection.

The underlying assertion of this book is that the risk-adjusted rewards associated with performing R&D for technologies that deliver the anticipated (future) needs of the market may outweigh the risk-adjusted rewards associated with performing R&D for sustaining technologies.  Managers have historically been taught to listen and respond to the immediate or near-term needs of the market, so allocating resources to development of disruptive technologies is a tough sell.  In addition, disruptive technologies often have not only little or no immediate market, but also they may not work with complimentary technologies and infrastructures (e.g., computer designers/assemblers must develop new chases to house 2.5 inch hard drives).

In my humble opinion, engineers and scientist have always recognized the dilemma described by Dr. Christensen but have never communicated the issue so eloquently.  The lifecycle of development for nearly every technology platform exhibits diminishing marginal returns in improvement for incremental development efforts.  New technology platforms must always be developed to bring significant increases in value to markets towards the end of any product development lifecycle.  The power of Dr. Christensen's message is that companies must,

1. learn when to investigate, develop and deliver disruptive technologies (sooner)
2. how to effectively organize a company to stimulate development of disruptive technologies
3. how to recognize the value of disruptive technologies through conservative initial marketing practices, targeting appropriate markets, and frequent redesign during the early stages of development

By account of the destruction of numerous blue-chip corporations, Dr. Christensen establishes the imperative that every company must have a strategy to address disruptive technologies.  He clearly demonstrates that many technologies are susceptible to profound innovation and that competitors with disruptive technologies (usually new entrants to markets) will likely attack your market from below, i.e., disruptive technologies are generally not as robust as existing technologies.  Thus every company must,

1. consider developing disruptive technologies,
2. recognize the threat of disruptive technologies as they appear in the market,
3. be prepared to incorporate the standards associated with these disruptive technologies into their products/services.

It is noteworthy that some companies have survived and remained profitable by maintaining existing technologies while losing overall market share to competitors that develop and market disruptive technologies.  According to Dr. Christensen, these companies must retreat up-market to survive, e.g., hydraulic technology replaced cable-actuated technology in earth moving equipment in all but the most heavy-duty applications.

Dr. Christensen points out that development of disruptive technologies requires a major shift in how companies do business.  First, management must be willing to accept the higher probability of failure associated with disruptive technologies.  Second, established firms must be willing to find new markets for these products/services rather than pushing disruptive technologies towards existing customers.  Finally, cultural norms in many organizations may result in across-the-board lack of support for disruptive technology development efforts if such technologies are not perceived to be central to the mission of the firm.  Regarding the last issue, Dr. Christensen proposes that companies are well-advised to spin-off or otherwise create separate incentive systems for individuals involved with developing a disruptive technology.

Dr. Christensen notes several other advantages to creating more distinct operating divisions to handle development and marketing of disruptive technologies.  First, large firms are generally dissatisfied with investments that do not generate cash from operations for extended periods of time.  Furthermore, even if an investment in a disruptive technology generates cash, it is likely to initially capture only a small fraction of its overall market - another typical cause for a project cancellation within the confines of a large firm.  A separate division is more likely to persist with its development efforts if all bets ride on the success of the disruptive technology.  Such a division is also more likely to act entrepreneurial by initially targeting very specific customers (thinking small) rather than changing the technology to suit existing customers.

The last few chapters of the book consider the important point that disruptive technologies are likely to require several iterations of product redesign before they find a market.  Thus, he strongly recommends that companies leave themselves enough cash to improve upon their technologies after initial development.

This book is a must read for every technologist and business manager.  With a greater understanding of the applications presented in this work, large corporations will eventually build this thinking into their cultures and embrace the development of breakthrough innovations.  Dr. Christensen has proven that standards will continue to be destroyed and redeveloped, and that markets can be made for disruptive technologies!

Persuasive Manager

The Persuasive Manager argues compellingly that strategic communication lies at the core of business leadership, and helps organizations run smoothly and effectively. What is persuasion, and how should managers balance their ability to persuade and exercise authority without becoming authoritarian? If credibility and mutual goodwill are to be established, then the need to inspire loyalty and build interpersonal relationships becomes an essential managerial strategy. The book explores the role of persuasion at different levels of the corporate hierarchy how does a manager convince her subordinates to initiate change? How can peers, or customers and suppliers, be won over and their opinions influenced? Persuading bosses is a particularly tricky business, so how does one use the perfect mix of tact, reasoning, discussion, and ingratiation? With its wealth of real-world illustrations, scenarios, and tips, The Persuasive Manager is the perfect communications roadmap for all managers.

The IIM Ahmedabad Business Books bring key issues in management and business to a general audience. With a wealth of information and illustrations from contemporary Indian businesses, these non-academic and user-friendly books from the faculty of IIM Ahmedabad are essential corporate reading. 

M.M. Monippally is a Professor of communications at IIM Ahmedabad. A specialist in strategies of managerial communication, persuasion, and bad news delivery, he has designed and run training worksops for middle and senior managers at Morgan Stanley, Reuters India, ICICI Bank, MICO Bosch, Global Trust Bank, and many other organizations.

Private Label Strategy: How to Meet the Store Brand Challenge

As retailers have become more powerful and global, they have increasingly focused on their own brands at the expense of manufacturer brands. Rather than simply selling on price, retailers have transformed private labels into brands. Consequently, manufacturers such as Johnson & Johnson, Nestle, and Procter & Gamble now compete with their largest customers: major retail chains like Carrefour, CVS, Tesco, and Wal-Mart. 

The growth in private labels has huge implications for managers on both sides. Yet, brand manufacturers still cling to their outdated assumptions about private labels. 

In "Private Label Strategy: How to Meet the Store Brand Challenge," Nirmalya Kumar and Jan-Benedict E.M. Steenkamp describe the new strategies for private labels that retailers are using, and challenge brand manufacturers to develop an effective response. Most important, they lay out actionable strategies for competing against--or collaborating with--private label purveyors. Packed with detailed international case studies, valuable visuals, and hands-on tools, Private Labels enables managers to navigate profitably in this radically altered landscape.

About the Author

Nirmalya Kumar (Winner: 2011 Thinkers50 Global Village Award) is a professor of marketing at London Business School, where he is also co-director of the Aditya Birla India Center. His work focuses on marketing and the rise of India as an economic force.Kumar is the author of several books. Marketing as Strategy: Understanding the CEO’s Agenda for Driving Growth and Innovation (2004); Global Marketing (2005); and Private Label Strategy: How to Meet the Store Brand Challenge (2007), focused on marketing strategy, where Kumar is also credited with introducing the concept of "3Vs": valued customer, value proposition and value network.More recently, he has written about India and its rise to economic superpower status. In India's Global Powerhouses: How They Are Taking on the World (2009), Kumar provides an insider's guide to doing business with Indian leaders and companies.His latest book is India Inside: The Emerging Innovation Challenge to the West, written with London Business School colleague Phanish Puranam (2011). A keen collector of the work of Indian artist Jamini Roy, Kumar is said to have the largest collection of Roy paintings outside of India.

Hard life for high-profile inmates in jail

Former telecom minister A. Raja spends his day in a 15x10 feet cell in Jail No. 1 of Delhi's Tihar Jail. The cell doesn't have a bed. Charged with facilitating a Rs 1,76,000-crore scam, he sleeps on the floor using two of the six blankets given to him as a mattress. Says Neeraj Kumar, director general prisons (Delhi), "Inside the jail, no one is a VIP. High-profile prisoners have been extended no extra facilities unless permitted by the court." In Raja's case, the court has granted him permission to get home-cooked food twice a week. Two conditions come attached: it should contain no curry and fruits.

Ex. Satyam Boss Ramalinga Raju

Courts have been more generous to some other high-profile prisoners. A court directed the Central Prison in Chanchalguda in Hyderabad to accord "special remand prisoner status" to former Satyam boss M. Ramalinga Raju. Prisoners have the right to apply for this status on the basis of their social standing and economic profile before being incarcerated. There are less than 20 prisoners in the special category among the 13,000 lodged in different jails across Andhra Pradesh.

The special status entitles Raju to better living conditions. Unlike Raja, Raju has a cot, a mattress, two pillows, a mosquito net, a reading table with a chair, and an additional easy chair in his prison cell. The 'special status' also enables him to get fruits, something that is denied to an ordinary remand prisoner like Raja. Raju is also entitled to fresh clothes and reading material. Like ordinary prisoners, he is allowed two visitors a week. Other privileges to those granted special status by a court include a barber on call. Ordinary remand prisoners have to wait for their turn: there are usually only 15 barbers for every 1,000 prisoners.

Haldiram co-owner Prabhu Shankar Agarwal

Life in prison, even with special privileges, is worse than in a hospital bed. Nine months after he was first imprisoned, Raju was moved to an air-conditioned ward in Hyderabad's Nizam Institute of Medical Sciences after he was diagnosed with Hepatitis C and a heart ailment. He stayed there for 10 months before being granted bail by the high court. The Supreme Court cancelled his bail 84 days later and sent him back to prison.

Manu Sharma, sentenced to life in prison for the murder of Jessica Lall, managed to get parole for two months in September 2009 to look after his ailing mother. Keen to make up for the lack of a social life in prison, Sharma hit Delhi's clubbing circuit with a vengeance only to get into a public brawl at a nightclub. His parole was cancelled.

Raja, for the moment, seems content with socialising within Tihar's walls. Prison guards saw him in conversation with R.K. Sharma, a former IPS officer convicted for the murder of journalist Shivani Bhatnagar.

According to Kumar, the prisoners are given ample opportunity to get together. "There are designated hours when prisoners are allowed to visit the common room or the sports field," he says. Sharma is reportedly an enthusiastic sportsperson and captains his jail's Twenty20 cricket team. Tihar Jail also has a television in each barrack.

Jesica Lall murder convict Manu Sharma

Some VIP prisoners help improve the quality of life of their fellow inmates. Prabhu Shankar Agarwal, co-owner of the Rs 500-crore Haldiram Bhujiawala snacks and eateries chain, spent a number of months in Kolkata's Alipore Central Jail, accused of conspiring to kill a tea-stall owner, before he was released on bail last September. He spent his jail term doing what he knew best: supervising the kitchen. "He contributed to improve the quality of food which was being served in our canteen. Many times he would make snacks such as samosas and kachoris to demonstrate to others," says an official at the jail. He trained at least 10 people in the art of cooking.

Social hierarchies don't just dissolve in jail. A Tihar prisoner who was released three months ago says, "The social profile outside the jail prevails inside the jail. Some privileges get accorded in a clandestine manner." He blames the lower level prison staff for this. In 2009, for example, Tihar officials recovered prohibited Internet data cards and pen drives from jail numbers 2, 3 and 4. In 2010, authorities recovered nine cellphones and 11 sim cards. A number of counter-measures like mobile phone jammers and cctv surveillance were installed after these incidents. Says the former prisoner: "Tihar jail is much better than other prisons, but high-profile prisoners can still buy their comfort."

For a high-profile prisoner, Raja seems to have caused minimal problems for the authorities and made few demands. Says Kumar: "He is cooperative and we have no issues with him." Raja follows the jail routine to the tee. He gets up at 5 a.m. and arrives punctually for breakfast at 6 a.m. At 7 p.m., he lines up with the other prisoners for a headcount before all are locked in their respective cells for the night.

"Jail is a great leveller," says Kumar. But a privileged few will always be more equal than others.