Being tech-savvy is I don’t think a USP, but not knowing what technology can do is a big disadvantage. This realization has been painfully growing within me. I need to buck up. The problem is not about my not being able to write a software or do an excel macro. If badly required, I can always have someone do it for me. The larger problem is if I do not have an appreciation of technology, how can I ever think of its benefits in improving business and thus my own success?

I last worked with HDFC Bank. The bank started operations in 1995. In less than 10 years it had many credits to its account – USD 12 Billion balance sheet; USD 750 Million revenues; best PE for any bank in Asia; always trades at a premium on NYSE; awarded by Morgan Stanley for the best policies on risk management. The list can go on. One reason why the bank stands different from others is that the MD of the Bank, Aditya Puri, saw that technology will be amongst the largest differentiators for the bank. He invested in centralized database, when no one ever thought about it, which resulted in many advantages for the Bank. Till date no other bank has been able to catch up. The problem is – redoing things always costs and has its own perils. He is named the best CEO by many a foreign financial magazines. He is not a techie himself, but he had a vision to think that technology will make difference.

It is technology which has made Wal-Mart what it is today. Automobile companies, it is said, will have 25 % of software content in its manufacture. Technology has changed / is going to further change the way product and services can be delivered. Ebay, Amazon are immediate examples. So, if I want to become someone in this corporate world or even think about that, I cannot afford to ignore the technology perspective of management. We have a course on strategic analysis of IT in our fourth term. But long before that I want to get a good hang of technology, because the best way to appreciate IT is by doing it myself. ISB has a whole lot of students from IT background. Perhaps, to begin with, I will request one to mentor me.

The strategy Prof tells that the article by name “the Core Competence of the Corporation” is the highest sold article ever published by HBR. The term “ Core Competence” was coined by Hamel-Prahalad duo in 1990 leading to the publishing of this article. The article heavily criticizes the American model of management (I am being very careless in using this phrase, but for the sake of understanding I choose to retain this phrase) in general and SBU modeled organization structure in particular. What they claim is that in a SBU modeled organization people do not rally around the organization’s core competence, if ever it is detected or built, but around the SBU focused and inward looking strategies which will hurt the organizations in the long run. Lack of focus on core competence, either in identifying or nurturing it, is a major flaw of the prevalent models of management. Japanese companies, in contrast, have built themselves around their core competencies. Core competence is something which is translatable into many products, scalable and is carry-forwardable into future. All of a company’s products emanate from core competence. Last but not least, the people who are bearers of this knowledge are the key differentiators and organizations have failed in managing and leveraging people.

Organizations can have core competence. Organizations are extensions of human beings. Can human beings have core competence too? Yes. I have my own core competence. But do I know what it is? If I know what it is, have I built my life, career, and my leisure time activities around my core competence? These are the questions that come to my mind. If my core competence was ability to relate to people there is no point being in an industry or job where I never interact with people. If analytical skills are my core competence then, try however much I want, I will not succeed in a people oriented job. Same rules apply for personal life too. So it is quintessential that I discover my core competence and rally around it to building and bettering my life. How do I know what my core competence is? Descartes, the famous Mathematician-Philosopher, says that he sat meditating one day thinking about each day of his entire life and when he woke up (after many hours), he had become enlightened. It is a good, but not the easiest, way to discover what one is. Other tools are MBTI tests or some personality profiling tests. But these alone, without some amount of reflection, will not help. Here I go, back to my desk to define my core competence.

Global Economics (GE) is my favorite subject for the Term II. Perhaps I should have become an economist. The reasons for my liking are a, the subject gives a macro framework within which all firms – hence managers – operate; b, I have much better chance of handling this subject than the others.

An aside: People working in dealing rooms would know, the US comes out with scores of economic data. There is one data release almost every day. And every FOMC (meeting of Federal Bank members) meeting is highly awaited because it decides the FED rate (akin to our Bank rate announced by RBI). Why do the US data affect Indian players? We operate in global economy. Foreign Exchange market is the largest market in the world and huge amounts of profits, or losses, are made on foreign exchange trading. US$ – Indian Rupee (INR) movements are highly affected by the US data. So is the stock market. The FII (foreign institutional investor) inflow into stock markets will depend on the interest rate differential between the US and India (even after adjusting for inflation). In perfect markets, there is no arbitrage; but there are no perfect markets. The FII inflow will decide how much of INR is available in the market, which in turn will decide bond rates and call rates.

In nutshell, the entire economic-financial system is an intricate web, the understanding of which is ‘far from easy’ and a ‘highly desirable thing’. These are the kinds of things which I will learn in GE. What I have known is, what can be called, the tip of an iceberg. I look forward to knowing more of GE. I will give more updates on GE as the term progresses.

Not to say that Competitive Strategy (CS) is any less important and interesting. I spent a whole lot of time browsing the past issues of Harvard Business Review (HBR). There is a huge wealth of information and rich stock of ideas on strategy. But Strategy is not science. It is an art, or shall I call it intuitive. If Porter says one thing; Hamel & Prahalad say something else. Late Sumantra Ghosal has his own views. It is quite easy to get lost in the deluge of these ideas, each great by its own measure, and end up getting confused on what strategy is or what strategy is not.

As far as this term and the coming terms are concerned, I have ‘decided’ that I am going to change my approach to studying. I am not going to stick to the prescribed syllabus and readings. I am going to go beyond these and dig deeper into the related, well-known books and articles. The important objective is to get a thorough hang of the subjects through which I will develop “my own independent ideas” on each of the topics/subjects. Because when I go back to the industry and make decisions, I cannot keep resorting to a Porter/ Kotler /Galbraith model to help me make and explain my decisions, of which I will be the owner and the consequences for which I will be responsible.

Having made this decision and discovered the true purpose of my ISB-life, I feel extremely happy and satisfied.

I have never been particularly offended by low marks. I don’t remember of having come in top 10 ever in my entire schooling. I was worried only once when my mother, frustrated not knowing what to do with me, tore my progress-card. I never used to study. Din’t know if the results were because of lack of grey matter or hard work. Enter +2, it became worse. Life used to be movies and more movies. Just managed to pass. The same is the case with under-graduate studies. Low marks were a habit with me.

When I joined my first job, I realized that I was doing better than my peers. I used to reflect on my marks and wonder if the marks ever represented what I am. But when I consistently performed well over my nine years of experience, competing with reasonably competent people, I was convinced that marks had nothing to do with my capabilities.

Today again when the economics marks were given out, I felt no pinch. I din’t even bother to check my answers with the correct answers. Term I is a fait accompli as far as marks were concerned. It hardly mattered to me. I think I have understood Economics to some extent. I know when I go back to the industry and make decisions, I will surely use what I learnt here and feel better than those marks would ever make me feel.

Perhaps, just perhaps, the system of exams and the classroom pedagogy are designed to test a few aspects of intelligence; never the person himself. Some people master to beat the system all the time. (I did it for once when I got good percentile in GMAT.) If I ask them to talk about some topic or write about it impromptu, they would fumble. But they can get good marks in the exam. Same is the case with class participation. Some people are hyper-active here. But take them aside and seek clarifications, you may not get much out of them. Some others are actually good; but don’t stand a chance in class participation. Today it happened with one guy in our class. A good presenter, good writer, has a clearer mind; but could not bring himself to talk about a topic in the class. Had to be motivated. Don’t think it is not without reason that the H/S/W have a grade non-disclosure policy.

Am I finding excuses for bad grades? No. To prove it to myself that I am not cooking up excuses and just for the sake of it, I want one A+ from a subject (accounting / finance, perhaps) before I leave ISB. I will write about my feelings, if ever the marks enthuse me, when I get A+.

Alvin Toffler had a theory on why time runs faster as life moves on. When I was ten year old, one year was a tenth of my life; when I became thirty, one year was a thirtieth of my life. Obviously, the thirtieth of life is much shorter than the tenth of life. So, I felt that one year went by faster when I was thirty than it was when I was ten. Time indeed is running faster. The five day break appeared too short and just whizzed past. However, I almost completed all tasks I had set to when the term break happened.

We are back to grinding – phase II. Don’t know whether the break was needed at all. A lot of us will curse when we go back to the class tomorrow as we will have to do the adjustment game all over again. We had scarcely got used to sitting in a class when the break came. This time, the fun is that the guys who attended evening sessions will attend morning sessions and we guys who attended morning session will attend evening session. Our PGP office would perhaps claim that this is just being fair. But it is also a part of the game where we are required to get used to all types of situations. Most of the guys attending morning sessions had gotten used to siesta. Now that can’t happen. Perhaps, will continue to see some people sleeping in class. Others will be thrilled. They don’t have to get up early, won’t miss their breakfasts.

To me, the subjects covered in Term II are more interesting. Strategy; Macroeconomics; Decision making & Optimization (DMO); and Marketing Decision Making (MDM). I love the former two subjects. Macroeconomics is not an alien subject to me. DMO is something I desperately want to learn. Marketing – I just need to clear this to get my degree.

The learnings from Term II will be greater than those from Term I. The learnings will follow compounding rule. Learnings from Term III will be much greater than those from Term II. As we reach our last term, it will have an exponential effect and each day will add greater value than the previous day. Yet again, we have a line of fantabulous teachers who will shower gyan on us. I am ready for tomorrow’s class having done my pre-reading.

Come what may, what I will not want to miss during the next terms at ISB are reading HBR and the Economist; researching banking, micro-credit and consulting industries; and having my Saturday and Sunday evenings free for my wife.

I had written in one of the blogs that, of the four subjects of Term I, econ was most interesting subject for me. What is econ about?

Microeconomics deals with the issues that concern the manager of a firm. For instance, demand for his product; how much to be supplied at what price; at what point should he shut down the plant, etc. As against macroeconomics which deals with issues mainly concerning a finance minister. For example, inflation, GDP growth rates; exchange rates, etc. Certainly, macro issues also affect managers of firms. But there is not much a manager can do about macro issues – they are beyond his control. Whereas many, not all, of the issues dealt with in microeconomics are under his control. He can control his costs, not his competitors’ price; he can control how much to produce; not how much will be consumed.

Microeconomics equips a manager with some tools to be able to handle various situations and provide him framework within which he can make other finance, marketing, etc decisions.

“Opportunity Cost” – this is fundamental. For example, the cost of MBA education at ISB is not the same for all the students. Why is it when the fee is same for all? This is because each one had a different salary and he had to give up this salary to pursue the course. The cost associated with loss of salary (for one year) is called opportunity cost. So, each one should evaluate MBA decision in the light of his opportunity.

But what should I do about it if I felt that ISB education did not offer any value proposition. Should I continue with the education because I have paid the fee or should I look at alternatives? Since the fee is already paid and there is nothing that I can do about this, I should not consider the cost of fee. The fee is “sunk cost”. It is a cost which I should not take into consideration to make my future decisions.

Is then the investment waste and unrecoverable. No. The cost is sunk to the extent that it will not impact my decisions; but when I decide to not continue education and take a job immediately, I should always include this cost in calculating my long term return on investment and profits. I should recover this cost.

Since I am continuing with the education, I will end up getting an interview offer. How should I bargain my salary with prospective employer? Should I quote my fixed investment/cost of the fee I paid to ISB and ask the employer to consider it in making a salary offer. Nope. It will surely be not acceptable. I should not be looking at recovering my entire fixed costs in short term. I should be okay if I am able to recover my variable costs and quote my price to equate my “marginal costs”/ the employer’s “marginal benefit” (perceived benefit by recruiting me). In the long run, if the job does not give me returns on my fixed costs, then I am going wrong.

But can I really get the price equating my marginal costs or what I want. Not necessarily. If there is too much “competition” for the job I have applied to, then no. If there is no competition, then yes. If there is too much competition, the employer (the buyer in this case), will choose the student who has the least marginal cost but offers highest marginal benefit to him. If there is no competition, then the student can set his price above his marginal cost and get paid much higher (“monopolistic or oligopolistic” behavior).

But what will decide which employer will short list me. It depends on my past experience and grades. “Externality” comes in here. Every student who studies better than I and secure higher grades than I, creates a “negative externality” to me. It causes loss to me. There is not much that as an individual I can do about it. If there was job reservation to someone who has secured lower grades then this negative externality can be offset. Students who secure lower grades create “positive externality” to those who secure higher grades.

How will I choose the employer, assuming I get more than one offer? It depends on when I get these offers. If the offers come simultaneously, then my equation is different (Stackelberg). But if the offers come one after the other, then I will need to make a decision whether to accept first job or not, based on my assumption of whether I have a reasonable chance of getting other jobs. In such a situation, the equations are different (Cournot).

But all through the year, all the students play games against each other. My preparation is not necessarily absolute. This is because grading is relative. What grade I receive depends on how others fare. So clearly there is a trade-off possible here. I will allocate only that much time that is required to get best grades. There is no point putting more effort than getting A+ grade. But much before this I set some expectations on how someone in my immediate circle of reference is going to fare and adjust my performance accordingly. This behavior is discussed in “Game Theory”. The game of competition will continue based on how others have fared at the end of each term. I will always try to have a dominant strategy to ensure that irrespective of how others study, I will allocate maximum time for studies and target A+ grades and get them. Under calculated circumstances, I will assume how others will perform and allocate my time optimally to ensure I get at least good grades (“Nash equilibrium”). In worst case scenario, I will have a “maximin strategy” and allocate minimal time to studies and ensure that at least I get a pass grade.

As it can be seen, the application of economics can be almost everywhere. Hence, my liking to this subject.

PS: As time passes, I hope to able to improve my understanding. Apologies if you find the text too sketchy. Or was it too long to be called short?

First on the exams –While I did statistics paper reasonably well, I royally goofed up marketing paper. I think many of the guys did well. It was more of math than marketing. I goofed up, nonetheless.

While the world at ISB is chilling out, I have been sitting for long at my working table doing self-analysis and making ground work for the next term and the remaining of the course. To begin with I want to revisit my objectives of coming for an MBA education. I looked at what I did right and what I did wrong. Bad thing, there are more wrongs than rights. Good thing, there are another seven terms to go.

• I am weak at quant, but no one cares when they ask my grades or come here to recruit. I better come up the curve.
• I should appreciate that if the course is tough to me then it tough to at least many of them. No point feeling alone. I will have company and I cannot let myself not believe normal distribution.
• The subjects in Term II are more difficult. There is going to be good amount of cold calling in the Term II classes. I am not willing to let myself embarrassed if and when the Prof calls on me to talk about a case. What are required – good preparation, physical participation in the class, followed by mental participation which will allow verbal participation. Class participation, that is.
• I missed one out of a total of 40 classes in Term I. It was by choice; but I realize it was a gross mistake. Imagine missing one session when entire Strategy course is being taught in eight sessions and 16 hours. I will never want to miss out a class.
• Thanks to a completely new set up where the skills being tested are way off from what were being tested in a work environment and consequent difficulty, many of us, at least I, have developed a negative vocab in our/my everyday language. I will be rid of this.
• I have not optimally utilized the resources available at ISB. Want to improve on this.
• Hard I tried to be very organized. But the work and complexity of the subjects overwhelmed me. This time I want to be in charge and not let the time and work control me. Break is a good time to do this.
• Come what may, will allocate ten minutes of every day for self-audit and meditation.
• While I may want to be presumptuous in not caring about grades, at some level grades represent understanding of subject.

Why do I not want to relax and chill out? Law of inertia. Having been studying for a few weeks and studying hard for the last few days, I have gathered some momentum and I dint want to put a brake on the momentum. If I take a break I will lose the momentum and coming back to this mind-set will take time. I will chill out, surely. But tomorrow and day after. Right now – time for self-audit.

Come tomorrow and I am one-eighth MBA. Our first of eight terms ends. My first two exams went well. Relatively, that is. Accounting was good. My corporate banking background which involved decent amount of dealing with financial statements did help. Economics was maddening. I think the Prof has a unusual way of looking at things. But, understand he is liberal when giving marks. There is partial grading, meaning that even if the answers to the problems are wrong, if one has worked with equations properly, one get some marks. What do equations and problems have to do with Economics? We were covering Microeconomics and globally, many good schools try to teach microeconomics through problem solving. Don’t know if this is the best way. Out Stats Profs have a better way of testing students. They give minimal number of questions and all are multiple choice. All that they test are conceptual understanding and clarity. One sure response I have been getting from all when I ask how is the prep for marketing exam, “what do you study/what to study for marketing”. No one seems to have clue on what is going to be asked in marketing exam. It was vaguely mentioned by Marketing Prof that he would give quant oriented questions.

As one can see, the entire first term was heavily quant oriented. I presume the remaining of the terms, at least core courses, will be so. Thought initially I felt quite repulsive to the idea of trying to measure everything, I think the only way to go about making sense when dealing with complexity, huge amount of information, divergent opinions, etc, is to have some common metric – numbers, which is best possible way of holding sway many complex variables. I hope by the time the course ends, I improve my quant abilities, not just a liking towards numbers.

PS: The common opinion is that many of the IITians are going to be amongst the toppers. These guys would really have been so much with equations and numbers that what we think through some language, they think through equations.

It is great to be amongst brilliant people. At first meeting, some people tend to give out an impression – “don’t know how he got in here”. But as one interacts or just observes him, one can appreciate “why he is at ISB” and “what makes him good”. Not to say that people who could not get through the admission process were not good. I will put a regression equation to explain why some people, who are equally good could not get through and what needs to be done to better chances of getting in.

Y (admission) = β0 + β1X1 + β2X2 + β3X3+ β4X4 + β5X5+ε

• The first term β0 is about basic qualifications
• The second term β1 is about academics (GMAT & Transcript)
• The third term β2 is about diversity (background)
• The fourth term β3 is about leadership attributes (within/without career)
• The fifth term β4 is about career goals focus and commitment to do an MBA
• The sixth term ε is an error term.

The first term needs no explanation. Each school has its own basic requirements.

Since most of the people who are targeting a b-school admit are already graduates, there is not much one can do about Transcripts. GMAT, if still not attempted, is a good source of improving one’s chances. B-schools are finicky about this as a higher GMAT average increases their ranking. I have already commented about association between performance and GMAT scores.*

Not much can be done about diversity issue in short run. If one is from an industry from which most of the b-school applicants come, one has a problem if there is no additional diversity factor such as an odd serious hobby, or sport or some special skill. Alternately, if one is very strong in acads, this diversity factor can be taken care of. In the long run $, one can change jobs, or get into some voluntary activity, etc to add diversity to.

Again, not many people will have many leadership experiences by the time they want to come to b-school. Since the b-school can know about this only by looking at recommendations, essays or additional certificates/claims of such attribute, one can retrospect and find some instances or situations where one had taken leadership role, discuss this with recommender to write in recos, and make sure these experiences are articulated in essays

The fifth term is critical. One needs to be clear about why one needs an MBA education and/or degree. Each person has his own reasons / ‘has to have his own reasons’. There is a need to introspect and come with reasons which explain past and can give clues to the Adcom about the fact that one has thought and clear about career. No b-school wants its alum to be unsuccessful; at least not because the alum was not clear about what he wanted to do.

The last term is an error term, which is completely beyond one’s control. People call it luck. The error term can include competition from stronger profiles from the same background or someone from diverse background, having a strong GMAT or acads, or a very good reco. An interview again is not fully controllable. One may want to put interview in this category too. Of course, with good preparation, the implications of the error term can be minimized.

One can add more Betas to the equation to factor in other conceivably important variables and work around them to improve the chance of an admit letter.

Post Scriptum:
*There is statistical evidence, as GMAC claim, about strong linkages between GMAT score and performance in first year of MBA. But by now I know of enough statistics to want to see more of their data to see if they have used any tricks in their regression equation to trick all b-schools into asking a GMAT score for admit decisions. GMAC, as one knows, make money (not necessarily profits as GMAC is not-for-profit) and name when we take GMAT exam.

$ In the long run all are dead – Keynes

Our Stats teacher, Prof Waterman of Wharton was wrapping up the course with a five minute review of the ‘10 hours’ of classes he had taught. It could not have been done better. He covered all that was to be covered and did not go beyond five minutes. What made such a thing possible?

Clarity of thought was the hallmark of these Profs from the big schools. Apart from bringing their learning from cutting edge research and industry-interface experience, they brought tremendous clarity with their thinking.

When one is clear about what one knows or what one does not, things become easy. Consequently, Clarity should be the goal of any learning. As I reflect, I realize that my biggest failures have been caused by lack of clarity in thought (including being unclear about how to execute).

But clarity is not easy to achieve. There are always potential confusers. How to handle confusers? When in doubt, plug in numbers; one good way is to quantify. Using a white paper to jolt out what is understood can give an opportunity to read out one’s own thoughts and scan any potential inconsistencies in conceptual understanding, is another. Applying what one has learnt to practical situations can be good too. Conversation enriches understanding – it always pays to speak out what one claims one knows. Explaining / Teaching a subject one has learnt to someone who is a layman. That is, trying to put what one knows in ‘simple’ English can be very effective in clearing confusers and clarifying thoughts.

Easier said than done. Sure. But what was ever achieved without trying. Seeking clarity, in whatever I presume I know or wanting to know, will be the goal of my education.