Friday, August 5, 2011

Are we on another melt down?

This week the Bears were in full form...they were looking for bad news and they had plenty of them to say let us sell pessimism. Over optimism and empty rhetoric of those in power, usually afraid to make hard decisions results in start of business cycles. This time has been no different.
Having said that I do think US needs a more holistic internal analysis of what its economies strengths are and what are the key drivers. As per me having failed to sell the idea that US is recovering and so invest in us (a clear marketing approach however subtle it has been) is start of a downward cycle for its economy. For sure acting as a policeman of the world does help in certain situations but not anymore as Industrial growth and innovation growth are not having US as its epicenter.
Europe is under a different cycle. A few easy going economies started the spiral and expected to be subsidies by EU. EU had to oblige in the interest of the bloc but unfortunately the number of countries wanting help keeps on increasing. So the hardworking Germans will think twice if it makes sense to subsidize the other countries for longer. But clearly consumption indicators and confidence is going down with a stretched financial situation. If a country is in debt then normal rules don't apply unlike an individual is an argument we hear often. But in a globalized environment it does affect as the currency, new investment flows and long term growth gets out the country of in crises as there are options for investors.
Coming to the BRIC economies-they still show strong medium and long term growth driven by middle class. But in connected world there is no escape from short term hiccups. Inflation reduction by interest rates increase is not working out well for them and people in power seem to have no other options but hope that growth slows down taking the heat out. So implicitly they are happy that the growth slows. China has officially said they want slower growth so that rebalancing can happen and more equitable growth is achieved. India has not said it but the government inaction on several critical matters has made this anyway. Once the financial spiral starts then concern for Non performing assets will start, credit will be squeezed and pessimism will spread. How long can be very subjective but for the new economies it will be surely short and recovery can start as early as end of Q4 this year. So driving with brakes and accelerator on is going to be the skill set that defines leaders in this quick business cycle patterns. If Bears wish a long melt down they are in old world business cycles are going to be shorter and swifter with differentiated recoveries in different geographies. This does not mean world is less connected, it only means different parts have different resilience and needs to be managed differently.

Tuesday, August 2, 2011 there a business context?

MBA's and consultants drive buzz words...Relationship Management is one the most quoted word I have come across. Be it Customer or supplier end there is always something to improve in relationships. Extended enterprise is surely going to be the future as it is not how a company or brand works individually that can define competitiveness but more how collectively we are able to win in the market.
While all this is a fact I have to mention that in new economies be it China, India, Brazil or Mexico companies have to manage the relationships within their organization to drive up the performance. Especially when we have so many opportunities in the market and there is always a constant attrition of people who have adapted to the culture and politics of a company there is a need to keep a watch on how relationships evolve. Politics by the way is not a bad word. Manipulative politics is surely is. Ultimately with every function trying to jockey for power when there is limited resources politics is inevitable. Relationships at middle management is crucial to ensure this politics does not take a destructive conflict mode. Senior leaders should ensure that this does not go out of control. Sometimes we see that HR tries to make simple 360 degrees to find improvement opportunities of individuals. However this does not clearly capture the dynamic situation of relationships which spills either positive energies to people down the line or negative energies making people seriously start to look for other jobs.
I also see people try to resolve conflicts by creating a more clear roles and responsibilities, have workshops to explain it etc. It is true that clarity helps but if relationships are good there is much lesser discussions on roles. A positive conflict is always good but if it becomes a pattern with a shell formed between dependent functions then we see performance going down. My take is pay attention to relationships..there is a business context to it. A strong people person also maintains a strong network of relationships which can be leaned on. Less critical the person is more stronger the network is and more happy people reporting to the person are. They are able to use the halo effect positively and success fetches more success.

Sunday, February 7, 2010

Middle Class-a driver to Global economy

The booming middle class of China, India, Brazil, Mexico, Russia contribute in their own way for driving the future economies. There are some very strong similarities in the middle class across the world in general and more so in developing economies.
There will be differences if we microscopically look at the daily lives as the culture and outlook are different depending on history. For example a youth taking to drinking alcohol or smoking in Russia at an early age can be normal as irrespective of class this is normal. But same will not be the case in India for example.
To look at differences and elaborating it is probably a way to defend why we should think complex but to look at similarities is a way to look at world as one.
Being the middle is always a challenge. Those born with Silver spoons don't bother too much as there is everything even without asking for it. Those born in poverty struggle with getting basic necessities of life as they cannot think beyond next time meals. Those born in the middle class have to prove to their parents that they can achieve and be disciplined to get something they wish to have. This sets a performance/reward culture in them. Since the surplus is not too much they realize the difficulties of the poor much better. This makes them more sensitive to the society they live in. There is an opportunity for the kids to spend time with their grand parents who usually have moved up the society with their hard work and know the value of education. They get to know the basic values of life from them. This is different from the rich parents who neither have time/is not a priority or the poor parents who cannot afford to spend quality time with their kids.
This setting is quite ideal for the children of middle class as they aspire to grow with their hard work and learning. The fact that Obama mentions several times that the skill set of Indians/Chinese students is much higher is that a developing economies are in the middle-not like US a developed economy and accompanying ego state or not like some African countries an under developed country where survival is an achievement.
Therefore to say that Middle Class will sit in a driver seat to shape the future Global economies is an understatement. They will be the brain, energy and fuel (as they will also be consumers to the products/services) and aspiration to the future. There is no doubt that the moderate middle class will also slowly force more aggressive and repressive regimes to change. This makes me feel more comfortable that the future is in safe hands. Let us hope that the middle class in their aspiration to grow don't get the success in their heads and spoil the next generation. To sustain a few more generation of middle class power with middle class mind set is key to a bright future of the world. I also hope there is some more cross collaboration among the middle class of different economies to ensure we move to a quicker learning and adoption across the world including Green Initiatives.

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Gothenburg, Sweden
Still finding introspecting to find who am I? Waiting for a Guru!