Random Snippets-IV

• Lots happening on campus.... the results for exchange were announced yesterday. This year ISB has done away with interviews for selecting candidates for exchange programme, instead the bidding system has been extended to exchange selection as well. For the uninitiated the bidding system is commonly used across b-schools to allocate elective courses. Each student is alloted a fixed quota of bidding points that can be used to bid for courses and now also the exchange programme. The ones bidding the highest are selected for the course. As was expected the bids for the exchange programme reached some very high levels with people bidding almost all the available points to the exchange programme.

• The only shortcoming with exchange in a one year course is that the exchange period typically includes the placement period, which would mean that you might not be able to participate in the campus placement process. Although, last year some of the students did travel back to India during the placement period , but it still is viewed as a risk by most since whether you can come back or not also depends on the schedule of exams etc at the school. Having said that being on a foreign campus is also a once in a lifetime experiance.... life's full of choices, heard about tradeoffs....

• I talked about the Class Economist contest in one of the previous posts, its an online debate around contemporary economic issues. The results were announced last week. And as you might have guessed it by now that yours truely was the winner. So I am entitled to use the title of Class Economist now. ;)

• Consulting club hosted the first event yesterday. The panel discussion was moderated by AjitRangnekar and also included three of the alums from BCG, McKinsey and Accenture discussing various whats and hows of consulting. Read more about this on the consulting club blog.

• Finally this was one of those rare weekends with just one assignment to complete. Friday night saw the Bhangra Fever come alive at the "Bend it with Bhangra" party.... I leave you with some snaps from the party...

Will the Yuan Appreciate ?

The US has long been frustrated by Chinas currency being artificially maintained at below the actual market value, and has been pressurising Beijing to revalue its currency , efforts that have borne little so far given the Yuan has appreciated by a mare 1.4% in the last one year.

Although the Chinese currency is traded over the counter but the Chinese govt, through its market interventions, makes sure the Yuan trades at the desired value. An undervalued Yuan makes Chinese exports cheaper thus helping the export driven Chinese economy.

As per recent reports the Chinese economy is currently growing at 10-11% per annum, on the back of a huge trade surplus. The flooding cash ends up being used for landings by the banks. Left unchecked this could lead to excess capacity and bankruptcies that could snowball into a financial crisis.

The Chinese govt has finally taken steps to prevent overheating of the economy by controlling the money supply in the economy by increasing reserve requirements for banks, and allowing its banks to invest overseas. The lending rates have also been revised upwards recently , all signaling an effort to slowdown the economy. An appreciating Yuan could be next….

Who Says Elephants Cant Dance ?

Just finished reading Who Says Elephants Cant Dance by Louis Gartner who led IBM for over a decade during which period the company witnessed a historic turnaround , rediscovered itself and regained industry leadership.

The book is a classic when it comes to corporate strategy, IBM once the industry leader ceded its advantage in the personal computer space to Intel and Microsoft by promoting an open standard, unknowingly they created competition for their flagship mainframe business. It was widely believed at one time that the PC revolution would wipe out the mainframe technology and with it IBM.

Gerstener who was a complete stranger to the world of high technology, changed the situation simply by taking an objective look at what was wrong with IBM as a company.

Three important messages from the book :

1.The power within :

Almost the entire management team the managed the turnaround were long time IBMers, the new CEO only made them realize their potential and the same team that had been written off actually staged a turnaround for the company. That’s the power of effective leadership..

2.The power of integration :

Although IBM was a giant with global presence, there was almost no coordination between the divisions and geographies. At times the same customers had to deal with different IBMs when it came to different regions or services. Gerstener created the idea of One IBM without hierarchies and the giant size soon turned to its advantage.

3.Coopetition

With the focus now shifting to services IBM had to work more closely with competitors like Oracle, SAP or Microsoft so as to offer better value to the customer. So although they were now competing at one level , at another IBM consultants were helping their client implement Oracle or Microsoft suites… to succeed organizations have to evolve with times and change with changing customer tastes.

A must read for all management professionals …hats off to Mr.Garstener….

Markstrat....

In my last post I talked about the marketing strategy simulation Markstrat... all the eight rounds are now over and in terms of our performance what began as a noghtmare has finally ended on a much sweeter note. We began the first round on a disasterous note finding ourselves at the bottom of the league. What followed were rounds of debate, arguements and at times self doubt.Not all was lost but we had to play it big to regain lost ground and stay competitive. But unfortunately given the disastor in round-1 there was not enough money to sustain our R&D for new products and market the existing brands effectively. Our calculations suggested that a loan was a feasible option and although we were strongly adviced against taking the risk (since few companied in the past had managed to recover after taking a loan) we decided to go with our own conviction. Well and it worked ... The loan money helped us develop blockbuster products quickly and we could utilise the market oppertunities to our advantage.The next seven rounds saw us grow exponentially and rise up from the 18th position to the top 3 teams.

Competition and failures bring out the real you and all of us saw it during the rounds of markstrat, when groups did badly but recovered, some did well consistanly while some others did extremenly well to begin with but faded soon after and a few started badly and could never recover. Some groups full of individual brilliance didnt do well while some groups of very ordinery people worked well as a team and the results showed . Lots of lessons for life .....

PS: Just finished reading "Who Says Elephants Cant Dance" by Louis Gerstener. Its a fabulous story about IBM's famous turnaround and how the company rediscovered its strenghts and itself... expect more on the book soon.