I AM

 I am starting to accept the reality with regards to “uncertainty”.  This realization is making me less possessive about events in my life and to decisions I take.  

I am able to priortize easily. I can define goals and attune my efforts towards achieving them. I regret less and rather move on with ease. I do worry but remain thoughful. I am anxious but not stressed. I am concerned but focused on solutions to problems.

I am evolving. I am maturing.

Omni Channel distribution structure

The rhetoric on the GMV (Gross Merchandize Value) seems to be replaced with “Net Sales” as a more relevant metric for the online retailers in India. This is in a perfect sync with constraints on raising fresh equity. Further, Omni-channel distribution structure is also getting a re-consideration both by pure brick-mortar and online marketplace retailers. Put simply, the forward and backward distribution structure in Omni-channel structure will have DCs, Retail stores, End-users with options of:

a. Online ordering/return with direct to home delivery

b. Online ordering/return with Store pick-up/drop

c. Store ordering with home delivery/return

There is a dearth of empirical evidence to validate the efficacy of Omni-channel in terms of its commercial viability. The complexity of managing the logistics and inventory levels at different points of supply chain warrants higher cost and may even erode the ‘cost-effective’ value proposition of online retailing. Tata Cliq is one such retailer (as per my knowledge) to launch an Omni-channel retail structure in India.

In retrospective, I feel, just like in the case of a relevant performance metric, the organized retailers have missed out on the Omni-channel structure from the start. My reasons to believe so are:

  1. Unlike some of the developed countries from where most of the platform-based/marketplace business models have been adopted, the share of unorganized retail in India is far higher i.e. greater than 90%. This means a supply chain structure is already in place. With ownership wide-spread across the stakeholders in the supply chain, the ‘efficiency’ at each stage has addressed several challenges pertaining to distribution structure, inventory levels etc.
  2. The scope for organized retail is well represented with a chart but the interpretation of this chart has been misplaced. It has been used to highlight the scope of retailing in India under the premise that the unorganized market share will fall and be replaced with organized retail market. Pls see below chart. (Source: ibef.org)

The other key reading of this chart is that 92% of USD 400 bn retail market in India has been operating and has existed only because it has been profitable. We have these retail outlets well spread across any city at locations that are accessible for in-store purchases. Instead of attempting to replace this with online marketplace model, the Omni-channel structure will allow leveraging these retail outlets that over the time could serve as decentralized inventory centers facilitating quicker forward and backward distribution easily and most importantly, the ‘localization’ is achieved.

There are tech start-ups that are attempting to better the distribution structure operating in the unorganized retail space. So there is a need for the organized retailers to revisit their business models when evaluating the Omni-channel structure.

Compensation puzzle

employee-compensation.jpg

One of the best questions I got to answer recently was “Who compensates you?” I promptly uttered ‘Work’.

Then I substantiated my reply stating that when I receive my monthly compensation (‘fixed’) it’s for my eligibility for employ-ability in the coming month rather previous month for which I am contractually eligible. Some may critique this as a too short-term approach to employment highlighting distrust towards one’s employer. They will have their opinion refined when they read further.

Compensation is a universal term that not only constitutes the explicit monetary reward but also the intrinsic rewards like belongingness to an institution, recognition, positivity, stability, and security.

Taking the economists assumption of a ‘perfect world’ with all humans ‘rational’, the word ‘compensation’ will be limited to monthly salary one draws for her work. However, we know that’s not true. We would not have four decades of empirical research on annual performance appraisals and impact of incentives of employee outcomes. And then quantum of time spent by on designing innovative reward structures.

I have often seen employers struggle with a right approach to fixing the executive compensation. Whether incentives should be included? Should a variable component added to the annual compensation payable? Is annual performance appraisal system needed?

To further substantiate the above, behavioral research is putting forth the negative impact of explicit compensation like incentives. It is said to be displacing other motivations like altruism, civic duty, and professionalism that humans are known for. This is true when we have forensic audit firms with their crude suggestions ruining the residual and scarce feelings of selflessness and responsibility.

Thinking objectively, I was able to compile below key aspects of compensation that may help employers address the compensation puzzle:

1. ‘Performance appraisal’ should be ‘reasonable’ when defined. We have ‘transparency’ and ‘objectivity’ achieved but ‘reasonableness’ goes missing.

2. If there is a variable component linked to annual compensation then the efficacy for annual appraisals is limited.

3. 70% of the performance of an institution is influenced by external factors or ‘factors’ beyond the control of any single employee.

4. If the average age is less than 30 years, then a good percentage of employed is ‘Next gen’ who will anyways change jobs every 2-3 years. In Asia, the average employee turnover is nearing 10% or higher.

5. As humans, reward visible in near future and measurable is more attractive but may produce undesirable behavior.

6. Limit the annual performance appraisal process for promoting or transferring to other functions.

7. The annual inflation-adjusted increase in compensation is not a necessity anymore.

My pitch to a recruiter!

I wholly understand the desperation and criticality of a start-up to not end-up being reckoned amongst those who hire and then fire. As a potential employee I need to appreciate the ‘risk’ and hence the inherent ‘expectation’ that an entrepreneur builds around his hiring decision. He is well aware of the fact that an individual’s contribution may not be more than 10% in total scheme of things yet he bets on falling into the trap to hire – hire in hope of being party to the ‘luck’ that may come with a potential recruit who has been ‘lucky’ in his past employment. Even if it’s all random, it’s more about cracking the code.

So all start-ups some wisdom on your business (of course only if it’s funded by the PEs):

a. They are to ‘milk’ your idea. Remember not to fall into trap of higher growth just because more money is available on table.

b. “Equity” is precious. Never offer it instantly to any new hire. It reflects that you value your own ‘idea’ (since it’s still not a sustainable business) far lower than the ‘pitch’ used to reach the target audience.

c. Remember the fact that ‘randomness’ is a fact and luck will play a significant role. If that’s what is accepted, choose to grow at a pace that is sustainable. After all firms gain ‘competitive advantage’ as function of time more than anything else.

So when out to hire, some caveats:

1. Try not to be an optimizer

2. Be careful on bias the causality may bring when reviewing the profiles and

3 Remember the inverse rule – no super heroes exist and if they do it’s only random

If you find me interesting, I will ATTEMPT to be rewarding as well ūüôā

Muslim call for prayers

I stay in a locality that has some 4 mosques in less than 2 sqkm. area. Of all the 5 calls for 5 prayers during the day, the most prominently heard is the ¬†one in morning – some 30 minutes before the sun rise. Most of them start the call simultaneously with loud speakers put to max volume – far beyond the capacity of the loud speaker to handle the decibel. The call of “Allah Hoo Akbar….” – Allah is great and let’s come and worship him is in Arabic. If recited in harmony and sound system tuned in at optimal levels it is music to ears.

I experienced the music when I have been in Leh for last two years consecutively. The mosque in the main market has the volume of speakers tuned to just the right pitch and with the Maulvi Sahab’s voice in harmony it’s as if tune of pied piper- difficult to resist and not pay attention to.

My experience here in Delhi is quite contrary to that in Leh. Maulvi Sahab starts the call as if an abrupt outburst, “Allaaaah hoooo Akbar”, as if it’s Allah who is to be woken from sleep. I hope they get trained to be more musical in their call for prayers. Also if all 4 ¬†mosques could decide to have a single call for the 4 mosques. The 5 calls instead of 20 will be more music to ears and finding the one best maulana will be easier than having 4.

The same holds true for Hindu temples as well. While they do not have calls daily but when they have religious singing days, the sound (music is hardly existent) is equally and even worse than Muslim call for prayers. The singers have no formal training and for them uttering the bhajan is a way to worship and offer their prayers to almighty. For the listeners, they believe that it not important to have the best of musical compositions, the lyrics should itself take care of the listening factor as well.

The other key religion in India that uses sound most prominently is sikhs. The singers are formally trained, the sound system is best and attuned to a more manageable decibels and played only twice a day.

I have no intention to be biased against any religion and favor the one I belong to. In fact I love this aspect of diversity here in India. I¬†learned that Ajaan – the Muslim call for payer- in morning and evening is a time when you do not need to guess sunrise and sunset times. It’s the most auspicious time to remember the almighty.¬† I was hesitant to write on this topic fearing negative feedback from my friends but then I have¬†put forth what I feel.

I ¬†miss the Ajaan in Leh……

Demonetization- a wrong approach

After all the excitement on demonetization exercise and being quite vocal about it, I am now veering towards supporting the opposite view- the stupidity of the decision.

Why?
A. Who created black money? Some of them are in Income tax department and are Govt employees. They will contnue to cheat in future as well.
B.Where is the Black money? Likely to be invested in real estate. So they loose over time (not immediately) when they intend to exit and cannot get the price they expected. If they do end up getting anything greater than their purchase cost the tax paid on gain will be insignificant compared to penalty on unaccounted money.
C. The unorganised sector in most of the sectors does cheat on taxes but then they also employed manpower. If they cheat who made it possible? Isn’t it the Government? For some of them it’s the only competitive advantage to be in business. For instance we have heard people building properties running a single kiraana shop in neighborhood but how many get to achieve the same today or for that matter in last decade.
D. It’s fooling the common man by first bringing scheme like IDS when most of the black was made white. Now the common man falls for the rhetoric of a great decision. The ones being troubled now are the tail of the Black money holders. It should have been a pecking order with biggest offenders penalised.
For the above reasons I prefer to name the #demonetization as a measure to kill the #unorganised sector. And to create a rhetoric to benefit political goals.

Abstract- life for that matter

Libra (Sep 24-Oct 23)

It’s time for a tough choice at home, yet too unstable are the general planetary alignments that it’s impossible to anticipate the consequences. You may therefore have no choice but to take a leap in the dark. It’s all a ¬†matter of confidence and of realizing that is something goes wrong, you can put it right.

I was straining my mind with an important decision I had to take the next morning. The complexity of the decision was being outlined by me quite objectively. I was able to visualize the impact of the decision either ways РYes or No -, except the confidence to decide. I tried to take refuge in my naive understanding of probability but it confused me even further. I seemed to be lost in the conditional probability of choices before me (i.e inter-linkages and possibility of highly skewed outcomes). I had nothing to spare from my learning of statistics. My mind was now building a causality to past decisions and likely future outcomes. All of this made me completely indecisive.

When I woke up in the morning, I picked the up daily newspaper. I usually do not read the horoscope for the day but since it was just adjacent to the Sudoku that I attempt solving, my eyes wandered over the text as shared above in color blue.

So my mind had taken a wild swing from the rationality to something as irrational as the daily horoscope. I knew the failings of my mind that it’s not acting in the optimal manner.

The statement while written under the ‘Daily Horoscope’ section is very insightful. It talks about uncertainty and then directs to focus on self confidence to deal with it. This was a simple straight message that was expressed beautifully.

But a couple of more events, a little during the day further re-affirmed the situation I was into:

I was able to click a picture below:

14723015_1457830910913307_3444109733219270656_n

I wrote following while sharing this pic on Instagram : #meditation with #reflection of the #window on the floor as if there is a way everywhere provided we are #ready to#see

Then I came upon the below picture as first update on my Linkedin web page.

photo

I am known to be impulsive and with my readings I am¬†getting to learn the role of randomness and how the behavior is only what I control. Taleb rightly says, “We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract.”

I am going to start loving the abstract and not be self-critical about being impulsive. When we say, “Best of Luck” as a wish to others it’s purely to recognize that ‘luck’ does have a more than significant role to deal with what is abstract- life¬†for that matter.