THE ASCENT OF MONEY
Niall Ferguson
AT TIMES, the ascent of money has seemed inexorable . In 2006 the measured economic output of the entire world was around $47 trillion. The total market capitalisation of the worlds stock markets was $51 trillion, 10% larger. The total value of domestic and international bonds was $68 trillion, 50% larger. The amount of derivatives outstanding was $473 trillion, more than ten times larger. Planet Finance is beginning to dwarf Planet Earth. And Planet Finance seems to spin faster too. Every day two trillion dollars change hands on foreign exchange markets. Every month seven trillion dollars change hands on global stock markets. Every minute of every hour of every day of every week, someone, somewhere , is trading. And all the time new financial life forms are evolving. In 2006, for example , the volume of leveraged buyouts (takeovers of firms financed by borrowing) surged to $753 billion.
An explosion of securitisation , whereby individual debts like mortgages are tranched then bundled together and repackaged for sale, pushed the total annual issuance of mortgage backed securities, asset-backed securities and collateralised debt obligations above $3 trillion. The volume of derivatives contracts derived from securities, such as interest rate swaps or credit default swaps has grown even faster, so that by the end of 2007 the notional value of all over-the-counter derivatives (excluding those traded on public exchanges) was just under $600 trillion. Before the 1980s, such things were virtually unknown.
Tuesday, June 30, 2009
Wednesday, June 24, 2009
MANIAS, PANICS, AND CRASHES
MANIAS, PANICS, AND CRASHES
Charles Kindleberger
EVERYmonth , we find out how to draw yet more business lessons from history. As the stock market continues its ride in great gulping drops and soaring heights, take heart from this fact: Its all happened before... Now overtrading is by no means a clear concept . It may involve pure speculation for a price rise, an overestimate of prospective returns, or excessive gearing . As firms or households see others making profits from speculative purchases and resales , they tend to follow: Monkey see, monkey do.
In my talks about financial crisis over the last decade, I have polished one line that always gets a nervous laugh: There is nothing so disturbing to ones well-being and judgement as to see a friend get rich. When the number of firms and households indulging in these practices grows large, bringing in segments of the population that are normally aloof from such ventures, speculation for profit leads away from normal, rational behaviour to manias or bubbles. The word mania emphasises the irrationality; bubble foreshadows the bursting. In the language of some economists, a bubble is any deviation from fundamentals , whether up or down , leading to the possibility and even the reality of negative bubbles, which rather gets away from the thrust of the metaphor. More often small price variations about fundamental values are called noise. In this book, a bubble is an upward price movement over an extended range that then implodes. An extended negative bubble is a crash.
Charles Kindleberger
EVERYmonth , we find out how to draw yet more business lessons from history. As the stock market continues its ride in great gulping drops and soaring heights, take heart from this fact: Its all happened before... Now overtrading is by no means a clear concept . It may involve pure speculation for a price rise, an overestimate of prospective returns, or excessive gearing . As firms or households see others making profits from speculative purchases and resales , they tend to follow: Monkey see, monkey do.
In my talks about financial crisis over the last decade, I have polished one line that always gets a nervous laugh: There is nothing so disturbing to ones well-being and judgement as to see a friend get rich. When the number of firms and households indulging in these practices grows large, bringing in segments of the population that are normally aloof from such ventures, speculation for profit leads away from normal, rational behaviour to manias or bubbles. The word mania emphasises the irrationality; bubble foreshadows the bursting. In the language of some economists, a bubble is any deviation from fundamentals , whether up or down , leading to the possibility and even the reality of negative bubbles, which rather gets away from the thrust of the metaphor. More often small price variations about fundamental values are called noise. In this book, a bubble is an upward price movement over an extended range that then implodes. An extended negative bubble is a crash.
Precursor to an enduring boom
Precursor to an enduring boom
GLOBAL liquidity improves, international investors appetite for risk increases, and to crown it all our country welcomes a stable and active government. The markets have risen to salute these changes. Yet, despite the recent exuberance , investors remain sceptical about whether this milieu of feel-good factors has changed the markets core fundamentals and, indeed, the course of muted corporate earnings. Most have chosen to wait, thinking the current situation will regress and is not the product of a sustainable economic change.
Will the markets remain subdued long after this impulsive exuberance We dont believe so. Our belief is grounded on a broader perspective. We believe that the present renewed bull wave resulted not simply from a change in government (sans the Left) but, rather, it is a continuation of the run that began in 2002, triggered primarily by the US-initiated decline in global interest rates and the new globalisation paradigm. These triggers have initiated our Indian growth story and ignited a potent demographic engine that activated consumption due to our peoples low financial leveraging. These are the fundamental growth drivers that remain robust.
Of the three essential engines that drive conventional economic growth population growth, financial leverage and innovation the availability of affordable finance became scarce after the Lehman Brothers crisis in the US. The ensuing sub-prime debacle in the US, followed by the global liquidity crisis, slammed the brakes on Indias accelerating economic growth. The global financial crunch became a monumental hurdle to our secular growth story. In response, the US government pressed for colossal bailouts, resulting in a huge dose of liquidity. The massive printing of money was deemed the preferential route to attracting more liquidity for global central banks. It seems the monetisation of fiscal deficits garnered an implicit acceptance among both global regulators and governments. Incidentally, due to its formerly high financial leveraging, the US is likely to require less capital in the upcoming years. Meanwhile, the RBI has also announced it will monetise Rs 80,000 crore during the first half of FY10.
A flurry of QIPs and the strength of FII inflows are just the beginning and it is likely that a large amount of cheap foreign capital potentially, as much as $50 billion will flow to India in the coming quarters. With foreign players investing again, foreign capital flows have turned positive in India, alongside our inherently strong domestic savings. However, while our deposit growth rate has been as high as 22%, credit growth continues to languish at 16-17 %, clearly pointing towards a further correction in interest rates. These progressions will ensure a benign interest rate regime for our country over the coming months.
Since 2002, low interest rates have been the key driver of global economic prosperity and revitalised GDP growth, even in mature economies. In the wake of the US dotcom debacle, the widespread availability of inexpensive funds that followed unleashed latent demand in emerging markets, particularly in India; the bottoming out of interest rates in 2004 served as a turning point for our GDP growth. Indeed, Indian GDP changed tracks and latched onto a higher growth trajectory even before the sizeable FDI influx that followed , and subsequently accelerated. The share of emerging markets in the global economy increased significantly, from 17% in 1990 to 31% by 2007. Equally significant, their contribution to global GDP growth soared substantially, from 50% in 1990 to 65% in 2007. In the aftermath, the presence of abundant finances, favourable demographics, and sufficient innovation from developed countries yet to be absorbed means that emerging economies especially China and India will witness robust growth.
As a result of the lower interest rate regime and under-penetration of housing and mortgages, rapid credit growth in this segment will likely cause a significantly higher GDP growth nationwide. Mortgage penetration in India is only about 6% of GDP, which is less than 1/10th the levels of developed countries like the US (75%) and the UK (100%). In fact, the housing sectors contribution to overall GDP peaked at just 3% in FY06, while in the US it has averaged about 10% over the past decade. Furthermore, the availability of cheap funding to the private sector is even expected to generate new projects under the PPP model, supported by effective viability gap funding from the new government.
Parenthetically, there are a myriad of issues for those who take a myopic view of this expansively positive scenario. For instance, concern about the fiscal deficits. A long-term examination of government spending through deficits shows that in the 1950s Indias domestic savings were merely 10% of GDP, while the corresponding government fiscal deficit was supposedly around 6%. Under this matrix, 60% of our savings were absorbed for government objectives. Between 1990 and 2002, our savings grew to around 25%, while our fiscal deficit inflated to about 10%, reducing the governments share to just 40%. Since 2002, Indias savings rate surged to about 35%. Although the fiscal deficit is greater than 10% now, the government is utilising a mere 30% of the countrys savings, devoting the remaining 70% to private sector use. Going forward , even if the fiscal deficit remains at 8-10 % for a decade or so and our real GDP grows at 7-8 %, our public debt to GDP will likely stretch to just 90%. Additionally , government expenditures as a percentage of GDP are just 27%, well below the 33% spent in even developed countries like the US. Thus, the Indian government is clearly reserving sufficient money for the private sector through lower revenue collections.
Finally, even with the sensex at 15,000, valuations at 2.5x P/BV (one year forward) are not overstretched. Market gyrations of 10-15 %, triggered by short-term factors (such as crude oil prices above $80 per barrel or unmet budget expectations), could benefit longerterm investors by providing classic entry points. However , opportunities may not be available for long the ongoing resolution of the global liquidity crisis and falling interest rates mean that the volatility plaguing our markets over the past year will eventually subside, as Indias recovery evolves into a sustained bull run.
(The author is CMD, Angel Broking)
GLOBAL liquidity improves, international investors appetite for risk increases, and to crown it all our country welcomes a stable and active government. The markets have risen to salute these changes. Yet, despite the recent exuberance , investors remain sceptical about whether this milieu of feel-good factors has changed the markets core fundamentals and, indeed, the course of muted corporate earnings. Most have chosen to wait, thinking the current situation will regress and is not the product of a sustainable economic change.
Will the markets remain subdued long after this impulsive exuberance We dont believe so. Our belief is grounded on a broader perspective. We believe that the present renewed bull wave resulted not simply from a change in government (sans the Left) but, rather, it is a continuation of the run that began in 2002, triggered primarily by the US-initiated decline in global interest rates and the new globalisation paradigm. These triggers have initiated our Indian growth story and ignited a potent demographic engine that activated consumption due to our peoples low financial leveraging. These are the fundamental growth drivers that remain robust.
Of the three essential engines that drive conventional economic growth population growth, financial leverage and innovation the availability of affordable finance became scarce after the Lehman Brothers crisis in the US. The ensuing sub-prime debacle in the US, followed by the global liquidity crisis, slammed the brakes on Indias accelerating economic growth. The global financial crunch became a monumental hurdle to our secular growth story. In response, the US government pressed for colossal bailouts, resulting in a huge dose of liquidity. The massive printing of money was deemed the preferential route to attracting more liquidity for global central banks. It seems the monetisation of fiscal deficits garnered an implicit acceptance among both global regulators and governments. Incidentally, due to its formerly high financial leveraging, the US is likely to require less capital in the upcoming years. Meanwhile, the RBI has also announced it will monetise Rs 80,000 crore during the first half of FY10.
A flurry of QIPs and the strength of FII inflows are just the beginning and it is likely that a large amount of cheap foreign capital potentially, as much as $50 billion will flow to India in the coming quarters. With foreign players investing again, foreign capital flows have turned positive in India, alongside our inherently strong domestic savings. However, while our deposit growth rate has been as high as 22%, credit growth continues to languish at 16-17 %, clearly pointing towards a further correction in interest rates. These progressions will ensure a benign interest rate regime for our country over the coming months.
Since 2002, low interest rates have been the key driver of global economic prosperity and revitalised GDP growth, even in mature economies. In the wake of the US dotcom debacle, the widespread availability of inexpensive funds that followed unleashed latent demand in emerging markets, particularly in India; the bottoming out of interest rates in 2004 served as a turning point for our GDP growth. Indeed, Indian GDP changed tracks and latched onto a higher growth trajectory even before the sizeable FDI influx that followed , and subsequently accelerated. The share of emerging markets in the global economy increased significantly, from 17% in 1990 to 31% by 2007. Equally significant, their contribution to global GDP growth soared substantially, from 50% in 1990 to 65% in 2007. In the aftermath, the presence of abundant finances, favourable demographics, and sufficient innovation from developed countries yet to be absorbed means that emerging economies especially China and India will witness robust growth.
As a result of the lower interest rate regime and under-penetration of housing and mortgages, rapid credit growth in this segment will likely cause a significantly higher GDP growth nationwide. Mortgage penetration in India is only about 6% of GDP, which is less than 1/10th the levels of developed countries like the US (75%) and the UK (100%). In fact, the housing sectors contribution to overall GDP peaked at just 3% in FY06, while in the US it has averaged about 10% over the past decade. Furthermore, the availability of cheap funding to the private sector is even expected to generate new projects under the PPP model, supported by effective viability gap funding from the new government.
Parenthetically, there are a myriad of issues for those who take a myopic view of this expansively positive scenario. For instance, concern about the fiscal deficits. A long-term examination of government spending through deficits shows that in the 1950s Indias domestic savings were merely 10% of GDP, while the corresponding government fiscal deficit was supposedly around 6%. Under this matrix, 60% of our savings were absorbed for government objectives. Between 1990 and 2002, our savings grew to around 25%, while our fiscal deficit inflated to about 10%, reducing the governments share to just 40%. Since 2002, Indias savings rate surged to about 35%. Although the fiscal deficit is greater than 10% now, the government is utilising a mere 30% of the countrys savings, devoting the remaining 70% to private sector use. Going forward , even if the fiscal deficit remains at 8-10 % for a decade or so and our real GDP grows at 7-8 %, our public debt to GDP will likely stretch to just 90%. Additionally , government expenditures as a percentage of GDP are just 27%, well below the 33% spent in even developed countries like the US. Thus, the Indian government is clearly reserving sufficient money for the private sector through lower revenue collections.
Finally, even with the sensex at 15,000, valuations at 2.5x P/BV (one year forward) are not overstretched. Market gyrations of 10-15 %, triggered by short-term factors (such as crude oil prices above $80 per barrel or unmet budget expectations), could benefit longerterm investors by providing classic entry points. However , opportunities may not be available for long the ongoing resolution of the global liquidity crisis and falling interest rates mean that the volatility plaguing our markets over the past year will eventually subside, as Indias recovery evolves into a sustained bull run.
(The author is CMD, Angel Broking)
Monday, June 22, 2009
Lessons from the financial crises
Lessons from the financial crises
The banking sector calls for reforms that will encourage our best and brightest young people not to chase banking careers and do real work as engineers, scientists, scholars and social workers, says Arun Duggal
THESE are difficult times. Bankers, including former bankers like myself , are in deep trouble. And deservedly so. We are the main, (though not the only) culprits in creating the current massive financial crises in the world. No one has ever accused bankers of being particularly bright or hardworking or reliable . Remember the guy who lent you an umbrella in fair weather and took it back when it rained. But now with their oversized bonuses under public scrutiny, bankers reputation has touched new lows, somewhere between bandits and thieves. No wonder, UBS has directed its bankers not to travel outside Switzerland lest they be arrested overseas for their misdeeds. Even the highly respected central bankers actions are being questioned it is conceivable that Maestro Alan Greenspan may have been affected by irrational exuberance.
Even though publics anger against bankers and AIG executives is justified, the important thing is to learn what mistakes were made, and reform the system to prevent their recurrence. Even more important is to take the right lessons from the crises and not the wrong one. In months and years to come, there would be a great deal of analysis on what caused the current financial crises. However, there is a fair degree of consensus that extreme excesses in the following areas contributed substantially to it:
In the US, too much money was lent to consumers, far beyond their ability to repay. Consumer credit which used to be 100-150 % of the GDP for most of the last century shot up to 300% in the last 10 years.
Size of the banking sector as a whole and individual banks became too large and very highly leveraged. As Simon Johnson, former chief economist of IMF, notes in a recent article in The Atlantic, the financial sectors profits which used to be around 16% of the total US corporate profits increased to 41% in recent years. Similarly the size of the banking sector in relationship to domestic economy in countries like Iceland, UK and Switzerland became excessively large.
Too many complex financial products were created and distributed. The real risks of these products were not understood by the bankers, rating agencies or the investors . The structured products creators and marketers within the banks became too powerful and the risk managers too weak, so there were no checks and balances.
Bankers were paid too much. We have heard about the obscene bonuses being paid to bankers and AIG executives in the US. Even closer home, in 2007, IIM graduates were getting offers of more than a crore per year from international banks, multiple of what their learned professors are earning.
US treasury secretary Tim Geithner in his testimony to House Financial Services Committee said, I share the anger and frustration of the American people, not just about the compensation practices at AIG and in other parts of our financial system , but that our system permitted a scale of risk-taking that has caused grave damage to the fortunes of all Americans .
To avoid this in future, policy makers should consider the following actions based on the lessons learnt from this financial crises:
One, the size of the banks should be restricted , so that some of them do not become so big as to endanger the entire financial system. Their activities should be restricted too. They should not be allowed in the investment banking or securities business.
TWO , banks all over the world should become a utility to serve the national economy under supervision of the local regulator. Their global expansion should be curbed. In order to support international trade and capital flows, international banks should be allowed to invest overseas, but only as minority investors. The local regulators should keep a close watch so that troubles in the home country of an international bank does not result in contagion.
Three, the central banks must act to prevent bubbles. They should expand their focus to control asset price inflation in addition to consumer price inflation. They should take corrective steps if there is excessive credit growth overall and in any particular sector of the economy.
Four, the capital adequacy requirements of banks and other financial institutions should be further increased. Banks should adopt dynamic provisioning policy, (as in Spain) to provide higher credit provisions and reserves during strong economy, which will act as cushion during recession.
Five, banks should not be allowed to accumulate any risk through off balance sheet structures. All risks must be included in ascertaining capital adequacy. Innovation in banking should be encouraged, but in areas such as use of technology and other means to serve its customers better. In India and in most developing countries innovations should target to include the unserved or under-served population into financial system.
Six, the whole system of creation and distribution of structured products needs overhaul. Banks should be asked to keep at least half of the assets created by them on their books so that the bank managements are well aware of the risks they are accumulating and distributing.
Similarly the rating agency system needs major correction. Perhaps they should have their skin in the game and not only earn fees and then wash their hands off. Let them also keep 10% of the paper they rate on their books until it matures. It will concentrate their minds to understand and evaluate long-term risks appropriately.
Seven, and perhaps the most important , the compensation of bankers and the risk management in banks require a thorough revision. Bankers compensation must come down and be in line with what other professionals earn. The bonuses should be downsized and linked to various performance parameters. Private equity offers a good model of long-term incentives : they make money (carry) only if and after their investors have made money. The risk management systems in the banks should be strengthened. While this should be the primarily job of board of directors of banks, the regulators should monitor compensation practices in banks.
This would encourage our best and brightest young people not to chase banking careers and do real work as engineers, scientists , scholars, social workers, etc. As Paul Krugman wrote recently, Banking should become once again a boring business .
(The author is former CEO-India ,
Bank of America)
The banking sector calls for reforms that will encourage our best and brightest young people not to chase banking careers and do real work as engineers, scientists, scholars and social workers, says Arun Duggal
THESE are difficult times. Bankers, including former bankers like myself , are in deep trouble. And deservedly so. We are the main, (though not the only) culprits in creating the current massive financial crises in the world. No one has ever accused bankers of being particularly bright or hardworking or reliable . Remember the guy who lent you an umbrella in fair weather and took it back when it rained. But now with their oversized bonuses under public scrutiny, bankers reputation has touched new lows, somewhere between bandits and thieves. No wonder, UBS has directed its bankers not to travel outside Switzerland lest they be arrested overseas for their misdeeds. Even the highly respected central bankers actions are being questioned it is conceivable that Maestro Alan Greenspan may have been affected by irrational exuberance.
Even though publics anger against bankers and AIG executives is justified, the important thing is to learn what mistakes were made, and reform the system to prevent their recurrence. Even more important is to take the right lessons from the crises and not the wrong one. In months and years to come, there would be a great deal of analysis on what caused the current financial crises. However, there is a fair degree of consensus that extreme excesses in the following areas contributed substantially to it:
In the US, too much money was lent to consumers, far beyond their ability to repay. Consumer credit which used to be 100-150 % of the GDP for most of the last century shot up to 300% in the last 10 years.
Size of the banking sector as a whole and individual banks became too large and very highly leveraged. As Simon Johnson, former chief economist of IMF, notes in a recent article in The Atlantic, the financial sectors profits which used to be around 16% of the total US corporate profits increased to 41% in recent years. Similarly the size of the banking sector in relationship to domestic economy in countries like Iceland, UK and Switzerland became excessively large.
Too many complex financial products were created and distributed. The real risks of these products were not understood by the bankers, rating agencies or the investors . The structured products creators and marketers within the banks became too powerful and the risk managers too weak, so there were no checks and balances.
Bankers were paid too much. We have heard about the obscene bonuses being paid to bankers and AIG executives in the US. Even closer home, in 2007, IIM graduates were getting offers of more than a crore per year from international banks, multiple of what their learned professors are earning.
US treasury secretary Tim Geithner in his testimony to House Financial Services Committee said, I share the anger and frustration of the American people, not just about the compensation practices at AIG and in other parts of our financial system , but that our system permitted a scale of risk-taking that has caused grave damage to the fortunes of all Americans .
To avoid this in future, policy makers should consider the following actions based on the lessons learnt from this financial crises:
One, the size of the banks should be restricted , so that some of them do not become so big as to endanger the entire financial system. Their activities should be restricted too. They should not be allowed in the investment banking or securities business.
TWO , banks all over the world should become a utility to serve the national economy under supervision of the local regulator. Their global expansion should be curbed. In order to support international trade and capital flows, international banks should be allowed to invest overseas, but only as minority investors. The local regulators should keep a close watch so that troubles in the home country of an international bank does not result in contagion.
Three, the central banks must act to prevent bubbles. They should expand their focus to control asset price inflation in addition to consumer price inflation. They should take corrective steps if there is excessive credit growth overall and in any particular sector of the economy.
Four, the capital adequacy requirements of banks and other financial institutions should be further increased. Banks should adopt dynamic provisioning policy, (as in Spain) to provide higher credit provisions and reserves during strong economy, which will act as cushion during recession.
Five, banks should not be allowed to accumulate any risk through off balance sheet structures. All risks must be included in ascertaining capital adequacy. Innovation in banking should be encouraged, but in areas such as use of technology and other means to serve its customers better. In India and in most developing countries innovations should target to include the unserved or under-served population into financial system.
Six, the whole system of creation and distribution of structured products needs overhaul. Banks should be asked to keep at least half of the assets created by them on their books so that the bank managements are well aware of the risks they are accumulating and distributing.
Similarly the rating agency system needs major correction. Perhaps they should have their skin in the game and not only earn fees and then wash their hands off. Let them also keep 10% of the paper they rate on their books until it matures. It will concentrate their minds to understand and evaluate long-term risks appropriately.
Seven, and perhaps the most important , the compensation of bankers and the risk management in banks require a thorough revision. Bankers compensation must come down and be in line with what other professionals earn. The bonuses should be downsized and linked to various performance parameters. Private equity offers a good model of long-term incentives : they make money (carry) only if and after their investors have made money. The risk management systems in the banks should be strengthened. While this should be the primarily job of board of directors of banks, the regulators should monitor compensation practices in banks.
This would encourage our best and brightest young people not to chase banking careers and do real work as engineers, scientists , scholars, social workers, etc. As Paul Krugman wrote recently, Banking should become once again a boring business .
(The author is former CEO-India ,
Bank of America)
Friday, June 19, 2009
RECESSION
Seven Signs
THAT THE CURRENT GLOBAL contagion has set in recession is well established. But less talked are the silent killers of its enduring severity, staidness and stilling effects that prolong this recess and require strategic responses.
The rooting of this recession in financial fiddle, eschewing of ethics and remiss of regulatory oversight on Wall Street have brought the very way the business is conducted with institutional finance into a question. The new rulebook carrying the prescription for this sick and debilitated patient called the global economy has new mantras. This has made banks with pile of cash from stimulus sit tight. A shrunken purse of capital is not likely to loosen easily. But that only helps recession.
These are economic, social and financial challenges from the writ of those in command in the recovery rooms of the world economy. In fact, the governments face lack of further options as the current bail out packages exhaust. It is likely to take at three to five years before new order, very different from the old one emerges. Here are these seven signs that this scenario translates into that India Inc. must see.
The first challenge is from the mirage of relative growth theory of India. Our domestic demand driven Indian growth story is claimed to be robust and intact. But let us face the truth. Of the entire exports, over $ 55 Billion annually from IT outsourcing has had the biggest snowballing effect on our domestic demand. This boom sprang a new earn-and-spend culture. The IT industry and its employees have driven up real estateboth for commercial and residential realtybanking and finance sectors, three most happening sectors of the last boom. Now its 25% employee strength is idle. What if the green shoots of early promise of global recovery are hit by another gale Our claim to robust domestic demand could come into question.
The export sector and the IT industry included are not going to give bigger employment in near term. And we are still away from diverse sectors contributing to a sustained demand. So is our domestic demand in for a bigger correction
The second challenge is from the unlikely rise of alternate employment sectors. The recent booms saw India being seen as an emerging globally competitive services and manufacturing hub in sectors like IT, R&D , automotive components and pharmaceuticals . This raised hopes for a sustained demand emerging from an earning and spending middle classes. But that demand is now hit.
Global recession is going to delay the opportunity that India was beginning to acquire in both services and manufacturing sectors. For example, a major shift in the US car makers strategy to hybrid cars is going to mean time lag before Indian auto ancillary can take advantage. Much of the financial sector outsourcing to India has shrunk by 50-60 % in its transaction volumes. The new Obama regime has proposed tax breaks for those not favouring outsourcing and taxing those outsourcing jobs. Unfortunately, much of our traditional exports are in tatters with the textiles industry almost singing its requiem. The latest is that our export sector may have lost close to 2 to 3 million jobs. These factors delay demand.
But a much needed alternate sector of mass employment is nowhere in sight. The Government actually holds the key here for spurring investments overdue in infrastructure. It is also capable of stimulating the services sector. But a new thrust still remains to be seen.
The third challenge is from constrained share holders funds and disappearance of valuation based capital. The infusion of valuation based capital has thus far been a key to business expansion. This applied equally to listed and unlisted companies . Going forward, the current spell has lowered the overall premium in valuations. New business valuations that value entrepreneurship are hardly on the scene. Venture capitalists are lying low, limiting promoter funding. Large PE players are simply constrained by the absence of leverage in their own their inflows. This coupled with higher disclosure norms on pledge of promoter shareholding post the Satyam saga adversely affects equity financing .
The World Economic Forum (WEF) in its most recent report titled The Future of the Global Financial System concludes that over the next few years the main drivers of industry change will be an expansion in the scope of regulatory oversight, a reversion to a utility model in the banking sector and major overhaul of alternative investment firms. In the longer term, it envisages that the primary influences on the future structure of the global financial system will be the extent to which regulators turn away from the global paradigmresulting in the balkanisation of the financial marketsand that is simply bad news for capital flows. In fact, first claimants of rationed capital will be the economies in the Far East. They are hit by as much as 10% in their GDPs and are capital starved. They are approaching multilateral agencies like World Bank and ADB for the first time in a decade. Investors shall apply a new yardstick to determine returns on capital - calculating the return on total capital employed after consolidating the balance sheets of both the investor and invested company. A recent exercise of five hundred investments, of the size exceeding $25 million reveals that of the total investments that turned profitable, 92% made profits by exiting via the stock markets. Even with recent spurts, there is still no certainty turning to stock markets in near term. First the global stock markets would need to be tested for raising capital before confidence returns in the Indian markets for fund raising. This then only adds to the delay in recovery. The fourth challenge is absence of cash in
M&A deals. Cash is simply not available for M&A
activities. This is due to the cumulative effect of all the above factorsin particular to the souring of the post-merger scenario due to high leverage in mega deals. This is not a happy sign for spurring efficiencies, economies of scale and consolidation of splintered markets. Yet cash is an essential motivator of mergers and acquisitions. Almost one hundred percent of the M&A deals had a cash component. How many deals have we heard of in the last six months This will continue to be status quo and a dampener for growth of businesses.
The fifth challenge comes from the current economic reality of imbalanced cost-revenue constructs that India Inc. braces. Current times are the most painful in their transition. The preceding boom forced India Inc. to adopt cost structures aligned to global levels without the corresponding rise in revenues. The top and senior management costs have risen to the international levels. The economic reforms clearly stand out as a watershed between the two different costs orientations of Indian businesses. Even our exporting industries, IT in particular , now face similar challenge.
The current downturn will certainly force curtailing costs but still leave a mismatched cost-revenue construct reality. This then delays arrival of profits.
The sixth challenge is from globally rising financial costs per unit of products and services. The central banks have slashed bank rates. In India , we have augmented the liquidity levels of the banks. But that doesnt automatically put liquidity back in businesses. There is no appetite for risk. Lenders seek onerous conditions that make access to liquidity difficult.
A sound business even in the US today can barely borrow even at rates similar to those prevailing here. A renowned global fast food chain with unblemished growth of decades had difficulty raising $200 million. Banks in India have certainly tightened their appraisals. On one hand this constricts the flow of liquidity; on the other, it contains the transaction base for banks, forcing higher cost per transaction. So whether we produce goods or services, global financial costs per unit of delivery are going to be high for some time. This does not augur well for competitiveness.
The seventh challenge is from employees turning renegades. One area of decreasing sanctity is the moral bond between organisations and its employees . Tough times force management to be ruthless in slashing headcount and pay cheques. But between the last two booms, there is the birth of a more adventurous genre of employees who can turn renegades. They can walk away with organisational knowledge and clients. This disruptive aspect of downturns needs to be combated with strategic responses.
The above challenges are real en-route to recovery and portend a longer recessionary mood. Watch out for those smart corporates who can still beat recessionary times, converting these challenges into opportunities
THAT THE CURRENT GLOBAL contagion has set in recession is well established. But less talked are the silent killers of its enduring severity, staidness and stilling effects that prolong this recess and require strategic responses.
The rooting of this recession in financial fiddle, eschewing of ethics and remiss of regulatory oversight on Wall Street have brought the very way the business is conducted with institutional finance into a question. The new rulebook carrying the prescription for this sick and debilitated patient called the global economy has new mantras. This has made banks with pile of cash from stimulus sit tight. A shrunken purse of capital is not likely to loosen easily. But that only helps recession.
These are economic, social and financial challenges from the writ of those in command in the recovery rooms of the world economy. In fact, the governments face lack of further options as the current bail out packages exhaust. It is likely to take at three to five years before new order, very different from the old one emerges. Here are these seven signs that this scenario translates into that India Inc. must see.
The first challenge is from the mirage of relative growth theory of India. Our domestic demand driven Indian growth story is claimed to be robust and intact. But let us face the truth. Of the entire exports, over $ 55 Billion annually from IT outsourcing has had the biggest snowballing effect on our domestic demand. This boom sprang a new earn-and-spend culture. The IT industry and its employees have driven up real estateboth for commercial and residential realtybanking and finance sectors, three most happening sectors of the last boom. Now its 25% employee strength is idle. What if the green shoots of early promise of global recovery are hit by another gale Our claim to robust domestic demand could come into question.
The export sector and the IT industry included are not going to give bigger employment in near term. And we are still away from diverse sectors contributing to a sustained demand. So is our domestic demand in for a bigger correction
The second challenge is from the unlikely rise of alternate employment sectors. The recent booms saw India being seen as an emerging globally competitive services and manufacturing hub in sectors like IT, R&D , automotive components and pharmaceuticals . This raised hopes for a sustained demand emerging from an earning and spending middle classes. But that demand is now hit.
Global recession is going to delay the opportunity that India was beginning to acquire in both services and manufacturing sectors. For example, a major shift in the US car makers strategy to hybrid cars is going to mean time lag before Indian auto ancillary can take advantage. Much of the financial sector outsourcing to India has shrunk by 50-60 % in its transaction volumes. The new Obama regime has proposed tax breaks for those not favouring outsourcing and taxing those outsourcing jobs. Unfortunately, much of our traditional exports are in tatters with the textiles industry almost singing its requiem. The latest is that our export sector may have lost close to 2 to 3 million jobs. These factors delay demand.
But a much needed alternate sector of mass employment is nowhere in sight. The Government actually holds the key here for spurring investments overdue in infrastructure. It is also capable of stimulating the services sector. But a new thrust still remains to be seen.
The third challenge is from constrained share holders funds and disappearance of valuation based capital. The infusion of valuation based capital has thus far been a key to business expansion. This applied equally to listed and unlisted companies . Going forward, the current spell has lowered the overall premium in valuations. New business valuations that value entrepreneurship are hardly on the scene. Venture capitalists are lying low, limiting promoter funding. Large PE players are simply constrained by the absence of leverage in their own their inflows. This coupled with higher disclosure norms on pledge of promoter shareholding post the Satyam saga adversely affects equity financing .
The World Economic Forum (WEF) in its most recent report titled The Future of the Global Financial System concludes that over the next few years the main drivers of industry change will be an expansion in the scope of regulatory oversight, a reversion to a utility model in the banking sector and major overhaul of alternative investment firms. In the longer term, it envisages that the primary influences on the future structure of the global financial system will be the extent to which regulators turn away from the global paradigmresulting in the balkanisation of the financial marketsand that is simply bad news for capital flows. In fact, first claimants of rationed capital will be the economies in the Far East. They are hit by as much as 10% in their GDPs and are capital starved. They are approaching multilateral agencies like World Bank and ADB for the first time in a decade. Investors shall apply a new yardstick to determine returns on capital - calculating the return on total capital employed after consolidating the balance sheets of both the investor and invested company. A recent exercise of five hundred investments, of the size exceeding $25 million reveals that of the total investments that turned profitable, 92% made profits by exiting via the stock markets. Even with recent spurts, there is still no certainty turning to stock markets in near term. First the global stock markets would need to be tested for raising capital before confidence returns in the Indian markets for fund raising. This then only adds to the delay in recovery. The fourth challenge is absence of cash in
M&A deals. Cash is simply not available for M&A
activities. This is due to the cumulative effect of all the above factorsin particular to the souring of the post-merger scenario due to high leverage in mega deals. This is not a happy sign for spurring efficiencies, economies of scale and consolidation of splintered markets. Yet cash is an essential motivator of mergers and acquisitions. Almost one hundred percent of the M&A deals had a cash component. How many deals have we heard of in the last six months This will continue to be status quo and a dampener for growth of businesses.
The fifth challenge comes from the current economic reality of imbalanced cost-revenue constructs that India Inc. braces. Current times are the most painful in their transition. The preceding boom forced India Inc. to adopt cost structures aligned to global levels without the corresponding rise in revenues. The top and senior management costs have risen to the international levels. The economic reforms clearly stand out as a watershed between the two different costs orientations of Indian businesses. Even our exporting industries, IT in particular , now face similar challenge.
The current downturn will certainly force curtailing costs but still leave a mismatched cost-revenue construct reality. This then delays arrival of profits.
The sixth challenge is from globally rising financial costs per unit of products and services. The central banks have slashed bank rates. In India , we have augmented the liquidity levels of the banks. But that doesnt automatically put liquidity back in businesses. There is no appetite for risk. Lenders seek onerous conditions that make access to liquidity difficult.
A sound business even in the US today can barely borrow even at rates similar to those prevailing here. A renowned global fast food chain with unblemished growth of decades had difficulty raising $200 million. Banks in India have certainly tightened their appraisals. On one hand this constricts the flow of liquidity; on the other, it contains the transaction base for banks, forcing higher cost per transaction. So whether we produce goods or services, global financial costs per unit of delivery are going to be high for some time. This does not augur well for competitiveness.
The seventh challenge is from employees turning renegades. One area of decreasing sanctity is the moral bond between organisations and its employees . Tough times force management to be ruthless in slashing headcount and pay cheques. But between the last two booms, there is the birth of a more adventurous genre of employees who can turn renegades. They can walk away with organisational knowledge and clients. This disruptive aspect of downturns needs to be combated with strategic responses.
The above challenges are real en-route to recovery and portend a longer recessionary mood. Watch out for those smart corporates who can still beat recessionary times, converting these challenges into opportunities
SENSE OF URGENCY
Cutting Out Complacency
IIF THERE IS ONE THING John Kotter doesnt believe in, it is candy-coating what he thinks are basic truths. Weve seen off the worst of the crisis, but anyone who thinks that well crawl out of this and not see bad times again is kidding themselves, says the Harvard Business School professor. The worst thing a company can do at a time like this is dig itself into a trench or seal itself in a cave to try and protect itself, he adds. According to Kotter, smart leaders are realising that this crisis is actually a great time to grab any opportunity the environment throws up. I suspect there are companies that are in such a difficult position that all they can do is hold on and keep themselves from dying , but for the others, difficult times can be useful to drive down complacency, he says. And it is driving down this feeling of complacency that forms the basis for his latest book, A Sense of Urgency. Among the worlds foremost authorities on leadership and change, Kotter says that over the years, a question people always asked of him was: What was the one aspect of handling change that managers seemed to struggle with the most. The search for the answer set him off on a new branch of research, which is what resulted in the book. This sense of urgency tends to manifest at three levels, in how people think, feel and act. People with a true sense of urgency deeply believe that there are major opportunities and major hazards out there and have a deep determination to get out there and do something, he explains. These are people who, instead of delegating the hygiene factor items on their agendas to other people, will simply purge them. And in times of crisis, it is this behavioural trait that will keep organisations afloat and help them succeed.
A CEO, Kotter says, needs to play multiple roles when seeing his firm through a crisis of this magnitude. The first is to make sure that they dont dig themselves into trenches and instead look for opportunities so that they not only survive, but are also stronger once the economy bounces back and in a better position to go after new business.
The other important thing the leader of the company needs to do is communicate with his people and be honest about the situation the company is in. Its important to encourage people to think about the circumstances, not in a negative way, but to make them view it as a time to build strengths and capabilities, he says. Companies need to remember that this isnt the first economic downturn the world has seen. There have been many over the centuries and weve always come out of them and grown and seen better times, says Kotter.
And to be able to make the most of
any potential opportunities, it is the CEOs who need to step up and instil a sense of urgency in their organisations. There are four aspects to this, says Kotter . The first is a series of actions people can take to access information that would give a clearer picture of both the opportunities and the hazards for the organisation. This can be something as simple as surfing the web or sending people back to university to bring back information about the real world, he says. Second on the list is for the CEO to act with a sense of urgency himself. It is one of the easiest things to do, and the most important as people see this behaviour and start to emulate it. This in turn has a ripple effect throughout the organisation, says Kotter. Next in line is being on the lookout, both within the organisation and outside, for a potential crisis and finding an opportunity in it to reduce a sense of complacency. The last, and most important for a CEO, is to be alert to the NoNos , especially if they have a crucial role to play in the shortterm , say Kotter, referring to the naysayers from his previous book, Our Iceberg is Melting. These are the people who resist change and push up false urgency and anxiety driven activity . If you have these people reporting to you, you have to realise that they can be very dangerous in a fast moving world, he cautions. Of course the enthusiasm to emerge stronger out of a slowdown can also result in a lot of excitement over nothing. Kotter calls this a false sense of urgency. This is where the leader needs to run a check and see if all the meetings and increased activities are actually resulting in anything or if everyone is simply running around in circles. Finally, he says, once the urgency levels are up, it is important to get a strong team in place to drive the change and ensure that the people are empowered to take steps that would aid the change process. According to Kotter, acting with a sense of urgency is soon moving from being an episodic behaviour pattern to a generic aspect of running a business and its important for an organisation to institutionalise the process once it is running smoothly. People have to remember that things are only going to get worse from now. With the amount of volatility out there and with the rate of change going up, it is akin to driving a car fast on curvy roadsthe chances of accidents are just going to go up, and that is what we are being forced to do today, says Kotter. priyanka.sangani@timesgroup .com
IIF THERE IS ONE THING John Kotter doesnt believe in, it is candy-coating what he thinks are basic truths. Weve seen off the worst of the crisis, but anyone who thinks that well crawl out of this and not see bad times again is kidding themselves, says the Harvard Business School professor. The worst thing a company can do at a time like this is dig itself into a trench or seal itself in a cave to try and protect itself, he adds. According to Kotter, smart leaders are realising that this crisis is actually a great time to grab any opportunity the environment throws up. I suspect there are companies that are in such a difficult position that all they can do is hold on and keep themselves from dying , but for the others, difficult times can be useful to drive down complacency, he says. And it is driving down this feeling of complacency that forms the basis for his latest book, A Sense of Urgency. Among the worlds foremost authorities on leadership and change, Kotter says that over the years, a question people always asked of him was: What was the one aspect of handling change that managers seemed to struggle with the most. The search for the answer set him off on a new branch of research, which is what resulted in the book. This sense of urgency tends to manifest at three levels, in how people think, feel and act. People with a true sense of urgency deeply believe that there are major opportunities and major hazards out there and have a deep determination to get out there and do something, he explains. These are people who, instead of delegating the hygiene factor items on their agendas to other people, will simply purge them. And in times of crisis, it is this behavioural trait that will keep organisations afloat and help them succeed.
A CEO, Kotter says, needs to play multiple roles when seeing his firm through a crisis of this magnitude. The first is to make sure that they dont dig themselves into trenches and instead look for opportunities so that they not only survive, but are also stronger once the economy bounces back and in a better position to go after new business.
The other important thing the leader of the company needs to do is communicate with his people and be honest about the situation the company is in. Its important to encourage people to think about the circumstances, not in a negative way, but to make them view it as a time to build strengths and capabilities, he says. Companies need to remember that this isnt the first economic downturn the world has seen. There have been many over the centuries and weve always come out of them and grown and seen better times, says Kotter.
And to be able to make the most of
any potential opportunities, it is the CEOs who need to step up and instil a sense of urgency in their organisations. There are four aspects to this, says Kotter . The first is a series of actions people can take to access information that would give a clearer picture of both the opportunities and the hazards for the organisation. This can be something as simple as surfing the web or sending people back to university to bring back information about the real world, he says. Second on the list is for the CEO to act with a sense of urgency himself. It is one of the easiest things to do, and the most important as people see this behaviour and start to emulate it. This in turn has a ripple effect throughout the organisation, says Kotter. Next in line is being on the lookout, both within the organisation and outside, for a potential crisis and finding an opportunity in it to reduce a sense of complacency. The last, and most important for a CEO, is to be alert to the NoNos , especially if they have a crucial role to play in the shortterm , say Kotter, referring to the naysayers from his previous book, Our Iceberg is Melting. These are the people who resist change and push up false urgency and anxiety driven activity . If you have these people reporting to you, you have to realise that they can be very dangerous in a fast moving world, he cautions. Of course the enthusiasm to emerge stronger out of a slowdown can also result in a lot of excitement over nothing. Kotter calls this a false sense of urgency. This is where the leader needs to run a check and see if all the meetings and increased activities are actually resulting in anything or if everyone is simply running around in circles. Finally, he says, once the urgency levels are up, it is important to get a strong team in place to drive the change and ensure that the people are empowered to take steps that would aid the change process. According to Kotter, acting with a sense of urgency is soon moving from being an episodic behaviour pattern to a generic aspect of running a business and its important for an organisation to institutionalise the process once it is running smoothly. People have to remember that things are only going to get worse from now. With the amount of volatility out there and with the rate of change going up, it is akin to driving a car fast on curvy roadsthe chances of accidents are just going to go up, and that is what we are being forced to do today, says Kotter. priyanka.sangani@timesgroup .com
The Recession Man
The Recession Man
IIN MAY 2007, when Manmohan Singh made his famous conspicuous consumption speech at the National Conference of the Confederation of Indian Industry (CII) in Delhi, some dubbed it a critique of capitalism. At a time when GDP growth was 9% and the Sensex was 15,000-going-on-20 ,000, the Prime Minister called on the gathered CEOs to be models of probity, moderation and charity and resist excessive remuneration to promoters and senior executives . What a party pooper. He even quoted Keynes, saying that if the rich spent their new wealth on their own enjoyments, the world would have long ago found such a regime intolerable.
Surinder Kapur was one of the CEOs attending the CII meet that day and he recalls being quite affected by the speech. There was a sense that quite a few things were going out of kilter in corporate India, including salaries, says the chairman of Sono Koyo Steering Systems . The downturn has shown that the PM was right. Corporates had far too much money available to spend and greed had come to be synonymous with success.
Temptation was everywhere and nearly every company ended up splurging during the boom in some measure . But now all those the expenditures on acquisitions, diversifications, real estate, talent, are causing headaches akin to hangovers after a binge, except that these after effects arent about to fade easily with time. Today, the toughest task before the downturn CEO is to work the
assets acquired during the boom.
As an auto component manufacturer, Kapur is one of the worst affected by the global recession. The leader in this sector, however, is Bharat Forge, a company that made several global acquisitions in the height of the boom. Chairman Baba Kalyani admits he was caught completely unawares by the severity of the global recession in the automobile sector. During the boom, we were focused on creating capacities ahead of the expected demand curve. We were making capital investments ahead of the curve, hiring people ahead of the curve, creating working capital ahead of the curve. Now we have to do just the opposite . The automobile industry is not going to return to previous demand levels anytime soon, he says. Its not uncommon for corporates to accumulate fat in good times some even make a provision for it. But as everyone knows, working off the fat is always much harder than putting it on, so the downturn CEO is forever on the treadmill. Kalyani, for one, is trying to diversify his customer portfolio and produce products for the global energy industry, which has been less affected by the recession. Thats actually a strategy adopted by many recession-hit CEOs. Rakesh Sarin, managing director of Wartsila India has seen demand for power plants dry up in the shipping sector, once the companys mainstay. Now the Finnish company is trying to open up the market for smaller capacity power plants of 300 MW and less, meant to serve small cities and metropolitan suburbs . You have to be creative in a downturn , he says. The CEOs job today is to go out and spot new business opportunities. The downturn has certainly changed the way the CEO allocates his time. Acquisitions are out and CEOs are no longer spending time with investment bankers. Instead, theyre spending more time with their staff, working out ways to deliver better products and services at lower costs. Labour and staffing policies cant be left to HR theyre strategic. Launching newer, competitive products and services for the shrinking market cant be left to marketing, theyre mission critical. With the dollar swinging from Rs 39 to Rs 52, forex contracts are no longer the CFOs prerogative, theyre strategic too. In a downturn, the only strategy is operational strategy, says Accentures Jaime Ferrer, who heads the firms consulting business in for Europe, Latin America, Middle East and Africa. The companies that come out of this recession better will be those that achieve excellence in their operations.
Since its become increasingly difficult to predict the economic weather, the downturn CEO is now busy building a boat that can withstand storms. This means envisioning worst case scenarios and building systems and structures designed to keep the organisation afloat if they actually occur . Several CEOs are having problems because they have been unable to sense risk, says Arun Maira, senior advisor, The Boston Consulting Group. Now, in order to grow their businesses in an uncertain environment, not only must the CEO have a mind that is permeable to a variety of ideas, but also an organisation that has permeable boundaries with the world outside.
IIN MAY 2007, when Manmohan Singh made his famous conspicuous consumption speech at the National Conference of the Confederation of Indian Industry (CII) in Delhi, some dubbed it a critique of capitalism. At a time when GDP growth was 9% and the Sensex was 15,000-going-on-20 ,000, the Prime Minister called on the gathered CEOs to be models of probity, moderation and charity and resist excessive remuneration to promoters and senior executives . What a party pooper. He even quoted Keynes, saying that if the rich spent their new wealth on their own enjoyments, the world would have long ago found such a regime intolerable.
Surinder Kapur was one of the CEOs attending the CII meet that day and he recalls being quite affected by the speech. There was a sense that quite a few things were going out of kilter in corporate India, including salaries, says the chairman of Sono Koyo Steering Systems . The downturn has shown that the PM was right. Corporates had far too much money available to spend and greed had come to be synonymous with success.
Temptation was everywhere and nearly every company ended up splurging during the boom in some measure . But now all those the expenditures on acquisitions, diversifications, real estate, talent, are causing headaches akin to hangovers after a binge, except that these after effects arent about to fade easily with time. Today, the toughest task before the downturn CEO is to work the
assets acquired during the boom.
As an auto component manufacturer, Kapur is one of the worst affected by the global recession. The leader in this sector, however, is Bharat Forge, a company that made several global acquisitions in the height of the boom. Chairman Baba Kalyani admits he was caught completely unawares by the severity of the global recession in the automobile sector. During the boom, we were focused on creating capacities ahead of the expected demand curve. We were making capital investments ahead of the curve, hiring people ahead of the curve, creating working capital ahead of the curve. Now we have to do just the opposite . The automobile industry is not going to return to previous demand levels anytime soon, he says. Its not uncommon for corporates to accumulate fat in good times some even make a provision for it. But as everyone knows, working off the fat is always much harder than putting it on, so the downturn CEO is forever on the treadmill. Kalyani, for one, is trying to diversify his customer portfolio and produce products for the global energy industry, which has been less affected by the recession. Thats actually a strategy adopted by many recession-hit CEOs. Rakesh Sarin, managing director of Wartsila India has seen demand for power plants dry up in the shipping sector, once the companys mainstay. Now the Finnish company is trying to open up the market for smaller capacity power plants of 300 MW and less, meant to serve small cities and metropolitan suburbs . You have to be creative in a downturn , he says. The CEOs job today is to go out and spot new business opportunities. The downturn has certainly changed the way the CEO allocates his time. Acquisitions are out and CEOs are no longer spending time with investment bankers. Instead, theyre spending more time with their staff, working out ways to deliver better products and services at lower costs. Labour and staffing policies cant be left to HR theyre strategic. Launching newer, competitive products and services for the shrinking market cant be left to marketing, theyre mission critical. With the dollar swinging from Rs 39 to Rs 52, forex contracts are no longer the CFOs prerogative, theyre strategic too. In a downturn, the only strategy is operational strategy, says Accentures Jaime Ferrer, who heads the firms consulting business in for Europe, Latin America, Middle East and Africa. The companies that come out of this recession better will be those that achieve excellence in their operations.
Since its become increasingly difficult to predict the economic weather, the downturn CEO is now busy building a boat that can withstand storms. This means envisioning worst case scenarios and building systems and structures designed to keep the organisation afloat if they actually occur . Several CEOs are having problems because they have been unable to sense risk, says Arun Maira, senior advisor, The Boston Consulting Group. Now, in order to grow their businesses in an uncertain environment, not only must the CEO have a mind that is permeable to a variety of ideas, but also an organisation that has permeable boundaries with the world outside.
Subscribe to:
Posts (Atom)