Friday, December 31, 2010

Giants of Enterprise: My favorite read of 2010

It has been almost a year since I first read Richard Tedlow’s “Giants of Enterprise” and I still haven’t got over the hangover. Several times I revisited the book for some specific incident or information like to check George Eastman’s early experiments and I ended up spending the next half an hour reading much more. It is a kind of stuff I had never read before. The book opened a door of a totally new discipline for me – that of “business history”.

What is “Giants of Enterprise” about? The book contains biographies of seven innovators who built large enterprises in America from railroads to microprocessors: Andrew Carnegie (Steel), George Eastman (Kodak), Henry Ford, Thomas Watson Sr (IBM), Charles Revson (Revlon), Sam Walton (WalMart), Robert Noyce (Intel). In my opinion to say that the book is a bunch of biographies doesn’t do justice to it.

Here are three things that I find unique about this book:

· Role of influencers: For each of the innovators, Tedlow identifies one or two key influencers in their life and shows how a few individuals influence formative minds. If your boss fires you, chances are high you will hate him. And if you don’t, it is almost certain you won’t continue to adore him. Well, even after John Patterson fired Thomas Watson Sr. from National Cash Register, Watson continued to adore his ex-boss. Watson’s son wrote, “Oddly, dad never complained of this treatment and revered Mr. Patterson until the day he died.” Watson told his son one day, “Nearly everything I know about building a business comes from Mr. Patterson”. As Tedlow writes – “Both men dominated their organizations. Both were big spenders on themselves and on the others. Both demanded, explicitly or implicitly, complete allegiance to their views. Both were, in a sense, totalitarians.” Tedlow shows how Tom Scott played a similar role for Andrew Carnegie.

· Psychology of turning points: One of the specialties of Tedlow is to identify one or two key turning points in one’s life and analyze them psychologically. For example, one such point Tedlow presents is the day Henry Ford announced on January 5, 1914, “The smallest amount to be received by a man 22 years old and upwards will $5 per day…” According to Tedlow, this was the point where Ford’s modesty became a thing of the past. He developed an insatiable appetite for headlines. To borrow Warren Buffett’s terminology, Henry Ford forgot about his “circle of competence”. And Tedlow concludes that from this point onwards it was all downhill for Ford. You may or may not agree with Tedlow. But I enjoyed his analysis.

· Anatomy of innovation: If a general reading about an innovation, say through wikipedia, can be compared to watching a dressed up man, then reading this book is like seeing the man in an operating theatre and a surgeon showing you the details from inside. Not everybody may like it. But for me, it is a like having a “flight simulator” to play with. If you want to know exactly at what point Eastman might have got curious about photography or how much money was he already making from his photography business before he quit his banking job or when did he realize that patents are not enough and he needed to create a brand (like Kodak) you can find it in the book with all the gory details.

“Chance favors prepared mind” is my favorite law of innovation. I found this book to be the best so far that gives a glimpse of what “chance”, “a prepared mind” and “favors” mean. Tedlow shows again and again that “success” is like any other addiction. One doesn’t know where to stop.

Personally “History” had lost to “Science” as a cool subject by a wide margin when I was in school. After reading Tedlow, it rekindled my interest in history. Thanks to Tedlow I got an opportunity to appreciate the worlds of Gita Piramal (Business Legends), Ramchandra Guha (India after Gandhi) and many more.

An article I wrote based on a story from this book:

Kodak: story of how George Eastman resolved the patent paradox

Friday, December 24, 2010

4 characteristics of an innovative culture

Last week I made a presentation on “Role of a manager as an innovation catalyst” to 50 odd managers at their company’s offsite. One manager asked me, “What are the characteristics of an innovative culture?” For some reason, I was not happy with my answer. Hence, the question stayed with me. Here is an attempt to present my view of 4 characteristics of an innovative culture in an organizational context.

Experimentation: The first sign that an organization is innovative is visible through the kind of experiments being performed. Typically experiments manifest themselves in the form of prototypes. For example, in a hospital the CEO showed me a checklist prepared by a nurse and subsequently institutionalized in all other branches. In another place, I saw a portal which sourced the latest blogs, ideas, news posted within the organization and showed it in different windows. In a place like Tihar Jail the prototype could very well be the notebooks of the inmates trying to learn alphabets (see the picture above).

Reflection: When you take the question, “How are you doing?” seriously, what you do next is called reflection. Similarly, when a team sits around after a milestone and asks, “What did we do right? What could we have done better?” it is a collective reflection. Why is reflection important? Because that is when you try to make sense out of the clutter in your mind. Only when I reflected did I realize the impact of Daniel Kahneman’s talk on “Psychology of intuition” on my thinking. Only after reflection a team may come to know the diverse set of assumptions under which development and test teams were working. Reflection is visible through the nature of communication in meetings, post project analysis reports, blogs, newsletters, quarterly communication etc.

Recognition: There are two forms of recognition: covert and overt. When an idea suggested by Paul Buchheit or David Grossman gets selected by the organization for further development it is a form of covert recognition. When Toyota announces gold, silver and bronze medals for the best innovators it is overt recognition. When TVS Motors sponsors Srinivasan to attend Kaizen conference in Malaysia that is also a form of recognition. When P&G’s feminine care division gives “Presidents Fail Forward Award” to the “team or individual that enabled the organization to significantly learn from a failure”, it also sends a message about what company values.

Collaboration: Collaboration happens at multiple levels: within a team, across teams, across business units and across companies. If “experimentation” is the first sign of an innovative culture, “collaboration” is the defining characteristic of innovation maturity. At Tihar Jail, collaboration was fostered through various communities like Legal Panchayat, Food Panchayat run by inmates. At another client, every year they form a cross-functional team and send them to the market and ask for their suggestions on the new trends and possible areas for new investments. This year I met a senior engineer who meets his friend from a different group for an hour every month to thrash out ideas – some of them turn out to be patents. I feel "collaboration" especially cross-functional collaboration is the toughest of these four to inculcate.

Related articles:

Thursday, December 9, 2010

When does an intervention begin? Story of Dr. Kiran Bedi’s first day at Tihar Jail

My engagement with my clients is called an intervention. It is similar to your doctor or fitness coach intervening in your regular routine through your working engagement with them. The objective is the same: help client become healthier. The question is: When does an intervention begin? There are two schools of thought. One school says that an engagement has two parts. The first one is about diagnosis which in an organization setting begins with surveys and/or interviews of various stakeholders and ends with planning of the intervention. The second part is the actual intervention. Prof. Edgar Schein belongs to the second school which says that intervention begins with the diagnosis itself i.e. with the first question you ask your client. Now, you might say, “What difference does it make?” Following story tells how much of a difference it can make.
The post of Inspector General (IG) of Tihar Jail, India’s largest prison was lying vacant for many months when Kiran Bedi was posted there. By then she had finished nine months of “paid wait” period after a full tenure as Deputy Inspector General of Police in Mizoram, in the North-East of India. The appointment was more like a “punishment posting”. One of the ex-IGs (Prison) told her, “What will you do there? There is no work there! I was IG (Prisons) many years ago; I received just two files a day. So I used to clear them from my home.”
Monday 3rd May 1993 was Kiran’s first day at Tihar. She had made a brief visit the previous Saturday and met her direct reports. Without settling down Kiran went for a round of Prison No. 1 (there are 4 prisons in Tihar). It was just a 20-yard walk from her office. She had to pass through two giant gates before actually entering the prison wards. Wearing a uniform was not mandatory. So Kiran wore a full-sleeved pastel pathan suite topped by a waist-length Nehru jacket. “This gave me a full cover, with a sense of grace” She writes. The Superintendent of the jail, K. R. Kishore, followed her. There was no armed guard. She held a notepad in her hand to record on-the-spot observations.
As Kiran filed past the waiting prisoners, the Warders, perhaps from the force of habit, started to physically contain the prisoners without the slightest provocation from them. Some even waved their sticks menacingly the onlooking prisoners, in a gesture to show concern for her security. Kiran signaled the Warders to stop doing this.
There were blank stares all around her. Kiran stood there not knowing what expression would be most suitable for the moment. Not being in uniform had already communicated a desire of informal tone. She started wondering if our system was at all designed to help change offenders and forgive those who were willing to mend. Perhaps in continuation of the thought, she suddenly broke the silence by asking them: “Do you pray?”
No one answered.
She repeated: “I am asking you, do you pray? Please tell me.” She spoke in Hindi.
The men looked towards the Warders as if to ask them if they were permitted to speak. The Warders were confused.
Kiran moved closer to the bunch and directed the question to one inmate chosen at random.
He answered, “Yes, sometimes,” nodding his head.
“Very good. Who else does? You?” She pointed to another prisoner, again at random, getting even closer to the crouching men.
And then one after another, voices joined in saying, “Yes, I also do. I recite the path. Most of us pray at our own timings…”
Perhaps the first human contact was made. She probed on, “Would it be better if ‘we’ say a prayer together? Would you like to?”
They fell silent again. They had never prayed together.
Then one of them, with one by one the staff and the other on me, said hesitantly, “Yes…” Others nodded their heads in agreement, wanting to be part of the prayer.
She said: “All right, which prayer should ‘we’ sing together? Can you suggest one?”
“Do you know ‘Aye Malik tere bande hum, aise hon hamare karam, neki par chalen (O Lord we are your creation/ May our actions be worthy)?” She asked.
This time there was an enthusiastic and instant response, “Yes!”
She said: “Get up to sing together.”
“Close your eyes and sing with me”
And they sang. Kiran says, “When our eyes opened, theirs and mine, I felt we had together succeeded in giving out the first signal of mutual trust which could set the pace and for our work relationship from now on”
Imagine if Kiran had sent out a survey through the Warders as the first step to gather the data!
Source: “It’s always possible: Transformation of one of the largest prisons in the world” by Kiran Bedi, Sterling publishers.

Sunday, November 21, 2010

Killing an idea: The good, the bad and the ugly way

If you are serious about innovation, then killing an idea should be normal. And even if you feel, you don’t kill ideas, chances are high ideas are getting killed anyway by not allocating resources to them. So the action need not be that of commission (pulling the trigger) but could very well be that of omission (not supplying enough oxygen). Hence people serious about innovation activity don’t debate whether we should kill ideas or not. The real question is, “What is a good way to kill ideas?” In this article let’s look at the good, the bad and the ugly way to kill an idea.

The ugly: Alan Robinson and Dean Shroeder narrate this story of a lieutenant colonel in their book “Ideas are free”. In the mid 1960s, as the Vietnam War was intensifying, the lieutenant colonel put an idea into one of Pentagon’s suggestion box. His office produced a constant stream of reports for senior officers, all with the fame format – an executive summary, a table of contents, and a thick divider sheets with protruding alphabetically ordered tables to identify the various sections. The divider sheets came in standard packets of twenty six, one for each letter of the alphabet. Most reports had only 5 or 6 sections and hence only 5 or 6 dividers in each packet were used. Lieutenant colonel suggested that if one report used sections A through F, begin the next report with section G. He thought his idea would save the office several thousands of dollars every year. One day he was summoned to the office of his commanding officer.

“Is this yours?” the general asked.

“Yes, sir”

“Eat it”, the general said.

“Excuse me, sir?”

“Eat it. Now!” the general ordered. The lieutenant colonel stepped forward, took the paper from his superior, put it in his mouth, chewed it up and swallowed it. He was abruptly dismissed and nothing was ever said about it. Decades later, after that lieutenant colonel retired as army’s top generals, he still remembered the incident.

The bad: Dan Ariely is a professor of behavioural economics at Duke University and also at MIT and known more for his best-selling book “Predictably Irrational”. He narrates following incident during an interview at PurpleCar in July this year: Dan met with a group of 80 people around May-Jun 2010 from this big big software company based in Seattle. This group had been working in an incubator on some new ideas. They came up with this idea that they thought would revolutionize the computer industry. They met with the CEO a week before Dan met them and CEO told them that he’s burying the project. They had worked on it for two years and Dan felt he had never seen a more deflated group of 80 people in his life. It was bad way to just bluntly telling people that their idea is killed. The CEO did better than the army general but could do much better. How?

The good: Dan did something interesting. He asked the group, “What would you do if you were to kill a project and not deflate the project team?” Lots of ideas came up. What if the CEO allowed them to present their work? Not just the product but the thought process and ideology around it etc. and then say, “Look we have decided to cancel it but there is lots to learn from it.” Or let the team share working prototypes with people in the company and see what they feel about it (something similar actually happened with Google’s AdSense)

Perhaps Bill Packard of Hewlett-Packard (HP) understood some of this several decades ago. This is how David Hewlett recalls Bill’s “hat-wearing process” in “The HP Way”. Upon first being approached by a creative inventor with enthusiasm for a new idea, Bill immediately put on a hat called “enthusiasm”. He would listen, express excitement where appropriate and appreciation in general, while asking a few general and not too pointed questions. A few days later he would get back to inventor wearing “inquisitor” hat. This was a time for very pointed questions, a thorough probing of the idea, lots of give-and-take. Without a final decision, the session would be adjourned. Shortly thereafter, Bill would put on his “decision” hat and meet once again with the inventor and with appropriate logic and sensitivity, judgment was rendered. No wonder many HP folks remembered the method with admiration.

Saturday, November 13, 2010

Searching the source of "low-cost car" idea in India

“Don’t go looking for the source of a river” goes a saying in my mother tongue – Marathi. A BBC documentary does exactly that as it traces the source of river Ganges from Gangotri to Gomukh to a trickle up the snow peaked mountains. As the documentary shows the real source is usually far more obscure and mostly impossible to find. Perhaps the same principle is applicable to ideas. The closer you look at an idea, you start seeing some other idea(s) which was a source for this idea. In this article, I will try to do to the idea of “low-cost car in India” what BBC did to river Ganges.

Today low-cost car in India is synonymous with Tata Nano. From mid 80s to 90s, it was Maruti 800. In fact, Maruti 800 was used as a reference while designing Nano. Where did Maruti idea come from? R. C. Bhargava, Chairman of Maruti Udyog Limited (MUL), tells the history of the car in his book “The Maruti story”. It is the first detailed biography of a product developed for Indian market that I have come across. Where did Maruti idea come from? It leads us to a different Maruti.

In November 1970, the Cabinet decided to manufacture a small car in public sector and discussions were held with foreign car makers, including Renault, Ford and Nissan. However, the estimate of Rs. 57 crore as initial investment turned out to be too much for the time. Instead private entrepreneurs wanting to manufacture a low-cost car were talked to. Eleven letters of intent were issued, one of those receiving the LoI was Sanjay Gandhi. Out of the 11 LoI, only three were converted into industrial licenses. Apart from Sanjay Gandhi, the other two went to Manubhai Thakkar of Vadodara and Sunrise Auto Industries of Bangalore, perhaps non-serious players by design.

Ever since his return from Britain, Sanjay had been obsessed with the idea of making a small car. He along with Captain Tillu an instructor at Delhi Flying Club, set up a workshop in 1966 in Gulabi Bagh, a congested locality in north Delhi. The workshop had minimal equipment and two mechanics. Maruti Motors Limited (a private company) was registered in 4 June 1971. Later Sanjay acquired 297 acres of land for Maruti in Gurgaon for Rs. 35 lakh. A prototype of the car was demonstrated at the India International Trade Fair in 1972. Another prototype was sent for testing to the vehicle research department of defence ministry, which gave it the certificate of roadworthiness. The car was test driven in Jammu & Kashmir, Rajasthan, Haryana, Punjab and Uttar Pradesh. Sevety-three dealers were appointed and each had to pay a deposit. Commercial production never started.

It was an impossible proposition considering the need to manufacture and procure all the required components, including gearbox and engine, locally. Two things shifted the priorities away from the project: First, the national emergency which came into force in June 1975 and subsequently Janata Party came to power in Jan 1977. And second, the aircraft crash on 23 June 1980 that killed Sanjay Gandhi. Sanjay's unfinished dream acted as an emotional force for Indira Gandhi to push government to start a small car project called Maruti Udyog Limited incorporated on 24 Feb 1981. Was Sanjay's Maruti Motors the first low-cost car project in India?

In late 1950s government formed an Ad Hoc committee on the Automobile Industry under economist L. K. Jha to look into the possibility of manufacturing a low-cost passenger car. It was meant to cater to those whose monthly salary with below Rs. 1,000. The committee, dubbed the Cheap Car Committee, studied different models and collaborators and submitted a report in 1960 laying out the criteria that should decide the model. The committee received 24 proposals from various firms including Hindustan Aeronautics, Renault, Hindustan Motors, Premier Automobiles, Telco (now Tata Motors). However, the tenure of the committee was over before it could take any action.

Does it really matter where the source of an idea is? What matters a lot more is how much impact the idea eventually makes, just like river Ganges.

Saturday, October 30, 2010

Electronic Voting Machine: An innovation from Bharat Electronics Limited (BEL)

Imagine you are designing a product that will be used by several hundred million users within a matter of a few days. What do you think would be your topmost requirement? Usability? Reliability? For Electronic Voting Machine (EVM) designed by Bharart Electronics Limited (BEL), it was “security”. In a country where the election story is never complete without rigging and booth capturing, this is not surprising. Last Wednesday we got an opportunity to listen to the EVM story from Mr. I V Sarma, Director R&D, BEL at the Innovation forum meeting held at IIMB. EVM was first introduced in a Goa state election and rolled out nationally in 2004 General Election.

Security was implemented in EVM at three levels: Technical level (tamper-proof hardware and software design), operational level (security during voting process) and procedural level (throughout the deployment process). For example, the selection of EVMs for polling stations is a random process. Moreover, the machine has no operating system, no network and no external devices connected to it. Imagine a BEL product manager telling this with pride to a Nokia product manager! In spite of this, there were several court cases filed against EVM and it hasn’t lost any yet. For a detailed analysis on security of EVM and its possible loopholes, look at a recent study, “Security analysis of India’s Electronic Voting Machine” by Prasad et. al. presented at the 17th ACM Conference on Computer and Communications Security (CCCS’10) this month.

Apart from security, what were the other challenges in developing EVM? Sarma mentioned two more:

  • Simplicity: EVM had to be used for diverse and many illiterate people. Ease of use was important. Hence, the design is kept as close to the ballot paper as possible. Similarly the operating mechanism is similar to the old style. A polling officer presses a button which releases a vote and then the voter presses a button.

  • Reliability: It had to work in adverse weather conditions sometimes without electricity and should be light-weight. In fact, in the last general election the kit had to be carried on a 45km trek to reach a remote destination in J&K valley.

The idea of EVM originated within BEL to automate an internal election. And then Election Commission picked it up. Guess what was the first hurdle it hit? Indian constitution didn’t permit electronic voting. So a bill had to be passed in the parliament!

What kinds of enhancements are planned to EVM? One problem with the current device is that the voter does not have any way of knowing that the vote has been cast. The new version of EVM will have a small paper strip (2 inch x 2 inch) that will fall off giving a visual cue to the voter. EVM is currently being exported to Nepal, Bhutan and Namibia. Patents are filed both inside and outside the country to protect the IPR.

So what is in the next big innovation coming from BEL? One is weapon locating radar and the other is software defined radio.

Thursday, October 14, 2010

What legends learn from gambling: Warren Buffett & the Rules of the Racetrack

I don’t gamble. At least that is what I would have liked to believe. “Nice people don’t gamble” is what I was told in school and at home. But when I look back on various decisions I took – like my investment in Satyam stock or leaving the job to become self-employed – each looked no different from a gamble. What differed were the odds and the stakes. Now I no longer look at gambling as – stuff that only other people do. It is something we do all the time whether we know it or not. What do people learn from real gambling? Here is an interesting tale from the chapter titled “The rules of the racetrack” in Warren Buffett’s biography “Snowball” written by Alice Shroeder.

“Pop, there is just one thing I want. I want you to ask the Library of Congress for every book they have on horse handicapping.” This is what Warren told his dad Howard who was at that time a Congressman living in Washington D. C. Howard cribbed, “Well, don’t you think they’re going to think it’s a little strange if the first thing a new Congressman asks for is all the books on horse handicapping?” Sixteen year old Warren persisted (1946) and got several books from the library. He studied them all and created his models. Tested them on old data he found in old racing forms in North Clark Street in Chicago. Through this process Warren discovered The Rules of the Racetrack:

  1. Nobody ever goes home after the first race.
  2. You don’t have to make it back the way you lost it.

The racetrack counts on people to keep betting until they lose. Couldn’t a good handicapper turn these rules around and win? Warren was to discover the answer first hand soon.

Warren found a new friend to go to racetrack with, Bob Dwyer, his high school golf coach. Together they started going to the racetrack in Charleston, West Virginia. Dwyer taught Warren advanced skills in reading the most important tip sheet, the Daily Racing Form. Warren recalls, “Sometimes you would find a horse where the odds were way, way off from the actual probability. You figure the horse has a ten percent chance of winning but it’s going off at fifteen to one.”

Then one time, Warren went to Charleston by himself. And he lost in the first race. But he didn’t go home. He kept on betting and he kept on losing, until he had lost more than $175 and his pockets were stripped nearly bare. This is what Warren recalls:

“I came back. I went to the Hot Shoppe, and I treated myself to the biggest thing they offered – a giant fudge sundae or something – and there went all the rest of my money. While I ate, I figured out how many newspapers I had to deliver to make up what I had lost (Note: Warren used to deliver Washington Post in the morning). I was going to have to work more than a week to make back the money. And I’d done it for dumb reasons.

You are not supposed to bet every race. I’d committed the worst sin, which is that you get behind and you think you’ve got to break even that day. [That is when I really learned] The first rule is that nobody goes home after the first race, and the second rule is that you don’t have to make it back the same way you lost it. That is so fundamental, you know. It was the last time I ever did anything like that.”

It is time we give some respect to bookies. By the way, which school do they go to?

Thursday, September 30, 2010

S. Chandrasekhar and his attempts to get away from Astrophysics

I went back to Nobel Laureate S. Chandrasekhar’s biography a few months back after 17 years. Chandra written by Kameshwar Wali was a birthday gift I gave to my wife a few months after she joined me in Buffalo, New York after our wedding. If you have given books as gifts to folks at home, you must be aware of the hidden agenda. I don’t remember who started reading the book first, but I was definitely the first one to finish it. It was the first biography I read where the hero of the story co-operated with the author in a frank manner and the author has done a splendid job with the narration. Why did I go back the book now?

I had a specific objective – to re-read the story of “Chandrasekhar Limit” – the idea that languished for several decades before gaining acceptance by the scientific community eventually leading to a Nobel. It is a masala story with lots of twists and turns. It even has a villain, Prof. Eddington then doyan of Astrophysics, who launched a campaign to kill Chandra’s idea. But that would be a topic of a separate article. In this second reading of the book one of things that struck me was Chandra’s two serious attempts in getting away from Astrophysics. Why did Chandra try to do that? And what happened in each attempt? Let’s see briefly in this article.

Chandra’s career in Astrophysics was more of an accident. By the time Chandra landed in Cambridge he had already published a paper based on the work of Fowler, a Fellow of the Royal Society. Chandra had encountered Fowler’s paper while browsing the newly arrived journals in university library in Madras. In fact, Fowler helped him secure admission at Cambridge. So it was natural for him to start his PhD work under Fowler in Astrophysics.

1930s were hey days of theoretical Physics as a totally new foundation known as quantum mechanics was being built. Chandra soon realized that working in Astrophysics was more like being on the periphery. The real action was in pure Physics. In the meantime, Fowler left Cambridge on sabbatical and Dirac who had nothing to do with Astrophysics became Chandra’s official guide. Chandra consulted Dirac who advised him to visit Niels Bohr and co in Copenhagen. Folks at Copenhagen indeed turned out to friendlier and it is here Chandra made his first serious attempt at pure physics. He wrote a paper titled “On the statistics of Similar Particles” and sent it to Dirac in Cambridge. Bohr had already given his nod. But pretty soon Dirac found an error in his paper. “My paper sent to the Proceedings of the Royal Society is WRONG. That is all” Chandra wrote to his father in Nov 1932. Over four months of work was down the drain. Pressure started building up to submit a thesis. Chandra went back to Astrophysics.

Chandra’s second attempt at quitting Astrophysics happened just after he finished PhD in 1933 and was elected to trinity fellowship. Could this be the time to shift to pure Physics or pure Mathematics? The dilemma ended soon when he got an advice from a senior Fellow Harold Davenport, “You can’t teach an old dog new tricks. Why don’t you continue in astrophysics? You got the fellowship on that account. There is enough time to do mathematics later.”

Fortunately for Astrophysics, Chandra not only stayed with it but made a significant contribution in bringing Astrophysics part of main stream physics. Today 10% of the 12th standard Physics syllabus my wife teaches is Astrophysics. Incidentally, we will be hearing a lot more of Chandra in the coming months as this year is Chandra’s birth centenary year. In fact, Kameshwar Wali will be giving a talk at a conference on Chandra at Indian Institute of Astrophysics, Koramangala, Bangalore in December. I hope to attend it.

Sunday, September 19, 2010

My most favorite YouTube video and the marvels & the flaws of intuition

Chances are high your most favorite YouTube video is very different from mine in its form and content. Mine is neither a funny clip nor a music video although I enjoy watching both kinds of clips. But here is what is perhaps common between your favorite video and mine. Like you, I have watched it a dozen times so far. But more importantly I have listened to the audio extract of the video several dozen times by now. I listened to it in the gym a couple of days back and I listened to it before going to bed last night. It is titled “Explorations of the mind” and it is an hour-long lecture given at University of California, Berkley by the father of behavioral economics and Nobel Laureate Prof. Daniel Kahneman of Princeton. Who is Kahneman? And what is this video all about? And why do I like it so much? Let me briefly describe in this article.

Kahneman was born in 1934 (same age as my dad) to Jewish parents of Lithuanian origin and spent his childhood in France where his parents had migrated in 1920s. He says in his bio at the Nobel Prize site, “I had grown up intellectually precocious and physically inept”. His school PE teacher felt to pass him means to stretch his extreme tolerance. Kahneman made up for what he lacked in his physique by writing essays in a notebook like, “What I write of what I think”. Kahneman became a psychologist and together with Emos Tversky formulated a theory known as Prospect Theory. This theory turned upside-down a long standing belief among economists that human decision making is a rational process and eventually earned him a Nobel in 2002.

This video is titled “Explorations of the mind: Intuition: the marvels and the flaws”. The video can be divided into three parts. Part 1 is where the speaker is introduced (0-4:20). In part 2 Kahneman sets the context and defines the question he is planning to address for the rest of the talk (4:20-20:10). Part 3 (20:10-55:05) is where he presents a simple and useful model that addresses the question.

What is the question Kahneman addresses in this talk? It is as follows – On the one hand we encounter marvels of intuition when we see world class chess players, basketball players, fire fighters consistently making accurate decisions in a “blink” of an eye (check out Malcolm Gladwell’s Blink for stories on this). On the other hand, we have “experts” like the Chief Economists of the International Monetary Fund (IMF) Olivier Blanchard who on September 2, 2008 said, “If the price of oil stabilizes, I believe we can weather the financial crisis at limited cost in terms of real activity”. Within two weeks some of the biggest financial companies in the world collapsed (check out Nassim Taleb’s Black Swan for stories of these kinds). Why is it that the human intuition works beautifully in certain areas like sports and doesn’t work in some other areas like long term forecasting?

Why do I find this question so interesting? I have a deep-rooted fascination for the learning process. And I believe this question is at the heart of this process. I encounter people all the time who have spent decades managing projects but have stopped learning a while ago. Surprisingly, they believe that with every passing year, they are learning more. But actually they are not. The talk sheds light on what happens when we learn or stop learning.

Wednesday, September 1, 2010

Vinay Deolalikars proof of P=NP and the power of "web-test"

There are several ways of making a million dollars. One way suggested by Warren Buffett is to start with a billion dollars and invest them in an airline company. Unfortunately, for most of us this is not a practical way. There is another way which surprisingly needs no investment. Well, it needs a pencil and a paper which you can borrow from your friend. And of course, it needs your time which you can steal from your employer like Einstein did at Swiss Patent Office. Or better still, like Srinivas Ramanujam, you can make your dreams work for you. But here is the catch – you should be able to solve one of the six open problems in mathematics called the “Millennium Problems” defined by the Clay Mathematics Institute. The original list contained seven problems but one was solved by Grigory Perelman of Moscow in 2002. Three weeks back, on August 8, an HP researcher Vinay Deolalikar put up a draft of a proof sketch for one of the six Millennium Problems called “P=NP” on the Internet. Will Vinay get his million dollars?

I am supposed to have studied ABC of complexity theory in my undergraduate and graduate schools. But I pretty much don’t remember anything except for what “P” and “NP” means. Class P contains problems like sorting and searching which have fast computer programs. The other class NP contains problems which don’t have fast programs yet but if someone gives us an answer, we can write a program that can check its correctness quickly. Nobody has been able to mathematically prove whether P is equal to NP or not equal to NP. The problem is around 40 years old and was proposed by Steven Cook in 1971.

For an abstract subject like complexity theory, Prof. Richard Lipton writes amazingly lucid blog titled Godel’s lost letter and P=NP. In the months of May, June and July Richard wrote 8 blogs every month and averaged 17, 20 and 33 comments respectively on each blog entry. That’s very high for an abstract mathematical topic like complexity theory. But something even more extraordinary happened earlier this month. From Sunday 8th August till next Sunday 15th August Richard wrote 6 blogs on topics related to Vinay Deolalikar’s proof. Here is the list of blogs and the number of comments on each blog:

8-Aug A proof that P is not equal to NP (188 comments)

9-Aug Issues in the proof that P not equal to NP (121 comments)

10-Aug Updates on Deolalikar’s proof that P not equal to NP (184 comments)

11-Aug Deolalikar responds to issues about his P not equal to NP proof (129 comments)

12-Aug Fatal flaws in Deolalikar’s proof? (311 comments)

15-Aug P=NP “Proof” is one week old (257 comments)

That’s an average of 198 comments, roughly 8 times his average over the past 3 months. Some of the comments came from students and amateurs. But many comments came from what Richard called “The group”: Timothy Gowers, Gil Kalai, Ken Regan, Terence Tao, and Suresh Venkatasubramanian a powerful collection of top experts in the field. The Group found out three major gaps in the proof which Vinay has worked on and sent a final version for publication to a journal. Only time will tell whether his proof can fill the gaps but at this point odds are stacked against him.

Following sample comment gives us an idea of what Richard’s blog meant to readers:

I also want to thank Dick Lipton for the monumental effort. I am very thankful not only for the things already said (things learned, putting N != NP in the spotlight, etc) but also for something else that many researchers here take for granted: this was a public showing of the rigorous peer-review process that many people, specially aspiring researchers, non graduate students and amateur scientists, are unfamiliar with. For somebody attending a good university in his/her country of origin but where top notch research is not conducted, this whole exercise provided a glimpse about what’s like doing cutting edge work. Hopefully that might be a motivation to pursue a career in math or science later on.

Peer review in scientific publishing is undergoing a shift. “web-test” is becoming a powerful alternative to traditional “it-may-take-a-year” kind of review. Will review of this kind happen also in literature & social sciences? I guess so. Shakespeare Quarterly a 60-year old prestigious humanities journal is going to open its review to the web. “web-test” is still in its infancy but holds a great promise.

I would like to thank my friend D. Sivakumar for sending me the link to Richard’s blog. It is because of Siva that I can claim – I have a friend who is an expert in complexity theory!

Friday, August 20, 2010

Entering the game-changer funnel: story of SAP Labs India

When Boria Majumdar, the cricket expert (he has a PhD on history of cricket from Oxford!) was invited to give a talk at SAP Labs Gurgaon, little did anyone know that it will catalyze the first idea from India Lab to enter the game-changer funnel. Game-changer is a new business incubation process at SAP Labs where only 3 ideas enter every year each having a potential of generating at least $20M of annual revenue. Last Wednesday V. R. Ferose, MD of SAP Labs India, narrated this story in Bangalore Innovation Forum at IIMB while speaking on how SAP Labs India is building an environment of innovation. What’s cricket got to do with software products? Let’s look at the story in brief and related questions that came up during the Q&A session.

When Ferose took over as MD at SAP Labs Gurgaon, he observed a fundamental issue with the environment. There were 500 smart employees with an average age of 26.5. However, they were surrounded by the same kind of people. Even outside the office they were mingling with their friends who were also from the same background i.e. IT. If one of the tenets of innovation is to “think different”, how can that happen when everybody thinks the same? Of course, one can’t control who one makes friends with. Then can we invite people with different background to the company and share their perspectives? That got a series of talks started where a non-IT person was invited every week for an hour. People who visited SAP Labs during this series are: Kiran Bedi, Dr. Abdul Kalam, Rahul Bose, Harsha Bhogle, Harish Hande etc. Boria Majumdar visited as part of this series.

Boria spoke about the problems with cricket administration. He mentioned how corrupt the whole administration is and how there is a huge need for bringing in efficiency in sports administration perhaps through a software. One of the employees picked it up as a potential opportunity. During the market survey it was clear that if we take into account the cash rich sports clubs like English Premier League (EPL) then there is indeed a huge opportunity. Perhaps IPL belongs to the same category. The idea was taken further – relevant patents were filed. And the idea got selected to enter the global business incubator i.e. game-changer process.

Q1: How did the idea author get rewarded in this case?

The idea author gets recognition in two forms. The first is that he becomes part of the incubation team not necessarily as a leader to the take the idea further. It took one and a half year for the idea to be incubated. The second form of recognition is an option given of going for a week to a design school either at Stanford or in Berlin for a course on design thinking.

Q2: Did $20 M goal act as a deterrent in submitting ideas?

We realized that technology people are not good at creating a business case. We have a value engineering group who help pre-sales in creating value propositions for prospective customers. We got the good ideas from technology people validated from the value engineering folks. This brought out the business potential of the ideas.

Q3: Have you come across an idea which started as incremental and then led to a disruptive innovation?

I don’t know all the innovations that came out from SAP Labs. However, from my experience I haven’t seen any incremental idea becoming disruptive.

Monday, August 2, 2010

Lessons from Einstein’s career progression at Swiss Patent Office

Imagine you have got a game-changing idea. You prototype it in your spare time and the demo get appreciated by a few people including a VP and a product manager. Then comes your performance appraisal and your boss rates you “above average”. He tells you the reason for the “above” part of the rating – it is because you got the Six Sigma certificate during the appraisal period. He doesn’t mention anything about your idea. Sounds surprising? Well, what happened here is similar to what happened to Einstein at Swiss Patent Office. The game-changing idea was that of “Special theory of relativity” and the certificate was the PhD degree from University of Zurich. Let’s see how the story unfolded during Einstein's six year tenure at the patent office.

In August 1900 Einstein was the only student among his friends to graduate and not get a job in spite of a respectable 4.91/6.00 average. He felt “I was suddenly abandoned by everyone standing at a loss on the threshold of life”. He had yet to publish any paper and had no credibility. After two short teaching stints in schools lasting a few months each, Einstein got called for an interview from Swiss Patent Office at Zurich in early 1902. In the interview “Albert was examined for two full hours. The director placed before him literature on new patents about which he was required to form immediate opinion. The examination unfortunately disclosed his obvious lack of technical training.” Einstein was offered a job in spite of the interview because of the good word put in by, his friend Marcel Grossman’s father Herr Grossman with the institute director Herr Friedrich Haller. The position offered, Technical Expert class III, was provisional and one level below what he was interviewed for i.e. Technical Expert class II and the salary was 3,500 francs a year. Einstein took up the job within a week of getting the formal letter sometime in the summer of 1902.

After two years, in September 1904, Einstein’s salary was revised from 3500 to 3900 francs when Haller wrote to Federal Council, Einstein had “proved himself very useful.” He should, however, remain class III rather than promoted to class II since, “he is not yet fully accustomed to matters of mechanical engineering”. The next revision happened in 1906 when his salary was increased by another 600 francs. Haller then wrote, “Einstein had continued to familiarize himself with the work, so that he handles very difficult patent applications with the greatest success and is one of the most valued experts in the office. He has acquired the title of Dr. Phil. from the University of Zurich this winter and the loss of this ma, who is still young, would be much regretted by the administration of the office.”

It is interesting to note that in the 1906 appraisal, the director did not even mention the three papers the young employee had published in the single issue of Annalen der Physik in 1905, his annus mirabilis – one important enough to take him to the history books (on Brownian motion), one which brought him the Noble prize sixteen years later (on photoelectric effect) and the third containing the outline of Special Theory of Relativity.

Moral of the story? If you have a game-changing idea, don’t expect to get “excellent” rating from your boss, at least not in the next appraisal cycle. Even by the turn of the decade (1910) there were only a handful of people in the world who had understood the impact of relativity. Einstein had to be extremely lucky to have a boss to be one of them.

What did the patent office job mean to Einstein? Three things: One – “Besides eight hours of work … eight hours of idleness plus a whole Sunday”, second, "He (Haller) taught me to express myself correctly", and third, what Einstein mentioned on his seventieth birthday, “It gave me the opportunity to think abut Physics. Moreover, a practical profession is a salvation for a man of my type; an academic career compels a young man to scientific production, and only strong characters can resist the temptation of superficial analysis”.

Source: Einstein: The life and times by Ronald Clark

Thursday, July 22, 2010

Acharya Jagadis Chandra Bose: The father of systematic experimentation in India

Thanks to the gift we got from Prof. Dipan Ghosh during our visit at IIT Bombay (alma mater of me & my wife) I got an opportunity to see the special issue of Physics News published in October 2009 on the 150th anniversary of Sir. J. C. Bose. It was fascinating to read about the man who, as The New Cambridge History of India says,” invented national science for India as laboratory science.”

In 1895 JCB gave his first public demonstration in Calcutta of electromagnetic waves, using them to ring a bell remotely and to explode some gunpowder. In 1896 the Daily Chronicle of England reported: “The inventor (JCB) has transmitted signals to a distance of nearly a mile and herein lies the first and obvious and exceedingly valuable application of this new theoretical marvel”. It would be two more years (1897) before the first successful demonstration of Marconi in Salsbury Plain in England. JCB had used semi-conducting crystal as a detector for radio waves. Sir Neville Mott, Nobel Laureate in 1977 for his own contribution to solid-state electronics remarked that, “J.C. Bose was at least 60 years ahead of his time” and “In fact, he had anticipated the existence of P-type and N-type semiconductors.” What do I find unique in JCB story? Let me articulate 3 things:

1. Fighting spirit: When JCB returned to Calcutta after completing BA from Cambridge in 1885, he had a recommendation letter from Viceroy Lord Ripon. Principal of Presidency College didn’t like this and JCB was given a position but at a salary one third the salary of sahib teacher. JCB continued to teach and yet didn’t accept any salary for three years until the Principal relented. JCB received all his arrear salary as a teacher in the senior grade with retrospective effect from the date of his joining the college.

2. Pursuing one’s passion: On his thirty sixth birthday in 1894, JCB took the now famous vow of devoting his life in the pursuit of scientific research. He converted a small enclosure adjoining a bathroom in the college into a laboratory. His productivity as a researcher zoomed during the following year. In May 1895 he read a paper before the Asiatic Society of Bengal; by October 1895 he was able to dispatch to the Royal Society another paper, while three short articles would appear in The Electrician in December 1895. Impressed by his work Royal Society offered him a special Parliamentary grant for his research. JCB would later say, “That day the closed gate opened and for five years this progress was uninterrupted”.

3. Role of instruments and laboratory: JCB developed extremely sophisticated instruments in his lab like resonant recorder, high magnification crescograph, photosynthetic recoder etc. The resonant recorder could automatically record velocity of excitatory impulse with an interval down to 1/1000th of a second.

Here is how JCB described his own method of research: “The first condition is imaginative faculty, for the true laboratory is one’s own mind where every experiment has first to be visualized in all details and where behind all illusions one catches glimpses of truth. Aimless experimentation without clear vision is futile… The researcher has next to compare his thoughts with facts to be discovered by following surer paths of demonstration. Unrestrained imagination inevitably leads to widest speculation which is subversive of intellectual sanity. Thus, methods of introspection and experimentation must equally balance, one supplementing the other. Two other conditions for successful prosecution of research are the facilities of a well equipped laboratory and the invention and construction of new equipments of extreme delicacy and precision.”

Source: Physics News, Bulletin of Indian Physics Association, Sir J. C. Bose 150th Anniversary issue, October 2009,

The work of Jagadis Chandra Bose: 100 years of mm-wave research by D. T. Emerson (1998)

Monday, July 19, 2010

1930: The year when Benjamin Graham re-discovered “Margin of safety”

1930 was the year when the Great Depression was in its infancy and Warren Buffett was born. It was also the year when Warren’s guru Benjamin Graham was at his career’s mid-point and he would re-discover the principle of “Margin of safety (MoS)”. MoS would become one of the core principles of Graham’s investment style known as value-investing. It would be published in the book Security Analysis in 1934. MoS, I believe, is also one of the core principles of systematic innovation. Question is – How did Graham forget the principle in the first place? And how did he re-discover it? Let’s see it in brief in this article.

By 1930 Graham was 36 years old and had been in Wall Street for 16 years. He had experienced what it means to lose big-time twice. The first loss was in 1903 when Graham lost his father. Graham was 8 years old and his father 35. For the next several years Graham saw practically all the assets including furniture and jewelry disappearing from home, some of it to the pawn shops. The second loss was during the market panic of 1907 when his mother’s margin account was wiped out and her bank closed down. Things began to change slowly for Graham when he entered Columbia on an Alumni scholarship.

During the great bull market of 1920s Graham saw considerable reversal of fortunes. In the middle of 1929, Graham’s fund was sitting on a two and a half million dollars capital – put in long terms investments and short term hedging & arbitrage operations. By the end of 1929, in spite of the September crash of Dow Jones, Graham’s fund had lost only 20 percent compared to a much larger loss of Dow Jones. In a few circles, Graham was being referred to as “financial genius”.

In January of 1930 Graham visited Sr. Petersburg, Florida for holidays along with his family. He met a man named Mr. John Dix who was ninety three years old. Mr. Dix’s father had founded the John Dix Uniform Company of Long Branch, New Jersey. Dix asked Graham all about his business, how many clients he had, how much money I owed to banks and brokers and innumerable other questions. Graham answered them politely but with smug self-confidence. Suddenly Dix said with greatest earnestness, “Mr. Graham, I want you to do something of the greatest importance to yourself. Get on the train to New York tomorrow; go to your office, sell out your securities; pay off your debts, and return their capital to your partners. I wouldn’t be able to sleep one moment at night if I were in your position in these times, and you shouldn’t be able to sleep either. I am much older than you, with lots of more experience, you’d better take my advice”. Graham felt the old man couldn’t possibly understand his business and thought Dix’s ideas were preposterous. Of course, Dix was 100 percent right, Graham 100 percent wrong.

Graham would remember Dix in June when the Dow Jones would reach the abysmally low level of 42 from the April level of 279. Graham’s loss in 1930 was 50 percent, in 1931 it was 16 percent and in 1932 only 3 percent. Graham suffered but perhaps far lesser than others. Surprising part is - Graham doesn’t blame himself for the failure to protect himself against the disaster. What is it that Graham regrets?

In 1928 Grahams had moved into a duplex apartment with terrace on the 18th and 19th floor of a thirty storied building at the heart of New York City. It had ten rooms and a rent of $11,000 per year and the lease was to run ten years. Considering Graham’s gains of $600,000 before taxes for the closing year, the expenditure appeared modest even by highly conservative methods. He was proved wrong and pretty soon Grahams moved out of the apartment. What was Graham’s learning?

The true key to material happiness lay in a modest standard of living which could be achieved with little difficulty under almost all economic conditions. Graham would remember Mr. Dix and the New York apartment experience for the rest of his life.

Source: Benjamin Graham: The memoirs of the Dean of Wall Street, McGraw-Hill, 1996

Related articles:

Margin of safety: My most favorite insight of 2009

Edison’s folly and understanding the exposure to negative Black Swan